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Accounting Policies of Shri Aster Silicates Ltd. Company

Mar 31, 2015

A) BASIS OF PREPARATION OF ACCOUNTS:

The financial statements have been prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles and provisions of Companies Act, 2013 and comply with applicable accounting standards referred to in Companies Act, 2013. The company follows mercantile system of accounting and recognizes significant items of Income & Expenditure on accrual basis.

b) FIXED ASSETS

Fixed Assets are stated at cost of acquisition less accumulated depreciation. The cost of fixed assets includes freight, taxes, duties and other incidental expenses related to acquisition and installation. The amount includes borrowing cost capitalized as per Accounting Standard-16 on borrowing cost, less CENVAT credit availed, VAT credit to the extent available and subsidy received from government relating to fixed assets.

During the year the company continued the development of built a new furnace at Jhagadia. The initial production capacity of 540 MT per day has been raised to 625 MT per day. The said furnace was again being put through trial runs in this financial year. The cost of gas consumed Rs. 1,65,59,287/- during trial runs has also been added to the value of Furnace Work in Progress. Commercial production has not been started from this furnace till 31.03.2015. Company has capitalized all the incidental cost of trial runs incurred till 31.03.2015.

The Company also under took the capacity enhancement of its 2nd furnace at Jhagadia from 200 MT per day to 275 MT per day. The capital expenses incurred on the same till 31.03.2015 have been classified as "Capital Work In Progress".

c) DEPRECIATION OF FIXED ASSETS:

Depreciation for the year has been provided in accordance with rates and manners specified in Part "C" of Schedule II of Companies Act, 2013 on Straight Line Method. Depreciation on addition/deduction during the year has been provided on pro-rata basis from date of such addition/deduction. The company has assessed the remaining useful life of its fixed assets equivalent to the specified life in schedule II of the Act starting from 2014-15. The depreciation has been charged accordingly without giving retrospective effect.

Throughout the year 2014-15, the company did not put furnace no. 2 (200 MT per day capacity) at Jhagadia as it was under reconstruction for capacity enhancement and hence depreciation on the same has not been charged.

d) INVENTORY VALUATION

Raw Material, WIP and Finished Goods are valued at lower of cost and net realizable value. Cost of raw material is computed on FIFO method of valuation. Cost of Work In Progress and Finished Goods includes raw material cost, estimated cost of conversion, including fuel cost, production overheads and other cost incurred in bringing the inventory to their present location and condition. The value of inventory of finished goods does not include excise duty that may be applicable.

f) CASH & CASH EQUIVALENTS

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an 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.

g) 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. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.


Mar 31, 2014

A) BASIS OF PREPARATION OF ACCOUNTS:

The financial statements have been prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles and provisions of Companies Act, 1956 and comply with applicable accounting standards referred to in section 211 (3C) of Companies Act, 1956. The company follows mercantile system of accounting and recognizes significant items of Income & Expenditure on accrual basis.

b) FIXED ASSETS

Fixed Assets are stated at cost of acquisition less accumulated depreciation. The cost of fixed assets includes freight, taxes, duties and other incidental expenses related to acquisition and installation. The amount includes borrowing cost capitalized as per Accounting Standard-16 on borrowing cost, less CENVAT credit availed, VAT credit to the extent available and subsidy received from government relating to fixed assets.

During the year the company has built a new furnace with the production capacity of 540 MT per day. The said furnace was put through trial runs in this financial year. Commercial production has not been started from this furnace till 31.03.2014. Company has capitalized all the incidental cost of trial runs incurred till 31.03.2014.

