1. Accounting convention
Financial statements are prepared in accordance with the generally
accepted accounting principles including accounting standards in India
and under historical cost convention.
2. Use of estimates
The preparation of the financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities on the date of the financial statements, disclosure of
contingent liabilities and reported amounts of revenues and expenses
for the year. Estimates are based on historical experience, where
applicable and other assumptions that management believes are
reasonable under the circumstances. Actual results could vary from
these estimates and any such differences are dealt with in the period
in which the results are known/ materialize.
RESTILE CERAMICS LIMITED
3. Fixed assets and depreciation
Cost of all assets, where the cost exceeds Rs. 10,000 and the estimated
useful life is two years or more, is capitalised. Cost of fixed assets
is net of eligible credits under Cenvat / Vat Scheme. Expenditure
directly related and incidental to construction are capitalised up to
the date of attainment of commercial production. Interest and other
related costs, including amortised cost of borrowings attributable only
to qualifying assets are capitalised as part of the cost of the
respective assets. Expenses incurred on major refurbishment extending
the life of Plant and Machinery has been capitalized to the respective
Assets are depreciatedon straight line basis, over their estimated
useful lives or lives derived from the rates prescribed in Schedule XIV
to the Companies Act, 1956, whichever is lower and in the manner
described.in Schedule XIV to the Companies Act, 1956.
Assets subject to impairment, on the asset''s revised carrying amount,
over its remaining useful life.
Long term investments are stated at cost less provision for diminution
other than temporary, if any.
Inventories are valued at lower of cost and net realisable value; cost
being ascertained on the following basis:
Stores, spares, consumable tools, and raw materials: on weighted
average cost basis. Work-in- progress, finished goods: under absorption
costing method with the cost of incomplete Work at the end of the year,
Cost includes taxes and duties and is net of eligible credits under
Cenvat / Vat Schemes.
Obsolete / slow moving inventories are adequately provided for.
6. Foreign currency transactions and derivatives
Foreign currency transactions are recorded at the rates prevailing on
the date of the transaction. Monetary assets and liabilities in
foreign currency are translated at closing rate. Exchange differences
arising on settlement or translation of monetary items are recognized
as income or expense in the Profit and Loss Account.
7. Amortization of deferred expenditure
Expenditure incurred on raising capital and other preliminary expenses
are amortised over a period of five years. AN identifiable amounts
spent on Brand Building resulting in long term benefits are amortized
over the period the benefit is expected to enure.
8. Revenue recognition
Revenue from sale of products is recognised on despatch to customers
and is inclusive of excise duty.
9. Research and Development Costs
Expenditure on- research is charged to revenue as incurred. Product
development costs, including on new variants of existing products are
recognised as Intangible assets and amortised.
10. Employee benefits
(a) Short term employee benefit obligations are estimated and provided
(b) Post employment benefits and other long term employee benefits
Defined contribution plans:
Company''s contribution to provident fund, employee state insurance and
other funds are determined under the relevant schemes and / or statute
and charged to revenue.
Defined benefit plans and compensated absences:
Company''s liability towards gratuity, other retirement benefits and
compensated absences are actuarially determined at each balance sheet
date using the projected unit credit method. Actuarial gains and losses
are recognised in revenue.
11. Deferred tax
(a) Deferred tax is recognized on timing differences, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversing in one or more subsequent
(b) Deferred tax assets on unabsorbed depreciation and carry forward of
losses are recognized only to the extent there is a virtual certainty
of its realization.