2.7. Provisions and Contingent Liabilities
Provisions are recognised when there is a present obligation as a result of a
past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and there is a reliable estimate
of the amount of the obligation.
Contingent liabilities are disclosed when there is a possible obligation arising
from past events, the existence of which will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the company or a present obligation that arises
from past events where it is either not probable that an outflow of resources
will be required to settle the obligation or a reliable estimate of the amount
cannot be made.
2.8. Revenue Recognition
Sale of goods: Sales are recognised when the significant risks and rewards of
ownership in the goods are transferred to the buyer as per the terms of the
contract and are recognised net of trade discounts, rebates, sales taxes and
excise duties.
Sale of services: In contracts involving the rendering of services, revenue is
measured using the proportionate completion method and is recognised net
of taxes.
Dividend income is recognised when the right to receive dividend is
established.
Revenue in respect of other types of income is recognised when no significant
uncertainty exists regarding realisation of such income.
2.9. Taxes on Income
Tax expense for the period, comprising current tax and deferred tax, are
included in the determination of the net profit or loss for the period. Current
tax is measured at the amount expected to be paid to the tax authorities in
accordance with the taxation laws prevailing in the respective jurisdictions.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
Deferred tax is measured using the tax rates and the tax laws enacted or
substantively enacted as at the reporting date. Deferred tax liabilities are
recognised for all timing differences. Deferred tax assets are recognised for
timing differences of items other than unabsorbed depreciation and carry
forward losses only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these can be
realised. However, if there is unabsorbed depreciation and carry forward of
losses, deferred tax assets are recognised only if there is virtual certainty that
there will be sufficient future taxable income available to realise the assets.
Deferred tax assets are reviewed at each balance sheet date for their
realisability.
Current tax assets and current tax liabilities are offset when there is a legally
enforceable right to set off the recognised amounts and there is an intention
to settle the asset and the liability on a net basis. Deferred tax assets and
deferred tax liabilities are offset when there is a legally enforceable right to set
off assets against liabilities representing current tax and where the deferred
tax assets and the deferred tax liabilities relate to taxes on income levied by
the same governing taxation laws.
2.10. Cash and Cash Equivalents
In the cash flow statement, cash and cash equivalents include cash in hand,
demand deposits with banks and other short-term highly liquid investments
with original maturities of three months or less.
2.11. Borrowing Costs
Borrowing costs, if any, directly attributable to acquisition or construction of
qualifying assets (i.e. those fixed assets which necessarily take a substantial
period of time to get ready for their intended use) are capitalised. Other
borrowing costs are recognised as an expense in the period in which they are
incurred.
2.12. Segment Reporting
The Company operates under a single operating segment in accordance with
Accounting Standard 17 - 'Segment Reporting' and hence, segment reporting
is not applicable to the Company.
2.13. Prior Period Items, Exceptional and Extraordinary Items
The Company follows the practice of making adjustments through 'prior year
adjustments' in respect of all material transactions pertaining to the period
prior to the current accounting year. The prior period adjustments, if any, are
shown by way of notes to financial statements.
Exceptional and Extra Ordinary Items, if any, are shown separately as per
applicable accounting standards.
2.14. Earnings per Share
The Company reports basic and diluted Earnings per Share (EPS) in accordance
with Accounting Standard 20.
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