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Accounting Policies of Raj Rayon Industries Ltd. Company

Mar 31, 2015

1. Basis of Preparation of Financial Statements

a) These financial statements have been prepared to comply with the Generally Accepted Accounting Principles in India, including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.

b) The financial statements are prepared on accrual basis under the historical cost convention. The financial statements are presented in Indian rupees.

2. Use of Estimates

The preparation of financial statements requires judgements, estimates and assumptions to be made that affect the reported amount of assets liabilities, disclosure of contingent 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 recognised in the period in which the results are known/ materialised.

3. Tangible and Intangible Fixed assets

a) Tangible fixed assets

i) Fixed Assets are stated at cost net of CENVAT / VAT wherever applicable and less accumulated depreciation. Cost comprises of Purchase Price and attributable Cost. The Preoperative expenses are capitalised.

ii) Expenditure (including financing costs) incurred for fixed assets, the construction/installation/acquisition of which is not completed up to the year end is included under the capital work-in-progress and on such completion the same is related/classified to the respective fixed assets.

b) Intangible fixed asset

i) Software licenses are stated at cost of acquisition including any cost attributable bringing the asset to its working condition, less accumulated amortisation. Any expenses on such software licenses for support and maintenance payable annually are charged to the Statement of Profit and Loss.

4. Investments

a) Investments are classified into Non Current and Current Investments.

b) Non Current investments are being valued at cost of acquisition. Provision is made to recognize a decline, other than temporary, in the carrying amount of long term investments.

c) Current investments are being valued at cost or market value whichever is lower.

5. Depreciation/Amortisation

a) Depreciation on fixed assets is being provided on "Straight line method" in accordance with Companies Act 2013 as per the useful life specified in schedule II of the act till the written down value is reduced to 5% of the gross value being Residual value. No further depreciation is provided on such balance.

b) Depreciation in respect of addition to the fixed assets is provided on Pro-rata basis from the month in which such assets are acquired/installed/started commercial production.

c) Depreciation on fixed assets sold, discarded or demolished during the year is being provided at their respective rates up to the month in which such assets are sold, discarded or demolished.

d) The provision for depreciation for multiple shifts, wherever applicable, as per records, and as advised, has been made on the basis of the actual utilisation of respective eligible assets.

6. Inventories

a) Valuation of inventories is inclusive of taxes or duties incurred and on FIFO basis except otherwise stated.

b) Raw materials and Work in progress are being valued at cost or net realisable value whichever is lower.

c) Stores, Spares and Tools are being valued at weighted average cost.

d) Goods in Transit, if any, are stated at actual cost up to the date of the Balance Sheet.

e) Finished Stocks are being valued at direct cost or net realisable values whichever is lower.

7. Sales

Sales are inclusive of excise duty; however, in conformity with the requirements of Accounting Standard 9 "Recognition of Revenue" the sales are presented in the financial statements as sales less excise duty. Sales exclude sales tax and value added tax discount, claims, and shortage. The commission, brokerage and incentives are recognised as an expense for the sales. Transportation and marine insurance recovered from customers are reduced from the respective expenses.

8. Retirement and other benefits to employees

a) Employees' benefit under defined contribution plan such as contribution to provident fund and employees' benefits under defined benefit plan for leave encashment are charged off at the undiscounted amount in the year in which the related service provided.

b) Post employment benefits under defined benefit plan such as gratuity are charged off in the year in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and/or losses in respect of post employment benefits are charged to Statement of Profit and Loss or capitalised in case of new projects are taken up by the company.

9. Prior period income / expenses

The company follows the practice of making adjustments through "Prior Period items" in respect of all material transaction pertaining to the period prior to current accounting period/year.

10. Income from investments

Incomes from Investments, where appropriate, are taken into revenue in full on declaration or receipt and tax deducted at source thereon is treated as advance tax.

11. Contingent liabilities

Contingent liabilities are not recognised but are disclosed by way of notes to accounts. Disputed demands in respect of Central Excise, Customs, Income Tax and other proceedings etc. are disclosed as contingent liabilities. Payments in respect of such demands, if any, are shown as advance till the final disposal of the matters.

12. Excise duty

a) CENVAT credit available as per the provisions of the Excise Rules on raw material, packing material, etc purchased, is accounted for by reducing the cost of the respective items.

b) Excise duty payable on finished goods lying at the factory premises at the close of the year is provided in the books as per the Excise Rules.

c) CENVAT credit available as per the provisions of the Excise Rules on capital goods is accounted for by reducing the cost of capital goods.

