2010-11 - Grasim

UltraTec
ech Cement Limited
SCHEDULE 21
ACCO
CCOUNTING POLICIES AND NOTES
TO ACCO
CCOUNTS
A
Significant Accounting Policies:
1. Basis of Accounting:
The financial statements are prepared and presented under the historical cost convention on
accrual basis of accounting in accordance with the Generally Accepted Accounting Principles
(GAAP) in India and comply in all material aspects with the Accounting Standards (AS) notified
under the Companies (Accounting Standard) Rules, 2006 (as amended), to the extent applicable,
other pronouncements of the Institute of Chartered Accountants of India and with the relevant
provisions of the Companies Act, 1956.
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 recognised prospectively in the current and future periods.
Difference between actual results and estimates are recognised in the period in which the results
are known or materialise.
3. Fixed
ed Assets:
Fixed assets, whether tangible or intangible, are stated at cost less accumulated depreciation/
impairment loss (if any), 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-in-progress.
Fixed Assets held for disposal are stated at lower of net book value and net realisable value.
4. Treatment of expendit
xpenditure ure 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:
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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. Derivativ
atives:
Financial Derivativ
ative Instruments
Derivative 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
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