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Accounting Policies of Ador Fontech Ltd. Company

Mar 31, 2015

1.01 Basis of preparation of the financial statements

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act ( to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

1.02 Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Accounting estimates could change from period to period. Actual results could differ from these estimates.

1.03 Revenue recognition

a. Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. The amount recognised as sale is exclusive of Sales tax/VAT and are net of returns. It is stated at gross and net of excise duty.

b. Income from conversion job is recognised on its completion and on its acceptance by the customers.

c. Dividend income is accounted for in the year in which the right to receive the same is established.

d. Interest income is recognised using time-proportion-method, based on rates implicit in the transaction.

1.04 Fixed assets

Tangible assets shown under gross block are valued at cost of acquisition inclusive of inward freight, duties, taxes and other incidental expenses/adjustments related to its acquisition. All such direct costs are capitalised when the tangible fixed assets are ready for use. Intangible assets relating to product development are recorded at actual cost incurred on the development of products and are capitalised once the products receive approval from relevant authorities and the same are carried at cost less accumulated amortisation.

1.05 Depreciation and amortisation

a. (i) Till the year ended March 31,2014, depreciation rates prescribed under Schedule XIV were treated minimum rates and the Company was not allowed to charge depreciation at lower rates, even if such lower rates were justified by the estimated useful life of the asset. From the current year Schedule XIV has been replaced by Schedule II of the Companies Act, 2013. The replaced Schedule II prescribes useful lives for fixed assets which, in many cases, are different from the lives prescribed under the erstwhile Schedule XIV.However, Schedule II allows Companies to use higher /lower useful lives and residual values if such useful lives and residual values can be technically supported and justification for difference is disclosed in the financial statements. (ii) Considering the applicability of Schedule II, the Management has re-estimated useful lives and residual values of all its fixed assets. The Management believes that depreciation rates currently used fairly reflects its estimate of useful lives & residual values of fixed assets and in compliance of Schedule II of the Companies Act, 2013.

b. Residual value of assets whose useful lives had expired as at the beginning of the year were charged to Reserves & Surplus.

c. Depreciation on tangible assets purchased during the year has been calculated as under-(i) All assets (except leasehold interest): On written down value basis. (ii) Lease hold land: On straight line basis over the period of lease. (iii) Intangible assets: Over a period of approximately four years-so as to effectively depreciate assets over the specified useful lives leaving behind a residual value of five percent.

d. Depreciation on additions to fixed assets during the current year are charged on pro-rata basis, for the period of use.

1.06 Impairment of assets

An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed, if there has been a change in the estimate of recoverable amount.

1.07 Investments

Trade investments are investments made to enhance the Company's business interests. Investments are either classified as current or long-term based on the Management's intention. Current investments are carried at cost. Cost of overseas investments comprise Indian rupee value of consideration paid for investment translated at the exchange rate prevalent on the date of the investment. Long-term investments are carried at cost less provisions recorded to recognise any decline, other than temporary, in the carrying value of each investment.

1.08 Inventories (cost is determined on a weighted average basis)

a. Traded goods, raw materials and packing materials: At cost or net realisable value, whichever is lower.

b. Process stock: At cost/estimated realisable value, whichever is lower.

c. Finished goods: At cost or net realisable value, whichever is lower and are inclusive of cenvat thereon.

d. Excise duty relating to the difference between closing and opening stock is recognised as part of changes in inventories.

1.09 Employee benefits

Gratuity: The Company has computed its liability towards future payment of gratuity to employees, on actuarial basis & the charge for current year is debited to the Statement of Profit and Loss.

Superannuation: The Company contributes towards superannuation fund, for future payment of retirement benefits to employees. The contributions accruing during each year are charged to the Statement of Profit and Loss.

Leave encashment: Liabilities are determined by actuarial valuation done at the end of the year and the charge for the current year is debited to the Statement of Profit and Loss.

Provident fund: Employer's contribution to provident fund is charged to the Statement of Profit and Loss.

1.10 Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate on the date of the transaction. Any income or expense on account of exchange difference, either on settlement or on translation is recognised in the Statement of Profit and Loss. Assets and liabilities in foreign currencies are restated at the year end exchange rate.

1.11 Leases

Lease rental payments under operating lease are recognised as an expense on straight line basis in the Statement of Profit and Loss over the lease term.

1.12 Post-sale-client support and warranties

The Company provides its clients with a fixed-period-warranty for corrections of errors and support on all its fixed price, fixed-time- frame contracts. Costs associated with such support services are accrued at the time when related revenues are recorded and included in the Statement of Profit and Loss. The Company estimates such costs based on historical experience and reviews the same annually for any material changes in assumptions.

1.13 Taxes on income

Current tax: Provision for current tax is made based on tax liability computed after considering tax allowances.

