2010-11 - Grasim

GRASIM BHIWANI
TEXTILES LIMITED
SCHEDULE 20
ACCO
CCOUNTING POLICIES AND NOTES ON ACCO
CCOUNTS
A
Significant Accounting Policies:
1. Accounting Concepts:
The financial statements are prepared under the historical cost
convention on accrual basis and in accordance with the applicable
mandatory Accounting Standards.
2. Fixed
Assets:
Fixed assets are stated at cost (including other expenses related to
acquisition and installation) less accumulated depreciation/
amortisation.
3. Foreign Currency
rency Transactions:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at balance sheet date are translated at
the exchange rate prevailing on that date. All other exchange
differences are recognised in profit and loss account. Premium or
discount on forward exchange contract is amortised as expense or
income over the life of the contract.
4. Treatment of expendit
xpenditure during construction period:
Expenditure during construction period is included under Capital Work
in Progress and the same is allocated to the respective Fixed Asset
on the completion of its construction.
5. Inventories:
Inventories are valued at the lower of cost or net realisable value
except waste/scrap which is valued at net realisable value.
The cost is computed on weighted average.
Finished goods and process stock include cost of conversion and
other costs incurred in bringing the inventories to their present
location and condition. Obsolete, defective and unserviceable
inventories are duly provided for.
6. Researc
esearch and development elopment expendit
xpenditure:
Revenue expenditure is charged to the profit and loss account and
capital expenditure is added to the cost of fixed assets in the period
in which it is incurred.
7. Depreciation/Amortization:
Depreciation/amortisation charge is provided for on the following
basis:
a) On fixed assets at Straight Line Method applying the rates /
useful life specified in Schedule XIV of the Companies Act,
1956, except as stated hereunder:
Asset
Estimated useful life
Motor Cars
5 years
Computer Software
3 years
Furniture & Equipments
7 years
Furniture & Equipments for Showroom 5 years
Computers
4 years
Telephone/ Mobile
3 years
b) In respect of assets added/disposed of during the Year on prorata
basis with reference to the month of addition/deduction
except in case of new projects where it is provided for on the
basis of the period of use.
8. Revenue enue Recognition:
Sales revenue is recognized on transfer of the significant risks and
rewards of ownership of the goods to the buyer and stated at net of
sales tax, VAT, trade discounts, rebates but includes excise duty.
Income from services is recognised as the services are rendered,
based on agreement/arrangement with the concerned parties.
Interest income is recognised on time proportion basis. Export
incentives, certain insurance, railway and other claims, where
quantum of accruals cannot be ascertained with reasonable certainty,
are accounted on acceptance basis.
9. Bor
orro
rowing Cost:
Interest and other costs in connection with the borrowing of the
funds to the extent related/attributed to the acquisition/construction
of qualifying fixed assets are capitalised upto the date when such
assets are ready for its intended use and other borrowing costs are
charged to Profit & Loss Account.
10.
0. Employee Benefits:
The Company makes regular contribution to provident fund and
superannuation fund and these contributions are charged to Profit &
Loss Account.
Contributions to the Gratuity Fund and provision for leave encashment
are made on the basis of actuarial valuation at the end of Year and
charged to Profit & Loss Account.
11. Pro
rovision for Current rent and Defer
erred
red Tax:
a) Provision for Current Tax is made on the basis of estimated
taxable income for the current accounting Year and in
accordance with the provisions as per Income Tax Act, 1961.
b) Deferred Tax resulting from timing difference between book
and taxable profit for the Year is accounted for using the tax
rates and laws that have been enacted or substantially enacted
as on the balance sheet date. The deferred tax asset is
recognized and carried forward only to the extent that there is
a reasonable certainty that the assets will be adjusted in future.
12. Pro
rovisions / Contingencies:
A provision is recognized when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are determined based on best
estimate of the amount required to settle the obligation at the Balance
Sheet date. Contingent liabilities are not provided for and are
disclosed in the Notes on Accounts.
Rs. in lacs
2011 2010
B. NOTES ON ACCO
CCOUNTS
1.1 Contingent Liabilities not provided for in respect of:
Claims not acknowledged as debts
(includes demands in respect of
Excise Duty, Cenvat Credit, Water Cess,
Sales Tax/TAV, Electricity Duty etc.)
Excise Duty 1464.85 1464.85
Custom Duty 31.35 31.35
Stamp Duty 433.80 433.80
1.2 Estimated amount of Contracts remaining
to be executed on capital account and
not provided (Net of advance
Rs. 53.97 Lacs) 80.81 6.75
(previous year Rs. 4.46 Lacs)
2. Advances recoverable in cash or in kind include :
a) Payment made to employees by way of Loans and Advances
in the nature of loan where there is
Rs. in Lacs
Outstanding as on Maximum Balance
Outstanding
31.03.2011 31.03.2010 31.03.2011 31.03.2010
No Interest or Interest
below Section 372A
of Companies
Act, 1956 147.86 80.83 147.86 108.21
147.86 80.83 147.86 108.21
3 There are no Micro, Small and Medium Enterprises, to whom the
Company owes dues, which are outstanding for more than 45 days
at the Balance Sheet date. The above information has been
determined to the extent such parties have been identified on the
basis of information available with the Company.
Rs. in Lacs
4 Auditors’ Remuneration 2011 2010
a) Statutory Auditors:
Audit Fee 82725 75000
Tax Audit Fee 27575 25000
For Certification and other Work 22060 20000
b) Cost Auditors:
Audit Fee 55150 55150
For Certification and Other Work
Reimbursement of Expenses - -
156