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Accounting Policies of Nath Pulp & Paper Mills Ltd. Company

Mar 31, 2014

A. GENERAL:

The financial statements are prepared on historical cost basis (except for revaluation of certain fixed assets) in accordance with applicable Accounting Standards issued by the Companies (Accounting Standards) Rule, 2006, relevant provision of the Companies Act,1956 and on the accounting principles of a going concern. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties.

All assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria set out in the Schedule VI to The Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.

B. USE OF ESTIMATES:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

C. REVENUE RECOGNITION:

Revenue from sale of goods is recognized when significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract. Sales are net of sales returns, trade and other discounts, sales taxes and excise duties.

D. INVENTORIES:

Items of inventories are valued at lower of the cost and net realizable value. Cost is assigned on moving weighted average basis. Obsolete, defective and unserviceable stocks are provided for, if any.

Finished goods and work-in-process include costs incurred in bringing the inventories to their present location and condition.

E. FIXED ASSETS AND DEPRECIATION:

Fixed Assets are stated at cost except Land, Building certain Plant & Machinery which were revalued on 30th June, 1994 and are stated at revalued cost less depreciation, wherever applicable.

Depreciation on assets is provided on Written down Value method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

Depreciation on machinery spares of the nature of capital spares and having irregular use is provided prospectively over a period, not exceeding the useful life of the asset to which they relate.

Depreciation on Fixed Assets added / disposed of during the year, is provided for on pro-rata basis with reference to the month of addition / disposal / discarding.

F. CAPITAL WORK-IN-PROGRESS:

Expenditure related to and incurred during implementation of expansion cum modernization projects are included under Capital Work-in-Progress and the same are capitalized under the appropriate heads on completion of the project.

G. IMPAIRMENT OF ASSETS:

In accordance with AS 28 on ''Impairment of Assets'' issued by the Institute of Chartered Accountants of India, where there is an indication of impairment of the Company''s assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of such assets exceeds its recoverable amount. Impairment loss is recognized in the profit and loss account. If at the

balance sheet date there is any indication that a previously assessed impairment loss no longer exists, then such loss is reversed and the assets are restated to that effect.

H. TRANSACTIONS IN FOREIGN CURRENCY:

Transactions in foreign currency are recorded at the rate of exchange in force on the date of the transactions. Current assets, current liabilities and borrowings denominated in foreign currency are translated at the exchange rate prevalent at the date of the Balance Sheet. The resultant gain/loss are recognized in the Statement of Profit & Loss, except in cases where they relate to the acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

I. EMPLOYEE BENEFITS:

A) Defined Contribution Plan:-

The company has defined contribution plan namely Provident Fund, administered by the Regional Provident Fund Commissioner. Regular contributions made to Provident Fund are charged to the Statement of Profit and Loss. The company has no further obligation beyond making its contribution on monthly basis.

B) Defined Benefit Plan:-

The company provides for gratuity, a defined benefit plan (the "Gratuity Plan") covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The gratuity plan provides a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. The Company''s liability is actuarially determined at the end of each year. Actuarial losses/gains are recognized in the Statement of Profit and Loss in the year in which they arise.

C) Compensated Absences:-

The employees of the company are entitled to leave as per the leave policy of the company. The liability for the compensated absences is provided on the basis of valuation, carried out by an independent actuary. Gains and losses arising out of actuarial valuations are recognized immediately in the Statement of Profit and Loss as income or expense.

J. INCOME TAX:

Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961.

Deferred tax is recognized for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assets are recognized and carry forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the group reassesses unrecognized deferred tax assets, if any.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

K. GOVERNMENT GRANTS:

Grants are accounted for where it is reasonably certain that the ultimate collection will be made.

Grants relating to Fixed Assets are shown as deduction from the gross value of the fixed assets and those of the nature of Project Capital Subsidy are credited to capital reserve. >

L. BORROWING COSTS:

Borrowing cost attributable to the acquisition and construction of qualifying fixed assets are capitalized as part of the cost of such asset up to the date when such asset is ready for its intended use. Other borrowing costs are charged to the Profit & Loss Account.

