2003-2004 - Cgglobal.com

Crompton Greaves Ltd.
Significant Accounting Policies
SCHEDULE [ A ]
1 BASIS OF PRESENTATION
The accounts have been prepared using historical cost convention, except for the revaluation of certain
fixed assets, in accordance with the Generally Accepted Accounting Principles (GAAP) on the accrual basis
and in accordance with the Accounting Standards referred to in Section 211(3C) and other provisions of
the Companies Act 1956. Insurance and other claims are accounted for as and when admitted by the
appropriate authorities.
The preparation of accounts under GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets & liabilities and disclosures of contingent liabilities as at the date of
the financial statements and the reported amounts of revenues and expenses during the year. Actual
results could differ from those estimates. Any revisions to accounting estimates is recognised prospectively
in the current and future periods.
2 FIXED ASSETS
(a)
(b)
(c)
(d)
(e)
(f)
Fixed assets are stated at cost, except for land and buildings added prior to 30th June 1985 which
are stated at revalued cost as at that date based on technical expert’s evaluation report.
Expenditure relating to existing fixed assets is added to the cost of the assets where it increases the
performance / life of the assets as assessed earlier.
Fixed assets are eliminated from financial statements, either on disposal or when retired from active
use. Such assets are removed from fixed asset records on disposal. Generally, such retired assets
are disposed off soon thereafter.
Pre-operative expenses for the projects incurred till the projects are ready for commercial production
are capitalised.
Internally manufactured / constructed fixed assets are capitalised at factory cost including excise
duty wherever applicable.
Lumpsum fees paid for acquisition of technical knowhow relating to Plant & Machinery is capitalised
as intangible asset.
(g) i) Machinery spares which are specific to particular item of Fixed Assets and whose use is irregular
are capitalised as part of the cost of machinery.
ii)
Machinery spares which are not specific to a particular item of Fixed Assets but can be used
generally for various items of Fixed Assets are treated as inventory and charged to Profit and
Loss Account as and when issued for consumption in the ordinary course of operation.
3 INVESTMENTS
Current Investments are carried at lower of cost or market value. The determination of carrying costs of
such investments is done on the basis of specific identification. Long term investments are carried at cost
after providing for any diminution in value, if such diminution is of a permanent nature.
4 INVENTORIES
Inventories are valued at the lower of cost or net realisable value after providing for obsolescence and
damage as under:-
(a) Raw materials, packing materials : At Cost, on FIFO/Weighted average basis
stores & spares and construction
material
(b) Work-in-Process : At Cost plus appropriate production overheads
(c) Construction Work-in-Progress : At Cost till a certain percentage of completion and thereafter
realisable value
(d) Finished goods : At Cost, plus appropriate production overheads, including
excise duty paid/payable on such goods.
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