13. Leases

The present value of the lease payments is recognised as an asset with a corresponding liability. Annual lease payments are allocated into financial charge and also principal repayment. The financial charge is charged to the Statement of Profit and Loss and the portion of the principal amount paid is deducted from the liability. The depreciation is also charged to Statement of Profit and Loss on the assets taken on finance lease.

14. Taxes on income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, on timing differences, being the difference between taxable incomes and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

Minimum Alternative Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax against which the MAT paid will be adjusted.

15. Segment reporting

Segments have been identified in line with the AS-17, taking into account the organisational structure as well as the differing risks and returns. The business segment is disclosed as primary segment.

16. Borrowing costs

The company capitalises interest and other costs incurred by it in connection with funds borrowed for the acquisition of fixed assets. Where specific borrowings are identified to a fixed asset or a new unit, the company uses the interest rates applicable to that specific borrowing as the capitalisation rate. Capitalisation of borrowing costs ceases when all the activities necessary to prepare the fixed assets for their intended use are substantially complete or the fixed assets are put to use. Other borrowing costs are charged to Statement of Profit and Loss.

17. Transaction in Foreign Currencies

a) Initial Reorganisation:

Transactions denominated in foreign currencies are recorded by applying the exchange rates prevailing at the date of the transactions.

b) Conversion:

Monetary items denominated in foreign currencies remaining unsettled at the end of the year, are restated using the closing rates.

c) Exchange Difference:

The exchange difference arising on the settlement of monetary items or on reporting unsettled monetary items at the rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognised as income or as expenses in the year in which they arise.

In case the monetary items are covered by the forward exchange contracts, the difference between the yearend exchange rate and the exchange rate at the date of the inception of the forward exchange contract is recognised as exchange difference.

d) Forward Exchange Contracts:

In case of transactions covered by forward exchange contracts, which are not intended for trading or speculation purposes, the premium/discount represented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract is amortised as expense or income over the life of the contract.

Exchange differences on such contracts are recognised in the statement of Profit and Loss in the year in which the exchange rate changes.

Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

In case of transactions covered by forward exchange contracts, which are intended for trading or speculation purposes, the premium/discount is ignored and at each balance sheet date, the value of the contract is marked to its market value and gain/ loss on the contract is recognised.

e) Non-monetary foreign currency items such as investments are carried at cost.

18. Impairment loss

Impairment loss is provided to the extent the carrying amount(s) of assets exceed their recoverable amount(s). Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flow expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm length transaction between knowledgeable, willing parties, less the cost of disposal.

19. Cash and Cash equivalents

Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.


Mar 31, 2014

1. System of accounting

a) The financial statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles in India and the provisions of the Companies Act, 1956 following the mercantile system of accounting and recognising income and expenditure on accrual basis.

b) The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known or materialised.

2. Presentation and disclosure of financial statements

a) The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3c) of the Companies Act, 1956 and the relevant provisions thereof.

b) 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 Revised Schedule VI to the Companies Act, 1956.

c) Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.

3. Tangible and Intangible Fixed assets

a) Tangible fixed assets are stated at cost of acquisition including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. The Preoperative expenses / Trial run expenses (net of revenue) are capitalised.

b) Intangible fixed asset comprising software licenses are stated at cost of acquisition including any cost attributable bringing the asset to its working condition, less accumulated amortisation. Any expenses on such software licenses for support and maintenance payable annually are charged to the Statement of Profit and Loss.

4. Investments

a) Investments are classified into Non Current and Current Investments.

b) Non Current investments are being valued at cost of acquisition. Provision is made to recognize a decline, other than temporary, in the carrying amount of long term investments.

c) Current investments are being valued at cost or market value whichever is lower.

5. Depreciation/Amortisation

a) No depreciation is provided for leasehold land and freehold land

b) Depreciation on fixed assets is being provided on "Straight line method" basis at the rates specified in

Schedule XIV to the Companies Act, 1956 till the written down value is reduced to 5% of the gross value being minimum fetchable value. No further depreciation is provided on such balance.

c) Depreciation in respect of addition to the fixed assets is provided on Pro-rata basis from the month in which such assets are acquired/installed/started commercial production.

d) Depreciation on fixed assets sold, discarded or demolished during the year is being provided at their respective rates up to the month in which such assets are sold, discarded or demolished.

e) The provision for depreciation for multiple shifts, wherever applicable, as per records, and as advised, has been made on the basis of the actual utilisation of respective eligible assets.

