Accounting Policies of SFL International Ltd. Company

Mar 31, 2015

CORPORATE INFORMATION:

SFL International Ltd (formerly known as Suryanagri Finlease Ltd.) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The company is listed on BSE and ASE. The company is engaged mainly in the business of trading of cloth.

SIGNIFICANT ACCOUNTING POLICIES:

1. BASIS OF PREPARATION OF FINANCIAL STATEMENT

The Financial Statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (“the Act”), as applicable. The financial statements have been prepared on accrual basis under historical cost convention and going concern basis. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2. USE OF ESTIMATES

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported accounts of assets and liabilities (including contingent liabilities) on the date of the financial statements and reported income and expenses during the year. The Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

3. INVENTORIES

Items of inventories are measured at lower of cost and net realizable value after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition. Cost of Raw Material, Packing material, Chemicals, Stores and Consumables, Finished goods, trading and other products are ascertained on FIFO basis.

4. CASH FLOW STATEMENT

(a) Cash & Cash Equivalents (for the purpose of cash flow statement)

Cash Comprises cash on hand and demand deposits with banks. Cash Equivalents are short-term balances (with original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

(b) Cash Flow Statement

Cash Flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

5. PRIOR PERIOD AND EXCEPTIONAL ITEMS

All identifiable items of Income and Expenditure pertaining to prior period are accounted through “Prior Period items”. Exceptional items are general non-recurring items of income and expense within profit or loss from ordinary activities, which are of such size, nature or incidence that their disclosure is relevant to explain the performance of the company for the year.

6. FIXED ASSETS/INTANGIBLE ASSETS & DEPRECIATION

i. Fixed assets are stated at their original cost of acquisition including respective taxes duties freight and other incidental expenses related to acquisition and installation of the respective assets.

ii. Intangible Assets are recognized as per the principle laid down in Accounting Standard 26 - Intangible Assets, as specified in the Companies (Accounting Standard) Rules, 2006 (as amended).

iii. Depreciation on fixed assets is provided on written down value method (WDV) at the rates and in the manner prescribed in Schedule II to the Companies Act, 2013. Intangible assets are amortized over their estimated useful life on a straight line basis.

7. REVENUE RECOGNITION

Sales of products/job work are recognized when they are invoiced to customers. Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Dividend income is recognized when the right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

7A. FOREIGN CURRENCY TRANSACTIONS Initial Recognition

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

Conversion

Monetary items denominated in foreign currencies at the year-end are restated at the year -end rates. Non monetary foreign currency items are stated at cost.

Exchange Differences

Any income or expense arising on account of exchange difference either on settlement or on translation is recognized in the Profit & Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

8. INVESTMENTS

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Long term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management. Current investments are carried at the lower of cost and quoted / fair value, computed category wise.

9. BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to statement of Profit & Loss.

10. SEGMENT REPORTING

The company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive management in deciding how to allocate resources and in accessing performance.

11. RELATED PARTY TRANSACTIONS

Disclosure of transactions with related parties, as required by Accounting Standard 18 -“Related Party Disclosure” as specified in Companies (Accounting Standards) Rules, 2006 (as amended), have been set out in a separate note forming part of the financial statements. Related party as defined under clause 3 of the Accounting Standard 18 have been identified on the basis of representation made by key managerial personnel and information available with the company.

12. EARNING PER SHARE

The Company reports basic and diluted Earnings Per Share (EPS) in accordance with the Accounting Standard 20 as specified in the Companies (Accounting Standard) Rules, 2006 (as amended). The basic EPS has been computed by dividing the income available to Equity Shareholders by the weighted average number of Equity Shares outstanding during the accounting year. The diluted E.P.S. has been computed using the weight average number of equity shares and dilutive potential equity shares outstanding at the end of the year.

13. PROVISION FOR BAD AND DOUBTFUL DEBTS

Provision is made in accounts for Bad Doubtful Debts/Advances which in the opinion of the management are considered irrecoverable.

14. TAXES ON INCOME Deferred Taxation

In accordance with the Accounting Standard 22 - Accounting for Taxes on Income, as specified in the Companies (Accounting Standard) Rules, 2006 (as amended), the deferred tax for timing difference between the book and the income tax profit for the year is accounted for by using the tax rate and laws that has been enacted and substantively enacted as of the balance sheet date.

Deferred tax assets arising from timing difference are recognized to the extent there is a virtual certainty that the assets can be realized in future.

Net outstanding balance in deferred tax account is recognized as deferred tax liability/ assets. The deferred tax account is used solely for reversing timing difference as and when crystallized.

Current taxation

Provision for taxation has been made in accordance with the income tax laws prevailing for the relevant assessment year.

15. IMPAIRMENT OF FIXED ASSETS

The carrying amount of assets, other than inventories, is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exist, the asset recoverable amount is estimated.

The impairment loss is recognized whenever the carrying cost amount of an asset or its cash generation unit exceed its recoverable amount. The recoverable amount is the greater of the asset net selling price and value in the use which is determined based on the estimated future cash flow discounted to the present value all impairment losses are recognize in the profit and loss account.

An impairment loss is reversed if there has been a change in the estimates used to determined the recoverable amount and its recognized in the profit and loss account.

16. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurements are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2014

1. BASIS OF PREPARATION OF FINANCIAL STATEMENT

Financial Statements have been prepared under historical cost convention on accrual basis, in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956. All income and Expenditure having a material bearing on the Financial Statement are recognized on accrual basis,

2. USE OF ESTIMATES

The preparation of Financial Statement in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported accounts of Assets and liabilities and disclosure of contingent liabilities on the date of the financial statements, Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods,

3. INVENTORY:

The dosing stock of shares is valued at cost.

