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Accounting Policies of Bhilwara Spinners Ltd. Company

Mar 31, 2015

1. Accounting Conventions

The Company follows the Mercantile system of accounting and recognizes Income and Expenditure on accrual basis. The accounts are prepared on historical cost basis, as a going concern and are consistent with generally accepted accounting principles.

2. Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect reportable amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results are known / materialized.

3. Revenue Recognition

a) Income and expenditure are accounted for on accrual basis except:

* Interest charged in the invoices, which is accounted for at the time of raising of invoices.

* Overdue interest on late payment, which is accounted for on cash basis.

* Medical reimbursement to employees, which are accounted for on cash basis.

b) Sales are inclusive of excise duty but exclude sales/vat tax.

4. Fixed Assets

a) Fixed assets are stated at their original cost of acquisition including freight , incidental expenses and other non refundable taxes or levies related to acquisition and installation of the concerned assets. Interest on borrowed funds attributable to acquisition/construction of fixed assets and related pre-operative expenses upto the date of commencement of commercial production, net of sales of trial production, are also capitalised where appropriate. CENVAT availed has been deducted from the cost of respective assets.

b) Project under Commissioning and other Capital Works-in-Progress are carried at cost, comprising direct cost, related incidental expenses and interest on borrowings there against.

c) (i)The carrying amounts of fixed assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal /external factors.

(ii) An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount and the same is recognized as an expense in the statement of Profit & Loss and Carrying amount of the asset is reduced to recoverable amount.

(iii) Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the assets no longer exists or have decreased.

5. Inventories

a) Trading Goods are valued at cost or net realisable value whichever is less

6. Depreciation

On Straight line method at the rates and in the manner prescribed under Part -C of Schedule II of the Companies Act, 2013 Depreciation on assets costing upto Rs.5000/- is provided in full in the year of acquisition.

7. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

8. Foreign Exchange Transaction /Translation

(a) There is no foreign currency transactions arising during the year.

9. Provisions, Contingent Liability & Contingent Assets

(a) Provisions involving substantial degree of estimation in measurement, are recognized when the present obligation resulting from past events given rise to probability of outflow of resources embodying economic benefits on settlement.

(b) Contingent liabilities are not recognized and are disclosed in notes.

(c) Contingent assets are neither recognized nor disclosed in financial statements.

(d) Provisions are reviewed at each Balance sheet date and adjusted to reflect the current best estimates.

10. Employees Benefits

(a) Retirement benefits in the form of Provident fund, Pension Schemes and Superannuation are defined contribution schemes and the contributions are charged to the Profit & Loss Account of the year when the contributions to the respective funds are due.

(b) Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation made at the end of each financial year. However, the company is contributing to the company's Gratuity Trust covering the gratuity liability of the employees. The difference between the acturial valuation of the gratuity of employees at the year-end and the balance of funds with Gratuity Trust is provided for as liability in the books.

(c) Provision for Leave encashment is accrued and provided for on the basis of an actual valuation made at the end of each financial year.

(d) Actuarial gains / losses are immediately taken to Profit & Loss Account and are not deferred.

(e) Expenses incurred on voluntary retirement of employees are charged off to the Profit & Loss Account in the year of incurrence.

(f) Liability on account of shortterm employee benefits, comprising largely of performance incentives is recognized on an undiscounted, accrual basis during the period on the vesting period of benefit.

11. Tax Expenses

a) Current year charge

Provision for taxation is ascertained on the basis of assessable profits computed in accordance with the provision of Income Tax Act, 1961.However, where the tax is computed in accordance with the provision of Section 115JB of the Income Tax Act,1961, as

Minimum Alternate Tax (MAT), it is charged.

b) Deferred Tax

i) Deferred tax is recognized, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income and accounting income computed for the current accounting year and reversal of earlier years' timing differences.

ii) Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carry forward losses which are recognized to the extent that there is deferred tax liabilities or there is virtual certainty, that sufficient future taxable income.




Mar 31, 2013

1. Accounting Conventions

The Company follows the Mercantile system of accounting and recognizes Income and Expenditure on accrual basis. The accounts are prepared on historical cost basis, as a going concern and are consistent with generally accepted accounting principles.

2. Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect reportable amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results are known / materialized.

3. Revenue Recognition

a) Income and expenditure are accounted for on accrual basis except:

- Interest charged in the invoices, which is accounted for at the time of raising of invoices.

- Overdue interest on late payment, which is accounted for on cash basis.

