C Mahendra Exports Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2015

A) Basis of preparation of financial statements

On the basis of management's assumption, it is expected that the company will have adequate cash flows from proceeds of export realisations to defray, in phased manner, its entire debt obligations. Company's operating results have been materially affected due to various factors including non availability of finance in view of the consortium bankers recalling the financial facilities granted, symbolic possession of premises have been taken by the Bankers. In near future Company is adopting to raise adequate finance from alternate means and/ or recoveries from overseas debtors to meet its short term and long term obligations as well as to establish consistent business operations. Hence, management is confident about the business and the financial statement has been prepared on Going Concern Basis.

b) System of accounting and Preparation of financial statements

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

c) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Appropriate changes in estimate are made as the management becomes aware of the changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements

d) Fixed assets

Fixed assets are accounted at cost of acquisition / construction inclusive of freight, duties, taxes, incidental expenses and borrowing cost.

e) Depreciation

The Company has continued to charge depreciation on written down value method except plant and machinery relating to Windmill at the rates and in the manner specified in erst while schedule XIV of old Companies Act, 1956. Depreciation on Windmill is provided on straight line method as per old rates. Leasehold land is amortised over the lease period.

f) Investments

Investments intended to be held for more than one year are classified as long-term investments and other investments are classified as current investments. Long-term investments are valued at cost less provision, if any, for diminution in value, which is other than temporary. Current investments are valued at the lower of cost or market value of each separate investment.

g) Inventories

i. Raw materials - Rough diamonds are valued at lower of cost or net realisable value. The cost is determined by weighted average method on lot wise basis. Rough diamond rejection is valued at estimated realisable value.

ii. Finished goods -Polished diamonds are valued at net realisable value which is certified by the management.

iii. Consumables are valued at lower of estimated cost or net realisable value.

h) Revenue recognition

i. Revenue from exports sales is recognised when delivery of goods is physically given to customs authorities. Revenue from domestic sales is recognised when the title of goods passes to the customers, which is generally on delivery, except in case of consignment sale which is recognised when sale is confirmed.

ii. (a) Income from sale of wind energy is recognised on its transmission as per terms of agreement.

(b) Income from Voluntary Emission Reduction

(VER) unit is accounted at the time of sale through APX registry.

iii. Rental Income is booked on accrual basis as and when it is receivable.

iv. Other income including labour income are accounted on accrual basis in general.

i) Foreign currency transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gain / loss arising on account of differences in foreign exchange rates on settlement / translation of monetary assets and liabilities are recognised in the statement of profit and loss. Non-monetary foreign currency items are carried at cost.

ii. The premium or discount arising at the inception of forward exchange contract is amortised as expenses or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the reporting year in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the year.

iii. Any profit or loss arising on settlement or cancellation of other derivative contracts (swaps and currency options) is recognised as income/expense for the year.

j) Retirement benefits

i. Retirement benefits in the form of provident fund and pension scheme are accounted on accrual basis.

ii. Provision for gratuity liability is made on the basis of actuarial valuation at the end of the accounting year.

iii. Liability for encashment of leave is recognised and charged to the statement of profit and loss in the year in which it is earned on accrual basis.

k) Borrowing cost

Borrowing cost directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use, are capitalised. Other borrowing costs are charged to statement of profit and loss.

l) Taxation

Tax expense comprises of current tax and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably/virtually certain that sufficient future taxable income will be available against which such deferred tax assets can be realised.

m) Accounting for provisions and contingent liabilities

A provision is made when there is a present 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. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

n) Earnings per share

The basic earnings per share (EPS) is computed by dividing the Net Profit after tax for the year available for the Equity Shareholders by the weighted average number of Equity Shares outstanding during the year. For the purpose of calculating diluted Earnings per Share, Net Profit after tax for the year available for Equity Shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential Equity Shares.

o) Impairment

The carrying amount of assets are reviewed at each balance sheet date to check if there is any, indication of impairment based on internal or external factors. An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. Impairment is charged to the statement of profit and loss in the year in which an asset is identified as impaired. The impairment loss if any, recognised in prior accounting year is reversed if there has been a change in the estimate of recoverable amount.

p) Forward Contracts in foreign currencies

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use those for trading or speculation purposes.

