TATA Acc Policy

Accounting Policies of TATA MOTORS
(a) The financial statements are prepared under the historical cost
convention on an accrual basis.
(b) Sale of Products and Services :
(i) Sales comprises sale of goods and services, net of trade discounts and
include exchange differences arising on sales
transactions.
(ii) Export incentive under the Duty Entitlement Pass Book Scheme has
been recognised on the basis of credits afforded in the pass book.
(c) Gratuity :
Provision for gratuity liability to employees is made on the basis of
actuarial valuation.
(d) Leave Salaries :

Provision is made for value of unutilised leave due to employees at the
end of the year.
(e) Relining Expenses :

Relining expenses other than expenses on Blast Furnace relining are
charged as an expense in the year in which they are incurred.
(f) Research and Development :

Research and Development costs (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
(g) Depreciation :
(I) Capital assets whose ownership does not vest in the Company have
been depreciated over the estimated period of their utility
or five years, whichever is less.
(II) In respect of other assets, depreciation is provided on a straight line
basis applying the rates specified in Schedule XIV to the
Companies Act, 1956 as under :—
(i) In respect of plant and machinery, railway siding, buildings and
vehicles acquired before 1.4.1993 the specified period
has been re-calculated by applying the revised rates in force in terms of
the notification dated 16.12.1993 and the
unamortised value of the asset has been allocated equally over the
remaining part of the specified period and on assets
acquired after 31.3.1993 at the revised rates.
For the purposes of determining the appropriate depreciation rates plant
and machinery falling in the category of
continuous process plants has been identified on the basis of technical
opinion obtained by the Company. Extra shift
depreciation, wherever applicable is calculated on actual shift basis in
respect of each mill/shop/unit.
(ii) In respect of furniture, fixtures and office equipment acquired before
1.4.1993 at the rates in force prior to the abovementioned
notification and at the revised rates for assets acquired thereafter.
(iii) Development of Property and Mining Rights are depreciated over the
useful life of the mine or lease period whichever is
shorter.
(iv) Blast Furnace relining is depreciated over a period of 10 years
(average expected life).
(v) Freehold land and leasehold land are not depreciated.
(h) Foreign Exchange Transactions :

Monetary assets and liabilities related to foreign currency transactions
remaining unsettled at the end of the year are translated at
year end rates.
The difference in translation of monetary assets and liabilities and
realised gains and losses on foreign exchange transactions
other than those relating to fixed assets are recognised in the Profit and
Loss Account. In respect of transactions covered by
forward exchange contracts, the difference between the contract rate and
the spot rate on the date of the transaction is charged
to the Profit and Loss Account over the period of the contract, except in
case of liabilities incurred for acquiring fixed assets.
Exchange differences relating to monetary items that are in substance
forming part of the Company's net investment in non
integral foreign operations are accumulated in Foreign Exchange
Fluctuation Reserve Account.
Exchange differences (including arising out of forward exchange
contracts) in respect of liabilities incurred to acquire fixed assets
are adjusted to the carrying amount of such fixed assets.
(i) Fixed Assets :

All fixed assets are valued at cost less depreciation. Pre-operation
expenses including trial run expenses (net of revenue) are
capitalised. Interest on borrowings and financing costs during the period
of construction is added to the cost of fixed assets.
Blast Furnace relining is capitalised. The written down value of the asset
consisting of lining/relining expenditure embedded in the
cost of the furnace is written off in the year of fresh relining. For assets
identified for replacement during future relining, the written
down value is depreciated proportionately over the period to the planned
relining date.
(j) Investments :
Long term investments are carried at cost less provision for permanent
diminution in value of such investments. Current investments
are carried at lower of cost and fair value. When investment is made in
partly convertible debentures with a view to retain only the
convertible portion of the debentures, the excess of the face value of the
non-convertible portion over the realisation on sale of
such portion is treated as a part of the cost of acquisition of the
convertible portion of the debenture.
(k) Inventories :
Finished and semi-finished products produced and purchased by the
Company are carried at lower of cost and net realisable
value. Purchased goods-in-transit are carried at cost.
Work-in-progress is carried at lower of cost and net realisable value.
Coal, iron ore and other raw materials produced and purchased by the
Company are carried at lower of cost and net realisable
value. Purchased raw materials-in-transit are carried at cost.
Stores and spare parts are carried at or below cost.
Cost of inventories is generally ascertained on the ‘weighted average’
basis. Work-in-progress and finished and semi-finished
products are valued on full absorption cost basis.

TATA Acc Policy

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TATA Acc Policy

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Accounting Policies of TATA MOTORS

(d) Leave Salaries :

(e) Relining Expenses :

(f) Research and Development :

(h) Foreign Exchange Transactions :

(i) Fixed Assets :

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