Annual Report for the year 2012

are charged off to statement of Profit and Loss, on
receipt.
v) The revenue in respect of the duty free import licenses,
under Served From India Scheme, is recognized as
income in the books of account when and to the extent
there is no significant uncertainty as to their ultimate
realization.
vi)
Interest on deposits of surplus funds in recognised on
time proportion basis.
e. Investments
Long term Investments are stated at cost. Diminution in the
value of investments, other than temporary in nature, is
provided for. Current investments are valued at cost or
market value whichever is lower.
f. Inventories
Inventories are valued at lower of Cost or Net Realisable
Value. The cost is determined under "First in First out"
formula.
g. Foreign Exchange Transactions
i) Transactions in foreign currencies are recorded at
standard exchange rates prevailing in the respective
fortnight of the relevant transactions. The realized
exchange gains or losses are recognized in the
statement of Profit and Loss.
ii)
iii)
iv)
The exchange differences on repayment / translation
of foreign currency liabilities contracted for
acquisition of fixed assets from a country outside India
were added to / deleted from the cost of the relevant
fixed assets in terms of the then Schedule VI to the
st
Companies Act 1956 upto 31 March,2007.
The exchange differences arising on reporting of long
term foreign currency monetary items (including those
arising on settlement), in so far as they relate to
acquisition of depreciable capital assets are adjusted to
st
the cost of the capital asset, with effect from 1 April
2007, in terms of Ministry of Corporate affairs
st
Notification dated 31 March, 2009 relating to
Accounting Standard 11.
Other Monetary Assets and Liabilities denominated in
foreign currency are translated at the year end exchange
rates. The resultant gain or loss on such translation is
recognised in the statement of Profit and Loss.
v) In respect of forward exchange contracts covering either
Company’s earnings or payments (other than firm
commitments and highly probable forecast
transactions), the premium or discount arising at the
inception of the contract is amortised as expense or
income over the life of the contract. Exchange
differences on such a contract are recognised in the
statement of profit and loss in the reporting period in
which the exchange rates change. Any profit or loss
arising on cancellation or renewal of such a forward
exchange contract is recognised as income or as
h. Derivatives
expense for the period. In case of a new built ship, in
respect of forward exchangr contract entered into to
hedge the foreign currency risk of a firm committment or
highly probable forecast transaction (not covered by
Accounting Standard 11 revised 2003), the company
capitalises all the related costs including premium or
discount, exchangre differences and profit/loss on
cancellation of such contracts, if any.
Derivatives are accounted as follows based on a limited early
adoption of AS-30 to the extent not in conflict with legal
provisions and other Accounting Standards:
a) Fair value hedges are marked to market and the notional
Loss or Gain is accounted in the statement of Profit and
Loss.
b) Cash flow hedges are marked to market and the notional
loss or gain is taken to Hedging reserve account.
c) Other derivatives are marked to market and the notional
losses or gains are booked in the statement of Profit and
Loss.
i. Employee Benefits
The Group has a defined Contribution plan for shore
employees for provident fund and contributions made to the
relevant authorities under this scheme are charged to the
statement of Profit and Loss. Company has no other
obligation except the monthly contributions.The Group has
defined benefit plans for shore employees namely gratuity
and leave encashment and compensated absence, the
liability for which is provided based on actuarial valuation
determined under Projected Unit Credit method.
Contributions under gratuity scheme are made to Life
Insurance Corporation of India (LIC) in accordance with the
terms of the policy taken under their Group Gratuity
Scheme.Actuarial gains / losses comprise experience
adjustments and the effect of changes in actuarial
assumptions and are recognised immediately in statement of
Profit and Loss as Income / Expense.Any other termination
benefits are recognised as expenses immediately on the basis
of actual expenses.In respect of Floating staff, Provident fund
and Gratuity contributions are made to Seamens Provident
Fund and Seafarers Welfare Fund Society respectively. No
Gratuity is payable in respect of officers on board who are on
contract with the Company. Company has no further
obligation except the monthly contributions."
j. Borrowing Costs
Borrowing costs that are directly attributable to the
acquisition / construction of the underlying qualifying fixed
assets are capitalised as a part of the respective asset up to
the date of acquisition /completion of construction.
k. Leases
Assets acquired on lease where a significant portion of the
risk and rewards of the ownership are retained by the lessor
are classified as operating leases. Lease rentals are charged
to revenue.
58 24th Annual Report 2011-12