Accounting Policies of Dujodwala Paper Chemicals Ltd. Company

Mar 31, 2010

1] Accounting convention

The financial statements have been prepared under historical cost convention on the basis of going concern and are in accordance with the requirements of the Companies Act, 1956 and the Accounting Standards notified in the companies (Accounting Standards) Rules,2006 except otherwise stated.

The company generally follows mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties and as stated otherwise in these financial statements.

2] Use of estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/materialized.

3] Fixed Assets, and Depreciation:

a) Fixed Assets are stated at cost less accumulated depreciation. The cost includes cost of acquisition/construction, installation and preoperative expenditure if any and borrowing costs incurred during pre-operational period.

b) Depreciation is provided for on the straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions to assets during the year is provided for on a pro-rata basis.

4] Impairment of assets

Impairment is ascertained at each balance sheet date in respect of Cash generating Units. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. An impairment loss can be reversed if there are changes in estimates used to determine the recoverable amount in future periods. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined, if no impairment loss has been recognized.

5] Investments

a) Long-term investments are stated at cost. Provision for diminution in value of investments is made to recognize a decline other than temprory.

b) Current investments are stated at cost or fair value which ever is lower. 6] Valuation of inventories

a) Raw Materials, Stores and Spares and Packing Materials are valued at cost or net realisable value whichever is lower. Cost is identified on FIFO basis.

b) Work-in-progress is valued at cost of materials and labour together with relevant factory overheads or net realizable value whichever is lower.

c) Finished Goods valued at cost or market value whichever is less. The value includes excise duty paid/payable on such goods.

7] Revenue recognition

a) Sale of goods is recognized when the risk and rewards of ownership are passed on to the customers. Export Sales are accounted for on the basis of date of bill of lading Sales Turnover for the year includes sales value of goods but exclude Value Added Tax.

b) Export benefits are accounted on accrual basis.

8] Employee benefit

The liability for employee retirement benefits including gratuity and leave encashment in respect of employees is accounted for on cash basis.

9] Foreign currency transactions

a) Foreign Currency transactions are recorded at the exchange rates prevailing on the dates of such transactions. Monetary assets and liabilities in foreign currency as at the Balance Sheet date are translated at the exchange rates prevailing at the date of Balance Sheet. Gains and losses arising on account of difference in foreign exchange rates on the settlement/translation of monetary assets and liabilities are recognized in the Profit and Loss Account.

b) In respect of the forward contracts assigned to the foreign currency assets /liability as at the Balance Sheet date, the proportionate premium/discount for the period up to the Balance sheet is recognized in the Profit and Loss account. The exchange difference measured by the change in rate between the inception of the forward contract and the date of balance sheet is applied on foreign currency amount of the forward contract and is recognized in the Profit and Loss Account

10] Borrowing costs

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue for the period to which they relate.

11] Accounting for Taxes on Income

a) Income tax comprises of current tax provision and the net change in the deferred tax asset or deferred tax liability for the year. Current tax provision is made in accordance with the Income Tax Act, 1961. The tax effect of temporary differences between the book profit and taxable profit are reflected through Deferred Tax Asset / Deferred Tax Liability.

b) Deferred tax is recognized subject to consideration of prudence, on timing difference, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using prevailing enacted or substantively enacted tax rates.

c) Minimum alternative tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay income tax higher than that computed under MAT, during the period that MAT is permitted to be set off under the Income Tax Act, 1961 (specified period). In the year, in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendation contained in the guidance note issued by the ICAI, the said asset is created by way of a credit to the profit and loss account and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay income tax higher than MAT during the specified period