Forward contracts are fair valued at each reporting date. The resultant gain or loss from these transactions is recognized in the Statement of Profit and Loss. The Company records the gain or loss on effective hedges, if any, in the foreign currency fluctuation reserve until the transactions are complete. On completion, the gain or loss is transferred to the Statement of Profit and Loss of that period. To designate a forward or options contract as an effective hedge, the Management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract and subsequently whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk. In the absence of a designation as effective hedge, a gain or loss is recognized in the Statement of Profit and Loss.

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Mar 31, 2014

A) Basis of preparation of financial statements

These financial statements are prepared in accordance with the generally accepted accounting principles (GAAP) in India under the historical cost convention and on the accrual basis. The financial statements have been prepared to comply in all material respects with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 notified by the Central Government, except as disclosed in notes.

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed assets

Fixed assets are accounted at cost of acquisition / construction inclusive of freight, duties, taxes, incidental expenses and borrowing cost.

d) Depreciation

The Company has been charging depreciation on written down value method except plant and machinery relating to Windmill at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Depreciation on Windmill is provided on straight line method. Leasehold land is amortised over the lease period.

e) Investments

Investments intended to be held for more than one year are classified as long-term investments and other investments are classified as current investments. Long-term investments are valued at cost less provision, if any, for diminution in value, which is other than temporary. Current investments are valued at the lower of cost or market value of each separate investment.

f) Inventories

i. Raw materials - Rough diamonds are valued at lower of cost or net realisable value. The cost is determined by weighted average method on lot wise basis. Rough diamond rejection is valued at estimated realisable value.

ii. Finished goods - Polished diamonds are valued at lower of cost or net realisable value. Cost is ascertained on lot-wise weighted average basis.

iii. Consumables are valued at lower of estimated cost or net realisable value.

g) Revenue recognition

i. Revenue from exports sales is recognised when delivery of goods is physically given to customs authorities. Revenue from domestic sales is recognised when the title of goods passes to the customers, which is generally on delivery, except in case of consignment sale which is recognised when sale is confirmed.

ii. (a) Income from sale of wind energy is recognised on its transmission as per terms of agreement.

(b) Income from Voluntary Emission Reduction (VER) unit is accounted at the time of sale through APX registry.

iii. Rental Income is booked on accrual basis as and when it is receivable.

iv. Other income are accounted on accrual basis in general.

h) Foreign currency transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gain / loss arising on account of differences in foreign exchange rates on settlement / translation of monetary assets and liabilities are recognised in the statement of profit and loss. Non-monetary foreign currency items are carried at cost.

ii. The premium or discount arising at the inception of forward exchange contract is amortised as expenses or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the reporting year in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the year.

iii. Any profit or loss arising on settlement or cancellation of other derivative contracts (swaps and currency options) is recognised as income/expense for the year. The derivative contracts outstanding at the year-end, are marked to its current market value and gain/ loss on such contracts, is recognized in the statement of profit and loss.

i) Retirement benefits

i. Retirement benefits in the form of provident fund and pension scheme are accounted on accrual basis.

ii. Provision for gratuity liability is made on the basis of actuarial valuation at the end of the accounting year.

iii. Liability for encashment of leave is recognised and charged to the statement of profit and loss in the year in which it is earned on accrual basis.

j) Borrowing cost

Borrowing cost directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use, are capitalised. Other borrowing costs are charged to statement of profit and loss. k) Taxation

Tax expense comprises of current tax and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably/virtually certain that

sufficient future taxable income will be available against which such deferred tax assets can be realised.

