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Accounting Policies of Nitin Spinners Ltd. Company

Mar 31, 2015

1) Basis for preparation of Financial Statement

(a) The financial statements have been prepared under the historical cost convention and on the principles of going concern in accordance with Indian Generally Accepted Accounting Principles, applicable Accounting Standards and provisions of the Companies Act, 2013.

(b) Accounting policies, not specifically referred to, are consistent with Generally Accepted Accounting Principles.

2) Revenue Recognition :

(a) Sales are recognised when goods are supplied and effective control of goods associated with ownership is transferred to the buyer. Sales are recorded net of Sales Tax, return, discounts and rebates but including Excise Duties.

(b) Foreign exchange differences relating to sales are included in Revenue from operation.

(c) Other Income and Incentives/Benefits are accounted for on accrual basis.

(d) Claims lodged with insurance companies are accounted and credited to the relevant head when recognized by the insurance company.

(e) Inter-divisional sales comprising of sale of power for captive use is reduced from gross turnover in arriving net turnover.

3) Expenditure

(a) Expenses are accounted for on accrual basis and provisions are made for all known losses and liabilities.

(b) Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with reasonable accuracy.

4) Inventory

Inventories are valued at cost or net realisable value, whichever is lower. The cost in respect of various items of inventory is computed as under :-

(a) Cost of raw materials and stores include duties, taxes, freight and other expenses and are net of Duty Drawback, VAT & CST refund, CENVAT credit wherever made applicable.

(b) Cost in relation to finished goods comprises of cost of materials, excise duty, production overheads and depreciation.

(c) Work in process is valued at raw material cost plus conversion cost depending upon the stage of completion.

(d) The material/finished goods despatched from the factory but lying at port pending shipment are taken as a part of finished goods stock.

5) Investments

(a) Investments are stated at cost.

(b) Dividend income is accounted when the right to receive is established.

6) Fixed Assets

(i) Tangible Assets

Fixed Assets are stated at cost net of CENVAT/VAT credit availed and includes amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All costs, including financing cost till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations directly attributable to the fixed assets are capitalized.

(ii) Intangible Assets

Intangible Assets are stated at cost less accumulated amortisation and impairment loss, if any.

7) Depreciation and Amortisation

(i) Tangible Assets

a) Depreciation on Plant & Machinery (other than Laboratory Equipments, Fire Fighting Equipments and Tools & Equipments) is provided on Straight Line Method (SLM) considering estimated useful life of 13 years (Triple Shift). Depreciation on other fixed assets has been provided based on useful lives prescribed in Schedule II of the Companies Act, 2013.

b) Depreciation on Fixed Assets for trial run period is not charged.

Intangible Assets consist of Computer Software and the same are amortised over a period of 5 years.

8) Prior Period Items

Prior period items including adjustment/Claims, arisen / settled / noted during the year are debited / credited to the respective heads of account, if not material in the nature.

9) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of Fixed Assets are capitalized as part of the cost of such assets for the period prior to commencement of commercial production or installation. All other costs are charged to revenue.

10) Government Grants, Subsidy & incentives

(a) Interest subsidy received or receivable on Term Loans taken under TUF Scheme is recognized on accrual basis and reduced from the Financial Expenses. The TUF benefits attributable to the acquisition/installation of Fixed Assets till the commencement of commercial production are netted against the cost of fixed assets.

(b) Duty Drawback, Sales Tax refunds and other incentives are reduced from the cost of respective assets/ purchases.

11) Foreign Currency Transactions/Translations

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transactions. Foreign currency assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end. Exchange rate differences are dealt with in the Profit and Loss statement except those relating to the acquisition of fixed assets, which are adjusted to the cost of the assets.

12) Financial Derivatives

Foreign Currency Derivative contracts are accounted for on the date of their settlement and realized gain/loss in respect of settled contracts are recognized in the Profit and Loss Statement, except where they relate to borrowings attributable to the acquisition of fixed assets, in that case they are adjusted to the carrying cost of the assets.