4. CASH FLOW STATEMENT

(a) Cash & Cash Equivalents (for the purpose of cash flow statement)

Cash Comprises cash on hand and demand deposits with banks. Cash Equivalents are short-term balances (with original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

(b) Cash Flow Statement

Cash Flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments,

5. FIXED ASSETS & DEPRECIATION:

(a) Gross block of Fixed Assets including leased assets are valued at historical cost.

(b) Depreciation on all assets is provided on straight Line Basis as per section 205(2)(b) of the Companies Act, 1956 at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 as amended from time to time. The Depreciation is calculated on a pro rata basis from the date on which the assets is purchased/ brought to use which-ever is later.

6 REVENUE RECOGNITION

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection.

(a) Dividend on investments is recognized when the right to receive is to be established,

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

(e) Revenue in respect of other Income is recognized when no significant uncertainty as to its determination or realization exists.

7. INVESTMENTS

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. Ail other investments are classified as long term investments. Long term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management. Current investments are carried at the lower of cost and quoted / fair value, computed category wise,

8. BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to statement of Profit & Loss,

9. RELATED PARTY TRANSACTIONS

Disclosure of transactions with related parties, as required by Accounting Standard 18 - "Related Party Disclosure" as specified in Companies (Accounting Standards) Rules, 2006 fas amended), have been set out in a separate note forming part of the financial statements. Related party as defined under clause 3 of the Accounting Standard 18 have been identified on the basis of representation made by key managerial personnel and information available with the company.

10. EARNING PER SHARE:

The Company reports basic and diluted earning per share (EPS) on accordance with the Accounting Standard 20 as specified in Companies (Accounting Standards) Rules, 2006 (as amended), The Basic EPS has been computed by dividing the income available to Equity Shareholders by the Weighted Average number of Equity Shares outstanding during the accounting year. The diluted EPS has been computed using the weighted average number of Equity shares and dilutive potential Equity shares outstanding at the end of the year.

11. TAXES ON INCOME Deferred Taxation

In accordance with the Accounting Standard 22 - Accounting for Taxes on Income, as specified in the Companies (Accounting Standard) Rules, 2006 (as amended), the deferred tax for timing difference between the book and the income tax profit for the year is accounted for by using the tax rate and laws that has been enacted and substantively enacted as of the balance sheet date.

Deferred tax assets arising from timing difference are recognized to the extent there is a virtual certainty that the assets can be realized in future.

Net outstanding balance in deferred tax account is recognized as deferred tax liability/assets. The deferred tax account is used solely for reversing timing difference as and when crystallized.

Current taxation

Provision for taxation has been made in accordance with the income tax laws prevailing for the relevant assessment year.

12. IMPAIRMENT OF FIXED ASSETS

The carrying amount of assets, other than inventories, is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indications exist, the asset recoverable amount is estimated.

The impairment loss is recognized whenever the carrying cost amount of an asset or its cash generation unit exceed its recoverable amount. The recoverable amount is the greater of the asset net selling price and value in the use which is determined based on the estimated future cash flow discounted to the present value all impairment losses are recognize in the profit and loss account.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and it is recognized in the profit and loss account,

13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurements are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2010

A. BASIS OF ACCOUNTING POLICY

(i) Financial Statements have been prepared under historical cost.

(ii) The Company follows accrual method of accounting.

B. FIXED ASSETS & DEPRECIATION:

a) Cross block of Fixed Assets including leased assets are valued at historical cost.

b) Depreciation on all assets is provided on straight Line Basis as per section 205(2)(b) of the Companies Act. 1 956 at the rates and in the manner specified in schedule XIV of the Companies Act. 1956 as amended from time to time. The Depreciation is calculated on a pro rata basis from the date on which the assets is purchased/brought to use which ever is letter. No depreciation is provided on the assets which were not used during the year.

C. INVESTMENTS :

Investments are valued at their acquisition cost. Diminution in the value of long term investment has not been accounted for.

D. INVENTORY :

The closing stocks of shares are valued at cost.

E. AMORTISATION OF MISCELLANEOUS EXPENDITURE :

Preliminary expenses and share issue expenses are deferred to be amortized over a period of ten years.

F. EARNING PER SHARE :

The Company reports basic and diluted earning per share (EPS) on accordance with the Accounting Standard 20 issued by the Institute of Chartered Accountant of India. The Basic EPS has been computed by dividing the income available to Equity Shareholders by the Weighted Average number of Equity Shares outstanding during the accounting year. The diluted EPS has been computed using the weighted average number of Equity shares and dilutive potential Equity shares outstanding at the end of the year.

G. IMPAIRMENT OF FIXED ASSETS :

The carrying amount of assets, other than inventories, is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated.

The impairment loss is recognized whenever the carrying amount of an asset or its cash generation unit exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in the uses which is determined based on the estimated future cash flow discounted to their present values. All impairment losses are recognized in the profit and loss account.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and is recognized in the profit and loss account.

H. Related Party Transactions :

Disclosure of transaction with related parties, as required by Accounting Standard 18 "RELATED PARTY DISCLOSURES" has been set out in a separate note forming part of the schedule. Related Party as defined under clause 3 of the Accounting Standard 18 have been identified on the basis of representation made by Key Managerial Personnel and information available with the company.

I. CASH FLOW STATEMENT :

The cash flow statement is feeing prepared as per Accounting standard - 3 prescribed by the Institute of Chartered Accountants of India.