Steel Tubes of India Ltd. कंपली की लेखा नीति

Mar 31, 2009

A. General:

The accounts of the Company are prepared on an accrual basis, under the historical cost convention and in accordance with the requirements of the Companies Act, 1956 and applicable mandatory Accounting Standards issued by the Institute of Chartered Accountants of India unless otherwise stated.

b. Fixed Assets:

Fixed Assets are stated at cost of acquisition/construction including freight, taxes, duties and other incidental expenses related to acquisition and installation.

c. Intangible Assets:

Intangible assets are recognised if and only if:

- it is probable that the future economic benefits that are attributable to the assets will flow to the Company, and

- the cost/ fair value of the assets can be measured reliable.

d. Depreciation:

Depreciation on fixed assets acquired upto 30th June, 1986 is provided on straight line method (SLM) as per section 205(2)(b) of the Companies Act, 1956, at the rates corresponding to the Income Tax Rules in force at the time of acquisition of the assets. In respect of assets acquired after 30th June, 1986, depreciation has been provided on WDV basis for vehicles, furniture, fixtures & office equipments and for all other assets depreciation is provided on SLM basis as per the rates prescribed in the Schedule XIV of the Companies Act, 1956 till the WDV is reduced to 5 % of Gross Cost. Depreciation on Non-conventional Energy Equipment has been charged at rates applicable to Continuous Process Plant.

e. Investments:

Long term investments are stated at cost less provision for diminution in value other than temporary, if any.

f. Borrowing Cost:

Interest cost relating to

(i) funds borrowed for acquisition of fixed assets are capitalized till the date of its intended use and thereafter charged to Profit & Loss Account.

(ii) funds borrowed for other purposes are charged to Profit and Loss Account.

g. Subsidies and Grants:

Subsidies and grants are accounted for on cash basis.

h. Taxation:

Tax liability of the Company is estimated considering the provisions of the Income Tax Act, 1961. Deferred Tax is recognized subject to the consideration of prudence, on timing differences, 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.

i. Revenue Recognition:

(i) Processing Income is recognized at the end of the month, for transfer of processed goods during the particular month. Yield claims, if any are recognized, as and when settled.

(ii) Loose Tools are charged to consumption in the year of issue to the job irrespective of their life.

j. Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

k. Provisions and Contingent Liabilities:

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.