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Accounting Policies of Keerthi Industries Ltd. Company

Mar 31, 2014

1.1. Basis of Preparation:

The financial statements have been prepared and presented under historical cost convention on accrual basis and comply in all material aspects with the Accounting Standards (AS) and the relevant provisions prescribed in the Companies Act, 1956, besides the pronouncements/guidelines of the Institute of Chartered Accountants of India and of the Securities and Exchange Board of India.

1.2. Classification of Assets and Liabilities as Current and Non-Current:

All assets and liabilities are classified as current/non-current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956.

1.3. Fixed Assets:

Fixed assets (Tangible and Intangible) are stated at cost, less accumulated depreciation /amortisation. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use.

1.4. Treatment of Expenditure during Construction Period:

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

1.5. Borrowing Cost:

Interest and other costs in connection with the borrowing of funds to the extent attributable to the acquisition or construction of a qualifying fixed asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

1.6. Depreciation:

i) Depreciation is provided on Straight Line method on the assets other than office equipment, furniture & fixtures and vehicles of Cement Division, on which depreciation is provided on written Down Value Method in accordance with Schedule XIV to the Companies Act, 1956.

ii) Upfront lease amount in respect of leasehold land is amortised over the period of lease.

1.7. Inventories:

Inventories are valued at the lower of cost and net realisable value. The cost is computed on weighted- average basis. In case of sale of raw material/stores the proceeds are credited to their respective heads.

1.8. Revenue Recognition:

Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated inclusive of duties and taxes collected, net of trade discounts and rebates.

1.9. Retirement benefits:

a. Provident fund contributions are remitted to Provident Fund Commissioner and the Contributions are charged to revenue.

b. Provision for gratuity and leave encashment is made on the basis of an actuarial valuation which is done as per Projected Unit Credit Method at the end of each financial year.

1.10. Provisions/Contingencies:

A provision is recognised when there is 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 and in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to the Statement of Profit and Loss) based on estimate of the amount required to settle the obligation at the Balance Sheet date and are not discounted to present value.

Contingent liabilities are not recognised but are disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2013

1.1. Basis of Preparation:

The financial statements have been prepared and presented under historical cost convention on accrual basis and comply in all material aspects with the Accounting Standards (AS) and the relevant provisions prescribed in the Companies Act, 1956, besides the pronouncements/guidelines of the Institute of Chartered Accountants of India and of the Securities and Exchange Board of India.

1.2. Classification of Assets and Liabilities as Current and Non-Current:

All assets and liabilities are classified as current/non-current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956.

1.3. Fixed Assets:

Fixed assets (Tangible and Intangible) are stated at cost, less accumulated depreciation /amortisation. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use.

1.4. Treatment of Expenditure during Construction Period:

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

1.5. Borrowing Cost:

Interest and other costs in connection with the borrowing of funds to the extent attributable to the acquisition or construction of a qualifying fixed asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

1.6. Depreciation:

i) Depreciation is provided on Straight Line method on the assets other than office equipment, furniture & fixtures and vehicles of Cement Division, on which depreciation is provided on written Down Value Method in accordance with Schedule XIV to the Companies Act, 1956.

ii) Upfront lease amount in respect of leasehold land is amortised over the period of lease.

1.7. Inventories:

Inventories are valued at the lower of cost and net realisable value. The cost is computed on weighted- average basis. In case of sale of raw material/stores the proceeds are credited to their respective heads.

1.8. Revenue Recognition:

Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated inclusive of duties and taxes collected, net of trade discounts and rebates.

1.9. Retirement benefits:

a. Provident fund contributions are remitted to Provident Fund Commissioner and the Contributions are charged to revenue.

b. Provision for gratuity and leave encashment is made on the basis of an actuarial valuation which is done as per Projected Unit Credit Method at the end of each financial year.

1.10. Provisions/Contingencies:

A provision is recognised when there is 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 and in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to the Statement of Profit and Loss) based on estimate of the amount required to settle the obligation at the Balance Sheet date and are not discounted to present value.

Contingent liabilities are not recognised but are disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2012

1.1 Basis of Preparation:

The financial statements have been prepared and presented under historical cost convention on accrual basis and comply in all material aspects with the Accounting Standards (AS) and the relevant provisions prescribed in the Companies Act, 1956, besides the pronouncements/guidelines of the Institute of Chartered Accountants of India and of the Securities and Exchange Board of India.

1.2. Classification of Assets and Liabilities as Current and Non-Current:

All assets and liabilities are classified as current/non-current as per the Company's normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956.

1.3. Fixed Assets:

Fixed assets (Tangible and Intangible) are stated at cost, less accumulated depreciation /amortisation. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use.

1.4. Treatment of Expenditure during Construction Period:

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

1.5. Borrowing Cost:

Interest and other costs in connection with the borrowing of funds to the extent attributable to the acquisition or construction of a qualifying fixed asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

1.6. Depreciation:

i) Depreciation is provided on Straight Line method on the assets other than office equipment, furniture & fixtures and vehicles of Cement Division, on which depreciation is provided on written Down Value Method in accordance with Schedule XIV to the Companies Act, 1956.

ii) Upfront lease amount in respect of leasehold land is amortised over the period of lease.

