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Accounting Policies of Mukesh Strips Ltd. Company

Mar 31, 2014

A) Basis of preparation of Financial Statements

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

b) Use of Estimates

The preparation of financial statements require estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

c) Fixed Assets

Fixed Assets are stated at cost of acquisition less accumulated depreciation. Cost is inclusive of purchase price and any other directly attributable cost to bring the asset to their working condition for intended use.

d) Depreciation

Depreciation on fixed assets has been provided on pro-rata basis at the STRAIGHT LINE METHOD in accordance with the Schedule XIV of the Companies Act, 1956.

e) Impairment of Assets

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss ft charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.

f) Inventories

Inventories are valued at lower of Cost and Net Realizable Value. The Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition. The cost is computed on FIFO basis.

g) CENVAT

CENVAT credit, wherever available, on Excise Duty paid inputs and capital assets is accounted for by reducing the purchase cost of the related inputs or the- capital assets, as the case may be.

h) Investments

Current investments are carried at lower of cost or quoted/fair value. Long term investments are carried at cost less provisions, if any, for permanent diminution In value.

i) Provisions and Contingent Liabilities

Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company.

j) Revenue Recognition Sales

Revenue on sale of products is recognized at the point of dispatch of goods to the customers. All incomes and expenses are accounted for on accrual basis.

Interest

Revenue for interest is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

k) Employee Benefits:

i) Short Term Employee Benefits: Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the statement of profit and loss of the year in which the related services is rendered.

ii) Post Employment Benefits: DEFINED CONTRIBUTION PLANS : Provident Fund : Contribution to Provident Fund is made in accordance with the provisions of the Employees Provident Fund & Miscellaneous Provisions Act, 1952 and is charged to the Statement of Profit & Loss.

DEFINED BENEFIT PLANS :

Gratuity:

Provision for Gratuity Liability to Employees is made on the basis of Actuarial Valuation as at the close of the year.

L) Borrowing Cost

Borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as a part of the cost of the assets. Other borrowing costs are recognized as an expense in the year in which they are incurred.

m) Foreign Currency Transactions

Foreign currency transactions are accounted for at equivalent rupee value converted at the rates prevalent at the time of transaction and/or at the forward contract rate, if so applicable. However, where there is no forward contract and the payments are pending, the rate prevailing at the year-end are considered. Any income or expense on account of exchange difference either on settlement or on transaction is recognized in the Statement of Profit and Loss.

n) Accounting for Taxes on Income

Provision for taxation for the year comprises of current tax and deferred tax.

i) Current tax is the amount of Income Tax ascertained on the basis of assessable profit computed in accordance with the provisioh of Income Tax Act, 1961.

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


Mar 31, 2010

A) Accounting Conventions

The financial statements are prepared under the historical cost convention in accordance with the applicable Accounting Standards referred to in sub section (3C) of Section 211 of the Companies Act, 1956 and relevant provisions of the said Act.

b) Fixed Assets

Fixed Assets are stated at cost of acquisition less accumulated depreciation. Cost is inclusive of purchase price and any other directly attributable cost to bring the asset to their working condition for intended use.

Fixed Assets are reviewed for impairment losses whenever events or changes in circumstances indicate that .carrying amount may not be recoverable. An impairment loss is then recognised for the amount by which the carrying amount of assets exceeds its recoverable amount, which is the higher of an assets net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

c) Depreciation

Depreciation, on fixed assets has been provided on pro-rata basis at the STRAIGHT LINE METHOD in accordance with the Schedule XIV of the Companies Act, 1956.

d) Inventories

Inventories are valued at cost or net realisable value whichever is lower. The cost in respect of the following items is computed as under:

Raw Material : At FIFO Basis plus Direct Expenses.

Stores & Spares : At FIFO Basis plus Direct Expenses.

Finished Goods : At Raw Material Cost plus Conversion Cost

Byproducts : At Net Realisable Value.

e) CENVATA/AT

CENVATA/AT credit, wherever available, on Excise Duty/VAT paid inputs and capital assets is accounted for by reducing the purchase cost of the related inputs or the capital assets, as the case may be.

f) Sales

Sales are Net of returns, Value Added Tax and Excise Duty.

g) Investments

Investments are stated at cost and where there is permanent diminution in the value of investments, a provision is made, wherever applicable. Dividend is accounted for as and when received.

h) Revenue Recognition

Revenue on sale of products is recognized at the point of dispatch of goods to the customers. i) Employee Benefits:

i) Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the profit and loss account of the year in which the related services is rendered.

ii) Post Employment Benefits:

DEFINED CONTRIBUTION PLANS :

Provident Fund :

Contribution to Provident Fund is made in accordance with the provisions of the Employees Provident Fund & Miscellaneous Provisions Act, 1952 and is charged to the Profit & Loss Account.

DEFINED BENEFIT PLANS:

Gratuity:

Provision for Gratuity Liability to Employees is made on the basis of Actuarial Valuation made at the end of the each financial year. The actuarial valuation is made on Projected Unit Credit Method.

j) Foreign Currency Transactions

i) Monetary Assets and Liabilities related to Foreign Currency Transactions and outstanding, except assets and liabilities hedged by a hedge contract, at the close of the year, are expressed in Indian rupees at the rate of exchange prevailing on the date of the Balance Sheet.

ii) Monetary Assets and Liabilities hedged by a hedge contract are expressed in Indian rupees at the rate of exchange prevailing on the date of the Balance Sheet adjusted to the rates in the hedge contracts. The exchange difference arising either on settlement or at reporting date is recognized in the profit and loss account except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such asset.

iii) Transactions in foreign currency are recorded in the books of account in Indian rupees at the rate of exchange prevailing on the date of transaction.

k) Borrowing Cost

Borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred..

l) Accounting for Taxes on Income

Provision for taxation for the year comprises of current tax and deferred tax.

i) Current tax is the amount of Income Tax ascertained on the basis of assessable profit computed in accordance with the provision of Income Tax Act, 196,1.

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

m) Provisions and Contingent Liabilities

Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company.

 
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