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Accounting Policies of Emtex Industries (India) Ltd. Company

Mar 31, 2011

A. System of Accounting:

The Company adopts the accrual concept in the preparation of the accounts. The financial statements are based on historical cost, unless otherwise stated. The accounting principles employed are generally accepted in India and materially comply with mandatory accounting standards issued by the Institute of Chartered Accountants of India.

B. Borrowing Cost:

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

C. Fixed Assets: :

Fixed Assets are stated at cost of acquisition or construction, net of canvas, less accumulated depreciation. All cost relating to the acquisition and installation of fixed assets are capitalized and include the financing costs till commencement of commercial production is capitalized.

During the year, the company has not made any additions to fixed assets (Previous year Rs. 26.18 lacs) which are free of charge and encumbrance from any financial institutions and/or any banks.

Advances paid towards the acquisition' or construction of fixed assets and the cost of assets not put to use before the period end are disclosed under capital work-in-progress.

D. Depreciation and Amortization:

I. Depreciation has been provided on straight-line method for Synthetics Division and Chemical Division and on written down value method for Cotton Division at the rates specified in Schedule XIV of the Companies Act, 1956. The additional charges of depreciation on fixed assets due to revaluation Rs 2.00 lacs (Previous year Rs. 2.00 lacs) an equivalent amount has been transferred from revaluation reserve to Profit and Loss Account.

II. Leasehold land is amortized over the unexpired period of lease.

E. investments:

There are no investment made during the year either current investments or long term investments.

F. Inventories:

I. Inventories are valued at lower of cost or net realizable value except for scrap, which are valued at net realizable value.

II. Cost of inventories of finished goods and work in progress includes material cost, cost of conversion and other cost incurred in bringing the inventory to their present location and condition.

III. Cost of raw materials, finished goods and work-in-progress is determined on First in First out (FIFO) basis except stores and spare parts which are valued at weighted average cost.

G. Turnover:

Turnover includes sales of goods and processing charges, deemed export incentives i.e. DEPB sales but excluding excise duty and value added tax.

H. Foreign Exchange Transactions:

I. Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction.

II. Monetary items denominated in foreign currencies at the yearend not covered by the forward exchange contract are translated at the yearend rates and those covered by forward exchange contract are translated at rate prevailing on the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction, such differences having been recognized over the life of the contract.

III. Non monetary foreign currency items are carried at cost.

IV. Any income or expenses on account of exchange difference either on settlement or on_ translation is recognized in the Profit and Loss Account except in cases where they related to the acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

I. Customs:

The liability on account of Custom duty is recognized on clearance of the goods from the bonded warehouse.

J. Retirement Benefits:

Contribution to Provident funds and superannuation fund are made to the respective funds and charged to the profit and loss account. Gratuity and leave encashment is being accounted on cash basis.

K. Miscellaneous expenditure:

Preliminary expenditure has already been written off over a period of 10 years.

L. Provision of Current and Deferred Tax: .

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961.

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. The accumulated absorbed losses & unabsorbed depreciation has been considered as deferred tax Assets to the extent that there is virtual certainty in the opinion of the Management that the future taxable income will be available against such Deferred Tax Assets.

In the opinion of the management since there is no certainty of future profitability the company has not accounted for deferred tax liability and assets on account of continuous losses.


Mar 31, 2010

A. System of Accounting:

The Company adopts the accrual concept in the preparation of the accounts. The financial statements are based on historical cost, unless otherwise stated. The accounting principles employed are generally accepted in India and materially comply with mandatory accounting standards issued by the Institute of Chartered Accountants of India.

B. Borrowing Cost:

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

C. Fixed Assets:

Fixed Assets are stated at cost of acquisition or construction, net of cenvat, less accumulated depreciation. All cost relating to the acquisition and installation of fixed assets are capitalised and include the financing costs till commencement of commercial production is capitalised.

During the year company has made additions to fixed assets Rs. 26.17 lacs (previous year Rs. 10.54 lacs) which are free of charge and encumbrance from any financial institutions and/or any banks.

Advances paid towards the acquisition or construction of fixed assets and the cost of assets not put to use before the period end are disclosed under capital work-in-progress.

D. Depreciation and Amortization:

I. Depreciation has been provided on straight-line method for Synthetics Division and Chemical Division and on written down value method for Cotton Division at the rates specified in Schedule XIV of the Companies Act, 1956. The additional charges of depreciation on fixed assets due to revaluation Rs. 2.00 lacs (Previous year Rs. 2.13 lacs) an equivalent amount has been transferred from revaluation reserve to Profit and Loss Account.

II. Leasehold land is amortised over the unexpired period of lease.

E. Investments:

There are no investment made during the year either current investments or long term investments.

F. Inventories:

I. Inventories are valued at lower of cost or net realisable value except for scrap, which are valued at net realisable value.

II. Cost of inventories of finished goods and work in progress includes material cost, cost of conversion and other cost incurred in bringing the inventory to their present location and condition.

III. Cost of raw materials, finished goods and work-in-progress is determined on First in First out (FIFO) basis except stores and spare parts which are valued at weighted average cost.

G. Turnover:

Turnover includes sales of goods and processing charges, deemed export incentives i.e. DEPB sales but excluding excise duty and value added tax.

H. Export Benefits:

The company adopt the policy of deemed export benefits.

I. Foreign Exchange Transactions:

I. Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction.

II. Monetary items denominated in foreign currencies at the year end not covered by the forward exchange contract are translated at the year end rates and those covered by forward exchange contract are translated at rate prevailing on the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction, such differences having been recognised over the life of the contract.

III. Non monetary foreign currency items are carried at cost.

IV. Any income or expenses on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss Account except in cases where they related to the acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

J. Customs:

The liability on account of Custom duty is recognized on clearance of the goods from the bonded warehouse.

K. Retirement Benefits:

Contribution to Provident funds and superannuation fund are made to the respective funds and charged to the profit and loss account. Gratuity and leave encashment is being accounted on cash basis.

L. Miscellaneous expenditure:

Preliminary expenditure has already been written off over a period of 10 years.

M. Provision of Current and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961.

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. The accumulated absorbed losses & unabsorbed depreciation has been considered as deferred tax Assets to the extent that there is virtual certainty in the opinion of the Management that the future taxable income will be available against such Deferred Tax Assets.

In the opinion of the management since there is no certainty of future profitability the company has not accounted for deferred tax liability and assets on account of continuous losses.

 
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