The Company is constructing the Two Additional Furnaces at Jhagadia Unit. The capital expenses incurred on the same till 31.03.2014 amounting to Rs. 56,77,46,183/- have been classified as "Capital Work In Progress". In the construction of these additional furnaces, the Company has utilized the Furnace Refractories and Equipments of the old furnaces at its Kheda unit amounting to Rs. 3,63,77,864/-.

c) DEPRECIATION OF FIXED ASSETS:

Depreciation for the year has been provided in accordance with rates and manners specified in Schedule XIV of Companies Act, 1956 on Straight Line Method. Depreciation on addition/deduction during the year has been provided on pro-rata basis from date of such addition/deduction. During the previous year, 2012- 13, the company had under taken extensive refurbishment of the entire Plant & Machinery which was lying unused for over 18 months. On account of the said refurbishment, which continued till 30th June 2013, the Plant and Machinery was not put to use other than for carrying out trial runs. The commercial production was started only from 1st July, 2013. In the view of above, the depreciation has been charged on pro-rata basis for the partial period starting from 1st July, 2013.

The company also started the redesigning & rebuilding the Furnace no. 2 located at its Jhagadia Unit having production capacity of 200 MT per day. The furnace remained closed and under development from October 2013 onwards. Hence the depreciation on the same has not been charged from October 2013 onwards. As the redesigned and redeveloped furnace would have higher production capacity with fully automated mechanism, the company has capitalized the expenditure incurred on redesigning and rebuilding. The furnace has not been put to use as on 31.03.2014 and hence has been classified as Capital Work in Progress.

d) FURNACE RESTARTING EXPENDITURE

The company''s manufacturing operations were suspended in financial year 2011-12 requiring total overhaul, refurbishing and recommissioning of plant & machinery. The expenditure incurred in preceding financial year for such repairs, refurbishing and recommissioning the machinery, being on capital field, were treated as Deferred Revenue Expenditure. According to the Management of the Company, the estimated period of benefit accrual from this expenditure shall be three to five years commencing from 1st July 2013. In the view of the above, the company had transferred the entire expenditure of refurbishment and related income to Deferred Revenue Expenditure and shown in balance sheet instead of charging the same to revenue. The same policy has been adopted by the company for the period up to 30th June 2013 in the financial year under audit. Company has started its commercial production from 1st July, 2013.

e) INVENTORY VALUATION

Raw Material, WIP and Finished Goods are valued at lower of cost and net realizable value. Cost of raw material is computed on FIFO method of valuation. Cost of Work In Progress and Finished Goods includes raw material cost, estimated cost of conversion, including fuel cost, production overheads and other cost incurred in bringing the inventory to their present location and condition. The value of inventory of finished goods does not include excise duty that may be applicable.

f) CASH & CASH EQUIVALENTS

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an 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.

g) 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. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

( c) Information regarding issue of Shares:

(1) The company has issued 86,65,511 no. of fresh Equity Shares to Sicom Investments & Finance Limited on 1 st August, 2013 through an Open Offer @ Rs. 11.54/Share. The said allotment is against the Loan Outstanding of Rs. 10,00,00,000/-.

(2) The company has not issues any shares without payment being not received in cash.

(3) The company has not taken any buy back of shares.

*Increase in Security Premium Account is on account of issue of 86,65,511 equity shares at the premium of Rs. 1.54/- per share to SICOM Investment & Finance Limited.


Mar 31, 2012

1. The financial statements have been prepared under Historical Cost Convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company. The same are prepared on a going concern basis. The Company follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

2. Depreciation on fixed assets is provided under the WDV method at the rates and in the manner prescribed by Income tax Act, 1961.

3. Inventories are valued at cost price including expenses incurred in putting the inventories in their present location and condition and Net Realizable value whichever is lower and formula used is FIFO method.

4. The accounting standards as prescribed by The Companies Accounting Standards Rules,2006 are applied wherever applicable in preparing and presenting the financial statements.

5. Investments are stated at cost.

6. P F Superannuation Fund and other employees benefits scheme are not yet applicable to the company.

7. Previous year figures have been regrouped and rearranged wherever necessary.

8 Balance of Debtors, Creditors and depositors are subject to confirmation and reconciliation.

 
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