Accounting Policies of Mohit Paper Mills Ltd. Company

Mar 31, 2015

(1) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

(i) The financial statements have been prepared in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant disclosure requirements of the Companies Act, 2013 under historical cost convention and on the basis of going concern.

(ii) Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles followed by the company.

(2) FIXED ASSETS

(I) Fixed Assets are stated at cost, net of credit availed in respect of any taxes, duties less accumulated depreciation. Cost comprises of the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for intended use are also included to the extent they relate to the period up to such assets are ready for their intended use. Expenditure directly relating to construction/erection activity is capitalized. Indirect expenditure incurred during construction period is capitalized as part of the construction or is incidental thereto.

(ii) Land, Building and Plant & Machinery were revalued by an approved valuer on 31.03.1996.The resultant surplus was credited to Capital Reserve from which depreciation on revalued portion is being written off every year. This has no impact on profit for the year.

(3) DEPRECIATION

Depreciation on fixed assets has been provided on written down method, except in respect of Steam Turbine, Boiler House, ETP Plant Conveyers & Handling Equipments, Laboratory Equipments, Forklift Truck and Ruling Machine in whose case the life of the assets have been reassessed based on technical evaluation taking into account the different set of environment in which these assets are operating due to which depreciation is provided on the above assets on Straight Line Method over their useful life.

(4) REVENUE RECOGNITION

The Company follows mercantile system of accounting where all the Income and Expenditure items having material bearing on the financial statements are recognized on accrual basis.

(5) INVESTMENTS

The investments being long-term investments are valued at cost, after providing for any diminution in value, if such diminution is of a permanent nature.

(6) FOREIGN CURRENCY TRANSACTIONS

i) Foreign currency transactions are recorded on initial recognition at the rate prevailing on the date of the transactions.

ii) Foreign currency monetary items are reported using the closing rate. Exchange difference arising on the settlement of monetary items or on reporting the same at the closing rate as at the balance sheet date are recognized as income or expenses in the period in which they arise except in case of liabilities incurred for the purpose of acquiring the fixed assets from outside India in which case such exchange differences are adjusted in the carrying amount of fixed assets.

(7) INVENTORIES

The Company has valued its inventories on "cost or net realizable value whichever is lower" basis and is in compliance with the Accounting Standard (AS-2)" issued by the Institute of Chartered Accountants of India. Further, the valuation of inventory is inclusive of Excise Duty component wherever applicable as required u/s 145A of the Income Tax Act, 1961.

Cost for the purposes of inventory valuation is calculated as follows :

i) Raw Materials and other materials at weighted average cost.

ii) Store Spares and loose tools at Cost on FIFO basis.

iii) Work in process - Material Cost plus appropriate share of labour and overheads.

iv) Finished Goods - Cost is determined by taking material, labour and related factory overheads including depreciation and fixed production overheads which are apportioned on the basis of normal capacity

(8) EXCISE DUTY

Excise Duty has been accounted on the basis of payments made in respect of goods cleared, as also provision for goods lying in store room wherever applicable.

(9) SALES & STOCKS

Sales are recorded on the basis of dispatches till the last day of the year. Sales are accounted for inclusive of excise duty, trade tax & sales tax. Closing Stocks of finished goods and semi-finished goods are accounted for inclusive of Excise Duty.

(10) TAX ON INCOME

Current tax is determined in accordance with the provision of the Income Tax Act, 1961, as the amount of tax payable to the taxation authorities in respect of taxable income for the year.

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

(11) BORROWING COST

Interest and other costs in connection with the borrowing of funds to the extent related / attributed to the acquisition / consumption of qualifying fixed assets are capitalized up to the date when such assets are ready for intended use and other borrowing costs are charged to Statement of Profit & Loss.

(12) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving a substantial degree of estimation in measurement are recognized when 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 provided for and are disclosed separately by way of Notes to the Accounts. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

(13) CASH FLOW

The Cash Flow Statement has been prepared under the "Indirect Method" as prescribed in the Accounting Standard -3 "Cash Flow Statement".

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Mar 31, 2014

(1) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

(i) The financial statements have been prepared in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant disclosure requirements of the Companies Act, 1956 under historical cost convention and on the basis of going concern. Revenues and expenses are accounted for on accrual basis with necessary provisions for all known liabilities and losses except certain items as noted elsewhere. Claims/refunds not ascertainable with reasonable certainty are accounted for on cash basis.