M. CONTINGENT LIABILITIES / ASSETS AND PROVISIONS

Contingent Liabilities in respect of show cause notices received are considered only when they are converted into demands. Contingent Liabilities under various fiscal laws include those in respect of which the Company / Department is in appeal. A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent Liabilities are disclosed in notes to financial statements. Contingent assets are neither recognized nor disclosed in the financial statements.

N. EARNING PER SHARE

Basic earning per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the company''s earnings per share are the net profit or loss for the period after deducting preference dividends and any attributable tax thereto for the period.

The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.


Mar 31, 2013

A. GENERAL:

The financial statements are prepared on historical cost basis (except for revaluation of certain fixed assets) in accordance with applicable Accounting Standards issued by the Companies (Accounting Standards) Rule, 2006, relevant provision of the Companies Act, 1956 and on the accounting principles of a going concern. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties.

All assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria set out in the Schedule VI to The Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.

B. USE OF ESTIMATES:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

C. REVENUE RECOGNITION:

Revenue from sale of goods is recognized when significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract. Sales are net of sales returns, trade and other discounts, sales taxes and excise duties.

D. INVENTORIES:

Items of inventories are valued at lower of the cost and net realizable value. Cost is assigned on moving weighted average basis. Obsolete, defective and unserviceable stocks are provided for, if any.

Finished goods and work-in-process include costs incurred in bringing the inventories to their present location and condition.

E. FIXED ASSETS AND DEPRECIATION:

Fixed Assets are stated at cost except Land, Building and Plant & Machinery which were revalued on 30th June, 1994 and are stated at revalued cost less depreciation, wherever applicable.

Depreciation on assets is provided on Written down Value method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

Depreciation on machinery spares of the nature of capital spares and having irregular use is provided prospectively over a period, not exceeding the useful life of the asset to which they relate.

Depreciation on Fixed Assets added / disposed of during the year, is provided for on pro-rata basis with reference to the month of addition / disposal / discarding.

F. CAPITAL WORK-IN-PROGRESS:

Expenditure related to and incurred during implementation of expansion cum modernization projects are included under Capital Work-in-Progress and the same are capitalized under the appropriate heads on completion of the project.

G. IMPAIRMENT OF ASSETS:

In accordance with AS 28 on ''Impairment of Assets'' issued by the Institute of Chartered Accountants of India, where there is an indication of impairment of the Company''s assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of such assets exceeds its recoverable amount. Impairment loss is recognized in the profit and loss account. If at the balance sheet date there is any indication that a previously assessed impairment loss no longer exists, then such loss is reversed and the assets are restated to that effect.

H. TRANSACTIONS IN FOREIGN CURRENCY:

Transactions in foreign currency are recorded at the rate of exchange in force on the date of the transactions. Current assets, current liabilities and borrowings denominated in foreign currency are translated at the exchange rate prevalent at the date of the Balance Sheet. The resultant gain/loss are recognized in the Statement of Profit & Loss, except in cases where they relate to the acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

I. EMPLOYEE BENEFITS:

A) Defined Contribution Plan:-

The company has defined contribution plan namely Provident Fund, administer by the Regional Provident Fund Commissioner. Regular contributions made to Provident Fund are charged to the Statement of Profit and Loss. The company has no further obligation beyond making its contribution on monthly basis.

B) Defined Benefit Plan:-

The company provides for gratuity, a defined benefit plan (the "Gratuity Plan") covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The gratuity plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. The Company''s liability is actuarially determined at the end of each year. Actuarial losses/gains are recognized in the Statement of Profit and Loss in the year in which they arise.

C) Compensated Absences:-

The employees of the company are entitled to leave as per the leave policy of the company. The liability for the compensated absences is provided on the basis of valuation, carried out by an independent actuary. Gains and losses arising out of actuarial valuations are recognized immediately in the Statement of Profit and Loss as income or expense.

J. INCOME TAX:

Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961,

Deferred tax is recognized for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assets are recognized and carry forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the group reassesses unrecognized deferred tax assets, if any.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

K. GOVERNMENT GRANTS:

Grants are accounted for where it is reasonably certain that the ultimate collection will be made.

Grants relating to Fixed Assets are shown as deduction from the gross value of the fixed assets and those of the nature of Project Capital Subsidy are credited to capital reserve.

L. BORROWING COSTS:

Borrowing cost attributable to the acquisition and construction of qualifying fixed assets are capitalized as part of the cost of such asset up to the date when such asset is ready for its intended use. Other borrowing costs are charged to the Profit & Loss Account.