13) CENVAT

(a) The purchase cost of raw materials and other expenses has been considered net of CENVAT available on inputs.

(b) The CENVAT benefits attributable to acquisition/installation of fixed assets are netted off against the cost of fixed assets.

(c) CENVAT is accounted for on the basis of payments made in respect of goods cleared and provision is made for goods lying in Stock, if applicable and the same is treated as part of the cost of respective Stock

14) Research & Development

Revenue expenditure on Research and Development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as addition to fixed assets.

15) Retirement Benefits

The company's contribution to Provident and other funds are charged to Profit & Loss Statement. The liability for gratuity and leave encashment is provided on the basis of actuarial valuation.

16) Provision for Current and Deferred Tax

a) Provision for Current Income Tax is made after considering Mat Credit entitlement, exemptions and deductions available under the Income Tax Act, 1961.

b) Deferred Tax Liability resulting from timing differences between book and tax profit is accounted for by using the tax rates and laws that are enacted or substantially enacted as on Balance Sheet date. The deferred tax assets is recognized and carried forward only to extent that there is a reasonable certainty that the assets will be realized in future.

17) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit and loss statement 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.

18) Deferred Revenue Expenditure

The Company does not recognize any Deferred Revenue Expenditure.

19) Provisions and Contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Provisions except Gratuity and Leave Encashment benefits are not discounted to its present value and are determined based on best estimate of the expenditure 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 estimate. A contingent liability is disclosed unless the possibility of an out flow of resources embodying economic benefit is remote. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2014

1) Basis for preparation of Financial Statement

(a) The financial statements have been prepared under the historical cost convention and on the principles of going concern in accordance with Indian Generally Accepted Accounting Principles, applicable Accounting Standards and provisions of the Companies Act, 1956.

(b) Accounting policies, not specifically referred to, are consistent with Generally Accepted Accounting Principles.

2) Revenue Recognition :

(a) Sales are recognised when goods are supplied and effective control of goods associated with ownership is transferred to the buyer. Sales are recorded net of Sales Tax, return, discounts and rebates but including Excise Duties.

(b) Foreign exchange differences relating to sales are included in Revenue from operation.

(c) Other Income and Incentives/Benefits are accounted for on accrual basis.

(d) Claims lodged with insurance companies are accounted and credited to the relevant head when recognized by the insurance company.

(e) Inter-divisional sales comprising of sale of power for captive use is reduced from gross turnover in arriving net turnover.

3) Expenditure

(a) Expenses are accounted for on accrual basis and provisions are made for all known losses and liabilities.

(b) Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with reasonable accuracy.

4) Inventory

Inventories are valued at cost or net realisable value, whichever is lower. The cost in respect of various items of inventory is computed as under :- (a) Cost of raw materials and stores include duties, taxes, freight and other expenses and are net of Duty Drawback, VAT & CST refund, CENVAT credit wherever made applicable.

(b) Cost in relation to finished goods comprises of cost of materials, excise duty, production overheads and depreciation.

(c) Work in process is valued at raw material cost plus conversion cost depending upon the stage of completion.

(d) The material/finished goods despatched from the factory but lying at port pending shipment are taken as a part of finished goods stock.

5) Investments

(a) Investments are stated at cost.

(b) Dividend income is accounted when the right to receive is established.

6) Fixed Assets

Fixed Assets are stated at cost net of CENVAT/VAT credit availed and includes amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All costs, including financing cost till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations directly attributable to the fixed assets are capitalized.

7) Depreciation

(a) (i) Depreciation on Plant & Machinery (other than Computers and Office Equipments),

Electric Installations and Power Plant is provided on Straight Line Method (SLM) considering estimated useful life of 13 years.

(ii) Depreciation on other Fixed Assets is provided at the rates specified in Schedule XIV to the Companies Act, 1956 on Straight Line Method.

(b) Depreciation on Fixed Assets for trial run period is not charged.

