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Accounting Policies of Shekhawati Poly Yarn Ltd. Company

Mar 31, 2015

A Basis of Accounting:

The Financial Statements have been prepared under the historical cost convention on an accrual basis and in compliance with all material aspects with the notified Accounting Standards specified under Section 133 of the Companies Act, 2013 ('Act ') read with Rule 7 of the Companies (Accounts) Rules 2014, the provisions of the Act (to the extent notified) and the guidelines issued by the Securities Exchange Board of India (SEBI).

B Use of Estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the financial statements and the reported amounts of revenues and expenses during the reporting period.

Difference between actual results and estimates are recognized in the periods in which the results are known/ materialize.

C Revenue Recognition

i) Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.

ii) Sales are recognised when all significant risks and rewards of ownership of the goods are passed on to the buyer.

iii) Revenue in respect of export sales is recognised on shipment of products.

iv) Export incentives are recognised in the Statement of Profit and Loss when the right to receive establishes as per the terms of the Scheme in respect of export made.

v) Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

vi) The Interest subsidy accrued under Technology Upgradtion Fund (TUF) Scheme are recognised on accrual basis and reduced from the cost of funds available on loan. The recognition of TUF subsidy amount has been made on the basis of entitlement under the scheme.

D Fixed Assets:

All Fixed Assets are stated at cost of acquisition/installation as reduced by accumulated depreciation/ amortisation. Cost of Assets includes direct/indirect and incidental costs incurred to bring such assets into its present location and working condition for its intended use.

E Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

F Depreciation:

a) Tangible Assets :

i) No depreciation is charged on Freehold Land.

ii) Leasehold Land is amortised over the remaining period of lease.

iii) Depreciation on Other Fixed Assets has been provided on 'Straight Line Method' on triple shift basis wherever applicable as per the manner specified and as per the useful life mentioned in Schedule II of the Companies Act, 2013

b) Intangible Assets:

i) Accounting Software is amortised on Straight Line Method over a period of ten years.

ii) Right to receive power is amortised on Straight Line Method over a period of ten years.

G Inventories:

Inventories are valued as follows:

i) Finished Goods are valued at lower of cost or net realisable value.

ii) Raw Materials are valued at lower of cost or net realisable value.

iii) Work-in-Process are valued at lower of cost or net realisable value.

iv) Stores & Spares are valued at lower of cost or net realisable value.

v) Packing Materials are valued at lower of cost or net realisable value.

vi) Scrap is valued at net realisable value.

Raw Materials, Stores and Spares and Packing Materials are determined on FIFO basis.

H Provisions and Contingent Liabilities:

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

I Borrowing Costs :

Borrowing costs are recognized as an expense in the period in which they are incurred except the borrowing costs attributable to the acquisition/ construction of qualifying assets which are capitalized as a part of the cost of the fixed assets, up to the date, the assets are ready for its intended use.

J Leases :

Assets leased out under operating leases are capitalized. Rental income is recognised on accrual basis over the lease term. All direct costs up to date of put to use of Leased Assets are capitalised and thereafter treated as revenue expenditure except in case of increase in utility of the assets.

K Investments:

Investments that is intended to be held for more than a year from the date of acquisition are classified as long term investments and are carried at cost less any provision for diminution other than temporary in value. Investments other than long term investments being current investments are valued at cost or fair market value whichever is lower.

L Expenditure during Construction Period:

i) Expenditure of capital nature incurred during construction period in respect of a capital asset being executed by the Company is grouped under Capital work in progress. Such Expenditure is capitalized upon the commencement of commercial operations of the capital asset.

ii) Pre operative expenses pending allocation included in capital work in progress represents expenditure incurred in connection with the capital asset which is intended to be capitalized to the capital asset.

M Purchases are inclusive of Cenvat after deducting purchase returns, discounts, rebates and incentives, if any.

N Sales are inclusive of Excise Duty after deducting sales returns, discounts if any.

O Earnings per share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in rights issue that have changed the number of outstanding equity shares, without a corresponding change in resources.

For the purpose of calculating dilutive earnings per share, the net profit or loss for the period attributable to equity shareholders and weighted number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

P Accounting for Taxes of Income:- Current Taxes

Provision for current income-tax is recognized in accordance with the provisions of Indian Income- tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantially enacted at the balance sheet date. Deferred Tax Assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future. Deferred Tax Assets are reviewed at each Balance Sheet date.

Minimum Alternate Tax

Minimum Alternate 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.