1.7. Inventories:

Inventories are valued at the lower of cost and net realisable value. The cost is computed on weighted- average basis. In case of sale of raw material/stores the proceeds are credited to their respective heads.

1.8. Revenue Recognition:

Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated inclusive of duties and taxes collected, net of trade discounts and rebates.

1.9. Retirement benefits:

a. Provident fund contributions are remitted to Provident Fund Commissioner and the Contributions are charged to revenue.

b. Provision for gratuity and leave encashment is made on the basis of an actuarial valuation which is done as per Projected Unit Credit Method at the end of each financial year.

1.10. Provisions/Contingencies:

A provision is recognised when there is 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 and in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to the Statement of Profit and Loss) based on estimate of the amount required to settle the obligation at the Balance Sheet date and are not discounted to present value.

Contingent liabilities are not recognised but are disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2010

The following are the significant Accounting Policies adopted by the Company in the preparation and presentation of financial statements.

a) Financial statements are based on historical cost.

b) Fixed Assets:

Tangible fixed assets are stated at cost net of depreciation provided.

c) Depreciation:

i) Depreciation is provided on Straight Line method on the assets other than office equipment, furniture & fixtures and vehicles in Cement Division, on which depreciation is provided on written Down Value Method in accordance with Schedule XIV to the Companies Act, 1956.

ii) Upfront lease amount in respect of land is amortised over the period of lease.

d) Inventories:

i) Finished goods and Work in process are valued at cost or net realisable value whichever is lower. ii) Raw materials, packing materials, Coal are valued at cost on FIFO basis and Stores & Spares are valued at cost on weighted average basis, Raw materials in Electronics division are valued at weighted average cost.

e) Sales:

Sales are inclusive of excise duty and sales tax collected.

f) Retirement benefits:

i) Provident fund contributions are remitted to Provident Fund Commissioner and the Contributions are charged to revenue.

ii) Provision for gratuity and leave encashment is made on the basis of actuarial valuation in accordance with A S -15 "Employee Benefits".

g) Contingent Liabilities:

All contingent liabilities are indicated by way of a note and will be paid/provided on Crystallisation. h) Internal Consumption:

Internal consumption of the Cement Divisions end product is accounted at cost and is included in sales.

2. Current year figures are for 12 months whereas those of previous year were for 9 months. Further Current year figures also include those of electronics division pursuant to amalgamation of erstwhile Hyderabad Flextech Ltd with the company. Hence, current year figures are not directly comparable with those of the previous year.

3. a) Contingent Liabilities not provided for in respect of:

i) Gratuity payable to erstwhile managing director Rs.3,38,341 (Previous year Rs.3,38,341) as the company disputed this and the matter is pending in the court of law.

ii) Karnataka Sales Tax demand of Rs.6,20,112/- (up to Previous year Rs.6,20,112/-) for the accounting year 1993- 94 as the company preferred an appeal in the Honble High Court of Karnataka.

iii) A.R General Sales Tax liability of Rs. 18,77,197/-( up to Previous year Rs.18,77,197/-) on packing materials purchased during the accounting years 1990-91 and 1991-92 as the Company preferred appeals before Appellate Authorities and the same are pending.

iv) Demand from Central Excise Authorities for Rs.44.36 lakhs(Previous year Nil) against alleged irregular availment of Cenvat Credit on inputs by Cement Division ,as the Companys legal counsel opined that the demand » not sustainable.

b) Estimated amount of contracts to be executed on capital on account of Project expansion of Cement Division Rs.542.11 lacs (previous year Rs.4393.39 lacs) (Net of advances).

c) Arrears of fixed Cumulative Dividends-9% cumulative dividend for the current year is Rs.93,45,960/- (up to Previous year Rs.6,77,89,275/- ) including erstwhile Hyderabad Flextech Limited dividend for the current year Rs 24,15,060/- (up to previous year Rs.1,88,16,000/-).

d) In the year 2003-04, Central Power Distribution Company of Andhra Pradesh had levied Voltage Surcharge of Rs. 1,30,29,457/- for getting the energy through general lines over and above the contracted load instead of dedicated lines. As getting the energy through specified line is not within the control of the company, the company challenged the levy before Honble High Court of Andhra Pradesh and the High Court was pleased to grant staying the collection of the said levy. However during the year under report APCPDCL has revised its demand and demanded only Rs.72,06,311 which was fully paid by the company under protest and shown under loans and advances, the said amount was not provided for in the books. The appeal is pending.

e) In the year 2004-05, the Commercial Tax Department of Andhra Pradesh passed orders raising a demand for the interstate sales made in 2001-02 and 2002-03 levying 16% rate of tax instead of 4% for the non-submission of C- Forms. The Company has provided in the books of accounts the difference in tax of Rs.1,20,93,803 and filed appeals before the Appellate Authorities for grant of time for submission of C-Forms. The appeals are pending. However the Company has paid Rs.1,20,93,803 (up to Previous year Rs.1,20,93,803) against these demands.

