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forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative
gain or loss recognised in Shareholders’ funds is transferred to the Statement of Profit and Loss for
the period.
11. Revenue recognition:
Revenue from sales are recognised when all significant risks and rewards of ownership have been transferred
to the buyer and no significant uncertainty exists regarding the amount of the consideration that will be
derived from the sale of goods.
a) Sale of goods and services:
i) Domestic sales are accounted for on dispatch from the point of sale, where property in goods are
transferred to the buyer.
ii) Export sales are accounted on the basis of dates of on board bill of lading and | or air way bill.
iii) Service income is recognised, net of service tax, when the related services are rendered.
b) Other revenue:
i) Eligible export incentives are recognised in the year in which the conditions precedent are met and
there is no significant uncertainty about the collectability.
ii) Lease rental income is recognised on accrual basis.
iii) Dividend income is accounted for in the year in which the right to receive the same is established.
iv) Interest income is recognised on a time proportion basis taking into account the amount outstanding
and the rate applicable.
12. Provisions, contingent liabilities and contingent assets:
Provisions involving a substantial degree of estimation in measurement are recognised when there is a present
obligation as a result of past events and it is probable that there will be an outflow of resources. Provision
is not discounted to its present value and is determined based on the best estimate required to settle an
obligation at the year end. These are reviewed every year end and adjusted to reflect the best current estimate.
Contingent liabilities are not recognised but are disclosed in the Financial Statements. Contingent assets are
neither recognised nor disclosed in the Financial Statements.
13. Research and Development expenditure:
Research and Development expenditure is charged to revenue under the respective heads of account in the year
in which it is incurred. However, development expenditure qualifying as an intangible asset, if any, is capitalised,
to be amortised over the economic life of the product | patent. Research and Development expenditure on
fixed assets is treated in the same way as expenditure on other fixed assets.
14. Employee benefits:
a) Defined contribution plan:
Contribution paid | payable by the Company during the period to Provident Fund, Superannuation
Fund, Employees’ State Insurance Corporation, National Pension Scheme and Labour Welfare Fund are
recognised in the Statement of Profit and Loss.
b) Defined benefit plan:
Gratuity:
Gratuity liability is a defined benefit obligation and is computed on the basis of an actuarial valuation
by an actuary appointed for the purpose as per projected unit credit method at the end of each
financial year. The liability so provided is paid to a Trust administered by the Company, which in turn
invests in eligible securities to meet the liability as and when it accrues for payment in future. Actuarial
gains | losses are immediately taken to the Statement of Profit and Loss. Any shortfall in the value of
assets over the defined benefit obligation is recognised as a liability with a corresponding charge to the
Statement of Profit and Loss.
Notes
to the Financial Statements
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
(continued)