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Category: From Published Accounts

Bajaj Electricals Ltd (31-3-2012)

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Basis of Preparation
All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or noncurrent classification of assets and liabilities.
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Oberoi Realty Ltd (31-3-2012)

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Other Notes

The Company’s normal operating cycle in respect of operations relating to under-construction real estate projects may vary from project to project depending upon the size of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and hospitality business is based on 12 months period. Assets and liabilities have been classified into current and non-current, based on the operating cycle of respective businesses.

Mahindra Lifespace Developers Ltd (31-3-2012)

Presentation and Disclosure of Financial Statements

During the year ended 31st March, 2012, the Revised Schedule VI notified under the Companies Act, 1956 has become applicable to the company, for preparation and presentation of its financial statements. The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. Assets & liabilities have been classified as Current & Non – Current as per the Company’s normal operating cycle and other criteria set out in the Schedule VI of the Companies Act, 1956. Based on the nature of activity carried out by the company and the period between the procurement and realisation in cash and cash equivalents, the Company has ascertained its operating cycle as five years for the purpose of Current and Non-Current classification of assets & liabilities.

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Section B: I. Scheme of amalgamation accounted as per Purchase Method Nagarjuna Fertilizers and Chemicals Ltd (31-3-2012)

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From Notes to Financial Statements

1. CORPORATE OVERVIEW

a. Nagarjuna Fertilizers and Chemicals Limited (Erstwhile NFCL) has during the year undertaken restructuring of its businesses. Accordingly, a Composite Scheme of Arrangement and Amalgamation (“Scheme”) was prepared, which was duly consented by the shareholders at the Court Convened Meeting held on 15th April, 2011 and also received the approval of jurisdictional High Courts of Andhra Pradesh at Hyderabad and Bombay at Mumbai. The restructuring envisaged de-merger of the Oil business undertaking to a separate company, Nagarjuna Oil Refinery Limited (“NORL”). The scheme also provide for merger of residual business of Erstwhile NFCL into its wholly owned subsidiary viz., Kakinada Fertilizers Limited (“KFL”) along with the business operation of iKisan Limited (iKisan). The entire scheme is made effective from 30th July, 2011 but operative from 1st April, 2011, being the Appointed Date.

b. Pursuant to the Scheme:

 i. Oil Business Undertaking of erstwhile NFCL was demerged into NORL and residual NFCL and iKisan are merged in to KFL.

 ii. The Effective Date of the Scheme is 30th July, 2011 but shall be operative from the Appointed Date i.e. 1st April, 2011. The Record Date of determining shareholders eligible to receive shares of KFL and NORL was fixed as 1st September, 2011.

iii. Equity Shares were allotted to the shareholders of erstwhile NFCL and iKisan on 1st October, 2011 and the account of the respective of shares, the existing pre-arrangement issued capital of Rs. 5 lakh stood cancelled.

iv. The name of KFL stands changed to Nagarjuna Fertilizers and Chemicals Limited w.e.f. 19th August, 2011

 c. The Financial Statement for the year have been drawn-up incorporating necessary adjustments as envisaged in the Scheme and in compliance with purchase method of accounting under AS 14 (Accounting for Amalgamations). In accordance with the Scheme:

i. the assets and liabilities of residual business of erstwhile NFCL and iKisan have been recorded in the books of KFL at Fair Values as on 1st April, 2011

ii. the fair values were determined by the Board of Directors based on the report obtained from a reputed firm of valuers.

iii. the difference between the fair value of equity shares and face value of equity shares is considered as Securities Premium.

iv. the difference between the value of net assets transferred to KFL over the fair value of Equity shares, and Preference shares allotted is credited to Capital Reserve Account. shareholders were credited in electronic mode or share certificates issued, as the case may be. Consequent to the allotment

v. on and from effective date, the Authorised shares capital of NFCL stands increased to Rs.
801,00,00,000/- comprising of 621,00,00,000 equity shares of Rs. 1/- each and 2,00,00,000 preference shares of Rs. 90/- each.

vi. 59,80,65,003 equity shares of Rs. 1/- each aggregating to Rs. 59,80,65,003/- have been allotted to the shareholders of erstwhile NFCL and iKisan on 1st October, 2011 without payment being received in cash.

d. Amalgamation expenses incurred Rs. 500.16 lakh have been adjusted to capital reserve.

e. The Bombay Stock Exchange vide letter dated 14th December, 2011 approved the application of the company for listing of the equity shares and the National Stock Exchange vide letter dated 13th January, 2012 accorded in-principle approval for listing of the equity shares subject to relaxation by Securities and Exchange Board of India from the fulfilment of requirement under Rule 19(2)(b) of Securities Contracts (Regulation) Rules, 1957.

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Tata Motors Ltd. (31-3-2010)

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From Accounting Policies: Product Warranty Expenses: The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claim will arise —being typically up to three years.

From Notes to Accounts: Other provisions include [Schedule 12(e), page 72]:

Siemens Ltd. (30-9-2010)

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From Accounting Policies:

Provision: Provisions comprise liabilities of uncertain timing or amount. Provisions are recognised when the Company recognises it has a present obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation 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. These are reviewed at each balance sheet date and adjusted to reflect current best estimates.

Disclosures for contingent liability are made when there is a possible or present obligation for which it is not probable that there will be an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no disclosure is made.

Loss contingencies arising from claims, litigation, assessment, fines, penalties, etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated.

Contingent assets are neither recognised, nor disclosed in the financial statements.

From Notes to Accounts:

Disclosure relating to provisions:
Provision for warranty: Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacement, material cost, servicing and past experience in respect of warranty costs. It is expected that this expenditure will be incurred over the contractual warranty period.

Provision for liquidated damages:
Liquidated damages are provided based on contractual terms when the delivery/commissioning dates of an individual project have exceeded or are likely to exceed the delivery/commissioning dates as per the respective contracts. This expenditure is expected to be incurred over the respective contractual terms up to closure of the contract (including warranty period).

Provision for loss orders:
A provision for expected loss on construction contracts is recognised when it is probable that the contract costs will exceed total contract revenue. For all other contracts loss order provisions are made when the unavoidable costs of meeting the obligation under the contract exceed the currently estimated economic benefits.

Contingencies:
The Company has made provisions for known contractual risks, litigation cases and pending assessments in respect of taxes, duties and other levies, the outflow of which would depend on the cessation of the respective events.

Jet Airways (India) Ltd. (31-3-2010)

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From Accounting Policies: Provisions, contingent liabilities and contingent assets:

Provisions involving a substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised, nor disclosed in the financial statements.

From Notes to Accounts:

As per Accounting Standard-29, Provisions, Contingent Liabilities and Contingent Assets, given below are movements in provision for Frequent Flyer Programme, Redelivery of Aircraft, Aircraft Maintenance Costs and Engine Repairs Costs.

(a) Frequent Flyer Programme: The Company has a Frequent Flyer Programme named ‘Jet Privilege’, wherein the passengers who frequently use the services of the Airline become members of ‘Jet Privilege’ and accumulate miles to their credit. Subject to certain terms and conditions of ‘Jet Privilege’, the passenger is eligible to redeem such miles lying to their credit in the form of free tickets.

The cost of allowing free travel to members as contractually agreed under the Frequent Flyer Programme is accounted considering the members’ accumulated mileage on an incremental cost basis. The movement in the provision during the year is as under:

Particulars 2009-10 2008-09
Opening balance 3,344 2,949
Add :
Additional provisions during the year 1,346 1 ,446
Less :
Amounts used during the year (1,053) (1,0 51)
Less :
Unused amounts reversed
during the year (416) —
Closing balance 3,221 3,344

(b) Redelivery of aircraft:

The Company has in its fleet aircraft on operating lease. As contractually agreed under the lease agreements, the aircraft have to be redelivered to the lessors at the end of the lease term in the stipulated technical condition. Such redelivery conditions would entail costs for technical inspection, maintenance checks, repainting costs prior to its redelivery and cost of ferrying the aircraft to the location as stipulated under the lease agreement.

The Company therefore provides for such redelivery expenses, as contractually agreed, in proportion to the expired lease period.

Particulars Opening Balance 2009-10 3,031 2008-09 2,115
Add : Additional provisions during the year* 315 1,441
Less : Amounts used during the year 753 525
Less : Un-used amounts reversed during the year — —
Closing balance 2,593 3,031
The cash outflow out of the above provisions as per the current terms under the lease agreements are as under:

Year

 

 

2009-10

2008-09

 

 

 

 

 

 

 

 

 

Aircraft

 

Amount

Aircraft

Amount

 

 

 

 

(Rs. in lakhs)

 

(Rs.
in lakhs)

 

 

 

 

 

 

 

2010-11

 

3

 

256

4

394

 

 

 

 

 

 

 

2011-12

 

2

 

205

1

87

 

 

 

 

 

 

 

2012-13

 

18

 

1,493

17

1,286

 

 

 

 

 

 

 

2014-15

 

3

 

130

3

106

 

 

 

 

 

 

 

2015-16

 

13

 

425

13

269

 

 

 

 

 

 

 

2017-18

 

3

 

20

—

—

 

 

 

 

 

 

 

2018-19

 

3

 

50

3

12

 

 

 

 

 

 

 

2019-20

 

2

 

14

—

—

 

 

 

 

 

 

 

Total

 

 

 

2,593

 

2,154

 

 

 

 

 

 

 

    Aircraft maintenance costs:

Certain heavy maintenance checks including over-haul of auxiliary power units need to be performed at specified intervals as enforced by the Director General of Civil Aviation in accordance with the Maintenance Programme Document laid down by the manufacturers. The movements in the provisions for such costs are as under:

Particulars

2009-10

2008-09

 

 

 

Opening balance

3,433

2,115

 

 

 

Add/(Less)
:

 

 

Adjustments during the year*

(268)

1,441

 

 

 

Less
:

 

 

Amounts used during the year

(1,230)

525

 

 

 

Less
:

 

 

Unused amounts reversed

 

 

during the year

(166)

—

 

 

 

Closing balance

1,769

3,031

 

 

 

    Adjustments during the year represent exchange fluctuation impact consequent to restatement of liabilities denominated in foreign currency.

(d) Engine repairs cost:

The aircraft engines have to undergo shop visits for overhaul and maintenance at specified intervals as per the Maintenance Programme Document. The same was provided for on the basis of hours flown at a pre-determined rate.

 

Amount (Rs. in lakhs)

 

 

 

 

Particulars

2009-10

2008-09

 

 

 

 

 

 

 

Opening balance

333

 

 

657

 

 

 

 

 

 

 

Add/(Less)
:

 

 

 

 

 

Adjustments during the year*

(6)

 

 

164

 

 

 

 

 

 

 

Less
:

 

 

 

 

 

Amounts used during the year

327

 

 

372

 

 

 

 

 

 

 

Less
:

 

 

 

 

 

Unused amounts reversed

 

 

 

 

 

during the year

—

 

116

 

 

 

 

 

 

Closing balance

—

 

 

333

 

 

 

 

 

 

 

*Adjustments during the year represent exchange fluctuation impact consequent to restatement of liabilities denominated in foreign currency.

Section A: Revision of Financial Statements since 31st March 2009 pursuant to approval obtained from the Ministry of Corporate Affairs (MCA)

Essar Oil Limited (31-3-2012)

From Directors’ Report Re-opening of books of accounts for financial years 2008-09, 2009-10 and 2010-11

As a consequence of the above-referred Supreme Court order, to reflect a true and fair view in the books of account for the three financial years ended on 31st March, 2009, 31st March, 2010 and 31st March, 2011 based on the permission received from the Ministry of Corporate Affairs, the Company proposes to re-open the books of accounts and financial statements for the said three financial years. Necessary resolution seeking approval of shareholders for re-opening of the said financial statements has been incorporated in the Notice convening the ensuing Annual General Meeting. Except for reflecting true and fair view of the sales tax incentives/liabilities etc. concerning the Government of Gujarat, there is no material change in the reopened and revised accounts of the Company.

Consequent to reopening of the books of account for the above three financial years, the financial statements for these years have been revised. The statement containing the salient features of the reopened and revised audited Balance Sheets, Statements of Profit and Loss, Cash Flow statements and auditors, reports on the abridged revised financial statements for the financial years 2008-09 to 2010-11 along with Auditors’ report on full revised financial statements and amendments to Directors’ Reports for respective financial years form part of the Annual Report. With amendment in the aforementioned financial statements, there are corresponding changes in the consolidated financial statements of the Company and its subsidiaries prepared in accordance with Accounting Standard AS 21 for the financial years ended on 31st March, 2009 and 31st March, 2010. Accordingly, statements containing the salient features of the reopened and revised audited Consolidated Balance Sheets, Statements of Profit and Loss, Cash flow statements and auditors’ reports on the abridged revised consolidated financial statements for the financial years 2008-09 and 2009-10 form part of the Annual Report.

From Auditors’ Report

2. We had previously audited the Balance Sheet of the Company as at 31st March, 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, both annexed thereto (“the original financial statements”) which were approved by the Board of Directors of the Company in its meeting held on 12th May, 2012. Our report dated 12th May, 2012 on the original financial statements, expressed a modified opinion with respect to the matter described in paragraph 3(a)(ii) of the said report.

As explained in Note 38 to the attached revised financial statements, the original financial statements have been revised pursuant to revision of the financial statements for the years ended 31st March, 2009, 31st March, 2010 and 31st March, 2011 (“the prior years”) in accordance with the approval of the Ministry of Corporate Affairs (“the MCA”) obtained during the financial year 2012-13, subsequent to the approval of the original financial statements by the Board of Directors of the Company. The said note explains the effect of the revision of the financial year 2011-12. As explained in the Note, the effect of the revision of the financial statements of the prior years on the opening balances include decrease of opening balance of Reserves and Surplus as at 1st April, 2011 by Rs. 3,006.17 crore. In view of the above, our report dated 12th May, 2012 on the original financial statements stands replaced by this report. 4.

Attention is invited to:

(a) Note 38 of the revised financial statements wherein it is stated that, the Honorable Supreme Court of India has vide its order dated 17th January, 2012, set aside the order of the Honourable High Court of Gujarat dated 22nd April, 2008 which had earlier confirmed the Company’s eligibility to the ‘Capital Investment Incentive Premier/Prestigious Units Scheme 1995 – 2000’ of the State of Gujarat (“the Scheme”), making the Company liable to immediately pay Rs. 6,168.97 crore being the sales tax collected under the Scheme (“the sales tax dues”). The Company has deposited Rs. 1, 000 crore on account of the sales tax as per the directive of the Honourable Supreme Court on 26th July, 2012. In response to a Special Leave Petition filed by the Company with the Honourable Supreme Court seeking payment of the sales tax dues in installments and without interest, the Honorable Supreme Court has, on 13th September, 2012, passed an order allowing the payment of the balance sales tax dues in eight equal quarterly installments beginning 2nd January, 2013 with interest of 10% p.a. with effect from 17th January, 2012.

Consequent to the above and having regard to the revision of the financial statements for the prior years referred in paragraph 2 above, the Company has reversed income of Rs. 978.59 crore recognised during 1st April 1, 2011 to 31st December, 2011 by defeasance of the deferred sales tax liability under the Scheme, reversed liability of Rs. 45.21 crore recognised during the said period towards contribution to a Government Welfare Scheme for being eligible under the Scheme, recognised interest income of Rs. 155.13 crore (net of break up charges of Rs. 10.57 crore) on account of interest receivable from the assignee of the defeased sales tax liability and recognised interest of Rs. 83.39 crore (net of Rs. 43.33 crore capitalised as cost of qualifying fixed assets) on sales tax dues; and presented the same under ‘Exceptional Items’ in the Revised Statement of Profit and Loss.

(b) Note 7(ii)(c) of the revised financial statements detailing the recognition and measurement of the borrowings covered by the Corporate Debt Restructuring Scheme (“the CDR”) as per the accounting policy consistently followed by the Company in the absence of specific guidance available under the Accounting Standards referred to in s/s. (3C) of section 211 of the Companies Act, 1956 and consideration of the CDR exit proposal submitted by the Company which has been recommended for approval to the CDR Core Group by the CDR Empowered Group. (c) Note 7(ii)(a) of the revised financial statements describing the fact about accounting of interest on certain categories of debentures on a cash basis as per the Court order.

37. Exceptional items

38.    Sales tax

The Company was granted a provisional registration for its Refinery at Vidinar, Gujarat under the Capital Investment Incentive to Premier/Prestigious Unit Scheme 1995-2000 of Gujarat State (“the Scheme”). As the commercial operations of the Refinery could not be commenced before the timeline under the Scheme due to reasons beyond the control of the Company viz, a severe cyclone which hit the Refinery Project site in June 1998 and a stay imposed by the Honourable Gujarat High Court on 20th August, 1999 based on a Public Interest Litigation which was lifted in January 2004 when the Honourable Supreme Court of India gave a ruling in favour of the Company, representations were made by the Company to the State Government for extension of the period beyond 15th August 15, 2003 for commencement of commercial operations of the Refinery to be eligible under the Scheme. As the State Government did not grant extension of the period as requested, the Company filed a writ petition in Honourable Gujarat High Court which vide its order dated 22nd April, 2008, directed the State Government to consider the Company’s application for granting benefits under the Scheme by excluding the period from 13th July, 2000 to 27th February, 2004 for determining the timeline of commencement of commercial production. Based on the order of the Honourable High Court, the Company started availing the benefits under the deferral option in the Scheme from May 2008 onwards and simulta-neously defeased the sales tax liability covered by the Scheme to a related party. An amount of Rs. 6,308.94 crore was collected on account of sales tax covered by the Scheme and defeased at an agreed present value of Rs. 1,892.82 crore resulting in a net defeasement income of Rs. 4,416.12 crore which was recognised during the period 1st May, 2008 to 31st December, 2011. The Company also recognised a cumulative liability of Rs. 189.27 crore towards contribution to a Government Wel-fare Scheme which was payable, being one of the conditions to be eligible under the Scheme.

The State Government had filed a petition on 14th July, 2008 in the Honourable Supreme Court of India against the order dated 22nd April, 2008 of the Honourable Gujarat High Court. The Honourable Supreme Court of India has vide its order dated 17th January, 2012, set aside the order of the Honourable High Court of Gujarat dated 22nd April, 2008 which had earlier confirmed the Company’s eligibility to the Scheme, making the Company liable to pay Rs. 6, 168.97 crore (net of payment of Rs. 236.82 crore) being the sales tax collected till 16th January, 2012 under the Scheme (“the sales tax dues”). Consequently, the Company had reversed the income of Rs. 4,416.12 crore recognised during 1st May, 2008 to 31st December, 2011, reversed the cumulative liability of Rs. 189.27 crore towards contribution to a Government Welfare Scheme and recognised income of Rs. 264.57 crore (net of breakup charges of Rs. 32.09 crore) on account of interest receivable from the assignee of the defeased sales tax liability, and had presented the same under ‘Exceptional Items’ in the Statement of Profit and Loss forming part of the financial statements for the year ended 31st March, 2012 which were approved by the Board of Directors in its meeting held on 12th May, 2012. These financial statements are hereinafter referred to as ‘the original financial statements’.

The Company has deposited Rs. 1,000 crore on account of the sales tax as per the directive of the Honourable Supreme Court of India on 26th July, 2012. In response to a Special Leave Petition filed by the Company with the Honourable Supreme Court of India seeking payment of the sales tax dues in installments and without interest, the Honorable Supreme Court has, on 13th September, 2012, passed an order allowing the payment of the balance sales tax dues in eight equal quarterly installments beginning 2nd Janu-ary, 2013 with interest of 10% p.a. with effect from 17th January, 2012.

The Company has since reopened its books of account for the financial years 2008-09 to 2010-11 (“the prior years”) in accordance with approval of the Ministry of Corporate Affairs (“the MCA”) obtained during the financial year 2012-13 subsequent to the approval of the original financial statement by the Board of Directors of the Company, for the limited purpose of reflecting true and fair view of the sales tax incentives/liabilities, etc. consequent to the order dated 17th January, 2012 of the Honourable Supreme Court of India. Accordingly, the income aggregating to Rs. 3,437.53 crore recognised during 1st May, 2008 to 31st March, 2011 by defeasance of the sales tax liability and the cumulative liability of Rs. 144.06 crore pertaining to the prior years towards contribution to a Government Welfare Scheme were reversed, and interest of Rs. 109.44 crore (net of breakup charges of Rs. 21.52 crore) recoverable from the assignee of the defeased sales tax liability was recognised and the net effect was presented as ‘Exceptional Items’ in the Revised Statement of Profit and Loss for the respective prior years.

The effects of the revisions have been explained in detail in the revised financial statements for the prior years.

In view of the above, the original financial statements for the year ended 31st March, 2012 have now been revised. Consequent to the said revision and having regard to the revision of the financial statements for the prior years described above, the Company has reversed income of Rs. 978.59 crore recognised during 1st April, 2011 to 31st December, 2011 by defeasance of the deferred sales tax liability under the Scheme, reversed liability of Rs. 45.21 crore recognised during the said period towards contribution to a Government Welfare Scheme for being eligible under the Scheme, recognised interest income of Rs. 155.13 crore (net of break-up charges of Rs. 10.57 crore) receivable from the assignee of the sales tax liability and recognised interest of Rs. 83.39 crore (net of Rs. 43.33 crore capitalised as cost of qualifying fixed assets) on the sales tax dues; and presented the same under ‘Exceptional Items’ in the Revised Statement of Profit and Loss.

The revised financial statements also consider the effect of subsequent events after the approval of the original financial statements in accordance with Accounting Standard 4, (AS 4), ‘Contingencies and Events Occurring after the Balance Sheet Date’.

The effects of the revisions of the financial statements for the prior years on the opening balances for 2011-12 have been summarised below:

The summary of changes in the original financial statements has been given below:


a)    Statement of Profit and Loss:


Section A: Financial Statements of an NGO

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Section A: Financial Statements of an NGO Compiler’s Note:

Compiler’s Note:

The financial statements and annual report of ‘The Akshaya Patra Foundation’, an NGO based in Bangalore, India has won several awards in India and abroad for the best presented annual report. It is also one of the few NGOs in India who, besides Indian GAAP, also prepares its financial statements under IFRS principles.

The annual report for 2011-12 for Akshaya Patra makes a very interesting reading and can encourage several other NGOs to improve on their financial reporting. The entire annual report can be accessed on www.akshayapatra.org/sites/default/files/Annual- Report-2011-12.pdf. Given below are the significant accounting policies followed by the Foundation.
The Akshaya Patra Foundation (31-03-2012)
Significant Accounting Policies

1.1 Organisation overview
The Akshay Patra Foundation (‘the Trust or TAPF’) is registered under the Indian Trust Act 1882 as a Public Charitable Trust. It was formed on 1st July 2000 and was registered on 16th October 2001. The principal activity for the Trust is to implement the mid-day meal program of the Government of India through respective state governments for the children studying in government and municipal schools.
The Trust is also involved in various other charitable activities such as providing intensive coaching for eligible students after school hours under “Vidya Akshaya Patra Program”, providing subsidised meals to daily wage earners under various schemes like “Akshaya Kalewa program” and “Aap Ki Rasoi Program”, providing food for babies and mothers in Anganwadis and implementing various other programs for the relief of the poor.

 1.2 Significant accounting policies

(i) Basis of preparation of financial statements The balance sheet and income and expenditure accounts are prepared under the historical cost convention and the accounting is on accrual basis. In the absence of any authoritatively established accounting principles for the specialised aspects related to charitable trusts which do not carry out any commercial activity, these statements have been prepared in accordance with the significant accounting policies as described below. There are no trusts or entities over which TAPF exercises controlling interest, thus there is no requirement of consolidating other entities into the TAPF’s financial statements.

(ii) Use of estimates The preparation of the financial statements in conformity with the significant accounting policies, requires that the Board of Trustees of the Trust (‘Trustees’) make estimates and assumptions that affect the reported amounts of income and expenditure of the year and reported balances of assets and liabilities. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

(iii) Fixed assets Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation. The cost of fixed assets includes the purchase cost of fixed assets and any other directly attributable costs of brining the assets to their working condition for the intended use. Borrowing costs, if any, directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised.

Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortisation. Fixed assets received as donation in kind are measured and recognised at fair value on the date of being ready for their intended use. Advances paid towards the acquisitions of fixed assets as at the balance sheet date are disclosed under long-term loans and advances.

(iv) Depreciation Depreciation on fixed assets is provided on a straight-line method basis over the estimated useful life as follows:

Class
of assets

Estimated

 

useful life

 

in years

Buildings

15

Kitchen and related
equipments

3

Office and other
equipments

3

Computer equipments

3

Furniture and fixtures

5

Vehicles

3

Distribution vessels

2

Intangible assets

3

 

 
Land is not depreciated. Depreciation on leasehold improvements is provided over the primary lease term or the useful life of assets, whichever is lower.

Depreciation is charged on a proportionate basis for all assets purchased and sold during the year.

Individual low cost assets, acquired for less than Rs.5,000 (other than distribution vessels), are depreciated fully in the year of acquisition.

(v) Inventory

Inventory comprises provisions and groceries which include food grains, dhal & pulses, oils and ghee and other items like spares and fuel. Inventory is valued at cost, determined under the First-In-First Out method.

In case of Government grants of rice and wheat, the inventory cost is determined at the lower of the market price of government regulated price.

Cost of inventory, other than those received as government grants, comprises purchase cost and all expenses incurred in bringing the inventory to its present location and condition.

Inventories received as donation in kind are measured at fair value on the date of receipt.

(vi) Revenue recognition

Donation received in cash, other than those received for depreciable fixed assets, are recognised as income when the donation is received, except where the terms and conditions require the donations to be utilised over a certain period.

Such donations are accordingly recognised rateably over the period of usage. The deferred income is disclosed as “Deferred donation – feeding” under other current liabilities in the balance sheet.

Donation received in kind, other than those received for depreciable fixed assets are measured at fair value on the date of receipt and recognised as income only upon their utilisation.

Unutilised donations are deferred and disclosed as kind donations or grain grants received in advance under other current liabilities in the balance sheet.

Donations made with a specific direction that they shall form part of the corpus fund or endowment fund of the Trust are classified as such, and are directly reflected as trust fund receipts in the balance sheet.

Government grants related to subsidy received in cash or in kind are recognised as income when the obligation associated with the grant is performed and right to receive money is established and reflected as receivables in the balance sheet. The value of subsidies and donations received in kind is determined based on the lower market price or government regulated price of those goods at the time of receipt.

Donations received in cash towards depreciable fixed assets, the ownership of which lies with the Trust, are treated as deferred donation income and recognised as donation income in the income and expenditure account on a systematic and rational basis over the useful life of the asset.

The deferred donations towards depreciable fixed assets (receive both in cash and in kind), being identified as funds which provide long term benefits to the Trust, are disclosed under the Designated Funds in the Balance Sheet.

Income from cultural events, if any, is recognised as and when such events are performed.

Income from receipts for other programs is recognised when the associated obligation is performed and right to receive money is established.

Interest on deployment of funds is recognised using the time-proportion method, based on underlying interest rates.

(vii) Income Tax

The Trust is registered u/s. 12A of the In-come tax Act, 1961 (‘the Act’). Under the provisions of the Act, the income of the Trust is exempt from tax, subject to the compliance of terms and conditions speci-fied in the Act.

Consequent to the insertion of tax liability on anonymous donations vide Finance Act 2006, the Trust provides for the tax liability in accordance with the provisions of Section 115 BBC of the Act, if at all there are any such anonymous donations.

(viii) Foreign exchange transactions

Transaction: Foreign exchange transactions are recorded at a rate that approximates the exchange rate prevailing on the date of the transaction. The difference between the rate at which foreign currency transactions are accounted and the rate at which they are realised, is recognised in the income and expenditure account.

Translation: Monetary foreign currency assets and liabilities at the year-end are restated at the closing rate. The difference arising from the restatement is recognised in the income and expenditure account.

(ix) Provisions and contingent liabilities

The provisions are recognised when, as a result of obligating events, there is a present obligation that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation.

The contingent liability disclosure is made when, as a result of obligating events, there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.

No provision or disclosure is made when, as a result of obligating events, there is a possible obligation or a present obligation when the likelihood of an outflow of resources is remote.

(x) Impairment of assets

The Trust periodically assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Trust estimates the recoverable amount of the asset. If such recoverable amount of the asset is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the income and expenditure account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recover-able amount subject to a maximum of depreciable historical cost.