f) In the year 2006-07,the Commercial Tax Department of Andhra Pradesh passed orders raising a demand for the interstate sales made in 2003-04 and 2004-05 levying 16% rate of tax instead of 4% for the non-submission of C- Forms. The Company has provided in the books of accounts the difference in tax of Rs.84,41,444 and Rs.1,18,49,917 for the years 2003-04 and 2004-05 respectively and filed appeals before the Appellate Authorities for grant of time for submission of C-Forms. The appeals are pending. However the Company has paid Rs.1,28,61,971 (up to Previous year Rs.1,28,61,971) against these demands.

g) In the year 2007-08 A P Commercial Tax Department had revised the CST Assessment for the year 2000-2001 and demanded Rs.39,25,213.The company got stayed the demand through on order of Honble High Court of A.P and deposited Rs. 19,08,835/- being 50% of the demand. As the matter is pending in appeal before the A P Sales Tax Appellate Tribunal, no provision is made in the accounts for the disputed tax of Rs.39,25,213/-.

h) Company had availed VAT input credit of Rs. 11,65,995 on coal purchased during the period April05 to August05 and utilised the said amount against its VAT liability on sales. Government of Andhra Pradesh Vide G.O.Ms. No.2201 Revenue Dated 29.12.2005 withdrawn the Input Tax Credit on coal purchases retrospectively from 01.04.2005. Pursuant to the notification the Commercial Tax Authorities raised a demand in the year 2005-06 for the payment of said Rs. 11, 65,995. The Company disputed the said demand and filed appeal before the Deputy Commissioner (Appeals). However the Company had paid entire demand Rs.l 1,65,995/- and treated as deposit with sales tax authorities.

i) No liability is provided amounting to Rs. 4,05,133/- payable towards excise duty against duty free imported raw- materials by Electronics Division which were not utilized in production before 31.03.2009, in view of companys applications to the authorities concerned to extend the time for utilization of said raw-materials in production upto 31.3.2010, which is pending.

j) In the year 2007-08 a supplier filed a suit and obtained an ex-party decree against the Company from District Court Cuddalore, Tamilnadu demanding Rs. 39.50 lacs against the liability of Rs. 23.59 lacs towards Lignite supplied in earlier years. Company disputed the liability of Rs. 39.5 lacs and deposited Rs. 5.00 lacs in court as directed and appealed to with draw the ex-party order and the matter is pending.

4. a) Pursuant to the sanction of the Scheme of Amalgamation of erstwhile Hyderabad Flextech Ltd(HFL) with the company by the Honourable High Court of Andhra Pradesh, the assets and liabilities of the erstwhile Hyderabad Flextech Limited (HFL).have been merged with the Company with effect from 1st April,2007 and to give the effect of the merger a new division "Electronics Division" is set up and effect has been given in the accounts as per the scheme.

b) The amalgamation has been accounted for under the "merger method" as prescribed by Accounting Standard 14 (AS-14) as notified by the Government of India. Accordingly the assets, liabilities and other reserves of the erstwhile HFL as at 1st April, 2007 have been taken over at their book values. As a result reserves of the erstwhile HFL aggregating to Rs. 5.43 Crores have been added to the reserves of the Company and the debit balance in the Profit and Loss Account of HFL has been reduced from the balance in the Profit and Loss Account of the Company.The difference of Rs. 4.12 Crores between the value of net assets taken over to the Amalgamation Reserve of the Company.

c) Pursuant to the Scheme, referred to in (a) above, 20,00,000 equity shares of Rs. 10/- each allotted to the promoters in 2002 on preferential basis, whose listing has been declined by tine Bombay Stock Exchange, have been cancelled. In view of the same the company is required to allot 9% Optionally convertible unsecured debentures 7,70,978 of Rs.100/- each in pursuance of this the company has transferred Rs.7,70,97,800/- to debenture suspense by transferring 2,00,00,000/- by from the above said equity and by debiting 5,70,97,800/- to capital reserve (on Amalgamation).The said debentures since been allotted on 11th May, 2010.These debentures are to be redeemed within 18 months from the date of allotment.

d) 2,21,588 Equity Shares of Rs. 10/- each fully paid-up are to be issued to the equity share holders of the amalgamating company, without payment being received in cash, whose names are registered in the register of members as on record date i.e.10 th June 2010 pending allotment as on 31.03.2010, the face value of 2,21,588 shares has been shown as Capital suspense. Shares since been allotted on 11 th June 2010.

e) 2,68,340 9% Cumulative Redeemable Preference Shares of Rs.100/- each fully paid-up are to be issued to the Preference Share holders of amalgamating company without payment being received in cash on the same terms and conditions on which they were originally issued. Pending allotment as on 31.03.2010 the face value of 2,68,340 shares has been shown as Capital suspense. Shares since been allotted on 11 th June 2010.