1. BASIS OF ACCOUNTING
The financial statements are prepared under the historical cost
convention and in accordance with the applicable mandatory Accounting
Standards and are based on accrual basis of accounting.
2. FIXED ASSETS
Fixed assets are recorded at cost of acquisition or at a revalued
cost. Cost of acquisition of vessels includes start up costs and
major improvements/upgradation. Interest on specific loans and roll
over charges are capitalised as part of fleet cost. (Note 10)
Depreciation is provided on straight line method at the rate provided
for in Schedule XIV to the Companies Act, 1956 in respect of ships
acquired prior to 31.03.1992.
In respect of fleet acquired thereafter, depreciation is provided
under the straight line method based on their economic life
determined by technical evaluation, at rates presently ranging from
6.10% to 20.00%.
Water circulation treatment system, leased out, is classified as a
continuous process plant and depreciation is provided on straight
line method at the rate applicable in Schedule XIV to the Companies
All other assets are depreciated on the written down value method at
the rate specified in Schedule XIV to the Companies Act, 1956.
Investments are stated at cost together with all incidental cost of
acquisition. Investments meant for long term are carried at cost and
diminution with reference to their market value, though material, is
not recognised, if such shortfall in the opinion of Directors is
temporary in nature.
5. FLEET OPERATING EARNINGS
Income from freight earnings is recognised where loading of the cargo
is completed before the close of the year on a pro rata basis for the
number of completed days of the voyage as at the close of the year.
The direct expenditure on such voyages are also prorated excluding
bunkers, the cost of which is accounted on the basis of actual
consumption. In other cases revenue is not recognised and the
expenses related thereto are carried to next accounting period. Hire
receipts from Time Charter is accounted on the basis of Charter party
Dividends on investments are accrued on the basis of declaration
7. SALE OF FLEET
All the expenses directly incidental to the sale of fleet are
deducted from the surplus on sale of fleet.
8. LEASE RENTALS
Lease rentals in respect of fleet taken on lease are amortised over
the useful life of the fleet as determined by the company which is
not co-terminus with the primary lease period.
9. RETIREMENT BENEFITS
Contribution to Provident Fund is made according to the rules of
Company. Contribution to Superannuation for eligible employees is
funded with Life Insurance Corporation of India.
The gratuity liability to shore based, floating staff and crew is
provided on accrual basis (not actuarially determined and funded).
Provision has been made for encashable leave entitlement of eligible
employees (not actuarially determined).
10. FOREIGN CURRENCY TRANSLATION
Foreign Currency loan balances for financing fixed assets are
translated at the rate of exchange ruling at year end or on the basis
of applicable forward contracts. Net gain or loss due to
increase/decrease in Rupee liabilities is adjusted to the cost of
assets acquired through these loans. Other transactions in foreign
currency are recorded at the exchange rate prevailing on the date of
Current assets and current liabilities are converted at the forward
exchange contract rate wherever taken.
In other cases,the conversion is done at the exchange rate prevailing
at the year end. The resultant gain or loss is recognised in tile
profit and loss account effective from this year.