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73
Notes
to the Financial Statements
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
(contd)
Depreciation is adjusted in subsequent periods to allocate the revised carrying amount of assets after the
recognition of an impairment loss on a systematic basis over its remaining useful life of assets.
Amortisation Expenses :
a) Premium on lease hold land is amortised over the period of lease.
b) Computer software is amortised over a period of three years.
6 Impairment of Assets:
The carrying amounts of assets are reviewed at each Balance Sheet date to assess if there is any indication of
impairment based on internal | external factors. An impairment loss on such assessment will be recognised
wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the
assets is net selling price or value in use whichever is higher. While assessing value in use, the estimated
future cash flows are discounted to the present value by using weighted average cost of capital. A previously
recognised impairment loss is further provided or reversed depending on changes in the circumstances.
7 Finance Costs:
Borrowing costs in relation to acquisition and construction of qualifying assets are capitalised as part of cost of
such assets up to the date when such assets are ready for intended use. Other borrowing costs are charged as
expense in the year in which these are incurred.
8 Investments:
Investments that are intended to be held for more than a year, from the date of acquisition, are classified as
long-term investments and are carried at cost. However, provision for diminution in value of investments is
made to recognise a decline, other than temporary, in the value of the investments.
Current investments not intended to be held for a period more than one year, are stated at lower of cost or fair value.
9 Inventories:
a) Raw materials, packing materials, purchased finished goods, work-in-progress, finished goods
manufactured, fuel, stores and spares other than specific spares for machinery are valued at cost or
net realisable value whichever is lower. Cost is arrived at on moving weighted average basis. However
materials and other supplies held for use in the production of inventories are not written down below cost
if the finished products in which they will be incorporated are expected to be sold at or above cost.
b) Goods-in-transit and in bonded warehouse are stated at the cost to the date of Balance Sheet.
c) ‘Cost’ comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory
to the present location and condition.
d) Due allowances are made for slow moving and obsolete inventories based on estimates made by the Company.
10 Foreign Currency Transactions:
a) Initial recognition:
Transactions denominated in foreign currencies are recorded at the rate prevailing on the date of the transaction.
b) Conversion:
At the year end, monetary items denominated in foreign currencies remaining unsettled are converted into
rupee equivalents at the year end exchange rates. Non-monetary items which are carried in terms of historical
cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
c) Exchange differences:
All exchange differences arising on settlement and conversion of foreign currency transactions are
included in the Statement of Profit and Loss. The Company has opted to avail the option provided under
paragraph 46A of Accounting Standard - 11 ‘The effects of changes in foreign exchange rates’ inserted
vide Notification dated December 29, 2011 issued by the Ministry of Corporate Affairs , Government of
India. Consequently, foreign exchange difference on account of long-term foreign currency borrowings
utilised to acquire a depreciable asset, is adjusted in the cost of the depreciable asset, which will be
depreciated over the balance life of the asset.
d) Forward exchange contracts not intended for trading or speculation purposes:
The premium or discount arising at the inception of forward exchange contracts intended to hedge existing
exposures is amortised as expenses or income over the life of the contract. Exchange differences on such