Q Employee Benefits :

i) Company's contribution to Provident Fund and other Funds for the year is accounted on accrual basis and charged to the Statement of Profit & Loss for the year.

ii) Retirement benefits in the form of Gratuity are considered as defined benefit obligations and are provided on the basis of the actuarial valuation, using the projected unit credit method as at the date of the Balance Sheet.

R "Foreign Currency Transaction"

i) The transactions in foreign currencies on revenue accounts are stated at the rate of exchange prevailing on the date of transaction.

ii) The difference on account of fluctuation in the rate of exchange prevailing on the date of transaction and the date of realisation is treated as revenue.

iii) Differences on translation of Current Assets and Current Liabilities remaining unsettled at the year end are recognised in the Statement of Profit and Loss.


Mar 31, 2014

A Basis of Accounting:

The Financial Statements have been prepared under the historical cost convention on an accrual basis and in compliance with all material aspects with the notified Accounting Standards by Companies (Accounting Standard) Rules 2006 and the relevant provisions of the Companies Act, 1956.

B Use of Estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the financial statements and the reported amounts of revenues and expenses during the reporting period.

Difference between actual results and estimates are recognized in the periods in which the results are known/ materialize.

C Revenue Recognition

i) "Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.

ii) Sales are recognised when all significant risks and rewards of ownership of the goods are passed on to the buyer.

iii) Revenue in respect of export sales is recognised on shipment of products.

iv) Export incentives are recognised in the Statement of Profit and Loss when the right to receive establishes as per the terms of the Scheme in respect of export made.

v) Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

vi) The Interest subsidy accrued under Technology Upgradtion Fund (TUF) scheme are recognised on accrual basis and reduced from the cost of funds available on loan. The recognition of TUF subsidy amount has been made on the basis of entitlement under the scheme.

D Fixed Assets:

All Fixed Assets are stated at cost of acquisition/installation as reduced by accumulated depreciation/ amortisation. Cost of Assets includes direct/indirect and incidental costs incurred to bring such assets into its present location and working condition for its intended use.

E Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

F Depreciation:

a) Tangible Assets :

i) No depreciation is charged on Freehold Land.

ii) Leasehold Land is amortised over the remaining period of lease.

iii) Depreciation on Other Fixed Assets has been provided on ''Straight Line Method'' on triple shift basis wherever applicable as per the rates and in the manner specified in Scheduled XIV of the Companies Act, 1956.

b) Intangible Assets:

i) Accounting Software is amortised on Straight Line Method over a period of ten years. ii) Right to receive power is amortised on Straight Line Method over a period of ten years.

G Inventories:

Inventories are valued as follows:

i) Finished Goods are valued at lower of cost or net realisable value.

ii) Raw Materials are valued at lower of cost or net realisable value.

iii) Work-in-Process are valued at lower of cost or net realisable value.

iv) Stores & Spares are valued at lower of cost or net realisable value.

v) Packing Materials are valued at lower of cost or net realisable value.

vi) Scrap is valued at net realisable value.

H Provisions and Contingent Liabilities:

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

I Borrowing Costs

Borrowing costs are recognized as an expense in the period in which they are incurred except the borrowing costs attributable to the acquisition/ construction of qualifying assets which are capitalized as a part of the cost of the fixed assets, up to the date, the assets are ready for its intended use.

J Investments:

Investments that is intended to be held for more than a year from the date of acquisition are classified as long term investments and are carried at cost less any provision for permanent diminution in value. Investments other than long term investments being current investments are valued at cost or fair market value whichever is lower.

K Expenditure during Construction Period:

Expenditure of capital nature incurred during construction period in respect of a project being executed by the

Company is grouped under Capital work in progress. Such Expenditure is capitalized upon the commencement of commercial operations of the project.

L Purchases are inclusive of Cenvat after deducting purchase returns, discounts, rebates and incentives, if any.

M Sales are inclusive of Excise Duty after deducting sales returns, discounts if any.

N Earnings per share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in rights issue that have changed the number of outstanding equity shares, without a corresponding change in resources.

For the purpose of calculating dilutive earnings per share, the net profit or loss for the period attributable to equity shareholders and weighted number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

O Accounting for Taxes of Income:- Current Taxes

Provision for current income-tax is recognized in accordance with the provisions of Indian Income- tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions

Deferred Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantially enacted at the balance sheet date. Deferred Tax Assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future. Deferred Tax Assets are reviewed at each Balance Sheet date.

P Employee Benefits :

i) Company''s contribution to Provident Fund and other Funds for the year is accounted on accrual basis and charged to the Statement of Profit & Loss for the year.

ii) Retirement benefits in the form of Gratuity are considered as defined benefit obligations and are provided on the basis of the actuarial valuation, using the projected unit credit method as at the date of the Balance Sheet.