6. Inventories

a) Valuation of inventories is inclusive of taxes or duties incurred and on FIFO basis except otherwise stated.

b) Raw materials and Work in progress are being valued at cost or net realisable value whichever is lower.

c) Stores, Spares and Tools are being valued at weighted average cost.

d) Goods in Transit, if any, are stated at actual cost up to the date of the Balance Sheet.

e) Finished Stocks are being valued at direct cost or net realisable values whichever is lower.

7. Sales

Sales are inclusive of excise duty; however, in conformity with the requirements of Accounting Standard 9 "Recognition of Revenue" the sales are presented in the financial statements as sales less excise duty. Sales exclude sales tax and value added tax discount, claims, and shortage. The commission, brokerage and incentives are recognised as an expense for the sales. Transportation and marine insurance recovered from customers are reduced from the respective expenses.

8. Retirement and other benefits to employees:

(a) Employees'' benefit under defined contribution plan such as contribution to provident fund and employees'' benefits under defined benefit plan for leave encashment are charged off at the undiscounted amount in the year in which the related service provided.

(b) Post employment benefits under defined benefit plan such as gratuity are charged off in the year in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and/or losses in respect of post employment benefits are charged to Statement of Profit and Loss or capitalised in case of new projects are taken up by the company.

9. Prior period income / expenses

The company follows the practice of making adjustments through "Prior Period items" in respect of all material transaction pertaining to the period prior to current accounting period/year.

10. Income from investments

Incomes from Investments, where appropriate, are taken into revenue in full on declaration or receipt and tax deducted at source thereon is treated as advance tax.

11. Contingent liabilities

Contingent liabilities are not recognised but are disclosed by way of notes to accounts. Disputed demands in respect of Central Excise, Customs, Income Tax and other proceedings etc. are disclosed as contingent liabilities. Payments in respect of such demands, if any, are shown as advance till the final disposal of the matters.

12. Excise duty

a) CENVAT credit available as per the provisions of the Excise Rules on raw material, packing material, etc purchased, is accounted for by reducing the cost of the respective items.

b) Excise duty payable on finished goods lying at the factory premises at the close of the year is provided in the books as per the Excise Rules.

c) CENVAT credit available as per the provisions of the Excise Rules on capital goods is accounted for by reducing the cost of capital goods.

13. Leases

The present value of the lease payments is recognised as an asset with a corresponding liability. Annual lease payments are allocated into financial charge and also principal repayment. The financial charge is charged to the Statement of Profit and Loss and the portion of the principal amount paid is deducted from the liability. The depreciation is also charged to Statement of Profit and Loss on the assets taken on finance lease.

14. Taxes on income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, on timing differences, being the difference between taxable incomes and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

Minimum Alternative Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax against which the MAT paid will be adjusted.

15. Segment reporting

Segments have been identified in line with the AS-17, taking into account the organisational structure as well as the differing risks and returns. The business segment is disclosed as primary segment.

16. Borrowing costs

The company capitalises interest and other costs incurred by it in connection with funds borrowed for the acquisition of fixed assets. Where specific borrowings are identified to a fixed asset or a new unit, the company uses the interest rates applicable to that specific borrowing as the capitalisation rate. Capitalisation of borrowing costs ceases when all the activities necessary to prepare the fixed assets for their intended use are substantially complete or the fixed assets are put to use. Other borrowing costs are charged to Statement of Profit and Loss.

17. Transaction in Foreign Currencies a) Initial Reorganisation:

Transactions denominated in foreign currencies are

recorded by applying the exchange rates prevailing at the date of the transactions.

b) Conversion:

Monetary items denominated in foreign currencies remaining unsettled at the end of the year, are restated using the closing rates.

c) Exchange Difference:

The exchange difference arising on the settlement of monetary items or on reporting unsettled monetary items at the rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognised as income or as expenses in the year in which they arise.

In case the monetary items are covered by the forward exchange contracts, the difference between the yearend exchange rate and the exchange rate at the date of the inception of the forward exchange contract is recognised as exchange difference.

d) Forward Exchange Contracts:

In case of transactions covered by forward exchange contracts, which are not intended for trading or speculation purposes, the premium/discount

represented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract is amortised as expense or income over the life of the contract.