- Medical reimbursement to employees, which are accounted for on cash basis.

b) Sales are inclusive of excise duty but exclude sales/vat tax.

4. Fixed Assets

a) Fixed assets are stated at their original cost of acquisition including freight , incidental expenses and other non refundable taxes or levies related to acquisition and installation of the concerned assets. Interest on borrowed funds attributable to acquisition/construction of fixed assets and related pre-operative expenses upto the date of commencement of commercial production, net of sales of trial production, are also capitalised where appropriate. CENVAT availed has been deducted from the cost of respective assets.

b) Project under Commissioning and other Capital Works-in-Progress are carried at cost, comprising direct cost, related incidental expenses and interest on borrowings there against.

c) (i)The carrying amounts of fixed assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal /external factors.

(ii) An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount and the same is recognized as an expense in the statement of Profit & Loss and Carrying amount of the asset is reduced to recoverable amount.

(iii)Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the assets no longer exists or have decreased.

5. Depreciation

On Straight line method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956. Depreciation on assets costing upto Rs.5000/- is provided in full in the year of acquisition.

6. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

7. Foreign Exchange Transaction/Translation

(a) There is no foreign currency transactions arising during the year.

8. Provisions, Contingent Liability & Contingent Assets

(a) Provisions involving substantial degree of estimation in measurement, are recognized when the present obligation resulting from past events given rise to probability of outflow of resources embodying economic benefits on settlement.

(b) Contingent liabilities are not recognized and are disclosed in notes.

(c) Contingent assets are neither recognized nor disclosed in financial statements.

(d) Provisions are reviewed at each Balance sheet date and adjusted to reflect the current best estimates.

9. Employees Benefits

(a) Retirement benefits in the form of Provident fund, Pension Schemes and Superannuation are defined contribution schemes and the contributions are charged to the Profit & Loss Account of the year when the contributions to the respective funds are due.

(b) Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation made at the end of each financial year. However, the company is contributing to the company''s Gratuity Trust covering the gratuity liability of the employees. The difference between the acturial valuation of the gratuity of employees at the year-end and the balance of funds with Gratuity Trust is provided for as liability in the books.

(c) Provision for Leave encashment is accrued and provided for on the basis of an actual valuation made at the end of each financial year.

(d) Actuarial gains / losses are immediately taken to Profit & Loss Account and are not deferred.

(e) Expenses incurred on voluntary retirement of employees are charged off to the Profit & Loss Account in the year of incurrence.

(f) Liability on account of shortterm employee benefits, comprising largely of performance incentives is recognized on an undiscounted, accrual basis during the period on the vesting period of benefit.

10. Tax Expenses

a) Current year charge

Provision for taxation is ascertained on the basis of assessable profits computed in accordance with the provision of Income Tax Act, 1961.However, where the tax is computed in accordance with the provision of Section 115JB of the Income Tax Act,1961, as Minimum Alternate Tax (MAT), it is charged.

b) Deferred Tax

i) Deferred tax is recognized, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income and accounting income computed for the current accounting year and reversal of earlier years'' timing differences.

ii) Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carry forward losses which are recognized to the extent that there is deferred tax liabilities or there is virtual certainty, that sufficient future taxable income.


Mar 31, 2011

1. Accounting Conventions

The Company follows the Mercantile system of accounting and recognizes Income and Expenditure on accrual basis. The accounts are prepared on historical cost basis, as a going concern and are consistent with generally accepted accounting principles.

2. Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect reportable amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results are known / materialized,

3. Revenue Recognition

a) Income and expenditure are accounted for on accrual basis except ;

- Interest charged in the invoices, which is accounted for at the time of raising of invoices.

- Overdue interest on late payment, which is accounted for on cash basis.

- Medical reimbursement to employees, which are accounted for on cash basis.

b) Sales are inclusive of excise duty but exclude sales/vat tax.

c) Insurance claims are accounted for in the year of lodgment to the extent they are measurable and any shortfall/excess is adjusted on receipt of the final claim.

4. Fixed Assets

a) Fixed assets are stated at their original cost of acquisition including freight , incidental expenses and other non refundable taxes or levies related to acquisition and installation of the concerned assets Interest on borrowed funds attributable to acquisition/construction of fixed assets and related pre-operative expenses upto the date of commencement of commercial production, net of sales of trial production, are also capitalised where appropriate. CENVAT availed has been deducted from the cost of respective assets.

b) Project under Commissioning and other Capital Works-in-Progress are carried at cost, comprising direct cost, related incidental expenses and interest on borrowings there against.

c) (i)The carrying amounts of fixed assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal /external factors.