l) Accounting for provisions and contingent liabilities

A provision is made when there is a present 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. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

m) Earnings per share

The basic earnings per share (EPS) is computed by dividing the Net Profit after tax for the year available for the Equity Shareholders by the weighted average number of Equity Shares outstanding during the year. For the purpose of calculating diluted Earnings per Share, Net Profit after tax for the year available for Equity Shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential Equity Shares.

n) Impairment

At each balance sheet date, the Company determines whether a provision should be made for impairment loss on fixed assets (including intangible assets), by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard (AS)-28 ''Impairment of Assets’. Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made. At the balance sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the fixed assets are reflected at the recoverable amount subject to a minimum of depreciated historical cost.

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Mar 31, 2013

A) Basis of preparation of financial statements

These financial statements are prepared in accordance with the generally accepted accounting principles (GAAP) in India under the historical cost convention and on the accrual basis. The financial statements have been prepared to comply in all material respects with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules. 2006 notified by the Central Government, except as disclosed in notes.

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed assets

Fixed assets are accounted at cost of acquisition / construction inclusive of freight, duties, taxes, incidental expenses and borrowing cost.

d) Depreciation

The Company has been charging depreciation on written down value method except plant and machinery relating to Windmill at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Depreciation on Windmill is provided on straight line method. Leasehold land is amortised over the lease period.

e) Investments

Investments intended to be held for more than one year are classified as long-term investments and other investments are classified as current investments. Long-term investments are valued at cost less provision, if any, for diminution in value, which is other than temporary. Current investments are valued at the lower of cost or market value of each separate investment.

f) Inventories

i. Raw materials - Rough diamonds are

valued at lower of cost or net realisable value. The cost is determined by weighted average method on lot wise basis. Rough diamond rejection is valued at estimated realisable value.

ii. Raw materials - Gold are valued at cost or net realisable value whichever is lower. The cost is ascertained on FIFO basis.

iii. Finished goods - Polished diamonds are valued at lower of cost or net realisable value. Cost is ascertained on lot-wise weighted average basis.

iv. Consumables are valued at lower of estimated cost or net realisable value.

g) Revenue recognition

i. Revenue from exports sales is recognised when delivery of goods is physically given to customs authorities. Revenue from domestic sales is recognised when the title of goods passes to the customers, which is generally on delivery.

ii. (a) Income from sale of wind energy is recognised on its transmission as per terms of agreement.

(b) Income from Voluntary Emission Reduction (VER) unit is accounted at the time of sale through APX registry.

iii. Rental Income is booked on accrual basis as and when it is receivable.

h) Foreign currency transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gain / loss arising on account of differences in foreign exchange rates on settlement / translation of monetary assets and liabilities are recognised in the statement of profit and loss. Non-monetary foreign currency items are carried at cost.

ii. The premium or discount arising at the inception of forward exchange contract is amortised as expenses or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the reporting year in which the exchange rate changes.

Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the year.

iii. Any profit or loss arising on settlement or cancellation of other derivative contracts (swaps and currency options) is recognised as income/expense for the year. The derivative contracts outstanding at the year-end, are marked to its current market value and gain/ loss on such contracts, is recognized in the statement of profit and loss.

i) Retirement benefits

i. Retirement benefits in the form of provident fund and pension scheme are accounted on accrual basis.

ii. Provision for gratuity liability is made on the basis of actuarial valuation at the end of the accounting year.

iii. Liability for encashment of leave is recognised and charged to the statement of profit and loss in the year in which it is earned on accrual basis.

j) Borrowing cost

Borrowing cost directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use, are capitalised. Other borrowing costs are charged to statement of profit and loss.

k) Taxation

Tax expense comprises of current tax and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

At each balance sheet date the Company re- assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably/ virtually certain that sufficient future taxable income will be available against which such deferred tax assets can be realised.

