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Depreciation on additions to the assets during the year is being provided on pro-rata basis at their respective
rate with reference to the month of acquisition | installation.
Depreciation on assets sold, scrapped or discarded during the year is being provided at their respective rates
up to the month in which such assets are sold, scrapped or discarded.
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:
a) Premium on lease hold land is amortised over the period of lease.
b) Cost of spares for specific machinery is amortised over remaining useful life of related machinery.
c) Cost of Computer software is amortised over a period of three years.
5 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 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.
6 Borrowing 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.
7 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.
8 Inventories:
a) Raw materials, packing materials, purchased finished goods, work-in-progress, finished goods, 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.
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 obsolete inventories based on technical estimates made by the Company.
9 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
Indian 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.
Notes
to financial statements
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
(contd)