Exchange differences on such contracts are recognised in the statement of Profit and Loss in the year in which the exchange rate changes.

Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

In case of transactions covered by forward exchange contracts, which are intended for trading or speculation purposes, the premium/discount is ignored and at each balance sheet date, the value of the contract is marked to its market value and gain/loss on the contract is recognised.

e) Non-monetary foreign currency items such as investments are carried at cost.

18. Impairment loss

Impairment loss is provided to the extent the carrying amount(s) of assets exceed their recoverable amount(s). Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flow expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm length transaction between knowledgeable, willing parties, less the cost of disposal.

19. Cash and Cash equivalents

Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.


Mar 31, 2013

1. System of accountng

a) The fnancial statements have been prepared under the historical cost conventon in accordance with generally accepted accountng principles in India and the provisions of the Companies Act, 1956 following the mercantle system of accountng and recognising income and expenditure on accrual basis.

b) The preparaton of fnancial statements requires estmates and assumptons to be made that afect the reported amounts of assets and liabilites on the date of the fnancial statements and the reported amounts of revenues and expenses during the reportng period. Diference between the actual results and estmates are recognised in the period in which the results are known or materialised.

2. Presentaton and disclosure of fnancial statements

a) The accounts have been prepared to comply in all material aspects with applicable accountng principles in India, the applicable Accountng Standards notfed under Secton 211(3c) of the Companies Act, 1956 and the relevant provisions thereof.

b) All assets and liabilites have been classifed as current or non-current as per the Company''s normal operatng cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956.

c) Based on the nature of products and the tme between acquisiton of assets for processing and their realisaton in cash and cash equivalents, the Company has ascertained its operatng cycle as 12 months for the purpose of current/non-current classifcaton of assets and liabilites.

3. Tangible and Intangible Fixed assets

a) Tangible fxed assets are stated at cost of acquisiton including any cost atributable for bringing the asset to its working conditon, less accumulated depreciaton. The Preoperatve expenses / Trial run expenses (net of revenue) are capitalised.

b) Intangible fxed asset comprising sofware licenses are stated at cost of acquisiton including any cost atributable bringing the asset to its working conditon, less accumulated amortsaton. Any expenses on such sofware licenses for support and maintenance payable annually are charged to the Statement of Proft and Loss.

4. Investments

a) Investments are classifed into Non Current and Current Investments.

b) Non Current investments are being valued at cost of acquisiton. Provision is made to recognize a decline, other than temporary, in the carrying amount of long term investments.

c) Current investments are being valued at cost or market value whichever is lower.

5. Depreciaton/Amortsaton

a) No depreciaton is provided for leasehold land and freehold land.

b) Depreciaton on fxed assets is being provided on "Straight line method" basis at the rates specifed in Schedule XIV to the Companies Act, 1956 tll the writen down value is reduced to 5% of the gross value being minimum fetchable value. No further depreciaton is provided on such balance.

c) Depreciaton in respect of additon to the fxed assets is provided on Pro-rata basis from the month in which such assets are acquired/installed/started commercial producton.

d) Depreciaton on fxed assets sold, discarded or demolished during the year is being provided at their respectve rates up to the month in which such assets are sold, discarded or demolished.

e) The provision for depreciaton for multple shifs, wherever applicable, as per records, and as advised, has been made on the basis of the actual utlisaton of respectve eligible assets.

6. Inventories

a) Valuaton of inventories is inclusive of taxes or dutes incurred and on FIFO basis except otherwise stated.

b) Raw materials and Work in progress are being valued at cost or net realisable value whichever is lower.

c) Stores, Spares and Tools are being valued at weighted average cost.

d) Goods in Transit, if any, are stated at actual cost up to the date of the Balance Sheet.

e) Finished Stocks are being valued at direct cost or net realisable values whichever is lower.

7. Sales

Sales are inclusive of excise duty; however, in conformity with the requirements of Accountng Standard 9 "Recogniton of Revenue" the sales are presented in the fnancial statements as sales less excise duty. Sales exclude sales tax and value added tax discount, claims, and shortage. The commission, brokerage and incentves are recognised as an expense for the sales. Transportaton and marine insurance recovered from customers are reduced from the respectve expenses.

8. Retrement and other benefts to employees

(a) Employees'' beneft under defned contributon plan such as contributon to provident fund and employees'' benefts under defned beneft plan for leave encashment are charged of at the undiscounted amount in the year in which the related service provided.

