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Accounting Policies of Futura Polyesters Ltd. Company

Dec 31, 2012

A. System of Accounting

The Financial Statements are prepared on accrual basis of accounting and in accordance with the Standard on Accounting notified by the Companies (Accounting Standard) Rules, 2006 and referred to in section 211 (3C) of the Companies Act, 1956.

B. Fixed Assets and Depreciation I Fixed Assets

Fibre, Resin and Preforms Divisions.

Fixed Assets are stated at cost / revalued amount less depreciation. Cost comprises of Cost of acquisition, cost of improvements and any attributable cost of bringing the asset to condition for its intended use. Interest on loans taken for the procurement of specific assets accrued upto the date of acquisition/ installation of the said assets is capitalised along with the cost of the assets.

II Depreciation

Fibre Division:

Depreciation has been provided on Plant and Machinery and Research and Development facilities on straight line basis and on other assets on written down value basis at the rates specified in Schedule XIV of the Companies Act, 1956 as amended from time to time. Certain Plants have been treated as continuous process Plants based on technical and other evaluation. However, higher rate of depreciation has been provided on certain Plant and Machinery ranging from 6.75% -12.50% compared to 5.28% of Schedule XIV rate, based on technical evaluation. The total accumulated depreciation is restricted up to 95% of the Gross Block Value.

Resin and Preforms Divisions:

Depreciation has been provided on all assets on straight line basis at the rates specified in Schedule

XIV of the Companies Act, 1956 as amended from time to time. However, higher rate of depreciation has been provided on certain Plant and Machinery ranging from 6.75%-12.50% compared to 5.28% of Schedule XIV rate, based on technical evaluation. The total accumulated Depreciation is restricted up to 95% of the Gross Block Value.

C. Investments

Investments are classified into current and long term investments. Current investments are stated at the lower of cost and fair value, Long term investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in value of long term investments.

Income on Investments:

Dividend income is accounted when right to receive payment is established.

D. Inventories

Inventories are valued as under:

Raw Materials, Packing Materials, Stores and Spares: at Cost (Weighted average method) Materials-in-transit and Semi Finished Goods: at Cost. (Weighted average method)

Finished Goods: at lower of cost or net realisable value. (Weighted average method)

Traded items: at lower of cost or net realisable value. (Weighted average method)

E. Sales

Sale of goods is recognised on despatch to customers. Sales include amounts recovered towards excise duty, but exclude amounts recovered towards sales tax.

F. Export Incentives

Export Incentives are accounted on an accrual basis.

G. Foreign Currency Transactions

Transactions in foreign currencies are recorded at current rates except transactions covered by forward contracts. Assets and Liabilities denominated in foreign currency are restated at the year end rates. All exchange gains and losses except those relating to acquisition of fixed assets which are adjusted to the carrying cost of such assets, are accounted for in the Profit and Loss Account.

H. Research and Development

Revenue expenditure on Research and Development is charged as an expense in the year in which they are incurred. Capital expenditure is shown as an addition to Fixed Assets.

Expenditure incurred on development of new products are amortised over a period of 10 years.

I. Employee Benefits

(i) Defined Contribution Plan

Company''s contributions paid /payable during the year to Superannuation Fund, ESIC and Labour Welfare Fund are recognised in the Profit and Loss Account. There are no other obligations other than the contribution payable to the respective trust/fund. Company''s Contribution towards Superannuation and ESIC is based on a percentage of salary which is made to an approved fund.

(ii) Defined Benefit Plan

Company''s Contribution towards Provident Fund is based on a percentage of salary which is made to an approved fund.

Company''s Contribution towards Gratuity is made to an approved fund as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method. (iii) Short term compensated absences are provided as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method.

(iv) Long term employee benefit

Long term compensated absences are provided as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method.

(v) Actuarial gains / losses are immediately taken to profit and loss account and are not deferred.

J. Taxes on Income

(a) Current Tax: Provision for Income Tax is determined in accordance with the provision of Income Tax Act, 1961.

(b) Deferred Tax Provision: Deferred Tax is recognised on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted on the Balance Sheet date. Deferred Tax Assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.


Mar 31, 2010

A. System of Accounting

The financial statements are prepared under Historical cost convention on an accrual basis except-for certain fixed assets which have been revalued.

