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Accounting Policies of Deepak Spinners Ltd. Company

Mar 31, 2015

(A) Basis of Accounting

The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards prescribed under section 133 and other relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on accrual basis except in case of claims lodged with Insurance Companies but not settled, interest on overdue debts from customers due to uncertainty in the realisation and export and other benefits doubtful of recovery are accounted for on receipt/ settlement.

(B) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.

(C) Classification of Assets and Liabilities as Current and Non Current

All assets and liabilities are 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 . Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months has been considered by the Company for the purpose of current/ non-current classification of assets and liabilities.

(D) Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase any attributable cost of bringing the asset to its working condition for its intended use. The carrying price and amounts are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

(E) Expenditure on New Projects, Substantial Expansion And During Construction Period Expenditure directly relating to construction activity is capitalised. Indirect expenditure incurred during construction period is capitalised as part of the indirect construction cost to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction period, which is not related to the construction activity nor is incidental thereto is charged to the Statement of Profit & Loss. Income earned during construction period is deducted from the total of the indirect expenditure.

All direct capital expenditure on expansion is capitalised. As regards indirect expenditure on expansion, only that portion is capitalised which represents the marginal increase in such expenditure as a result of capital expansion. Both direct and indirect expenditure are capitalised only if they increase the value of the asset beyond its originally assessed standard of performance. Expenditure during construction/installation period is included under capital work-in-progress and the same is allocated to respective fixed assets on the completion of its construction.

(F) Investments

Long term investments are stated at cost. The Company provides for diminution other than temporary, in the value of long term investments. Current investments are valued at lower of cost or fair value.

( G) Inventories

(i) Inventories are valued as follows :

Raw materials, stores and spares Lower of cost and net realisable value. Cost is

determined on FIFO basis. Materials and other items held for use in the production of inventories are not written down below costs, if finished goods in which they will be incorporated are expected to be sold at or above cost.

Work-in-progress and finished goods Lower of cost and net realisable value. Cost includes direct materials, labour and a proportion of manufacturing overheads.

Waste At net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale.

(ii) Work-in-progress and finished goods have been valued as per the principles and basis consistently followed.

(iii) Provision for obsolete/ old inventories is made, wherever required.

(iv) In view of substantially large number of items in work-in-progress, it is not feasible to maintain the status of movement of each item at shop floor on perpetual basis. The Company, however, physically verifies such stocks at the and of every month and valuation is made on the basis of such physical verification.

(H) Provisions

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made provisions, except those disclosed elsewhere in the notes to the financial statements, are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

(I) Revenue Recognition

(i) Revenue from sales is recognised when significant risks and rewards of ownership of the goods have passed to the buyer, which generally coincides with the delivery.

(ii) Net Sales are exclusive of excise duty and net of sales return, discounts, claims and rebates.

(iii) Revenue (other than sale) is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

(iv) Interest other than interest on overdue debts from customers, is recognised on time proportion basis.

(J) Government Grants and Subsidies

Grants and subsidies from the government are recognised when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant

or subsidy relates to an expense item, it is recognised as income or deducted from the relevant expense. Grant and Subsidy related to specific fixed asset is deducted from the gross value of the asset.

(K) Retirement and other employee benefits

(i) Retirement benefits in the form of provident fund, which are defined contribution plans, are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due.

(ii) Gratuity and leave encashment which are defined benefits, are accrued based on actuarial

valuation at the Balance Sheet date carried out by an independent actuary using the projected unit credit method.

(L) Foreign Currencies

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Monetary items related to foreign currencies transactions are restated at year end exchange rates. All exchange differences arising from such conversion including gain or loss on cancellation of foreign currency forward covers are included in the Statement of Profit and Loss. Premium/Discount on forward contracts covered by AS-11 is recognised over the length of the contract.

(M) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying fixed assets, are capitalised as part of the cost of such assets upto the date of commencement of commercial production/put to use of plant. Other borrowing costs are charged to revenue.

(N) Depreciation

Depreciation on Building and Plant & Machinery have been charged on straight line method on the

following economic useful life as determined by technical evaluation

Buildings (All type) 60 years

Plant and Machinery 30 years

Power Plant 36 years

Solar Power Plant 15 years

In case of other assets, depreciation has been provided on straight line method on the economic useful life prescribed by Schedule II to the Companies Act, 2013. Depreciation on additions due to machinery spares is provided retrospectively from the date the related assets are put to use. Depreciation on additions to or on disposal of assets is calculated on pro-rata basis. Leasehold land is being amortised over the period of lease tenure.

