Accounting Policies of Kutch Salt & Allied Industries Ltd. Company

Mar 31, 2011

A. System of Accounting:

The Company follows the mercantile system of accounting recognizes Income and Expenditure on accrual basis. The Accounts are prepared on historical cost convention basis and as a going concern. Accounting policies not specifically referred to otherwise are consistent with generally accepted accounting principles.

B. Fixed Assets: .

Fixed Assets are stated at cost of acquisition including freight, duties, taxes, pre-operative and other incidental expenses, related to acquisition and installation and any directly attributed cost of bringing the assets to its working condition for intended use. The financial cost till commencement of commercial production and adjustments arising from exchange rate variation attributable to the fixed assets are capitalized.

C. Depreciation

Depreciation on Fixed Assets of the Company is charged on written down value method & at the rates prescribed under schedule XTV of the Companies Act, 1956.

D. Impairment of Assets

At each balance sheet date, an assessment is made whether any indication exist that an assets has been impaired in terms of AS -28 issued by ICAI. If any such indication exists, an impairment loss i.e. the amount by which carrying amount of an assets exceeds its recoverable amount is provided in the books of accounts and charged to the profit & loss account. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount

E. Revenue Recognition:

a) Revenue from sale of goods is recognized at the point of passing of title of the goods to the customers which generally coincides with deliveiy.

b) Export sales are accounted for on the basis of date of bill of lading.

c) Revenue in respect of export incentive is recognized when such incentive accrues upon filling of claim with the appropriate authority, .

F. Inventories;

a) Closing stock of Finished and Trading Goods are valued at cost or net realizable value which, ever is lower.

b) Stock of Stores, Spare and Fuel Oil & Lubricants are valued at cost,

G. Investments:

Investments are stated at cost.

H. Foreign Exchange Transactions

Transaction in foreign currency are recorded at the exchange rates prevalent at the time of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the period end exchange rates. Whereas non-monetary foreign currency items like Investment in foreign subsidiaries are carried at cost and expressed in Indian currency at the rate of exchange prevailing at the time of making the original investment.

I. Borrowing Cost

Borrowing costs directly attributable to the acquisition/construction of qualifying fixed assets are capitalized as a part of the cost of the assets, up to the date the assets put to use. Other borrowing costs are charged to the Profit & Loss Account in the year in which they are incurred,

J. Provision for Current tax and deferred tax

Provision for Current Tax is made on the basis of taxable Income for the period computed in accordance with the provisions of the Income Tax Act, 1961. Deferred tax resulting from timing difference between book profit and profit as per Income Tax Act, 1961 is accounted for at the enacted rate of tax, to the extent that the tuning differences are expected to crystallize. Deferred Tax Assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable profits will be available against which such deferred tax assets can be realized.

K. Retirement Benefits:

a) Provision for Gratuity, as required by Accounting Standard 15, has not been made in the accounts as the same is accounted as and when paid. The liability on this account as on 31,03.2011 as per actuarial valuation is Rs. 12,62,052/- (Previous year Rs. 10,72,054/-),

b) Provision for leave encashment, as required by Accounting Standard 15, has not been made in the accounts as the same is accounted as and when paid.

c) Fixed contribution to provident fund are recognized in the accounts on actual cost to the company.

L. Earnings Per Share :

The earning considered in ascertaining the company's earnings per share comprise the net profit after tax (and includes the post tax effect of any extra ordinary items). The number of shares used in computing basic earnings per share is weighted average number of shares outstanding during the year.

M. Provisions. Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized where there is a present obligation as a result of past events and it is probable that there will be an outflow of resources; Contingent liabilities are not recognized but are disclosed in the notes, Contingent Assets are neither recognized nor disclosed in the financial statements.

N. Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the results of operations of during the reporting year. Although these estimates are based on management's best knowledge of current events and action, actual result could differ from these estimates.

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Mar 31, 2010

A. System of Accounting:

The Company follows the mercantile system of accounting recognizes Income and Expenditure on accrual basis. The Accounts are prepared on historical cost convention basis and as a going concern. Accounting policies not specifically referred to otherwise are consistent with generally accepted accounting principles.

