1. Accounting Convention:
The financial statements of the Company have been prepared, unless
otherwise stated, under historical cost convention, having due regard
to the fundamental accounting assumptions of going concern,
consistency, accrual and in compliance with the mandatory Accounting
Standards as specified in the Companies (Accounting Standards) Rules,
2. Use of estimates:
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires Management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon Management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
B) Significant Accounting Policies
1. Revenue recognition:
Revenues are generally recognised on accrual basis except where there
is an uncertainty of ultimate realisation.
i) Sales are recognised when the property in goods are transferred for
a price and their collection is expected within the agreed time.
ii) Lease income from non-cancellable operating leases are recognised
in the statement of Profit & Loss Account, on straight line basis, over
the lease term. In respect of other operating leases, lease income is
recognised in accordance with the terms of the lease deeds as modified
based on negotiations from time to time.
iii) Interest is recognised on time proportion basis taking into
account the amount outstanding and the rate applicable.
iv) Dividends and royalty income are accounted for, when the right to
receive the payment is established.
2. Valuation of Inventories:
Inventories are valued at lower of weighted average cost and net
realisable value. Cost of inventories comprises of cost of purchase,
cost of conversion and other costs incurred in bringing the inventories
to their present location and condition.
3. Fixed Assets:
Fixed assets are stated at cost less depreciation, wherever applicable.
The land in Bangalore is stated at the revalued amount as adjusted in
accordance with the revaluation done in August 2001 at the market value
determined by approved valuers. All costs relating to the acquisition
and installation of fixed assets are capitalised and such costs include
borrowing cost relating to borrowed funds attributable to the
acquisition of qualifying assets for the period upto the date of
acquisition / installation.
4. Borrowing Cost:
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset are capitalised as part of cost of
such assets till such time as the asset is ready for its intended use
or sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.
Depreciation has been provided under written down value method at the
rates prescribed under Schedule XIV of the Companies Act, 1956.
6. Effects of changes in Foreign Exchange rates :
i) Transactions in foreign currencies are translated applying the
following exchange rates:
a) In respect of export transactions, at the average exchange rate
prevailing in the month preceding the month in which the transaction
b) In respect of all other transactions at the rate of exchange
prevailing on the date of transaction.
ii) Monetary assets and liabilities denominated in foreign currency are
translated at the rates of exchange at the Balance Sheet date and the
resultant gain or loss is recognised in the Profit & Loss Account .
iii) Non monetary items are carried at historical cost denominated in
foreign currency and these are translated using the exchange rate
prevailing on the date of transaction.
7. Accounting for Government Revenue Grants :
Government revenue grants available to the Company are considered for
inclusion in the accounts, where there is reasonable assurance that the
Company will comply with the conditions attached to them and where such
benefits have been earned by the Company and it is reasonably certain
that the ultimate collection will be made. Grants of revenue nature are
recognised in the Profit & Loss Account.
i) Current investments refer to the investments that are readily
realisable and intended to be held for not more than a year.
ii) Trade investments refer to the investments made with the aim of
enhancing the group''s business interest.
iii) Long term investments are stated at cost. All expenses relating to
acquisition of investments are capitalised. Diminution in the value of
investments, if considered permanent, is provided for.
iv) Current investments are stated at lower of cost and fair value on
the Balance Sheet date.
9. Employee Benefits:
a) Defined-contribution plans :
These are plans in which the Company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the Employees''
Provident Fund, Superannuation Fund and certain state plans like
Employees'' State Insurance and Employees'' Pension Scheme. The Company''s
payments to the defined contribution plans are recognised as expenses
during the period in which the employees perform the services that the
b) Defined-benefit plans:
Gratuity: The Company provides for gratuity, a defined benefit plan
(Gratuity Plan), to certain categories of employees. Liability with
regard to gratuity plan is accrued based on actuarial valuation, based
on Projected Unit Credit Method, carried out by an independent actuary,
at the Balance Sheet date. Actuarial Gains and Losses comprise
experience adjustments and the effect of changes in the actuarial
assumptions and are recognised immediately in the Profit & Loss Account
as income or expense.
c) Other long term employee benefits:
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 based on
actuarial valuation carried out at each Balance Sheet date.
d) Short term employee benefits:
Undiscounted amount of short term employees benefits expected to be
paid in exchange for the services rendered by the employees is
recognised during the period when the employee renders the services.
These benefits include compensated absences such as paid annual leave
and performance incentives.
10. Segment reporting:
The operations of the Company are divided into alcoholic beverages,
leather products, investments, guarantee services, property development
and other activities. Accordingly, the primary segment reporting
comprises the performance under these segments and the secondary
segment reporting is based on geographical locations of customers.
11. Related Party disclosures:
Transactions between related parties are disclosed as per Accounting
Standard 18 - Related Party Disclosures. Accordingly, disclosures
regarding the name of the transacting related party, description of the
relationship between the parties, nature of transactions and the amount
outstanding as at the end of the accounting year, are made.
12. Taxes on Income:
Provision for income tax comprises current taxes and deferred taxes.
Current tax is determined as the amount of tax payable in respect of
taxable income for the period.
Deferred tax is recognised on timing differences between the accounting
income and the taxable income for the year and quantified using the tax
rates and laws enacted or substantively enacted as on the Balance Sheet
Deferred tax assets are recognised and carried forward to the extent
that there is reasonable / virtual certainty that sufficient future
taxable income will be available against which such deferred tax asset
can be realised.
13. Impairment of assets:
The Company evaluates all its assets for assessing any impairment and
accordingly recognises the impairment, wherever applicable, as provided
in Accounting Standard 28 - Impairment of Assets.
14. Provisions and Contingencies:
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an out flow 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 estimates required
to settle the obligation at the Balance Sheet date. These are reviewed
at each Balance Sheet date and adjusted to reflect the current
15. Earnings per share:
Earnings per equity share (basic / diluted) is arrived at by dividing
the Net Profit or Loss for the year attributable to the equity
shareholders by the weighted average number of equity shares
outstanding during the year.