(xi) Retirement benefits

Provident fund
All eligible employees receive benefit from provident fund, which is a defined contribution plan. Both the employee and the Trust make monthly contributions to the fund, which is equal to a specified percentage of the covered employee’s basic salary. The Trust has no further obligations under this plan, beyond its monthly contributions. Monthly contributions made by the Trust are charged to income and expenditure account.

Gratuity
The Trust provides gratuity, a defined benefit retirement plan, to its eligible employees. In accordance with the Payment of Gratuity Act, 1972, the gratuity plan provides a lumpsum payment of the eligible employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s basic salary and tenure of employment with the Trust. The gratuity liability is accrued based on an actuarial valuation at the balance sheet date, carried out by an independent actuary.

Compensated absences
The employees of the Trust are entitled to compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation based on the additional amount expected to be paid as a result of the unused entitlement that has accumulated as at the Balance Sheet date. Expense on non-accumulating compensated absences is recognised in the period in which the absences occur.

(xii) Leases

Assets acquired under lease, where the Trust substantially has all the risk and rewards of ownership, are classified as finance lease. Such assets acquired are capitalised at the inception of lease at lower of the fair value or present value of minimum lease payments.

Assets acquired under lease where the significant portion of risks and rewards of ownership are retained by the lessor are classified as operating lease. Lease rentals are charged to income and expenditure account on a straight line basis over the lease term.

Revision for dividend declaration

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NHPC Ltd. (31-3-2011)
From Notes to Accounts
33. Subsequent to the approval of accounts for the year ended 31st March, 2011 by the Board of directors on 27th May, 2011, the members of the Board has recommended dividend @ Rs.0.60 per share [subject to rounding off to nearest Rupee in terms of Rule 23 of Companies (Central Government’s) General Rules & Forms, 1956] on the paid-up equity capital of the Company (as per Balance Sheet as at 31st March 2011) for the year ended as at 31st March 2011 in the meeting held on 30-6-2011. Accordingly the Company has reopened and revised its earlier finalised audited account for the year ended 31st March 2011 and a provision for dividend amounting to Rs.738.04 crore (subject to rounding off) @ 6% on the paid up equity capital amounting to Rs.12300.74 crore (divided into 1230,07,42,773 equity shares of Rs.10 each fully paid-up) and dividend distribution tax thereon, has been made.

From Auditors Report

1. We have audited the attached revised Balance Sheet of M/s. NHPC Limited as at March 31, 2011 and the revised Profit & Loss account, revised Statement of expenditure during construction and revised Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. Reference is invited to Auditors’ Report dated 27-5-2011 given by us on the Financial Statements of NHPC Limited for the financial year ended as at 31-3-2011.

3. The Company has amended its aforesaid financial statements covered by the abovereferred Auditor’s Report so as to incorporate the provision for dividend and dividend distribution tax thereon in the books, which has been recommended by the Board of NHPC Limited. Accordingly, the Balance Sheet as at 31-3-2011 and Profit & Loss Account for the period ended on even date, audited by us (covered by our above-referred Auditors Report) has been amended by the Company (refer Note No. 33 of Schedule 24).

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Revision pursuant to merger

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Tata Communications Ltd. (31-3-2011)

From Notes to Accounts

The Board of Directors of the Company at its meeting held on 31st January 2011 had approved the merger of the Company’s wholly owned subsidiary, Tata Communications Internet Services Limited (TCISL) with the Company with effect from 1st April 2010. The Company had obtained the consent of the shareholders for the merger at Extra Ordinary General Meeting held on 27th April 2011.

In accordance to the final order dated 20th August 2011 as pronounced by the Bombay High Court the financials have been revised to reflect the merger of TCISL with the Company effective 1st April 2010.

In accordance to the said Scheme, the Company has accounted for this amalgamation in the nature of merger under the pooling-of-interest method. Consequently:

(i) All the assets, debts, liabilities and obligations of TCISL have been vested in the Company with effect from 1st April 2010 and have been recorded at their respective book values.

(ii) The net asset value of TCISL as on the date of amalgamation was Rs.15.28crore as against the investment of the Company of Rs.384.47 crore. The excess of the cost of investment of Rs.369.19 crore is adjusted against the general reserve to the extent of Rs.78.24 crore, Rs.0.56 crore against capital reserve and Rs.291.51 crore against the opening profit and loss account.

(iii) Consequent to the merger there has been a reduction in the current tax expense of Rs.37.97 crore and increase in deferred tax benefit of Rs.39.65 crore.

From Auditors’ Report

(3) The financial statements for the year ended 31st March, 2011 were audited by us and our report dated 29th May, 2011 expressed an unqualified opinion on those financial statements. Consequent to order dated 20th August, 2011 of the High Court of Bombay sanctioning the merger of Tata Communications Internet Services Limited with the Company, the audited financial statements for year ended 31st March, 2011 were revised by the Company to give effect to the said merger, effective from 1st April, 2010. We have accordingly carried out audit procedures and amended the date of our audit report in respect of this subsequent event. (Refer Note B9 of Schedule 19 to the financial statements.)

(1) As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

(2) Further to our comments in paragraph 3 . . .

                   For                                          ………………… & Co. Partner  (M. No. . . . . . . .)
__________________________
        Chartered Accountants
Mumbai 29th May 2011 (30th August 2011 as to give effect the amendment discussed in paragraph 3 above).
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Section A: Illustration of an audit report giving ‘Disclaimer of Opinion’

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Gujarat NRE Coking Coke Ltd (Australian Subsidiary of Gujarat NRE Coke Ltd, India) (31-3-2013)

From Summary of Accounting Policies

Going Concern

As at the reporting date the Consolidated Entity had a net loss for the period of INR4,744 million (March 2012: Net Profit of INR605 million). Included in the loss are impairment charges of INR5,189 million (refer note below on critical accounting estimate and judgment for further breakdown). The Net cash from operation for the year was INR2,405 million (March 2012 INR4,289 million). The Consolidated Entity has a net current asset deficiency of INR25,266 million (March 2012: INR5,040 million), which includes the current portion of borrowings of INR5,021 million (March 2012: INR2,267 million) and the balance INR14,362 million (March 2012: Nil) have be reclassified as Current liabilities in accordance with AASB101 on account of breach of financial covenants.

The Directors believe this in itself is not a cause of concern considering the nature of business where there are no raw materials, WIP or finished goods until such time as they are mined. Further-more once the coal is mined it is transported to nearby port for export, as such inventory holding is expected to be low. In addition to the above the current liabilities includes installments of loan payable in next 12 months and the creditors mainly comprises of capex creditors as the company continues to be in brown field expansion.

The following events in the current financial year have led to the current performance:

•    Significant changes with the adverse effect on the entity have taken place during the period (i.e. a considerable decline in the prices of coking coal)

•    Delays in production at both the mines

•    Reduced production on account of delay in approvals

•    Due to above reasons there was cash flow restraints with payment terms being of certain creditors being extended against normal terms of payment.

Notwithstanding the loss for the year and the Consolidated Entity’s deficiency in net current assets, the financial report has been prepared on the going concern basis.

The directors consider the entity to be a going concern on the basis of the following:

•    An anticipated increase in production levels to around 2.3 million tonnes for the coming financial year based on detailed mine plans;

•    NRE Wongawilli colliery has all the necessary approvals in place to continue mining upto 2015-2016, the company is in the process of lodging further applications to extend this for another 5-15 years.

•    NRE No.1 currently has approval to extract coal from LW 5 upto September 2013 and anticipates receiving long-term approval to extract coal in December 2013.

•    The necessary approvals, as described above, for Wongawilli and NRE 1 will be obtained to continue production through the 2014 FY and beyond;

•    Increased revenue due to both mines being in production and the anticipated future profit-able position.

•    The Company has agreed a term sheet for the introduction approximately A$66 million in new capital to the Company through a placement at 20 cents per share to Jindal Steel & Power Group (“Jindal”) subject to shareholders’ approval. As part of placement Jindal will receive 328.5 million ne shares as well as around 328.5 million unlisted transferable options which shall be exercisable for nil consideration within a period of 5 years from the date of issue of the option. In addition, the Company will make an offer to shareholders not associated with Jindal and Gujarat on a pro-rata basis one new share for every four shares held on the record date plus one attaching unlisted transferable option for every one share subscribed. The ordinary shares will be issued at the price of 20 cents per new shares and each option shall be exercisable for nil consideration within a period of 5 years from the date of issue of the option, subject to shareholders’ approval.

•    Suppliers will be brought back into their credit terms and the Consolidated Entity will have ongoing support from its suppliers and creditors;

•    The Company is also in an advance discussion with its existing bankers for further borrowing the $200 million:

o    $140 million of the same shall held the Company in freeing up the funds utilized for capex incurred (from its own sources) in FY13 and H1FY14 which is proposed to be utilized to prepay the scheduled princi-pal repayments falling due in FY14 & FY15 under the Axis Bank syndicated facilities. The Company has received sanction for $66 million from some of the lenders; and

o    $60 million would be used to part-financing the capex for Project in H1FY14 and meet-ing expenses in relation to this facility. The Company has received sanction for $10 mil-lion from one of the banks.

Sanctions from the remaining banks are expected to be in place in the next few weeks.

•    The entity has prepared cash flow forecasts covering a period of more than 12 months from the date of approval of these financial statements. These indicate that the entity will meet its liabilities as they fall due.

•    The entity continues to develop the two mines to secure production into the future.

In order to complete these projects the entity will have to continue to be able to sources funding by way of debt or equity. The di-rects are in the process of exploring funding opportunities and are confident of being able to secure sufficient funds to complete both mines.

Based on the above, the Directors consider the entity to be a going concern and able to meet its debts and obligations as they fall due.

Notwithstanding the above, if one or more of the planned measures doe not eventuate or are not resolved in the Entity’s favour, then in the opinion of the Directors, there will be significant uncertainty regarding the ability of the Entity to continue as a going concern and pay its debts and obligations as and when they become due and payable.

If the Entity is unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal course of business at amounts different from those states in the financial report.

No adjustments have been made to the financial report relating to the recoverability and classification of the recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Entity not continue as a going concern.

Trade and Other Receivables

Trade receivables are recognised at original invoice amounts less an allowance and impairment for uncollectible amounts. Collectability of trade receivables is assessed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance is made for doubtful debts where there is objective evidence (such as significant financial difficulties on the part of the counterparty of default or significant delay in payment) that the group will not be able to collect all amounts due according the original terms.

Impairment of Assets

At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to profit or loss.

The Details of impairments that have been recog-nised during the financial year is as under:

1.Impairment of Land & Building in Gujarat NRE
Properties Pty Ltd.    $5.50 million
2. Impairment of Investments    $11.58 million
3. Impairment of Cethana    $5.25 million
4. Impairment of Mining Assets    $61.46 million

Impairment of Mining Assets – $61.46 Million

The Company undertook review of the carrying value of its assets to assess for impairment, if any, as there were the following indicators:

•    the carrying amount of the net assets of the entity is more than its market capitalisation

•    significant changes with an adverse effect on the entity have taken place during the period (i.e. a considerable decline in the prices of coking coal)

•    Delays in production due to outstanding ap-provals

•    Cash flow restraints.

The Company accordingly appointed Geos Mining (Geos) to carry out an independent valuation of the assets. Geos provided the valuation of the assets in the range of $398 million to $995 million with preferred value being $810 million. The preferred value was not considered appropriate due to the following factors:

1.    The mine plan of the Company has been made by its executives who have a considerable experience of coal mining in the region and the mine plans have been duly assessed an independent technical review undertaken independently by Runge Pincock Minarco (Minarco). However the preferred value arrived by Geos was based on, amongst other assumption, on achieving 95% of the optimal Bulli mine plan.

2.    Also Geos have considered the recommendation of Edwards Global Services as the High case for coking coal prices. There are coking coal price forecasts which were higher than those of Edwards. It was believed that the coking coal prices recommended by Edwards Global Services are in between the range of forecast and closer to higher long term prices forecast in the market and it was considered appropriate to adopt these prices for the valuation exercise.

The Company’s business operation i.e. coal mining, coal preparation and export of coal from two coal mines has been assessed as a single cash generating unit (CGU) considering the following justifications:

a)    Mines are located in the same regional area.

b)    Both the mines have only one product line, coal.

c)    The performance of the cash inflow of one mine gets directly affected by the performance of the other mine.

d)    The revenue from each mine is not independent of each other.

e)    The management monitors the operations collectively and that the revenue from one mine is directly affected by the quantity exported by other mine.

Based on the assessment undertaken by the Company the preferred valuation of the CGU based on value in use has been arrived at $995 million considering the undernoted assumptions:

a)    The company has done a valuation using a discount rate of 8.5% (based on WACC).

b)    Long Term coking coal price of $197.

c)    Long Term US$: AUS$ long-term exchange rate of 0.85.

d)    Life of each mine should have in excess of 25 years.

e)    The permitted rates of extraction will be up to 3.2 Mtpa for both mines, in line with current plans.

The Carrying value of the mining assets of the Company is $1,056.46 million & based on the above factors and assessments undertaken by the Company, the preferred valuation of the assets (CGU) has been arrived at $995 million, and an impairment of $61.46 million has been recognized in the books.

Impairment of Property Held in Gujarat NRE Properties Pty Ltd – $5.50 million

The Company owns a property located at Cliff Road, Wollongong, the carrying value of which was $9.25 million as at 31st March 2013. An independent valuation of said property was carried out and the property was valued at $3.75 million resulting in an impairment of $5.50 million. This impairment was on account of general downtrend in the real-estate market.

Impairment of Investment: – $11.58 million

The Company made investments in mutual funds anticipating better returns. However, the value of those investments have significantly diminished due to economic and financial crisis and impaired accordingly.

Impairment of Cethana Project: – $5.25 million

As a result of limited expenditure being incurred on the tenements over the past two years, the Board considered it was prudent to obtain a valuation of the Cethana project tenements. The Cethana project was valued using two approaches: attributable value of exploration expenditure and comparable market valuations, these resulted in a preferred valuation of $1.20 million for 100% of the project. Our share in JV, being 30% of the Cethana project has thereby been reduced to $0.36 million from a carrying value of $5.61 million. An impairment of $5.25 million has been recognised in profit and loss.

From Independent Auditor’s Report (dated 15th August 2013)

Basis for Disclaimer of Opinion

We have been unable to obtain sufficient appropriate audit evidence on the books and records and the basis of accounting of the consolidated entity. Specifically, we have been unable to satisfy ourselves on the following areas:

i.    Valuation and impairment of assets – the consolidated entity obtained an independent valuation of its mining assets and mining licences. The independent valuation was based on certain assumptions which may no longer be valid. The directors have not obtained an updated independent valuation to determine the extent of the impairment to the carrying value of the mining assets and mining leases. We have been unable to obtain supporting evidence, based on updated assumptions, which would provide sufficient appropriate audit evidence as to the carrying value of the mining assets and mining leases.

ii.    Going concern – the financial report has been prepared on a going concern basis, however the directors have not provided an update of their assessment of the consolidated entity’s ability to pay their debts as and when they fall due. The consolidated entity has reported a loss before income tax of $112,182,825 (including an impairment charge of $83,792,190) for the year ended 31st March 2013 and a working capital deficiency of $407,998,443. At the year end, the consolidated entity is in breach of loan covenants, has significant creditors in arrears and has been unable to provide evidence to support the full amount of the replacement loan facility which is required to pay existing facilities. As discussed in Note 1(c), the consolidated entity is in the process of renegotiating financing and has announced a share placement to the market, subject to shareholder approval, for additional equity funding.

We have been unable to obtain alternative evidence which would provide sufficient appropriate audit evidence as to whether the consolidated entity may be able to obtain such financing, and hence remove significant doubt of its ability to continue as a going concern for a period of 12 months from the date of this auditor’s report.

iii.    Deferred Tax Assets – included in non-current assets are Deferred Tax Assets of $87,302,944. In accordance with AASB112 “Income Taxes”, the recognition of deferred tax assets when an entity has incurred tax losses requires convincing other evidence that sufficient taxable profit will be available against which the unutilised tax losses can be utilised by the Group. The directors have not provided sufficient appropriate audit evidence of the Group’s ability to recover these losses.

iv.    Recoverability of Trade Receivable – included in Trade Receivables is an amount of $27,795,628 due from the consolidated entity’s ultimate parent company. We were unable to obtain sufficient appropriate audit evidence to determine the recoverability of this receivable. Consequently, we were unable to determine whether any adjustment to this receivable was necessary.

v.    Completeness of Contingent Liabilities and Sub-sequent Events disclosures – we were unable to obtain sufficient appropriate audit evidence to determine the completeness of the contingent liabilities and subsequent events disclosures. Consequently, we were unable to determine whether any additional disclosures are required to the relevant notes.

vi.    To the date of the directors approving the financial statements, we were not provided with sufficient appropriate audit evidence, or time, to finalise our procedures pertaining to various disclosures and transactions contained within the financial report. This constitutes a limitation of scope.

As a result of these matters, we were unable to determine whether any adjustments might have been found necessary in respect of the elements making up the consolidated statement of financial position, consolidated statement of profit and loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows, and related notes and disclosures thereto.


Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial report.

From Independent Auditors’ Report on Consolidated Financial Statements of Holding Company, Gujarat NRE Coke Ltd, India (dated 30th May 2013)

Other Matter

We have relied on the unaudited financial statements of all the Australian subsidiaries as referred in not no. 31 of the Consolidated Financial Statement, whose financial statements reflect total assets of Rs. 8.532.55 Crore as at 31st March, 2013 and total revenue of Rs. 1,394.86 Crore and net Cash outflows of Rs. 5.61 Crore for the year ended 31st March, 2013. These unaudited financial statements has been approved by the Management Committee of the respective subsidiaries and have been furnished to us by the management, and our report in so far as it relates to the amounts included in respect of these subsidiaries are based solely on such Management approved financial statements.

Section B : Miscellaneous

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The Company had initiated a voluntary recall of certain products as a precautionary measure against possible contamination due to the packaging integrity of such recalled products. The provision for loss due to products recalled is based on estimates made by the management by applying principles laid down in Accounting Standard – 29 ‘Provisions, Contingent Liabilities and Contingent Assets’. Further it is not possible to estimate the timing/uncertainty relating to the outflow. The movement in the provision during the period is as under:
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Section A : Accountin g Treatment for Share Issue and IPO-related expenses

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Bajaj Corp. Ltd. (31-3-2011)
From Significant Accounting Policies:

Initial Public Offer (IPO) Expenses: All the IPO expenses amounting to Rs.1,896.25 lac are written off during the year and shown as exceptional item in the Profit & Loss Account.

IndoSolar Ltd. (31-3-2011)

From Significant Accounting Policies and Notes to Accounts:

Miscellaneous expenditure: Until 31st March 2010, the Company had an accounting policy to amortise share issue expenses over a period of 5 years. The share issue expenses amounting to Rs.308,863,060 incurred during the year and the balance of Rs.26,960,927 remaining unamortised as at 31st March 2010, has now been adjusted against the Securities Premium Account as permitted u/s.78 of the Companies Act, 1956, on account of a change in the accounting policy in the year ended 31st March 2011. Had the Company continued to follow the same accounting policy, the miscellaneous expenditure written off and the net loss would have been higher by Rs.34,778,485 for the year ended and miscellaneous expenditure would have been higher by Rs.301,045,502 as at 31st March 2011.

Subex Ltd. (31-3-2011)

From Significant Accounting Policies:

Preliminary and Share Issue Expenses: Expenses incurred during the Initial Public Offer, follow on offer and issue of Bonus Shares are amortised over 5 years. Other issue expenses are charged to the securities premium account.

 Kingfisher Airlines Ltd. (31-3-2011)

Deferred revenue expenses: Share issue expenses are amortised over a period of three years on a straight-line basis following the year of incurring the expenses.

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Section A: AS 29: Disclosures regarding provision for potential civil and criminal liability

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Section A: AS 29: Disclosures regarding provision for potential civil and criminal liability

Ranbaxy Laboratories Ltd Year ended 31-12-2011

From Notes to Accounts (Rupees in millions)

On 20th December 2011, the Company agreed to enter into a Consent Decree with the Food and Drug Administration (“FDA”) of United States of America (“USA”) to resolve the existing administrative actions taken by FDA against the Company’s Paonta Sahib and Dewas facilities. The Consent Decree was approved by the United States District Court for the District of Maryland on 26th January 2012. The Consent Decree establishes certain requirements intended to further strengthen the Company’s procedures for ensuring the integrity of data in its US applications and good manufacturing practices at its Paonta Sahib and Dewas facilities. Successful compliance with the terms of the Consent Decree is required for the company to resume supply of products from the Dewas and Paonta Sahib facilities to USA.

Further, the Company is negotiating towards a settlement with the Department of Justice (“DOJ”) of USA for resolution of potential civil and criminal allegations by DOJ. Accordingly, the Company has recorded a provision of Rs. 26,480 million ($500 million) which the Company believes will be sufficient to resolve all potential civil and criminal liability.

From Auditor’s Report

Without qualifying our opinion, we draw attention to note 2 of schedule 24 of the financial statements, wherein it has been stated that the management is negotiating towards a settlement with the Department of Justice (“DOJ”) of the United States of America for resolution of potential civil and criminal allegations by the DOJ. Accordingly, a provision of Rs. 26,480 million has been recorded which the management believes will be sufficient to resolve all potential civil and criminal liability.

From CARO report
According to the information and explanations given to us, the provisions created for FDA/DOJ for Rs. 26,480 million (as explained in Note 2 of Schedule 24) by the Company has resulted into long-term funds being lower by Rs. 21,754.09 million compared to long-term assets as at 31st December 2011. Accordingly, on an overall examination of the balance sheet of the Company as at 31st December 2011, it appears that short term funds of Rs. 21,754.09 million have been used for long-term purposes during the current year (without considering the impact of excess remuneration paid to Chief Executive Officer and Managing Director as explained in paragraph (d) of the audit report). As represented to us by the management, the shortfall is temporary in nature, hence resulting in long-term funds being lower.

From Directors’ Report

With regard to qualifications contained in the auditors’ report, explanations are given below:

i) Long term funds lower than long term assetsnote no. 2 of Schedule 24 to the financial statements.

The Company has made a provision of Rs. 26,480 million for settlement with the Department of Justice (DoJ) of U.S.A., which the Company believes will be sufficient to resolve all potential civil and criminal liability. This has resulted into long-term funds being lower by Rs. 21,754.09 million compared to long-term assets as at 31st December 2011. The Company believes that the abovementioned shortfall is temporary in nature.

From Management Discussions and Analysis statement

Regulators across the world have become stricter, in respect of compliance to requirements with even more severe consequences for non-compliance.

Ranbaxy signed a Consent Decree (“CD”) with the United States Food & Drug Administration (“US FDA”) in December 2011 to resolve the existing administrative actions taken by the US FDA against the Company’s Poanta Sahib, Dewas and Gloversville facilities. The CD was subsequently approved by the United States District Court for the Court of Maryland on 25th January, 2012. The CD establishes certain requirements intended to further strengthen the Company’s procedures for ensuring the integrity of data in the US applications and good manufacturing practices at its Poanta Sahib and Dewas facilities.

Specifically, the CD requires that Ranbaxy comply with detailed data integrity provisions before FDA will resume reviewing drug applications containing data or other information from the afore-mentioned plants. These provisions include:

1. Hire a third party expert to conduct a thorough review at the facilities and audit applications containing data from affected plants;

2. Implement procedures and controls sufficient to ensure data integrity in the Company’s drug applications; and

3. Withdraw any applications found to contain untrue statements of material fact and/or a pattern or practice of data irregularities that could affect approval of the application.

The Company will have to relinquish 180 days exclusivity for 3 pending generic drug applications. This will not have material impact on the performance of the Company. The Company could also be liable for liquidated damages to cover potential violations of the law and CD. The implementation of CD, is expected to put to rest the legacy issue that impacted Ranbaxy, and requires strict adherence.

The Company separately announced a provision of $500 Mn in connection with the investigation of the Department of Justice, which the Company believes will be sufficient to resolve all potential civil and criminal liabilities. The Company has taken corrective actions to address the CD concerns and is confident of working together with the regulators towards its satisfactory closure.

Ranbaxy Laboratories Ltd Year ended 31-12-2012

From Notes to Accounts (Rupees in millions)

The Company is negotiating towards a settlement with the Department of Justice (“DOJ”) of the USA for resolution of potential civil and criminal allegations by DOJ. Accordingly, the Company had recorded a provision of Rs 26,480 ($500 Million) in the year ended 31st December 2011, which on a consideration of the progress in the matter so far, the Company believes will be sufficient to resolve all potential civil and criminal liability. The Company and its subsidiaries are in the process of negotiations which will conclusively pave the way for a Comprehensive DOJ Settlement. The settlement of this liability is expected to be made by the Company in compliance with the terms of settlement, once concluded and subject to other regulatory/statutory provisions.

From Auditor’s Report
No mention

From CARO Report


Clause 10
The accumulated losses of the Company at the end of the year are not less than fifty percent of its net worth (without adjusting accumulated losses). As explained to us, these are primarily due to provision created for settlement with the Department of Justice (DOJ) of the United States of America for resolution of potential civil and criminal allegations by the DOJ (refer to note 8 of the financial statements). The Company has not incurred cash losses in the current financial year though it had incurred cash losses in the immediately preceding financial year.

Clause 17

According to the information and explanations given to us, the provision created for settlement with the DOJ amounting to Rs. 26,480 million (refer to note 8 of the financial statements) by the Company in the previous accounting year have resulted in long-term funds being lower by Rs. 5,558.22 million compared to long-term assets as at 31st December 2012. Accordingly, on an overall examination of the Balance Sheet of the Company as at 31st December 2012, it appears that short term funds of Rs. 5,558.22 million have been used for long-term purposes. As represented to us by the management, the shortfall is temporary in nature and action is being taken to have long term funds within a short period of the amount being actually paid.

From Directors’ Report
In continuation of signing of the Consent Decree with the USFDA, the Company is in the final stage of settlement with the U.S. Department of Justice (DOJ) to resolve civil and criminal liabilities.

With regard to comments contained in the Auditors’ Report, explanations are given below:

i)    The accumulated losses of the Company at the end of the year are not less than fifty percent of its net worth:

The accumulated losses are primarily due to provision of Rs. 26,480 million created by the Company in the year ended 31st December, 2011 for settlement with the DOJ for resolution of potential civil and criminal allegations by the DOJ.

ii) Short term funds used for long term purposes:

The Company had made a provision of Rs. 26,480 million in the previous accounting year for settlement with the DOJ. This has resulted into long-term funds being lower by Rs. 5,558.22 million compared to long-term assets as at 31st December, 2012. Accordingly, short-term funds of Rs. 5,558.22 million have been used for long-term purposes which are temporary in nature.

Pantaloon Retail (India) Limited (30-6-2010)

New Page 1

Section A : Disclosures on Clause 21 of CARO, 2003 regarding
fraud noticed or reported on or by the company during the year


10. Pantaloon Retail (India) Limited (30-6-2010)

From Auditor’s Report :

To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the Company has been
noticed or reported during the year, although there were some instances of fraud
on the Company by the Management, the amounts whereof were not material in the
context of the size of the Company and the nature of its business and the
amounts were adequately provided for.


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Godrej Consumer Products Ltd. (31-3-2010)

New Page 1

Section A : Disclosures on Clause 21 of CARO, 2003 regarding
fraud noticed or reported on or by the company during the year


9. Godrej Consumer Products Ltd. (31-3-2010)

From Auditor’s Report :

Based upon the audit procedures performed by us, to the best
of our knowledge and belief and according to the information and explanations
given to us by the management, no fraud on or by the Company has been noticed or
reported during the year except in one case where certain claims amounting to
Rs.2,424.18 lakhs have been made on the Company on account of the unauthorised,
illegal and fraudulent acts of one of its employee whose services have since
been terminated. The Company has been legally advised that it has a strong legal
case in the matter.


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Kingfisher Airlines Ltd. (31-3-2010)

New Page 1

Section A : Disclosures on Clause 21 of CARO, 2003 regarding
fraud noticed or reported on or by the company during the year


8. Kingfisher Airlines Ltd. (31-3-2010)

From Auditor’s Report :

As per the information and explanations furnished to us by
the management, no material frauds on or by the Company and causing material
misstatements to financial statements have been noticed or reported during the
course of our audit, except for charge backs received by the Company aggregating
to Rs.475.44 lacks from the credit card service providers due to misutilisation
of credit cards by third parties.

