SIGNIFICANT ACCOUNTING POLICIES OF THE FINANCIAL STATEMENTS 1 Recognition of Income and Expenditure (a) Income and expenditure are recognized on accrual basis in accordance with the applicable accounting standards and provision is made for all known losses and liabilities. (b) Freight income is accounted when goods are delivered by the Company to customers, except in case of the Seaways Division where freight income is accounted when the ship sails out of the port. (c) Freight expenses are accounted when hired vehicles deliver goods to the Company at destination. (d) Having regard to the size of operations and the nature and complexities of the Company's business, freight received/paid in advance is accounted as income/expense on payment. (e) Year-end liability in respect of claims for loss and damages is provided as calculated by claims recovery agents except in case of the Seaways Division where such liability is provided as calculated by the Company's claim department. 2 Gratuity and Leave Encashment A provision for gratuity and leave encashment liability to employees is made on the basis of actuarial valuation. Gratuity liability is paid to the approved Gratuity Fund. 3 Debrciation Effective 1st April 2014, the Company debrciates its fixed assets over the useful life in the manner brscribed in Schedule II of the Company Act 20l3, as against the earlier practice of debrciating at the rates brscribed in Schedule XIV of the Companies Act, l956. Debrciation on additions to assets or on sales/ discardment of assets, is calculated prorata from/ to the date of addition/deduction of individual assets. 4 Fixed Assets Fixed Assets are stated at cost and/or at revaluation. 5 Investment (a) Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. (b) Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. 6 Inventories Inventories are valued of lower of cost and net realisable value. 7 Foreign Exchange Transactions: (a) Initial recognition All transactions in foreign currency are recorded at the rate of exchange brvailing on the dates when the relevant transactions take place. (b) Measurement of foreign currency monetary items at the balance sheet date Monetary items in foreign currency at the year end are converted in Indian Currency at the year end rates. In terms of the amendments to Accounting Standard ll on The Effects of Changes in Foreign Exchange Rates, exchange differences relating to long-term monetary items are dealt with in the following manner: (i) Exchange differences relating to long-term monetary items, arising during the year, in so far as they relate to the acquisition of a debrciable capital asset are added to/ deducted from the cost of the asset and debrciated over the balance life of the asset. (ii) In other cases such differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" and amortised over the balance life of the long-term monetary item. (c) Treatment of exchange differences Any income or expense on account of exchange difference either on settlement or translation is recognised in the Statement of Profit and Loss. (d) In respect of Forward Exchange contracts entered into to hedge foreign currency risks, the difference between the forward rate and exchange rate at the inception of the contract is recognised as income or expense over the life of the contract. Taxation Provision for tax is made for both current and deferred taxes. Provision for current income tax is made on the current tax rates based on assessable income. Provision for current income tax on income from shipping activities is made on the basis of deemed tonnage income of the Company. The Company, except for its Seaways division, provides for deferred tax based on the tax effect of timing differences resulting from the recognition of items in the accounts and in estimating its current tax provision. The effect on deferred taxes of a change in tax rate is recognized in the year in which the change is effected. Impairment of Assets The Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired and if such indication exists, the carrying value of such asset is reduced to its recoverable amount and a provision is made for such impairment loss in the Statement of Profit and Loss. In terms of our Report of even date For and on behalf of the Board For R S Agarwala & Co. Chartered Accountants Firm Regn No. 304045E S M Datta Chairman O Swaminatha Reddy Vice Chairman & Managing Director D P Agarwal Managing Director Vineet Agarwal Director R S Agarwala Partner Membership No. 005534 Chander Agarwal Joint Managing Director Archana Pandey Company Secretary & Group CFO Ashish Tiwari Compliance Officer Place: Gurgaon Date: 25th May |