(ii) Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles followed by the company.

(iii) The Company has adopted accrual system of accounting and the financial statements have been prepared in accordance with the accepted accounting policies. All expenses and incomes are accounted on accrual basis.

(2) REVENUE RECOGNITION

Sales are recognised at the point of dispatch of goods to customers and includes excise duty and Sales Tax. Income/Expenses/Revenues are accounted for on accrual basis in accordance with the Accounting Standard (AS-9) issued by the Institute of Chartered Accountants of India.

(3) INVESTMENTS

Long term investments are held at cost. Provision will be made as and when deemed necessary under AS-13 issued by the Institute of Chartered Accountants of India.

(4) FOREIGN CURRENCY TRANSACTIONS

i) Foreign currency transactions are recorded on initial recognition at the rate prevailing on the date of the transactions.

ii) Foreign currency monetary items are reported using the closing rate. Exchange difference arising on the settlement of monetary items or on reporting the same at the closing rate as at the balance sheet date are recognized as income or expenses in the period in which they arise except in case of liabilities incurred for the purpose of acquiring the fixed assets from outside India in which case such exchange differences are adjusted in the carrying amount of fixed assets.

(5) INVENTORIES

The Company has valued its inventories on "cost or net realizable value whichever is lower" basis and is in compliance with the Accounting Standard (AS-2)" issued by the Institute of Chartered Accountants of India. Further, the valuation of inventory is inclusive of Excise Duty component wherever applicable as required u/s 145A of the Income Tax Act, 1961.

Cost for the purposes of inventory valuation is calculated as follows :

i) Raw Materials and other materials at weighted average cost.

ii) Store Spares and loose tools at Cost on FIFO basis.

iii) Work in process - Material Cost plus appropriate share of labour and overheads.

iv) Finished Goods - Cost is determined by taking material, labour and related factory overheads including depreciation and fixed production overheads which are apportioned on the basis of normal capacity.

(6) EXCISE DUTY

Excise Duty has been accounted on the basis of payments made in respect of goods cleared, as also provision for goods lying in store room wherever applicable.

(7) SALES & STOCKS

Sales are recorded on the basis of dispatches till the last day of the year. Sales are accounted for inclusive of excise duty, trade tax & sales tax. Closing Stocks of finished goods and semi-finished goods are accounted for inclusive of Excise Duty.

(8) TAX ON INCOME

Current tax is determined in accordance with the provision of the Income Tax Act, 1961, as the amount of tax payable to the taxation authorities in respect of taxable income for the year.

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

(9) BORROWING COST

Interest and other costs in connection with the borrowing of funds to the extent related / attributed to the acquisition /consumption of qualifying fixed assets are capitalized up to the date when such assets are ready for intended use and other borrowing costs are charged to Statement of Profit & Loss.

(10) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving a substantial degree of estimation in measurement are recognized when 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 provided for and are disclosed separately by way of Notes to the Accounts. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

(11) CASH FLOW

i. The Cash Flow Statement has been prepared under the "Indirect Method" as prescribed in the Accounting Standard -3 "Cash Flow Statement".

ii. The figures of previous year have been recast, rearranged and regrouped whenever considered necessary.

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Mar 31, 2013

(1) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

(i) The financial statements have been prepared in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant disclosure requirements of the Companies Act, 1956 under historical cost convention and on the basis of going concern. Revenues and expenses are accounted for on accrual basis with necessary provisions for all known liabilities and losses except certain items as noted elsewhere. Claims/refunds not ascertainable with reasonable certainty are accounted for on cash basis.

(ii) Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles followed by the company

(iii) The Company has adopted accrual system of accounting and the financial statements have been prepared in accordance with the accepted accounting policies. All expenses and incomes are accounted on accrual basis.

(2) REVENUE RECOGNITION

Sales are recognised at the point of dispatch of goods to customers and includes excise duty and Sales Tax.

Income/Expenses/Revenues are accounted for on accrual basis in accordance with the Accounting

Standard (AS-9) issued by the Institute of Chartered Accountants of India.

(3) INVESTMENTS

Long term investments are held at cost. Provision will be made as and when deemed necessary under AS-

13 issued by the Institute of Chartered Accountants of India.

