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Accounting Policies of Natural Capsules Ltd. Company

Mar 31, 2012

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Mar 31, 2011

A. METHOD OF ACCOUNTING:

The financial statements have been prepared under the historical cost convention and on the basis of the going concern, with revenues recognized and expenses accounted on their accrual, including provisions / adjustments for committed obligations and amounts determined as payable or receivable during the year.

The financial statements generally comply with all the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India.

B. FIXEDASSETS:

Fixed Assets are stated at cost of acquisition inclusive of freight, duties, taxes and incidental expenditure relating to the acquisition, such as cost of installation / erection and interest up to the date of commissioning of the asset as applicable. Excise duty paid on Fixed Assets to the extent eligible for claiming of Cenvat credit has been separately debited to Cenvat credit receivable account and disclosed under current assets.

Cost includes related pre-operative project expenditure and other related indirect / incidental expenses attributable to the cost of construction, including borrowing cost, allocated based on best estimate of the management.

C. CAPITAL WORK IN PROGRESS:

Capital Work-in-progress inclusive of advances to supplier of capital equipments/buildings are carried at cost, comprising direct cost, related incidental expenses pending allocation / capitalization to the related projects / assets and interest on borrowings there-against.

D. DEPRECIATION:

Depreciation on Fixed assets is provided in the accounts on the Straight Line method as per the rates prescribed under Schedule XIV of the Companies Amendment Act, 1988, read with Section 205 (2) (b) of the Companies Act 1956. Depreciation is provided on pro-rata basis on assets put to use during the year. 100% Depreciation has been provided on assets costing less than Rs. 5,000/- each.

E. INVENTORIES:

Inventories Comprise of raw materials, packing materials, work in process and finished goods. These are valued at lower of cost or net realizable value whichever is lower. Cost is determined as follows: Raw Materials and Packing Materials: on First-In-First-Out basis. Work in Process and Finished Goods: at Material cost and an appropriate share of production overheads

F. REVENUE RECOGNITION:

Sales are recognized on the dispatch of goods to customers and are recorded net of excise duty, taxes, trade discounts, and shortages in transit.

G. CASHFLOW:

Cash flow statement has been prepared under the "Indirect Method" as set out in the Accounting Standard 3 on Cash Flow Statements.

H. FOREIGN CURRENCY TRANSACTIONS:

All transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Current assets and liabilities denominated in foreign currency as at the yearend are restated as at the year-end rate. Exchange differences on settlement / restatement of foreign currency transactions relating to fixed assets are adjusted to the cost of the respective assets. Exchange differences relating to other transactions are charged to the Profit and Loss Account.

I. EMPLOYEE BENEFITS:

(a) Defined Contribution Plans

Under the Provident Fund plan, the company contributes to a government administered provident fund on behalf of its employees and has no further obligation beyond making its contribution.

The Company makes contributions to state plans namely Employee's state insurance Fund and Employee's pension scheme 1995 and has no further obligation beyond making the payment to them. The Company's contributions to the above funds are charged to revenue every year. (b) Defined Benefit Plan

The company has a Defined Benefit plan namely Gratuity for all its employees. The Liability for the defined benefit plan of gratuity is determined on the basis of an actuarial valuation at the year end. The company has taken a group gratuity policy with Life Insurance Corporation Limited and is funded. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognized immediately in the Profit and Loss Account as income or expense.

J. ACCOUNTING FOR TAXES ON INCOME:

(a) Income Tax have been accounted for as per payable method.

(b) Deferred Tax is provided on all timing differences, which are recognized during the year after utilizing the deferred assets (carried forward depreciation as per Income tax), on the basis of estimate of income during future years received from the Management. The provision of deferred tax is after netting the deferred tax liability with deferred tax asset.

K. BORROWING COST:

Borrowing cost incurred up to date of commencement of commercial production / intended uses of fixed assets are capitalized in accordance with the Accounting Standard 16 on "Borrowing Cost".

Borrowing costs other than attributable to a qualifying asset are expensed as and when incurred

L. IMPAIRMENT OF ASSETS:

If the carrying amount of fixed assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the net selling price and the value in use determined by the present value of estimated future cash flows.

M. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

A Provision is recognized when an enterprise has a present obligation as a result of past event it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

N. PRIOR PERIOD AND EXTRAORDINARY ITEMS:

Prior period and extraordinary items, and changes in accounting policies, having a material impact on the financial affairs of the company are disclosed.


