Notes on accounts
1. SIGNIFICANT ACCOUNTING POLICIES
I. Basis of preparation of financial statements:
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule
7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (“the 2013 Act”). The financial
statements are prepared on accrual basis under the historical cost convention. The financial statements are presented in Indian rupees
rounded off to the nearest rupees in crore.
II. Use of estimates:
The preparation of financial statements in conformity with Indian GAAP requires judgements, estimates and assumptions to be made
that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are
recognized in the period in which the results are known/ materialized.
III. Tangible & Intangible Fixed Assets:
a) Tangible assets are stated at their original cost of acquisition inclusive of inward freight, duties and expenditure incurred in the
acquisition, construction/installation less accumulated amortization and impairment loss, if any. CENVAT/ VAT credit availed on
capital equipment is accounted for by credit to respective fixed assets.
b) Expenditure during construction period including trial run expenses (net of revenue) are capitalised. Borrowing costs during the
period of construction is added to the cost of eligible tangible assets.
c) Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization/ depletion and impairment
loss, if any.
IV. Depreciation and amortization:
Tangible Assets
Depreciation on tangible fixed assets is provided to the extent of depreciable amount on the straight line (SLM) Method. Depreciation
is provided at the rates and in the manner prescribed in Schedule II to the Companies Act, 2013 except on some assets, where useful
life has been taken based on external / internal technical evaluation as given below:
Particulars
Useful Life
Plant & machinery
7, 10 & 18 years
Fit-out and other assets at sales outlets
5 years
Leasehold land is amortized over the period of the lease.
Intangible Assets
Intangible assets are amortised over their estimated useful lives on straight line method as follows:
Particulars
Useful Life
Computer software
6 years
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the
amortisation period is revised to reflect the changed pattern, if any.
V. Impairment:
The carrying values of assets /cash generating units at each balance sheet date are reviewed for impairment if any indication of
impairment exists. An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is
charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in
prior accounting period is reversed if there is a change in the estimate of recoverable amount.
108
Kajaria Ceramics Limited
