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Accounting Policies of Kallam Spinning Mills Ltd. Company

Mar 31, 2014

1. General

The Accounts are prepared under the historical cost convention and in accordance with generally accepted accounting practices. The financial statements are prepared to comply in all respects with the Accounting Standards notified under section 211(3C) of the Companies Act, 1956 read with the General Circular 15/2013 dated 13.9.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and all the relevant provisions thereof.

2. Use of Estimates

The preparation of financial statements requires the management of the Company to make judgments, estimates and assumptions that affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. The judgments, estimates and underlying assumptions are made with the management''s best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to these accounting estimates is recognized prospectively in the current and future periods.

3. FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of directly attributable cost of bringing the assets to their working condition for the intended use. CENVAT/VAT/Terminal Excise duty availed, if any, on fixed assets is not included in the cost of such fixed assets capitalized. Interest on borrowings incurred upto the date of commissioning of assets are capitalized

4. BORROWING COSTS

Borrowing costs incurred in connection with the funds borrowed for acquisition of assets that takes necessarily substantial period of time to get ready for intended use are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

5. DEPRECIATION

Depreciation on Tangible fixed Assets has been provided on Straight Line Method at applicable rates prescribed in Scheduled XIV of the Companies Act, 1956.

6. INVENTORIES

Inventories are valued as follows :

I. Spinning and Weaving Division :

a) Finished stocks are valued at cost or net realizable value which ever is lower.

b) Cotton Waste is valued at Net realizable Value.

c) Work-in-progress, Raw materials, stores and spares are valued at cost except where net realizable value of the finished goods they are used in is less than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.

II. Power Division :

a) Stock of power (Banked with APTRANSCO) is valued at cost or net realizable value which ever is lower.

c) Tools & Implements are being valued at cost.

7. REVENUE RECOGNITION :

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

i) Revenue from sale of products is recognised when the risks and rewards of ownership are transferred to the buyer under the terms of the contract which usually coincide on the dispatch of goods to the customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales are stated net of trade discounts and sales tax.

iii) Incentives such as DEPB benefits are recognized as Income only on actual realization/on sale/ utilization of said licences.

iv) Power generated and supplied to spinning division is accounted for at the rate at which company purchases from the APTRANSCO.

v) Interest on investments and deposits is booked on a time proportion basis taking into account the amounts invested and the rate of interest.

8. INTER-DIVISIONAL TRANSFERS:

Inter-divisional transfer of goods as independent marketable products of separate divisions used for captive consumption are transferred at prevailing market prices. This accounting treatment has no impact on the profit of the company. Such transactions are neither included in turnover nor in consumption of materials, except for valuation purposes.

9. DEFERRED GOVT. GRANTS

Grants related to specific fixed assets are treated as deferred income and recognized to profit and loss account over the expected life of the said asset on which subsidy received.

Grants which are given with reference to the total investment in an undertaking are treated as part of shareholders'' funds and grouped under capital reserves.

10. RETIREMENT BENEFITS

The company provides retirement benefit in the form of provident fund and group gratuity. Contributions to the Provident Fund, a defined contribution scheme, is made at the prescribed rates to the provident fund commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable.

The Liability for group gratuity, which is unfunded, is provided based on actuarial valuation as per the Projected Unit Credit Method at the end of the each year.

The Liability for Leave encashment being short term benefits, is accounted on accrual of said liability.

11. FOREIGN CURRENCY TRANSACTIONS

i) Foreign Currency Liability contracted for acquiring Fixed Assets are restated at the Foreign Exchange rates prevailing at the year end and all exchange differences arising as a result of such restatement are charged to the Profit and loss account.

ii) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

iii) At each balance sheet date

- Foreign Currency monetary items are reported using the rate of exchange on that date

- Foreign Currency non-monetary items are reported using the exchange rate at which they were initially recognized.

- In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortized over the term of the contract

- Exchange differences on the contract are recognized as profit or loss in the period in which they arise.

12. TAXES ON INCOME

Current tax is determined as per provisions of Income Tax Act, 1961 in respect of Taxable Income for the year.

Deferred tax liability is recognized, subject to the consideration of prudence on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation as per Income-tax laws are recognized only when there is virtual certainty supported by convincing evidence that such assets will be realized. Deferred tax assets arising on other temporary differences are recognized only if there is a reasonable certainty of realization.

13. SEGMENT REPORTING

The accounting polices adopted for segment reporting are in line with the accounting policies of the Company with the following additional policies for segment reporting.

Inter Segmental revenue have been accounted for based on the market related price.