8) Prior Period Items

Prior period items including adjustment/Claims, arisen / settled / noted during the year are debited / credited to the respective heads of account, if not material in the nature.

9) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of Fixed Assets are capitalized as part of the cost of such assets for the period prior to commencement of commercial production or installation. All other costs are charged to revenue.

10) Government Grants, Subsidy & incentives

(a) Interest subsidy received or receivable on Term Loans taken under TUF Scheme is recognized on accrual basis and reduced from the Financial Expenses. The TUF benefits attributable to the acquisition/installation of Fixed Assets till the commencement of commercial production are netted against the cost of fixed assets.

(b) Duty Drawback, Sales Tax refunds and other incentives are reduced from the cost of respective assets/ purchases.

11) Foreign Currency Transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transactions. Foreign currency assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end. Exchange rate differences are dealt with in the Profit and Loss statement except those relating to the acquisition of fixed assets, which are adjusted to the cost of the assets.

12) Financial Derivatives

Foreign Currency Derivative contracts are accounted for on the date of their settlement and realized gain/loss in respect of settled contracts are recognized in the Profit and Loss Account, except where they relate to borrowings attributable to the acquisition of fixed assets, in that case they are adjusted to the carrying cost of the assets.

13) CENVAT

(a) The purchase cost of raw materials and other expenses has been considered net of CENVAT available on inputs.

(b) The CENVAT benefits attributable to acquisition/installation of fixed assets are netted off against the cost of fixed assets.

(c) CENVAT is accounted for on the basis of payments made in respect of goods cleared and provision is made for goods lying in Stock, if applicable and the same is treated as part of the cost of respective Stock

14) Research & Development

Revenue expenditure on Research and Development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as addition to fixed assets.

15) Retirement Benefits

The company''s contribution to Provident and other funds are charged to Profit & Loss Statement. The liability for gratuity is provided on the basis of actuarial valuation and leave encashment liability on actual basis.

16) Provision for Current and Deferred Tax

a) Provision for Current Income Tax is made after considering Mat Credit entitlement, exemptions and deductions available under the Income Tax Act, 1961.

b) Deferred Tax Liability resulting from timing differences between book and tax profit is accounted for by using the tax rates and laws that are enacted or substantially enacted as on Balance Sheet date. The deferred tax assets is recognized and carried forward only to extent that there is a reasonable certainty that the assets will be realized in future.

17) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit and loss statement 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.

18) Deferred Revenue Expenditure

The Company does not recognize any Deferred Revenue Expenditure.

19) Provisions and Contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Provisions except gratuity benefits are not discounted to its present value and are determined based on best estimate of the expenditure 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 estimate. A contingent liability is disclosed unless the possibility of an out flow of resources embodying economic benefit is remote. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2013

1) Basis for preparation of Financial Statement

(a) The financial statements have been prepared under the historical cost convention and on the principles of going concern in accordance with Indian Generally Accepted Accounting Principles, applicable Accounting Standards and provisions of the Companies Act, 1956.

(b) Accounting policies, not specifically referred to, are consistent with Generally Accepted Accounting Principles.

2) Revenue Recognition :

(a) Sales are recognised when goods are supplied and effective control of goods associated with ownership is transferred to the buyer. Sales are recorded net of Sales Tax, return, discounts and rebates but including Excise Duties.

(b) Foreign exchange differences relating to sales are included in Revenue from operation.

(c) Other Income and Incentives/Benefits are accounted for on accrual basis.

(d) Claims lodged with insurance companies are accounted and credited to the relevant head when recognized by the insurance company.

(e) Inter-divisional sales comprising of sale of power for captive use is reduced from gross turnover in arriving net turnover.

3) Expenditure

(a) Expenses are accounted for on accrual basis and provisions are made for all known losses and liabilities.

(b) Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with reasonable accuracy.