(ii) An Impairment lots is recognized wherever the carrying amount of an asset exceeds its recoverable amount and the same Is recognized at an expense in the statement of Profit & Loss and Carrying amount of the asset Is reduced to recoverable amount.

(iii)Reversal of Impairment losses recognized in prior years is recorded when there Is an Indication that the Impairment losses recognized for the assets no longer exists or have decreased,

5. Depreciation

On Straight line method at the rates and In the manner prescribed under Schedule XIV of the Companies Act, 1956. Depreciation on assets costing upto Rs. 5000/- is provided in full in the year of acquisition.

6. Borrowing Costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of assets, A qualifying asset Is one that necessarily takes substantial period of time to get ready for Intended use. All other borrowing costs are charged to revenue.

7. Foreign Exchange Transaction/Translation

(a) Foreign currency transactions arising during the year are recorded at the exchange rates prevailing on the dates of the transactions

(b) In accordance with the Revised Accounting Standard 11 for the "Effects of the Changes in Foreign Exchange Rates", Foreign Currency Assets and Liabilities are converted into Rupee equivalent at the exchange rate prevailing at the date of Balance Sheet.

(c) Where the Company has entered Into forward exchange contract, which is not intended for trading and speculation, Premium/ Discount i.e. the difference between the contract rate and the rate at the date of transaction, Is recognized over the period of contract.

(d) Gain or Loss on the restatement of foreign currency transactions or on maturity or cancellation of forward exchange contact, if any, is reflected in the Profit & Loss account.

8. Provisions, Contingent Liability & Contingent Assets

(a) Provisions involving substantial degree of estimation in measurement, are recognized when the present obligation resulting from past events given rise to probability of outflow of resources embodying economic benefits on settlement.

(b) Contingent liabilities are not recognized and are disclosed in notes.

(c) Contingent assets are neither recognized nor disclosed in financial statements.

(d) Provisions are reviewed at each Balance sheet date and adjusted to reflect the current best estimates.

9. Employees Benefits

(a) Retirement benefits in the form of Provident fund, Pension Schemes and Superannuation are defined contribution schemes and the contributions are charged to the Profit & Loss Account of the year when the contributions to the respective funds/ Trust are due.

(b) Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation made at the end of each financial year. However, the company is contributing to the company's Gratuity Trust covering the gratuity liability of the employees. The difference between the actuarial valuation of the gratuity of employees at the year-end and the balance of funds with Gratuity Trust is provided for as liability in the books.

(c) Provision for Leave encashment is accrued and provided for on the basis of an actuarial valuation made at the end of each financial year.

(d) Actuarial gains / losses are immediately taken to Profit & Loss Account and are not deferred.

(e) Expenses incurred on voluntary retirement of employees are charged off to the Profit & Loss Account in the year of incurrence.

(f) Liability on account of short term employee benefits, comprising largely of performance incentives is recognized on an undiscounted, accrual basis during the period on the vesting period of benefit.

10. Tax Expenses

a) Current year charge

Provision for taxation is ascertained on the basis of assessable profits computed in accordance with the provision of Income Tax Act, 1961. However, where the tax is computed in accordance with the provision of Section 115JB of the Income Tax Act,1961, as Minimum Alternate Tax (MAT), it is charged off to the Profit & Loss Account of the relevant year.

b) Deferred Tax

i) Deferred tax is recognized, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income and accounting income computed for the current accounting year and reversal of earlier years' timing differences.

ii) Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carry forward losses which are recognized to the extent that there is deferred tax liabilities or there is virtual certainty, that sufficient future taxable income will be available against which such deferred tax assets can be realized.


Mar 31, 2010

1. Accounting Conventions

The Company follows the Mercantile system of accounting and recognizes Income and Expenditure on accrual basis. The accounts are prepared on historical cost basis, as a going concern and are consistent with generally accepted accounting principles.

2. Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect reportable amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results are known/ materialized.

3. Revenue Recognition

a) Income and expenditure are accounted for on accrual basis except:

-Interest charged in the invoices, which is accounted for at the time of raising of invoices.

- Overdue interest on late payment, which is accounted for on cash basis.

-Medical reimbursement to employees, which are accounted for on cash basis.

b) Sales are inclusive of excise duty but exclude sales/vat tax.