1) Accounting for provisions and contingent liabilities

A provision is made when there is a present 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. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

m) Earnings per share

The basic earnings per share (EPS) is computed by dividing the Net Profit after tax for the year available for the Equity Shareholders by the weighted average number of Equity Shares outstanding during the year. For the purpose of calculating diluted Earnings per Share, Net Profit after tax for the year available for Equity Shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential Equity Shares.

n) Impairment

At each balance sheet date, the Company determines whether a provision should be made for impairment loss on fixed assets (including intangible assets), by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard (AS)-28 ''Impairment of Assets''. Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made. At the balance sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the fixed assets are reflected at the recoverable amountsubject to a minimum of depreciated historical cost.

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Mar 31, 2012

A) Basis of preparation of financial statements

These financial statements are prepared in accordance with the generally accepted accounting principles (GAAP) in India under the historical cost convention and on the accrual basis. The financial statements have been prepared to comply in all material respects with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 notified by the Central Government, except as disclosed in notes.

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed assets

Fixed assets are accounted at cost of acquisition / construction inclusive of freight, duties, taxes, incidental expenses and borrowing cost.

d) Depreciation

The Company has been charging depreciation on written down value method except plant and machinery relating to Windmill at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Depreciation on Windmill is provided on straight line method. Leasehold land is amortised over the lease period.

e) Investments

Investments intended to be held for more than one year are classified as long-term investments and other investments are classified as current investments. Long-term investments are valued at cost less provision, if any, for diminution in value, which is other than temporary. Current investments are valued at the lower of cost or market value of each separate investment.

f) Inventories

i. Raw materials - Rough diamonds are valued at lower of cost or net realisable value. The cost is determined by weighted average method on lot wise basis. Rough diamond rejection is valued at estimated realisable value.

ii. Raw materials - Gold are valued at cost or net realisable value whichever is lower. The cost is ascertained on FIFO basis.

iii. Finished goods - Polished diamonds are valued at lower of cost or net realisable value. Cost is ascertained on lot-wise weighted average basis.

iv. Consumables are valued at lower of estimated cost or net realisable value.

g. Revenue recognition

i. Revenue from exports sales is recognised when delivery of goods is physically given to customs authorities. Revenue from domestic sales is recognised when the title of goods passes to the customers, which is generally on delivery.

ii. Income from sale of wind energy is recognised on its transmission as per terms of agreement.

h) Foreign currency transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gain / loss arising on account of differences in foreign exchange rates on settlement / translation of monetary assets and liabilities are recognised in the statement of profit and loss. Non-monetary foreign currency items are carried at cost.

ii. The premium or discount arising at the inception of forward exchange contract is amortised as expenses or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the reporting year in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the year.

iii. Any profit or loss arising on settlement or cancellation of other derivative contracts (swaps and currency options) is recognised as income/expense for the year. The derivative contracts outstanding at the year-end, are marked to its current market value and gain/ loss on such contracts, is recognized in the statement of profit and loss.

i) Retirement benefits

i. Retirement benefits in the form of provident fund and pension scheme are accounted on accrual basis.

ii. Provision for gratuity liability is made on the basis of actuarial valuation at the end of the accounting year.

iii. Liability for encashment of leave is recognised and charged to the statement of profit and loss in the year in which it is earned on accrual basis.

j) Borrowing cost

Borrowing cost directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use, are capitalised. Other borrowing costs are charged to statement of profit and loss.

k) Taxation

Tax expense comprises of current tax and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably/virtually certain that sufficient future taxable income will be available against which such deferred tax assets can be realised.

l) Accounting for provisions and contingent liabilities

A provision is made when there is a present 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. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

m) Earnings per share

The basic earnings per share (EPS) is computed by dividing the Net Profit after tax for the year available for the Equity Shareholders by the weighted average number of Equity Shares outstanding during the year. For the purpose of calculating diluted Earnings per Share, Net Profit after tax for the year available for Equity Shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential Equity Shares.

n) Impairment

At each balance sheet date, the Company determines whether a provision should be made for impairment loss on fixed assets (including intangible assets), by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard (AS)-28 'Impairment of Assets'. Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made. At the balance sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the fixed assets are reflected at the recoverable amount subject to a minimum of depreciated historical cost.