B. Fixed Assets:

Fixed assets are stated at cost of acquisition including freight, duties, taxes, pre-operative and other incidental expenses, related to acquisition and installation and any directly attributed cost of bringing the assets to its working condition for intended use. The financial cost till commencement of commercial production and adjustments arising from exchange rate variation attributable to the fixed assets are capitalized.

C. Depreciation : .

Depreciation on Fixed Assets of the Company is charged on written down value method & at the rates prescribed under schedule XIV of the Companies Act, 1956.

D. Impairment of Assets :

At each balance sheet date, an assessment is made whether any indication exist that an assets has been impaired in terms of AS -28 issued by 1CAI. If any such indication exists, an impairment loss i.e. the amount by which carrying amount of an assets exceeds its recoverable amount is provided in the books of accounts and charged to the profit & loss account. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

E. Revenue Recognition : _

a) Revenue from sale of goods is recognized at the point of passing of title of the goods to the ' customers which generally coincides with delivery.

b) Export sales are accounted for on the basis of date of bill of lading.

c) Revenue in respect of export incentive is recognized when such incentive accrues upon filling of claim with the appropriate authority.

F. Inventories:

a) Closing stock of Finished and Trading Goods are valued at cost or net realizable value whichever is lower.

b) Stock of Stores and spare are valued at cost.

G. Investments :

investments are stated at cost.

H. Foreign Exchange Transactions

Transaction in foreign currency are recorded at the exchange rates prevalent at the time of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the period end exchange rates. Whereas non-tnonetary foreign currency items like Investment in foreign subsidiaries are carried at cost and expressed in Indian currency at the rate of exchange prevailing at the time of making the original investment.

I. Borrowing Cost

Borrowing costs directly attributable to the acquisition/construction' of qualifying fixed assets are capitalized as a part of the cost of the assets, up to the date the asset put to use. Other borrowing costs are charged to the Profit & Loss Account in the year in/which they are incurred.

J. Provision for Current tax and deferred tax .

Provision for Current Tax is made on the basis of taxable Income for the period computed in accordance with the provisions of the Income tax Act, 1961. Deferred tax resulting from timing difference between book profit and profit as per Income Tax Act, 1961 is accounted for at the enacted rate of tax, to the extent that the timing differences are expected to crystallize. Deferred Tax Assets are recognized only to the extend that there is a reasonable certainty that sufficient future taxable profits will be available against which such deferred tax assets can be realized.

K. Retirement Benefits : .

a) Provision for Gratuity, as required by Accounting Standard 15, has not been made in the accounts as the same is accounted as and when paid. The liability on this account as on 31.03.2010 as per actuarial valuation is Rs.10,72,054/- (Previous year Rs. 10,49,388/-).

b) Provision for leave encashment, as required by Accounting Standard 15, has not been made in the accounts as the same is accounted as and when paid.

c) Fixed contribution to provident fund are recognized in the accounts on actual cost to the company.

L. Contingent Liabilities:

Mo provision is made for liabilities which are contingent in nature, unless it is probable that future events will confirm that an asset has been impaired or a liability incurred as at the balance sheet date and a reasonable estimate of the resulting loss can be made. However, all known, material contingent liabilities are disclosed by way of separate notes.

M. Earnings Per Share:

The earning considered in ascertaining the company's earnings per share comprise the net profit after tax (and includes the post tax effect of any extra ordinary items). The number of shares used in computing basic earnings per share is weighted average number of shares outstanding during the year.

N. Provisions Contingent Liabilities and Contingent Assets: _

Provisions involving substantial degree of estimation in measurement are recognized where there is a present obligation as a result of past events and it is probable that there will be an outflow of resources,, Contingent liabilities are not recognized but are disclosed in the notes, Contingent Assets are neither recognized nor disclosed in the financial statements,

O. Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the results of operations of during Che reporting year. Although these estimates are based on management s best knowledge of current events and action, actual result could differ from these estimates.