1.1 Basis of Preparation
The financial statements have been prepared to comply in all material
aspects with the Notified Accounting Standards by Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Companies
1.2 Method of Accounting and Revenue Recognition
Accounts are maintained on an accrual basis and at historical cost.
Sales are recognised on passing of risks and rewards attached to the
goods. Sales include excise duty but do not include Value Added Tax
(VAT) and Central Sales Tax (CST).
Dividend income is recognised for when the right to receive is
established. Interest income is recognised on a time proportion basis
taking into account the amount outstanding and the rate applicable on
Yield To Maturity (YTM) basis.
1.3 Use of Estimates
The preparation of financial statements in conformity with Indian
Generally Accepted Accounting Principles (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures relating to contingent
liabilities as at the date of financial statements and reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from these estimates. Differences between the actual
result and estimates are recognised in periods in which the results are
1.4 Fixed Assets
Fixed assets are stated at cost less depreciation/amortisation and
impairment loss, if any. The cost is inclusive of interest and
incidental expenses incurred during construction period and is net of
cenvat credit availed.
The fixed assets are tested for impairment if there is any indication
of impairment, based on internal/ external factors. Impairment loss, if
any, is provided by a charge to Profit and Loss Statement.
Machinery spares, which are specific to a particular machinery and
whose use is expected to be irregular, are capitalised and depreciated
over the useful life of the related asset.
Assets acquired under lease are treated as operating/finance lease as
per the provisions of Accounting Standard - 19 Leases issued by the
Institute of Chartered Accountants of India.
1.5 Depreciation and Amortisation
i. Depreciation on additions to/deductions from fixed assets is being
provided on pro-rata basis from/to the date of acquisition/disposal.
ii Depreciation on foreign exchange differences on borrowings utilised
for acquisition of assets is provided prospectively over the remaining
life of the assets.
iii The cost incurred to purchase mining land is bifurcated into cost
of land and cost of estimated mining reserves for the purpose of
depreciation. Amortisation of mining reserves is calculated by using
Unit of Production Method and the same is charged to Profit and Loss
iv Depreciation is provided on straight line method at the rates
specified in the Schedule XIV to the Companies Act, 1956 except in the
following cases where the rates are higher than Schedule XIV of the
Companies Act, 1956.
Cement Division :
a. For certain vehicles used by employees : 15.25%.
b. Expenses on mines development are capitalised and are amortised
over a period of five years from the month of commencement of
extraction of limestone from that area.
c. Leasehold land and mining surface rights are amortised from the
month of commencement of commercial production, over the remaining
a. Cost of acquisition of leasehold land is amortised over the
remaining lease period.
b The civil and other costs attributable to the plants/office on leased
premises are capitalised and are being written off over the unexpired
period of the lease.
a. Cost of acquisition of leasehold land is amortised over the period
b. For certain vehicles used by employees : 15.25%.
c. Expenses on mines development are capitalised and amortised over a
period of extraction on the basis of Unit of Production Method.
1.6 Research and Development
Revenue expenditure on research phase is recognised as an expense when
it is incurred. Expenditure on development phase is capitalised as per
Accounting Standard - 26.
Long Term Investments are carried at cost. Diminution, if any, other
than temporary, is provided for Current investments are carried at
lower of cost or fair value.
Inventories are valued at lower of cost and net realisable value. They
are valued after considering for obsolescence and other losses. The
cost is worked out on weighted average basis.
1.9 Foreign Currency Transactions
Transactions in foreign currency are accounted at the exchange rate
prevailing on the date of the transaction. The exchange differences
arising on restatement or on settlement are recognised in the Profit
and Loss Statement.
Forward contracts are entered into for hedging the foreign currency
risk of the underlying outstanding at the Balance Sheet date. The
premium or discount on such contracts is amortised as income or expense
over the life of the contract. Any profit or loss arising on the
cancellation or renewal of forward contracts is recognised as an income
or expense for the period. The difference on account of exchange rate
fluctuation is taken to Profit and Loss Statement.
The Company has availed option provided under paragraph 46A of
Accounting Standard - 11 : ''The Effects of Changes in Foreign Exchange
Rates'', vide Notification dated December 29, 2011 issued by MCA.
Exchange differences arising on principal amount of borrowings are not
considered as borrowing costs and treated as part of exchange
difference. Consequently, the exchange differences on long-term foreign
currency monetary items, which were being recognised in the Profit and
Loss Statement in the earlier years, are now being dealt with in the
following manner :
i. Foreign exchange differences on long term borrowings utilised for
acquisition of depreciable asset is treated as an adjustment to the
cost of depreciable asset and the same is depreciated over the balance
useful life of the asset.
ii. Foreign exchange differences arising from other long term monetary
items are accumulated in a Foreign Currency Monetary Item Translation
Difference Account, and amortised over the balance period of the said
1.10 Borrowing Cost
Borrowing costs that are directly attributable to the acquisition or
production of qualifying assets are capitalised as the cost of the
respective assets. Other borrowing costs are charged to the Profit and
Loss Statement in the year in which they are incurred.
1.11 Government Grants
VAT subsidy is accounted on accrual basis, based on the entitlement.
The said subsidy is considered as a part of sales under Revenue from
Operations in the Profit and Loss Statement.
1.12 Employee Benefits
Superannuation and ESIC are defined contribution plans. Also Provident
Fund is treated as defined contribution plan. A contribution is made to
Regional Provident Fund Commissioner (RPFC) for certain employees and
in case of other employees covered under the Provident Fund Trust of
the Company, the management does not expect any material liability on
account of interest shortfall to be borne by the Company. Gratuity
benefits are treated as defined benefit plan. Gratuity obligation is
worked out based on actuarial valuation.
Employees are entitled to carry forward unutilised leave, the liability
of which is arrived based on an actuarial valuation. Employees are also
entitled to medical benefit for which premium is paid by Company. The
contribution made by the Company for Provident Fund, Superannuation and
Medical Premium is charged to the Profit and Loss Statement.
Incremental liability for leave entitlement and gratuity is charged to
the Profit and Loss Statement.
1.13 Taxes on Income
The Company provides current tax based on the provisions of the Income
Tax Act applicable to it. Timing differences between book profit and
taxable profit is accounted as deferred tax. Deferred Tax Asset, if
any, is recognised considering prudence.
1.14 Provision and Contingent Liabilities
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation in respect of which
a reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on management''s estimate for the
amount required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to reflect
the current estimates of the management.
A Contingent Liability is disclosed, unless the possibility of an
outflow of resources embodying the economic benefit is remote.
1.15 Segment Reporting
The Company has identified primary segments based on the products and
does not have any secondary segments. The primary segments identified
are as follows : i. Cement
ii TBK (Tile, Bath and Kitchen)
iii RMC (Readymixed Concrete)
Segment revenue, segment expenses, segment assets and segment
liabilities have been identified to segments on the basis of their
relationship to the operating activities of the segment. Revenue,
expenses, assets and liabilities, which relate to the Company as a
whole and are not allocable to segments on reasonable basis have been
included under Unallocated revenue/expenses/assets/liabilities.
However, segment information has been presented in the Consolidated
Financial Statements as permitted by Accounting Standard - 17 on
Segment Reporting as notified under the Companies (Accounting
Standards) Rules, 2006.