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Accounting Policies of Rajvir Industries Ltd. Company

Mar 31, 2015

1.1 Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention on accrual basis to comply in all material aspects and in accordance with Indian General Accepted Accounting Principles (GAAP), which comprises of mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified). The accounting policies have been consistently applied by the Company unless otherwise stated.

1.2 Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made 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 recognised in the period in which the results are known/ materialized.

1.3 Revenue Recognition

(i) The company recognises revenues on the sale of products, when the products are dispatched / delivered to the customer/dealer or when delivered to the carrier for export sales, which is when risks and rewards of ownership pass to the customer/ dealer.

(ii) Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection.

(iii) Revenue from services is recognized as per the terms of the contracts with the customers when the services are performed.

(iv) Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

1.4 Recognition of Expenditure

Expenses are accounted for on an accrual basis and provision is made for all known losses and liabilities.

1.5 Fixed Assets

(i) Fixed assets are stated at cost less accumulated depreciation and impairment loss, if any.

(ii) The cost of Fixed Asset comprises its purchase price, including non-refundable taxes & duties and directly attributable cost of bringing the asset (including leasehold improvements) to its working condition for its intended use.

(iii) All costs, including borrowing costs till commencement of commercial production, attributable to fixed assets are capitalized.

1.6 Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount.

1.7 Capital Work-in-Progress

Capital work-in-progress comprises cost of fixed assets that are not yet ready for their internal use at the balance sheet date.

1.8 Depreciation

Depreciation is provided on assets on Straight Line method at the rates and in the manner specified in Schedule II of the Companies Act, 2013.

1.9 Inventories

Inventories are valued as follows:

Raw Material At lower of cost or net realizable value.

Work-in-progress At lower of cost or net realizable value.

Stores & Spares At lower of cost or net realizable value.

Finished Goods At lower of cost or net realizable value.

Obsolete, slow moving and defective inventories are identified at the time of physical verification and necessary provision is made for such inventories. The cost is determined on weighted basis for raw material, stores and spares, packing materials and trading goods. Cost includes the purchase price and attributable direct cost less discounts.

In case of work-in-progress and finished goods cost includes material cost, direct labour and production overheads.

1.10 Employee Benefits

Short-term employee benefits are recognized as an expense in the Statement of Profit and Loss of the year in which the related service is rendered

Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss

1.11 Foreign Currency Transactions

(i) Transactions denominated in foreign currencies are restated at the appropriate rates of exchange prevailing on the date of transaction

(ii) Monetary assets and liabilities denominated in foreign currencies are restated at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year

(iii) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss

(iv) In respect of Forward Exchange contracts entered into to hedge foreign currency risks, the difference between the forward rate and exchange rate at the inception of the contract is recognized as income or expense over the life of the contract. Further, the exchange differences arising on such contracts are recognized as income or expense along with the exchange differences on underlying assets/ liabilities Further, in case of other contracts with committed exchange rates, the underlying is accounted at the rate so committed Profit or loss on cancellation / renewals of forward contracts is recognized during the year. In case of option contracts, the losses are accounted on mark to market basis.

1.12 Leases

Operating lease payments are recognized as expense in the Statement of Profit and Loss on a straight-line basis over the lease term

1.13 Borrowing Cost

hterest and other borrowing costs attributable to qualifying assets are capitalized. Other interest and borrowing costs are charged to Statement of Profit & Loss.

1.14 Government Grants

Grants and subsidies are recognized when there is a reasonable assurance that the grant or subsidy will be received and that all the underlying conditions will be complied with

Grants and Subsidies related to specific fixed asset is shown as deduction from the gross value of the asset concerned and subsidies not related to specific fixed asset are treated as Capital Reserve.

1.15 Accounting for Taxes on Income

The Current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company on the computed total income for the year.

Deferred Tax assets and liabilities are recognized on timing differences between taxable income and accounting income. originating in one period and expected to reverse in subsequent periods

The Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

Minimum alternative tax (MAT) under the provisions of Income Tax Act 1961 is recognized as current tax in the Statement of Profit and Loss.

The Credit available under the Act in respect of MAT paid is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal Income Tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability.

MAT credit recognized as an asset is reviewed at each Balance Sheet date and written down to the extent the aforesaid convincing evidence no longer exist.