(5) INVENTORIES

The Company has valued its inventories on "cost or net realizable value whichever is lower" basis and is in compliance with the Accounting Standard (AS-2)" issued by the Institute of Chartered Accountants of India. Further, the valuation of inventory is inclusive of Excise Duty component wherever applicable as required u/s 145Aofthe Income TaxAct, 1961

Cost for the purposes of inventory valuation is calculated as follows:

i) Raw Materials and other materials at weighted average cost

ii) Store Spares and loose tools at Cost on FIFO basis

iii) Work in process - Material Cost plus appropriate share of labour and overheads.

iv) Finished Goods - Cost is determined by taking material, labour and related factory overheads including depreciation and fixed production overheads which are apportioned on the basis of normal capacity.

(6) EXCISE DUTY

Excise Duty has been accounted on the basis of payments made in respect of goods cleared, as also provision for goods lying in store room wherever applicable

(7) SALES & STOCKS

Sales are recorded on the basis of dispatches till the last day ofthe year. Sales are accounted for inclusive of excise duty, trade tax & sales tax. Closing Stocks of finished goods and semi-finished goods are accounted for inclusive of Excise Duty.

(8) TAX ON INCOME

Current tax is determined in accordance with the provision of the Income Tax Act, 1961, as the amount of tax payable to the taxation authorities in respect of taxable income for the year

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

(9) BORROWING COST

Interest and other costs in connection with the borrowing of funds to the extent related I attributed to the acquisition /consumption of qualifying fixed assets are capitalized up to the date when such assets are ready for intended use and other borrowing costs are charged to Profit & Loss Account.

(10) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving a substantial degree of estimation in measurement are recognized when 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 provided for and are disclosed separately by way of Notes to the Accounts. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

(11) CASHFLOW

i .The Cash Flow Statement has been prepared under the "Indirect Method" as prescribed in the Accounting Standard - 3 "Cash Flow Statement". ,

ii. The figures of previous year have been recast, rearranged and regrouped whenever considered necessary.

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Mar 31, 2012

(1) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

(i) The financial statements have been prepared in accordance with the applicable Accounting

Standards issued by the Institute of Chartered Accountants of India and the relevant disclosure requirements of the Companies Act, 1956 under historical cost convention and on the basis of going concern. Revenues and expenses are accounted for on accrual basis with necessary provisions for all known liabilities and losses except certain items as noted elsewhere. Claims/refunds not ascertainable with reasonable certainty are accounted for on cash basis.

(ii) Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles followed by the company.

(iii) The Company has adopted accrual system of accounting and the financial statements have been prepared in accordance with the accepted accounting policies. All expenses and incomes are accounted on accrual basis.

(2) REVENUE RECOGNITION

Sales are recognised at the point of dispatch of goods to customers and includes excise duty and Sales

Tax.

income/Expenses/Revenues are accounted for on accrual basis in accordance with the Accounting

Standard (AS-9) issued by the Institute of Chartered Accountants of India.

(3) FIXED ASSETS INCLUDING INTANGIBLE ASSETS AND DEPRECIATION

(a)Fixed Assets including Intangible Assets are stated at Acquisition Cost (Net of Modvat/Cenvat) less Accumulated Depreciatioh. Cost comprises of purchase price and other attributes expenses incurred during the installation period and is net of modvat credit availed.

(b)Depreciation on Fixed Assets is provided on Written Down Method(WDV) at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 over their useful life, except on Fixed Assets pertaining to Boiler House, ETP Plant Conveyers & Handling Equipments, Laboratory Equipments, Forklift Truck and Ruling Machine where considering different set of environment in which these assets are operation viz-a-viz the other Plant and Machinery, depreciation is provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act,1956 over their useful life.

(4) INVESTMENTS

Long term investments are held at cost. Provision will be made as and when deemed necessary under AS- 13 issued by the Institute of Chartered Accountants of India.

(5) FOREIGN CURRENCYTRANSACTIONS

i) Foreign currency transactions are recorded on initial. ^cognition at the date prevailing on the date of the transactions.

ii) Foreign currency monetary items are reported using the closing rate. Exchange difference arising on the settlement of monetary items or on reporting the same at the closing rate as at the balance sheet date are realized as income or expenses in the period in which they arise except in case of liabilities incurred for the purpose of acquiring the fixed assets from outside India in which case such exchanqe differences are adjusted in the carrying amount of fixed assets.