4) Inventory

Inventories are valued at cost or net realisable value, whichever is lower. The cost in respect of various items of inventory is computed as under :- (a) Cost of raw materials and stores include duties, taxes, freight and other expenses and are net of Duty Drawback, VAT & CST refund, CENVAT credit wherever made applicable.

(b) Cost in relation to finished goods comprises of cost of materials, excise duty, production overheads and depreciation.

(c) Work in process is valued at raw material cost plus conversion cost depending upon the stage of completion.

(d) The material/finished goods despatched from the factory but lying at port pending shipment are taken as a part of finished goods stock.

5) Investments

(a) Investments are stated at cost.

(b) Dividend income is accounted when the right to receive is established.

6) Fixed Assets

Fixed Assets are stated at cost net of CENVAT/VAT credit availed and includes amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All costs, including financing cost till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

7) Depreciation

(a) (i) Depreciation on Plant & Machinery (other than Computers and Office Equipments), Electric

Installations and Power Plant is provided on Straight Line Method (SLM) considering estimated useful life of 13 years. (ii) Depreciation on other Fixed Assets is provided at the rates specified in Schedule XIV to the Companies Act, 1956 on Straight Line Method.

(b) Depreciation on Fixed Assets for trial run period is not charged.

8) Prior Period Items

Prior period items including adjustment/Claims, arisen / settled / noted during the year are debited / credited to the respective heads of account, if not material in the nature.

9) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of Fixed Assets are capitalized as part of the cost of such assets for the period prior to commencement of commercial production or installation. All other costs are charged to revenue.

10) Government Grants, Subsidy & incentives

(a) Interest subsidy received or receivable on Term Loans taken under TUF Scheme is recognized on accrual basis and reduced from the Financial Expenses. The TUF benefits attributable to the acquisition/ installation of Fixed Assets till the commencement of commercial production are netted against the cost of fixed assets.

(b) Duty Drawback, Sales Tax refunds and other incentives are reduced from the cost of respective assets/ purchases.

11) Foreign Currency Transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transactions. Foreign currency assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end. Exchange rate differences are dealt with in the Profit and Loss statement except those relating to the acquisition of fixed assets, which are adjusted to the cost of the assets.

12) Financial Derivatives

Foreign Currency Derivative contracts are accounted for on the date of their settlement and realized gain/loss in respect of settled contracts are recognized in the Profit and Loss Account, except where they relate to borrowings attributable to the acquisition of fixed assets, in that case they are adjusted to the carrying cost of the assets..

13) CENVAT

(a) The purchase cost of raw materials and other expenses has been considered net of CENVAT available on inputs.

(a) The CENVAT benefits attributable to acquisition/installation of fixed assets are netted off against the cost of fixed assets.

(a) CENVAT is accounted for on the basis of payments made in respect of goods cleared and provision is ade for goods lying in Stock, if applicable and the same is treated as part of the cost of respective

Stock

14) Research & Development

Revenue expenditure on Research and Development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as addition to fixed assets.

15) Retirement Benefits

The company''s contribution to Provident and other funds are charged to Profit & Loss Statement. The liability for gratuity is provided on the basis of actuarial valuation and leave encashment liability on actual basis.

16) Provision for Current and Deferred Tax

a) Provision for Current Income Tax is made after considering exemptions and deductions available under the Income Tax Act, 1961.

b) Deferred Tax Liability resulting from timing differences between book and tax profit is accounted for by using the tax rates and laws that are enacted or substantially enacted as on Balance Sheet date. The deferred tax assets is recognized and carried forward only to extent that there is a reasonable certainty that the assets will be realized in future.

17) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit and loss account 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.

18) Deferred Revenue Expenditure

The Company does not recognize any Deferred Revenue Expenditure.

19) Provisions and Contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Provisions except in respect of employee benefits are not discounted to its present vale and are determined based on best estimate of the expenditure 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 estimate. A contingent liability is disclosed unless the possibility of an out flow of resources embodying economic benefit is remote. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2012

1) Basis for preparation of Financial Statement

(a) The financial statements have been prepared under the historical cost convention and on the principles of going concern in accordance with Indian Generally Accepted Accounting Principles, applicable Accounting Standards and provisions of the Companies Act, 1956.

