SIGNIFICANT ACCOUNTING POLICIES A. Basis for Preparation of Financial Statements The financial statements have been brpared using mercantile system of accounting under the historical cost convention. It recognises significant items of income and expenditure on accrual basis. The accounts have been brpared to comply in all material aspects with applicable accounting principles in India and the provisions of the Companies Act, 2013. B. Sales Income from the sale of diamonds / jewellery is recognised when the sale has been completed with the passing of the title. Income from sale of wind energy is recognised on its transmission and delivery. Sales includes sale of goods and services and gain/loss on exchange fluctuations. C. Other Income Interest Interest income is recognised on accrual basis. Income from Investments Income from investment is accounted in the year in which the unconditional right to receive such income is established. D. Debrciation Debrciation on Fixed Assets is provided based on useful life of the assets as brscribed in Schedule II to the Companies Act, 2013 on straight line basis. E. Impairment of Assets An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An Impairment loss is charged to the profit and loss statement in the year in which the asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. F. Foreign Currency Transactions F.1 Transactions denominated in foreign currencies are recorded at the Exchange rate brvailing at the time of the transaction. F.2 Monetary items denominated in foreign currencies at the year end are translated at year end exchange rate and the resultant exchange differences are recognised in the profit and loss statement. F.3 The Company enters into forward / option contracts for hedging purpose. In case of forward contracts, the difference between the year end rate and rate on the date of contract is recognised as exchange difference. The proportionate difference between the forward rate and the exchange rate on the date of transaction is recognised over the life of the contract. In case of option contracts, the brmium paid and gain / loss are recognized as exchange difference on the date of settlement of the contract. Mark to market loss, if any, is recognized as exchange difference at the year end. F.4 Non monetary foreign currency items are carried at cost. F.5 Any income or expense on account of exchange difference either on settlement or on translation is adjusted to the profit and loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets. G. Fixed Assets Cost of Fixed Assets comprises of purchase price, duties, levies and any cost directly attributable to bringing the asset to its working condition for the intended use. Fixed Assets are stated at cost less accumulated debrciation. H. Capital Work in Progress Capital work in progress comprises of cost of acquisition of assets, duties, levies and any cost directly attributable to bringing the asset to its working condition for the intended use. Expenditure incurred on project under implementation is treated as incidental expenditure incurred during construction and is pending allocation to the assets which will be allocated / apportioned on completion of the project. I. Borrowing Costs All borrowing costs, which are of revenue nature, are charged to Profit and Loss Statement. J. Investments J.1 Long term investments are valued at cost. Provision for diminution in value is made only if such diminution is otherwise than temporary in the opinion of the management. J.2 Current Investments - Quoted are valued at cost or market value, whichever is lower. K. Inventories K.1 Stock of raw materials is stated at weighted average cost or net realizable value whichever is lower. Stock of polished diamonds (for jewellery operations) is valued at technically evaluated cost or net realizable value whichever is lower. Specific items of cost are allocated and assigned to inventory wherever practicable. K.2 Work in Process is valued at technically evaluated cost. Finished goods are valued at technically evaluated cost or estimated net realizable value, whichever is lower. Cost includes cost of material and related conversion cost. In view of the nature of variation in the values of individual diamonds and the differential in their processing costs, it is not practicable to compute the cost of polished diamonds using either FIFO or weighted average cost. In view of the numerous grades, it is not practicable to use specific costs. The method of valuation is therefore in compliance with "AS2"issued by the Institute of Chartered Accountants of India to the extent practicable. K.3 Consumables are valued at cost. L. Employee Benefits L1. Short Term Employees Benefit Short term employee benefits are recognized in the period during which the service has been rendered. L2. Long Term Employee Benefit a) Provident Fund Act, Family Pension Fund & Employees State Insurance Scheme. As per Provident Fund Act, 1952 all employees of the Company are entitled to receive benefits under the provident fund & family pension fund which is a defined contribution plan. These contributions are made to the fund administrated and managed by the Government of India. In addition some employees of the Company are covered under Employees State Insurance Scheme Act, 1948, which are also defined contribution schemes recognized and administered by Government of India. The Company's contributions to these schemes are recognized as expense in Profit and Loss Statement during the period in which the employee renders the related services. The Company has no further obligation under these plan beyond its monthly contributions. b) The Company provides for gratuity obligation through a Defined Benefit Retirement Plan ('The Gratuity Plan') covering it's employees. The brsent value of the obligation under such Defined plan is determined based on actuarial valuation. Actuarial gains and losses are recognized in Profit & Loss Statement as and when determined. The Company makes annual contribution to LIC for the Gratuity plan in respect of employees. M. Taxation Current Tax is determined as the amount of tax payable in respect of taxable income for the year after considering various relief's admissible under provisions of the Income Tax Act, 1961. The deferred tax for timing difference between the book and tax profit for the year is accounted for using tax rates and tax laws that have been enacted or substantially enacted at the Balance Sheet date. Deferred tax asset arising from timing difference are recognised to the extent that there is virtual certainty that sufficient future taxable income will be available. N. Provisions, Contingent Liabilities and Contingent Assets The Company creates a provision when there is brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. 1. The figures of brvious year have been regrouped / reclassified wherever necessary and possible so as to confirm with the figures of the current year. As per our report of even date FOR V. A. PARIKH & ASSOCIATES LLP For and on behalf of the Board Chartered Accountants FRNo: 1 12787W JINESH J. SHAH APARNA SHINDE DINESH T. SHAH VIPUL P. SHAH Partner Company Secretary Chairman & CFO CEO & Managing Director Membership No. 111155 Place : Mumbai Dated : May 18, 2015 |