(6) INVENTORIES

The Company has valued its inventories on "cost or net realizable value whichever is lower basis and is in compliance with the Accounting Standard (AS-2)" issued by the Institute of Chartered Accountants of India of inventory is inclusive of Excise Dutv component wherever applicable as required u/s145Aofthe Income Tax Act, 1961.

Cost for the purposes of inventory valuation is calculated as follows :

i) Raw Materials and other materials at weighted average cost.

ii) Store Spares and loose tools at Cost on FIFO basis.

iii) Work in process-Material Cost plus appropriate share of labour and overheads.

iv) Finished Goods - Cost is determined by taking material, labour and related factory overheads

including depreciation and fixed production overheads which are apportioned on the basis of normal capacity.

(7) EXCISE DUTY

Excise Duty has been accounted on the basis of payments made in respect of goods cleared as also provision for goods lying in store room wherever applicable.

(8) SALES & STOCKS

Sales are recorded on the basis of dispatches till the last day of the year. Sales are accounted for inclusive of excise duty, trade tax & sales tax. Closing Stocks of finished goods and semi-finished goods are accounted for inclusive of Excise Duty.

(9) TAX ON INCOME

Current tax is determined in accordance with the provision of the Income Tax Act, 1961, as the amount of tax payable to the taxation authorities in respect of taxable income for the year.

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

(10) BORROWING COST

Interest and other costs in connection with the borrowing of funds to the extent related / attributed to the acquisition /consumption of qualifying fixed assets are capitalized up to the date when such assets are ready for intended use and other borrowing costs are charged to Profit & Loss Account.

(11) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving a substantial degree of estimation in measurement are recognized when 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 provided for and are disclosed separately by way of Notes to She Accounts. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

(12) CASHFLOW

i. The Cash Flow Statement has been prepared under the Indirect Method" as prescribed in the Accounting Standard-3 "Cash Flow Statemenf.

ii. The figures of previous year have been recast, rearranged and regrouped whenever considered necessary.

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Mar 31, 2010

(i) The financial statements have been prepared in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant disclosure requirements of the Companies Act, 1956 under historical cost convention and on the basis of going concern. Revenues and expenses are accounted for on accrual basis with necessary provisions for all known liabilities and losses except certain items as noted elsewhere. Claims/refunds not ascertainable with reasonable certainty are accounted for on cash basis.

(ii) Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles followed by the company.

(iii) The Company has adopted accrual system of accounting and the financial statements have been prepared in accordance with the accepted accounting policies. All expenses and incomes are accounted on accrual basis.

(2) REVENUE RECOGNITION

Sales are recognised at the point of dispatch of goods to customers and includes excise duty and sales tax.

Income/Expenses/Revenues are accounted for on accrual basis in accordance with the Accounting Standard (AS-9) issued by the Institute of Chartered Accountants of India.

(3) FIXED ASSETS INCLUDING INTANGIBLE ASSETS AND DEPRECIATION

Fixed Assets including intangible assets are stated at acquisition cost (net of modvat/cenvat) less accumulated depreciation, cost comprises of purchase price and other attributable expenses incurred during the installation period and is net of modvat credit availed.

Depreciation on fixed assets is provided on Written Down Method (WDV) at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 over their useful life, except on fixed assets pertaining to boiler house and ETP plant where considering different set of environment in which the Boiler and ETP plant are operating viz-a-viz the other plant and machinery, adoption of straight line method at the rates and in the manner prescribed in Schedule XIV of the Companies Act,1956 over their useful life, will result in more appropriate preparation and presentation of the financial statements of the Company. Due to change in accounting policy during the current year, depreciation has been recalculated on these assets in accordance with the changed method, from the date of the asset coming into use, and difference arising from the retrospective re-computation has been reflected in the accounts of the year.

(4) INVESTMENTS

Long term investments are held at cost. Provision will be made as and when deemed necessary under AS- 13issued by the Institute of Chartered Accountants of India.

(5) FOREIGN CURRENCY TRANSACTIONS

i) Foreign currency transactions are recorded on initial recognition at the rate prevailing on the date of the transactions.

ii) Foreign currency monetary items are reported using the closing rate. Exchange difference arising on the settlement of monetary items or on reporting the same at the closing rate as at the balance sheet date are recognized as income or expenses in the period in which they arise except in case of liabilities incurrea for the purpose of acquiring the fixed assets from outside India in which case such exchange differences are adjusted in the carrying amount of fixed assets.

