(a) ACCOUNTING CONVENTION
The Financial Statements have been prepared in accordance with
applicable Accounting Standards in India. A summary of important
accounting policies which have been applied consistently, is set out
below. The financial statements have also been prepared in accordance
with the relevant presentational requirements of the Companies Act,
1956 of India.
(b) BASIS OF ACCOUNTING
The financial statements have been prepared in accordance with the
historical cost convention as modified by revaluation of certain fixed
(c) FIXED ASSETS
Land including development, certain building, and plant and machinery
at Tea Estates as at 30th June 1984, 1st April 1990, 31st March 1993,
31st March 1999 and 31st March 2002 are stated at valuation made by
an approved valuer at the then current cost. Subsequent acquisition of
these assets other than land at Estates and other fixed assets are
stated at their purchase cost together with any incidental expenses of
Assets acquired on hire purchase, for which ownership will vest at a
future date, are capitalised at cash cost.
Depreciation on Fixed Assets other than Freehold and Leasehold land at
Tea Estates including Development is provided on written down value
method in accordance with Schedule XIV to the Companies Act, 1956.
Additional charge of depreciation on amount added on revaluation is
adjusted against revaluation reserve. Renewal of land lease is
assumed, consistent with past practice.
All expenditure incurred for extension of new area of cultivation are
capitalised. However, cost of upkeep and maintenance of the areas till
not matured for plucking and cost of replanting in existing areas are
charged to revenue.
Profit or Loss on disposal of Fixed Assets is recognised in the Profit
and Loss Account.
An impairment loss is recognised where applicable when the carrying
value of the fixed assets of a cash generating unit exceeds its market
value or value in use, whichever is higher.
Long Term Investments are stated at cost and provision is made where
there is a fall other than temporary in valuation of investments.
Inventories are valued at cost (net of CENVAT credit) or net realisable
value whichever is lower. Cost is determined on weighted average basis
and includes expenditure incurred in the normal course of business in
bringing inventories to their location and condition including
appropriate overheads wherever applicable. Provision is made for
obsolete, slow-moving and defective stocks, where necessary.
(f) FOREIGN CURRENCYTRANSACTIONS
Transactions in foreign currency are recorded at the exchange rate
prevailing at the date of transactions. Gains/losses arising out of
fluctuations in the exchange rates are recognised in Profit & Loss in
the period in which they arise except in respect of fixed assets where
exchange variance is adjusted in the carrying amount of the respective
The difference between the forward exchange rates and the exchange
rates at the date of transactions are accounted as income or expense
over the life of the contracts, except in respect of liabilities
Incurred for acquiring fixed assets, in which case such differences are
adjusted in the carrying amount of the respective fixed assets.
Gains/losses arising on cancellation or renewal of forward exchange
contracts are accounted for as income/expenses for the period except
in case of forward exchange contracts relating to liabilities incurred
for acquiring fixed assets, in which case such profit/loss are adjusted
in the carrying amount of the respective fixed assets.
Transactions remaning unsettled at the end of the year are translated
at the year-end rate and gains/losses on foreign exchange rate
fluctuations relating to current assets and liabilities, except
inventories, is recognized in the Profit & Loss Accounts.
Sales represent the invoiced value of goods supplied less Sales Tax.
(h) INCOME FROM INVESTMENTS
Income from Investments is included together with the related tax
credit in the Profit and Loss Account.
(i) REPLANTING SUBSIDY
Replanting Subsidy is recognised as income in the Profit and Loss
Account in the year of receipt.
(j) COMPENSATION OF LAND
Compensation in respect of certain lands acquired by the Assam
Government under the Assam Fixation of Ceiling on Land Holdings Act,
1956, which is yet to be determined will be accounted for as and when
(k) RESEARCH AND DEVELOPMENT
Research and Development Expenditure of revenue nature is charged to
revenue and capital expenditure is treated as fixed assets.
(l) RETIREMENT BENEFITS
The Company makes regular contribution to provident funds,
superannuation funds and pension funds which are fully funded and
administrated by Trustees and are independent of Companys finance. The
Company also contributes to gratuity fund and such contribution is
determined by the actuary The gratuity fund is administrated by the
Trustees and is independent of the Companys finance. Leave encashment
benefit on retirement, where applicable is provided in the accounts as
per actuarial valuation.
(m) DEFERRED TAXATION
Provision for deferred taxation is made using the liability method, at
the current rates of taxation, on all timing differences to the extent
that it is probable that a liability or asset will crystallise.
Deferred tax assets are recognized subject to consideration of prudence
and are periodically reviewed to assess realisation thereof.