Q "Foreign Currency Transaction"

i) The transactions in foreign currencies on revenue accounts are stated at the rate of exchange prevailing on the date of transaction.

ii) The difference on account of fluctuation in the rate of exchange prevailing on the date of transaction and the date of realisation is treated as revenue.

iii) Differences on translation of Current Assets and Current Liabilities remaining unsettled at the year end are recognised in the Statement of Profit and Loss.

c. Terms/rights attached to equity shares

The Company has one class of equity shares having a par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

a Loan from State Bank of India amounting to Rs. 302.00 Lakhs (P.Y. Rs. 494.00 Lakhs) was sanctioned during the financial

year 2007-08 and carries Interest @ Base Rate 5% p.a. The loan is repayable in 81 monthly installments starting from September 2008. The Loan is Secured By 1st equitable mortgage charge on Company''s Land & Building, Plant & Machinery, Furniture & Fixtures, Office Equipments & all other Fixed assets situated at Government Industrial Estate Masat, Silvassa. 2nd charge on paripassu basis with other Bank on the Land, Building, Plant & Machinery, Office Equipments and all other Fixed Assets situated at village Naroli, Silvassa. 1st Charge on office situated at Goregoan (East) and 2nd charge on parripassu basis with other lenders over the entire current assets of the company.

b Loan from State Bank of India amounting to Rs. 375.69 Lakhs (P.Y. Rs. 501.33 Lakhs) was sanctioned during the financial

year 2009-10 and carries interest @ Base rate 5% p.a. The loan is repayable in 78 monthly installments starting from October 2010. The Loan is Secured By 1st Equitable mortgage on pari-passu basis with other Banks on the Land & Building (Ground Floor),Plant & Machinery, Office Equipment (10 texturising machines) and all other Fixed Assets to be situated at village Naroli Silvassa. 2nd charge on pari passu basis over entire fixed assets land & building situated at Govt Industrial Estate Masat, Silvassa and other location.1st Charge on office situated at Goregoan (East) and 2nd charge on parripassu basis with other lenders over the entire current assets of the company.

c Loan from State Bank of India amounting to Rs. 422.00 Lakhs (P.Y Rs. 476.00 Lakhs) was sanctioned during the financial

year 2011-12 and carries interest @ Base rate 5.65% p.a. The Loan is repayable in 80 monthly installments starting from April 2012. The Loan is secured by 1st equitable charge on Building (1st & 2nd Floor) situated at village Naroli, Silvassa owned by the Company. 2nd charge on paripassu basis with other Bank on the Land, Building, Plant & Machinery, Office Equipments and all other Fixed Assets situated at village Naroli, Silvassa. 2nd parripassu charge with other Bank Ltd on entire fixed assets(other than 1st charge on assets to be created out of TL-IV from SBI) at Govt Industrial Estate Masat,Silvassa and village Naroli Silvassa. 1st Charge on office situated at Goregoan (East) and 2nd charge on parripassu basis with other lenders over the entire current assets of the company.)

d Loan State Bank of India amounting to Rs. 3810.00 Lakhs (PY Rs. 4290.00 Lakhs) was sanctioned during the financial year

2011-12 and carries interest @ Base rate 4.50% p.a. The loan is repayable in 76 monthly installments starting from October 2012. The Loan is secured by 1st hypothecation charge on shed, plant & machinery at Naroli, Silvassa owned by the company and extension of 1st charge on Building (1st & 2nd Floor) at Naroli. 2nd charge on paripassu basis with other Bank on the Land, Building, Plant & Machinery, Office Equipments and all other Fixed Assets situated at Naroli, Silvassa. 2nd parripassu charge with other Bank Ltd on entire fixed assets(other than 1st charge on assets to be created out of TL-IV from SBI) at Govt Industrial Estate Masat, Silvassa and S.No. 185/P Naroli Silvassa. 1st Charge on office situated at Goregoan (East) and 2nd charge on parripassu basis with other lenders over the entire current assets of the company.

e Loan from Axis Bank amounting to Rs. 948.90 Lakhs (P.Y. Rs.1224.90 Lakhs) was sanctioned during the financial year 2010-

11 and carries interest @ Base rate 3.50% p.a The loan is repayable in 78 monthly installments starting from January 2011. The loan is secured by Equitable mortgage of land and building & hypothecation of Plant & Machinery(both acquired out of TL and installed at Silavassa ,D&N Haveli (UT) on parripassu with SBI. Second parripassu charge on entire fixed assets of the company with SBI (for land & building at Govt Industrial Estate Masat, Silvassa to the extent of Rs. 10 Crore).Second parripassu charge on entire current assets of the company with SBI.

f All the above term loans are personally guaranteed by the Chairman & Managing Director of the Company.