(6) INVENTORIES

The Company has valued its inventories on "cost or net realizable value whichever is lower" basis and is in compliance with the Accounting Standard (AS-2) issued by the Institute of Chartered Accountants of India. Further, the valuation of inventory is inclusive of excise duty component wherever applicable as required u/s 145A of the Income Tax Act, 1961.

Cost for the purposes of inventory valuation is calculated as follows:

i) Raw Materials and other materials at weighted average cost.

ii) Store spares and loose tools at cost on FIFO basis.

iii) Work in process material cost plus appropriate share of labour and overheads.

iv) Finished Goods - Cost is determined by taking material, labour and related factory overheads including depreciation and fixed production overheads which are apportioned on the basis of normal capacity.

(7) EXCISE DUTY

Excise Duty has been accounted on the basis of payments made in respect of goods cleared, as also provision for goods lying in store room wherever applicable.

(8) SALES & STOCKS

Sales are recorded on the basis of dispatches till the last day of the year. Sales are accounted for inclusive of excise duty, trade tax & sales tax. Closing Stocks of finished goods and semi-finished goods are accounted for inclusive of excise duty.

(9) TAX ON INCOME

Current tax is determined in accordance with the provision of the Income Tax Act, 1961, as the amount of tax payable to the taxation authorities in respect of taxable income for the year.

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

(10) EARNING PER SHARE

Basic earning per share is calculated by dividing the net profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year.

Diluted earning per share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year.

(11) BORROWING COST

Interest and other costs in connection with the borrowing of funds to the extent related / attributed to the acquisition / consumption of qualifying fixed assets are capitalised up to the date when such assets are ready for intended use and other borrowing costs are charged to Profit & Loss Account.

(12) SHARE CAPITAL

The authorised share capital has been increased from Rs. 10,00,00,000 to Rs.12,00,00,000. The Company have issued 20,00,000 convertible warrants of Rs.10 per warrant to the promoters on preferential basis out of which 6,66,667 warrants have been converted into 6,66,667 equity shares of Rs.10 each during the financial year 2009- 2010, So the paid up capital of the company stands increased from Rs. 9,00,00,000 to Rs. 9,66,66,670.

(13) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving a substantial degree of estimation in measurement are recognized when 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 provided for and are disclosed separately by way of notes to the accounts. contingent assets are neither recognized nor disclosed in the financial statements.

(14) RETIREMENT BENEFITS

The Company has adopted the Revised Accounting Standard-15 (Revised-2005) for employee benefits. The relevant policies are:

Short Term Employee Benefits

Short term employee benefits are recognized in the period during which the services have been rendered.

Long Term Employee Benefits

a) Defined Contribution plan

(i) Provident Fund Scheme

Contribution to this scheme are expensed in the Profit & Loss Account.

These contribution are made to the fund administered and managed by the Government of India. The Company has no further obligations under these plans beyond its monthly contribution.

(ii) Gratuity

Group Gratuity cum Life Assurance Scheme with the Life Insurance Corporation of India has been taken in such a way that the gratuity benefits will be payable under an irrevocable trust. The trustees appointed for the purpose of administrating the Scheme shall insure gratuity benefits with the LIC. The Company shall pay to the trustees such contributions as are required to secure gratuity benefits to the employees which will include the liberalized death cover to the employees. The employees gratuity fund scheme managed by the Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

DEFINED BENEFIT PLAN

Actuarial Assumptions

Mortality Rate - Indian Assured Lives Mortality Table (1994-1996) ultimate

Discount Rate-8% p.a.

Interest Rate - 9%

Salary Escalation -7%

Withdrawal Rate -1 % to 3% depending on age

(15) CASH FLOW

i. The Cash Flow Statement has been prepared under the "Indirect Method" as prescribed in the Accounting Standard 3 "Cash Flow Statement".

ii. The figures of previous year have been recast, rearranged and regrouped whenever considered necessary.

iii. During the year, the Company has issued share warrants amounting to Rs. 2,00,00,000 out of which equity shares of Rs. 66,66,670 have been allotted on their conversion. The same have been considered for the purpose of Cash Flow Statement.