RED HERRING PROSPECTUS Dated August 24 ... - Globus Spirits

Note-2 – During the year 2003-04 and 2004-05 the Administrative and Selling expenses was
higher as it includes the amount paid as royalty for bottling under franchise agreement with TDV
(a UB Group co.). No such tie-up was there in the year 2005-06 and 2006-07. Again the co. has
entered into bottling tie-up agreement with BDA Pvt. Ltd. for bottling their product during the
year 2007-08, 2008-09 & 2009-10 resulting in higher Administrative & Selling expenses.
ANNEXURE-III
SIGNIFICANT ACCOUNTING POLICIES
A. SIGNIFICANT ACCOUNTING POLICIES
1. ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost convention in accordance
with the Accounting standards specified to be mandatory by the Institute of Chartered
Accountants of India and the relevant provisions of the Companies Act, 1956.
2. FIXED ASSETS (including Intangible Asset)
Fixed Assets and Intangible Assets are stated at cost less accumulated depreciation less
impairment, if any. Cost of tangible fixed assets and intangible assets comprises the
purchase price and any attributable cost of bringing the asset to working condition for its
intended use. Insurance spares are capitalized with the related mother asset from the
date such asset is put to use.
3. DEPRECIATION
The company has charged the depreciation under the W.D.V. method in accordance with
the Companies Act, 1956.
4. INVENTORY
The basis of determining the cost of the various categories of inventories is as follows
Stores, Spares and Fuel
Raw material & Packing Material
Finished Goods
: Average cost
: Average cost
: Valued at cost or market price which ever is
less
5. INVESTMENTS
Investments are carried at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However, provision for
diminution has not been made in the value of the investments.
6. REVENUE RECOGNITION
1. Revenue in respect of domestic sale of the goods and scrap material is recognized at
the point of dispatch to the customers from warehouse
2. Sales are net of Sales return
3. Investment income: Income from investments is accounted for in the year in which
right to receive such income is established
7. RETIREMENT BENEFITS
Provisions for contribution to retirement benefits scheme are made as follows
a) Provident fund on actual liability basis
b) Provision for Gratuity and Leave encashment has been provided for as per actuary’s
valuation method up to 30 th June, 2009 amounting to Rs.17,11,272/-.
8. EARNING PER SHARE
Basic earnings per share are calculated by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of equity shares
outstanding during the year. The Company has not issued any potential equity shares,
and accordingly, the basic earnings per share and diluted earnings per share are the
same.
9. IMPAIRMENT OF ASSETS
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