1.16 Segment Reporting

The operations of the company predominantly comprises of "Manufacturing of yarn". These activities constitute the Primary segment and is the only reportable segment.

1.17 Provisions, Contingent Liabilities and Contingent Assets

(i) Provisions: Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

(ii) Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

(iii) Contingent Assets: Contingent Assets are neither recognized or disclosed in the financial statements.


Mar 31, 2014

1.1 Basis for Preparation of Accounts:

The Accounts have been prepared by following the going concern concept, on historical cost convention, on an accrual basis and the relevant provisions of the Companies Act, 1956.

1.2 Revenue Recognition:

a. Revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred to the customer.

b. Revenue is recognized when it is earned and no significant uncertainty exists as to its Realization or collection.

c. Income from services rendered is accounted as per contractual terms with the parties concerned.

d. Dividend income is accounted for in the year in which it is declared.

e. Export benefits under the duty remission scheme and the DEPB scheme are recognized as income when the right to receive the incentive as per the terms of the scheme is established in respect of the exports made.

1.3 Expenditure:

Expenses are accounted for on an accrual basis and provision is made for all known losses.

1.4 Fixed Assets:

a) Fixed assets are stated at cost less accumulated depreciation and impairment loss if any, except for Plant & Machinery and other equipment which were revalued on 31.03.1993 and shown as a separate item.

b) Depreciation has been provided on assets on Straight Line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

c) Depreciation on revalued part is transferred from Revaluation Reserve to Profit & Loss account.

d) All costs, including financing costs till commencement of commercial production, net charges on Foreign exchange contracts and adjustments arising from exchange rate variations attributable to fixed assets are capitalized.

1.5 Inventories:

Inventories are valued as follows:

Raw Material : At lower of cost or net realizable value.

Work in process : At lower of cost or net realizable value.

Stores & Spares : At lower of cost or net realizable value.

Finished Goods (Yarn) : At lower of cost or net realizable value.

Cost of raw-material, stores &spares and packing material and trading goods is determined on Weighted Average basis.

Cost of Work in process includes costs of raw material, conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formulae used is on FIFO basis.

Cost of finished goods (yarn) includes costs of raw material, conversion and other costs incurred in bringing the inventories to their present location and condition.

1.6 Employee Benefits:

The company has adopted Accounting Standard-15 (Revised 2005) ''Employee benefits''. The company has used the Projected unit credit method for arriving at gratuity liability.

i) Defined contribution schemes:

a) Employee Provident Fund

b) Family Pension Scheme

c) Employee State Insurance Scheme

d) Labour Welfare Fund

ii) Defined benefit Schemes:

a) Gratuity plan - Gratuity is payable to all eligible employees of the company in terms of the provisions of the Payment of Gratuity Act.

b) Leave Encashment Plan - Eligible employees can carry forward and encash leave on superannuation death/resignation subject to maximum accumulation of 15 days.

1.7 Foreign Exchange Transactions:

a) Foreign currency transactions are accounted at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities relating to Foreign currency transactions remaining unsettled at the end of the year are translated at the year end rate and the difference in translation and realized gains and losses on Foreign exchange transactions (other than for fixed assets ) are recognized in the profit and loss account.

b) Pursuant to adoption of the Companies (Accounting Standards) Rules, 2006 exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed assets are recognized in the profit and loss account.

c) Any income or expense on account of exchange difference either on settlement or on translation is recognized as Revenue.

d) In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.

1.8 Derivative transactions

In respect of Derivative contracts, premium paid and provision for losses on restatement and gains/losses on settlement are recognized along with the underlying transactions and charged to Profit & Loss Account.

1.9 Taxes on Income

The Current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company on the computed total income for the year.

Deferred Tax assets and liabilities are recognized on timing differences between taxable income and accounting income, originating in one period and expected to reverse in subsequent periods.

The Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

Minimum alternative tax (MAT) under the provisions of Income Tax Act 1961 is recognised as current tax in the statement of Profit and Loss.

The Credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal Income Tax during the period for which the MAT credit can be carried forward for set - off against the normal tax liability.

MAT credit recognised as an asset is reviewed at each Balance Sheet date and written down to the extent the aforesaid convincing evidence no longer exist.

