Accounting Policies of IAG Glass Company Ltd. Company

Mar 31, 2010

A) Basis of Accounting

i) The accounts have been prepared on historical cost convention as modified by revaluation of certain fixed assets.

ii) Income and Expenditure are accounted for on accrual basis in accordance with the normally accepted accounting principles except insurance and other claims which, due to uncertainty in realisation, are accounted for on cash basis.

b) Fixed Assets

Fixed Assets are valued at cost less depreciation, together with resultant write-up due to Revaluation. Cost comprises procurement price, attributable charges including interest and foreign currency conversion effect on term loans funding the particular assets.

c) Depreciation on fixed assets have been provided in the accounts in accordance with the rates as per Schedule-XIV of The Companies Act, 1956 as under:-

i) All additions prior to 1988-89 On reducing balance method

ii) Additions after 1988-89 On straight line method

d) Investments

Quoted investments are stated at lower of cost or market value. Unquoted/long term investments are considered at cost, unless there is a permanent decline in value thereof, in which case adequate provision is made against the diminution in the value of investments.

e) Inventories

Valued in conformity with Accounting Standard - 2 as under :- Raw Materials, Packing Materials,Stores and

Spares (including insurable spares) - Weighted average basis at lower of cost or net realisable value.

Goods-in-Process and Partly manufactured goods - At lower of cost or net realisable value

Finished Goods - At lower of cost or net realisable value

[ Excise duty impact on stocks lying at factory warehouse have been provided for in the accounts and also included in the valuation of stocks in conformity with AS-2]

f) Sales

Sales ( excluding trading sale of imported glass and other items) are inclusive of Central Excise Duty. Revenue from sale of goods are recognised upon passage of title to goods to the customers.

g) Foreign Exchange Transactions

Transactions in foreign currency have been accounted for at the exchange rates prevailing on the dates of the respective transactions. Foreign Exchange liabilities not covered by forward exchange contracts have been translated at the exchange rates prevailing at the year end.Gains or losses arising on the re-alignment of such liabilities, except to the extent these are related to fixed assets, have been charged to the Profit and Loss Account under the respective revenue heads.

h) Retirement and other "Employee Benefits"

i. Defined Contribution Plan

Companys contribution to Provident Fund are charged to Profit & Loss Account of the year when contributions to the funds are due.

The Company has no obligations other than the contribution payable to respective authorities.

ii. Defined Benefit Plan

1. The Company has created an approved gratuity fund which has taken a group gratuity insurance policy with Life Insurance Corporation of India.

2. Liability in respect of leave encashment, due on retirement, is accounted for in conformity with Accounting Standard-15.

3. Medical benefits of the employees not covered by ESI are accounted for on cash basis.

i) Income Tax

Provision for current tax is made based on the liability computed in accordance with relevant tax rates and laws. Deferred tax is recognised, subject to the consideration of prudence, on timing difference, being the difference between taxable and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets is not recognised on unabsorbed depreciation or carry forward of losses unless there is virtual certainty and convincing evidence that there will be sufficient future taxable income available to realise such assets.

j) Impairment of Fixed Assets

In case, the recoverable amount of Fixed asets is lower than its carrying amount, a provision is made for impairment loss.

k) Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent and disclosed by way of notes to the accounts. 26. Figures of the previous year have been regrouped and re-arranged wherever necessary.