Deferred tax: Provision for deferred tax is made using the applicable rate of taxation, for all timing differences, which arise during a year and are reversed in subsequent periods.

1.14 Provisions and contingent liabilities

Based on the best estimate of the Management, provisions are determined on the outflow of economic benefits, which are required to settle obligations, as at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Disclosure for contingent liability is also made when there is a possible obligation that may, but probably will not, require an outflow of the Company's resources.

1.15 Cash flow statement

Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts/payments and item of income or expenses associated with investing/financing cash flows. Cash flows from operating investing and financing activities of the Company are segregated accordingly.


Mar 31, 2014

Basis of preparation of financial statements

These financial statements are prepared under the historical cost basis of accounting and evaluated on a going concern basis, with revenues recognised and expenses accounted for on their accrual to comply in all material aspects with the Accounting Standards notified under the Companies (Accounting Standards) Rules 2006 (as amended) and the relevant provisions of the Companies Act, 1956 read with General Circular #15/2013 dated 13th September 2013 issued by the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and the guidelines issued by the Securities and Exchange Board of India (SEBI).

Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. All the assets and liabilities have been classified as current or non current as per the Company''s normal operating cycle and other criteria set out in Schedule VI to the Companies Act, 1956. Accounting estimates could change from period to period. Actual results could differ from these estimates. Appropriate changes in estimates are made as and when the Management becomes aware of the changes in the circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which the changes are made and if material their effects are disclosed in the notes to the financial statements.

The following significant accounting policies have been adopted in the preparation and presentation of the financial statements:

1.1 Revenue recognition

a. Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. The amount recognised as sale is exclusive of Sales tax/VAT and are net of returns. It is stated at gross and net of excise duty.

b. Income from conversion job is recognised on its completion and on its acceptance by the customers.

c. Dividend income is accounted for in the year in which the right to receive the same is established.

d. Interest income is recognised using time-proportion method, based on rates implicit in the transaction.

1.2 Fixed assets

Tangible assets shown under gross block are valued at cost of acquisition inclusive of inward freight, duties, taxes and other incidental expenses/adjustments related to its acquisition. All such direct costs are capitalised when the tangible fixed assets are ready for use. Intangible assets relating to product development are recorded at actual cost incurred on the development of products and are capitalised once the products are approved by the authorities and the same is being carried at cost less accumulated amortisation.

1.3 Depreciation and amortisation

a. Depreciation on tangible assets has been calculated in accordance with the revised Schedule XIV of the Companies Act, 1956:

i. All assets (except leasehold interest): On written down value basis.

ii. Lease hold land: On straight line basis (over lease period).

iii. Intangible assets: Over a period of approx. four years.

b. Depreciation on additions to fixed assets during the current year are charged on pro-rata basis, for the period of use.

c. Depreciation methods, useful lives and residual values of fixed assets are reviewed at each reporting date.

1.4 Impairment of assets

An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

1.5 Investments

Investments are valued at cost inclusive of dividend re-invested thereon (where applicable).

1.6 Inventories

a. Traded goods, raw materials and packing materials: At cost or net realisable value, whichever is lower.

b. Process stock: At cost or estimated realisable value, whichever is lower.

c. Finished goods: At cost or net realisable value, whichever is lower and are inclusive of cenvat thereon.

d. Excise duty relating to the difference between closing and opening stock is recognised as part of changes in inventories of finished goods, work in progress and stock-in trade.

Note: Cost is determined on a weighted average basis.

1.7 Employee benefits

a. Gratuity: The Company has computed its liability towards future payments of gratuity to employees, on actuarial basis and the charge for current year is debited to the Statement of Profit and Loss.

b. Superannuation: The Company contributes towards superannuation fund, for future payment of retirement benefits to employees. The contributions accruing during each year are charged to the Statement of Profit and Loss.

c. Leave encashment: Liabilities are determined by actuarial valuation done at the end of the year and the charge for the current year is debited to the Statement of Profit and Loss.

d. Provident fund: Employer''s contribution to provident fund is charged to the Statement of Profit and Loss.

1.8 Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate on the date of the transaction. Any income or expense on account of exchange difference, either on settlement or on translation is recognised in the Statement of Profit and Loss. Assets and liabilities in foreign currencies are restated at the year-end exchange rates.

1.9 Leases

Lease rental payments under operating lease are recognised as an expense on straight line basis in the Statement of Profit and Loss over the lease term.

1.10 Taxes on income

a. Current tax: Provision for current tax is made based on tax liability computed after considering tax allowances and exemptions.

b. Deferred tax: Provision for deferred tax is made using the applicable rate of taxation, for all timing differences, which arise during a year and are reversed in subsequent periods.