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Thomas Cook (India) Ltd. (31-12-2009)

New Page 1

Section A : Disclosures on Clause 21 of CARO, 2003 regarding
fraud noticed or reported on or by the company during the year


7. Thomas Cook (India) Ltd. (31-12-2009)

From Auditor’s Report :

During the course of our examination of the books and records
of the Company carried out in accordance with the Auditing Standards generally
accepted in India, we have neither come across any instance of fraud by the
Company noticed or reported during the year, nor have been informed of such case
by the management. Fraud on the Company or misappropriation of assets
aggregating to Rs.49,87,000 by employees of the Company were noticed and
reported. The management has since recovered Rs.7, 50,000 of the total amount
[Refer Note 2(t) of the Schedule Q].

From Notes to Accounts :

Employees of the Company and other parties misappropriated
assets aggregating to Rs. 4,987,000 (previous year Rs.7,251,682) during the
year. The cases are under investigation and the Company has taken steps for
recovering the balance amount. There is no open exposure on the profit for the
year in respect of misappropriated assets except for Rs. Nil (previous year
Rs.751,100).

 

levitra

Full adoption of Accounting Standard 30 Strides Arcolab Ltd. (31-12-2008)

From Accounting Policies

Financial Assets, Financial Liabilities, Financial Instruments, Derivatives and Hedge Accounting

1. The Company classifies its financial assets into the following categories: financial instruments at fair value through profit and loss, loans and receivables, held to maturity investments and available for sale financial assets. Financial assets of the Company mainly include cash and bank balances, sundry debtors, loans and advances and derivative financial instruments with a positive fair value.

Financial liabilities of the Company mainly comprise secured and unsecured loans, sundry creditors, accrued expenses and derivative financial instruments with a negative fair value. Financial assets/liabilities are recognised on the balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when all of risks and rewards of the ownership have been transferred. The transfer of risks and rewards is evaluated by comparing the exposure, before and after the transfer, with the variability in the amounts and timing of the net cash flows of the transferred assets.

Available for sale financial assets (not covered under other Accounting Standards) are carried at fair value, with changes in fair value being recognised in Equity, unless they are designated in a Fair value hedge relationship, where such changes are recognised in the Profit and Loss account.

Loans and receivables, considered not to be in the nature of Short-term receivables, are discounted to their present value. Short-term receivables with no stated interest rates are measured at original invoice amount, if the effect of discounting is immaterial. Non-interest bearing deposits, meeting the criteria of financial asset, are discounted to their present value.

Financial liabilities held for trading and liabilities designated at fair value, are carried at fair value through profit and loss. Other financial liabilities are carried at amortised cost using the effective interest method. The Company measures the short-term payables with no stated rate of interest at original invoice amount, if the effect of discounting is immaterial.

Financial liabilities are derecognised when extinguished.

2. Determining fair value

Where the classification of a financial instrument requires it to be stated at fair value, fair value is determined with reference to a quoted market price for that instrument or by using a valuation model. Where the fair value is calculated using financial markets pricing models, the methodology is to calculate the expected cash flows under the terms of each specific contract and then discount these values back to a present value.


3. Derivative financial instruments

The Company is exposed to foreign currency fluctuations on foreign currency assets and liabilities. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into forward exchange financial instruments where the counterparty is a bank. Changes in fair values of these financial instruments that do not qualify as a Cash flow hedge accounting are adjusted in the Profit and Loss.

4. Hedge Accounting

Some financial instruments and derivatives are used to hedge interest rate, exchange rate, commodity and equity exposures and exposures to certain indices. Where derivatives are held for risk management purposes and when transactions meet the criteria specified in Accounting Standard 30, the Company applies fair value hedge accounting or cash flow hedge accounting as appropriate to the risks being hedged.


5. Fair value hedge accounting

Changes in the fair value of financial instruments and derivatives that qualify for and are designated as fair value hedges are recorded in the Profit and Loss Account, together with changes in the fair value attributable to the risk being hedged in the hedged assets or liability. If the hedged relationship no longer meets the criteria for hedge accounting, it is discontinued.

From Notes to Accounts

6. Adoption of Accounting Standard-30 : Financial Instruments : Recognition and Measurement, issued by Institute of Chartered Accountants of India

Arising from the Announcement of the Institute of Chartered Accountants of India (ICAI) on March 29, 2008, the Company has chosen to early adopt Accounting Standard (AS) 30 :

‘Financial Instruments : Recognition and Measurement’. Coterminous with this, in the spirit of complete adoption, the Company has also implemented the consequential limited revisions in view of AS 30 to AS 2, ‘Valuation of Inventories’, AS 11’ The Effect of Changes in Foreign Exchange Rates’, AS 21 ‘Consolidated Financial Statements and Accounting for Investments in Subsidiaries in Separate Financial Statements’, AS 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’, AS 26 ‘Intangible Assets’, AS 27 ‘Financial Reporting of Interests in Joint Ventures’, AS 28 ‘Impairment of Assets’ and AS 29 ‘Provisions, Contingent Liabilities and Contingent Assets’ as have been announced by the ICAI.

Consequent to adoption of AS 30 and the transitional provision under the standard :

The Company has changed the designation and measurement principles for all its significant financial assets and liabilities existing as at January 1, 2008. The impact on account of the above measurement of these is as described below :

6.1 Foreign Currency Convertible Bonds (FCCBs or Bonds)

On adoption of AS 30, the FCCBs are split into two components comprising (a) option component which represents the value of the option in the hands of the FCCB-holders to convert the bonds into equity shares of the Company and (b) debt component which represents the debt to be redeemed in the absence of conversion option being exercised by FCCB-holder, net of issuance costs. The debt component is recognised and measured at amortised cost while the fair value of the option component is determined using a valuation model with the below mentioned assumptions.

Assumptions used to determine fair value of the options:

Valuation and amortisation method – The Company estimates the fair value of stock options granted using the Black Scholes Merton Model and the principles of the Roll-Geske-Whaley extension to the Black Scholes Merton model. The Black Scholes Merton model along with the extensions above requires the following inputs for valuation of options:

Stock Price as at the date of valuation – The Company’s share prices as quoted in the National Stock Exchange Limited (NSE), India have been converted into equivalent share prices in US Dollar terms by applying currency rates as at valuationates. Further, stock prices have been reduced by continuously compounded stream of dividends expected over time to expiry as per the principles of the Black-Scholes Merton model with Roll Geske Whaley extensions.

Strike price for the option – has been computed in dollar terms by computing the redemption amount in US dollars on the date of redemption (if not converted into equity shares) divided by the number of shares which shall be allotted against such FCCBs.

Expected Term – The expected term represents time to expiry, determined as number of days between the date of valuation of the option and the date of redemption.

Expected Volatility – Management establishes volatility of the stock by computing standard deviation of the simple exponential daily returns on the stock. Stock prices for this purpose have been

6.1 Foreign Currency  Convertible Bonds (FCCBs or computed by expressing daily closing prices as Bonds) quoted  on the NSE into equivalent  US dollar terms. For the purpose  of computing  volatility  of stock prices, daily prices for the last one year have been considered as on the respective valuation dates.

Risk-Free Interest Rate – The risk-free interest rate used in the Black-Scholes valuation method is assumed at 7%.

Expected Dividend – Dividends have been assumed to continue, for each valuation rate, at the rate at which dividends were earned by shareholders in the last preceding twelve months before the date of valuation.

Measurement of Amortised cost of debt component:

For the purpose of recognition and measurement of the debt component, the effective yield has been computed considering the amount of the debt component on initial recognition, origination costs of the FCCB and the redemption amount if not converted into Equity Shares. To the extent the effective yield pertains to redemption premium and the origination costs, the effective yield has been amortised to the Securities Premium Account as permitted under section 78 of the Companies Act, 1956. The balance of the effective yield is charged to the Profit and Loss Account.


Consequent to change in policy for accounting of FCCBs,

a) Rs.934.71 Million being the previously accrued Debenture Redemption Reserve out of the Securities Premium Account has been credited back to Securities Premium Account.

b) Rs.124.68 Million being the amount of FCCB issue expenses previously debited to Securities Premium Account has been reversed.

c) Rs.443.20 Million and Rs.546.41 Million has been debited to Securities Premium Account as at December 31, 2007 and during the year 2008, respectively towards the amortised interest attributable to the effective yield pertaining to the redemption premium and FCCB issue expenses.

d) Rs.202 Million being the excess of amortised interest chargeable to Profit and Loss Account as per the policy adopted by the Company over the previously recognised interest cost upto December 31, 2007 has been debited to General Reserve Account.

e) Interest expense for the year debited to Profit and Loss Account is higher by Rs.216.48 Million, and Profit Before Tax for the year is lower by the corresponding amount.

f) The difference between the fair value of the option component on the date of issue of the FCCBs and December 31, 2007 amounting to Rs.427.10 Million has been credited to the General Reserve Account.

g) Rs.452.21 Million being the difference in the carrying amount of the option component between December 31, 2008 and December 31 2007 has been credited to the Profit and Loss Account of the year.

h) Rs.63.31 Million being the incremental exchange difference upto December 31, 2007 arising out of the accounting treatment of FCCBs described above has been debited to General Reserve Account. Exchange loss on restatement of FCCBs is lower and Profit Before Tax for the year is higher by Rs.101.54 Million.

6.2 Consequent to change in policies for accounting for External commercial borrowings (another financial liability), excess of amortised interest cost of Rs.0.53 Million and Rs.0.79 Million chargeable to Profit and Loss Account as per the policy adopted by the Company over the previously recognised interest cost for the period upto December 31, 2007 and for year ended December 31, 2008, respectively, has been debited to General Reserve Account and the Profit and Loss account respectively.

6.3 The financial assets and liabilities arising out of issue of corporate financial guarantees to third parties are accounted at fair values on initial recognition. Financial assets continue to be carried at fair values. Financial liabilities are subsequently measured at the higher of the amounts determined under AS 29 or the fair values on the measurement date. At December 31,2008, the fair values of such financial assets are equal to such liabilities and have been set off in the financial statements.

6.4 As required under the Companies Act, 1956, Redeemable Preference Shares are included as part of share capital and not as debt and dividend on the preference shares will be accounted as dividend as part of appropriation of profits and have not been accrued as interest cost. Further, due to inadequate profits, the Company has not accrued dividend of Rs. 29.50 Million each for the year ended December 31, 2007 and December 31, 2008, and the related Dividend distribution taxes.

6.5 Fully convertible debentures are considered as borrowings and are not disclosed as part of shareholder funds, and interest thereon of Rs.24.73 Million is debited to the Profit and Loss Account as interest cost as required under the Companies Act, 1956 and has not been treated as dividend.


Hedge  Accounting:

The Company had prior to December 31, 2007 designated its investments in Starsmore Limited, Cyprus, Strides Africa Limited, British Virgin islands and Akorn Strides LLC, USA, whose functional currency is US dollars as hedged items in a fair value hedge and to the extent of the hedge items, designated FCCB’s availed in US dollars as hedging instruments, to hedge the risk arising from fluctuations in the foreign exchange rate between the Indian Rupee and the US dollar. The carrying values of the designa ted hedged iterns and the hedging instruments as at December 31, 2008 is USD 100.55 Million and USD 69.20 Million as at December 31, 2007.

Accordingly, applying the fair value hedge accounting principles, the exchange gains/ losses on the hedging instrument is recognised in Profit and Loss Account along with the associated exchange gains/losses on the restatement of the designated portion of the investments. The impact of exchange loss arising on restatement of designated portion of the USD investments as of December 31, 2007 amounted to Rs. 120.42 Million and has been debited to the General Reserve Account.

The exchange gains arising on restatement of designated portion of the USD investments for the year ended December 31, 2008 amounting to Rs. 923.40 Million has been treated as an effective fair value hedge since the loss arising on the dollar loans designated as hedging instruments amounted to a similar amount and such gains have been credited to the Profit and such gains have been credited to the Profit and Loss account for year ended December 31,2008.

Prior to the adoption of the AS 30 ‘Financial Instruments: Recognition and Measurement’, and the limited revisions to AS 21 ‘Consolidated Financial Statements and Accounting for Investments in Subsidiaries in Separate Financial Statements’, investments in subsidiaries were valued at cost less diminution in value that was other than temporary as per the provisions of AS-13 ‘Accounting for Investments’ that was notified under section 21l(3C) of the Companies Act, 1956. As a result of above change in accounting policy, carrying value of investments as at December 31, 2008 is higher by Rs. 802.98 Million, profit for the year is higher by Rs. 923.40 Million and General Reserve is higher by Rs. 802.98 Million.

6.7 The Company has availed Bill Discounting facility from Banks which do not meet the de-recognition criteria for transfer of contractual rights to receive cash flows from the Debtors since they are with recourse to the Company.

Accordingly, as at December 31, 2008, Sundry Debtor balances include such amounts and the corresponding financial liability to the Banks is included as part of short term secured loans.

6.8 All the open derivative positions as on January 1, 2008 not designated as hedging instruments have been classified as held for trading and gains/losses recognised in the Profit and Loss Account. The incremental negative fair value of such derivatives over and above provision carried was Rs. 100.92 Million as at December 31,2007 which has been debited to the General Reserve Account. Incremental negative fair value of the open derivatives position as at December 31, 2008 amounting to Rs. 346.08 Million has been debited to Profi t and Loss Account for the year.

From Notes  to Accounts (con’td.)

33. Disclosures relating to Financial instruments to the extent not disclosed elsewhere in Schedule P

Breakup of Allowance for Credit Losses is as under:


Details on Derivatives Instruments & Unhedged Foreign Currency Exposures

The following derivative positions are open as at December 31, 2008. While these transactions have been undertaken to act as economic hedges for the Company’s exposures to various risks in foreign exchange markets, they have not qualified as hedging instruments in the context of the rigour of such classification under Accounting Standard 30. Theses instruments are therefore classified as held for trading and gains/losses recognised in the Profit and Loss Account.

i. The Company had entered into the following derivative instruments:

a . Forward Exchange Contracts [being a derivative instrument), which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

The following are the outstanding Forward Exchange Contracts entered into by the Company as on December 31, 2008.

  1. b) Interest Rate Swaps to hedge against fluctuations in interest rate changes: No. of contracts: Nil (Previous year: No. of contracts: 3, Notional Principal: USD 20 Million).c) Currency Swaps (other than forward exchange contracts stated above) to hedge against fluctuations in change in exchange rate.of contracts: Nil (Previous Year: No of  contracts 6, Notional Principal: USD 80 Million).ii. The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

iii. Derivative Instruments (causing an un-hedged foreign currency exposure) : Nil (Previous Year USD 8 Million – Sell)

iv. Losses on forward Exchange Derivate contracts (Net) included in the Profit and Loss account for year ended December 31, 2008 amount Rs.454.27 Million.

Categories of Financial Instruments

a) Loans and Receivables:

The following financial assets in the Balance Sheet have been classified as Loans and Receivables as defined in Accounting Standard 30. These are carried at amortised cost less impairment if any. The carrying amounts are as under:

In the opinion of the management, the carrying amounts above are reasonable approximations of fair values of the above financial assets.

b)  Financial Liabilities  Held at Amortised Cost

The following financial liabilities are held at amortised cost. The Carrying amount of Financial Liabilities is as under:

  1. c) Financial Liabilities  Held for Trading

The option component of Foreign Currency Convertible Bonds (FCCBs) has been classified as held for trading, being a derivative under Accounting Standard 30. Refer Note B.6 of Schedule P on FCCBs. The carrying amount of the option component was Rs.134.20 Million as at December 31,2008 and Rs.586.42 Million as at December 31, 2007. The difference in carrying value between the two dates, amounting to Rs.452.21 Million is taken as gain to the Profit and Loss Account of the year in accordance with provisions of Accounting Standard 30.

The fair value  of the  option  component  has been determined using a valuation model. Refer to Note B.6 above on FCCBs for detailed disclosure on the valuation method.

d) There are no financial assets in the following categories:

o Financial assets carried at fair value through profit and loss designated at such at initial recognition.

o Held  to maturity

o Available  for sale

o Financial liabilities carried at fair value through profit and loss designated as such at initial recognition.

Financial    assets pledged

The following financial assets have been pledged:

Financial Asset Carrying value Dec. 31, 2007 Carrying value Dec. 31, 2007 Liability/Contingent Liability for which

pledged as collateral

 Terms and conditions

relating to pledge
I. Margin Money with Banks
A. Margin Money for

Letter of Credit

 80.89 82.87 Letter of Credit The Margin Money is

interest bearing deposit

with Banks. These

deposits can be

withdrawn on the

maturity of all Open

Letters of Credit.
B. Margin   Money   for 26.31 6.29 Bank  Guarantee The Margin Money is
Bank  Guarantee interest bearing deposit
with Banks. These
Deposits are against
Performance Guarantees.
Theses  can be withdrawn
on the  satisfaction  of the
purpose for which the
Guarantee is provided.
C.  Other Margin  Money 11.82 Margin  Money The Margin Money is
as Guarantee   for interest bearing deposit
Loan  to with Banks. This Deposit
Subsidiary is against Guarantees for
Loan advanced to
Subsidiary. This deposit
has been withdrawn on
the repayment of the
Loan by the Subsidiary.
II.  Sundry debtors 974.61 651.61 Bills discounted The Bills discounted  with
Banks  are secured  by the
Receivable.

Nature and extent of risk arising from financial instruments

The  main    financial    risks faced by  the  Company relate to fluctuations in interest and foreign exchange rates, the risk of default by counterparties to financial transactions, and the availability of funds to meet business needs. The Balance Sheet as at December 31, 2008 is representative of the position through the year. Risk management is carried out by a central treasury department under the guidance of the Management.


Interest rate  risk

Interest rate risk arises from long term borrowings. Debt issued at variable rates exposes the company to cash flow risk. Debt issued at fixed rate exposes the company to fair value risk. In the opinion of the management, interest rate risk during the year under report was not substantial enough to require intervention or hedging through derivatives or other financial instruments. For the purposes of exposure to interest risk, the company considers its net debt position evaluated as the difference between financial assets and financial liabilities held at fixed rates and floating rates respectively as the measure of exposure of notional amounts to interest rate risk. This net debt position is quantified as under:

Particulars 2008 2007
Fixed
Financial Assets …………………. 301.02 ……… 745.74
Financial liabilities  ……….. (7,123.32) …. (7,665.91)
(6,822.30) …. (6,920.17)
Floating
Financial Assets …………………. 229.20 ……… 196.26
Financial liabilities  ……….. (3,717.10) …. (2,961.78)
(3,487.90) …. (2,769.52)

Credit risk

Credit risk arises from cash and cash equivalents, financial instruments and deposits with banks and financial institutions. Credit risk also arises from trade receivable and other financial assets.

The credit risk arising from receivable is subject to concentration risk in that the receivable are predominantly denominated in USD and any appreciation in the INR will affect the credit risk. Further, the Company is not significantly exposed to geographical distribution risk as the counter-parties operate across various countries across the Globe.

Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to Company’s reputation. liquidity risk is managed using short term and long term cash flow forecasts.

The following is an analysis of undiscounted contractual cash flows payable under financial liabilities and derivatives as at December 31, 2008 :

Financial

Liabilities

 Due within
1 year 1 and 2 and 3 and 4 and
2 years 3 years 4 years 5 years
Bank Borrowings 2,860.74 369.43 279.97 182.59 91.29
Interest  payable

on borrowings

 0.08 – – – –
Hire

Purchase  liabilities

 2.48 2.23 0.41 0.13 –
Other

Borrowings

 – 2,306.64 – 4,744.43 –
Trade

and

other

payables

not in

net debt

 1,985.95 – – – –
Fair Value

of Options

embedded

in FCCBs

 – 11.06 – 123.15 –
Fair value

of Forward

exchange

derivative  contracts

 174.12 165.61 – – –
Total 5,023.37 2,689.36 280.38 5,050.30 91.27

For the purposes of the above table, undiscounted cash flows have been applied. Undiscounted cash flows will differ from fair values. Foreign currency liabilities have been computed applying spot rates on the Balance Sheet date.

Foreign exchange risk
The Company is exposed to foreign exchange risk principally via:

o Debt availed in foreign currency

o Net investments in subsidiaries and joint ventures that are made in foreign currencies.

o Exposure arising from transactions relating to purchases, revenues, expenses etc to be settled in currencies other than Indian Rupees, the functional currency of the respective entities.

The Company had designated its investments in certain subsidiaries whose functional currency is US dollars as hedged items in a fair value hedge and certain loans availed in US dollars as hedging instruments to hedge the risk arising from fluctuations in the foreign exchange rate between the Indian Rupee and the US dollar. The carrying values of the financial liabilities designated as hedging instruments as at December 31, 2008 is Rs.4,897.97 Million.

The loss arising on the dollar loans designated as hedging instruments recognised in the Profit and Loss Account for the year ended December 31, 2008 is Rs.923.40 Million. The gain arising from investments in certain subsidiaries designated as hedged items as much as is attributable to the hedged foreign exchange risk recognised in the Profit and Loss Account for the year ended December 31, 2008 is Rs.923.40 Million.

Sensitivity analysis as at December 31, 2008

Financial instruments affected by interest rate changes include Secured Long term loans from banks, Secured Long term loans from others, Secured Short term loans from banks and Secured Short term loans from banks. The impact of a 1% change in interest rates on the profit of an annual period will be Rs.108.29 Million assuming the loans as of December 31, 2008 continue to be constant during the annual period. This computation does not involve a revaluation of the fair value of loans as a consequence of changes in interest rates. The computation also assumes that an increase in interest rates on floating rate liabilities will not necessarily involve an increase in interest rates on floating rate financial assets.

Financial instruments affected by changes in foreign exchange rates include FCCBs, External Commercial Borrowings (ECBs), investments in subsidiaries, loans in foreign currencies to erstwhile subsidiaries and loans to subsidiaries and joint ventures. The company considers US Dollar and the Euro to be principal currencies which require monitoring and risk mitigation. The Company is exposed to volatility in other currencies including the Great Britain Pounds (GBP) and the Australian Dollar (AUD).

For the purposes of the above table, it is assumed that the carrying value of the financial assets and liabilities as at the end of the respective financial years remains constant thereafter. The exchange rate considered for the sensitivity analysis is the Exchange Rate prevalent as a December 31, 2008.

In the opinion of the management, impact arising from changes in the values of trading assets (including derivative contracts, trade receivable, trade payables, other current assets and liabilities) is temporary and short term in nature and would vary depending on the levels of these current assets and liabilities substantially from time to time and even on day to day basis and hence are not useful in an analysis of the long term risks which the Company is exposed to.

This is the first year of adoption of Accounting Standard 3D, consequently comparative figures relating to 2007 in respect of disclosures under Accounting Standard 30 have been provided only where such information is available.

From Auditors’ Report

d) The Company has early adopted Accounting Standard 30 ‘Financial Instruments: Recognition and Measurement’, along with the limited revision to Accounting Standard 2 ‘Valuation of Inventories’, Accounting Standard 11 ‘The Effect of Changes in Foreign Exchange Rates’, Accounting Standard 21 ‘Consolidated Financial Statements and Accounting for Investment in Subsidiaries in Separate Financial Statements’, Accounting Standard 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’, Accounting Standard 26 ‘Intangible Assets’, Accounting Standard 27 ‘Financial Reporting of Interest in Joint Ventures’, Accounting Standard 28 ‘Impairment of Assets’, and Accounting Standard 29 ‘Provisions, Contingent Assets and Contingent Liabilities, arising from the announcement of the Institute of Chartered Accountants of India on 29 March 2008, as stated in Note B.6 of Schedule P to the financial statements. Pursuant to the above, as detailed in note B.6.6 of Schedule P to the financial statements, certain US Dollar investments in subsidiaries and joint ventures have been designated as hedged items in a fair value hedge for changes in spot rates and have been restated at the closing exchange rate at December 31, 2008 and a credit of Rs. 923.40 Million has been recognised in the Profit and Loss Account, as compared to the earlier policy of valuing these investments at cost less diminution that is other than temporary, as required under Accounting Standard 13 ‘Accounting for Investments’, notified under section 211 (3C) of the Companies Act, 1956.

e) read with our comments in paragraph (d) above, in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-Section (3C) of Section 211 of the Companies Act, 1956.

From Management Discussions and Analysis

Early adoption of Accounting Standard 30 and IFRS convergence

The Company has early adopted Accounting Standard 30 : Financial Instruments: Recognition and Measurement and the consequential limited revisions to other applicable Accounting Standards as have been announced by the ICAI. Accordingly, the Company has changed the designation and measurement principles for all its significant financial assets and liabilities including FCCBs and ECBs. In case where there are conflicts between provisions of AS 30 and Companies Act, 1956, provisions of Companies Act, 1956 have been followed.

Detailed disclosures in this regard have been made in Note 1.11 of Part A, Note 6 and 33 of Part B of Schedule – ‘P’ to the financial statements forming part of the Annual Report.

Accounting Standards 30, 31 and 32 are new accounting Standards, to be made mandatory from April 01, 2011. These are global standards in line with IAS 39, as a prelude to IFRS Convergence. By adopting Accounting Standard 30 the company is progressing towards IFRS convergence.

Wipro Ltd.

New Page 1

WIPRO LTD. —
(31-3-2008) (consolidated)


From Accounting Policies :

Foreign currency transactions :

The Company is exposed to currency fluctuations on foreign
currency transactions. Foreign currency transactions are accounted in the books
of accounts at the average rate for the month.

 

Transaction :

The difference between the rate at which foreign currency
transactions are accounted and the rate at which they are realised is recognised
in the profit and loss account.

 

Translation :

Monetary foreign currency assets and liabilities at
period-end are translated at the closing rate. The difference arising from the
translation is recognised in the profit and loss account.

 

Derivative instruments and Hedge accounting :

The Company is exposed to foreign currency fluctuations on
foreign currency assets and forecasted cash flows denominated in foreign
currency. The Company limits the effects of foreign exchange rate fluctuations
by following established risk management policies including the use of
derivatives. The Company enters into forward exchange and option contracts,
where the counterparty is a bank. Since March 2004, based on the principles set
out in International Accounting Standard (IAS 39) on Financial Instruments’ the
Company has designated forward contracts and options to hedge highly probable
forecasted transactions as cash flow hedges. The exchange differences relating
to these forward contracts and gains/losses on such options were being
recognised in the period in which the forecasted transactions were expected to
occur. The exchange differences relating to forward contracts/options, other
than designated forward contracts/ options, were recognised in the profit and
loss account as they arose.

 

Effective April 1, 2007, based on the recognition and
measurement principles set out in the Accounting Standard (AS) 30 on Financial
Instruments: Recognition and Measurement, the changes in the fair values of
forward contracts and options designated as cash flow hedges are recognised
directly in shareholders’ funds and are reclassified into the profit and loss
account upon the occurrence of the hedged transaction. The gains/losses on
forward contracts and options designated as cash flow hedges are included along
with the underlying hedged forecasted transactions. The changes in fair value
relating to the ineffective portion of the cash flow hedges and forward
contracts/options not designated as cash flow hedges are recognised in the
profit and loss account as they arise. The Company has also designated forward
contracts and options as hedges of net investment in non-integral foreign
operation. The portion of the changes in fair value of forward contracts and
options that is determined to be an effective hedge is recognised in
shareholders’ fund and would be recognised in profit and loss account on the
disposal of foreign operation. The portion of the changes in fair value of
forward contracts and options that is determined to be an ineffective hedge is
recognised in the profit and loss account.

 

The Institute of Chartered Accountants of India (ICAI) has
recently issued an announcement ‘Accounting for Derivatives’ on accounting for
derivatives and early adoption of AS 30. The Company has already been applying
the principles of AS 30 in accounting for derivative instruments and the
announcement did not have any impact on the Company.

 

Integral operations :

In respect of integral operations, monetary assets and
liabilities are translated at the exchange rate prevailing at the date of the
balance sheet. Non-monetary items are translated at the historical rate. The
items in the profit and loss account are translated at the average exchange rate
during the period. The differences arising out of the translation are recognised
in the profit and loss account.

 

Non-integral operations :

In respect of non-integral operations, assets and liabilities
are translated at the exchange rate prevailing at the date of the balance sheet.
The items in the profit and loss account are translated at the average exchange
rate during the period. The differences arising out of the translation are
transferred to translation reserve.

 

From Notes to Accounts :

The Company designated forward contracts and options to hedge
highly probable forecasted transactions based on the principles set out in
International Accounting Standard (IAS 39) on Financial Instruments :
Recognition and Measurement. Until March 31, 2007, the exchange differences on
the forward contracts and gain/loss on such options were recognised in the
profit and loss account in the periods in which the forecasted transactions were
expected to occur.