4. Inventory Valuation.





Basis of valuation

Finished goods At lower of cost and net realizable value

Stock in process At lower of cost and net realizable value

Waste At estimated realizable value

Raw Materials At lower of cost and net realizable value. Cost is arrived at by using "First In

First Out" method.





Stores & spares At cost or below. Cost is arrived at by using "weighted average" method.

5. Investments

Long Term investments are stated at cost. In case of diminution in the value other than temporary, the Carrying amount is reduced to recognize the decline.

6. Fixed Assets

a) Fixed assets are stated at their original cost of acquisition including freight, incidental expenses and other non refundable taxes or levies related to acquisition and installation of the concerned assets. Interest on borrowed funds attributable to acquisition/construction of fixed assets and related pre-operative expenses upto the date of commencement of commercial production, net of sales of trial production, are also capitalised where appropriate. CENVAT availed has been deducted from the cost of respective assets.

b) Project under Commissioning and other Capital Works-in-Progress are carried at cost, comprising direct cost, related incidental expenses and interest on borrowings there against.

c) (i) The carrying amounts of fixed assets are reviewed at each balance sheet date, if there is any

indication of impairment based on internal /external factors.

(ii) An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount and the same is recognized as an expense in the statement of Profit & Loss and Carrying amount of the asset is reduced to recoverable amount."

(iii) Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the assets no longer exists or have decreased.

7. Depreciation

On Straight line method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956. Depreciation on assets costing upto Rs.5000/- is provided in full in the year of acquisition.

8. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

9. Foreign Exchange Transaction /Translation

(a) Foreign currency transactions arising during the year are recorded at the exchange rates prevailing on the dates of the transactions.

(b) In accordance with the Revised Accounting Standard 11 for the "Effects of the Changes in Foreign Exchange Rates", Foreign Currency Assets and Liabilities are converted into Rupee equivalent at the exchange rate prevailing at the date of Balance Sheet.

(c) Where the Company has entered into forward exchange contract, which is not intended for trading and speculation, Premium/ Discount i.e. the difference between the contract rate and the rate at the date of transaction, is recognized over the period of contract.

(d) Gain or Loss on the restatement of foreign currency transactions or on maturity or cancellation of forward exchange contact, if any, is reflected in the Profit & Loss account except gain or loss on transactions relating to acquisition of fixed assets, which is adjusted to the carrying amount of fixed assets.

10. Provisions, Contingent Liability & Contingent Assets

(a) Provisions involving substantial degree of estimation in measurement, are recognized when the present obligation resulting from past events given rise to probability of outflow of resources embodying economic benefits on settlement.

(b) Contingent liabilities are not recognized and are disclosed in notes.

(c) Contingent assets are neither recognized nor disclosed in financial statements.

(d) Provisions are reviewed at each Balance sheet date and adjusted to reflect the current best estimates.

11. Employees Benefits

(a) Retirement benefits in the form of Provident fund, Pension Schemes and Superannuation are defined contribution schemes and the contributions are charged to the Profit & Loss Account of the year when the contributions to the respective funds/ Trust are due.

(b) Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation made at the end of each financial year. However, the company is contributing to the companys Gratuity Trust covering the gratuity liability of the employees. The difference between the actuarial valuation of the gratuity of employees at the year-end and the balance of funds with Gratuity Trust is provided for as liability in the books.

(c) Provision for Leave encashment is accrued and provided for on the basis of an actuarial valuation made at the end of each financial year.

(d) Actuarial gains / losses are immediately taken to Profit & Loss Account and are not deferred.

(e) Expenses incurred on voluntary retirement of employees are charged off to the Profit & Loss Account in the year of incurrence.

(f) Liability on account of short term employee benefits, comprising largely of performance incentives is recognized on an undiscounted, accrual basis during the period on the vesting period of benefit.

12. Tax Expense

a) Current year charge

Provision for taxation is ascertained on the basis of assessable profits computed in accordance with the provision of Income Tax Act, 1961.However, where the tax is computed in accordance with the provision of Section 115JB of the Income Tax Act,1961, as Minimum Alternate Tax (MAT), it is charged off to the Profit & Loss Account of the relevant year.

b) Deferred Tax

i) Deferred tax is recognized, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income and accounting income computed for the current accounting year and reversal of earlier years timing differences."

ii) Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carry forward losses which are recognized to the extent that there is deferred tax liabilities or there is virtual certainty, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

 
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