(b) Post employment benefts under defned beneft plan such as gratuity are charged of in the year in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuaton techniques. Actuarial gain and/or losses in respect of post employment benefts are charged to Statement of Proft and Loss or capitalised in case of new projects are taken up by the company.

9. Prior period income / expenses

The company follows the practce of making adjustments through "Prior Period items" in respect of all material transacton pertaining to the period prior to current accountng period/year.

10. Income from investments

Incomes from Investments, where appropriate, are taken into revenue in full on declaraton or receipt and tax deducted at source thereon is treated as advance tax.

11. Contngent liabilites

Contngent liabilites are not recognised but are disclosed by way of notes to accounts. Disputed demands in respect of Central Excise, Customs, Income Tax and other proceedings etc. are disclosed as contngent liabilites. Payments in respect of such demands, if any, are shown as advance tll the fnal disposal of the maters.

12. Excise duty

a) CENVAT credit available as per the provisions of the Excise Rules on raw material, packing material, etc purchased, is accounted for by reducing the cost of the respectve items.

b) Excise duty payable on fnished goods lying at the factory premises at the close of the year is provided in the books as per the Excise Rules.

c) CENVAT credit available as per the provisions of the Excise Rules on capital goods is accounted for by reducing the cost of capital goods.

13. Leases

The present value of the lease payments is recognised as an asset with a corresponding liability. Annual lease payments are allocated into fnancial charge and also principal repayment. The fnancial charge is charged to the Statement of Proft and Loss and the porton of the principal amount paid is deducted from the liability. The depreciaton is also charged to Statement of Proft and Loss on the assets taken on fnance lease.

14. Taxes on income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, on tming diferences, being the diference between taxable incomes and accountng income that originate in one year and are capable of reversal in one or more subsequent years.

Minimum Alternatve Tax (MAT) paid in accordance with the tax laws, which gives future economic benefts in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax against which the MAT paid will be adjusted.

15. Segment reportng

Segments have been identfed in line with the AS-17, taking into account the organisatonal structure as well as the difering risks and returns. The business segment is disclosed as primary segment.

16. Borrowing costs

The company capitalises interest and other costs incurred by it in connecton with funds borrowed for the acquisiton of fxed assets. Where specifc borrowings are identfed to a fxed asset or a new unit, the company uses the interest rates applicable to that specifc borrowing as the capitalisaton rate. Capitalisaton of borrowing costs ceases when all the actvites necessary to prepare the fxed assets for their intended use are substantally complete or the fxed assets are put to use. Other borrowing costs are charged to Statement of Proft and Loss.

17. Transacton in Foreign Currencies

a) Inital Reorganisaton:

Transactons denominated in foreign currencies are recorded by applying the exchange rates prevailing at the date of the transactons.

b) Conversion:

Monetary items denominated in foreign currencies remaining unsetled at the end of the year, are restated using the closing rates.

c) Exchange Diference:

The exchange diference arising on the setlement of monetary items or on reportng unsetled monetary items at the rates diferent from those at which they were initally recorded during the year, or reported in the previous fnancial statements, are recognised as income or as expenses in the year in which they arise. In case the monetary items are covered by the forward exchange contracts, the diference between the yearend exchange rate and the exchange rate at the date of the incepton of the forward exchange contract is recognised as exchange diference.

d) Forward Exchange Contracts:

In case of transactons covered by forward exchange contracts, which are not intended for trading or speculaton purposes, the premium/discount represented by diference between the exchange rate at the date of the incepton of the forward exchange contract and forward rate specifed in the contract is amortsed as expense or income over the life of the contract.

Exchange diferences on such contracts are recognised in the statement of Proft and Loss in the year in which the exchange rate changes.

Any proft or loss arising on cancellaton or renewal of forward exchange contract is recognised as income or as expense for the year.

In case of transactons covered by forward exchange contracts, which are intended for trading or speculaton purposes, the premium/discount is ignored and at each balance sheet date, the value of the contract is marked to its market value and gain/ loss on the contract is recognised.

e) Non-monetary foreign currency items such as investments are carried at cost.

18. Impairment loss

Impairment loss is provided to the extent the carrying amount(s) of assets exceed their recoverable amount(s). Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estmated future cash fow expected to arise from the contnuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm length transacton between knowledgeable, willing partes, less the cost of disposal.