Vehicle Loan (Secured)

Vehicle Loan amounting to Rs.13.46 Lakhs (P.Y. Rs. 22.02 Lakhs ) was obtained during the financial year 2009-10 and carries interest @ 8.67% p.a. The loan is repayable in 60 monthly instalments along with interest starting from Oct 2010.The loan is secured by 1st charge on the vehicle specifically financed out of the loan

Loan from Companies (Unsecured)

Loan from a Company amounting to Rs. 100.00 Lakhs was obtained during the year 2013-14 and carries @ 12% p.a..The loan is unsecured and is repayable after 31st March 2015.

Loan from Related Parties (Unsecured)

Loan from Related Parties amounting to Rs. 1810.00 Lakhs (P.Y. Rs. 508.00 Lakhs) was obtained in the financial year 2013- 14 and is interest free. The loan is unsecured and is repayable after 31st March 2015.

a Cash credit from State Bank of India amounting to Rs. 4,889.23 Lakhs (P.Y. 3467.45 Lakhs) is secured by 1st Hypothecation charge on entire current assets of the company on parripassu basis. 2nd charge on pari passu basis on Land & Building, Plant & Machinery, Office Equipments and all other Fixed Assets situated at village Naroli Silvassa. 2nd charge on pari passu basis over entire fixed assets Land & Building at Govt Industrial Estate, Masat, Silvassa and othe location(for land and building to the extent of Rs.10 Crores). 2nd charge on building Shed, Plant & Machinery of Proposed Project at Unit-3 situated at Naroli (under New project) 1st charge in office situated at Goregoan (East).The cash credit is repayable on demand and carries interest @ Base Rate 4% p.a.

b Cash credit from Axis bank amounting to Rs.118.90 Lakhs (P.Y.184.75 Lakhs ) is secured by 1st parri passu charge over entire current assets of the company, present & future. 2nd parripassu charge over the entire fixed assets of the company, present, future (for land & building at Govt Industrial Estate Masat, Silvassa. The cash credit is repayable on demand and carries interest @Base Rate 3.5% p.a.

c All the above secured short term borrowings are personally guaranteed by the Chairman & Managing Director of the Company .


Mar 31, 2013

A Basis of Accounting:

The Financial Statements have been prepared under the historical cost convention on an accrual basis and in compliance with all material aspects with the notified Accounting Standards by Companies (Accounting Standard) Rules 2006 and the relevant provisions of the Companies Act, 1956.

B Use of Estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the financial statements and the reported amounts of revenues and expenses during the reporting period.

Difference between actual results and estimates are recognized in the periods in which the results are known/ materialize.

C Revenue Recognition:

i) Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.

ii) Sales are recognised when all significant risks and rewards of ownership of the goods are passed on to the buyer.

iii) Revenue in respect of export sales is recognised on shipment of products.

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

v) Export incentives are recognised in the Statement of Profit and Loss when the right to receive credit as per the terms of the Scheme is established in respect of export made.

D Fixed Assets:

All Fixed Assets are stated at cost of acquisition/installation as reduced by accumulated Depreciation/ amortisation. Cost of Asset includes direct/indirect and incidental cost incurred to bring such assets into its present location and working condition for its intended use.

E Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

F Depreciation:

a) Tangible Assets :

i) No depreciation is charged on Freehold Land.

ii) Leasehold Land is amortised over the remaining period of lease.

iii) Depreciation on Other Fixed Assets has been provided on ''Straight Line Method'' on triple shift basis wherever applicable as per the rates and in the manner specified in Scheduled XIV of the Companies Act, 1956.

b) Intangible Asset :

i) Accounting Software is amortised on Straight Line Method over a period of ten years.

ii) Right to receive power is amortised on Straight Line Method over a period of ten years.

G Inventories: Inventories are valued as follows:

i) Finished Goods, Raw Material, Work-in-Process, Stores & Spares and Packing Material are valued at lower of cost or net realisable value.

ii) Yarn Scrap is valued at net realisable value.

H Provisions and Contingent Liabilities:

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

I Borrowing costs

Borrowing costs are recognized as an expenses in the period in which they are incurred except the borrowing cost attributable to be acquisition/ construction of qualifying assets which are capitalized as a part of the cost of the fixed assets, up to the date, the assets are ready for its intended use.