Mar 31, 2010

A. METHOD OF ACCOUNTING:

The financial statements have been prepared under the historical cost convention and on the basis of the going concern, with revenues recognized and expenses accounted on their accrual, including provisions / adjustments for committed obligations and amounts determined as payable or receivable during the year.

The financial statements generally comply with all the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India.

B. FIXED ASSETS:

Fixed Assets are stated at cost of acquisition inclusive of freight, duties, taxes and incidental expenditure relating to the acquisition, such as cost of installation / erection and interest up to the date of commissioning of the asset as applicable. Excise duty paid on Fixed Assets to the extent eligible for claiming of Cenvat credit has been separately debited to Cenvat credit receivable account and disclosed under current assets.

Cost includes related pre-operative project expenditure and other related indirect / incidental expenses attributable to the cost of construction, including borrowing cost, allocated based on best estimate of the management.

C. CAPITAL WORK IN PROGRESS:

Capital Work-in-progress inclusive of advances to supplier of capital equipments/buildings are carried at cost, comprising direct cost, related incidental expenses pending allocation / capitalization to the related projects / assets and interest on borrowings there-against.

D. DEPRECIATION:

Depreciation on Fixed assets is provided in the accounts on the Straight Line method as per the rates prescribed under Schedule XIV of the Companies Amendment Act, 1988, read with Section 205 (2) (b) of the Companies Act 1956. Depreciation is provided on pro-rata basis on assets put to use during the year. 100% Depreciation has been provided on assets costing less than Rs. 5,000/- each.

E. INVENTORIES:

Inventories Comprise raw materials, packing materials, work in process and finished goods. These are valued at lower of

cost or net realizable value. Cost is determined as follows:

Raw Materials and Packing Materials: On First-In-First-Out basis.

Work in Process and Finished Goods: at Material cost and an appropriate share of production overheads

F. REVENUE RECOGNITION:

Sales are recognized on the dispatch of goods to customers and are recorded net of excise duty, taxes, trade discounts, and shortages in transit.

G. CASHFLOW:

Cash flow statement has been prepared under the "Indirect Method" as set out in the Accounting Standard 3 on Cash Flow Statements.

H. FOREIGN CURRENCY TRANSACTIONS:

All transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Current assets and liabilities denominated in foreign currency as at the yearend are restated as at the year-end rate. Exchange differences on settlement/ restatement of foreign currency transactions relating to fixed assets are adjusted to the cost of the respective assets. Exchange differences relating to other transactions are charged to the Profit and Loss Account.

I. EMPLOYEE BENEFITS:

(a) Defined Contribution Plans

Under the Provident Fund plan, the company contributes to a government administered provident fund on behalf of its employees and has no further obligation beyond making its contribution.

The Company makes contributions to state plans namely Employees state insurance Fund and Employees pension scheme 1995 and has no further obligation beyond making the payment to them. The Companys contributions to the above funds are charged to revenue every year.

(b) Defined Benefit Plan

The company has a Defined Benefit plan namely Gratuity for all its employees. The Liability for the defined benefit plan of gratuity is determined on the basis of an actuarial valuation at the year end. The company has taken a group gratuity policy with Life Insurance Corporation Limited and is funded. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognized immediately in the Profit and Loss Account as income or expense.

1. ACCOUNTING FORTAXES ON INCOME:

(a) Income Tax/Fringe Benefit Tax have been accounted for as per payable method.

(b) Deferred Tax is provided on all timing differences, which are recognized during the year after utilizing the deferred assets (carried forward depreciation as per Income tax), on the basis of estimate of income during future years received from the Management. The provision of deferred tax is after netting the deferred tax liability with deferred tax asset.

K. BORROWING COST:

Borrowing cost incurred up to date of commencement of commercial production / intended use of fixed assets are capitalized in accordance with the Accounting Standard 16 on "Borrowing Cost".

Borrowing costs other than attributable to a qualifying asset are expensed as and when incurred.

L. IMPAIRMENT OF ASSETS:

If the carrying amount of fixed assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the net selling price and the value in use determined by the present value of estimated future cash flows.

M. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

A Provision is recognized when an enterprise has a present obligation as a result of past event it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

N. PRIOR PERIOD AND EXTRAORDINARY ITEMS:

Prior period and extraordinary items, and changes in accounting policies, having a material impact on the financial affairs of the company are disclosed.

 
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