(b) Accounting policies, not specifically referred to, are consistent with Generally Accepted Accounting Principles.

2) Revenue Recognition :

(a) Sales are recognised when goods are supplied and effective control of goods associated with ownership is transferred to the buyer. Sales are recorded net of Sales Tax, return, discounts and rebates but including Excise Duties.

(b) Foreign exchange differences relating to sales are included in Revenue from operation.

(c) Other Income and Incentives/Benefits are accounted for on accrual basis.

(d) Claims lodged with insurance companies are accounted and credited to the relevant head when recognized by the insurance company.

(e) Inter-divisional sales comprising of sale of power for captive use is reduced from gross turnover in arriving net turnover.

3) Expenditure

(a) Expenses are accounted for on accrual basis and provisions are made for all known losses and liabilities.

(b) Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with reasonable accuracy.

4) Inventory

Inventories are valued at cost or net realisable value, whichever is lower. The cost in respect of various items of inventory is computed as under

(a) Cost of raw materials and stores include duties, taxes, freight and other expenses and are net of Duty Drawback, VAT & CST refund, CENVAT credit wherever made applicable.

(b) Cost in relation to finished goods comprises of cost of materials, excise duty, production overheads and depreciation.

(c) Work in process is valued at raw material cost plus conversion cost depending upon the stage of completion.

(d) The material/finished goods despatched from the factory but lying at port pending shipment are taken as a part of finished goods stock.

5) Investments

(a) Investments are stated at cost.

(b) Dividend income is accounted when the right to receive is established.

6) Fixed Assets

Fixed Assets are stated at cost net of CENVAT/VAT credit availed and includes amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All costs, including financing cost till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

7) Depreciation

(a) (i) Depreciation on Plant & Machinery (other than Computers and Office Equipments), Electric Installations and Power Plant is provided on Straight Line Method (SLM) considering estimated useful life of 13 years.

(ii) Depreciation on other Fixed Assets is provided at the rates specified in Schedule XIV to the Companies Act, 1956 on Straight Line Method.

(b) Depreciation on Fixed Assets for trial run period is not charged.

8) Prior Period Items

Prior period items including adjustment/Claims, arisen / settled / noted during the year are debited / credited to the respective heads of account, if not material in the nature.

9) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of Fixed Assets are capitalized as part of the cost of such assets for the period prior to commencement of commercial production or installation. All other costs are charged to revenue.

10) Government Grants, Subsidy & incentives

(a) Interest subsidy received or receivable on Term Loans taken under TUF Scheme is recognized on accrual basis and reduced from the Financial Expenses. The TUF benefits attributable to the acquisition/installation of Fixed Assets till the commencement of commercial production are netted against the cost of fixed assets.

(b) Duty Drawback, Sales Tax refunds and other incentives are reduced from the cost of respective assets/ purchases.

11) Foreign Currency Transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transactions. Foreign currency assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end. Exchange rate differences are dealt with in the Profit and Loss statement except those relating to the acquisition of fixed assets, which are adjusted to the cost of the assets.

12) Financial Derivatives

Foreign Currency Derivative contracts are accounted for on the date of their settlement and realized gain/loss in respect of settled contracts are recognized in the Profit and Loss Account, except where they relate to borrowings attributable to the acquisition of fixed assets, in that case they are adjusted to the carrying cost of the assets.

13) CENVAT

(a) The purchase cost of raw materials and other expenses has been considered net of CENVAT available on inputs.

(b) The CENVAT benefits attributable to acquisition/installation of fixed assets are netted off against the cost of fixed assets.

(c) CENVAT is accounted for on the basis of payments made in respect of goods cleared and provision is made for goods lying in Stock, if applicable and the same is treated as part of the cost of respective Stock

14) Research & Development

Revenue expenditure on Research and Development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as addition to fixed assets.

