Atul Ltd 2011-12

Atul Ltd | Annual Report 2011-12 Notes to Consolidated financial statements NOTE 1 SIGNIFICANT ACCOUNTING POLICIES 1 System of Accounting: 1.1 The Company, generally, follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties. 1.2 The consolidated financial statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money except in case of freehold land, certain leasehold land, building premises and plant and machinery which have been revalued and resultant surplus is kept credited under revaluation reserves. 2 Principles of Consolidation: 2.1 The consolidated financial statements include the financial statements of Atul Ltd, the parent company and all of its subsidiary companies (collectively referred to as ‘the Group’), in which the Company has more than one-half of the voting power of an enterprise or where the Company controls the composition of the Board of Directors. 2.2 The consolidated financial statements are prepared in accordance with Accounting Standard-21 ‘Consolidated Financial Statements’ issued by the Institute of Chartered Accountants of India. 2.3 The investments in associate companies are accounted in these consolidated financial statements in accordance with the requirements of Accounting Standard-23 ‘Accounting for Investments in associate companies in Consolidated Financial Statements’, issued by the Institute of Chartered Accountants of India. (for details see Note No 27.9) 2.4 The investments in Joint Venture companies are accounted in these consolidated financial statements in accordance with the requirements of Accounting Standard-27 ‘Financial Reporting of Interest in Joint Venture Company’ issued under the Companies (Accounting Standards) Rules 2006 on proportionate consolidation method. Thus the Group’s Statement of Profit and Loss, Balance Sheet and Cash Flow Statement incorporate the Group’s share of income, expenses, assets, liabilities and cash flows of the Joint Venture on a line-by-line basis. 2.5 The financial statements of the parent company and its subsidiary companies have been combined on a line by line basis by adding together book values of the items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses. 2.6 The consolidated financial statements are prepared by adopting uniform Accounting Policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as standalone financial statements of the parent Company. 2.7 Financial statement of integral foreign subsidiary companies translated into Indian rupees pursuant to Accounting Standards-11 (revised 2003) ‘The effects of changes in foreign exchange rate’ are as follows: 2.7.1 Revenues and expenses are translated into Indian rupees at average exchange rate, which is not as per requirements of Accounting Standards-11, but having no material effect on the results of consolidated accounts. 2.7.2 Monetary items are translated into Indian rupees using the year end rate. 2.7.3 Non-monetary items are translated using exchange rate at the date of transaction. 2.7.4 The net exchange difference resulting from the translation of items in financial statement of the subsidiaries companies is recognised as income or expense under the head ‘Exchange difference on translation of foreign subsidiaries companies.’ 3 Other Significant Accounting Policies: 3.1 Basis of preparation: These financial statements have been prepared on accrual basis and under historical cost convention and in compliance, in all material aspects, with the applicable Accounting Principles in India, the applicable