1.10 Borrowing Costs:

Borrowing costs are recognized as expenses in the period in which they are incurred except for borrowings for acquisition of qualifying assets which are capitalized upto the date, the asset is ready for its intended use.

1.11 Government Grants:

Grants and subsidies are recognized when there is a reasonable assurance that the grant or subsidy will be received and that all the underlying conditions will be complied with.

Grants and Subsidies related to specific fixed asset is shown as deduction from the gross value of the asset concerned and subsidies not related to specific fixed asset are treated as Capital Reserve.

1.12 Deferred Revenue Expenditure:

Deferred revenue expenditure, the benefit of which is accrued to the company over a period of time, is written off in 10 years.

1.13 Segment Reporting:

The operations of the company predominantly comprises of "Manufacturing of yarn". These activities constitute the Primary segment and is the only reportable segment.

1.14 Leases:

The Company''s significant leasing arrangements are in respect of Operating leases for premises like operational units, offices, residences etc. These leases which are not non-cancelable are generally for more than 11 months, or for longer period and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Rent to Profit and Loss Account.

1.15 Impairment of Assets:

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such an indication exists, then the carrying value is reduced to the higher of the net selling price or the value in use. The value in use is the present value of estimated future net income expected from use of the asset.

1.16 Provisions/Contingent Liabilities:

Provisions are recognized, when the Company has a present legal or constructive obligation, as a result of past events, for which it is probable that an out flow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. The disclosure is made for all present or possible obligations that may but probably will not require outflow of resources as contingent liability in the financial statements.


Mar 31, 2013

1.1 Basis for Preparation of Accounts:

The Accounts have been prepared by following the going concern concept, on historical cost convention, on an accrual basis and the relevant provisions of the Companies Act, 1956.

1.2 Revenue Recognition:

a. Revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred to the customer.

b. Revenue is recognized when it is earned and no significant uncertainty exists as to its Realization or collection.

c. Income from services rendered is accounted as per contractual terms with the parties concerned.

d. Dividend income is accounted for in the year in which it is declared.

e. Export benefits under the duty remission scheme and the DEPB scheme are recognized as income when the right to receive the incentive as per the terms of the scheme is established in respect of the exports made.

1.3 Expenditure:

Expenses are accounted for on an accrual basis and provision is made for all known losses.

1.4 Fixed Assets:

a) Fixed assets are stated at cost less accumulated depreciation and impairment loss if any, except for Plant & Machinery and other equipment which were revalued on 31.03.1993 and shown as a separate item.

b) Depreciation has been provided on assets on Straight Line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

c) Depreciation on revalued part is transferred from Revaluation Reserve to Profit & Loss account.

d) All costs, including financing costs till commencement of commercial production, net charges on Foreign exchange contracts and adjustments arising from exchange rate variations attributable to fixed assets are capitalized.

1.5 Inventories:

Inventories are valued as follows:

Raw Material At lower of cost or net realisable value.

Work in process At lower of cost or net realisable value.

Stores & Spares At lower of cost or net realisable value.

Finished Goods (Yarn) At lower of cost or net realisable value.

Cost of raw-material, stores &spares and packing material and trading goods is determined on Weighted Average basis.

Cost of Work in process includes costs of raw material, conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formulae used is on FIFO basis.

Cost of yarn includes costs of raw material, conversion and other costs incurred in bringing the inventories to their present location and condition.

1.6 Employee Benefits:

The company has adopted Accounting Standard-15 (Revised 2005) ''Employee benefits''. The company has used the Projected unit credit method for arriving at gratuity liability.

i) Defined contribution schemes:

a) Employee Provident Fund

b) Family Pension Scheme

c) Employee State Insurance Scheme

d) Labour Welfare Fund ii) Defined benefit Schemes:

a) Gratuity plan – Gratuity is payable to all eligible employees of the Company in terms of the provisions of the Payment of Gratuity Act.

b) Leave Encashment Plan – Eligible employees can carry forward and encash leave on superannuation death / resignation subject to maximum accumulation of 15 days.