B. Fixed Assets and Depreciation

I. Fixed Assets

Fibre, Resin and Preforms Divisions.

Fixed Assets are stated at cost less depreciation. Cost comprises of Cost of acquisition, cost of improvements and any attributable cost of bringing the asset to condition for its intended use. Interest on loans taken for the procurement of specific assets accrued upto the date of acquisition/ installation of the said assets is capitalised along with the cost of the assets.

II. Depreciation

Fibre Division:

Depreciation has been provided on Plant and Machinery and Research and Development facilities on straight line basis and on other assets on written down value basis at the rates specified in Schedule XIV of the Companies Act, 1956 as amended from time to time. Certain Plants have been treated as continuous process Plants based on technical and other evaluation. However, higher rate of depreciation has been provided on certain Plant and Machinery ranging from 6.75% -12.50% compared to 5.28% of Schedule XIV rate, based on technical evaluation. The total accumulated depreciation is restricted up to 95% of the Gross Block Value.

Resin and Preforms Divisions:

Depreciation has been provided on all assets on straight line basis at the rates specified in Schedule XIV of the Companies Act, 1956 as amended from time to time. However, higher rate of depreciation has been provided on certain Plant and Machinery ranging from 6.75%-12.50% compared to 5.28% of Schedule XIV rate, based on technical evaluation. The total accumulated Depreciation is restricted up to 95% of the Gross Block Value.

C. Investments

Investments are classified into current and long term investments. Current investments are stated at the lower of cost and fair value, Long term investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in value of long term investments.

Income on Investments:

Dividend income is accounted when right to receive payment is established.

D. Inventories

Inventories are valued as under:

Raw Materials, Packing Materials, Stores and Spares: at Cost (Weighted average method) Materials-in-transit and Semi Finished Goods: at Cost. (Weighted average method)

Finished Goods: at lower of cost or net realisable value.

(Weighted average method) ;

Traded items: at lower of cost or net realisable value. (Weighted average method)

E. Sales

Sale of goods is recognised on despatch to customers. Sales include amounts recovered towards excise duty, but exclude amounts recovered towards sales tax.

F. Export Incentives

Export Incentives are accounted on an accrual basis.

G. Foreign Currency Transactions

Transactions in foreign currencies are recorded at current rates except transactions covered by forward contracts. Assets and Liabilities denominated in foreign currency are restated at the year end rates.

- All exchange gains and losses except those relating to acquisition of fixed assets which are adjusted to the carrying cost of such assets, are accounted for in the Profit and Loss Account.

H. Research and Development

Revenue expenditure on Research and Development is charged as an expense in the year in which they are incurred. Capital expenditure is shown as an addition to Fixed Assets.

Expenditure incurred on development of new products are amortised over a period of 10 years.

I. Employee Benefits

(i) Defined Contribution Plan

Companys contributions paid/payable during the year to Superannuation Fund, ESIC and Labour Welfare Fund are recognised in the Profit and Loss Account. There are no other obligations other than the contribution payable to the respective trust/fund. Companys Contribution towards Superannuation and ESIC is based on a percentage of salary which is made to an approved fund.

(ii) Defined Benefit Plan

Companys Contribution towards Provident Fund is based on a percentage of salary which is made to an approved fund.

Companys Contribution towards Gratuity is made to an approved fund as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method.

(iii) Short term compensated absences are provided as per actuarial valuation certificate obtained from an- actuary which is determined using projected unit credit method.

(iv) Long term employee benefit

Long term compensated absences are provided as per actuarial valuation certificate obtained from an actuary which is determined using projected unit : credit method.

(v) Actuarial gains / losses are immediately taken to profit and loss account and are not deferred.

J. Deferred Revenue Expenses:

Voluntary Retirement Scheme related payments are amortised over a period of 5 years.

K. Taxes on Income

(a) Current Tax: Provision for Income Tax is determined in accordance with the provision of Income Tax Act, 1961.

(b) Deferred Tax Provision: Deferred Tax is recognised on timing differences between the accounting income and the taxable-income for the year and quantified using the tax rates and laws enacted or subsequently enacted on the Balance Sheet date. Deferred Tax Assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

 
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