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Accounting Policies of Eastern Treads Ltd. Company

Mar 31, 2015

General

The financial statements are prepared under historical cost convention and in accordance with the applicable accounting standards in India.

Use of Estimates

The preparation of financial statements in conformity with the Generally Accepted Accounting Principal (GAAP) requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities on the date of the financial statements and reported amount of income and expenses during the period. Actual figures may differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

Fixed Assets

Fixed Assets are stated at historical cost less accumulated depreciation. Advances paid towards acquisition of fixed assets and contractors are disclosed under ''Capital Advances''

Depreciation

Depreciation on tangible assets has been provided under Straight Line Method over the useful life of the assets estimated by the management which is in line with the terms prescribed in Schedule II to The Companies Act, 2013. Depreciation for assets purchased/sold during the period is proportionately charged.

The management estimates the useful life of the fixed assets as follows:

Factory Building : 30 years

Building -Godown : 30 years

Roads - Non RCC : 5 years

Plant & Equipment : 15 years (Depreciation charged on double shift basis)

Electrification & Water Systems : 10 years Lab Equipments : 10 years

Furniture & Fixtures : 10 years

Office Equipments : 5 years

Computer & Accessories : 3 years

Vehicles : 8 years

During the current year, the Company has reviewed the useful life of its assets as per the Companies Act, 2013 and has re-estimated the same accordingly. Consequently, an amount of Rs. 104,05,973/- being the excess depreciation charged as per the earlier regime is written back during the year.

Amortisation of Intangible Assets

Intangible assets, being Computer Software are written off over a period of five years under Straight Line Method.

Revenue Recognition

Revenue from sale of goods is recognised at the point of despatch to the customers. Revenue from job work is recognised at the completion of the agreed services. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the interest rate applicable.

Inventories and Tools & Spares

Raw materials are valued at cost on FIFO basis. Finished Goods are valued at lower of cost or net realisable value. Cost includes indirect costs. 25% of Tools & Spares are written off to revenue.

Employee Benefits

(a) Short term employee benefits such as salaries, wages, bonus and incentives which fall due within 12 months of the period in which the employee renders the related services which entitles him to avail such benefits are recognised on an undiscounted basis and charged to the profit and loss account.

(b) Defined Contribution Plans - Contributions made to the Recognised Provident Fund & Employee State Insurance Corporation are expensed to the Profit & Loss Account. The Company''s obligation is limited to the amount contributed by it.

(c) Defined Benefit Plans - The Company is a member of Group Gratuity Scheme administered by LIC of India. The liability for gratuity is accounted on the basis of actuarial valuation done by LIC of India.

Foreign Exchange Transactions

Revenue denominated in foreign currencies is translated into relevant functional currencies using the exchange rate in effect on the date of transaction. Transaction gain or loss realised upon the settlement of foreign currency transactions are included in determining net profit for the period in which transaction is settled.

The premium or discount on a forward exchange contract taken to hedge foreign currency risk of an existing asset/liability is recognised over the period of the contract and is recognised in the statement of profit and loss.

The forward exchange contracts taken to hedge existing assets/liabilities are translated at the closing exchange rates and resultant exchange differences are recognised in the same manner as those on the underlying foreign currency asset/liability.

Borrowing Costs

Borrowing costs are expensed in the absence of outlay on qualifying assets.

Segment Reporting

In the absence of more than one distinguishable business/ geographical segment, segment information is not given.

Taxes on Income

Income tax expense comprises current tax and deferred tax charge or credit. The current tax is determined as the amount of tax payable in respect of the estimated taxable income of the period. The deferred tax charge or credit is recognised using prevailing enacted or substantively enacted tax rates. Where there are unabsorbed depreciation or carry forward losses, deferred tax asset are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets are reviewed at each Balance Sheet date based on the developments during the period.

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 the guidance note issued by The Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each Balance Sheet date and writes 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.

Impairment of Assets

The carrying amount of assets is reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss will be recognised wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing the value in use; the estimated future cash flows are discounted to the present value using the weighted average cost of capital.

Provisions, Contingent Liabilities and Contingent Assets

The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is a possible obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2013

The significant Accounting Policies followed by the Company are as stated below:

General

The financial statements are prepared under historical cost convention and in accordance with the applicable Accounting Standards in India.

Use of Estimates

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles (GAAP) requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities on the date of the financial statements and reported amount of income and expenses during the period. Actual figures may differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

Fixed Assets

Fixed Assets are stated at historical cost less accumulated depreciation.

Advances paid towards acquisition of fixed assets and contractors are disclosed under ''Capital Advances''

Depreciation

Depreciation has been provided on fixed assets under Straight Line Method at the rates and in the manner given underScheduleXIVtoTheCompaniesAct, 1956.