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The company does not recognise contingent liabilities but the same are disclosed in the Notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

15. DIVIDENDS

Provision is made in accounts for the dividends payable by the company as recommended by the board of directors pending approval of the shareholders at the Annual General Meeting. Tax on Distributable profit is provided for in the year to which such distributable profits relate.


Mar 31, 2012

1. GENERAL

The Accounts are prepared under the historical cost convention and in accordance with generally accepted accounting practices. The financial statements are prepared to comply in all respects with the Accounting Standards notified under section 211 (3C) of the Companies Act, 1956 and all the relevant provisions thereof.

2. USE OF ESTIMATES

The preparation of financial statements requires the management of the Company to make judgements, estimates and assumptions that affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. The judgements, estimates and underlying assumptions are made with the management's best knowledge of the business environment and are reviewed on an on going basis. However, future results could differ from these estimates. Any revision to these accounting estimates is recognised prospectively in the current and future periods.

3. FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of directly attributable cost of bringing the assets to their working condition for the intended use. CENVAT/VAT/Terminal Excise duty availed, if any, on fixed assets is not included in the cost of such fixed assets capitalised. Interest on borrowings incurred up to the date of commissioning of assets are capitalised.

4. BORROWING COSTS

Borrowing costs incurred in connection with the funds borrowed for acquisition of assets that takes necessarily substantial period of time to get ready for intended use are capitalised as part of cost of such assets. All other borrowing costs are charged to revenue.

5. DEPRECIATION

Depreciation on Tangible fixed Assets has been provided on Straight Line Method at applicable Rates prescribed in Scheduled XIV of the Companies Act, 1956.

6. INVENTORIES

Inventories are valued as follows

I. Spinning Division:

a) Finished stocks are valued at cost or net realisable value which ever is lower.

b) Cotton Waste is valued at Net realisable Value.

c) Work-in-progress, Raw materials, stores and spares are valued at cost except where net realisable value of the finished goods they are used in is less than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.

II. Power Division:

a) Stock of power (Banked with APTRANSCO) is valued at cost or net realisable value which ever is lower.

b) Tools & Implements are being valued at cost.

7. REVENUE RECOGNITION

Revenue 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.

i) Revenue from sale of products is recognised when the risks and rewards of ownership are transferred to the buyer under the terms of the contract which usually coincide on the dispatch of goods to the customer orwhen they are unconditionally appropriated underthe terms of sale.

ii) Sales are stated net of trade discount and sales tax.

iii) Incentives such as DEPB benefits are recognised as Income only on actual realisation / on sale / utilisation of said licenses.

iv) Power generated and supplied to spinning division is accounted for at the rate at which company purchases from the APTRANSCO

v) Interest on investments and deposits is booked on a time proportion basis taking into account the amounts invested and the rate of interest.

8. INTER-DIVISIONAL TRANSFERS

Inter-divisional transfer of goods as independent marketable products of separate divisions used for captive consumption are transferred at prevailing market prices. This accounting treatment has no impact on the profit of the company. Such transactions are neither included in turnover nor in consumption of materials, except for valuation purposes.

9. DEFERRED GOVT. GRANTS

State subsidy received towards installation of Generator is being recognised to profit and loss account over the expected life ofthe said asset on which subsidy received.

10. RETIREMENT BENEFITS

The company provides retirement benefit in the form of provident fund and group gratuity. Contributions to the Provident Fund, a defined contribution scheme, is made at the prescribed rates to the provident fund commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable.

The Liability for group gratuity is provided based on actuarial valuation as per the Projected Unit Credit Method at the end ofthe each year.

The Liability for Leave encashment being shortterm benefits, is accounted on accrual of said liability.

11. FOREIGN CURRENCY TRANSACTIONS

i) Foreign Currency Liability contracted for acquiring Fixed Assets are restated at the Foreign Exchange rates prevailing at the year end and all exchange differences arising as a result of such restatement are charged to the Profit and Loss Account.

ii) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

iii) At each balance sheet date

- Foreign Currency monetary items are reported using the rate of exchange on the date

- Foreign Currency non-monetary items are reported using the exchange rate at which they were initially recognised.

In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term ofthe contract

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise. "

12. TAXES ON INCOME

Currenttax is determined as per provisions of Income Tax Act, 1961 in respect of Taxable Income for the year.

Deferred tax liability is recognised, subject to the consideration of prudence on timing differences, being the difference between taxable inome and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation as per Income-tax laws are recognised only when there is virtual certainity supported by convincing evidence that such assts will be realised. Deferred tax assets arising on other temporary differences are recognised only if there is a reasonable certainty of realisation.

