Election 2014
Moneycontrol.com India | Accounting Policy > Cement - Major > Accounting Policy followed by Prism Cement - BSE: 500338, NSE: PRISMCEM
Prism Cement
BSE: 500338|NSE: PRISMCEM|ISIN: INE010A01011|SECTOR: Cement - Major
Apr 17, 17:00
1.35 (3.36%)
VOLUME 37,188
Apr 17, 13:30
0.8 (1.99%)
VOLUME 82,107
Mar 12
Accounting Policy Year : Mar '13
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 Act, 1956.

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 known/materialised.

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 Statement.

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 and mobiles used by employees : 15.25% and 25% respectively.

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 lease period.

d. Assets acquired under the finance lease is amortised over the primary lease period and secondary lease period if renewable at nominal cost, if any.

a. Cost of acquisition of leasehold land is amortised over the remaining period of lease.

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.

1.7 Investments

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.

1.8 Inventories

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 to hedge 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. The exchange differences on long-term foreign currency monetary items, are 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 asset/liability.

1.10 Borrowing Costs

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 in the later case. The contribution made by the Company for Provident Fund, Superannuation and Medical Premium is charged to the Profit and Loss Statement.

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. 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 for other disputed matters, 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/asset/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.

Source : Dion Global Solutions Limited
Quick Links for prismcement
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.