15) Retirement Benefits

The company's contribution to Provident and other funds are charged to Profit & Loss Statement. The liability for gratuity is provided on the basis of actuarial valuation and leave encashment liability on actual basis.

16) Provision for Current and Deferred Tax

a) Provision for Current Income Tax is made after considering exemptions and deductions available under the Income Tax Act, 1961.

b) Deferred Tax Liability resulting from timing differences between book and tax profit is accounted for by using the tax rates and laws that are enacted or substantially enacted as on Balance Sheet date. The deferred tax assets is recognized and carried forward only to extent that there is a reasonable certainty that the assets will be realized in future.

17) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit and loss account 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.

18) Deferred Revenue Expenditure

The Company does not recognize any Deferred Revenue Expenditure.

19) Provisions and Contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Provisions except in respect of employee benefits are not discounted to its present vale and are determined based on best estimate of the expenditure 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 estimate. A contingent liability is disclosed unless the possibility of an out flow of resources embodying economic benefit is remote. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2011

1) Basis for preparation of Financial Statement

(a) The financial statements have been prepared under the historical cost convention and on the principles of going concern in accordance with Indian Generally Accepted Accounting Principles, applicable Accounting Standards and provisions of the Companies Act, 1956.

(b). Accounting policies, not specifically referred to, are consistent with Generally Accepted Accounting Principles.

2) Revenue Recognition :

(a) Sales are recognised when goods are supplied and effective control of goods associated with ownership is transferred to the buyer. Sales are recorded net of Sales Tax, return, discounts and rebates but including Excise Duties. Sale of surplus Power is also recognized as sales.

(b) Other Income and Incentives/Benefits are accounted for on accrual basis.

(c) Claims lodged with insurance companies are accounted and credited to the relevant head when recognized by the insurance company.

(d) Inter-divisional sales comprising of sale of power for captive use is reduced from gross turnover in arriving net turnover.

3) Expenditure

(a) Expenses are accounted for on accrual basis and provisions are made for all known losses and liabilities.

(b) Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with reasonable accuracy.

4) Inventory

Inventories are valued at cost or net realisable value, whichever is lower. The cost in respect of various items of inventory is computed as under :- (a) Cost of raw materials and stores include duties, taxes, freight and other expenses and are net of Duty

Drawback, VAT & CST refund, CENVAT credit wherever made applicable. The cost is determined on FIFO basis.

(b) Cost in relation to finished goods comprises of cost of materials, excise duty, production overheads and depreciation.

(c) Work in process is valued at raw material cost plus conversion cost depending upon the stage of completion.

(d) The material/finished goods despatched from the factory but lying at port pending shipment are taken as a part of finished goods stock.

5) Investments

(a) Investments are stated at cost.

(b) Dividend income is accounted when the right to receive is established.

6) Fixed Assets

Fixed Assets are stated at cost net of CENVAT/VAT credit availed and includes amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All costs, including financing cost till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

7) Depreciation

(a) (i) Depreciation on Plant & Machinery (other than Computers and Office Equipments), Electric Installations and Power Plant is provided on Straight Line Method (SLM) considering estimated useful life of 13 years. Earlier the same was provided on the basis of rate applicable to Continuous Process Plant on SLM as provided in Schedule XIV. (ii) Depreciation on other Fixed Assets is provided at the rates specified in Schedule XIV to the Companies Act, 1956 on Straight Line Method.

(b) Depreciation on Fixed Assets for trial run period is not charged.

8) Prior year Adjustments

Earlier year items, adjustment/Claims, arisen / settled / noted during the year are debited / credited to the respective heads of account being not material in the nature.

9) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of Fixed Assets are capitalized as part of the cost of such assets for the period prior to commencement of commercial production or installation. All other costs are charged to revenue.

