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Annexure I
SIGNIFICANT ACCOUNTING POLICIES:
A. Basis of preparation of financial statements:
The financial statements are prepared under the historical
cost convention on the accrual basis of accounting. The
accounts of the Holding Company have been prepared in
accordance with the Accounting Standards and those of the
foreign subsidiaries have been prepared in accordance with
the local laws and the applicable Accounting Standards /
generally accepted accounting principles. The financial
statements of the subsidiaries used in the consolidation,
wherever required, are drawn upto the same reporting date
as that of the Holding Company, i.e. year ended 31st March.
B. Principles of Consolidation:
a. The financial statements of the Holding Company and
its subsidiaries have been consolidated on a line-byline
basis by adding together the book values of like
items of assets, liabilities, income and expenses, after
eliminating intra-group balances, intra-group
transactions and the unrealised profits.
b. The financial statements of the Holding Company and
its subsidiaries have been consolidated using uniform
accounting policies except, to the extent of variation
mentioned in Note 11 above, which, in the opinion of
the management, does not have any material impact.
C. Revenue Recognition:
a. Revenue / Income and Cost / Expenditure are
generally accounted for on accrual as they are earned
or incurred except in case of significant uncertainties;
b. Sale of goods is recognized on transfer of significant
risks and rewards of ownership, which is generally on
the despatch of goods;
c. Export Benefits are recognised in the year of export;
d. Share / Securities Issue Expenses are charged first
against available balance in the Securities Premium
Account.
D. Employee Benefits:
a. Short term employee benefits and defined contribution
plans are recognised in the Profit and Loss Account of
the year in which the related service is received;
b. Termination Benefits are recognised as an expense in
the Profit and Loss Account of the year in which they
are incurred.
E. Foreign Currency Translations:
a. For the purpose of consolidation, the amounts
appearing in foreign currencies in the Financial
Statements of the foreign subsidiaries (considered as
non-integral operations) are translated at the following
rates of exchange:
EVEREST KANTO CYLINDER LIMITED
i. Average rates for income and expenditure.
ii. The year-end rates for all assets and liabilities.
Resulting exchange rates are accumulated in a
foreign currency translation reserve account.
b. Translations within the entity:
i. All transactions in foreign currency are recorded
at the rates of exchange prevailing on the dates
when the relevant transactions take place;
ii. Monetary assets and liabilities in foreign currency
outstanding at the close of the year are converted
in Indian Currency at the appropriate rates of
exchange prevailing on the date of the Balance
Sheet. Resultant gain or loss is accounted for
during the year;
iii. In respect of forward exchange contracts entered
into to hedge foreign currency risks the difference
between the forward rate and exchange rate at
the inception of the contract is recognized as
income or expense over the life of the contract.
Further, the exchange differences arising on such
contracts are recognised as income or expense
along with the exchange differences on the
underlying assets / liabilities. Derivative contracts
intended for trading purposes, are marked to their
current market value and gain / loss on such
contracts is recognised in the Profit and Loss
Account for the year. Profit or loss on cancellations /
renewals of forward contracts is recognised during
the year;
iv. Exchange differences arising on other derivative
contracts entered into to hedge foreign currency
exposure on account of highly probable forecast
transactions, were recognized and marked to
market, in line with principles laid down in
Accounting Standard 30 - Financial Instruments -
Recognition and Measurement, issued by The
Institute of Chartered Accountants of India, to the
extent, no specific accounting treatment is
prescribed under Company law or by any other
regulatory authority. Accordingly, such gain or loss
on effective hedges was carried forward under
Hedging Reserve to be recognized in the Profit
and Loss Account only in the year in which
underlying transactions are complete. In the
absence of a designation as effective hedge, the
gain or loss would be immediately recognized in
the Profit and Loss Account. With effect from
1st April, 2010, the Company has discontinued the
aforesaid accounting treatment and is accordingly,
recognizing mark to market losses in the Profit
and Loss Account (Refer Note ‘13’ in Schedule ‘U’).
Schedules forming part of Consolidated Financial Statements Annual Report 2010-11
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