1.11 Provisions and contingent liabilities

Based on the best estimate of the Management, provisions are determined on the outflow of economic benefits, which are required to settle obligations, as at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Disclosure for contingent liability is also made when there is a possible obligation that may, but probably will not, require an outflow of the Company''s resources.

1.12 Cash flow statement

Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated accordingly.

The Company adopts the accrual concept in the preparation of Accounts. Assets and liabilities are recorded at historical cost. These costs are not adjusted to reflect the changing value in the purchasing power of money (inflation). Further, based on the nature of activities, the Company has determined its operating cycle as twelve months for the purpose of classification of its assets and liabilities as current and non-current.

2.01 Shareholders'' fund

The Company has only one class of shares, referred to as equity shares having a par value of Rs. 2/- per share. Each holder of equity share is entitled to one vote per share and dividend as may be declared at the Annual General Meeting. The right of the shareholders is governed by the Articles of Association and the Companies Act.

d. Share warrants

Rupees two hundred and sixty seven lakhs was received from J B Advani and Company Private Limited (JBA), the promoters towards issue of 17,50,000 warrants on preferential basis. Since necessary approvals were not received before the close of the year, the share warrants were not issued. The amount has since been refunded as per the provisions of the Companies Act, 2013 with commitment/undertaking from JBA executed for specific performance / requirements to subscribe, subject to necessary approvals/consents from requisite authorities.

e. As on the date of the Balance Sheet

i. The Company has not issued any equity share as fully paid pursuant to contracts without payment being received in cash.

ii. The Company has not issued any fully paid bonus share.

iii. The Company also did not buy back any equity share.

f. Issue/conversion of equity shares

As on the date of the Balance Sheet, the Company has not issued securities like convertible preference shares, convertible debentures, etc., which are convertible in to equity/preference shares.


Mar 31, 2013

1.01 Revenue recognition

(a) Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. The amount recognised as sale is exclusive of sales tax/VAT and are net of returns. It is stated at gross and net of excise duty.

Excise duty relating to the difference between closing and opening stock is recognised as part of changes in inventories of finished goods, work in progress and stock-in trade.

(b) Income from conversion job is recognised on its completion and on its acceptance by the customers.

(c) Dividend income is accounted for in the year in which the right to receive the same is established.

(d) Interest income is recognised using the time-proportion method, based on rates implicit in the transaction.

1.02 Fixed assets

Tangible assets shown under gross block are valued at cost of acquisition inclusive of inward freight, duties, taxes and other incidental expenses/adjustments related to its acquisition. All such direct costs are capitalised when the tangible fixed assets are ready for use. Intangible assets relating to product development are recorded at actual cost incurred on the development of products and are capitalised once the products receive approval from relevant authorities and the same are carried at cost less accumulated amortisation.

1.03 Depreciation and amortisation

(a) Depreciation on tangible assets has been calculated in accordance with the revised Schedule XIV of the Companies Act, 1956: (i) All assets (except leasehold interest): On written down value basis.

(ii) Lease hold land: On straight line basis over the period of lease.

(iii) Intangible assets: Over a period of approximately four years.

(b) Depreciation on additions to fixed assets during the current year are charged on pro-rata basis, for the period of use.

(c) Depreciation methods, useful lives and residual values of fixed assets are reviewed at each reporting date.

1.04 Impairment of assets

An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

1.05 Investments

Valued at cost inclusive of dividend re-invested thereon (where applicable).

1.06 Inventories

(a) Traded goods, raw materials and packing materials: At cost or net realisable value, whichever is lower.

(b) Process stock: At cost or estimated realisable value, whichever is lower and

(c) Finished goods: At cost or net realisable value, whichever is lower and are inclusive of cenvat thereon. Note: Cost is determined on a weighted average basis.

1.07 Employee benefits

(a) Gratuity: The Company has computed its liability towards future payments of gratuity to employees, on actuarial basis and the charge for current year is debited to the Statement of Profit and Loss.

(b) Superannuation: The Company contributes towards superannuation fund, for future payment of retirement benefits to employees. The contributions accruing during each year are charged to the Statement of Profit and Loss.

(c) Leave encashment: Liabilities are determined by actuarial valuation done at the end of the year and the charge for the current year is debited to the Statement of Profit and Loss.

(d) Provident fund: Employer''s contribution to provident fund is charged to the Statement of Profit and Loss.

1.08 Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate on the date of the transaction. Any income or expense on account of exchange difference, either on settlement or on translation is recognised in the Statement of Profit and Loss. Assets and liabilities in foreign currencies are restated at the year-end exchange rates.

1.09 Leases

Lease rental payments under operating lease are recognised as an expense on straight line basis in the Statement of Profit and Loss over the lease term.

1.10 Taxes on income

(a) Current tax: Provision for current tax is made based on tax liability computed after considering tax allowances and exemptions.