Amortisation of Intangible Assets

Intangible assets are written off over a period of five years under Straight Line Method

Revenue Recognition

Revenue from sale of goods is recognised at the point of despatch to the customers. Revenue from job work is recognised at the completion of the agreed services.

Inventories and Tools & Spares

Raw materials are valued at cost on FIFO basis.

Finished Goods are valued at lower of cost or net realisable value. Cost includes indirect costs.

25% of Tools & Spares are written off to revenue.

Preference Share Issue Expenses

The expenses in relation to the preference share issue is written off over a period of 5 years on straight line method.

Employee Benefits

a.Short term employee benefits such as salaries, wages, bonus and incentives which fall due within 12 months of the period in which the employee renders the related services which entitles him to avail such

benefits are recognised on an undiscounted basis and charged to the profit and loss account.

b.Defined Contribution Plans - Contributions made to the Recognised Provident Fund & Employee State Insurance Corporation are expensed to the Profit & Loss Account. The Company''s obligation is limited to the amount contributed by it.

c.Defined Benefit Plans - The Company is a member of Group Gratuity Scheme administered by LIC of India. The liability for gratuity is accounted on the basis of acturial valuation done by LIC of India.

Borrowing Costs

Borrowing costs are expensed in the absence of outlay on qualifying assets.

Segment Reporting

In the absence of more than one distinguishable business/geographical segment, segment information is not given.

Taxes on Income

Income tax expense comprises current tax and deferred tax charge or credit. The current tax is determined as the amount of tax payable in respect of the estimated taxable income of the period. The deferred tax charge or credit is recognised using prevailing enacted or substantively enacted tax rates. Where there are unabsorbed depreciation or carry forward losses, deferred tax asset are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets are reviewed at each Balance Sheet date based on the developments during the period.

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 the guidance note issued by The Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each Balance Sheet date and writes 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.

Impairment of Assets

The carrying amount of assets is reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss will be recognised wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing the value in use; the estimated future cash flows are discounted to the present value using the weighted average cost of capital.

Provisions, Contingent Liabilities and Contingent Assets

The company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is a possible obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2012

General

The financial statements are prepared under historical cost convention and in accordance with the applicable accounting standards in India.

Use of Estimates

The preparation of financial statements in confirm its with the Generally Accepted Accounting Principles (GAAP) requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities on the date of the financial statements and reported amount of income and expenses during the period. Actual figures may differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

Fixed Assets

Fixed Assets are stated at historical cost less accumulated depreciation.

Advances paid towards acquisition of fixed assets and contractors are disclosed under'Capital Advances'.

Depreciation

Depreciation has been provided on fixed assets under Straight Line Method at the rates and in the manner given under Schedule XlV to The Companies Act, 1956.

Revenue Recognition

Revenue from sale of goods is recognised at the point of despatch to the customers.

Revenue from job work is recognised at the completion of the agreed services.

Inventories and Tools & Spares

Raw materials are valued at cost on FIFO basis.

Finished Goods are valued at lower of cost or net realisable value. Cost includes indirect costs.

25% of Tools & Spares are written off to revenue.

Preference Share Issue Expenses

The expenses in relation to the preference share issue is written off over a period of 5 years on straight line method.

Employee Benefits

a. Short term employee benefits such as salaries, wages, bonus and incentives which fall due within 12 months of the period in which the employee renders the related services which entitles him to avail such benefits are recognised on an undiscounted basis and charged to the profit and loss account.

b. Defined Contribution Plans - Contributions made to the Recognised Provident Fund & Employee State Insurance Corporation are expensed to the Profit & Loss Account. The Company's obligation is limited to the amount contributed by it.

c. Defined Benefit Plans - The Company is a member of Group Gratuity Scheme administered by LIC of India. The liability for gratuity is accounted on the basis of acturial valuation done by LIC of India

Borrowing Costs

Borrowing costs are expensed in the absence of outlay on qualifying assets.

Segment Reporting

In the absence of more than one distinguishable business/ geographical segment, segment information is not given.

Taxes on Income

Taxes on Income is accounted under the Tax Effect Method in accordance with Accounting Standard -22 issued by the Institute of Chartered Accountants of India. On account of the substantial amount of unabsorbed losses and depreciation under the tax provisions, the net DTA position of the previous year (Rs. 79.20 Lakhs) was not recognised as on 31.03.2011. In view of the increased profitability and the positive future outlook, Deferred Tax Asset of Rs. 4.12 lakhs is recognised during the year.

Impairment of Assets

The carrying amount of assets is reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss will be recognised wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing the value in use; the estimated future cash flows are discounted to the present value using the weighted average cost of capital.

Provisions, Contingent Liabilities and Contingent Assets

The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is a possible obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.

 
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