J Investments:

Investments that is intended to be held for more than a year from the date of acquisition are classified as long term investments and are carried at cost less any provision for permanent diminution in value. Investments other than long term investments being current investments are valued at cost or fair market value whichever is lower.

K Expenditure during Construction Period:

Expenditure of capital nature incurred during construction period in respect of a project being executed by the Company is grouped under Capital work in progress. Such Expenditure is capitalized upon the commencement of commercial operations of the project.

L Purchases are inclusive of Cenvat after deducting purchase returns, discounts, rebates and incentives, if any.

M Sales are inclusive of Excise Duty after deducting sales returns, discounts if any.

N Earnings per share:

Basic Earnings per share are calculated by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in rights issue that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating Dilutive Earnings per share, the net profit or loss for the period attributable to equity shareholders and weighted number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

O Accounting forTaxes of Income: CurrentTaxes

Provision for current income-tax is recognized in accordance with the provisions of Indian Income- tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

DeferredTaxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantially enacted at the balance sheet date. Deferred tax Assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future. Deferred Tax Assets are reviewed as at each Balance Sheet date.

P Employee Benefits :

i) Company''s contribution to Provident Fund and other Funds for the year is accounted on accrual basis and charged to the Statement of Profit & Loss for the year.

ii) Retirement benefits in the form of Gratuity are considered as defined benefit obligations and are provided on the basis of the actuarial valuation, using the projected unit credit method as at the date of the Balance Sheet.

Q Foreign CurrencyTransaction

i) The transactions in foreign currencies on revenue accounts are stated at the rate of exchange prevailing on the date of transaction.

ii) The difference on account of fluctuation in the rate of exchange prevailing on the date of transaction and the date of realisation is treated as revenue.

iii) Differences on translation of Current Assets and Current Liabilities remaining unsettled at the year end are recognised in the Statement of Profit and Loss.


Mar 31, 2010

1) Basis of Accounting

i) The financial statements have been prepared in compliance with the Accounting Standards notified by Companies (Accounting Standard) Rules 2006 and the relevant provisions of the Companies Act, 1956 in all material aspects.

ii) Financial Statements are based on historical cost convention.

2) Recognition of Revenue & Expenditure

i) The Company follow the accrual basis of accounting except in case of Gratuity and Bonus which is accounted for on cash basis.

ii) Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.

iii) Revenue in respect of export sales is recognised on shipment of products.

3) Fixed Assets

All Fixed Assets are stated at cost of acquisition/Installation as reduced by accumulated Depreciation. Cost of Asset includes Direct/Indirect and incidental cost incurred to bring such assets into its present location and working condition for its intended use.

4) Impairment of Fixed Assets

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indication that an impairment loss may have occurred in accordance with Accounting Standard 28 on "Impairment of Assets". Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference.

5) Depreciation

i) No depreciation charged on Freehold Land.

ii) Leasehold land is amortised over the remaining period of lease.

iii) Depreciation on Fixed Assets has been provided on ''Straight Line Method'' on triple shift basis as per the rates and in the manner specified in Scheduled XIV of the Companies Act, 1956.

iv) Mobile phones are fully depreciated in the year of purchase.

6) Borrowing Cost I

Borrowing costs are recognized as an expenses in the period in which they are incurred except the borrowing cost attributable to be I acquisition/ construction of qualifying assets which are capitalized as a part of the cost of the fixed assets, up to the date, the assets I are ready for its intended use.

7) Valuation of Inventories

i) Raw Materials, Work-in-Process, Stores & Spares and Packing Materials are valued at lower of cost or net realisable value.

ii) Finished goods are valued at lower of cost or net realisable value.

8) Excise Duty

Excise duty on manufactured goods is accounted for at the time of their clearance from the Factory.

9) Provisions and Contingent Liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

10) Taxes on Income Current Taxes

Provision for current Income-tax is recognized in accordance with the provisions of Indian Income- tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for Income tax and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantially enacted at the balance sheet date. Deferred tax Assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future. Deferred Tax Assets are reviewed as at each Balance Sheet date.

11) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the financial statements and the reported amounts of revenues and expenses during the reporting period.

Difference between actual results and estimates are recognized in the periods in which the results are known/materialize.

12) Foreign Currency Transaction

a. The transactions in foreign currencies on revenue accounts are stated at the rate of exchange prevailing on the date of transaction.

b. The difference on account of fluctuation in the rate of exchange prevailing on the date of transaction and the date of realisation is treated as revenue.

c. Differences on translation of Current Assets and Current Liabilities remaining unsettled at the year end are recognised in the Profit and Loss Account.

 
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