2010-11 - Grasim

ULTRATECH CEMENT
MIDDLE EAST INVESTMENTS LIMITED
Schedule 20
ACCO
CCOUNTING POLICIES AND NOTES
TO ACCO
CCOUNTS
A
Significant Accounting Policies:
1. Basis of Accounting
The group financial statements are prepared and presented under the historical cost convention on
accrual basis of accounting in accordance with the UltraTech Cement Ltd. (India)’s group accounting
policies. The accounting policies set out below have been applied consistently to the period presented
in this group financial statements in dealing with items which are considered material in relation to the
Company’s group financial statements.
The group prepares its financial statements in Dirham (AED) which is the functional currency of the
group. These financial statements are translated into Indian Rupees, the assets and liabilities are
translated into presentation currency at the exchange rate prevailing on the balance sheet date and
profit and loss account items are translated at the average rate for the year. Translation difference is
recognised as a separate component of Reserves & Surplus.
Closing Rate – 31/03/2011 – 1 AED = 12.1425 INR (31.03.2010 – 1 AED = 12.2250 INR)
Average Rate – INR – (01/04/2010 – 31/03/2011) – 1 AED = 12.4034 INR (20.09.2009 – 31/03/2010 –
12.5859)
2. Use of estimates
The preparation of financial statements in conformity with the GAAP requires estimates and assumptions
to be made that affect the reported amounts of assets and liabilities on the date of the financial statements,
the reported amounts of revenues and expenses during the reported period and the disclosures relating to
contingent liabilities as of the date of the financial statements. Any revision to accounting estimates is
recognized prospectively in the current and future periods. Difference between actual results and estimates
are recognized in the period in which the results are known or materialize.
3. Fixed
Assets
Fixed assets, whether tangible or intangible, are stated at cost less accumulated depreciation net of
modvat /cenvat (wherever claimed). The cost of fixed assets includes taxes, duties, freight and other
incidental expenses incurred in relation to their acquisition and bringing the assets for their intended use.
Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost
of fixed assets not ready for their intended use before such date are disclosed under capital work-inprogress.
4. Treatment of expendit
xpenditure during construction period
Expenditure / Income, during construction period is included under Capital-Work-in-Progress and the same
is allocated to the respective Fixed Assets on the completion of their construction.
5. Foreign Currency
rency Transactions
a. Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date
of the transaction. Monetary assets and liabilities denominated in foreign currency at the balance sheet
date are translated at the year-end rates.
b. In respect of Forward exchange contracts, premium or discount, being the difference between the
forward exchange rate and the exchange rate at the inception of contract is recognised as expense or
income over the life of the Contract.
c. Exchange difference including premium or discount on forward exchange contracts, relating to borrowed
funds, liabilities and commitments in the foreign currency for acquisition of fixed assets, arising till the
assets are ready for their intended use, are adjusted to cost of fixed assets. Any other exchange
difference either on settlement or translation is recognised in the Profit and Loss account.
d. Investments in equity capital of companies registered outside India are carried in the Balance Sheet at
the rates at which transactions have been executed.
6. Financial Derivativ
atives
Derivative financial instruments are used to hedge risk associated with foreign currency fluctuations and
interest rates. The derivative contracts are closely linked with the underlying transactions and are intended
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