1.7 Foreign Exchange Transactions:

a) Foreign currency transactions are accounted at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities relating to Foreign currency transactions remaining unsettled at the end of the year are translated at the year end rate and the difference in translation and realized gains and losses on Foreign exchange transactions (other than for fixed assets ) are recognized in the profit and loss account.

b) Pursuant to adoption of the Companies (Accounting Standards) Rules, 2006 exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed assets are recognized in the profit and loss account.

c) Any income or expense on account of exchange difference either on settlement or on translation is recognized as Revenue.

d) In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.

1.8 Derivative transactions

In respect of Derivative contracts, premium paid and provision for losses on restatement and gains/losses on settlement are recognized along with the underlying transactions and charged to Profit & Loss Account.

1.9 Taxes on Income

The Current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company on the computed total income for the year.

Deferred Tax assets and liabilities are recognized on timing differences between taxable income and accounting income, originating in one period and expected to reverse in subsequent periods.

The Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

Minimum alternative tax (MAT) under the provisions of Income Tax Act 1961 is recognised as current tax in the Statement of Profit and Loss.

The Credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal Income Tax during the period for which the MAT credit can be carried forward for set - off against the normal tax liability.

MAT credit recognised as an asset is reviewed at each Balance Sheet date and written down to the extent the aforesaid convincing evidence no longer exist.

1.10 Borrowing Costs:

Borrowing costs are recognized as expenses in the period in which they are incurred except for borrowings for acquisition of qualifying assets which are capitalized upto the date, the asset is ready for its intended use.

1.11 Government Grants:

Grants and subsidies are recognized when there is a reasonable assurance that the grant or subsidy will be received and that all the underlying conditions will be complied with.

Grants and Subsidies related to specific fixed asset is shown as deduction from the gross value of the asset concerned and subsidies not related to specific fixed asset are treated as Capital Reserve.

1.12 Deferred Revenue Expenditure:

Deferred revenue expenditure, the benefit of which is accrued to the company over a period of time, is written off in 10 years.

1.13 Segment Reporting:

The operations of the company predominantly comprises of "Manufacturing of yarn". These activities constitute the Primary segment and is the only reportable segment.

1.14 Leases:

The Company''s significant leasing arrangements are in respect of Operating leases for premises like operational units, offices, residences etc. These leases which are not non-cancelable are generally for more than 11 months, or for longer period and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Rent to the Statement of Profit and Loss.

1.15 Impairment of Assets:

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such an indication exists, then the carrying value is reduced to the higher of the net selling price or the value in use. The value in use is the present value of estimated future net income expected from use of the asset.

1.16 Provisions/Contingent Liabilities:

Provisions are recognized, when the Company has a present legal or constructive obligation, as a result of past events, for which it is probable that an out flow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. The disclosure is made for all present or possible obligations that may but probably will not require outflow of resources as contingent liability in the financial statements.


Mar 31, 2012

1.1 Basis for Preparation of Accounts:

The Accounts have been prepared by following the going concern concept, on historical cost convention, on an accrual basis and the relevant provisions of the Companies Act, 1956.

1.2 Revenue Recognition:

a. Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the customer.

b. Revenue is recognised when it is earned and no significant uncertainty exists as to its Realisation or collection.

c. Income from services rendered is accounted as per contractual terms with the parties concerned.

d. Dividend income is accounted for in the year in which it is declared.

e. Export benefits under the duty remission scheme and the DEPB scheme are recognised as income when the right to receive the incentive as per the terms of the scheme is established in respect of the exports made.

1.3 Expenditure:

Expenses are accounted for on an accrual basis and provision is made for all known losses.

1.4 Fixed Assets:

a) Fixed assets are stated at cost less accumulated depreciation and impairment loss if any, except for Plant & Machinery and other equipment which were revalued on 31.03.1993 and shown as a separate item.

b) Depreciation has been provided on assets on Straight Line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

c) Depreciation on revalued part is transferred from Revaluation Reserve to Profit & Loss account.

d) All costs, including financing costs till commencement of commercial production, net charges on Foreign exchange contracts and adjustments arising from exchange rate variations attributable to fixed assets are capitalised.

1.5 Inventories:

Inventories are valued as follows:

Raw Material At lower of cost or net realisable value.

Work in process At lower of cost or net realisable value.

Stores & Spares At lower of cost or net realisable value.

Finished Goods (Yarn) At lower of cost or net realisable value.

Cost of raw-material, stores &spares and packing material and trading goods is determined on Weighted Average basis.

