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Accounting Policies of Aanchal Ispat Ltd. Company

Mar 31, 2015


The financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting in accordance with, the generally accepted accounting principles ('GAAP') in India and comply with the Accounting Standards notified by the Central Government pursuant to Companies {Accounting Standard) Rules, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and the relevant provisions of the Companies Act, 3013, to the extent applicable.


The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period reported. Actual results could differ from these estimates. Airy revision to accounting estimates is recognized prospectively in the current and future periods.


Tangible fixed Assets are stated at cost of acquisition less accumulated depreciation. The cost of tangible fixed assets includes freight, duties and taxes and other incidental expenses related to the acquisition, but exclude duties and taxes that are recoverable subsequently from tax authorities. Borrowing costs directly attributable to acquisition of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalized.

Advances paid towards acquisition of tangible fixed assets and the cost of assets not ready to be put to use before the year-end are disclosed under long term loans and advances and capital work in progress respectively

Subsequent expenditures related to an item of Tangible Asset axe added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.


Depreciation on Fixed Assets is provided to the extent of depreciable amount on the Straight Line Method (SLM). Depreciation is presided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 20T3.


Current investments are carried at lower of cost and quoted/fair value, computed category-wise. Non Current investments are stated at cost. Provision for diminution in the value of Non Current investments is made only if such a decline is other than temporary'.

F. Impairment of Assets

The Company assesses at each balance sheet date whether there is any' indication that ail asset may be impaired. If any such indication exists, the Company estimates the recoverable amount (higher of net realisable value and value in use) of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than the carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflcted at the recoverable amount subject to a maximum of depreciable historical cost.


Inventories are valued at the lower of cost and net realizable value. Cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing theinventori.es to their present location and condition. Cost includes all taxes and duties, but excludes duties and taxes that are subsequently recoverable from tax authorities.

The methods of determining cost of various categories of inventories are as follows:

Raw Materials First in first out

Work in Progress Lower of Cast or NRV

Finished Goods Lower of Cost or NRV


Revenue from sale of goods is recognised on despatch of goods to customers which corresponds with transfer of all significant risks and rewards of ownership to the buyer. The amount recognised as sale is exclusive of sales tax, trade and quantity discounts.

Dividend income is recognised when unconditional right to receive the payment is established.

Interest income on. deposits and interest bearing securities is recognised on the time proportionate method.


Excise duty j Service tax is accounted on the basis of both, payments made in respect of goods cleared l services provided and provisions made for goods lying in bonded warehouses.


a) Short term employee benefits (Le. benefit payable within one year) are recognized in the period in. which employee services are rendered. These benefits include performance incentive and compensated absences.

b) Contribution made towards Provident Fund, in accordance with applicable rules/statutes, is charged to revenue.

C) Based on actuarial valuation necessary provision has been created in the books to meet the liability as per Accounting Standard 15.


Borrowing cost comprising interest and finance charges directly attributable to the construction of qualifying assets are capitalized as part of the cost of that asset until the activities necessary to prepare the qualifying asset for its intended, use are complete. Other borrowing costs are recognized as an expense in the period in which they are incurred.


Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected TO be paid to the tax authorities, using the applicable tax rates. Deferred income tax reflect 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 recognised 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 recognised if there is virtual certainty that sufficient future taxable income will be available to realise the same.

Deferred tax assets and Liabilities are measured using the tax rates and tax law that have been enacted or substantively enacted by the Balance Sheet date.

L. Earnings per share

Basic earnings per share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share amounts are computed after adjusting the effects of all dilutive potential equity shares. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value (i.e. the average market value of the outstanding shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

M. Provision and Contingent liabilities

Provision is recognized in the accounts when there is a present obligation as a result of past event(s) and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjus ted to reflect the current best estimates.

Contingent liabilities are disclosed unless the possibility of outflow of resources is remote.

N. Cash and Cash Equivalents

In the cash flow statement, cash and cash equivalents includes cash and cheques in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.

Oct 28, 5:50 pm
Oct 28, 5:59 pm
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