1.1 Basis of Preparation of financial statements
The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting and
comply with the Accounting Standards prescribed in the Companies
(Accounting Standards) Rules, 2006 issued by the Central Government in
consultation with the National Advisory Committee on Accounting
Standards fNACAS''), and the relevant provisions of the Companies Act,
1956, to the extent applicable.
1.2 Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) in India reguires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities on
the date of the financial statements. Actual results could differ from
those estimates. Management believes the assumptions used in the
estimates are prudent and reasonable. Any revision to accounting
estimates is recognized prospectively in the current and future
1.3 Fixed assets and depreciation / amortisation
Fixed assets are stated at cost of acauisition less accumulated
depreciation / amortization and impairment. Cost includes purchase
price and other cost attributable to acauisition and installation of
Intangible assets are recognised only when it is probable that the
future economic benefits that are attributable to the assets will flow
to the Company and the cost of such assets can be measured reliably.
Intangible assets are stated at cost less accumulated amortisation and
impairment loss, if any. All costs relating to the acauisition are
Depreciation on fixed assets other than lease hold improvements and
computer software has been provided on the written down value, prorata
to the period of use at the rates specified in schedule XIV of the
Companies Act, 1956, which reflect the management''s best estimate of
the economic useful life of the assets. Lease hold improvements are
amortised over shorter of, the period of lease or useful life. Computer
software is capitalised and amortised over a period of five years.
Assets individually costing uptoRs. 5,000 are fully depreciated in the
year of purchase.
1.4 Impairment of assets
In accordance with AS 28-''lmpairment of Assets'', where there is an
indication of impairment of the Company''s asset, the carrying amounts
of the Company''s material assets and/or the cash generating units are
reviewed at each Palance sheet date to determine whether there is any
impairment.The recoverable amount of the asset (or where applicable,
that of the cash generating unit which the asset belongs) is estimated
as the higher of its net selling price and its value in use.
An impairment loss is recognized whenever the carrying amount of an
asset or a cash generating unit exceeds its recoverable amount.An
impairment loss is recognised in the profit and loss account.
Value in use is the present value of estimated future cash flows
expected to arise from the continuing use of the asset and from its
disposal at the end of its useful life.
Long term investments are carried at cost. Provision for diminution in
the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management.
Inventories are stated at lower of cost and net realizable value. Cost
is determined as follows:
i) in case of gold, loose diamond, silver, zaverat, platinum and
platinum diamond jewellery at weighted average costs; and ii) in case
of diamond jewellery, jadau jewellery, stones, pearls and watches, at
Costs comprise all cost of purchase, duties, taxes (other than those
subseauently recoverable from tax authorities) and all other costs
incurred in bringing the inventory to their present location and
Cost of finished goods include costs of raw material, direct labour and
other directly attributable expenses incurred in bringing such goods to
their present location and condition. In the case of diamond jewellery
the cost of finished goods include cost of raw material i.e. gold,
direct labour, other directly attributable expenses incurred in
bringing such goods to their present location and condition and cost of
diamonds forming part of the jewellery as determined by management
based on technical estimate of the purity and clarity of diamonds used,
on which the auditors have placed reliance, as this being a technical
Raw materials held for the use in manufacturing of inventories are not
written down below cost except in cases where material prices have
declined and it is estimated that the cost of the finished products
will exceed their net realisable value.
1.7 Revenue recognition
Revenue from sale of goods is recognized on transfer of all significant
risks and rewards of ownership to the buyer (net of sales tax, sales
return, and trade discounts)
Interest income is recognized on a time proportion basis.
1.8 Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rates
prevailing on the dates of the transactions. Exchange differences
arising on foreign currency transactions settled during the period are
recognized in the profit and loss account of that period.
Monetary assets and liabilities denominated in foreign currencies at
the balance sheet date are translated at the closing exchange rates.