19. Cash and Cash equivalents

Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturites of three months or less.


Mar 31, 2012

1. SYSTEM OF ACCOUNTING

a) The financial statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles in India and the provisions of the Companies Act, 1956 following the mercantile system of accounting and recognising income and expenditure on accrual basis.

b) The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known or materialised.

2. PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS

a) The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3c) of the Companies Act, 1956 and the relevant provisions thereof.

b) 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 Revised Schedule VI to the Companies Act, 1956.

c) Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/ non-current classification of assets and liabilities.;

3. TANGIBLE AND INTANGIBLE FIXED ASSETS

a) Tangible fixed assets are stated at cost of acquisition including any cost attributable for bringing the asset to its working condition, less accumulated depreciation.

b) Intangible fixed asset comprising software licenses are stated at cost of acquisition including any cost attributable bringing the asset to its working condition, less accumulated amortisation. Any expenses on such software licenses for support and maintenance payable annually are charged to the Statement of Profit and Loss.

4. INVESTMENTS

a) Investments are classified into Non Current and Current Investments.

b) Non Current investments are being valued at cost of acquisition. Provision is made to recognize a decline, other than temporary, in the carrying amount of long term investments.

c) Current investments are being valued at cost or market value whichever is lower.

5. DEPRECIATION/AMORTISATION

a) No depreciation is provided for leasehold land and freehold land.

b) Depreciation on fixed assets is being provided on "Straight line method" basis at the rates specified in Schedule XIV to the Companies Act, 1956 till the written down value is reduced to 5% of the gross value being minimum fetchable value. No further depreciation is provided on such balance.

c) Depreciation in respect of addition to the fixed assets is provided on pro-rata basis from the month in which such assets are acquired/installed/started commercial production.

d) Depreciation on fixed assets sold, discarded or demolished during the year is being provided at their respective rates up to the month in which such assets are sold, discarded or demolished.

e) The provision for depreciation for multiple shifts, wherever applicable, as per records, and as advised, has been made on the basis of the actual utilisation of respective eligible assets.

6. INVENTORIES

a) Valuation of inventories is inclusive of taxes or duties incurred and on FIFO basis except otherwise stated.

b) Raw materials and Work in progress are being valued at cost or net realisable value whichever is lower.

c) Stores, Spares and Tools are being valued at weighted average cost.

d) Goods in Transit, if any, are stated at actual cost up to the date of the Balance Sheet.

e) Finished Stocks are being valued at direct cost or net realisable values whichever is lower.

7. SALES

Sales are inclusive of excise duty; however, in conformity with the requirements of Accounting Standard 9 "Recognition of Revenue" the sales are presented in the financial statements as sales less excise duty. Sales exclude sales tax and value added tax discount, claims and shortage. The commission, brokerage and incentives are recognised as an expense for the sales. Transportation and marine insurance recovered from customers are reduced from the respective expenses.

8. RETIREMENT AND OTHER BENEFITS TO EMPLOYEES

(a) Employees' benefit under defined contribution plan such as contribution to provident fund and employees' benefits under defined benefit plan for leave encashment are charged off at the undiscounted amount in the year in which the related service provided.

(b) Post employment benefits under defined benefit plan such as gratuity are charged off in the year in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and/or losses in respect of post employment benefits are charged to Statement of Profit and Loss or capitalised in case of new projects are taken up by the company.

9. PRIOR PERIOD INCOME / EXPENSES

The company follows the practice of making adjustments through "Prior Period Items" in respect of all material transaction pertaining to the period prior to current accounting period/year.

10. INCOME FROM INVESTMENTS

Incomes from Investments, where appropriate, are taken into revenue in full on declaration or receipt and tax deducted at source thereon is treated as advance tax.

11. CONTINGENT LIABILITIES

Contingent liabilities are not recognised but are disclosed by way of notes to accounts. Disputed demands in respect of Central Excise, Customs, Income Tax and other proceedings etc. are disclosed as contingent liabilities. Payments in respect of such demands, if any, are shown as advance till the final disposal of the matters.

12. EXCISE DUTY

a) CENVAT credit available as per the provisions of the Excise Rules on raw material, packing material, etc. purchased, is accounted for by reducing the cost of the respective items.

b) Excise duty payable on finished goods lying at the factory premises at the close of the year is provided in the books as per the Excise Rules.

c) CENVAT credit available as per the provisions of the Excise Rules on capital goods is accounted for by reducing the cost of capital goods.