 

Effective April 1, 2007, based on the recognition and
measurement principles set out in the Accounting Standard (AS) 30 on Financial
Instruments : Recognition and Measurement, the changes in the derivative fair
values relating to forward contracts and options that are designated as
effective cash flow hedges are recognised directly in shareholders’ funds until
the hedged transactions occur. Upon occurrence of the hedged transactions the
amounts recognised in the shareholders’ funds would be reclassified into the
profit and loss account along with the underlying hedged forecasted
transactions. During the year ended March 31, 2008 the Company has reclassified
net exchange gains of Rs.951 Million along with the underlying hedged forecasted
transaction. In addition, the Company also designates forward contracts as
hedges of the net investment in non-integral foreign operations. The changes in
the derivative fair values relating to forward contracts and options that are
designated as net investments in non-integral foreign operations have been
recognised directly in shareholders’ funds within translation reserve. The
gains/losses in shareholders’ funds would be transferred to profit and loss
account upon the disposal of non-integral foreign operations.


Infosys Technologies Ltd.

New Page 1INFOSYS TECHNOLOGIES LTD.

— (31-3-2008)

From Accounting Policies :

Foreign currency transactions :

Revenue from overseas clients and collections deposited in
foreign currency bank accounts are recorded at the exchange rate as of the date
of the respective transactions. Expenditure in foreign currency is accounted at
the exchange rate prevalent when such expenditure is incurred. Disbursements
made out of foreign currency bank accounts are reported at the daily rates.
Exchange differences are recorded when the amount actually received on sales or
actually paid when expenditure is incurred, is converted into Indian Rupees. The
exchange differences arising on foreign currency transactions are recognised as
income or expense in the period in which they arise.

Fixed assets purchased at overseas offices are recorded at
cost, based on the exchange rate as of the date of purchase. The charge for
depreciation is determined as per the company’s accounting policy.

Monetary current assets and monetary current liabilities that
are denominated in foreign currency are translated at the exchange rate
prevalent at date of the balance sheet. The resulting difference is also
recorded in the profit and loss account.

Forward contracts and options in foreign

currencies :

The company records the gain or loss on effective hedges in
the foreign currency fluctuation reserve until the transactions are complete. On
completion, the gain or loss is transferred to the profit and loss account of
that period. To designate a forward contract or option as an effective hedge,
management objectively evaluates and evidences with appropriate supporting
documents at the inception of each contract whether the contract is effective in
achieving off-setting cash flows attributable to the hedged risk. In the absence
of a designation as effective hedge, a gain or loss is recognised in the profit
and loss account.

From Notes to Accounts :

Forward contracts outstanding :

Reliance Petroleum Ltd.

New Page 1RELIANCE PETROLEUM LTD.

— (31-3-2008)

From Accounting Policies :

Derivative Transactions :

In respect of Derivative Contracts, premium paid, provision
for losses on restatement and gains/losses on settlement are recognised along
with the underlying transactions and charged to Profit and Loss Account/Project
Development Expenditure Account.

 

From Notes to Accounts :

Financial and Derivative Instrument :



(a) Nominal amount of derivative contracts entered into by
the Company for hedging currency and interest rate related risks and
outstanding as on 31st March 2008 amounts to Rs.77330187080 (Previous year
Rs.47122063440). Category wise break-up is given below :

In Rupees


Particulars
 As at
31-3-2008 		As at
31-3-2007
1 Interest
rate swaps 		44132000000
 10867500000
2 Currency
swaps 		14470737830
 10500000000
3 Options
 12053125000
 24114330450
4 Forward
Contracts 		6674324250
 1640232990

(b) All financial and derivative contracts entered into by
the Company are for hedging purposes only.

(c) In respect of outstanding derivative contracts which
are stated in para ‘a’ above, there is a net unrealised gain as on 31st March,
2008 which has not been recognised in the books, considering the principles of
prudence as enunciated in Accounting Standard 1 “Disclosure of Accounting
Policies” notified in the Companies (Accounting Standards) Rules 2006.

(d) Foreign currency exposures that are not hedged by
derivative or forward contracts as on 31st March 2008 amounts to
Rs.108075292858 (Previous year Rs.43470000000).

 

 

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Tata Consulting Services Ltd.

New Page 1TATA
CONSULTING SERVICES LTD.

— (31-3-2008) (Consolidated)

From Accounting Policies :

Foreign currency transactions :

Income and expenses in foreign currencies are converted at
exchange rates prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities other than net investments in non-integral
foreign operations are translated at the exchange rate prevailing on the balance
sheet date. Exchange difference arising on a monetary item that, in substance,
forms part of an enterprise’s net investments in a non-integral foreign
operation are accumulated in a foreign currency translation reserve.

 

Premium or discount on forward contracts and currency options
are amortised and recognised in the profit and loss account over the period of
the contract. Forward contracts and currency options outstanding at the balance
sheet date, other than designated cash flow hedges, are stated at fair values
And any gains or losses are recognised in the profit and loss account.

 

For the purpose of consolidation, income and expenses are
translated at average rates and the assets and liabilities are stated at closing
rate. The net impact of such change is disclosed under Foreign exchange
translation reserve.

 

Derivative instruments and hedge accounting :

The Company uses foreign currency forward contracts and
currency options to hedge its risks associated with foreign currency
fluctuations relating to certain firm commitments and forecasted transactions.
The Company designates these hedging instruments as cash flow hedges applying
the recognition and measurement principles set out in the Accounting Standard 30
‘Financial Instruments : Recognition and Measurement’ (AS-30).

 

The use of hedging instruments is governed by the Company’s
policies approved by the board of directors, which provide written principles on
the use of such financial derivatives consistent with the Company’s risk
management strategy.

 

Hedging instruments are initially measured at fair value, and
are re-measured at subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges of future cash
flows are recognised directly in shareholders’ funds and the ineffective portion
is recognised immediately in profit and loss account.

 

Changes in the fair value of derivative financial instruments
that do not qualify for hedge accounting are recognised in profit and loss
account as they arise.

 

Hedge accounting is discontinued when the hedging instrument
expires or is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. At that time for forecasted transactions, any cumulative gain or
loss on the hedging instrument recognised in shareholder’s funds is retained
there until the forecasted transaction occurs. If a hedged transaction is no
longer expected to occur, the net cumulative gain or loss recognised in
shareholders’ funds is transferred to profit and loss account for the period.

 

From Notes to Accounts :

Derivative financial instruments :

TCS Limited, in accordance with its risk management policies
and procedures, enters into foreign currency forward contracts to mange its
exposure in foreign exchange rates. The counter party is generally a bank. These
contracts are for a period between one day and eight years.

 

During the year ended March 31, 2008, TCS Limited has
re-evaluated its risk management program and hedging strategies in respect of
forecasted transactions. Upon completion of the formal documentation and testing
for effectiveness, TCS Limited has designated certain foreign currency options
in respect of forecasted transactions, which meet the hedging criteria, as Cash
Flow Hedges:

 

TCS Limited has following outstanding derivative instruments
as on March 31, 2008 :

(i) The following are outstanding Foreign Exchange Forward
contracts, which have been designated as Cash Flow Hedges, as on :

The following are outstanding Currency Option contracts, which have been designated as Cash Flow Hedges, as on :

Net loss on derivative instruments of Rs.21.83 crores recognised in Hedging Reserve as on March 31, 2008 is expected to be reclassified to the Profit and loss account by March 31, 2009.

The movement in Hedging Reserve during period ended March 2008, for derivatives designated as Cash Flow Hedges is as follows:

In addition to the above cash flow hedges, the Company has outstanding foreign exchange forward contracts and currency option contracts aggregating Rs.2,141.90 crores (previous year: Rs.2062.61 crores), whose fair value showed a loss of Rs.4.46 crores as on March 31, 2008 (previous year: gain of Rs.9.22 crores) to hedge the future cash flows. Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting and accordingly these are accounted as derivatives instruments at fair value with changes in fair value recorded in the Profit and Loss Account.

Exchange gain of Rs.283.96 crores (previous year gain of Rs.45.13 crores) on foreign currency forward exchange contracts have been recognised in the period ended March 31, 2008.


Additional non statutory disclosures in Annual Reports

From Published Accounts

Compiler’s Note :


Infosys has over the years been a pioneer in providing
additional relevant information in its annual reports. Keeping up with the same,
the company has, in its annual report for 2010, given (as additional
information), an Intangible Assets Score Card which makes a very interesting
reading. The same is reproduced below.

1 Infosys Technologies Ltd. — (31-3-2010)

Additional information :

Intangible assets score sheet :

We caution investors that this data is provided only as
additional information to them. We are not responsible for any direct, indirect
or consequential losses suffered by any person using this data.

From the 1840s to the early 1990s, a corporate’s value was
mainly driven by its tangible assets — values presented in the corporate Balance
Sheet. The managements of companies valued these resources and linked all their
performance goals and matrices to these assets — Return on investment and
capital turnover ratio. The market capitalisation of companies also followed the
value of tangible assets shown in the Balance Sheet with the difference seldom
being above 25%. In the latter half of the 1990s, the relationship between
market value and tangible asset value changed dramatically. By early 2000, the
book value of the assets represented less than 15% of the total market value. In
short, intangible assets are the key drivers of market value in this new
economy.

A knowledge-intensive company leverages know-how, innovation
and reputation to achieve success in the marketplace. Hence, these attributes
should be measured and improved upon year after year to ensure continual
success. Managing a knowledge organisation necessitates a focus on the critical
issues of organisational adaptation, survival, and competence in the face of
ever-increasing, discontinuous environmental change. The profitability of a
knowledge firm depends on its ability to leverage the learnability of its
professionals, and to enhance the reusability of their knowledge and expertise.
The intangible assets of a company include its brand, its ability to attract,
develop and nurture a cadre of competent professionals, and its ability to
attract and retain marquee clients.

Intangible assets :

The intangible assets of a company can be classified into
four major categories: human resources, intellectual property assets, internal
assets and external assets.

Human resources :

Human resources represent the collective expertise,
innovation, leadership, entrepreneurship and managerial skills of the employees
of an organisation.

Intellectual property assets :

Intellectual property assets include know-how, copyrights,
patents, products and tools that are owned by a corporation. These assets are
valued based on their commercial potential. A corporation can derive its
revenues from licensing these assets to outside users.

Internal assets :

Internal assets are systems, technologies, methodologies,
processes and tools that are specific to an organisation. These assets give the
organisation a unique advantage over its competitors in the marketplace. These
assets are not licensed to outsiders. Examples of internal assets include
methodologies for assessing risk, methodologies for managing projects, risk
policies and communication systems.

External assets :

External assets are market-related intangibles that enhance
the fitness of an organisation for succeeding in the marketplace. Examples are
customer loyalty (reflected by the repeat business of the company) and brand
value.

The score sheet :

We published models for valuing two of our most important
intangible assets — human resources and the ‘Infosys’ brand. This score sheet is
broadly adopted from the intangible asset score sheet provided in the book
titled, The New Organisational Wealth, written by Dr. Karl-Erik Sveiby and
published by Berrett-Koehler Publishers Inc., San Francisco. We believe such
representation of intangible assets provides a tool to our investors for
evaluating our market-worthiness.

Clients :

The growth in revenue is 3% this year, compared to 12% in the
previous year (in US $). Our most valuable intangible asset is our client base.
Marquee clients or image-enhancing clients contributed 50% of revenues during
the year. They gave stability to our revenues and also reduced our marketing
costs.

The high percentage 97.3% of revenues from repeat orders
during the current year is an indication of the satisfaction and loyalty of our
clients. The largest client contributed 4.6% to our revenue, compared to 6.9%
during the previous year. The top 5 and 10 clients contributed around 16.4% and
26.2% to our revenue, respectively, compared to 18.0% and 27.7%, respectively,
during the previous year. Our strategy is to increase our client base and,
thereby reduce the risk of depending on a few large clients.

During the year, we added 141 new clients compared to 156 in
the previous year. We derived revenue from customers located in 66 countries
against 67 countries in the previous year. Sales per client grew by around 3.7%
from US $8.05 million in the previous year to US $8.35 million this year. Days
Sales Outstanding (DSO) was 59 days this year compared to 62 days in the
previous year.

Organisation :

During the current year, we invested around 2.58% of the
value-added (2.37% of revenues) on technology infrastructure, and around 2.09%
of the value-added (1.93% of revenues) on R&D activities.

A young, fast-growing organisation requires efficiency in the
area of support services. The average age of support employees is 30.4 years, as
against the previous year’s average age of 29.6 years. The sales per support
staff has come down during the year compared to the previous year and the
proportion of support staff to the total organisational staff, has improved over
the previous year.

People :

We are in a people-oriented business. We added 27,639 employees this year on gross basis (net 8,946) from 28,231 (net 13,663) in the previous year. We added 4,895 laterals this year against 5,796 in the previous year. The education index of employees has gone up substantially to 2,96,586 from 2,72,644. This reflects the quality of our employees. Our employee strength comprises people from 83 nationalities March 31, 2010. The average age of employees as at March 31, 2010 was 27. Attrition was 13.4% for this year compared to 11.1% in the previous year (excluding subsidiaries).

Notes:

  •     Marquee or image-enhancing clients are those who enhance the company’s market-worthiness, typically, Global 1,000 clients. They are often reference clients for us.

  •     Sales per client is calculated by dividing total revenue by the total number of clients.

  •     Repeat business revenue is the revenue during the current year from those clients who contributed to our revenue during the previous year too.

  •     Value-added statement is the revenue less payment to all outside resources. The statement is provided in the value-added statement section of this document.

  •     Technology investment includes all investments in hardware and software, while total investment in the organisation is the investment in our fixed assets.

  •     The average proportion of support staff is the average number of support staff to average total staff strength.

  •     Sales per support staff is our revenue divided by the average number of support staff (support staff excludes technical support staff).

The education index is shown as at the year end, with primary education calculated as 1, secondary education as 2 and tertiary education as 3.

Toolings classified as Inventories (pending receipt of opinion from EAC of ICAI)

New Page 1

  1. Toolings classified as Inventories (pending receipt of
    opinion from EAC of ICAI)


Vesuvius India Ltd. — (31-12-2008)

From Accounting Policies :

Inventories :

Toolings are considered as inventories and are amortised on
a straight-line basis over a period of three years based on their estimated
useful lives. The Company’s statutory auditors are of the view that such
toolings are in the nature of moulds that are used in the production of
finished goods and hence should be classified as fixed assets and depreciated
over their estimated useful lives of three years. The company is in the
process of obtaining the opinion of the Expert Advisory Committee of the
Institute of Chartered Accountants of India regarding appropriate
classification and accounting of such toolings considering their nature.

 

Had the toolings been classified as fixed assets, the gross
block and net block of fixed assets would have been higher by Rs.140,560
thousand (Previous year Rs.106,881 thousand) and Rs.47,917 thousand (Previous
year Rs.42,564 thousand) respectively, while inventories would have been lower
by Rs.47,917 thousand (Previous year Rs.42,564 thousand).

 

Consequently, the depreciation charge for the year would
have been higher by Rs.26,893 thousand (Previous year Rs.24,961 thousand) and
the tolling charges would have been lower by Rs.26,893 thousand (Previous year
Rs.24,961 thousand).

 

The provisions for current tax and deferred tax release for
the year would have been higher by Rs.2,435 thousand (Previous year Rs.2,451
thousand) and Rs.2,435 thousand respectively. Deferred tax charge for the
previous year would have been lower by Rs.2,451 thousand. Considering the
amount of income taxes deposited by the Company, there will be no dues towards
interest under the provisions of the Income-tax Act, 1961 had these
adjustments been recognised.

 

From Auditors’ Report :

We draw attention to Note 1(iv) on Schedule 14 to the
financial statements. As explained in the note, the Company has classified
toolings as inventory which is being amortised over their estimated useful
lives of 3 years. In our opinion such toolings are fixed assets and should be
depreciated over their useful lives as explained in the aforesaid Note. Had
the toolings been classified as fixed assets, gross block and net block of
fixed assets would have been higher by Rs.140,560 thousand (Previous year
Rs.106,881 thousand) and Rs.47,917 thousand (Previous year Rs.42,564 thousand)
respectively, which inventories would have been lower by Rs.47,917 thousand
(Previous year Rs.42,564 thousand). Consequently, the depreciation charge for
the year would have been higher by Rs.26,893 thousand (Previous year Rs.24,961
thousand) and the tooling charges would have been lower by an equivalent
amount. However, there is no impact on the profit after tax.

 

In view of the significance of the matter, we believe that
the divergent views on the matter need to be resolved through reference to the
Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of
India. The Company is in the process of making such a reference. Accordingly,
the opinion expressed in paragraph 5 below should be considered pending
reference of the matter to the EAC and the confirmation by the EAC of the
classification and accounting followed by the Company.

 

From Directors’ Report :

Difference in opinion expressed by Auditors in para 4(f) of
their Report to Members of the Company dated February 24, 2009 relate to
classification of toolings which according to the Auditors should be
classified under fixed assets. The Company is consistently following the
normal industry practice of classifying them as inventory. In either case
there is no impact on profits after tax.


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Scheme of arrangement with High Court approvals

New Page 1

  1. Scheme of arrangement with High Court approvals


Nestle India Ltd. — (31-12-2008)

From Notes to Accounts :

During the calendar year 2007, the Company had sought
approval of the Delhi High Court under Sections 391 to 394 of the Companies
Act, 1956 for a Scheme of Arrangement (‘Scheme’) between the Company and its
shareholders and creditors. The Scheme envisaged utilisation of following
amounts for payment to the shareholders, subject to applicable taxes :

(i) An amount of Rs.432,363 thousands as lying in the
Share Premium Account of the Company; and

(ii) An amount of Rs.430,857 thousands from the General
Reserve Account of the Company, which was voluntarily transferred by the
Company in excess of the prescribed 10% of the profits of the Company in
accordance with the provisions of the Companies (Transfer of Profit to
Reserves) Rules, 1975 during the financial years 1981 to 1996.

 


The equity shareholders supported the Scheme at a meeting
held on May 3, 2007 as per directions of the Delhi High Court. Subsequently,
the Delhi High Court vide its Order dated September 30, 2008 sanctioned the
aforesaid Scheme and the Scheme became effective from October 31, 2008 after
filing of the certified copy of the aforesaid Order with the Registrar of
Companies NCT of Delhi and Haryana. Thereafter as per the Scheme, after
deducting applicable corporate dividend tax for the aggregate amount of
Rs.863,220 thousands credited to the Profit and Loss Account, a Special
Dividend of Rs.7.50 (Rupees seven and paise fifty only) per share calculated
by dividing the net amount by the outstanding 96,415,716 equity shares of face
value of Rs.10 each and rounding it off to the nearest half Rupee, was paid on
November 26, 2008 to those shareholders whose name appeared in the Register of
Members/Beneficial Owners on November 17, 2008.

 

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Transactions covered u/s 297 of the Companies Act, 1956

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1. Transactions covered u/s 297 of the Companies Act, 1956

Avaya Global Connect Ltd. — (30-9-2008)

 From Notes to Accounts :

    In respect of contracts for the provision/supply of services/goods, with a private company in which a Director of the Company is Director, the Company is of the view that the provisions of Section 297 of the Companies Act, 1956 are not applicable. However, as a matter of abundant caution, the Board of Directors of the Company in their meeting held on 26th October, 2007 resolved to make an application seeking the approval of the Central Government.

     

    Pursuant to above, Company has filed application under section 621(A) for compounding of offence committed under section 297 of the Companies Act, 1956, for the transactions entered in 2006-07 and in 2007-08 (upto February 24, 2008) for which approval is pending. The Company has obtained Central Government approval for entering into transactions with the above mentioned Company from the date of approval February 25, 2008 to September 30, 1010.

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Disclosures regarding Premium payable on redemption of FCCB

New Page 1

Section B : Miscellaneous


5 Disclosures regarding Premium payable on redemption of FCCB

WOCKHARDT LTD. — (31-12-2007)

From Notes to Accounts :



(d) 108,500 (previous year — 108,500) Zero-coupon Foreign
Currency Convertible Bonds of USD 1,000 each are :

(i) Convertible by the holders at any time on or after
November 24, 2004 but prior to close of business on September 25, 2009. Each
bond will be converted into 94.265 fully paid-up equity shares with par
value of Rs.5 per share at a fixed price of Rs.486.075 per share.


(ii) redeemable, in whole but not in part, at the option
of the Company at any time on or after October 25, 2007, but not less than
seven business days prior to maturity date i.e., October 25, 2009,
subject to the fulfillment of certain terms and obtaining requisite
approvals.


(iii) redeemable on maturity date at 129.578 percent of
its principal amount, if not redeemed or converted earlier.


 



The bonds are considered as monetary liability. The bonds are
redeemable only if there is no conversion of the bonds earlier. Hence the
payment of premium on redemption is contingent in nature, the outcome of which
is dependent on uncertain future events. Hence no provision is considered
necessary, nor has it been made in the accounts in respect of such premium
amounting to a maximum of Rs.775.98 million. (Previous Year — Rs.581.74 million)

 

From Auditors’ Report :

Without qualifying our opinion, we state that the financial
statements are without provision for premium payable on 108,500 Zero-Coupon
Foreign Currency Convertible bonds of USD 1000 each [refer note 30(d) to the
financial statements] as the premium payable on redemption which is contingent
upon a future uncertain event, namely, the redemption of such bonds is presently
not determinable.

 

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Straight-lining of lease rent pursuant to clarification by EAC of ICAI

New Page 1

Section B : Miscellaneous


 3 Straight-lining of lease rent pursuant to
clarification by EAC of ICAI


 

BATA INDIA LTD. — (31-12-2007)

From Notes to Accounts :

Pursuant to clarification issued by Expert Advisory Committee
of Institute of Chartered Accountants of India on Accounting Standard-19 on
Leases on recognition of operating lease rent expense, the Company has decided
to recognise the scheduled rent increases over the lease term on a straight-line
basis in respect of all lease rent agreements entered on or after April 1, 2001
and still in force. The total impact in respect of these agreements till
December 31, 2006 of Rs.29,712 (Net of deferred tax impact of Rs.2,540) is
disclosed as ‘Prior period item’ in Schedule-21 in accordance with Accounting
Standard-5 on ‘Net Profit or Loss for the Period, Prior Period items and Changes
in Accounting Policies’.

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Scheme of arrangement for transfer of amalgamation reserve to restructuring reserve and one-time restructuring costs adjusted

New Page 1

Section B : Miscellaneous



4 Scheme of arrangement for transfer of
amalgamation reserve to restructuring reserve and one-time restructuring costs
adjusted

GILLETTE INDIA LTD. — (30-6-2007)

From Notes to Accounts :

Consequent upon the scheme of arrangement u/s. 391 of the
Companies Act, 1956 as approved by the shareholders and confirmed by the Hon’ble
High Court of Rajasthan a sum of Rs.85,00,000 was transferred from the
amalgamation Reserve forming part of the Capital Reserves of the Company to a
Reconstruction Reserve Account. Further, vide a clarification dated December 4,
2006, the Hon’ble High Court has clarified that the transfer of expenses to the
Reconstruction Reserve Account should be gross of tax.

 

A detailed break-up of Rs.65 22 74 068 as has been utilised
towards the Business Restructuring expenses up to June 30, 2007 is given below :


One-time expenditure for the restructuring
Maximum amount as sanctioned by the Court
Actual expenses upto June 30, 2007
  Rs. Rs.

Employee separation, Relocation and related costs 		536000000 490835509

Costs associated with change in Go to Market and Distribution model 		212000000 139415791
Estimated value of
asset write down w.r.t.
the restructure		 43500000 8117433

Transition costs including travel/ training/ communication and other related
costs 		35000000 13905335

Other miscellaneous restructuring items including contingencies 		23500000 —

Total 		850000000 652274068

 

The said Business Restructuring is expected to be completed
during the next financial year.

 

From Auditors’ Report :

Attention is invited to Note B2 of the Schedule 18 annexed to
and forming part of the financial statements regarding charging off of Business
Restructuring expenses to Capital Reserve. Pursuant to the approval given by the
High Court of Rajasthan dated August 22, 2006 and December 04, 2006 to the
Scheme of Arrangement filed by the Company under Section 391 of the Companies
Act, 1956, in respect of charging off of ‘business restructuring expenses —
gross of tax’ to the capital reserve; the Company has been permitted to transfer
an amount of up to Rs.8500.00 lakhs from the Capital Reserve to a
‘Reconstruction Reserve Account’. The total expenses charged off to
Reconstruction Reserve Account for the period from January 01, 2006 to June 30,
2007 amounted to Rs.6522.74 lakhs. Had the restructuring expenses not been
adjusted to Capital Reserve under the order of the High Court of Rajasthan and
debited to the Profit and Loss Account as per the generally accepted accounting
principles, the net profit after tax (inclusive of the effect of deferred tax)
would have been lower and the Capital Reserve been higher for the period from
January 01, 2006 to June 30, 2007 by Rs.5538.72 lakhs.

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Qualifications in certificate on corporate governance

New Page 3

Section B : Miscellaneous


2 Qualifications in certificate on corporate governance

BATA INDIA LTD. — (31-12-2007)

In our opinion and to the best of our information and
according to the explanations given to us, subject to the following :

1. Chairman of Audit Committee Meeting Mr. V. Narayanan was
not present in the Annual General Meeting held on 27th June 2007.

2. Code of conduct and quarterly results are not available
on the website of the company.


We certify that the Company has complied with the conditions
of Corporate Governance as stipulated in the above-mentioned Listing Agreement.

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TRF Ltd. (31-3-2010)

New Page 1

Section A : Disclosures on Clause 21 of CARO, 2003 regarding
fraud noticed or reported on or by the company during the year


6. TRF Ltd. (31-3-2010)

From Auditor’s Report :

To the best of our knowledge and according to the information
and explanations given to us, no material fraud on or by the Company has been
noticed during the year except for the misstatement in the financial reporting
having a net effect of Rs.239.90 lacks as disclosed in Note (xiii) on Schedule
19 which was perpetrated on the Company.

Note (xiii) on Schedule 19 :

Certain contract costs recorded without underlying
transactions in earlier years were noted during years ended March 31, 2010 and
March 31, 2009. Management has now initiated an investigation into the matter as
well as payments made thereagainst, if any. Pending completion of investigation,
such wrong costs and consequential revenues recorded in the earlier years have
been reversed in the current year and the previous year to the extent identified
by management as summarised below :

Profit & Loss Account :

Prior period
items

31-3-2010

31-3-2009

 

Rs. in lakhs

Rs. in lakhs

Sales & services erroneously
recognised in previous year, reversed

1,149.56

4,615.08

Corresponding adjustment/reversal in

 

 

— Raw material and components

60.96

843.88

— Payments to sub-contractors

712.00

—

— Contracts in
progress

136.69

2,439.42

(Net)

(239.91)

(1,331.78)

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SKS Microfinance Ltd. (31-3-2010)

New Page 1

Section A : Disclosures on Clause 21 of CARO, 2003 regarding
fraud noticed or reported on or by the company during the year


5. SKS Microfinance Ltd. (31-3-2010)

From Auditor’s Report :

Based upon the audit procedure performed for the purpose of
reporting the true and fair view of the financial statements and as per the
year, though there were some instances of fraud on the Company by its employees
and borrowers as given below :

(a) Eighty-two cases of cash embezzlements by the employees
of the Company aggregating Rs.15,024,158 were reported during the year. The
services of all such employees involved have been terminated and the Company
is in the process of taking legal action. We have been informed that
thirty-seven of these employees were absconding. The outstanding balance (net
of recovery) aggregating Rs. 8,663,302 has been written off.

(b) Sixty-one cases of loans given to non-existent
borrowers on the basis of fictitious documentation created by the employees of
the Company aggregating Rs.13,645,345 were reported during the year. The
services of all such employees involved have been terminated and the Company
is in the process of taking legal action. The outstanding loan balance (net of
recovery) aggregating Rs. 11,029,667 has been written off; and

(c) Thirty-one cases of loans taken by certain borrowers,
in collusion with and under the identity of other borrowers, aggregating Rs.
6,025,000, were reported during the year. The Company is pursuing the
borrowers to repay the money. The outstanding loan balance (net of recovery)
aggregating Rs.2,359,930 has been written off.


From Directors’ Report :

In terms of the provisions of S. 217(3) of the Companies Act,
1956, the Board would like to place on record an explanation to the Auditors’
comments in their Audit Report dated 4th May 2010 :

(a) There is an inherent risk involved in our operations as
all the transactions at the field are in cash. The Company has taken legal or
remedial action in almost all the cases of embezzlement of cash and issue of
fake loans by employees. The Company has recovered an amount of Rs. 2,226,304
out of cash embezzled from the employees and an amount of Rs.4,134,552 from
the Insurance Company, as the company has the adequate insurance coverage in
place;

(b) To mitigate this risk the Company has formed the policy
which is as follows :



  •   Not to deploy the Sangam Manager in their hometown



  •   Rotate the Centres handled by Sangam Manager’s in every six months



  •   Transfer Sangam Manager/Branch Manager in a span of 9 to 12 months.



