Dabur Foods Limited Audited Balance Sheet and Profit & Loss ...

Schedules annexed to and forming part of the accounts for the year ended 31st March 2005(Rs. In lac)Schedule N - Notes Forming Part Of The Accounts For The Year Ended 31st March,2005A. ACCOUNTING POLICIESSignificant accounting policies are summarized below:1. Accounting ConventionThe financial statements are prepared under the historical cost convention in accordance with applicable mandatoryAccounting Standards and relevant provisions of the Companies Act, 1956.2. Use of estimates• The preparation of the financial statement in conformity with generally accepted accounting policies requiresmanagement to make estimates and assumptions that effect the reported balances of assets & liabilities anddisclosure relating to contingent assets & liabilities as at the date of the financial statements and reportedamounts of income & expenses during the period.• Management assesses using external and internal sources whether there is an indication that asset may beimpaired. An impairment occurs where the carrying value exceeds the present value of future cash flows expectedto arise from the continuing use of the assets and its eventual disposal. The impairment loss to be expensed isdetermined as the excess of the carrying amount over the higher of the asset’s net sales price or present valueas determined above.• Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonablyestimated. Actual results could differ from those estimates.3. InvestmentsLong term investments are stated at cost. A provision for diminution is made to recognize a decline other thantemporary in the nature of value of investment.4. SalesSales are recognized net of returns when goods are supplied in accordance with terms of sale. Sales comprise of saleprice of goods including sales tax. Breakage and leakage claims from customers are charged as expenses uponapproval.5. Fixed Assets and Depreciation• Fixed assets are stated at cost less depreciation. Cost includes inward freight, duties and taxes and expensesincidental to acquisition.• Depreciation on Fixed Assets has been provided on written down value method at rates specified in ScheduleXIV of the Companies Act.6. InventoriesInventories, other than goods in transit, are valued at cost (on FIFO basis) or estimated net realizable value, whicheveris lower, after providing for cost of obsolescence and other anticipated losses, where considered necessary.7. Deferred Entitlement on LTC :As per the opinion of the Expert Advisory Committee of the ICAI, the Company has provided liability accruing onaccount of deferred entitlement towards LTC in the period in which the employees concerned render their serviceseven though no expenditure has been incurred on performance of journeys.8. Foreign Currency Transactions• Transactions in foreign exchange, other than those covered by forward contracts, are accounted for at theexchange rates prevailing on the date of transactions. Assets and Liabilities, if any, remaining unsettled at theend of the year, other than those covered by forwards contracts, are translated at the closing rates. Realizedgains and losses on Foreign Exchange transactions are recognized in the Profit and Loss account.• In respect of transactions covered by the forward contracts, the difference between the contract rate and thespot rate on the date of the transaction is charged to the Profit and Loss account over the period of contract.Dabur Foods Limited • Annual Report 2004-051517