13. LEASES

The present value of the lease payments is recognised as an asset with a corresponding liability. Annual lease payments are allocated into financial charge and also principal repayment. The financial charge is charged to the Statement of Profit and Loss and the portion of the principal amount paid is deducted from the liability. The depreciation is also charged to Statement of Profit and Loss on the assets taken on finance lease.

14. TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, on timing differences, being the difference between taxable incomes and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

15. SEGMENT REPORTING

Segments have been identified in line with the AS-17, taking into account the organisational structure as well as the differing risks and returns. The business segment is disclosed as primary segment.

16. BORROWING COSTS

The company capitalises interest and other costs incurred by it in connection with funds borrowed for the acquisition of fixed assets. Where specific borrowings are identified to a fixed asset or a new unit, the company uses the interest rates applicable to that specific borrowing as the capitalisation rate. Capitalisation of borrowing costs ceases when all the activities necessary to prepare the fixed assets for their intended use are substantially complete or the fixed assets are put to use. Other borrowing costs are charged to Statement of Profit and Loss.

17. TRANSACTION IN FOREIGN CURRENCIES

a) Initial Reorganisation:

Transactions denominated in foreign currencies are recorded by applying the exchange rates prevailing at the date of the transactions.

b) Conversion:

Monetary items denominated in foreign currencies remaining unsettled at the end of the year, are restated using the closing rates.

c) Exchange Difference:

The exchange difference arising on the settlement of monetary items or on reporting unsettled monetary items at the rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognised as income or as expenses in the year in which they arise.

In case the monetary items are covered by the forward exchange contracts, the difference between the year end exchange rate and the exchange rate at the date of the inception of the forward exchange contract is recognised as exchange difference.

d) Forward Exchange Contracts:

In case of transactions covered by forward exchange contracts, which are not intended for trading or speculation purposes, the premium/discount represented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract is amortised as expense or income over the life of the contract.

Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rate changes.

Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

In case of transactions covered by forward exchange contracts, which are intended for trading or speculation purposes, the premium/discount is ignored and at each balance sheet date, the value of the contract is marked to its market value and gain/loss on the contract is recognised.

e) Non-monetary foreign currency items such as investments are carried at cost.

18. IMPAIRMENT LOSS

Impairment loss is provided to the extent the carrying amount(s) of assets exceed their recoverable amount(s). Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flow expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm length transaction between knowledgeable, willing parties less the cost of disposal.

19. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.


Mar 31, 2011

1. SYSTEM OF ACCOUNTING

a) The financial statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles in India and the provisions of the Companies Act, 1956 following the mercantile system of accounting and recognising income and expenditure on accrual basis.

b) The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known or materialised.

2. FIXED ASSETS

Fixed assets are stated at cost of acquisition or construction inclusive of freight, duties and taxes and incidental expenses, less accumulated depreciation (except land), amortisation, amortisation and impairment loss, if any.

3. INVESTMENTS

a) Long term investments are being valued at cost of acquisition. Provision is made to recognise a decline, other than temporary, in the carrying amount of long term investments.

b) Short-term investments are being valued at cost or market value whichever is lower.

4. DEPRECIATION

a) No depreciation is provided for leasehold land and freehold land.

b) Depreciation on fixed assets is being provided on "Straight line method" basis at the rates specified in Schedule XIV to the Companies Act, 1956 till the written down value is reduced to 5% of the gross value being minimum fetchable value. No further depreciation is provided on such balance.

c) Depreciation in respect of addition to the fixed assets is provided on Pro-rata basis from the month in which such assets are acquired/installed/started commercial production.

d) Depreciation on fixed assets sold, discarded or demolished during the year is being provided at their respective rates upto the month in which such assets are sold, discarded or demolished.

e) The provision for depreciation for multiple shifts, wherever applicable, as per records, and as advised, has been made on the basis of the actual utilisation of respective eligible assets.

5. INVENTORIES

a) Valuation of inventories is inclusive of taxes or duties incurred and on FIFO basis except otherwise stated.

b) Raw materials and Work in progress are being valued at cost or net realisable value whichever is lower.

c) Stores, Spares and Tools are being valued at weighted average cost.

d) Goods in Transit, if any, are stated at actual cost upto the date of the Balance Sheet.

e) Finished Stocks are being valued at direct cost or net realisable values whichever is lower.