(O) Carbon Credit

Sale of Certified Emission Reductions (CERs) is recognized as income on the delivery of the CERs to the buyer's account as evidenced by the receipt of confirmation on execution of delivery instruction.

(P) Taxation

Current tax is measured at the amount expected to be paid to the revenue authorities, using the applicable tax rates and laws. Deferred tax for timing differences between the book and taxable Income for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet date. Deferred tax assets arising from temporary timing differences are recognised to the extent there is reasonable certainty that the assets can be realised in future and the same is reviewed at each Balance Sheet date.

Minimum alternate tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and written down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.


Mar 31, 2013

(A) Basis of Accounting

The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards issued under the Accounting Standard Rules,2006 notified by the Central Government and the relevant provisions of the Companies Act,1956. The financial statements have been prepared under the historical cost convention on accrual basis except in case of claims lodged with Insurance Companies but not settled and interest on overdue debts from customers due to uncertaintly in the realisation, are accounted for on receipt/ settlement.

(B) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.

(C) Classification of Assets and Liabilities as Current and Non Current

All assets and liabilities are classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months has been considered by the Company for the purpose of current/ non-current classification of assets and liabilities.

(D) Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase any attributable cost of bringing the asset to its working condition for its intended use. The carrying price and amounts are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors.An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

(E) Expenditure on New Projects , Substantial Expansion And During Construction Period

Expenditure directly relating to construction activity is capitalised. Indirect expenditure incurred during construction period is capitalised as part of the indirect construction cost to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction period, which is not related to the construction activity nor is incidental thereto is charged to the Statement of Profit & Loss. Income earned during construction period is deducted from the total of the indirect expenditure.

All direct capital expenditure on expansion is capitalised. As regards indirect expenditure on expansion, only that portion is capitalised which represents the marginal increase in such expenditure as a result of capital expansion. Both direct and indirect expenditure are capitalised only if they increase the value of the asset beyond its originally assessed standard of performance.

Expenditure during construction/installation period is included under capital work-in-progress and the same is allocated to respective fixed assets on the completion of its construction. F) Investments

Long term investments are stated at cost . The Company provides for diminution other than temporary,

in the value of long term investments. Current investments are valued at lower of cost or fair value.

(G) Inventories

i) Inventories are valued as follows :

Raw materials, stores and spares Lower of cost and net realisable value. Cost is

determined on FIFO basis. Materials and other items held for use in the production of inventories are not written down below costs, if finished goods in which they will be incorporated are expected to be sold at or above cost.

Work-in-progress and finished goods Lower of cost and net realisable value. Cost includes direct materials, labour and a proportion of manufacturing overheads.

Waste At net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale.

ii) Work-in-progress and finished goods have been valued as per the principles and basis consistently followed.

iii) Provision for obsolete/ old inventories is made, wherever required.

iv) In view of substantially large number of items in work- in- progress, it is not feasible to maintain the status of movement of each item at shop floor on perpetual basis. The Company, however, physically verifies such stocks at the and of every month and valuation is made on the basis of such physical verification.

(H) Provisions

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made Provisions. Except those disclosed elsewhere in the notes to the financial statements, are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(I) Revenue Recognition

(i) Revenue from sales is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer,which generaly coincides with the delivery.

(ii) Net Sales are exclusive of excise duty and net of sales return, discounts, claims and rebates.

(iii) Revenue (other than sale) is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

(iv) Interest include other than interest on overdue debts from customers, is recognised on time proportion basis.

(J) Government Grants and Subsidies

Grants and subsidies from the government are recognised when there is reasonable assurance that the grant/ subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognised as income or deducted from the relevant expense. Grant and Subsidy related to specific fixed asset is deducted from the gross value of the asset.

(K) Retirement and other employee benefits

(i) Retirement benefits in the form of provident fund, which are defined contribution plans, are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due.

(ii) Gratuity and leave encashment which are defined benefits, are accrued based on actuarial valuation at the balance sheet date carried out by an independent actuary using the projected unit credit method.