M. CONTINGENT LIABILITIES / ASSETS AND PROVISIONS

Contingent Liabilities in respect of show cause notices received are considered only when they are converted into demands. Contingent Liabilities under various fiscal laws include those in respect of which the Company / Department is in appeal. A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent Liabilities are disclosed in notes to financial statements. Contingent assets are neither recognized nor disclosed in the financial statements.

N. EARNING PER SHARE

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the company''s earnings per share are the net profit or loss for the period after deducting preference dividends and any attributable tax thereto for the period.

The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.


Mar 31, 2010

A. GENERAL:

The financial statements are prepared on historical cost basis (except for revaluation of certain fixed assets) in accordance with applicable Accounting Standards issued by the Companies (Accounting Standards) Rule, 2006, relevant provision of the Companies Act, 1956 and on the accounting principles of a going concern. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis except those with significant uncertainties.

B. USE OF ESTIMATES:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities or the date of financial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates.

C. REVENUE RECOGNITION:

Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the customers. Sales are net of sales returns, trade and other discounts.

D. INVENTORIES:

i. Inventories are valued at lower of the cost and net realizable value. Cost is assigned on weighted

average basis. Obsolete, defective and unserviceable stocks are provided for.

ii. Finished goods and work-in-process include costs incurred in bringing the inventories to their present location and condition.

E. FIXED ASSETS AND DEPRECIATION:

i. Fixed Assets are stated at cost except Land, Building and Plant & Machinery which were revalued on 30th June, 1994 and are stated at revalued cost less depreciation, wherever applicable.

ii. Depreciation on assets is provided on Written down Value method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

iii. Depreciation on machinery spares of the nature of capital spares and having irregular use is provided prospectively over a period, not exceeding the useful life of the asset to which they relate.

iv Depreciation on Fixed Assets added / disposed of during the year, is provided for on pro-rata basis with reference to the month of addition / disposal / discarding.

F. CAPITAL WORK-IN-PROGRESS:

Expenditure related to and incurred during implementation of expansion cum modernisation projects are included under Capital Work-in-Progress and the same are capitalised under the appropriate heads on completion of the project.

G. IMPAIRMENT OF ASSETS :

In accordance with AS 28 on Impairment of Assets issued by the Institute of Chartered Accountants of India, where there is an indication of impairment of the Companys assets related to cash generating units, the carrying amount of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of such assets exceeds its recoverable amount. Impairment loss is recognised in the profit and loss account. If at the balance sheet date there is any indication that a previously assessed impairment loss no longer exists, then such loss is reversed and the assets are restated to that effect.

H. TRANSACTIONS IN FOREIGN CURRENCY:

Transactions in foreign currency are recorded at the rate of exchange in force on the date of transactions. Current assets, current liabilities and borrowings denominated in foreign currency are translated at the exchange rate prevalent at the date of the Balance Sheet. The resultant gain/loss are recognized in the Profit & Loss Account, except in cases where they relate to the acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

I. EMPLOYEE BENEFITS:

i. Contribution to Provident and Family Pension Funds are funded as a percentage of salary/ wages.

ii. Gratuity liability at the year end is funded as per group gratuity scheme of Life Insurance Corporation of India.

iii. Leave entitlement liability at the year end is provided for on the basis of leave rules of Company.

J. INCOME TAX:

i. Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961.

ii. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been substantively enacted as of the balance sheet date.

iii. Deferred tax assets arising from timing differences are recognized to the extent there is virtual/ reasonable certainty that these would be realized in future.

K. GOVERNMENT GRANTS:

i. Grants are accounted for where it is reasonably certain that the ultimate collection will be made.

ii. Grants relating to Fixed Assets are shown as deduction from the gross value of the fixed assets and those of the nature of Project Capital Subsidy are credited to capital reserve.

L. BORROWING COSTS:

Borrowing cost attributable to the acquisition and construction of qualifying fixed assets are capitalised as part of the cost of such asset upto the date when such asset is ready for its intended use. Other borrowing costs are charged to the Profit & Loss Account.