6. SALES

Sales include excise duty, sales tax and value added tax and exclude discount, claims, and shortage. The commission, brokerage and incentives are recognised as an expense for the sales. Transportation and marine insurance recovered from customers are reduced from the respective expenses.

7. RETIREMENT AND OTHER BENEFITS TO EMPLOYEES

(a) Employees' benefit under defined contribution plan such as contribution to provident fund and employees' benefits under defined benefit plan for leave encashment are charged off at the undiscounted amount in the year in which the related service provided.

(b) Post employment benefits under defined benefit plan such as gratuity are charged off in the year in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and/or losses in respect of post employment benefits are charged to profit and loss account or capitalised in case of new projects are taken up by the company.

8. MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED)

Miscellaneous expenditures are amortised over a period of 5 years in which the same are incurred.

9. PRIOR PERIOD INCOME / EXPENSES

The company follows the practice of making adjustments through "Prior Period items" in respect of all material transaction pertaining to the period prior to current accounting period/year.

10. INCOME FROM INVESTMENTS

Incomes from Investments, where appropriate, are taken into revenue in full on declaration or receipt and tax deducted at source thereon is treated as advance tax.

11. CONTINGENT LIABILITIES

Contingent liabilities are not recognised but are disclosed by way of notes to accounts. Disputed demands in respect of Central Excise, Customs, Income Tax and other proceedings etc. are disclosed as contingent liabilities. Payments in respect of such demands, if any, are shown as advance till the final disposal of the matters.

12. EXCISE DUTY

a) CENVAT credit available as per the provisions of the Excise Rules on raw material, packing material, etc purchased, is accounted for by reducing the cost of the respective items.

b) Excise duty payable on finished goods lying at the factory premises at the close of the year is provided in the books as per the Excise Rules.

c) CENVAT credit available as per the provisions of the Excise Rules on capital goods is accounted for by reducing the cost of capital goods.

13. LEASES

The present value of the lease payments is recognised as an asset with a corresponding liability. Annual lease payments are allocated into financial charge and also principal repayment. The financial charge is charged to the profit & loss account and the portion of the principal amount paid is deducted from the liability. The depreciation is also charged to profit & loss account on the assets taken on finance lease.

14. TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, on timing differences, being the difference between taxable incomes and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

15. SEGMENT REPORTING

Segments have been identified in line with the AS-17, taking into account the organisational structure as well as the differing risks and returns. The business segment is disclosed as primary segment.

16. BORROWING COSTS

The company capitalises interest and other costs incurred by it in connection with funds borrowed for the acquisition of fixed assets. Where specific borrowings are identified to a fixed asset or a new unit, the company uses the interest rates applicable to that specific borrowing as the capitalisation rate. Capitalisation of borrowing costs ceases when all the activities necessary to prepare the fixed assets for their intended use are substantially complete or the fixed assets are put to use. Other borrowing costs are charged to Profit & Loss Account.

17. TRANSACTION IN FOREIGN CURRENCIES

a) Initial Reorganisation:

Transactions denominated in foreign currencies are recorded by applying the exchange rates prevailing at the date of the transactions.

b) Conversion:

Monetary items denominated in foreign currencies remaining unsettled at the end of the year, are restated using the closing rates.

c) Exchange Difference:

The exchange difference arising on the settlement of monetary items or on reporting unsettled monetary items at the rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognised as income or as expenses in the year in which they arise.

In case the monetary items are covered by the forward exchange contracts, the difference between the year end exchange rate and the exchange rate at the date of the inception of the forward exchange contract is recognised as exchange difference.

d) Forward Exchange Contracts:

In case of transactions covered by forward exchange contracts, which are not intended for trading or speculation purposes, the premium/discount represented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract is amortised as expense or income over the life of the contract.

Exchange differences on such contracts are recognised in the statement of profit and loss account in the year in which the exchange rate changes.

Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

In case of transactions covered by forward exchange contracts, which are intended for trading or speculation purposes, the premium/discount is ignored and at each balance sheet date, the value of the contract is marked to its market value and gain/loss on the contract is recognised.

e) Non-monetary foreign currency items such as investments are carried at cost.

18. IMPAIRMENT LOSS

Impairment loss is provided to the extent the carrying amount(s) of assets exceed their recoverable amount(s). Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flow expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm length transaction between knowledgeable, willing parties, less the cost of disposal.

 
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