13. SEGMENT REPORTING

The accounting polices adopted for segment reporting are in line with the accounting policies of the Company with the following additional policies for segment reporting.

Inter Segmental revenue have been accounted for based on the market related price.

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The company does not recognise contingent liabilities but the same are disclosed in the Notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

15. DIVIDENDS

Provision is made in accounts for the dividends payable by the company as recommended by the board of directors pending approval of the shareholders at the Annual General Meeting. Tax on Distributable profit is provided for in the year to which such distributable profits relate.


Mar 31, 2010

1. GENERAL

The accounts are prepared under the historical cost convention and in accordance with generally accepted accounting practices.

2. FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of directly attnoutable cost of bringing the assets to their working condition for the intended use. CENVATA/AT/Terminal Excise duty availed, if any, on fixed assets is not included in the cost of such fixed assets capitalized. Interest on borrowings incurred upto the date of commission- ing of assets are capitalized.

3. BORROWING COSTS

Borrowing costs incurred in connection with the funds borrowed for acquisition of assets that takes necessarily substantial period of time to get ready for intended use are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

4. DEPRECIATION

Depreciation on Fixed Assets has been provided on Straight Line Method at applicable Rates prescribed in Scheduled XIV of the Companies Act, 1956.

5. INVESTMENTS

Long Term Investments are stated at cost and Income thereon is accounted for on accrual. Provi- sion towards decline in the value of long term Investments is made only when such decline is other than temporary.

6. INVENTORIES

Inventories are valued as follows :

I. Spinning Division:

a) Finished stock of Yarn is valued at cost or net realizable value which ever is lower.

b) Cotton Waste is valued at Net realizable Value.

c) Work-in-progress, Raw materials, stores and spares are valued at cost except where net realizable value of the finished goods they are used in is less than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.

II. Power Division:

a) Stock of power (Banked with APTRANSCO) is valued at cost or net realizable value

which ever is lower. c) Tools & Implements are being valued at cost.

7. SALES :

a) Sales are inclusive of Excise Duty, Packing charges and Sale Tax.

b) Export incentives such as DEPB benefits are recognized on export of the goods.

q) Power generated and supplied to spinning division is accounted for at the rate at which company purchases from the APTRANSCO.

8. DEFERRED GOVT. GRANTS

State subsidy received towards installation of Generator is being recognized to profit and loss account over the expected life of the said asset on which subsidy received.

9. RETIREMENT BENEFITS

The company provides retirement benefit in the form of provident fund and group gratuity. Contribu- tions to the Provident Fund, a defined contribution scheme, is made at the prescribed rates to the provident fund commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable.

The Liability for group gratuity is provided based on actuarial valuation as per the Projected Unit credit method at the end of each year.

10. FOREIGN CURRENCY TRANSACTIONS

i) Foreign Currency Liability contracted for acquiring Fixed Assets are restated at the Foreign Ex- change rates prevailing at the year end and all exchange differences arising as a result of such restatement are charged to the Profit and loss account. ii) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

iii) At each balance sheet date.

-Foreign Currency monetary items are reported using the rate of exchange on that date.

-Foreign Currency non-monetary items are reported using the exchange rate at which they were initially recognized. a. In respect of forward exchange contracts in the nature of hedges.

-Premium or discount on the contract is amortized over the term of the contract.

-Exchange differences on the contract are recognized as profit or loss in the period in which they arise.

11. PLANTATION DIVISION

(i) Expenditure on maintenance of teak plants is accumulated to Teak Plants Work in Progress account till the plants are sold.

(ii) Purchase of teak plants from its unit- holders: To the extent of original deposit, it is charged to deposit account and balance to plantations account.

12. TAXES ON INCOME

Current tax is determined as per provisions of Income Tax Act, 1961 in respect of Taxable Income for the year. Deferred tax liability is recognized, subject to the consideration of prudence on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation as per Income-tax laws are recognized only when there is virtual certainty supported by convincing evi- dence that such assets will be realized. Deferred tax assets arising on other temporary differences are recognized only if there is a reasonable certainty of realization.

13. SEGMENT REPORTING

The accounting polices adopted for segment reporting are in line with the accounting policies of the Company with the following additional policies for segment reporting. a) Inter Segmental revenue have been accounted for based on the market related price. (Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.)

14. CONTINGENT LIABILITIES

Contingent liabilities are not recognized in the accounts, but are disclosed after a careful evaluation of the concerned facts and legal issues involved.

15. DIVIDENDS

Provision is made in the accounts for the dividends payable by the company as recommended by the board of directors pending approval of the shareholders at the Annual general meeting. Tax on distributable profits is provided for in the year to which such distributable profits relate.

 
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