Notes on the consolidated financial statements
c) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement
of profit and loss.
XII. Government grants and subsidies:
Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Company will comply with
the conditions attached to them, and (ii) the grant/ subsidy will be received.
Where the grant or subsidy relates to revenue, it is recognized as income on a accrual basis in the statement of profit and loss. Where
the grant relates to a fixed asset, it is net off from the relevant asset.
XIII. Employee Benefits:
Employee benefits, inter alia, include Defined Contribution Plan and Defined Benefit Plan as under:
Defined Contribution Plan
Company’s contribution towards provident fund paid/payable during the year is recognised as expense in the Statement of Profit &
Loss under Employee Benefit Expense.
Defined Benefits Plan
Company’s liability towards gratuity and compensation towards accumulated leaves is determined by an independent actuary at the
end of the year using the projected unit credit method.
The liability towards gratuity (long term and short term) as ascertained by actuary and as reduced by fair value of plan assets is
recognised in the balance sheet at present value. Acturial gains/losses are recognised immediately in the Statement of Profit & Loss.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for
measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected
unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not
deferred. The Company presents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional
right to defer its settlement for 12 months after the reporting date.
XIV. 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 its intended use. All other borrowing
costs are charged to the Statement of Profit and Loss in the period in which they are incurred.
XV. Research & Development:
Revenue Expenditure on research and development is charged to the Statement of Profit & Loss in the year in which it is incurred.
Capital Expenditure on research and development is treated as additions to Fixed Assets in case the same qualifies as a tangible asset
as per AS – 10.
XVI. Taxes on income:
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax
rates and the provisions of the Income Tax Act, 1961. Deferred income tax reflects the current period timing differences between
taxable income and accounting income for the period and reversal of timing differences of earlier years/ period. Deferred tax assets are
recognized only to the extent that there is a reasonable certainty that sufficient future income will be available except that deferred
tax assets, in case there are unabsorbed depreciation or losses, are recognized if there is virtual certainty that sufficient future taxable
income will be available to realize the same. Deferred tax assets and liabilities are measured using the tax rates and tax law that have
been enacted or substantively enacted at the reporting date.
XVII. Provision, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement are recognized 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 recognized but are disclosed in
the notes. Contingent assets are neither recognized nor disclosed in the financial statements.
XVIII.
Unless specifically stated to be otherwise, these policies are consistently followed.
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Kajaria Ceramics Limited