In addition to the above, stringent monitoring systems at all
levels have been implemented and checked/verified by risk/audit team on a
monthly basis. Going forward at Head Office level we are implementing automated
dropouts of dormant members month on month to mitigate the risk of fake loans.

(c) While the system of Joint Liability Groups in the
Centre and changing Centre Leader every one year persists, intentional and
fraudulent Centre Leaders have been identified and we have initiated legal
proceedings with the help of Group Leaders and respective members. The net
impact of frauds comes to around 0.029% of the total amount disbursed during
the year. The company is working towards bringing down this percentage to the
least possible by making process improvements, covering the loss by having
adequate insurance policy and by increasing the number of opportunities for
direct contact with our members.

 


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Disclosure regarding Foreign Currency Convertible Bonds (FCCBs) and premium on redemption of FCCB

New Page 1

10 Disclosure regarding Foreign Currency
Convertible Bonds (FCCBs) and premium on redemption of FCCB


Fame India Ltd. — (31-3-2008)


From Notes to Accounts :


On 21 April 2006, the Company, pursuant to a resolution of
the Board of Directors dated 28 January 2006 and by a resolution of the
shareholders dated 8 March 2006, issued

(i) 12000, Zero Coupon Series A Unsecured Foreign Currency
Convertible Bonds (‘Series A Bonds’) of the face value of US $ 1000; and

(ii) 8,000, 0.5% per annum Series B Unsecured Foreign
Currency Convertible Bonds (‘Series B Bonds’) of the face value of US $ 1000
aggregating to USD 20,000,000 (approximately Rs.901,000,000) due in 2011 (the
Series A Bonds and the Series B Bonds are collectively called the ‘Bonds’).
The Series Bonds bear interest at the rate of 0.5% per annum, which accrues
semi-annually in arrears on 31 December and 30 June of each year. Interest
will accrue on each interest payment date and on maturity, accrued interest
will be paid. The Bonds will mature on 22 April 2011.

 


The Bonds are convertible at any time on or after 21 May 2008
and prior to 12 April 2011 at the option of the Bond holders into newly issued,
ordinary equity share of par value of Rs.10 per share (‘Shares‘), at an initial
conversion price of

(i) Rs.90 per share for Series A Bonds; and

(ii) Rs.107 per share for Series B Bonds

(as defined in terms and conditions for the Bonds) at the
rate of exchange equal to the US Dollar to Rupees exchange rate as announced
by the Reserve Bank of India (the ‘RBI’) on the business day immediately prior
to the issue date. The conversion price is subject to adjustment in certain
circumstances.

 


Unless previously converted, redeemed or repurchased and
cancelled,

(i) the Series A Bonds will be redeemed on 22 April 2011 at
137.01% of their principal amount representing a gross yield to maturity of
6.5%; and

(ii) the Series B Bonds will be redeemed on 22 April 2011
at 140.69% of their principal amount representing a gross yield to maturity of
7.5%.

 


During the year 1,504,999 (31 March 2007; Nil) equity shares
of Rs.10 each were allotted against 3000 Series A Foreign Currency Convertible
Bonds (FCCB) of US $ 1,000 each at an exercise price of Rs.90 per share and
1,687,850 (31 March 2007; Nil) equity shares of Rs.10 each were allotted against
4000 Series B FCCB of US $ 1,000 each at an exercise price of Rs.107 per share,
thus aggregating to a total allotment of 3,192,849 equity shares of Rs.10 each
of the Company.

 

Exchange gain/loss arising on such conversion have been
adjusted against share premium reserve. Premium on FCCB amortised and adjusted
to the share premium account up to the date of conversion has been reversed.

 

The Bond issue expenses have been adjusted against share
premium as per the provision of Section 78 of the Act.

 

Utilisation up to 31 March 2008 of the proceeds from the FCCB
issue is as under :

Purpose Amount in Rs.
(a) New cinema
complexes 		705,645,427
(b) Expansion/modernisation
of existing cinema complexes 		83,027,839
(c) FCCB issue
expense 		29,813,462
Total 818,486,728


(Currency :
Indian Rupees)




Balance
unutilised funds have been invested in :		  
(a) Deposit
accounts 		10,180,107
(b) Current
accounts 		 
— in India
 20,832,448
— outside
India 		8,151,235

The proceeds utilised have been converted at an average
exchange rate of Rs.42.58 per US $ and the balance outstanding as at 31 March
2008 is translated at the exchange rate of Rs.39.97 per US $, being the exchange
rate as at 31 March 2008.

 Premium on redemption of Foreign Currency Convertible Bonds (FCCB)

* Premium payable on redemption of FCCB charged to the securities premium account has been provided pro rata for the year. In the event the conversion option is exercised by the holders of FCCB in future, the amount of premium charged to the securities premium account will be suitably adjusted in the respective years.


Opinion of Expert Advisory Committee of ICAI not followed regarding revenue recognition

Opinion of Expert Advisory Committee of ICAI not followed regarding treatment of dredger spares

New Page 1

8 Opinion of Expert Advisory Committee of
ICAI not followed regarding treatment of dredger spares


Dredging Corporation of India Ltd. — (31-3-2008)

From Notes to Accounts :

On a reference made by DCI regarding accounting treatment of
spares issued to dredgers, the Expert Advisory Committee of Institute of the
Chartered Accountants of India gave its opinion on 27th May 2008, which was
received by the Company on 31st May 2008. As per the opinion, if the spares are
of capital nature and purchased subsequent to the acquisition of particular
dredger, these need to be capitalised and depreciated systematically over the
remaining useful life of the particular dredger. In case where the useful life
of the particular dredger has been completed, the same is to be charged to
Profit & Loss A/c through depreciation. Since the opinion has come after the
close of the accounting period and several complexities are involved, no
adjustments have been made in the accounts for the year in this regard. The
Company proposes to implement the same from Financial Year 2008-09 onwards after
examining all the issues involved.

 

From Auditors’ Report :

Reference is invited to Note 9(g) of Notes on Accounts. As
per the Expert Advisory Committee of ICAI’s opinion, the accounting practice of
charging off spares to expenditure as when issued to dredgers is not in
accordance with the provisions of AS- 10 and its effect on current year’s profit
is not quantifiable.

levitra

Section C : Withdrawal of Audit Report issued earlier : Satyam Computer Services Ltd.

New Page 2

Compilers’ Note :


In the case of the above company, Statutory Audit Reports and
Limited Review Reports for the period June 2000 to September 2008 were issued by
the Statutory Auditors as required under the provisions of the Companies Act,
1956 and Clause 41 of the Listing Guidelines. In view of certain developments,
the said reports have been withdrawn by the Statutory Auditors by writing a
letter to the new Board of Directors and the Company Secretary with copies
marked to the ROC, SEBI, RBI, CBDT, BSE, NSE, NYSE. The said letter of the
Statutory Auditors is reproduced below.

 

Dear Sirs,


Re : Our audit of your financial statements


1. As statutory auditors, we performed audits of Satyam
Computer Services Limited (the ‘Company’) from the quarter ended June
2000 until the quarter ended September 30, 2008 (‘Audit Period’).

 

2. The above-referred financial statements were prepared by
the management of the Company.

 

3. We planned and performed the required audit procedures on
such financial statements, and examined the books and records of the Company
produced before us by the Company management. We placed reliance on management
controls over financial reporting, and the information and explanations provided
by the management, as also the verbal and written representations made to us
during the course of our audits.

 

4. As you are aware, vide a letter dated January 7, 2009 (“Chairman’s
Letter”) addressed to the erstwhile Board of Directors of the Company, the
former Chairman of the Company, Mr. Ramalinga Raju has stated that the financial
statements of the Company have been inaccurate for successive years. The
contents of the said letter, even if partially accurate, may have a material
effect (which effect is currently unknown and cannot be quantified without a
thorough investigation) on the veracity of the Company’s financial statements
presented to us during the Audit Period. Consequently, our opinions on the
financial statements may be rendered inaccurate and unreliable. A copy of the
Chairman’s Letter, extracted from the official website of the National Stock
Exchange is annexed hereto as Annexure A, for the sake of record. (not
reproduced here)

 

5. The ICAI has issued a guidance note on revision of audit
reports in January 2003 (‘Guidance Note’), which prescribes steps to be
followed by the auditor to prevent reliance on audit reports in such
circumstances. In view of the contents of the Chairman’s Letter, we hereby, in
accordance with the Guidance Note, state that our audit reports and opinions in
relation to the financial statements for the Audit Period should no longer be
relied upon.

 

6. Such a requirement is also prescribed under the generally
accepted accounting standards in the United States, where, as you are aware, the
American Depository Receipts of the Company are listed. We wish to inform you
that pursuant to Section 10A of the United States Securities and Exchange Act of
1934, the information contained in the Chairman’s Letter indicates that an
illegal act could have occurred. Accordingly, we advise that the Board of
Directors of the Company should promptly commence an independent investigation
pursuant to Section 10A of the United States Securities and Exchange Act of 1934
in order to determine whether such illegal acts occurred and, if so, the nature
and extent of such acts.

 

7. We hope to work with the Company and provide assistance to
the new Board of Directors to address any issues that arise in the course of
such investigation, to enable both the Company and us as your Statutory Auditors
to fulfil obligations under applicable law.

 

8. We wish to advise that the Company should promptly notify
any person or entity that is known to be relying upon or is unlikely to rely
upon our audit report that our audit opinion should no longer be relied upon.

 

9. Consequently, such notification should be made to at least
the Company’s shareholders, lenders, creditors, Indian regulatory authorities
and the United States Securities and Exchange Commission, and indeed to all the
stock exchanges, whether in India or abroad, where such securities of the
company are listed. We expect such notification would be made promptly and
request that the Company advise us as soon as the notification has been made.
Since we are required under the Guidance Note to mark a copy of this letter to
the relevant regulatory authorities, we have done so.

levitra

Section A : Audit Report containing Qualifications on Going Concern, etc.

New Page 1Spicejet Ltd. — (31-3-2008)

From Notes to Accounts :


3. Legal proceeding by and/or against the company

3.1 Share capital includes 11,624,472 equity shares of Rs.10
each (issued at a premium of Rs.30 each) originally allotted to the three
investment companies of S. K. Modi Group (SKM). These shares were partly paid
and were treated as fully paid by adjusting the calls in arrears of Rs.333.18
million against assignment of security deposit of Rs.360 million by Agache
Associates Limited (belonging to SKM) in favour of the said investment
companies. The Security deposit of Rs.360 million was shown payable to Agache
Associates Limited, under a purported lease agreement dated September 11, 1995,
which was to be effective from April 1, 1996 for a property situated at
Calcutta, West Bengal. Subsequently, the Delhi High Court has passed an order on
July 15, 2005 appointing Receivers to sell shares belonging to SKM’s group
companies and deposit the proceeds with the Court. The manner of receipt of
these sale proceeds by the Company shall be decided by the Court in the pending
proceedings. The Company had also filed a criminal complaint in the Court of
Chief Metropolitan Magistrate, New Delhi against some of the erstwhile promoter
directors and ex-employees of the Company for executing the above transaction.

3.3 In respect of ICDs aggregating Rs.100 million, the
Company has not accrued interest payable amounting to Rs.240.95 million up to
March 31, 2008 (previous year Rs.222.15 million), computed based on interest
rates as per original contract terms for reasons explained below :


l
ICD of Rs.50 million in the name of Agache Associates Limited (affiliated to
SKM) being a party to the fraudulent transactions (Refer Note 3.1 above).


l
In a suit filed by one of the ICD lenders (petitioners), the Company had
deposited a sum of Rs.50 million with the Bombay High Court and the Hon’ble
Bombay High Court later allowed the petitioner to withdraw the said amount
upon furnishing an undertaking that the petitioner will restitute the said sum
or such part thereof, with 9% interest, to the Company, if and as directed by
the Court at the time of the final decision of the suit filed by the
petitioner. Accordingly, pending finality of the matter, both the ICD and
deposit with the High Court have been disclosed under the unsecured loans and
advances, respectively.



3.5 The Company has in its possession the bank-statement of
ICICI Bank, New Delhi, which shows a deposit of Rs.34.29 million on account of
refunds from the Income-tax Department on November 6, 2000 and July 2, 2001 and
subsequent withdrawals (details of amounts appropriated not available with the
Company) on various dates aggregating to Rs.34.29 million against cheques/drafts
issued to several parties, including group companies of SKM, by erstwhile
Director(s) and/or some ex-employees of the Company, which amount to fraudulent
preference under Section 531 of the Companies Act, 1956, which was brought to
the notice of the Hon’ble Court vide CA 606of 2003 and CA797 of 2000. The
difference of Rs.34.29 million between balance as per books (since no accounting
entry has been recorded for unauthorised withdrawals) and that confirmed by the
bankers, is being carried as recoverable under Loans and Advances and is pending
appropriate adjustment on outcome of the ongoing cases and has not been provided
for in the accounts.

3.7 The Company has in its possession the bank statement of
Standard Chartered Grindlays Bank, Mumbai, which shows deposits of Rs.14.20
million and withdrawals of Rs.16.01 million through various transactions made
during the period March 1999 to March 2002. However, in the absence of complete
details of these transactions, appropriate accounting entries could not be
recorded in the books in respect of these transactions. The difference of
Rs.1.81 million between the balance as per books and that confirmed by the bank,
is carried as recoverable under ‘Loans and Advances’ and is pending appropriate
adjustment on the outcome of the ongoing litigations with SKM and entities in
which they are interested.

5. The Management and Board of Directors of the Company are
looking at various steps to improve financial performance of the Company by
rationalising network, improve yield and lower non-fuel costs as a result of
industrywide efforts. Steps are also being taken to evaluate various
alternatives for raising funds for which a merchant banker has been appointed.
The Board of Directors expects improvement in the business results in the
forthcoming years. Accordingly, the financial statements have been prepared on
going concern basis.

From Auditors’ Report :

4. Without qualifying our opinion, we draw attention to Note 5in Schedule XVII to the financial statements which indicate that the Company has suffered recurring losses from operations with net loss for the year ended March 31, 2008, without considering the impact of the matters mentioned in paragraph 5 below, amounting to Rs.1,335.07 million, and as of that date, the Company’s accumulated losses amounted to Rs.5,074.52 million, as against the Company’s share capital and reserves of Rs.5,354.33 million. Also, as discussed in Note 3 in Schedule XVII to the financial statements, realisation of the carrying amount of certain receivable amounting to Rs.68.82 million and dismissal of interest liability amounting to Rs.240.95 million is dependent upon success of the claims filed by the Company against some of the erstwhile directors and employees. These conditions raise significant doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 5. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties and also do not include any adjustments relating to the recoverability and classification of asset carrying amount or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

5. We report  that:

(a) As more fully explained in the Note 3.1 of Schedule XVII to the financial statements, an amount of Rs.360 million, given as security deposit towards lease of a property, is carried as recoverable under the head Loans and Advances, of which an amount of Rs.26.82 million appears to be doubtful for recovery. The Company has not made provision for this doubtful amount in the financial statements.

(b) As more fully explained in the Note 3.3 of Schedule XVII to the financial statements, the Company has not accrued interest in respect of outstanding inter-corporate deposits of Rs.10 million, which as at March 31, 2008 amounts to Rs.240.95 million.

6. (e) Subject to our comments in paragraph 5 above, ….

Section A : Notes regarding Revenue Recognition Disputed Interest income 59

New Page 1Hotel Leelaventure Ltd. — (31-3-2008)

From Notes to Accounts :

The Honourable Supreme Court of India has upheld the interest
claim of the Company against HUDCO vide their order dated 12th February 2008.
The Company has recognised interest income of Rs.46.15 crores (Previous years
Rs.10.63 crores) during the year under review. Computation of interest payable
is disputed by HUDCO and the matter is pending before the Execution Court
i.e., The High Court of Delhi. Total disputed interest income recognised by
the Company till 31st March 2008 amounted to Rs.110.30 crores.

From Auditors’ Report :



(f) In our opinion, and to the best of information and
according to the explanation given to us, the said accounts, give the
information required by the Companies Act, 1956 in the manner so required,
subject to our inability to express an opinion on the impact of disputed
interest income recognised as referred to in Note 10 of Schedule K to the
accounts and read with other notes, give a true and fair view :


Recognition of Sales on despatch of goods from works


Setco Automotive Ltd. — (31-3-2008)


From Accounting Policies :




(i) Sales and services are accounted for on dispatch of
products from the works.


From Notes to Accounts :

The sales determined in accordance with the accounting policy
followed (Refer Note 7, Schedule 17) include Rs.954.80 lacs (Rs.312.55 lacs)
being sales value of dispatches in transit as on 31st March 2008. The inventory
value thereof amounts to Rs.690.83 lacs (Rs.223.47 lacs).

From Auditors’ Report :

In our opinion, the Balance Sheet, Profit & Loss Account and
Cash Flow Statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of Section 211 of the Companies Act,
1956; except as regards :

(i) Accounting Standard-9, which provides for recognition of
revenue from sales only on transfer of significant risks and rewards of
ownership to the buyer, whereas the Company has been recognising sales on
dispatch of goods from works. As a result, goods in transit valued at Rs.690.83
lacs have been recognised as sales at a value of Rs.954.80 lacs. [Refer
Accounting Policy 7(i) of Schedule 17 and Note 08 of Schedule 18]


levitra

Disclosures regarding Amalgamation

From Published Accounts

1 TV Today Network Ltd.
(31-3-2010)

From Notes to
Accounts :

Pursuant to the
Composite Scheme of Arrangement under the provisions of the Companies Act,
1956 (The Scheme), approved by the shareholders, sanctioned by the High Court
at Delhi and the Ministry of Information and Broadcasting on November 21,
2009, February 24, 2010 and May 20, 2010, respectively, the undertaking of the
radio broadcasting business of Radio Today Broadcasting Limited, a company
engaged in the radio broadcasting and trading business (the Transferor
Company), was transferred to and vested in the Company (the Transferee
Company) with effect from 1st April, 2009 (Appointed Date). ‘The Scheme’, a
copy of which was filed with the Registrar of Companies subsequent to the
year-end on 13th April, 2010, is an amalgamation in the nature of merger and
has been given effect to in these accounts under pooling of interest method.

In accordance
with ‘The Scheme’, the Company will issue 1,655,999 equity shares of Rs.5 each
as fully paid up to the equity shareholders of Radio Today Broadcasting
Limited, in the ratio of 1 equity share of Rs.5 each fully paid up of the
Company for every 6 equity shares of the face value of Rs.10 each fully paid
up, held in Radio Today Broadcasting Limited towards consideration for the
aforesaid transfer and vesting of radio business, which will be credited in
its books at face value, pending issuance of the shares as at the year-end,
the face value of Rs.8,279,995 has been credited to Share Capital Suspense.

In accordance
with ‘The Scheme’, all assets and liabilities pertaining to the radio
broadcasting business of the Transferor Company, as on the appointed date,
have been incorporated in the books of the Company at book value and the
excess of the Share Capital Suspense over the book value of net assets
acquired, amounting to
Rs.423,622,791, has been adjusted against Securities Premium Account of the
Company. The unamortised licence fees pertaining to the Transferor Company and
transferred to the Company pursuant to the Scheme, amounting to Rs.244,229,509
has also been adjusted against the Securities Premium Account. Further, the
Company has determined the deferred tax assets, amounting to Rs.249,529,332,
based on the assets and liabilities of the radio broadcasting business which
has been adjusted with the General Reserve Account.

The accounting
treatment in respect of excess of Share Capital Suspense over the book value
of net assets acquired and unamortised licence fee are different from that
prescribed by the Accounting Standard (AS) 14, Accounting for Amalgamations,
notified u/s.211(3C) of the Companies Act, 1956 with respect of Amalgamation
in the nature of Merger. AS-14 requires the difference between the amount
recorded as share capital and the amount of share capital of the transferor
company to be adjusted against reserve.

The difference
in accounting treatment as above, in compliance with the High Court Order, is
as permitted by paragraph 42 of the AS-14. As the said paragraph 42 of AS-14
requires disclosure of the impact of the amalgamation on all accounts, had the
accounting treatment as per AS-14 been followed, this is given below for
information.

Had the
accounting treatment prescribed in AS-14 been followed, amortisation of
intangible assets would have been higher by Rs.27,990,000 with its
consequential impact on the profit of the Company, General Reserve would have
been lower by Rs.423,622,791, Unamortised Licence Fees would have been higher
by Rs.216,239,509 and Share Premium Account would have been higher by
Rs.667,852,300.

2. Titagarh Wagons Ltd.
(31-3-2010)

From Notes to Accounts :

25. (a) Pursuant to a
Scheme of Amalgamation (the Scheme) sanctioned by the High Court of Calcutta
by order dated September 14, 2009, Titagarh Steels Limited (TSL) and Titagarh
Biotec Private Limited (TBPL) were amalgamated with the Company with effect
from April 1, 2009 (the appointed date). The amalgamation has been accounted
for under the Pooling of Interest Method as prescribed by the Institute of
Chartered Accountants of India (ICAI). TSL was in the business of
manufacturing of steel castings and TBPL was in the process of setting up
biotech business. The transferred companies carried on all their businesses
and activities for the benefit of and in trust for, the Company from the
Appointed Date. Thus, the profit or income accruing or arising to or
expenditure or losses arising or incurred by the transferred companies from
the Appointed Date are treated as the profit or income or expenditure or loss,
as the case may be, of the Company. The Scheme has accordingly been given
effect to in these accounts upon filing of certified copy of the Order of the
High Court at Calcutta on November 27, 2009 (the Effective Date).

(b) In terms of the
Scheme, the following assets and liabilities of TSL and TBPL have been
transferred to and stand vested with the Company at their respective book
values with effect from 1st April 2009:

 

 

(Rs. in lacs)

Particulars

TSL

TBPL

 

 

 

Fixed Assets (Net, including

1,804.35

Nil

Capital work in progress)

 

 

 

 

 

Current Assets, Loans and

 

 

Advances

4,858.09

2.09

 

 

 

Total Assets

6,662.44

2.09

 

 

 

Less
:

 

 

Current Liabilities and

 

 

Provisions

4,033.32

0.28

 

 

 

Loans

914.55

Nil

 

 

 

Total
Liabilities

4,947.87

0.28

 

 

 

Net
Assets

1,714.57

1.81

 

 

 

    c) The Company has issued 3,66,954 equity shares of Rs.10 each aggregating to Rs.36.70 lakhs to the shareholders of TSL on January 16, 2010, while in case of TBPL which was a wholly-owned subsidiary of the Company, all the shares held by the Company in TBPL were cancelled and extinguished.

    d) A sum of Rs.1288.85 lakhs being the difference between the amounts recorded as additional shares of the Company and the total share capital of TSL and TBPL has been adjusted and reflected as general reserve, instead of capital reserve as prescribed under Accounting Standard-14 in terms of the above court order.

    e) To make the accounting policies followed by TSL fall in line with those of the Company, a sum of Rs. 411.13 lakhs as on April 1, 2009 representing the impact of following accounting policy differences has been adjusted against General Reserve which as per Accounting Standard-5 should have been charged to Profit and Loss Account:

Particulars

Amount

 

(Rs. in lacs)

 

 

Depreciation

77.09

 

 

Liquidated damages (Net of Taxes)

334.04

 

 

Total

411.13

 

 

    f) Certain immoveable properties, investments, licences, contracts/agreements which were acquired pursuant to the above Scheme are in the process of registration in the name of the Company.

3    HCL Infosystems Ltd. (30-6-2010)
From Notes to Accounts:
    The Scheme of Amalgamation (‘Scheme’) for merging the wholly-owned subsidiary Natural Technologies Private Limited (NTPL) with the Company u/s.391 to u/s.394 of the Companies Act, 1956 sanctioned by the High Courts of Delhi and Rajasthan vide their respective orders dated 11-8-2008 and 29-5-2009 has come into effect on July 6, 2009 from the appointed date of 1-7-2008. On the scheme becoming effective NTPL stands dissolved without winding up in the previous year.

Pursuant to the Scheme:

The amalgamation of erstwhile NTPL with the Company was accounted for under the ‘pooling of interest method’ in the manner specified in the Scheme and complies with the Accounting Standard notified u/s.211(3C) of the Companies Act, 1956 and the following balances as at July 1, 2008 of erstwhile NTPL was adjusted with the profit and loss account forming part of reserves of the Company

 

(Rs. crores)

 

 

Assets

 

Fixed assets (including Capital

 

Work-in-progress Rs.0.80 crore)

4.09

 

 

Deferred Tax Assets

0.13

 

 

Sundry Debtors

3.34

 

 

Cash & Bank Balance

0.78

 

 

Other Current Assets

2.19

 

 

Loans & Advances

0.03

 

 

Total

10.56

 

 

Liabilities

 

Current Liabilities and Provisions

3.68

 

 

Secured Loan

1.52

 

 

Unsecured Loan

1.34

 

 

Total

6.54

 

 

Net
Assets acquired on

 

amalgamation
(a)

4.02

 

 

Transfer of balances of

 

Amalgamated Company

 

 

 

Securities Premium Account

0.45

 

 

Profit and Loss

0.55

 

 

Revaluation Reserve

2.54

 

 

Total
Reserves and Surplus (b)

3.54

 

 

Less
:

 

Adjustment for cancellation of

 

Company’s investment in Transferor

 

Company (c)

8.41

 

 

Shortfall
arising on Amalgamation

(7.93)

(a)
– (b) – (c) = (d)

 

 

 

Adjusted with :

 

— Revaluation Reserve

5.70

 

 

— Profit and Loss Account

2.23

 

 

Total

7.93

 

 


4. Godrej Consumer Products Ltd. (31-3-2010)
From Notes to Accounts:

    a) A Scheme of Amalgamation (‘the Scheme’) for the amalgamation of Godrej Consumer Biz Ltd. (GCBL) [a 100% subsidiary of Godrej & Boyce Manufacturing Company Ltd. (G&B)] and Godrej Hygiene Care Ltd. (GHCL) [a 100% subsidiary of Godrej Industries Ltd. (GIL)] together called ‘the Transferor Companies’, with Godrej Consumer Products Limited (the Transferee Company), with effect from June 1, 2009, (‘the Appointed Date’) was sanctioned by the High Court of Judicature at Bombay (‘the Court’), vide its Order dated October 8, 2009 and certified copies of the Order of the Court sanctioning the Scheme were filed with the Registrar of Companies, Maharashtra on October 15, 2009 (the ‘Effective Date’).

    b) The amalgamation has been accounted for under the ‘pooling of interests’ method as prescribed by AS-14 — Accounting for Amalgamations and the specific provisions of the Scheme. Accordingly, the Scheme has been given effect to in these accounts and all assets and liabilities of the Transferor Companies stand transferred to and vested in the Transferee Company with effect from the Appointed Date and are recorded by the Transferee Company at their book values as appearing the books of the Transferor Companies.

    c) The value of Net Assets of the Transferor Companies taken over the Transferee Company on Amalgamation are as under :
   

 

 

 

(Rs. in lac)

 

 

 

 

 

Particulars

GHCL

GCBL

Total

 

 

 

 

 

 

Investments in

 

 

 

 

Godrej Sara Lee

 

 

 

 

Limited

4,741.61

14,958.91

19,700.52

 

 

 

 

 

 

 

 

Cash and Bank

 

 

 

 

Balances

1.34

15.02

16.36

 

 

 

 

 

 

Loans and Advances

—

0.30

0.30

 

 

 

 

 

 

Advance Taxes Paid

—

1.03

1.03

 

 

 

 

 

 

Current Liabilities

 

 

 

 

and Provisions

(2.94)

(15.31)

(18.25)

 

 

 

 

 

 

Provision for taxes

—

(1.20)

(1.20)

 

 

 

 

 

 

Net Assets

4,740.01

14,958.74

19,698.76

 

 

 

 

 

 

    d) GCBL and GHCL held 29% and 20%, respectively, in Godrej Saralee Ltd., which is a 49 : 51 unlisted joint venture company between the Godrej Group and Saralee Corporation, USA. As a result of the amalgamation, Godrej Sara Lee Limited has become a joint venture between the Company and Sara Lee Corporation USA.

    e) In accordance with the Scheme of Amalgamation, the Company has issued and allotted 30,296,727 equity shares having a face value of Re.1 each to G&B and 20,939,409 equity shares having a face value of Re.1 each to GIL, being 10 equity shares in the Transferee Company for every 11 equity shares held by them in GCBL an GHCL, respectively, as consideration for the transfer. Consequently, the issued, subscribed and paid up equity shares capital of the Company stands increased to 308,190,044 equity shares having a face value of Re.1 each aggregating Rs.3,081.90 lac.

    f) The excess of book value of the net assets of the Transferor Companies taken over, amounting to Rs.18,455.25 lac, after adjusting the expenses and cost of the Scheme which amounted to Rs.731.15 lac, over the face value of shares issued as consideration to the Members of the Transferor Companies has been credited to the General Reserve as per the Scheme.

    g) Had the Scheme not prescribed the above treatment, the balance in Security Premium Account would have been higher by Rs.19,165.65 lac, investments would have been higher by Rs.731.15 lac, Capital Reserve would have been higher by Rs.51.24 lac, the Profit and Loss Account and the General Reserve would have been lower by Rs.30.50 lac and Rs.18,455.25 lac, respectively.

    h) Since the aforesaid Scheme of amalgamation of GCBL and GHCL with the Company, which is effective from June 1, 2009, has been given effect to in these accounts, the figures for the current year to that extent are not comparable with those of the previous year.