10) Government Grants, Subsidy & incentives

(a) Interest subsidy received or receivable on Term Loans taken under TUF Scheme is recognized on accrual basis and reduced from the Financial Expenses. The TUF benefits attributable to the acquisition/installation of Fixed Assets till the commencement of commercial production are netted against the cost of fixed assets.

(b) Duty Drawback, Sales Tax refunds and other incentives are reduced from the cost of respective assets/ purchases.

11) Foreign Currency Transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transactions. Foreign currency assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end. Exchange rate differences are dealt with in the Profit and Loss account except those relating to the acquisition of fixed assets, which are adjusted to the cost of the assets.

12) Financial Derivatives

Foreign Currency Derivative contracts are accounted for on the date of their settlement and realized gain/ loss in respect of settled contracts are recognized in the Profit and Loss Account, except where they relate to borrowings attributable to the acquisition of fixed assets, in that case they are adjusted to the carrying cost of the assets.

13) CENVAT

(a) The purchase cost of raw materials and other expenses has been considered net of CENVAT available on inputs.

(b) The CENVAT benefits attributable to acquisition/installation of fixed assets are netted off against the cost of fixed assets in accordance with the Guidance Note issued by the Institute of Chartered Accountants of India.

14) Excise Duty

Excise Duty is accounted for on the basis of payments made in respect of goods cleared and provision is made for goods lying in Stock and the same is treated as part of the cost of respective Stock

15) Research & Development

Revenue expenditure on Research and Development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as addition to fixed assets.

16) Retirement Benefits

The company's contribution to Provident and other funds are charged to Profit & Loss Account. The liability for gratuity is provided on the basis of actuarial valuation and leave encashment liability on actual basis.

17) Provision for Current and Deferred Tax

a) Provision for Current Income Tax is made after considering exemptions and deductions available under the Income Tax Act,1961.

b) Deferred Tax Liability resulting from timing differences between book and tax profit is accounted for by using the tax rates and laws that are enacted or substantially enacted as on Balance Sheet date. The deferred tax assets is recognized and carried forward only to extent that there is a reasonable certainty that the assets will be realized in future.

18) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit and loss account 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.

19) Deferred Revenue Expenditure

The Company does not recognize any Deferred Revenue Expenditure.

20) Provisions and Contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Provisions except in respect of employee benefits are not discounted to its present value and are determined based on best estimate of the expenditure 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 estimate. A contingent liability is disclosed unless the possibility of an out flow of resources embodying economic benefit is remote. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2010

1) Basis for preparation of Financial Statement

(a) The financial statements have been prepared under the historical cost convention and on the principles of going concern in accordance with Generally Accepted Accounting Principles, applicable Accounting Standards and provisions of the Companies Act, 1956.

(b) Accounting policies, not specifically referred to, are consistent with Generally Accepted Accounting Principles.

2) Use of Estimates

The presentation of financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions that affect the reported amount of assets and liabilities on the date of the 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.

3) Revenue Recognition :

(a) Sales are recognised when goods are supplied and effective control of goods associated with ownership is transferred to the buyer. Sales are recorded net of Sales Tax, return, discounts and rebates but including Excise Duties and exchange fluctuations. Sale of surplus Power is also recognized as sales.

(b) Other Income and Incentives/Benefits are accounted for on accrual basis.

(c) Claims lodged with insurance companies are accounted and credited to the relevant head when recognized by the insurance company.

(d) Inter-divislonal sales comprising of sale of power for captive use is reduced from gross turnover in arriving net turnover.

4) Expenditure

(a) Expenses are accounted for on accrual basis and provisions are made for all known losses and liabilities.

(b) Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with reasonable accuracy.

5) Inventory

Inventories are valued at cost or net realisable value, whichever is lower. The cost in respect of various items of inventory is computed as under :-

(a) Cost of raw materials and stores include duties, taxes, freight and other expenses and are net of Duty Drawback, VAT & CST refund, CENVAT credit wherever made applicable. The cost is determined on FIFO basis.