(b) Deferred tax: Provision for deferred tax is made using the applicable rate of taxation, for all timing differences, which arise during a year and are reversed in subsequent periods.

1.11 Provisions and contingent liabilities

Based on the best estimate of the Management, provisions are determined on the outflow of economic benefits, which are required to settle obligations, as at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Disclosure for contingent liability is also made when there is a possible obligation that may, but probably will not, require an outflow of the Company''s resources.

1.12 Cash flow statement

Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated accordingly.


Mar 31, 2012

Basis of preparation of financial statements

These financial statements are prepared under the historical cost basis of accounting and evaluated on a going concern basis, with revenues recognized and expenses accounted for on their accrual to comply in all material aspects with the applicable accounting principles and applicable Accounting Standards notified U/s. 211 (3C) of the Companies Act, 1956; other relevant provisions of the Companies Act, 1956 and the guidelines issued by the Securities and Exchange Board of India (SEBI).

Use of estimates

The preparation of financial statements require estimates and assumptions to be made that affect the reported balances of assets as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Accounting estimates could change from period to period. Actual results could differ from these estimates. Appropriate changes in estimates are made as and when the Management becomes aware of the changes in the circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which the changes are made and if material, their effects are disclosed in the notes to the financial statements.

The following significant accounting policies are adopted in the preparation and presentation of these financial statements:

1 Revenue recognition

(a) Sales are recognized when goods are supplied and are recorded net of discounts. Sale revenues are presented net of value-added taxes in the Statement of profit and loss.

(b) Income from conversion job is recognized on its completion and on its acceptance by the customers.

(c) Dividend income is accounted for in the year in which the right to receive the same is established.

(d) Interest income is recognized using the time-proportion method, based on rates implicit in the transaction.

2 Fixed assets

Tangible assets shown under gross block are valued at cost of acquisition inclusive of inward freight, duties, taxes and other incidental expenses related to its acquisition. All such direct costs are capitalized when the tangible fixed assets are ready for use.

Intangible assets relating to product development are recorded at actual cost incurred on development of products and are capitalized once the products receive approval from the relevant authorities and the same are carried at cost less accumulated depreciation.

3 Depreciation and amortization

(a) Depreciation on tangible assets has been calculated in accordance with the revised Schedule XIV of the Companies Act, 1956 as under:

(i) All assets except leasehold interest-on written down value basis.

(ii) On lease hold land-on straight line basis over the period of lease.

(iii) In case of intangible assets-over a period of four years.

(b) Depreciation on additions to fixed assets during the current year are charged on a pro-rata basis, for the period of use.

(c) Depreciation methods, useful lives and residual values of fixed assets are reviewed at each reporting date.

4 Impairment of assets

An impairment loss is charged to the Statement of profit and loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

5 Investments

Valued at cost, inclusive of dividend reinvested thereon.

6 Inventories

(a) Trading goods - At cost or net realizable value, whichever is lower.

(b) Raw materials and packing materials - At cost or net realizable value.

(c) Process stock - At cost or estimated realizable value, whichever is lower and

(d) Finished goods - At cost or net realizable value, whichever is lower and are inclusive of convert thereon.

Note: Cost is determined on a weighted average basis.

7 Employee benefits

(a) Gratuity: The Company has computed its liability towards future payments of gratuity to employees, on actuarial basis and the charge for the current year is debited to the Statement of profit and loss.

(b) Superannuation: The Company contributes towards its employees' superannuation fund, for future payment of retirement benefits to employees. The contributions accruing during each year are charged to the Statement of profit and loss.

(c) Leave encashment: Liabilities are determined by actuarial valuation done at the end of the year and the charge for current year is debited to the Statement of profit and loss.

(d) Provident fund: Employer's contribution to provident fund is charged to the Statement of profit and loss.

8 Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate on the date of transaction. Any income or expense on account of exchange difference, either on settlement or on translation, is recognised in the Statement of profit and loss. Liabilities payable in foreign currency are restated at the year-end exchange rates.

9 Leases

Lease rental payments under operating leases are recognized as an expense on a straight line basis in the Statement of profit and loss over the lease term.

10 Taxes on income

(a) Current tax

Provision for current tax is made based on tax liability computed after considering tax allowances and exemptions.

(b) Deferred tax

Provision for deferred tax is made using the applicable rate of taxation, for all timing differences which arise during the year and are reversed in subsequent periods.

11 Provisions and contingent liabilities

Based on the best estimate of the Management, provisions are determined of the outflow of economic benefits which are required to settle the obligation as at the reporting date. Where no reliable estimate can be made, disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation that may, but probably will not, require an outflow of the Company's resources.

12 Cash flow statement

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated, accordingly.

 
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