Illustration of an audit report containing large number of qualifications : Mahanagar Telephone Nigam Limited (31-3-2009)

Disclosures regarding provisions for liabilities (as per AS-29)

2. Nestle India Ltd. — (31-12-2009)

From Notes to Accounts :
The Company has created a contingency provision of Rs.457,181 thousands (previous year Rs.325,882 thousands) for various contingencies resulting mainly from matters, which are under litigation/dispute and other uncertainties requiring management judgment. The Company has also reversed/utilised contingency provision of Rs.133,980 thousands (previous year Rs.20,966 thousands) due to the satisfactory settlement of certain disputes for which provision was no longer required. The details of classwise provisions are given below :

Notes:
(a) `Litigations and related disputes — represents estimates made mainly for probable claims arising out of litigations/disputes pending with authorities under various statutes (i.e., Income Tax, Excise Duty, Service Tax, Sales and Purchase Tax, etc.). The provability and the timing of the outflow with regard to these matters depend on the ultimate settlement/conclusion with the relevant authorities.

(b) Others — include estimates made for products sold by the Company which are covered under free replacement warranty on becoming unfit for human consumption during the prescribed shelf life, investments held by the employee benefit trusts and other uncertainties requiring management judgment. The timing and probability of outflow with regard to these matters will depend on the external environment and the consequent decision/conclusion by the management.

3. Fulford India Ltd. — (31-12-2009)

From Notes to Accounts :

Provisions, Contingent Liabilities and Contingent Assets Disclosure for the year December 31, 2009 :

The Company has an understanding with trade associations, based on prevailing trade practices, for the replacement of its date-expired and damaged products upon return of such products subject to certain terms and conditions. With effect from the current financial year; the Company has also opted to replace such products by way of credit notes issued. Provision for replacement of such products of the Company is made, based on the best estimates of the management taking into consideration the type of products sold, the likely returns and the costs required to be incurred for such replacements.

The movement in the provision for such costs is as under :


4. Pfizer Ltd. — (30-11-2009)

From Notes to Accounts :

Personnel-related provisions :

Personnel-related provision at the beginning of the year have been settled based on completion of negotiations and execution of the new contract.

The Company has made provision for pending   assessment in respect of duties and other levies, the outflow of which would depend on the outcome of the respective events.

The movement in the above provisions are summarised as under :

Section B : Assurance Statement for Sustainability Reporting : Infosys Technologies Ltd.

Compiler’s Note :

    Sustainability Reporting is a global development which is fast gaining importance and momentum in India. Infosys Technologies Ltd. has published its first Sustainability Report for 2007-08 which presents an account of economic performance, innovations in solutions, services and products, environmental initiatives, people engagement, and social responsibility in accordance with the Global Reporting Initiative (GRI) framework. An Assurance Statement on the same was also obtained by the company. The same is reproduced below. (Names of the firm/s giving the report have been omitted).

Introduction

    XYZ has been commissioned by the management of Infosys Technologies Limited (‘Infosys’) to carry out an assurance engagement on the Infosys Sustainability Report, 2007-08 (‘the Report’).

    Infosys is responsible for the collection, analysis, aggregation and presentation of information within the Report. Our responsibility in performing this work is to the management of Infosys only and in accordance with terms of reference agreed with the Company. XYZ disclaims any liability or responsibility to a third party for decisions, whether investment or otherwise, based upon this assurance statement.

Scope of Assurance :

    The scope of work agreed upon with Infosys includes the following :

  • The full Report as well as references made in the Report to the annual report and corporate website;

  •  Review of the Report against Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, 2006 and confirmation of the application level;

  •  Reporting boundary as set out in the Report;

  • Visits to the Infosys head-office in Bangalore and two development centres in India.

    The verification was carried out between April and July 2008.

Independence

    XYZ did not provide any services to Infosys during 2007-08 that could conflict with the independence of our work. XYZ was not involved in the preparation of any statements or data included in the Report except for this Assurance Statement.

Verification Methodology

    Our assurance engagement was planned and carried out in accordance with the XYZ Protocol for Verification of Sustainability Reporting, which is based both on the GRI Guidelines and the AA1000 Assurance Standard. XYZ took a risk-based approach throughout the assurance engagement, concentrating on the issues that we believe are most material for both Infosys and its stakeholders.

    As part of the verification we have :

  •  Challenged the sustainability-related statements and claims made in the Report and assessed the robustness of the data management system, information flow and controls;

  • Examined and reviewed documents, data and other information made available to XYZ by Infosys;

  • Visited the head-office and two development centres located in Banagalore and Chennai;

  • Conducted interview with 42 representatives (including data owners and decision-makers from different divisions and functions) of Infosys;

  • Performed sample-based audits of the mechanisms for implementing the Company’s own sustainability-related policies, as described in the Report;

  • Performed sample-based review of processes for determining material issues to be included in the Report.

  • Performed sample-based audits of the processes for generating, gathering and managing the quantitative and qualitative data included in the Report;

  •  Reviewed the process of acquiring information and economic/financial data from the company’s 2007-08 certified consolidated Balance Sheet.

Conclusions

    In XYZ’s opinion, the Infosys Sustainability Report 2007-08 provides a fair representation of the Company’s policies, strategies, management systems, initiatives and projects. The Report meets the general content and quality requirements of the GRI Sustainability Reporting Guidelines, 2006, and XYZ confirms that the GRI requirements for application Level ‘A+’ have been met.

Materiality : Infosys has demonstrated a formal approach to assessing material aspects and indicators for reporting. XYZ recommends that Infosys identifies more indicators, other than GRI indicators, representing material issues for the Information Technology (IT) sector, and that they are incorporated in the future sustainability strategy.

 Completeness : Within the reporting boundary defined by Infosys, we do not believe that the Report omits relevant information that would influence stakeholder assessments of decisions or that reflect significant economic, environmental and social impacts.

Accuracy : XYZ has not found material inaccuracies in the data verified or instances where data is presented in a way which significantly affects the comparability of data.

Neutrality : XYZ considers that the information contained in the Report is balanced. The emphasis on various topics in the Report is proportionate to their relative materiality.

 Comparability : XYZ recognises that this is the first Sustainability Report published by Infosys, and we commend the Company for its commitment to reporting accurate and comparable data. The Report clearly states that for many indicators, especially the Environment Health and Safety (EHS) indicators, the reported information will be the baseline.

Responsiveness : Infosys demonstrates an active commitment to dialogue on sustainability issues with stakeholders. The expectations expressed by stakeholders through different engagement channels have generally been addressed in the Report.

Opportunities for Improvement

The following is an excerpt from the observations and opportunities reported back to the management of Infosys. However, these do not affect our conclusions on the Report, and they are indeed generally consistent with the management objectives already in place.

(b) An internal verification mechanism should be developed to further improve the reliability of data as well as help improve internal communication on sustainability reporting.

(b) Systems and processes should be strengthened to better facilitate reporting on global operations.

(b) The materiality assessment approach should be further developed and refined to identify appropriate indicators for all material issued identified.

Extracts from Certificate on Corporate Governance

New Page 1Section B :
Miscellaneous

Extracts from Certificate on Corporate Governance

Based on such a review and to the best of our information and
according to the explanations given to us, in our opinion, the Company has
complied with the conditions of Corporate Governance as stipulated in Clause 49
of the Listing Agreement of the Stock Exchange of India, except the following :

I. The Company has not applied certain Accounting Standards
as referred to Para 3(d) of our Audit Report dated 31st July 2007;

II. Two complaints of shareholders could not be resolved by
the Company within a reasonable time period of 1 month.


Since the relevant records were not made available to us, we
are unable to comment on the disclosure of all the pecuniary relationships and
transactions of the Company with the Directors.


levitra

Disclosure of Accounting Policies by Professional Bodies

5 International Accounting Standards Committee (IASC) Foundation — (31-12-2009)

    Accounting Policies :

    (a) Basis of preparation :

    These financial statements have been prepared in accordance with International Financial Reporting Standards, on the historical cost basis, as modified by the revaluation of financial assets and liabilities, including derivative financial instruments, at fair value through profit or loss. The policies have been consistently applied to all years presented, unless otherwise stated.

    For the purposes of organising the financial information the IASC Foundation has categorised income and expenses into two categories. Standard-setting and related activities include all activities associated with standard-setting and support functions required to achieve the organisations objectives. Publications and related activities include information related to the sales of print and electronic IFRS materials, educational activities and Extensible Business Reporting Language (XBRL).

    (b) Contributions :

    Contributions are recognised as revenue in the year designated by the contributor.

    (c) Publications and related revenue :

    Subscriptions to the IASC Foundation’s comprehensive package and eIFRS products are recognised as revenue on a time-apportioned basis over the period covered by the subscriptions. Royalties are recognised as revenue on an accrual basis. Publications’ direct cost of sales comprises printing, salaries, promotion, computer and various related overhead costs.

    (d) Inventories :

    Inventories of current publications are valued at the lower of net realisable value and the cost of printing the publications, on a first-in-first-out basis. Inventories that have been superseded by new editions are written off.

    (e) Depreciation :

    Leasehold improvements and furniture and equipment are initially measured at cost, and depreciated on a straight-line basis (in the case of leasehold improvements over the period of the lease). All other assets are depreciated over 5 years, except computer equipment, which is depreciated over 3 years.

    (f) Foreign currency transactions :

    The IASC Foundation’s presentational and functional currency is sterling. Transactions denominated in currencies other than sterling are recorded at the exchange rate at the date of the transaction. Differences in exchange rates are recognised in the Statement of Comprehensive Income. Monetary assets and liabilities are translated into sterling at the exchange rate at the end of the reporting period.

    (g) Operating leases — Office accommodation :

    Lease payments for office accommodation are recognised as an expense on a straight-line basis over th e non-cancelable term of the lease. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

    (h) Financial assets :

    Regular purchases and sales of financial assets are recognised on the trade date, the date on which the IASC Foundation is committed to purchase or sell the asset. Investments are recognised initially at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the IASC Foundation has transferred substantially all risks and rewards of ownership. The IASC Foundation classifies financial assets as subsequently measured at either amortised cost or fair value based on its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. All financial assets, except for bonds and derivatives, are carried at amortised cost as the objective is to hold these assets in order to collect contractual cash flows and those cash flows are solely principal and interest. Investments in bonds are classified as subsequently measured at fair value through profit or loss, and the corresponding gains or losses are included within profit (loss) before tax. Bond holdings are discussed more fully in Note 10.

    (i) Derivative financial assets and liabilities :

    The IASC Foundation uses contributions, primarily in US dollars and euro, to fund a portion of sterling obligations arising from its activities. In accordance with its financial risk management policy, the IASC Foundation does not hold or issue derivative financial instruments for trading purposes; the forward foreign currency hedges are entered into to provide certainty regarding funding to protect against currency fluctuation on future cash flows that are designated in US dollars and euro. Derivative financial instruments are recognised and subsequently measured at fair value. The corresponding gains or losses are included within profit (loss) before tax.

    (j) Provisions and contingencies :

    Provisions are recognised when the following three conditions are met — the IASC Foundation has a present obligation (legal or constructive) 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 a reliable estimate can be made of the amount of the obligation. The amount of the provision represents the best estimate of the expenditure required to settle the obligation at the end of the reporting period. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.

    (k) Critical accounting estimates and judgments :

    The IASC Foundation makes estimates and assumptions regarding the future. In the future, actual experience may differ from those estimates and assumptions. The Trustees consider there are none that are material to the preparation of the financial statements.

        l) New standards and interpretations issued:

    The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period on 1 January 2009, except for that explained below. The IASC Foundation has concluded that there are no other relevant standards or interpretations in issue not yet adopted.

    l Standard adopted early IFRS 9 Financial Instruments was issued in November 2009 and is required to be applied from 1st January 2013. The presentation of the IASC Foundation’s financial statements has not significantly changed as a result of the early adoption of the new standard as it did not change the measurement of any assets.

        m) Reclassification of items in the financial statements:

    In order to conform to the current year’s presentation in the financial statements, the following comparative amounts were reclassified. The changes in presentation are to improve the information provided :

        Recruitment expenses are included in Other Costs and listed in Note 9. The prior year amount of £ 126,000 was presented as follows : £ 121,000 was included in salaries, wages and benefits; £ 5,000 was included in Trustees’ fees. A corresponding change has been made to the statement of cash flows and the details of salaries, wages and benefits as disclosed in Note 5.

        Fundraising expenses are included in Other Costs and listed in Note 9. In the prior year, £ 36,000 was listed separately in the statement of comprehensive income.

        The details of accommodation expenses presented in Note 8(a) has been expanded to disclose the amount included in publication costs.

        The details of cash holdings presented in Note 10(a) have been clarified by listing currencies irrespective of their country location.

    6. The Institute of Chartered Accountants of  India — (31-3-2009)

    Statement on Significant Accounting Policies:

    I.    Accounting convention:

    These accounts are drawn up on historical cost basis and have been prepared in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and are on accrual basis unless otherwise stated.

    II) Revenue recognition:

        a. Membership Fee

    i. The Entrance Fee is collected at the time of admission of a person as a member and one-third thereof is recognised as income in that year.

    ii. Annual Membership and Certificate of Practice Fee(s) are recognised in the year as and when these become due.

    b. Distant Education and Post-Qualification Course Fee are recognised over the duration of the course.

    c.Examination Fee is recognised on the basis of conduct of examination.

    d. Subscription for Journal is recognised in the year as and when it becomes due.
    e. Revenue from Sale of Publications is recognised at the time of preparing the sale bill i.e., when the property in goods as well as the significant risks and rewards of the property get transferred to the buyer.

    Income from Investments:

        i. Dividend on investments in units is recognised as income on the basis of entitlement to receive.

        ii.     Income on Interest-bearing securities and fixed deposits is recognised on a time-proportion basis taking into account the amount out-standing and the rate applicable.

    III. Allocations/transfer to reserves & surplus and earmarked fund :

    a) Admission Fee from Fellow Members and brd portion of the Entrance Fee from persons ad-mitted as Members are taken to Infrastructure Reserve.

    b) Donations received during the year for build-ings and for research purpose are accounted for directly under the respective Reserves Account.

    c) 25% of the Distant Education Fee not ex-ceeding 50% of the net surplus of the year is transferred to Education fund.

    d) 0.75% of Membership Fee (Annual and Certificate of Practice Fee) received from the members during the year is allocated to the Employees’ Benevolent Fund.

    e) Transfer to Education Reserve from the following earmarked funds :

 

    f) Income from investments of Earmarked Funds is allocated directly to Earmarked Funds on opening balances of the respective Earmarked Funds on the basis of weighted average method.

    IV.    Fixed assets/depreciation and amortisation :

    a) Fixed Assets excluding land are stated at historical cost less depreciation.

    b) Freehold land is stated at cost. Leasehold land is stated at the amount of premium paid for acquiring the lease rights. The premium so paid is amortised over the period of the lease.

    c) Depreciation is provided on the written down value method at the following rates as approved by the Council based on the useful life of the respective assets :

  

       
    d) Depreciation on additions is provided on monthly pro-rata basis.

    e) Library books are depreciated at the rate of 100% in the year of purchase.

    f) Intangible Assets (Software) are amortised equally over a period of three years.

        V) Investments:

    a. Long-term investments are carried at cost and diminution in value, other than temporary is provided for.

    b. Current investments are carried at lower of cost or fair value.
     

    VI.    Inventories:

    Inventories of paper, consumables, publications and study material are valued at lower of cost or net realisable value. The cost is determined on FIFO Method.

    VII. Foreign currency transactions:

        a) Foreign currency transactions are recorded on initial recognition in the reporting currency by applying to the foreign currency amount at the exchange rate prevailing on the date of transaction.

        b) All incomes and expenses are translated at average rate. All monetary assets/liabilities are translated at the year-end rates whereas non-monetary assets are carried at the rate on the date of transaction.

        c) Any income or expense on account of ex-change rate difference is recognised in the Income and Expenditure Account.

    VIII.    Employee benefits:

        a) Short-term employee benefits are charged off in the year in which the related service is rendered.

        b) Post-employment and other long-term employee benefits are charged off in the year in which the employee has rendered services. The amount charged off is recognised at the present value of the amounts payable determined on the basis of actuarial valuation. The actuarial valuation is done as per Projected Unit Credit Method. Actuarial gain and losses in respect of post-employment and other long-term benefits are charged to Income & Expenditure Account and are not deferred.

        c) Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contribution to the Provident Fund Trust is charged to the Income and Expenditure Account for the period when the contribution to the respective fund is due.

    IX.    Impairment of assets:

        a) The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is higher of asset’s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value at the weighted cost of capital.

        b) After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

        x. Provisions:

    A provision is recognised when an enterprise has a present obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligations at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

    7. Bombay Chartered Accountants’ Society — (31-3-2010)

    Significant accounting policies:

        a) Method of Accounting:

    Accounts are maintained on accrual basis.

        b) Fixed Assets and Depreciation:

    Fixed assets are stated at cost. Depreciation is provided on fixed assets as per the written-down value method at the rates prescribed in the Income Tax Rules except for books on which depreciation is provided at the rate of 50% per annum.

        c) Investments:

    Investments are stated at cost of acquisition less permanent diminution (if any) in compliance with AS-13 issued by The Institute of Chartered Accountants of India.

        d) Inventories:

    Inventories are stated at cost.

        e) Life Membership & Entrance Fees:

    Life Membership fees and Entrance fees are credited to Corpus Fund.

        f) Gratuity:

    The premium payable each year on the Group Gratuity Policy taken with Life Insurance Corporation of India is recognised as Gratuity expenses of that year.

Section A : Treatment of Profit/loss on Derivative Transactions

From Published Accounts

Compiler’s Note :


Also refer BCAJ June 2008 for other disclosures on the above.

&
Hexaware Technologies Ltd. — (31-12-2007)


From Notes to Accounts :

The Company, in the month of November 2007, reported about
having entered into foreign currency transactions (financial derivatives) which
were not communicated to the senior management and the Board of Directors. These
transactions have since been settled and the net loss on account of such
transactions aggregates Rs.1,029.95 million at the year end. The Company’s
profit for the year, turned into a loss, consequent to the loss on such foreign
currency transactions. The said loss being one-time and non-recurring has been
considered and disclosed as an exceptional item in the Profit and Loss account.

The Company, during the year, suffered a foreign exchange
loss of Rs.750.05 million, which is aggregate of foreign exchange gain (net) of
Rs.279.90 million and exceptional foreign exchange loss (net) of Rs.1,029.95
million as stated in the Note No. 7 of schedule 12(B). Considering the aggregate
loss on foreign currency transactions during the year as aforesaid, the foreign
exchange loss of exceptional nature of Rs.1,029.95 million has been disclosed as
stated in the Note No. 7 of Schedule 12(B) and the balance amount of Rs.279.90
million (gain) has been disclosed under ‘Administration and other expenses’ and
previous year’s figures have been accordingly regrouped.

&
The Great Eastern Shipping Co Ltd.


— (31-3-2008)

From Notes to Accounts :

Hedging Contracts :

The Company uses foreign exchange forward contracts, currency
and interest swaps and options to hedge its exposure to movements in foreign
exchange rates. The use of these foreign exchange forward contracts, currency
and interest swaps and options reduce the risk or cost to the Company and the
Company does not use the foreign exchange forward contracts, currency and
interest swaps and options for trading or speculation purposes.


(i) Derivate instruments outstanding:

(a) Commodity futures contracts for import of Bunker :

Details not reproduced

(b) Forward exchange contracts :

Details not reproduced

(c) Forward Exchange Option contracts :

Details not reproduced

(d) Interest rate swap contracts :

Details not reproduced

(e) Currency Swap Contract :

Details not reproduced


(ii) Un-hedged foreign currency exposures as on March 31 :

Details not reproduced

(iii) The above-mentioned derivative contracts having been
entered into, the hedge foreign currency risk and the exposure to bunker price
risk, are being accounted for on settlement as per the accounting policy
consistently being followed by the Company for the past several years. The
mark-to-market (loss)/gain on the foreign exchange derivative contracts and the
mark-to-market gain on the commodity futures outstanding as on March 31, 2008
amounted to Rs.(5520) lakhs and Rs.17 lakhs, respectively. The said losses and
gains have not been provided for in the accounts for the year ended March 31,
2008.

From Auditors’ Report

(e) Without qualifying our opinion, we draw attention to :

(iii) Note 17(iii) of Schedule 20, Notes to Accounts
regarding derivative contracts entered into by the Company to hedge foreign
currency risks and bunker price risk. As per the policy consistently followed
by the Company in the past, such derivative contracts are accounted only on
settlement and the mark-to-market (loss)/ gain thereon amounting to Rs.(5520)
lakhs and Rs.17 lakhs, respectively has not been provided for in the accounts
for the year ended March 31, 2008.


&
Mangalore Refinery and Petrochemicals Ltd.


— (31-3-2008)

From Notes to Accounts :

Forward Contracts to cover Forex Risk :

Forward contracts to the tune of US$ 208 million are
outstanding as on 31st March 2008, which were entered into to hedge the risk of
changes in foreign currency exchange rates on future export sales against
existing long-term export contract. The notional mark-to-market loss on these
unexpired contracts as on 31-3-2008 amounting to Rs.120.47 million has not been
considered in the financial statements. The actual gain/loss could vary and be
determined only on settlement of the contract on their respective due dates.

&
ALSTOM Projects India Ltd. — (31-3-2008)


From Significant Accounting Policies :




2.8.4 Forward Exchange Contracts not intended for trading
or speculation purposes

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



Derivative instruments :

The Company uses derivative financial instruments such as forward exchange contracts to hedge its risks associated with foreign currency fluctuations. Accounting policy for forward exchange contracts is given in note 2.8.4.

The foreign exchange contracts other than those covered under AS-l1, enter,ed for non-speculative purposes, including the underlying hedged items, are valued on the basis of a fair value on marked-to-market basis and any loss on valuation is recognised in the Profit and Loss account, on a port-folio basis. Any gain arising on this valuation is not recognised by the Company in line with the principle of prudence as enunciated in Accounting Standard 1 – ‘Disclosure of Accounting Policies’. Any subsequent changes in fair values, occurring after the balance sheet date are accounted for in the period in which they arise.

Finolex  Cables  Ltd. –   (31-3-2008)

From Notes  to Accounts

10A. Quantitative information of derivative instruments outstanding as at the balance sheet date:

Not reproduced.

B. The Company has entered into derivative transactions with an objective to hedge the financial risks associated with its business viz. foreign exchange and interest rate.

C. The Company has not hedged the following foreign currency exposures:

i) Borrowings grouped under secured loans equivalent to Rs.999.250 Million (Previous year Rs.1,476.875 million) and under unsecured loans equivalent to Rs.739.657 million. (Previous year Rs.652.678 million).

ii) Creditors for imports equivalent to Rs.39.393 million (Previous year 45,961 million).

iii) Receivables equivalent to RS.171.991million. (Previous year Rs.195.630 million).

d) Loss on derivative/forex transactions in-cludes Rs.92.000 million loss on certain outstanding derivatives at the balance sheet date assessed by the management based on the principle of prudence. In respect of other contracts, since they are in the nature of ef-fective hedge, profit/loss, if any, has not been ascertained separately.

ITC Ltd. –   (31-3-2008)

From Notes  to Accounts:

Derivative    Instruments:

The company uses Forward Exchange Contracts and Currency Options to hedge its exposures in foreign currency related to firm commitments and highly probable forecasted transactions. The information on Derivative Instruments is as follows:

a) Derivative Instrument outstanding as at year end:

Not  reproduced.

b) Foreign exchange currency exposures that have not been hedged by a derivative instrument or otherwise as at year end:

Not reproduced.

c) Consequent to the announcement issued by the Institute of Chartered Accountants of India in March 2008 on Accounting for Derivatives, the Company has marked to market the outstanding derivative contracts as at 31st March, 2008 and accordingly, unrealised gains of Rs.9.05 crores (net of taxes) have been ignored. As a result, profit after tax for the year and reserves are lower by Rs.9.05 crores.

Housing Development Finance Corporation Ltd. – (31-3-2008)

From Notes to Accounts:

ii) As on March 31, 2008, the Corporation has foreign currency borrowings (excluding FCCB) of USD 1,079.58 million equivalent (Previous year USD 1,068048 million). The Corporation has undertaken principal-only swaps, currency options and forward contracts on a notional amount of USD 808 million equivalent (Previous year USD 777 million) to hedge the foreign currency risk. Further, interest rate swaps on a notional amount of USD 230 million equivalent (Previous year USD 391 million) are outstanding, which have been undertaken to hedge the interest rate risk on the foreign currency borrowings. As on March 31,2008, the Corporation’s net foreign currency exposure on borrowings net of risk management arrangements is USD 447.13 million (Previous year USD 100.17 million).

As a part of asset liability management and on account of the increasing response to the Corporation’s Adjustable Rate Home Loan product as well as to reduce the overall cost of borrowings, the Corporation has entered into interest rate swaps wherein it has converted its fixed-rate rupee liabilities of a notional amount of Rs.12,265 crores (Pre-vious year Rs.7,265 crores) as on March 31,2008 for varying maturities into floating rate liabilities linked to various benchmarks. In addition, the Corporation has entered into cross-currency swaps of a notional amount of USD 652 million equivalent (Previous year USD 643 million), wherein it has converted its rupee liabilities into foreign currency liabilities and the interest rate is linked to the benchmarks of respective currencies.

iii) Gains/losses arising out of foreign exchange fluctuations in respect of foreign currency borrowings, net of risk management arrangements, are to the account of the Corporation. Wherever the Corporation has entered into a forward contract or an instrument, that is in substance, a forward exchange contract, the difference between the forward rate and the exchange rate on the date of the transaction is recognised as income or expense over the life of the contract. The amount of exchange difference in respect of such contracts to be recognised as expense in the Profit and Loss account over subsequent accounting periods is Rs.97.78 crores (Previous year Rs. 45.54 crores).

Other monetary assets and liabilities in foreign currencies are revalued at the rates of exchange prevailing at the year end. The reduced liability, net of risk management arrangements, of Rs.8.67 crores (Previous year Rso4.31cores [net of loss on mark to market of derivatives Rs.103.04 crores]) arising upon revaluation at the year end (based on the prevailing exchange rate) has been credited to the Provision for Contingencies account.

iv) Cross-currency swaps and other derivatives have been marked to market at the year end. The net gain of Rs.293.59 crores on such mark to market of derivatives is included under Advance Payments (Schedule No.7) and not recognised in the Profit and Loss account in view of the recent announcement by the Institute of Chartered Accountants of India (ICAI), which requires the principle of prudence to be followed in accounting for mark-to-market gains/losses on derivatives.

SRF Ltd. –   (31-3-2008)

From Significant  Accounting Policies

a) Transactions in foreign currencies are recorded at the rate prevalent on the date of transactions.

b) All foreign currency liabilities and monetary assets are stated at the exchange rate prevailing as at the date of balance sheet and the difference taken to Profit and Loss account as exchange fluctuation loss or gain.

c) Pursuant to ICAI announcement for adoption of AS-30 Financial Instruments: Recognition and Measurement, the Company has accounted for the hedge accounting of all the hedging instruments including derivatives in accordance with paragraph 99 and 106 of the said standard, affecting either the Profit and Loss account or hedging reserve (equity segment) as the case may be. The debit balance, if any, in the hedging reserve is being shown as a deduction from free reserves.

d) The Company discloses the open and hedged foreign exchange exposure as note to the accounts.