Cost of Work in process includes costs of raw material, conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formulae used is on FIFO basis.

Cost of yarn includes costs of raw material, conversion and other costs incurred in bringing the inventories to their present location and condition.

1.6 Employee Benefits:

The Company has adopted Accounting Standard-15 (Revised 2005) 'Employee benefits'. The Company has used the Projected unit credit method for arriving at gratuity liability.

i) Defined contribution schemes:

a) Employee Provident Fund

b) Family Pension Scheme

c) Employee State Insurance Scheme

d) Labour Welfare Fund

ii) Defined benefit Schemes:

a) Gratuity plan - Gratuity is payable to all eligible employees of the Company in terms of the provisions of the Payment of Gratuity Act.

b) Leave Encashment Plan - Eligible employees can carry forward and encash leave on superannuation death/ resignation subject to maximum accumulation of 15 days.

1.7 Foreign Exchange Transactions:

a) Foreign currency transactions are accounted at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities relating to Foreign currency transactions remaining unsettled at the end of the year are translated at the year end rate and the difference in translation and realised gains and losses on Foreign exchange transactions (other than for fixed assets ) are recognised in the profit and loss account.

b) Pursuant to adoption of the Companies (Accounting Standards) Rules, 2006 exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed assets are recognised in the profit and loss account.

c) Any income or expense on account of exchange difference either on settlement or on translation is recognised as Revenue.

d) In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognised as income or expense over the life of the contract.

1.8 Derivative transactions

In respect of Derivative contracts, premium paid and provision for losses on restatement and gains/losses on settlement are recognised along with the underlying transactions and charged to Profit & Loss Account.

1.9 Taxes on Income

The Current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company on the computed total income for the year.

Deferred Tax assets and liabilities are recognised on timing differences between taxable income and accounting income, originating in one period and expected to reverse in subsequent periods.

The Deferred tax assets are recognised only to the extent that there is reasonable certainity that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

1.10 Borrowing Costs:

Borrowing costs are recognised as expenses in the period in which they are incurred except for borrowings for acquisition of qualifying assets which are capitalised upto the date, the asset is ready for its intended use.

1.11 Government Grants:

Grants and subsidies are recognised when there is a reasonable assurance that the grant or subsidy will be received and that all the underlying conditions will be complied with.

Grants and Subsidies related to specific fixed asset is shown as deduction from the gross value of the asset concerned and subsidies not related to specific fixed asset are treated as Capital Reserve.

1.12 Deferred Revenue Expenditure:

Deferred revenue expenditure, the benefit of which is accrued to the Company over a period of time, is written off in 10 years.

1.13 Segment Reporting:

The operations of the Company predominantly comprises of "Manufacturing of yarn". These activities constitute the Primary segment and is the only reportable segment.

1.14 Leases:

The Company's significant leasing arrangements are in respect of Operating leases for premises like operational units, offices, residences etc. These leases which are not non-cancelable are generally for more than 11 months, or for longer period and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Rent to Profit and Loss Account.

1.15 Impairment of Assets:

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such an indication exists, then the carrying value is reduced to the higher of the net selling price or the value in use. The value in use is the present value of estimated future net income expected from use of the asset.

1.16 Provisions/Contingent Liabilities:

Provisions are recognised, when the Company has a present legal or constructive obligation, as a result of past events, for which it is probable that an out flow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. The disclosure is made for all present or possible obligations that may but probably will not require outflow of resources as contingent liability in the financial statements.


Mar 31, 2010

I. Basis for Preparation of Accounts:

The Accounts have been prepared by following the going concern concept, on historical cost convention, on an accrual basis

and the relevant provisions of the Companies Act, 1956. ii. Revenue Recognition:

a. Revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred to the customer.

b. Income from services rendered is accounted as per contractual terms with the parties concerned.

c. Dividend income is accounted for in the year in which it is declared.

d. Export benefits under the duty remission scheme and the DEPB scheme are recognized as income when the right to receive the incentive as per the terms of the scheme is established in respect of the exports made.

iii. Expenditure:

Expenses are accounted for on an accrual basis and provision is made for all known losses. iv. Fixed Assets:

1) Fixed assets are stated at cost less accumulated depreciation and impairment loss if any, except for Plant & Machinery and other equipment which were revalued on 31.03.1993 and shown as a separate item.

