Accounting Policies of Best & Crompton Engineering Ltd. Company

Mar 31, 2013

A. Accounting Convention: The Financial Statements are presented under historical cost convention and applicable Accounting Standards.

B. Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses for the year and disclosure of contingent liabilities as of the date of the Balance Sheet. The estimates and assumptions used in the accompanying financial statements are based upon the management''s evaluation of relevant facts and circumstances as of the date of the financial statements. Actual amounts could differ from these estimates.

C. Fixed Assets

(i) Fixed Assets other than land are stated at cost, including interest beyond the period after commencement of commercial production capitalised in case of certain Plant & Machinery acquired up to 1985 under deferred and hire purchase schemes.

(ii) Additional cost on account of foreign currency translation for acquisition of fixed assets is added to cost of such fixed assets upto the date of Commissioning of such assets.

(iii) Assets acquired under hire purchase agreements are capitalised and finance charges thereon are expended when due.

D. Investments

Investment in certain subsidiaries and certain Trade Investments which are meant to be long term and are valued either at cost or in appropriate cases at Directors'' valuation taking into consideration permanent diminution in value.

E. Depreciation

Fixed Assets are depreciated on straight line method in accordance with Schedule XIV to the Companies Act, 1956.

F. Inventories

(i) Work - in - Progress on Contracts is valued at direct cost after deducting there from ''Proportionate Costs'', for which progressive bills have so far been raised.

(ii) Stores and spare parts, Raw Materials, Work-in-Progress on manufacturing, Finished Goods and Trading Stocks are valued at the lower of cost (Weighted Average Method) and net realisable value.

(iii) Land converted into stock in trade meant for disposal are valued at fair market value on the date of conversion.

G. Revenue recognition

(i) Revenue from Sales is recognised on delivery of goods.

(ii) Revenue from Contracts is recognised individually on each Contract, as and when progressive bills/claims are raised based on customers acceptance and terms of the Contract.

(iii) Income from service activities is accounted on accrual as per terms of agreement.

(iv) MODVAT / CENVAT Credits are carried forward in respect of inputs not consumed.

(v) Income from investments, interest income are accounted on accrual basis.

(vi) Sale of land converted into stock in trade is recognised on legal transfer of title to the land.

H. Retirement Benefits

(i) Contribution to Provident Fund and Family Pension fund are charged to Profit and Loss Account on accrual basis;

(ii) The liability for gratuity has been actuarially ascertained and provided for and are being progressively funded through an insurer;

(iii) Leave encashment liability has been actuarially ascertained and provided for.

(iv) Sickness benefit is covered by medical insurance.

I. Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of transaction and outstanding balances at the end of the accounting period are translated at the rate of exchange prevailing on that date and the resultant difference other than those that relating to fixed assets is recognised in the Profit & Loss Account. Difference in exchange due to translation of foreign currency relating to fixed assets are adjusted to the cost of the fixed assets.

J. Segment Reporting

The accounting policies adopted for segment reporting are in line with the accounting policies of the company with the following additional policies.

(i) Inter segment transfers have been accounted on the basis of prices charged to the external customers for limited purpose of computing segment revenue.

(ii) Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis have been included under "Unallocated corporate expenses".

K. Impairment of Assets

The Company has a policy of annually comparing the Net Realisable Value with carrying cost and providing for Impairment wherever required.

L. Provisions for Contingent Liabilities and Contingent Assets

All Contingent Liabilities are recognized in accordance with the Accounting Standard. Contingent assets are recognized only upon certainty of realisation.

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Mar 31, 2010

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