From Notes  to Accounts:

SRF has entered into long-term contracts for the transfer / sale of Carbon Emission Reductions (CER) with reputable global buyers. The cash flow from these sales forms the mainstay of SRF’s multi-year capital expansion plan, and as such these cash flows need to be both stable and secure. To ensure stability of revenues in foreign currency from the transfer / sale of CERs, the Company has entered into forward contracts with the banks to part sell Euros to be earned out of future CER sales.

The details of the forex exposure of the Company as on 31 March, 2008 are as under:

Details not reproduced.

The Company has not entered into any hedging transactions in the nature of speculation in 2007-08 (Previous year Nil).

Tube Investments  of India  Ltd. (31-3-2008)
From Significant Accounting Policies:

The Company uses forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The Company designates these as cash flow hedges.

The use of forward contracts is governed by the Company’s policies on the use of such financial derivatives consistent with the Company’s risk management strategy. The Company does not use derivative financial instruments for speculative purposes.

Forward contract derivatives instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognised directly in ‘Hedge Reserve Account’ under shareholders’ funds and the ineffective portion is recognised immediately in the Profit and Loss account.
 
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the Profit and Loss account as they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or ( exercised, or no longer qualifies for hedge account-ing. At that time, for forecasted transactions, any cumulative gain or loss on the hedging instrument recognised under shareholders’ funds is retained there until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised under shareholders’ funds is transferred to the Profit and Loss account for the year.

From Notes  to Accounts:

Pursuant to the announcement of the Institute of Chartered Accountants of India (ICAI) in respect of ‘Accounting for Derivatives’, the Company has opted to follow the recognition and measurement principles relating to derivatives as specified in AS-30 ‘Financial Instruments, Recognition and Measurement’, issued by the ICAI, from the year ended 31st March,2008.

Consequently, as of 31st March 2008, the Company has recognised mark-to-market (MTM) losses of Rs.3.03 cr. relating to forward contracts and other derivatives entered into to hedge the foreign currency risk of highly probable forecast transactions that are designated as.effective cash flow hedges, in the Hedge Reserve Account as part of the shareholders funds.

The MTM net loss on undesignated/ineffective forward contracts amounting to Rs.0.65 cr. has been recognised in the Profit & Loss account.

Manner of Disclosure of Accounting Policies

From Published Accounts

1 ITC
Limited — (31-3-2009)

Significant Accounting Policies

It is corporate policy :

Convention :

To prepare financial statements
in accordance with applicable Accounting Standards in India.

A summary of important
accounting policies is set out below. The financial statements have also been
prepared in accordance with relevant presentational requirements of the
Companies Act, 1956.

Basis of accounting :

To prepare financial statements
in accordance with the historical cost convention modified by revaluation of
certain Fixed Assets as and when undertaken as detailed below.

Fixed assets :

To state Fixed Assets at cost of
acquisition inclusive of inward freight, duties and taxes and incidental
expenses related to acquisition. In respect of major projects involving
construction, related pre-operational expenses form part of the value of assets
capitalised. Expenses capitalised also include applicable borrowing costs.

To capitalise software where it
is expected to provide future enduring economic benefits. Capitalisation costs
include licence fees and costs of implementation/system integration services.

The costs are capitalised in the
year in which the relevant software is implemented for use.

To charge off as a revenue
expenditure all upgradation/enhancements unless they bring similar significant
additional benefits.

Depreciation :

To calculate depreciation on
Fixed Assets and Intangible Assets in a manner that amortises the cost of the
assets after commissioning, over their estimated useful lives or, where
specified, lives based on the rates specified in Schedule XIV to the Companies
Act, 1956, whichever is lower, by equal annual instalments. Leasehold properties
are amortised over the period of the lease.

To amortise capitalised software
costs over a period of five years.

Revaluation of assets :

As and when Fixed Assets are
revalued, to adjust the provision for depreciation on such revalued Fixed
Assets, where applicable, in order to make allowance for consequent additional
diminution in value on considerations of age, condition and unexpired useful
life of such Fixed Assets; to transfer to Revaluation Reserve the difference
between the written-up value of the Fixed Assets revalued and depreciation
adjustment and to charge Revaluation Reserve Account with annual depreciation on
that portion of the value which is written up.

Investments :

To state Current Investments at
lower of cost and fair value; and Long-Term Investments, including in Joint
Ventures and Associates, at cost. Where applicable, provision is made where
there is a permanent fall in valuation of Long-Term Investments.

Inventories :

To state inventories including
work-in-progress at lower of cost and net realisable value. The cost is
calculated on weighted average method. Cost comprises expenditure incurred in
the normal course of business in bringing such inventories to its location and
includes, where applicable, appropriate overheads based on normal level of
activity. Obsolete, slow moving and defective inventories are identified at the
time of physical verification of inventories and, where necessary, provision is
made for such inventories.

Sales :

To state net sales after
deducting taxes and duties from invoiced value of goods and services rendered.

Investment income :

To account for Income from
Investments on an accrual basis, inclusive of related tax deducted at source.

Proposed dividend :

To provide for Dividends
(including income-tax thereon) in the books of account as proposed by the
Directors, pending approval at the Annual General Meeting.

Employee benefits :

To make regular monthly
contributions to various Provident Funds which are in the nature of defined
contribution scheme and such paid/payable amounts are charged against revenue.

To administer such Funds through
duly constituted and approved independent trusts with the exception of Provident
Fund and Family Pension contributions in respect of unionised staff which are
statutorily deposited with the Government.

To administer through duly constituted and approved independent trusts, various Gratuity and Pension Funds which are in the nature of defined benefit/contribution schemes. To determine the liabilities towards such schemes, as applicable, and towards employee leave encashment by an independent actuarial valuation as per the requirements of Accounting Standard-15 (revised 2005) on ‘Employee Benefits’. To determine actuarial gains or losses and to recognise such gains or losses immediately in Profit and Loss Account as income or expense.

To charge against revenue, actual disbursements made, when due, under the Workers’ Voluntary Retirement Scheme.

Lease rentals?:

To charge rentals in respect of leased equipment to the Profit and Loss Account.

Research and Development?:

To write off all expenditure other than capital expenditure on Research and Development in the year it is incurred. Capital expenditure on Research and Development is included under Fixed Assets.

Taxes on income?:

To provide current tax as the amount of tax payable in respect of taxable income for the period.

To provide deferred tax on timing differences between taxable income and accounting income-subject to consideration of prudence. Not to recognise deferred tax assets on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

Foreign currency translation?:

To account for transactions in foreign currency at the exchange rate prevailing on the date of transactions. Gains/Losses arising out of fluctuations in the exchange rates are recognised in the Profit and Loss Account in the period in which they arise. To account for differences between the forward exchange rates and the exchange rates at the date of transactions, as income or expense over the life of the contracts.

To account for profit/loss arising on cancellation or renewal of forward exchange contracts as income/ expense for the period.

To account for premium paid on currency options in the Profit and Loss Account at the inception of the option.

To account for profit/loss arising on settlement or cancellation of currency option as income/expense for the period.

To recognise the net mark-to-market loss in the Profit and Loss Account on the outstanding portfolio of options as at the Balance Sheet date, and to ignore the net gain, if any.

To account for gains/losses in the Profit and Loss Account on foreign exchange rate fluctuations relating to monetary items at the year end.

Caims?:

To disclose claims against the Company not acknowledged as debts after a careful evaluation of the facts and legal aspects of the matter involved.

Segment reporting?:

To identify segments based on the dominant source and nature of risks and returns and the internal organisation and management structure.

To account for inter-segment revenue on the basis of transactions which are primarily market-led.

To include under ‘Unallocated Corporate Expenses’ revenue and expenses which relate to the enterprise as a whole and are not attributable to segments.

Joint ventures for oil and gas fields

New Page 1VIDEOCON INDUSTRIES LTD.

7. Joint ventures for oil and gas fields :

In respect of joint ventures in the nature of Production
Sharing Contracts (PSC) entered into by the Company for oil and gas exploration
and production activities, the Company’s share in the assets and liabilities as
well as income and expenditure of joint venture operations are accounted for
according to the participating interest of the Company as per the PSC and the
joint-operating agreements on a line-by-line basis in the Company’s financial
statements.

Exploration, development and production costs :

The Company follows the ‘Successful Efforts Method’ of
accounting for oil and gas exploration, development and production activities as
explained below :

(a) Exploration and production costs are expensed in the
year/period in which these are incurred.

(b) Development costs are capitalised and reflected as
‘Producing Properties’. Costs include recharges to the joint venture by the
operator/affiliate in respect of the actual cost incurred and as set out in
the Production Sharing Contract (PSC). Producing properties are depleted using
the ‘Unit of Production Method’.


Abandonment costs :

Abandonment Costs relating to dismantling, abandoning and
restoring offshore well sites and allied facilities are provided for on the
basis of ‘Unit of Production Method’. Aggregate abandonment costs to be incurred
are estimated, based on technical evaluation by experts.

Revenue recognition :

(a) Revenue is recognised on transfer of significant risk and reward in respect of ownership.

(b) Sale of crude oil and natural gas are exclusive of sales tax. Other sales/turnover includes sales value of goods, services, excise duty, duty drawback and other recoveries such as insurance, transportation and packing charges, but excludes sale tax and recovery of financial and discounting charges.

levitra

Section A : Illustration of accounts and audit report of a company based in United States where the assumption of Going Concern is questioned

General Motors Corporation, USA — (31-12-2008)

From Notes to Consolidated Financial Statements :
Note 2 : Basis of Presentation :

Going Concern :

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realisation of assets and the liquidation of liabilities in the normal course of business. We have incurred significant losses from 2005 through 2008, attributable to operations and to restructurings and other charges such as support for Delphi and past, present and future costcutting measures. We have managed our liquidity during this time through a series of cost reduction initiatives, capital markets transactions and sales of assets. However, the global credit market crisis has had a dramatic effect on our industry.

In the second half of 2008, the increased turmoil in the mortgage and overall credit markets (particularly the lack of financing to buyers or lessees of vehicles), the continued reductions in U.S. housing values, the volatility in the price of oil, the recession in the United States and Western Europe and the slowdown of economic growth in the rest of the world created a substantially more difficult business environment. The ability to execute capital markets transactions or sales of assets was extremely limited, and vehicle sales in North America and Western Europe contracted severely and the pace of vehicle sales in the rest of the world slowed. Our liquidity position, as well as our operating performance, were negatively affected by these economic and industry conditions and by other financial and business factors, many of which are beyond our control.

These conditions have not improved through January 2009, with sales of total vehicles for the U.S. industry falling to 657,000 vehicles, or a seasonally adjusted rate of 9.8 million vehicles, which was the lowest level for January since 1982. We do not believe it is likely that these adverse economic conditions, and their effect on the automotive industry, will improve significantly during 2009, notwithstanding the unprecedented intervention by governments in the United States and other countries in the global banking and financial systems.

Due to this sudden and rapid decline of our industry and sales, particularly in the three months ended December 31, 2008, we determined that, despite the far-reaching actions to restructure our U.S. business, we would be unable to pay our obligations in the normal course of business in 2009 or service our debt in a timely fashion, which required the development of a new plan that depended on financial assistance from the U.S. Government. On December 31, 2008, we entered into a Loan and Security Agreement (UST Loan Agreement) with the United States Department of the Treasury (UST), pursuant to which the UST agreed to provide us with a $ 13.4 billion secured term loan facility (UST Loan Facility). We borrowed $ 4.0 billion under the UST Loan Facility on December 31, 2008, an additional $ 5.4 billion on January 21, 2009 and $ 4.0 billion on February 17, 2009. As a condition to obtaining the UST Loan Facility, we agreed to achieve certain restructuring targets within designated time frames as more fully described in Note 15.

Pursuant to the terms of the UST Loan Facility and as described more fully in Note 15, we submitted to the UST on February 17, 2009 our plan to return to profitability and to operate as a going concern (Viability Plan). In order to execute the Viability Plan, we have requested additional U.S. Government funding of $ 22.5 billion to cover our baseline scenario liquidity requirements and $ 30.0 billion to cover our downside sensitivity liquidity requirements. We proposed that the funding could be met through a combination of a secured term loan of $ 6.0 billion and preferred equity of $ 16.5 billion under a Viability Plan baseline scenario, representing an increase of $ 4.5 billion over our December 2008 request, reflecting changes in various assumptions subsequent to the December 2, 2008 submission and $ 9.1 billion incremental to the $ 13.4 billion currently outstanding. We have suggested to the UST that the current amount outstanding as of February 28, 2009 of $ 13.4 billion under the UST Loan Facility plus an incremental $ 3.1 billion requested in 2009 could be provided in the form of preferred stock. We believe this structure would provide the necessary medium-term funding we need and provide a higher return to the UST, commensurate with the higher returns the UST receives on other preferred stock investments in financial institutions.

Under a Viability Plan downside sensitivity sce-nario, an additional $ 7.5 billion of funding would be required above the amounts described above, which we have requested in the form of a secured revolving credit facility. The collateral used to sup-port the current $ 13.4 billion UST Loan Facility would be used to support the proposed $ 7.5 billion secured revolving credit facility and the $ 6.0 billion term loan. Our Viability Plan also assumes $ 7.7 billion in loans under the provisions of the Energy Independence and Security Act of 2007 (Section 136 Loans) from the Department of Energy. Our 2009 baseline vehicle sales forecast is 10.5 million vehicles in the United States and 57.5 million vehicles globally. In 2009, our liquidity, under our Baseline plan, is dependent on obtaining $ 4.6 billion of funding from the UST in addition to the $ 13.4 billion received to date; a net $ 2.3 billion from other non-U.S. governmental entitles the receipt of $ 2.0 billion in Section 136 Loans; and the sale of certain assets for net proceeds of $ 1.5 billion. This funding and additional amounts described above are required to provide the necessary working capital to operate our business until the global economy recovers and consumers have an available credit and begin purchasing automobiles at more historical volume levels. In addition, the Viability Plan is dependent on our ability to execute the bond exchange and voluntary employee beneficiary association (VEBA) modifications contemplated in our submissions to the UST and our ability to achieve the revenue targets and execute the cost reduction and other restructuring plans. We currently have approximately $1 billion of outstanding Series D convertible debentures that mature on June 1, 2009. Our funding plan described -above does not include the payment at maturity of the principal amount of these debentures. If we are unable to restructure the Series D convertible debentures prior to June 1, 2009, or otherwise satisfactorily address the payment due on June I, 2009, a default would arise with respect to payment of these obligations, which could also trigger cross defaults in other outstanding debt, thereby potentially requiring us to seek relief under the U.S. Bankruptcy Code.

The following is a summary of significant cost reduction and restructuring actions contemplated by the Viability Plan:

(Not reproduced here)

Report of Independent Registered Public Accounting Firm :

We have audited the accompanying Consolidated Balance Sheets of General Motors Corporation and subsidiaries (the Corporation) as of December 31, 2008 and 2007, and the related Consolidated Statements of Operations, Cash Flows and Stockholders’ Equity (Deficit) for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Over-sight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of General Motors Corporation and subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

The accompanying consolidated financial statements for the year ended December 31,2008, have been prepared assuming that the Corporation will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Corporation’s recurring losses from operations, stockholders’ deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also discussed in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 3 to the consolidated financial statements, the Corporation: (1) effective January 1, 2008, adopted Statement of Financial Accounting Standards No.157, Fair Value Measurements, (2) effective January 1, 2007, adopted the recognition and measurement provisions of FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109, (3) effective January 1, 2007, changed the measurement date for defined benefit plan assets and liabilities to coincide with its year end to conform to Statement of Financial Accounting Standards No. 158,Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132 (R) (SFAS No.158), and (4) effective December 31, 2006, began to recognise the funded status of its defined benefit plan in its consolidated balance sheets to conform to SFAS No. 158.

As discussed in Note 4 to the consolidated financial statements, on November 30,2006, the Corporation sold a 51% controlling interest in GMAC LLC, its former wholly-owned finance subsidiary. The Corporation’s remaining interest in GMAC LLC is accounted for as an equity method investment.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Corporation’s internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission and our report dated 4-3-2009 expressed an adverse opinion on the Corporation’s internal control over financial reporting.

Oil and gas exploration and development costs

New Page 1ESSAR OIL LTD. — (31-3-2007)

6. Oil and gas exploration and development costs

The Company follows the ‘Full Cost Method’ of accounting for
its oil and gas exploration and development activities, whereby all costs
associated with acquisition, exploration and development of oil and gas
reserves, are capitalised under capital work-in-progress, irrespective of
success or failure of specific parts of the overall exploration activity within
or outside a cost centre (known as ‘cost pool’). Exploration and survey costs
incurred are held outside cost pools until the existence or otherwise of
commercial reserves are determined. These costs remain undepleted pending
determination, subject to there being no evidence of impairment. Costs are
released to its cost pool upon determination or otherwise of reserves. When any
field in a cost pool is ready to commence commercial production, the accumulated
costs in that cost pool are transferred from capital work-in-progress to the
gross block of assets under producing properties. Subsequent exploration
expenditure in that cost pool will be added to gross block of assets, either on
commencement of commercial production from a field discovery or failure. In case
a block is surrendered, the accumulated exploration expenditure pertaining to
such block is transferred to the gross block of assets. Expenditure carried
within each cost pool (including future development cost) will be depleted on a
unit-of-production basis with reference to quantities, with depletion computed
on the basis of the ratio that oil and gas production bears to the balance
proved and probable reserves at commencement of the year. The financial
statements of the Company reflect its share of assets, liabilities, income and
expenditure of the joint-venture operations, which are accounted on the basis of
available information on line-to-line basis, with similar items in the Company’s
financial statements to the extent of the participating interest of the Company
as per the various joint-venture agreement(s).

Revenue recognition :

Revenue on sale of goods is recognised when the property in
the goods is transferred to buyer for a price, or when all significant risks and
rewards of ownership have been transferred to the buyer and no effective control
is retained by the Company in respect of the goods transferred to a degree
usually associated with ownership and no significant uncertainty exists
regarding the amount of consideration that will be derived from the sale of
goods.

Revenue on transactions of rendering services is recognised,
either under the completed service contract method or under the proportionate
completion method, as appropriate. Performance is regarded as achieved when no
significant uncertainty exists regarding the amount of consideration that will
be derived from rendering the services.


levitra

Oil and gas assets

New Page 1CAIRN INDIA LTD. — (31-12-2006)

4. Oil and gas assets :

Cairn India Group follows the ‘Successful Efforts Method’ for
accounting for oil and gas assets as set out by the Guidance Note issued by the
ICAI on ‘Accounting for Oil and Gas Producing Activities’.

Expenditure incurred on the acquisition of a licence interest
is initially capitalised on a licence-by-licence basis. Costs are held,
undepleted, within exploratory & development wells in progress until the
exploration phase relating to the licence area is complete or commercial oil and
gas reserves have been discovered.

Exploration expenditure incurred in the process of
determining exploration targets which cannot be directly related to individual
exploration wells is expensed in the period in which it is incurred.

Exploration/appraisal drilling costs are initially
capitalised within exploratory & development wells in progress on a well basis
until the success or otherwise of the well has been established. The success or
failure of each exploration/appraisal effort is judged on a well-by-well basis.
Drilling costs are written off on completion of a well, unless the results
indicate that oil and gas reserves exist and there is a reasonable prospect that
these reserves are commercial.

Where results of exploration drilling indicate the presence
of oil and gas reserves which are ultimately not considered commercially viable,
all related costs are written off to the Profit and Loss Account. Following
appraisal of successful exploration wells, when a well is ready for commencement
of commercial production, the related exploratory and development wells in
progress are transferred into a single-field cost centre within producing
properties, after testing for impairment.

Where costs are incurred after technical feasibility and
commercial viability of producing oil and gas is demonstrated and it has been
determined that the wells are ready for commencement of commercial production,
they are capitalised within producing properties for each cost centre.
Subsequent expenditure is capitalised when it enhances the economic benefits of
the producing properties or replaces part of the existing producing properties.
Any costs remaining associated with such part replaced are expensed in the
financial statements.

Net proceeds from any disposal of an exploration asset within
exploratory and development wells in progress are initially credited against the
previously capitalised costs and any surplus proceeds are credited to the Profit
and Loss Account. Net proceeds from any disposal of producing properties are
credited against the previously capitalised cost and any gain or loss on
disposal of producing properties is recognised in the Profit and Loss Account,
to the extent that the net proceeds exceed or are less than the appropriate
portion of the net capitalised costs of the asset.


(c) Depletion :



The expenditure on producing properties is depleted within
each cost centre. Depletion is charged on a unit-of-production basis, based on
proved reserves for acquisition costs and proved and developed reserves for
other costs.


(d) Site restoration costs :



At the end of the producing life of a field, costs are
incurred in removing and restoring the site of production facilities. Cairn
India Group recognises the full cost of site restoration as an asset and
liability when the obligation to rectify environmental damage arises. The site
restoration asset is included within producing properties of the related asset.
The amortisation of the asset, calculated on a unit-of-production basis on
proved and developed reserves, is included in the ‘depletion and site
restoration costs’ in the Profit and Loss Account.

Revenue from operating activities :

Revenue represents the Cairn India Group’s share of oil, gas
and condensate production, recognised on a direct-entitlement basis and tariff
income received for third-party use of operating facilities and pipelines in
accordance with agreements.


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Accounting for Oil and Gas Activity

New Page 1RELIANCE INDUSTRIES LTD. — (31-3-2007)

3. Accounting for Oil and Gas Activity :

The Company has adopted ‘Full Cost Method’ of accounting for
its oil and gas activity and all costs incurred in acquisition, exploration and
development are accumulated considering the country as a cost centre. Oil and
gas joint ventures are in the nature of jointly controlled assets. Accordingly,
assets and liabilities as well as income and expenditure are accounted on the
basis of available information, on line-by-line basis with similar items in the
Company’s financial statements, according to the participating interest of the
Company.

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Exploration, Development & Production Costs

New Page 1Oil and Natural Gas Corporation Ltd. — (31-3-2007)

1. Exploration, Development & Production Costs :

5.1 Acquisition cost :


Acquisition cost of an oil and gas property in
exploration/development stage is taken to acquisition cost under the respective
category. In case of overseas projects, the same is taken to capital work in
progress. Such costs are capitalised by transferring to producing property when
it is ready to commence commercial production. In case of abandonment, such
costs are expensed. Acquisition cost of a producing oil and gas property is
capitalised as producing property.

5.2 Survey costs :


Cost of surveys and prospecting activities conducted in the
search of oil and gas are expensed in the year in which these are incurred.

5.3 Exploratory/Development wells in progress :


5.3.1 All acquisition costs, exploration costs involved in
drilling and equipping exploratory and appraisal wells, cost of drilling
exploratory type stratigraphic test wells are initially capitalised as
exploratory wells in progress till the time these are either transferred to
producing properties on completion as per policy no. 5.4.1 or expensed in the
year when determined to be dry or of no further use, as the case may be.

5.3.2 All wells under as ‘exploratory wells in progress’
which are more than two years old from the date of completion of drilling are
charged to Profit and Loss Account except those wells which have proved reserves
and the development of the fields in which the wells are located has been
planned.

5.3.3 All costs relating to development wells are initially
capitalised as development wells in progress and transferred to producing
properties on completion as per policy no. 5.4.1.

5.4 Producing properties :


5.4.1 Producing properties are created in respect of an
area/field having proved developed oil and gas reserves, when the well in the
area/field is ready to commence commercial production.

5.4.2 Cost of temporary occupation of land, successful
exploratory wells, all development wells, depreciation on related equipment and
facilities, and estimated future abandonment costs are capitalised and reflected
as producing properties.

5.4.3 Depletion of producing properties :


Producing properties are depleted using the ‘Unit of
Production Method’. The rate of depletion is computed with reference to the area
covered by individual lease/licence/asset/amortisation base by considering the
proved developed reserves and related capital costs incurred including estimated
future abandonment costs. In case of acquisition, cost of producing properties
is depleted by considering the proved reserves. These reserves are estimated
annually by the Reserve Estimates Committee of the Company, which follows the
International Reservoir Engineering Procedures.

5.5 General administrative expenses :


General administrative expenses at assets, basins, services,
regions and headquarters are charged to Profit and Loss Account.

5.6 Production costs :


Production costs include pre-well head and post well head
expenses including depreciation and applicable operating costs of support
equipment and facilities.

Abandonment costs :

7.1 The full eventual estimated liability towards costs
relating to dismantling, abandoning and restoring offshore well sites and allied
facilities is recognised at the initial stage as cost of producing property and
liability for abandonment cost, based on the latest technical assessment
available at current costs with the Company. The same is reviewed annually.

7.2 Cost relating to dismantling, abandoning and restoring
onshore well sites and allied facilities are accounted for in the year in which
such costs are incurred, as the salvage value is expected to take care of the
abandonment costs.

Revenue recognition :

15.1 Revenue from sale of products is recognised on transfer
of custody to customers.

15.2 Sale of crude oil and gas produced from exploratory
wells in progress in exploratory areas is deducted from expenditure on such
wells.

15.3 Sales are inclusive of all statutory levies except Value
Added Tax (VAT). Any retrospective revision in prices is accounted for in the
year of such revision.

15.4 Revenue in respect of fixed price contracts is
recognised for the quantum of work done on the basis of percentage of completion
method. The quantum of work done is measured in proportion of cost incurred to
date to the estimated total cost of the contract or based on reports of physical
work done.

15.5 Finance income in respect of assets given on finance
lease is recognised based on a pattern reflecting a constant periodic rate of
return on the net investment outstanding in respect of the finance lease.

15.6 Revenue in respect of the following is recognised when
there is reasonable certainty regarding ultimate collection :

(a) Shortlifted quantity of gas.
(b) Gas pipeline transportation charges and statutory duties thereon.
(c) Reimbursable subsides and grants.
(d) Interest on delayed realisation from customers.
(e) Liquidated damages from contractors.

ACC LTD. — (31-12-2007)

New Page 1ACC LTD. — (31-12-2007)

From Notes to Accounts :

There are no Micro, Small and Medium Enterprises, as defined
in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the
Company owes dues on account of principal amount together with interest and
accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium
Enterprises has been determined to the extent such parties have been identified
on the basis of information available with the Company. This has been relied
upon by the auditors.


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FULFORD (INDIA) LTD. — (31-12-2007)

New Page 1FULFORD (INDIA) LTD. — (31-12-2007)

From Notes to Accounts :

The Company has not received any intimation from the
suppliers regarding status under the Micro, Small and Medium Enterprises
Development Act, 2006 (the act) and hence disclosure regarding :

(a) Amount due and outstanding to suppliers as at the end
of accounting year;

(b) Interest paid during the year;

(c) Interest payable at the end of the accounting year, and

(d) Interest accrued and unpaid at the end of the
accounting year, has not been provided.


The Company is making efforts to get the confirmations from
the suppliers as regards their status under the Act.


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Honeywell Automation India Ltd. — (31-12-2007)

New Page 1HONEYWELL AUTOMATION INDIA LTD. — (31-12-2007)

From Notes to Accounts :

Disclosure in accordance with Section 22 of the Micro, Small
and Medium Enterprises Development Act, 2006 :

Particulars

Amount (Rs.
‘000)

(a) Principal amount remaining unpaid and

206,945

Interest due
thereon

—

(b) Interest
paid in terms of Section 16

—

(c) Interest due and payable for the period of delay in
payment

—

(d) Interest accrued and remaining unpaid

—

(e) Interest due and payable even in succeeding years

—

The Company has compiled the above information based on
verbal confirmations from suppliers. As at the year end, no supplier has
intimated the Company about its status as a Micro or Small Enterprise or its
registration under the Micro, Small and Medium Enterprises Development Act,
2006.

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MRF LTD. — (30-9-2007)

New Page 1MRF LTD. — (30-9-2007)

From
Schedules :

A. Current
Liabilities :

Rs. crore

Rs. crore

Sundry Creditors :

Outstanding dues of Micro Enterprises & Small Enterprises
(Note 5)

3.30

1.50

Outstanding dues of creditors other than Micro
Enterprises & Small Enterprises

411.68

370.73


From Notes to Accounts :




8. There are no delays in the payment of dues to micro,
small and medium enterprises, to the extent such parties have been identified
on the basis of information available with the Group. Previous year’s figures
stated in Schedule 8 represent amounts due to small-scale industrial
undertakings.



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HINDUSTAN UNILEVER LTD.

New Page 1HINDUSTAN UNILEVER LTD.

— (31-12-2007)

From Schedule :

Sundry Creditors (Refer Note 21)

From Notes to Accounts :

There are no Micro and Small Enterprises, to whom the Company
owes dues, which are outstanding for more than 45 days as at 31st December,
2007. This information as required to be disclosed under the Micro, Small and
Medium Enterprises Development Act, 2006 has been determined to the extent such
parties have been identified on the basis of information available with the
Company.

