Financial Year - GMM Pfaudler Ltd

GMM PFAUDLER LIMITEDAnnual Report 2010 - 2011g) Foreign Exchange TransactionsTransactions in foreign currency are recorded at rates prevailing on the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currency are translated at the period end exchange rates. Exchange gains / losses are recognized inthe profit and loss account. Non monetary foreign currency items are carried at cost and expressed in Indian currency at therate of exchange prevailing at the time of transactions.h) Revenue RecognitionSales of products and services are recognized on dispatch/delivery of the goods or when services are rendered, except largecontracts, exceeding the Rupee equivalent of USD 1 million at the time of order receipt and the contract term of at least sixmonths from contract signing through product delivery, which are recognized on percentage of completion basis. Sales arerecorded net of trade discounts, sales tax and excise duties.Dividend income is recognized when the right to receive the same is established.Interest income is recognized on the time proportion method.i) Product Warranty ExpensesProvision is made in the financial statements for the estimated liability on account of costs that may be incurred on products soldunder warranty. The costs to be incurred for providing free service under warranty are determined based on past experienceand are provided for in the year of sale.j) Employee BenefitsEmployee benefits in the form of provident fund, family pension fund and superannuation scheme which are defined contributionschemes are charged to the Profit and Loss account of the year when the contributions accrue.The liability for Gratuity, a defined benefits scheme and provision for Leave Encashment is accrued and provided for in theaccounts on the basis of actuarial valuation as at the year end.Actuarial gains and losses comprising of experience adjustments and the effects of changes in actuarial assumptions arerecognised in the Profit and Loss account for the year as income or expense.k) Provisions and Contingent LiabilitiesProvisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliablyestimated.Contingent Liabilities are disclosed in respect of possible obligations that may arise from past events but their existence isconfirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of theCompany.l) TaxationTax expense comprises of both current and deferred tax.Provision for current income tax is made on the basis of assessable income under the Income Tax Act, 1961.Deferred income tax arising on account of timing differences between taxable income and accounting income that originate inone period and are capable of reversal in one or more subsequent periods is accounted for by applying the income tax ratesand laws enacted or substantially enacted on the Balance Sheet date. Deferred tax assets, subject to the consideration ofprudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxableincome will be available against which such deferred tax assets can be realized.m) Segment reportingThe Accounting Policies adopted for segment reporting are in line with the Accounting Policies of the Company. Segment assetsinclude all operating assets used by the business segments and consist principally of fixed assets, debtors and inventories.Segment liabilities include the operating liabilities that result from operating activities of the business segment. Assets andLiabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilitiesrespectively. Income / Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to businesssegments are reflected as unallocated corporate income / expenses.30