(L) Foreign Currencies

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Monetary items related to foreign currencies transactions are restated at year end exchange rates. All exchange differences arising from such conversion including gain or loss on cancellation of foreign currency forward covers are included in the Statement of Profit and Loss. Premium/Discount on forward contracts covered by AS-11 is recognised over the length of the contract.

(M) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying fixed assets, are capitalised as part of the cost of such assets upto the date of commencement of commercial production/put to use of plant. Other borrowing costs are charged to revenue.

(N) Depreciation

Depreciation on fixed assets has been charged at straight line method as per the rates and manner prescribed in the Schedule XIV of the Companies Act,1956. Depreciation on additions due to machinery spares is provided retrospectively from the date the related assets are put to use. Depreciation on additions to or on disposal of assets is calculated on pro-rata basis.Leasehold land is being amortised over the period of lease tenure.

(O) Carbon Credit

Sale of Certified Emission Reductions (CERs) is recognized as income on the delivery of the CERs to the buyer''s account as evidenced by the receipt of confirmation of execution of delivery isntructions.

(P) Taxation

Current tax is measured at the amount expected to be paid to the revenue authorities, using the applicable tax rates and laws. Deferred tax for timing differences between the book and taxable Income for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred tax assets arising from temporary timing differences are recognised to the extent there is reasonable certainty that the assets can be realised in future and the same is reviewed at each Balance Sheet date.

Minimum alternate tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and written down the carryingamount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.


Mar 31, 2012

I) Recognisation of Income and Expenditure :

Income and Expenditure are accounted for on accrual basis except interest from customers and insurance claim lodged with insurance company pending for settlement due to uncertainly in realisation are accounted for as and when received/settled.

ii) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liablities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

iii) Fixed Assets

a) Fixed Assets are stated at their original cost(excluding cenvat, wherever taken) which includes acquisition, construction/installation and pre-operational expenses for new project as applicable.Impairment of Assets are assessed at Balance Sheet date and if any indicators of impairment exists, the same is assessed and provided for.

b) Depreciation has been provided on all fixed assets as per Straight Line Method at rates and manner prescribed in Schedule XIV of the Companies Act, 1956 (as amended).

c) Leasehold land is amortised over the period of the lease.

iv) Investments :

Long term investments are stated at cost less provision for permanent diminution in value of such investment, if any.

v) Valuation of Inventories :

Inventories are valued at cost or net realisable value whichever is lower except waste/scrap which is valued at estimated net realisable value .In case of Raw Materials and Stores and Spare parts cost is determined on FIFO method.

Cost in respect of work in progress and Finished Goods includes cost of purchase,cost of conversion and other appropriate overheads (including depreciation but excludes intrest cost) incurred in bringing the inventories to their present location.However, materials and other items held for use in the production of inventories are not written down below cost if finished product in which they will be incorporated are expected to sold at or above cost. In view of susbantially large number of items in work in progress, it is not feasible to maintain the status of movement of each item at shop floor on perpetual basis. The Company, however, physically verifies such stocks at the end of every month and valuation is made on the basis of such physical verification.

vi) Foreign Currencies

Foreign currency transactions are recorded in the reporting currnecy, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Monetary items related to foreign currencies transaction are restated at year end exchange rate. All exchange differences arising from such conversion including gain or loss on cancellation of foreign currency forward covers are included in the Profit & Loss Account. Premum/ Discount on Forward Covers in recognised over the length of the contract.

vii) Retirement Benefits :

a) Year end Liability in respect of Gratuity to Employees is provided on the basis of actuarial valuation.

b) Year end leave encashment benefit is provided for on the basis of acturial valuation.

viii) Stores and Spares issued for repairs and maintenance of assets is charged directly to Stores and Spares Consumed Account.

ix) Revenue Recognition

a) Revenue from sales is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, which generally coincides with the delivery.

b) Net sales are exclusive of excise duty and net of sales returns, discounts, claims and rebates.

c) Revenue (other than sale) is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

x) Carbon Credit

Sale of Certified Emission Reductions (CERs) is recognized as income on the delivery of the CERs to the buyers's account as evidenced by the receipt of confirmation of execution of delivery instructions.

xi) Provisions

A provision is recognised when an enterprises has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation ,in respect of which a reliable estimate can be made.Provisions except those disclosed elsewhere in the notes to the financial statements, are not discounted to its present value and are determined based on the best estimate required to settle the obligation at the balance sheet date . These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

xii) Borrowing Cost :

Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised. Other borrowing costs are recognised as expenses in the period in which they are incurred.

xiii) Taxation :

Current tax is measured at the amount expected to be paid to the revenue authorties, using the applicable tax rates and laws. Deferred tax for timing differences between the book and taxable income for the year is accounted for by using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred Tax Assets arising from temporary timing differences are recognised to the extent there is reasonable certainty that the assets can be realised in future and the same is reviewed at each Balance Sheet date.