&

HONEYWELL AUTOMATION INDIA LTD. — (31-12-2007)


From Notes to Accounts :

Disclosure in accordance with Section 22 of the Micro, Small
and Medium Enterprises Development Act, 2006 :

Particulars

Amount (Rs.
‘000)

(a) Principal amount remaining unpaid and

206,945

Interest due
thereon

—

(b) Interest
paid in terms of Section 16

—

(c) Interest due and payable for the period of delay in
payment

—

(d) Interest accrued and remaining unpaid

—

(e) Interest due and payable even in succeeding years

—

The Company has compiled the above information based on
verbal confirmations from suppliers. As at the year end, no supplier has
intimated the Company about its status as a Micro or Small Enterprise or its
registration under the Micro, Small and Medium Enterprises Development Act,
2006.

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S & S Power Switchgear Ltd.

New Page 1S & S POWER SWITCHGEAR LTD.

— (30-9-2007)

From Notes to Accounts :

7. The Company is in the process of identifying the
small-scale units and Micro, Small and Medium Enterprises and hence :

(a) Interest, if any, payable as per Interest on Delayed
Payment to Small Scale and Ancillary Industrial Undertakings Ordinance, 1993
and the Micro, Small and Medium Enterprises Development Act, 2006 is not
ascertainable, and

(b) Amount payable to small-scale units is not
ascertainable.


From Auditors’ Report :



(g) Subject to the foregoing, in our opinion and to the
best of our information and according to the explanations given to us, the
said financial statements read along with the notes thereon, subject to the
dues to the small-scale industry units (Refer Note 7 of Schedule 15), give
the information required by the Companies Act, 1956, in the manner so required
and give a true and fair view in conformity with the accounting principle
generally accepted in India.



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Abbott India Ltd. — (30-11-2007)

New Page 1ABBOTT INDIA LTD. — (30-11-2007)

From Schedules :

A. Current Liabilities :

 
Rupees in millions
As at 30-11-2006 Rupees in millions

Sundry Creditors :

Due to Micro & Small Enterprises (Refer Note B 27 —
Schedule 16)

—
 —

Others†
308.4
286.6

† Previous year includes an amount of Rs.36.7 million due to
small-scale industrial undertakings.



From Notes to Accounts :




(a) An amount of Rs.4.4 million and Nil was due and
outstanding to suppliers as at the end of the accounting year on account of
Principal and Interest, respectively.

(b) No interest was paid during the year.

(c) No interest is payable at the end of the year other
than interest under the Micro, Small and Medium Enterprises Development Act,
2006.

(d) No amount of interest was accrued and unpaid at the end
of the accounting year.

The above information and that given in Schedule 10 —
‘Current Liabilities and Provisions’ regarding Micro, Small and Medium
Enterprises has been determined to the extent such parties have been
identified on the basis of information available with the Company. This has
been relied upon by the auditors.



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Section A : Disclosures in Unaudited Quarterly Results regarding treatment of foreign exchange fluctuations for the period/quarter ended 31-12-2008

From Published AccountsTata Motors Ltd.

2. Net Loss after tax of Rs.26,326 lakhs for the quarter
ended December 31, 2008 includes notional exchange loss (net) of Rs.22,652 lakhs
on revaluation of foreign currency borrowings, deposits and loans given. Net
Profit after tax of Rs.40,984 lakhs for the nine months ended December 31, 2008
includes notional exchange loss (net) of Rs.63,255 lakhs on revaluation of
foreign currency borrowings, deposits and loans given.

4. Effective from April 1, 2008 the Company has applied hedge
accounting principles in respect of forward exchange contracts as set out in
Accountings Standards (AS) 30 — Financial Instruments : Recognition and
Measurement, issued by the Institute of Chartered Accountants of India.
Accordingly, all such contracts outstanding as on December 31, 2008 are marked
to market and a notional loss aggregating to Rs.16,481 lakhs (net of tax)
arising on contracts that were designated and effective as hedges of future cash
flows, has been directly recognised in the Hedging Reserve Account to be
ultimately recognised in the Profit and Loss Account depending on the exchange
rate fluctuation till and when the underlying forecasted transaction occurs.
Earlier such notional loss/gain was recognised in the Profit and Loss Account on
the basis of exchange rate on the reporting date.

&
GMR Infrastructure Ltd.


The foreign exchange loss (Net) of Rs.2,524 lakhs for the
quarter ended December 31, 2008 (2007 : Gain of Rs.96 lakhs) and Rs.12,986 lakhs
for the nine months period ended December 31, 2008 (2007 : Gain of Rs.1,829
lakhs), accounted pursuant to Accounting Standard 11 on the Effects of Changes
in Foreign Exchange Rates include the following :

(a) Vemagiri Power Generation Limited (VPGL), a notional
loss of Rs.477 lakhs for the quarter ended December 31, 2008 (2007 : Gain of
Rs.122 lakhs) and Rs.2,639 lakhs for the nine months period ended December 31,
2008 (2007 : Gain of Rs.1,392 lakhs)

(b) GMR Hyderabad International Airport Limited (GHIAL), a
notional loss of Rs.2,501 lakhs for the quarter ended December 31, 2008
(2007 : NIL) and Rs.11,012 lakhs for the nine months period ended December 31,
2008 (2007 : NIL)


The above notional foreign exchange losses of these two
subsidiaries have been accounted on the conversion of their project loans
denominated in foreign currency into Indian Rupees, using closing rates as at
the reporting date. However, both these subsidiaries have adequate foreign
currency revenues to provide hedge against any currency fluctuation risks that
may arise as and when the interest payments and principal repayments of these
loans are made and hence forex risks associated with these loans will not have
any bearing on the profitability of these two subsidiaries.

&
Reliance Industries Ltd.


The Company has continued to adjust the foreign currency
exchange differences on amounts borrowed for acquisition of fixed assets, to the
carrying cost of fixed assets in compliance with Schedule VI to the Companies
Act, 1956 as per legal advice received which is at variance to the treatment
prescribed in Accounting Standards (AS-11) on ‘Effects of Changes in Foreign
Exchange Rates’ notified in the Companies (Accounting Standards) Rules 2006. Had
the treatment as per the AS-11 been followed, the net profit after tax for the
nine months period ended 31st December 2008 would have been lower by Rs.1,177
crore (US $ 242 million).

&
The Great Eastern Shipping Co. Ltd.


1. Even though not yet mandatory, in accordance with the
recommendations of the Institute of the Chartered Accountants of India, the
Company has with effect from April 01, 2008 adopted the principles enunciated in
Accounting Standard (AS) 30, Financial Instruments : Recognition and Measurement
in respect of hedge accounting and recognition and measurement of derivatives.
Consequently, the revaluation gain/(loss) on designated hedging instruments that
qualify as effective hedges has been appropriately recorded in the hedging
reserve account. Designated hedging instruments include foreign currency loan
liabilities and currency, interest rate and bunker derivatives. Earlier, the
revaluation gain/(loss) on the foreign currency loan liabilities was recognised
in the profit and loss account, whereas the gain/(loss) on currency, interest
rate and bunker derivatives was recognised on settlement. Consequent to the
designation of foreign currency loan liabilities as hedging instruments, the
profit of the Company for the quarter and nine months ended December 31, 2008 is
higher by Rs.62.60 crores and Rs.252.18 crores, respectively. Gain/(loss) on
revaluation of ineffective hedge transactions and on settlement of hedge
transactions is recognised in the Profit and Loss Account.

2. Exceptional item includes :

(a) Net Compensation (paid)/received on cancellation of
vessel construction/sale contracts for the quarter and nine months ended
December 31, 2008 was Rs.(14.85) crores. (for the quarter and nine moths ended
December 31, 2007 the corresponding amount was Rs. ‘Nil’).

(b) Exchange gain/(loss) on revaluation of foreign currency
loan liabilities in accordance with As-11 for the quarter and nine months
ended December 31, 2008 were Rs. ‘Nil’ and Rs.(138.57) crores,
respectively. (For the quarter and nine months ended December 31, 2007 the
corresponding amounts were Rs.22.42 crores and Rs.186.49 crores,
respectively.)

Tata Steel Ltd.


Notional exchange loss during the period includes an unrealised translation loss of Rs.753.38 crores (Rs.153.56 crores for the quarter) on Convertible Alternate Reference Securities (CARS) issued in September 2007. The liability has been translated at the exchange rate as on 31st December 2008. CARS are convertible into equity shares only between 4th September 2011 and 6th August 2012 and are redeemable in foreign currency only in September 2012, if not converted into equity, and are neither convertible nor redeemable ti114th September 2011.

Bharti  Airtel  Ltd.

As reported in the last quarter, the Company has followed the accounting policy to adjust foreign exchange fluctuation on loan liability for fixed assets till June 30, 2008, as per requirement of Schedule VI of the Companies Act, 1956 based on legal advice. During the nine months period effective April I, 2008, the Company has adopted the treatment prescribed in Accounting Standard (AS-11) ‘Effect of Changes in Foreign exchange Rates’ notified in the Companies (Accounting Standard) Rules 2006 dated December 7, 2006. Instead of capitalising/ recapitalising such fluctuation as per policy hitherto followed, the Company has changed/ credited such fluctuations directly to the Profit & Loss Account.

Had the Company continued with the earlier policy net profit after tax would have been higher by Rs.245.09 crore and Rs.900.12 crore for the quarter and nine months ended December 31, 2008, respectively, for the Company and the net profit after tax would have been higher by RS.248.42 crore and Rs.929.94 crore for the quarter and nine months ended December 31, 2008, respectively, for the Group.

Reliance  Communications   Ltd.

The Company is pursuing aggressive capex plans which include significant expansion of nationwide wireless network. The Company has funded these initiatives primarily by long-term borrowings in foreign currency and Foreign Currency Convertible Bonds (‘FCCBs’). In compliance of Schedule VI of the Companies Act, 1956 and on the basis of legal advice received by the Company, short-term fluctuations in foreign exchange rates relate to such liabilities and borrowings related to acquisition of fixed assets are adjusted in the carrying cost of fixed assets. Had the accounting treatment as per Accounting Standard (AS) 11 been continued to be followed by the Company, the net profit after tax for the quarter and nine months ended 31st December 2008 would have been lower by Rs.59,566 lakh and Rs.84,837 lakh for realised and Rs.2,757 lakh and Rs.1,80,359 lakh for unrealised currency exchange fluctuation, respectively. This excludes an amount of Rs.21,048 lakh and Rs.1,14,674 lakh for the quarter and nine months ended on 31st December 2008 on FFCBs for which the Company will not be liable, if FCCBs are converted on or before the due date i.e., 1st May 2011 and 18th February 2012. This matter was referred to by the auditors of the Company in their limited review report.

 Jet Airways  Ltd.

The Company,  based  on legal advice has, from the first quarter of the current year, adjusted the foreign currency differences on amounts borrowed for acquisition of fixed assets acquired from outside India aggregating Rs.38,081 lac and Rs.188,454 lac for quarter and nine months ended 31st December 2008 to the carrying cost of the fixed assets, in compliance with Schedule VI of the Companies Act, 1956 which is in variance with the treatment prescribed in Accounting Standard (AS) 11 on ‘Effects of Changes in Foreign Exchange Rates’ notified in the Companies (Accounting Standards) Rules. Had the treatment as per AS-ll been followed, the net loss before tax for the quarter and nine months ended 31st December 2008 would have been higher by Rs.35,791 lac and Rs.185,227 lac, respectively.

Consequent to following this practice from the first quarter of the current year, the foreign currency difference (gain) previously credited to the profit and loss account aggregating Rs.20,727 lac has been reversed from the opening balance of profit and loss account and adjusted to the cost of fixed assets.

These are matters of reference in limited review report of statutory auditors.

Ranbaxy  Laboratories  Ltd.

3. Foreign exchange Loss/(Gain) on loans represents exchange differences arising during the period(s) on foreign currency borrowings including Foreign Currency Convertible Bonds.

4. (A) Pursuant to ICAI Announcement’ Accounting for Derivatives’ on the early adoption of Accounting Standard (AS) 30 – Financial Instruments: Recognition and Measurement, the Company has early adopted the said Standard with effect from October I, 2008, to the extent that the adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, company law and other regulatory requirements. Pursuant to the adoption:

i) Transitional loss mainly representing the loss on fair valuation of foreign currency options, determined to be ineffective cash flow hedges on the date of adoption, amounting to Rs.ll,788 million (net of tax) has been adjusted against the opening balance of revenue reserves as of January I, 2008.

ii) Loss on fair valuation of forward covers, which qualify as effective cash flow hedges amounting to Rs.723 million (net of tax), on the date of adoption, has been recognised in the hedging reserve account.

B) For the quarter, foreign exchange loss arising on account of change in fair value of foreign currency options determined to be ineffective cash flow hedge, amounted to Rs.7,843 million before tax and has been recognised under ‘Exceptional items’. Net of tax the loss is Rs.5,177 million.

Essar Oil Ltd.

2. Exceptional items consist of (a) forex loss of Rs.679 crore on account of unprecedented depreciation in the value of rupee during the quarter, and (b) provision of Rs.524 crore on account of write down of inventory to net realisable value due to steep fall in crude/petroleum product prices during the quarter.

3. The Company has recognised exchange difference on all foreign currency monetary items as at the end of the period. There is no loss (net) on outstanding commodity derivative contracts at the end of the period.

Format and disclosures for financial statements prepared using IFRS

Revision of Financial Statements

Lok Housing and Constructions Ltd.


    — (31-3-2009)

    From Notes to Accounts :

    (2a) The global economy in general and the real estate industry in particular is passing through recession, which has resulted into financial meltdown of an un-precedental scale. During the previous financial years the Company had entered into various agreements for sale of its real estate, plots, properties, development rights and constructed premises, held by it as stock in trade. In accordance with the consistently followed accounting practice of the Company, sales revenue and profit thereon were recognised at the time of entering into such agreement to sell. Due to the above-mentioned financial meltdown some of the parties to whom sales had been effected have failed to meet their commitment. Considering the overall interest of the Company, the management decided to reacquire the properties by mutually terminating the agreements for sale entered into in the previous financial years. During the current financial year the Company has entered into 53 agreements resulting into cancellations of sale. These agreements for cancellation of sales pertain to sales and revenue/profits recognised during financial year 2006-07 and 2007-08. Though the cancellation of sales was effected during the current year and accordingly in normal course the sales return and reversal of profit thereon should be effected during the current financial year. However, the Company has been legally advised that on the doctrine of ‘Real Income’ and ‘Relation Back’, the cancellation effect should be effected in the year in which the sales and profits were originally recognised and not in the year in which the actual cancellation has taken place (that is the current financial year). Accordingly the Company has revised and re-casted its financial statements for financial years 2006-07 and 2007-08 on the above-mentioned principles. Accordingly, during the year under review, sales return and reversal of profit are not reflected, though the cancellations of sales have occurred during this financial year. The aggregate value of sales return and profit reversal as mentioned above are Rs.181.56 crores and Rs.91.23 crores, respectively for financial year 2006-07 and Rs.100.58 crores and Rs.77.78 crores, respectively for financial year 2007-08. The auditors do not concur with the above view of revising the financial statements of earlier years on the principle of ‘Relation Back’ and ‘Real Income’, instead are of the opinion that the sales return and its consequence on the profit and loss account should be reflected in the year in which such sales return takes place (cancellation of sales agreements), accordingly in the opinion of the auditors the sales return and reversal of profit thereon should be accounted/reflected during the current financial year and not in the earlier years as done by the Company.

    (2b) The Company has revised its financial statements for financial years 2006-07 and 2007-08, giving effect of cancellation of sales, in the respective years, in the manner stated in note 2(a) above. The revised financial statements are already approved by the Board of Directors at its meeting held on 30th March 2009, However the revised financial statements 2006-07 and 2007-08 are not yet adopted and approved by the shareholders. It is proposed to get the revised financial statements for financial years 2006-07 and 2007-08 at the forthcoming Annual General Meeting, along with the financial statements for 2008-09. The act of revision of the Financial Statements for F.Y. 2006-07 and 2007-08 is in accordance with the Circular No. 17/75/2002-CL.V, dated 13-1-2003 issued by the Ministry of Finance and Company Affairs permitting revision of financial statements under certain circumstances.

    From Auditors’ Report :

    (e) In our opinion and to the best of our knowledge and according to the explanation given to us and subject to the specific reference being drawn on :

    (i) note # 2(a) regarding non-accounting of sales returns of Rs.2,82,14.46 lacs effected during the year under review (instead of sales return being accounted in earlier years). The resulting impact being that sales/gross revenue for the year is over-stated by Rs.2,82,14.46 lacs and the net loss after tax is under-stated by Rs.1,69,01.50 lacs, however the reserves and surplus and inventories remaining the same; and

    (ii) note # 2(b) regarding the current financial statements for financial year 2008-09 are subject to the approval of the revised financial statements of financial year 2006-2007 and 2007-2008 by the shareholders at the forthcoming general meeting of the shareholders;

    (iii) . . . .

    (iv) . . . .

    (v) . . . .

    the said Balance Sheet, Profit and Loss Account and Cash Flow Statement read together . . . .

    From Directors’ Report :

    Review of Operations :

    . . . .

    In Financial Year 2008-09, number of agreements for sale have been cancelled, such agreements pertaining to Financial Years 2006-2007 and 2007-2008. The Company has been legally advised that since cancellation of sales pertains to sales recognised earlier, the financial statements of the period during which sales and profits were recognised need re-construction/amendment on the doctrine of ‘Relation-back’ to determine ‘Real-income’. Accordingly the Company has amended the financial statements of the relevant previous years i.e., 2006-2007 and 2007-2008 and shall submit them before the shareholders to adopt the same in this forthcoming Annual General Meeting. An elaborate explanation in this respect has been given in the Explanatory Statement of Notice convening this Annual General Meeting. (not reproduced here)

Lok Housing and Constructions Ltd.

— (31-3-2008 — revised)

    From Notes to Accounts :

During the year under review the Company had entered into several ,agreements in respect of sale of residential flats, commercial shops, properties and developments rights. Sales and revenue in respect of which is accounted in accordance with the consistently followed method of revenue recognition as mentioned in note no. 1 above. During the financial year 2008-09 the Company has entered into 48 agreements having aggregate sales value Rs.100,58.14Iacs, resulting into cancellation of sales recognised during the year under review. This cancellation of agreements have resulted into reduction in gross sales by Rs.100,58.14 lacs and corresponding reduction in net profit after tax by Rs.77,78.03 lacs. Though the cancellation of sales in respect of sales effected during the year under review has happened during the financial year 2008-2009, the Company has been legally advised that on the doctrine of ‘Real Income’ and ‘Relation Back’, the cancellation effect in respect of the above transaction should be effected in the year under review and not at the time when actual cancellation took place. Accordingly the Company has redrafted its financial statements on the above-mentioned principles as if the transaction for sales had not occurred at all. Consequently during the year under review, sales and net profit before tax is reduced compared to the original financial statements prepared for the year under review. In view of the amendment to the financial statements of the Company giving effect to the above-mentioned cancellation transactions, the Company is once against presenting the amended financial statements to the members for their approval.

The financial statements are revised in accordance with the Circular number 1/2003, dated 13th January 2003, issued by the Ministry of Finance and Company Affairs. The auditors have relied on the management’s interpretation of the said Circular that the proposed revision of the financial statements is in accordance with the letter and spirit of the said Circular, thereby the revision of financial statements is in accordance with the provisions of the Companies Act, 1956.

From Auditors’ Report:

As per our opinion, which opinion is also supported by the Institute of Chartered Accountants of India, a company cannot reopen and revise the accounts once adopted by the shareholders at an Annual General Meeting. Contrary to this opinion, the Board of Directors of the Company has reopened and revised the aforesaid accounts in terms of Circular of the Ministry of Finance and Company Affairs dated 13-1-2003 in compliance with the accounting standards.

We have considered the earlier Auditor’s Report dated 30th June 2008 on the original accounts and have examined the changes made therein, which are as under:

Cancellation of sale amounting to Rs.l00,58.14 lacs reversal of cost of sales thereto amounting to Rs.22,80.10 lacs and resulting reduction in profit after tax by Rs.77,78.03 lacs.

e) In our opinion and to the best of our knowledge and according to the explanation given to us and subject to the specific reference being drawn on note # 2(a) regarding the treatment for cancellation of sale agreements aggregating to Rs.100,58.14 lacs and resulting reduction in profit after tax by Rs.77,78.03 lacs and thereby revising the financial statements of the said year, the said Balance Sheet, Profit & Loss Account and Cash Flow Statement read together with the notes ….

From Directors’ Report:

Your Company had entered into several transactions for sale of various real estate products and properties during the year under review, when the market situations were at its pinnacle. As it is the practice in the real estate industries the payments are deferred and paid over a period of time. In accordance with the consistent accounting practice of the Company as mentioned in the notes to account the sale and profit in respect of these sale transactions were recorded. However, after the sub-prime crises, fall of giant financial institutions like Fannie Mai, Freddi Mac, Lehman Brothers, the world economy has gone into severe recession and financial meltdown, consequent of which the prices in all markets and real estate in particular have fallen by over 50-60%. The parties who had transacted in the past started defaulting on their payments. Considering the peculiarity of our business and the over-all interest of the Company, your management thought of mutually terminating some of the transactions for sale, so as to avoid the property from going into prolonged and unproductive litigation.

These cancellations of sales happened during November-December 2008, that is falling into the financial year 2008-09. In normal and regular course these sales would be shown as sales return during financial year 2008-09, however the Company has been legally advised that on the principle of ‘Real income’ and on the doctrine of ‘Relation back’, the Company should revise its financial statements for the year in which the original sales transaction hapened. Accordingly the financials statements of financial year 2007-08 are revised.
 
The Company has approached the shareholders to consider and adopt the Revised Annual Accounts and relevant Report there on for the financial Year 2007-2008.

Lok Housing and Constructions Ltd. – (31-3-2007 – revised)

From Notes to Accounts:

During the year under review the company had entered into several agreements in respect of sale of residential flats, commercial shops, properties and development rights. Sales and revenue in respect of which is accounted in accordance with the consistently followed method of revenue recognition as mentioned in note no. 1 above. During the financial year 2008-2009 the Company has entered into agreements having aggregate sales value Rs.1,81,5633 lacs resulting into cancellation of sales recognised during the year under review. This cancellation of agreements has resulted into reduction in gross sales by Rs.1,81,56331acs and corresponding reduction in net profit after tax by Rs.91,23.47 lacs. Though the cancellation of sales effected during the year under review has happened during the financial year 2008-2009, the Company has been legally advised that on the doctrine of ‘Real Income’ and ‘Relation Back’, the cancellation effect in respect of the above transactions should be effected in the year under review and not at the time when actual cancellation took place. Accordingly the Company has redrafted its financial statements on the above-mentioned principles as if the transaction for sales had not occurred at all. Consequently during the year under review, sales and net profit before tax is reduced compared to the original financial statements prepared for the year under review. In view of the amendment to the financial statements of the Company giving effect to the above-mentioned cancellation transactions, the Company is once again presenting the amended financial statements to the members for their approval.

The financial statements are revised in accordance with the Circular number 1/2003, dated 13th January 2003, issued by the Ministry of Finance and Company Affairs. The auditors have relied on the management’s interpretation of the said Circular, that the proposed revision of the financial statements is in accordance with the letter and spirit of the said Circular, thereby the revision of financial statements is in accordance with the provisions of the Companies Act, 1956.

From Auditors’ Report:

As per our opinion, which opinion is also supported by the Institute of Chartered Accountants of India, a company cannot reopen and revise the accounts once adopted by the shareholders at an Annual General Meeting. Contrary to this opinion, the Board of Directors of the Company. has reopened and revised the aforesaid accounts in terms of the Circular of the Ministry of Finance and Company Affairs dated 13-1-2003 in compliance with the accounting standards.

We have considered the earlier Auditor’s Report dated 28th June, 2007 on the original accounts and have examined the changes made therein which are as under:

Cancellation of sales amounting to Rs.l,81,56.333Iacs reversal of cost of sales thereto amounting to Rs.90,32.86 lacs and resulting in reduction in profit after tax by Rs.91,23.47 lacs.

These financials statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

e) In our opinion and to the best of our knowledge and according to the explanation given to us and subject to the specific reference being drawn on note # 2, regarding the treatment for cancellation of certain sale agreements aggregating to Rs.l,81,56.33 lacs and resulting into reduction in profit after tax by Rs.91,23.47 lacs and thereby revising the financial statements of said year, the said Balance Sheet, Profit & Loss Account and Cash Flow Statement read together with the notes …


From Directors’ Report:

Not reproduced since similar to disclosures in Directors’ Report for 31-3-2008 (revised).

Section A : Treatment of Foreign Exchange Fluctuations as per AS-11 — ‘The Effects of Changes in Foreign Exchange Rates’ issued under the Companies Acounting Standards) Rules, 2006

New Page 1Section A : Treatment of
Foreign Exchange Fluctuations as per AS-11 — ‘The Effects of Changes in Foreign
Exchange Rates’ issued under the Companies (Accounting Standards) Rules, 2006

  • Reliance Industries Ltd. — (31-3-2008)


From Notes to Accounts :

The Company has continued to adjust the foreign currency
exchange differences on amounts borrowed for acquisition of fixed assets to the
carrying cost of fixed assets in compliance with Schedule VI to the Companies
Act, 1956 as per legal advice received, which is at variance to the treatment
prescribed in Accounting Standard (AS-11) on ‘Effects of Changes in Foreign
Exchange Rates’ notified in the Companies (Accounting Standards) Rules 2006. Had
the treatment as per AS-11 been followed, the net profit after tax for the year
would have been higher by Rs.29.65 crore.

From Auditors’ Report :

In our opinion and read with Note No. 5 of Schedule ‘O’
regarding accounting for foreign currency exchange differences on amounts
borrowed for acquisition of fixed assets, the Balance Sheet, Profit and Loss
Account and Cash Flow Statement dealt with by this report are in compliance with
the Accounting Standards referred to in Ss.(3C) of S. 211 of the Companies Act,
1956.

  • ACC Ltd. — (31-12-2007)


From Accounting Policies on Foreign Currency Translation :

Exchange differences :

Exchange differences arising on the settlement of monetary
items or on reporting company’s monetary items at rates different from those at
which they were initially recorded during the year, or reported in previous
financial statements, are recognised as income or as expenses in the year in
which they arise, except those arising from investments in non-integral
operations. Exchange differences arising in respect of fixed assets acquired
from outside India on or before accounting period commencing after December 7,
2006 are capitalised as a part of fixed asset.

  • Chemplast Sanmar Ltd. — (31-3-2008)


From Notes to Accounts :

Consequent to the Notification of Companies (Accounting
Standards) Rules, 2006, the exchange differences relating to import of fixed
assets, which were hitherto being capitalised as part of the cost of fixed
assets, have been recognised in Profit and Loss Account. As a result of this
change, the profit for the year ended 31st March 2008 has decreased by Rs. 76.07
lacs.

  • Tata Elxsi Ltd. — (31-3-2008)


From Notes to Accounts :

Adoption of Revised Accounting Standard :

Treatment of Foreign Fluctuation :

The Company has adopted the Accounting Standard 11 ‘The
Effects of Changes in Foreign Exchange Rates’ (AS-11) issued under the Companies
(Accounting Standards) Rules, 2006, consequent to which exchange differences
arising on restatement/payment of foreign currency liabilities contracted for
purchase of fixed assets are charged to the Profit and Loss account.

Prior to the adoption of AS-11, the Company adjusted the
exchange differences arising on restatement/payment of such liabilities against
the cost of the related asset. Consequent to the change in accounting policy,
the profit before tax for the year and exchange gain is higher by Rs.1.90 lakhs.

  • Ramkrishna Forgings Ltd. — (31-3-2008)


From Notes to results submitted to BSE :

As per the legal advice received by the Company with regard
to treatment for the foreign currency exchange difference on amount borrowed for
acquisition of fixed assets from country outside India, the foreign currency
exchange difference has been adjusted to carrying cost of fixed assets in
compliance with Schedule VI of the Companies Act, 1956 which is at variance with
the treatment prescribed in Accounting Standard (AS-11) on ‘Effects of Change in
Foreign Currency Rates’ as notified in the Companies (Accounting Standard)
Rules, 2006. Had the treatment as per AS-11 been followed, the net profit after
tax, net block as well as reserves and surplus would be lower by Rs.2,33,92,121.

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