2) Depreciation has been provided on assets on Straight Line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

3) Depreciation on revalued part is transferred from Revaluation Reserve to Profit & Loss account.

4) All costs, including financing costs till commencement of commercial production, net charges on Foreign exchange contracts and adjustments arising from exchange rate variations attributable to fixed assets are capitalized.

v. Inventories:

Inventories are valued as follows:

Raw Material At lower of cost or net realizable value.

Work in process At lower of cost or net realizable value.

Stores & Spares At lower of cost or net realizable value.

Finished Goods (Yarn) At lower of cost or net realizable value.

Cost of raw-material, stores &spares and packing material and trading goods is determined on Weighted Average basis.

Cost of Work in process includes costs of raw material, conversion and other costs incurred in bringing the inventories to their

present location and condition. Cost formulae used is on FIFO basis.

Cost of yarn includes costs of raw material, conversion and other costs incurred in bringing the inventories to their present

location and condition.

vi. Employee Benefits: The company has adopted Accounting Standard-15 (Revised 2005) Employee benefits. The company has used the Projected unit credit method for arriving at gratuity liability.

i) Defined contribution schemes:

a) Employee Provident Fund

b) Family Pension Scheme

c) Employee State Insurance Scheme

d) Labour Welfare Fund ii) Defined benefit Schemes:

a) Gratuity plan - Gratuity is payable to all eligible employees of the company in terms of the provisions of the Payment of Gratuity Act.

b) Leave Encashment Plan - Eligible employees can carry forward and encash leave on superannuation/ death/ resignation subject to maximum accumulation of 15 days.

vii. Foreign Exchange Transactions:

a) Foreign currency transactions are accounted at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities relating to Foreign currency transactions remaining unsettled at the end of the year are translated at the year end rate and the difference in translation and realized gains and losses on Foreign exchange transactions (other than for fixed assets) are recognized in the profit and loss account.

b) Pursuant to adoption of the Companies (Accounting Standards) Rules, 2006 exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed assets are recognized in the profit and loss account.

c) Any income or expense on account of exchange difference either on settlement or on translation is recognized as Revenue.

d) In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.

viii. Derivative transactions

In respect of Derivative contracts, premium paid and provision for losses on restatement and gains/losses on settlement are recognized along with the underlying transactions and charged to Profit & Loss Account. ix. Taxes on Income

The Current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company on the computed total income for the year.

Deferred Tax assets and liabilities are recognized on timing differences between taxable income and accounting income, originating in one period and expected to reverse in subsequent periods.

The Deferred tax assets are recognized only to the extent that there is reasonable certainity that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date. x. Borrowing Costs:

Borrowing costs are recognized as expenses in the period in which they are incurred except for borrowings for acquisition of qualifying assets which are capitalized upto the date, the asset is ready for its intended use.

xi. Government Grants:

Grants and subsidies are recognized when there is a reasonable assurance that the grant or subsidy will be received and that all the underlying conditions will be complied with.

Grants and Subsidies related to specific fixed asset is shown as deduction from the gross value of the asset concerned and subsidies not related to specific fixed asset are treated as Capital Reserve.

xii. Deferred Revenue Expenditure:

Deferred revenue expenditure, the benefit of which is accrued to the company over a period of time, is written off in 10 years.

xiii.Segment Reporting:

The operations of the company predominantly comprises of "Manufacturing of yarn". These activities constitute the Primary segment and is the only reportable segment.

xiv. Leases:

The Companys significant leasing arrangements are in respect of Operating leases for premises like operational units, offices, residences etc. These leases which are not non-cancelable are generally for more than 11 months, or for longer period and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Rent to Profit and Loss Account.

xv. Impairment of Assets: The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such an indication exists, then the carrying value is reduced to the higher of the net selling price or the value in use. The value in use is the present value of estimated future net income expected from use of the asset.

xvi. Provisions/Contingent Liabilities: Provisions are recognized, when the Company has a present legal or constructive obligation, as a result of past events, for which it is probable that an out flow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. The disclosure is made for all present or possible obligations that may but probably will not require outflow of resources as contingent liability in the financial statements.

 
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