Annual Report 2011 - Ballarpur Industries Limited

ConsoLIDATeD sCheDuLes "I" To "VIII" attached to and forming part of the profit & loss account for the year ended June 30, 2011
sCheDuLe "VIII": sIGnIFICAnT ACCounTInG poLICIes AnD noTes
1. sIGnIFICAnT ACCounTInG poLICIes
A. BAsIs oF presenTATIon oF ConsoLIDATeD FInAnCIAL sTATemenTs
The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21), “Consolidated Financial
Statements” and Accounting Standard 23 (AS 23), “Accounting for Investments in Associates in Consolidated Financial Statements”, issued
by the Institute of Chartered Accountants of India.
B. FIXeD AsseTs -TAnGIBLe
1. Fixed Assets (other than those which have been revalued) are stated at cost net of CeNVAT/Value Added Tax, rebates, less accumulated
depreciation and impairment loss, if any.
2. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contract and
adjustments arising from exchange rate variations attributable to fixed assets are capitalized.
3. Preoperative expenditure:
Indirect expenditure incurred during construction period is capitalized under the respective asset head as a part of the indirect
construction cost, to the extent to which the expenditure is indirectly related to the assets head. Other Indirect expenditure incurred
during the construction period, which is not related to the construction activities or which is not incidental thereto is written off in the
profit and loss account.
C. DepreCIATIon
Depreciation on Fixed Assets is provided on Straight Line Method on certain Assets and on Written down Value Method on other Assets
in accordance with Schedule XIV of the Companies Act, 1956, except in case of one of the Company’s foreign subsidiary, depreciation is
charged so as to write off the depreciable amount of assets over their estimated useful lives using the straight-line method and improvements
to leased premises which are amortised over the period of lease. Land is not depreciated. Depreciation on revalued portion of fixed Assets,
as applicable, is appropriated and adjusted out of revaluation reserve if available with the Company, on a global pooling basis and the
balance is charged off in Accounts.
D. FIXeD AsseTs -InTAnGIBLe
Assets identified as intangible assets are stated at cost including incidental expenses thereto, and are amortised over a predetermined
period.
e. InVenTorY VALuATIon
raw Materials, Stores, Spare Parts, Chemicals etc., are valued at cost, computed on weighted average basis. Finished goods and work in
process are valued at cost or net realisable value, whichever is lower. In the case of finished goods and work in process cost comprises of
material, direct labour and applicable overhead expenses. The cost of finished goods also includes applicable excise duty.
F. InVesTmenTs
(a) Investments made by the Company in various securities are primarily meant to be held over a long-term period.
(b) (i) holding of certain Investments is of strategic importance to the Company and therefore, the Company does not consider it
necessary to provide for decrease in the Book Value of such Investments, till continuation of the relationship of strategic importance
with the Investee Company, namely that of a Subsidiary, Associate, Company under the same management, Foreign Joint Ventures
and/or Company associated with Avantha Group.
(ii) however, appropriate provisions are made to recognise decrease in the Book Value of Investments in companies of Strategic
importance also, as and when the Investee Company is either wound up or goes into liquidation or where the operations cease or are
taken over by receiver by Operation of Law.
(c) Investments in Government Securities are shown at cost and Investments other than that of Strategic Importance to the Company are
shown in the books at lower of cost or fair market value.
(d) As a conservative and prudent policy, the Company does not provide for increase in the Book Value of individual investments held by
it on the date of Balance Sheet.
G. DIVIDenD
Provision for Dividend, as proposed by the Directors, is made in the books of account, pending approval of the Shareholders at the Annual
General Meeting.
h. ForeIGn CurrenCY TrAnsACTIons
(i) Initial recognition
Foreign currency transaction are recorded in Indian rupees being the reporting currency, by applying to the foreign currency amount,
the exchange rate between the reporting currency and the foreign currency at the respective dates of the transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate as at the year end. 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.
(iii) exchange Differences
exchange differences arising on the settlement of monetary items or on reporting the company’s monetary items at rates different from
those at which they were initially recorded during the financial year are recognized as income or as expenses in the financial year in
90 Ballarpur industries limited i annual report 2010-11