(b) Cost in relation to finished goods comprises of cost of materials, excise duty, production overheads and depreciation.

(c) Work in process, at raw material cost plus conversion cost depending upon the stage of completion.

(d) The material/finished goods despatched from the factory but lying at port pending shipment are taken as a part of finished goods stock.

6) Investments

(a) Investments are stated at cost.

(b) Dividend income is accounted when the right to receive is established.

7) Fixed Assets

Fixed Assets are stated at cost net of CENVAT/VAT credit availed and includes amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All costs, including financing cost till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

8) Depreciation

(a) (i) Depreciation on Plant & Machinery, Electric Installations, 10.50 MW Thermal Power Plant and 7.67 MW F.O. Power Plant is provided on the rates applicable to Continuous Process Plant - Straight Line Method as provided in Schedule XTV to the Companies Act, 1956. (ii) Depreciation on other Fixed Assets is provided at the rates specified in Schedule XIV to the Companies Act, 1956 on Straight Line Method.

(b) Depreciation on Fixed Assets for trial run period has not been charged.

9) Prior year Adjustments

Earlier year items, adjustment/Claims, arisen / settled / noted during the year are debited / credited to the respective heads of account being not material in the nature.

10) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of Fixed Assets are capitalized as part of the cost of such assets for the period prior to commencement of commercial production or installation. All other costs are charged to revenue.

11) Government Grants, Subsidy & incentives

(a) Interest subsidy received or receivable on Term Loans taken under TUF Scheme is recognized on accrual basis and reduced from the Financial Expenses. The TUF benefits attributable to the acquisition/installation of Fixed Assets till the commencement of commercial production are netted against the cost of fixed assets.

(b) Duty Drawback, Sales Tax refunds and other incentives are reduced from the cost of respective assets/ purchases.

12) Foreign Currency Transactions

Foreign currency assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end. Exchange rate differences are dealt with in the Profit and Loss account except those relating to the acquisition of fixed assets, which are adjusted to the cost of the assets.

13) Financial derivatives

Foreign Currency Derivative contracts are accounted on the date of their settlement and realized gain/loss in respect of settled contracts are recognized in the Profit and Loss Account, except where they relate to borrowings attributable to the acquisition of fixed assets, in that case they are adjusted to the carrying cost of the assets.

14) CENVAT / Duty Drawback

(a) The purchase cost of raw materials and other expenses has been considered net of CENVAT available on inputs.

(b) The CENVAT benefits attributable to acquisition/installation of fixed assets are netted off against the cost of fixed assets in accordance with the Guidance Note issued by the Institute of Chartered Accountants of India.

15) Excise Duty

Excise Duty is accounted for on the basis of payments made in respect of goods cleared and provision is made for goods lying in Stock and the same is treated as part of the cost of respective Stock

16) Research & Development

Revenue expenditure on Research and Development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as addition to fixed assets.

17) Retirement Benefits

The companys contribution to Provident and other funds are charged to Profit & Loss Account. The liability for gratuity is provided on the basis of actuarial valuation and leave encashment liability on actual basis.

18) Provision for Current and Deferred Tax

(a) Provision for Current Income Tax is made after considering exemptions and deductions available under the Income Tax Act, 1961.

(b) Deferred Tax Liability resulting from timing differences between book and tax profit is accounted for by using the tax rates and laws that are enacted or substantially enacted as on Balance Sheet date. The deferred tax assets is recognized and carried forward only to extent that there is a reasonable certainty that the assets will be realized in future.

19) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit and loss account 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.

20) Deferred Revenue Expenditure

The Company does not recognize any Deferred Revenue Expenditure.

21) Provisions and Contingencies

Provision is recognized when the company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions except in respect of employee benefits are not discounted to its present vale and are determined based on best estimate of the expenditure 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 estimate. A contingent liability is disclosed unless the possibility of an out flow of resources embodying economic benefit is remote.

 
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