M. CONTINGENT LIABILITIES / ASSETS AND PROVISIONS

Contingent Liabilities in respect of show cause notices received are considered only when they are converted into demands. Contingent Liabilities under various fiscal laws include those in respect of which the Company / Department is in appeal. A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent Liabilities are disclosed in notes to accounts. Contingent assets are not recognised or disclosed in the financial statements.


Mar 31, 2009

A. GENERAL:

The financial statements are prepared on historical cost basis (except for revaluation of certain fixed assets) in accordance with applicable Indian accounting standards and on the accounting principles of a going concern. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis except those with significant uncertainties.

B. USE OF ESTIMATES:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires Management to make estimates and assumptions that affect the reported amounts -of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates.

C. REVENUE RECOGNITION:

Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the customers. Sales are net of sales returns, trade and other discounts.

D. INVENTORIES:

i. Inventories are valued at lower of the cost and net realizable value. Cost is assigned on weighted average basis. Obsolete, defective and unserviceable stocks are provided for.

ii. Finished goods and work-in-process include costs incurred in bringing the inventories to their present location and condition.

E. FIXED ASSETS AND DEPRECIATION:

i. Fixed Assets are stated at cost except Land, Building and Plant & Machinery which were revalued on 30th June, 1994 and are stated at revalued cost less depreciation, wherever applicable.

ii. Depreciation on assets is provided on Written down Value method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

iii. Depreciation on machinery spares of the nature of capital spares and having irregular use is provided prospectively over a period, not exceeding the useful life of the asset to which they relate.

iv. Depreciation on Fixed Assets added / disposed of during the year, is provided for on pro-rata basis with reference to the month of addition / disposal / discarding.

F. CAPITAL WORK-IN-PROGRESS:

Expenditure related to and incurred during implementation of expansion cum modernisation projects are included under Capital Work-in-Progress and the same are capitalised under the appropriate heads on completion of the project.

G. IMPAIRMENT OF ASSETS :

In accordance with AS 28 on Impairment of Assets prescribed by Companies (Accounting Standards) Rules, 2006, where there is an indication of impairment of the Companys assets related to cash generating units, the carrying amount of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of such assets exceeds its recoverable amount. Impairment loss is recognised in the profit and loss account. If at the balance sheet date there is any indication that a previously assessed impairment loss no longer exists, then such loss is reversed and the assets are restated to that effect.

H. TRANSACTIONS IN FOREIGN CURRENCY:

Investments in foreign entities are recorded at the exchange rate prevailing on the date of making the investment. Transactions in foreign currencies are recorded at the rates prevailing on the date of transaction. Monetary items denominated in foreign currency are restated at the rate prevailing on the balance sheet date.

I. EMPLOYEE BENEFITS:

i. Contribution to Provident and Family Pension Funds are funded as a percentage of salary/ wages.

ii. Gratuity liability at the year end is funded as per group gratuity scheme of Life Insurance Corporation of India.

iii. Leave entitlement liability at the year end is provided for on the basis of leave rules of Company.

J. INCOME TAX:

i. Provision for current tax is made on the basis of estimated taxable income for the current accounting year

in accordance with the Income Tax Act, 1961.

ii. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been substantively enacted as of the balance sheet date.

iii. Deferred tax assets arising from timing differences are recognized to the extent there is virtual/ reasonable certainty that these would be realized in future.

iv. The provision for Fringe Benefit Tax has been made in respect of employee benefits and other specified expenses as determined under the Income Tax Act, 1961.

K. GOVERNMENT GRANTS:

i. Grants are accounted for where it is reasonably certain that the ultimate collection will be made.

ii. Grants relating to Fixed Assets are shown as deduction from the gross value of the fixed assets and those of the nature of Project Capital Subsidy are credited to capital reserve.

L. BORROWING COSTS:

Borrowing cost attributable to the acquisition and construction of qualifying fixed assets are capitalised as part of the cost of such asset upto the date when such asset is ready for its intended use. Other borrowing costs are charged to the Profit & Loss Account.

M. CONTINGENT LIABILITIES / ASSETS AND PROVISIONS

Contingent Liabilities in respect of show cause notices received are considered only when they are converted into demands. Contingent Liabilities under various fiscal laws include those in respect of which the Company / Department is in appeal. A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent Liabilities are disclosed in notes to accounts. Contingent assets are not recognised or disclosed in the financial statements.

 
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