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Mar 31, 2011

A) Basis of preparation of financial statements

These financial statements are prepared in accordance with the generally accepted accounting principles (GAAP) in India under the historical cost convention (except as disclosed in note no. 4) on the accrual basis. The financial statements have been prepared to comply in all material respects with the Accounting Standards prescribed by the Companies Accounting Standards Rules, 2006 notified by the Central Government, except as disclosed in notes and the relevant provisions of the Companies Act, 1956.

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed assets

Fixed assets are accounted at cost of acquisition (except as mentioned in note no. 4) inclusive of freight, duties, taxes, incidental expenses and borrowing cost.

d) Depreciation

The Company has been charging depreciation on written down value method except plant and machinery relating to Windmill at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Depreciation on Windmill is provided on straight line method. Leasehold land is amortised over the lease period.

e) Investments

Investments intended to be held for more than one year are classified as long-term investments and other investments are classified as current investments. Long-term investments are valued at cost less provision, if any, for diminution in value, which is other than temporary. Current investments are valued at the lower of cost or market value of each separate investment.

f) Inventories

i. Raw materials - Rough diamonds are valued at lower of cost or net realisable value. The cost is determined by weighted average method on lot wise basis. Rough diamond rejection is valued at estimated realisable value.

ii. Raw materials – Gold are valued at cost or net realisable value whichever is lower. The cost is ascertained on FIFO basis.

iii. Finished goods - Polished diamonds are valued at lower of estimated cost as certified by directors or net realisable value.

iv. Consumables are valued at lower of estimated cost or net realisable value.

g) Revenue recognition

i. Revenue from exports sales is recognised when delivery of goods is physically given to customs authorities. Revenue from domestic sales is recognised when the title of goods passes to the customers, which is generally on delivery.

ii. Income from sale of wind energy is recognised on its transmission as per terms of agreement.

h) Foreign currency transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gain / loss arising on account of differences in foreign exchange rates on settlement / translation of monetary assets and liabilities are recognised in the Profit and Loss Account. Non-monetary foreign currency items are carried at cost.

ii. The premium or discount arising at the inception of forward exchange contract is amortised as expenses or income over the life of the contract. Exchange differences on such contracts are recognised in the Profit and Loss Account in the reporting year in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the year.

iii. Any profit or loss arising on settlement or cancellation of other derivative contracts (swaps and currency options) is recognised as income/ expense for the year. The derivative contracts outstanding at the year-end, are marked to its current market value and gain/ loss on such contracts, is recognized in the profit and loss account.

i) Retirement benefits

i. Retirement benefits in the form of provident fund and pension scheme are accounted on accrual basis.

ii. Provision for gratuity liability is made on the basis of actuarial valuation at the end of the accounting year.

iii. Liability for encashment of leave is recognised and charged to the profit and loss account in the year in which it is earned on accrual basis.

j) Borrowing cost

Borrowing cost directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use, are capitalised. Other borrowing costs are charged to profit and loss account.

k) Taxation

Tax expense comprises of current tax and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably/virtually certain that sufficient future taxable income will be available against which such deferred tax assets can be realised.

l) Accounting for provisions and contingent liabilities

A provision is made when there is a present 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. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

m) Earnings per share

The basic earnings per share (EPS) is computed by dividing the Net Profit after tax for the year available for the Equity Shareholders by the weighted average number of Equity Shares outstanding during the year. For the purpose of calculating diluted Earnings per Share, Net Profit after tax for the year available for Equity Shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential Equity Shares.

n) Impairment

At each balance sheet date, the Company determines whether a provision should be made for impairment loss on fixed assets (including intangible assets), by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard (AS)-28 'Impairment of Assets'. Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made. At the balance sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the assets is reflected at the recoverable amount subject to a minimum of depreciated historical cost.