The resultant exchange differences are recognized in the profit and
1.9 Employee benefits
Provident fund and Employees State Insurance :-
The Company makes regular contributions to the Provident Fund and
Employees State Insurance at the prescribed rates. Provident fund and
Employee State Insurance dues are recognized when the liability to
contribute to the provident fund and employees state insurance arises
under the respective Acts.
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave. The
undiscounted amount of short- term employee benefits expected to be
paid in exchange for the services rendered by employees is recognised
during the period.
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognised as a liability at the present value of
the defined benefit obligation at the balance sheet date determined on
the basis of an actuarial valuation by an independent actuary using the
projected unit credit method. The discount rates used for determining
the present value of the obligation under defined benefit plan are
based on the market yields on Government securities as at the balance
sheet date. Actuarial gains and losses are recognized immediately in
the profit and loss account.
The Company''s gratuity benefit scheme is an unfunded defined benefit
plan. The Company''s obligation in respect of gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods and discounting that benefit to determine its present value.
The present value is determined based on actuarial valuation at the
balance sheet date using the projected unit credit method, which
recognizes each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation is measured at the present
value of the estimated future cash flows. The discount rates used for
determining the present value of the obligation under defined benefit
plan are based on the market yields on Government securities as at the
balance sheet date. Actuarial gains and losses are recognized
immediately in the profit and loss account.
1.10 Employees Stock Option Scheme
The intrinsic value of option granted under Employees Stock Option
Schemes is accounted as employee compensation cost and written off over
the vesting period.
Lease rentals in respect of assets acauired under operating lease are
charged to the profit and loss account on straight linePasis.
Leases in which the company transfers suPstantially all the risks and
Penefits of ownership of the asset are classified as finance leases.
Assets given under finance lease are recognised as a receivaPle at an
amount eaual to the net investment in the lease. After initial
recognition, the company apportions lease rentals Petween the principal
repayment and interest income so as to achieve a constant periodic rate
of return on the net investment outstanding in respect of the finance
lease. The interest income is recognised in the statement of profit and
loss. Initial direct costs such as legal costs, Prokerage costs, etc.
are recognised immediately in the statement of profit and loss.
Leases in which the company does not transfer suPstantially all the
risks and Penefits of ownership of the asset are classified as
operating leases. Assets suPjectto operating leases are included in
fixed assets. Lease income on an operating lease is recognised in the
statement of profit and loss on a straight-line Pasis over the lease
term. Costs, including depreciation, are recognised as an expenses in
the statement of profit and loss. Initial direct costs such as legal
costs, Prokerage costs, etc. are recognised immediately in the
statement of profit and loss.
Income tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income- tax law) and deferred
tax charge or credit (reflecting the tax effects of timing differences
Petween accounting income and taxaPle income for the year). The current
charge for income taxes is calculated in accordance with the relevant
tax regulations applicaPle to the Company. The deferred tax charge or
credit and the corresponding deferred tax liabilities or assets are
recognised using the tax rates that have been enacted or substantially
enacted by the balance sheet date. Deferred tax assets are recognised
only to the extent there is reasonable certainly that the assets can be
realised in future; however, where there is unabsorbed depreciation or
carry forward of losses, deferred tax assets are recognised only if
there is a virtual certainty of realisation of such assets. Deferred
tax assets are reviewed as at each Palance sheet date and written down
or written-up to reflect the amount that is reasonaPly/ virtually
certain (as the case may Pe) to Pe realised.
1.13 Earnings per share (EPS)
Basic EPS is computed using the weighted average numPer of eauity
shares outstanding during the year. Diluted EPS is computed using the
weighted average numPer of eauity and potential eauily shares
outstanding during the year except where the results would Pe
1.14 Provision and contingent liabilities
The Company creates a provision when there is a present oPIigation as a
result of a past event that proPaPly reauires an outflow of resources
and a reliaPle estimate can Pe made of the amount of oPIigation. A
disclosure for a contingent liability is made when there is a possiPle
oPIigation or a present oPIigation that may or may not reauire an
outflow of resources. When there is a possiPle oPIigation or a present
oPIigation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made.