Mar 31, 2010

I) (a) Recognisation of Income and Expenditure : All Income and Expenditure are accounted for on accrual basis except interest from customers and insurance claim lodged with insurance company pending for settlement are accounted for as and when received/settled due to uncertainly in realisation.

b) Incentive in respect of export made as per the Import Export Policy is being accounted for on accrual basis

ii) Fixed Assets :

a) Fixed Assets are stated at their original cost(excluding cenvat, wherever taken) which includes acquisition, construction/installation and pre-operational expenses for new project as applicable.Impairment of Assets are assessed at Balance Sheet date and if any indicators of impairment exists, the same is assessed and provided for.

b) Depreciation has been provided on all fixed assets as per Straight Line Method at rates and manner prescribed in Schedule XIV of the Companies Act, 1956 (as amended).

c) Leasehold land is amortised over the period of the lease.

d) Depreciation on foreign exchange fluctuations on fixed assets upto 30/06/07 is being provided on the basis of residual life of assets.

iii) Investments :

Long term investments are stated at cost less provision for permanent diminution in value of such investment, if any.

iv) Valuation of Inventories :

Inventories are valued at cost or net realisable value whichever is lower except waste/scrap which is valued at estimated net realisable value .In case of Raw Materials and Stores and Spare parts cost is determined on FIFO method.

Cost in respect of work in progress and Finished Goods includes cost of purchase,cost of conversion and other appropriate overheads (including depreciation but excludes intrest cost) incurred in bringing the inventories to their present location.However, materials and other items held for use in the production of inventories are not written down below cost if finished product in which they will be incorporated are expected to sold at or above cost. In view of susbantially large number of items in work in progress, it is not feasible to maintain the status of movement of each item at shop floor on perpetual basis. The Company, however, physically verifies such stocks at the end of every month and valuation is made on the basis of such physical verification.

v) Foreign Currency Transactions :

a) The foreign currency transactions completed during the year are adjusted at the rate of exchange prevailing on the date of transactions. Outstanding monetary items related to Foreign Currency transaction are stated at the rates ruling at the year end. Exchange difference, if any, arising on such transactions is charged to the Profit and Loss Account.

b) Foreign currency transactions covered by forward contracts, the difference between the forward rate and the exchange rate at the inception of a forward contract is recognised as the income or expenses over the life of contract. Profit or loss on forward contract is recognised as income or expense in the year in which value of such forward contract changes.

vi) Retirement Benefits :

a) Year end Liability in respect of Gratuity to Employees is provided on the basis of actuarial valuation.

b) Year end leave encashment benefit is provided for on the basis of acturial valuation.

vii) Stores and Spares issued for repairs and maintenance of assets is charged directly to Stores and Spares Consumed Account

viii) Sales :

a) Revenue from sales is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, which generally coincides with the delivery.

b) Net sales are exclusive of excise duty and net of sales returns, discounts, claims and rebates.

ix) Provisions, Contingent Liability & Contingent Assets :

Provisions are recognised in respect of present obligations arising out of past events where there are reliable estimate of probable outflows of resources. Contingent liabilities are the possible obligation of the past events, the existence of which will be confirmed only by the occurance or non occurance of a future event. These are not provided for and are disclosed by way of notes on accounts. Contingent Assets are not provided for or disclosed.

x) Borrowing Cost :

Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised. Other borrowing costs are recognised as expenses in the period in which they are incurred.

xi) Taxation :

Current Tax is determined on the amount of tax payable in respect of taxable income for the period. Deferred tax liabilities and assets are recognised at current tax rates or substantively enacted tax rates, subject to the consideration of prudence in case of deferred tax assets, on timing difference, being the difference between book and tax income

 
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