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Accounting Policies of Sri Arumuga Enterprise Ltd. Company

Mar 31, 2014

1.1Accounting Convention: The financial statements of the company are prepared under the historical cost convention on an accrual basis in accordance with the Generally Accepted Accounting Policies (GAAP) to comply with the Accounting Standards notified by the Government of India/issued by the Institute of Chartered Accountants of India (ICAI) , as applicable and the relevant provisions of the Companies Act, 1956.

The accounting policies adopted in the preparation of financial statements are consistent with those of the previous years.

1.2 An asset has been classified as current when it satisfies any of the following criteria:

a. It is expected to be realized in, or is intended for sale or consumption in the companies normal operating cycle;

b. It is held primarily for the purpose of being traded.

c. It is expected to be realized within 12 months after the reporting date.; or

d. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

A liability has been classified as current when it satisfies any of the following criteria:

a. It is expected to be settled in the Companies normal operating cycle;

b. It is held primarily for the purpose of being traded;

c. It is due to be settled within 12 months after the operating cycle; or

d. The company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of the liability that could at the option of counter party result in its settlement by the issue of equity instruments do not affect its classification.

All other assets and liabilities have been classified as non-current.

1.3Use of Estimates :

The preparation of Financial Statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and Liabilities (Including Contingent Liabilities) as of the date of the financial statements and the reported income and expenses like provision for employee benefit , provision for doubtful trade receivables/ advances/ contingencies, provision for warranties, allowance for slow/ non-moving inventories, useful life of fixed assets, provision for taxation, etc., during the reporting year. The management beleives that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates.

1.4Tangible Fixed Assets:

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses, if any. Cost includes related taxes, duties, freight, etc. attributable to the acquisition and installation of the fixed assets but excludes duties and taxes that are recoverable from tax authorities. Borrowing costs are capitalised as part of qualifying fixed assets. Exchange differences arising on restatement/ settlement of long term foreign currency borrowings relating to acquisition of depreciable fixed assets are recognised in the statement of profit and loss.

Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Susequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately in the balance sheet Capital work in progress: projects under which assets are not ready for their intended use and other capital work in progress are carried at cost, comprising direct cost and attributable interest.

1.5 Impairment of Assets:

The carrying values of assets/ cash generating units are reviewed at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the company''s assets. If any indication exists, an asset''s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of the asset exceeds the recoverable amount. The recoverable amount is the greater of the net selling price and their value in use . Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. when there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased such reversal of impairment loss is recognised in the statement of profit and loss.

1.6 Investments:

a) Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non current investments.

b) Non-Current investments are carried at cost. Dimunision in the value of such investments, other than temporary, is provided for.

c) Current investments are carried at lower of cost and fair value.

1.7 Inventories:

a) Raw materials, stores & spare parts and traded goods are valued at lower of weighted average cost(net of allowances) and estimated net realisable value. Cost includes freight, taxes and duties and is net of credit under VAT and CENVAT scheme, Where applicable.

b) Work-in-process and finished goods are valued at lower of weighted average cost (net of allowances) and estimated net realisable value. Cost includes all direct costs and appropriate Proportion of overheads to bring the goods to the present location and condition.

c) Due allowance is made for slow/ non-moving items, based on management estimates.

1.8 Revenue and other income:

a) Sales are recognised on shipment or on unconditional appropriation of goods and comprise amounts invoiced for the goods, including excise dutiy, but excluding sales tax/ value added tax.

b) Service revenues are recognised when services are rendered.

c) Dividend income is accounted for when the right to receive it is established as on the date of balance sheet.

d) Interest income is recognised on time proportion basis.

1.9 Government Grants, Subsidies and Export incentives:

Government grants and subsidies are recognised when there is reasonable assurance that the company will complywith the conditions attached to them and the grants/ subsidy will be received.

when the grant or subsidy from the government relates to revenue, it is recognised as income on a systematic basis in the statement of profit and loss over the period necessary to match them with the related costs, which they are intended to compensate.

When the grant or subsidy from the government is in the nature of promoters'' contribution, where no repayment is ordinarily expected in respect thereof, it is credited to capital reserve and treated as a part of the shareholders'' funds on receipt basis.

Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.

1.10. Employee Benefits:

I. Defined Contribution Plan:

a. Provident Fund

Contributions are made to Regional Provident Fund in accordance with the Fund Rules. The interest rate payable to the beneficiaries every year is being notified by the government.

II. Defined Benefit Plan:

Gratuity

The Company accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date, determined every year using the projected unit credit method . Actuarial gains/Losses are immediately recognised in the Statement of Profit and Loss.

III. Short Term Employee Benefit

Short Term employee benefits includes short term compensated absences which is recognizes based on thee ligible leave at credit on the Balance sheet date, and the estimated cost is based on the terms of the employment contract.

IV. Voluntary Retirement Scheme:

Compensation to employees under voluntary Retirement Schemes is expensed in the period in which the liability arises.

1.11 Operating Leases:

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases . Operating lease payments are recognised as an expense in the revenue account as per the lease terms.

1.12 Foreign Currency Transactions:

Initial recognition

Transactions in foreign currencies entered into by the company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement

Foreign currency monetary items (other than derivative contracts) of the company outstanding at the balance sheet date are restated at year end exchange rates.

Treatment of Exchange Differences

Exchange differences arising on settlement/restatement of short term foreign currency monetary assets and liabilities of the company are recognised as income or expense in the statement of profit and loss.

Accounting of forward contracts

The company enters into forward exchange contracts and other instruments that are in substance a forward exchange contract to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of a forward exchange contract (other than for a firm commitment or a highly probable forecast transaction) or similar instrument is amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the statement of Profit and Loss in the year in which the exchange rates change. Any profit or Loss arising on cancellation of such a contract is recognised as income or expense for the year.

1.13 Depreciation :

Depreciation has been provided on written down value method as laid down in Section 205(2)(b) of the Companies Act 1956 and as per the rates provided in accordance with Schedule XIV of the Companies Act, 1956 . Individual fixed assets whose actual cost does not exceed Rs. 5000 is fully depreciated in the year of acquisition. Pro-rata Depreciation has been charged to Assets purchased during the accounting year 31.03.2014

1.14 Taxes on Income :

Current Tax is the amount of tax payable on the taxable income for the year and is determined in accordance with the provisions of the Income Tax Act,1961.

Deffered tax is recognised on timing difference ; being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deffered Tax Assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainity that there will be sufficient future taxable income available to realise such assets. Other deferred tax assets are recognised if there is reasonable certainity that there will be sufficient future taxable income available to realise such assets.

1.15 Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that mey never be realised.


Mar 31, 2013

1. Significant Accounting Policies:

The Financial Statements are prepared under the historical cost convention, on the accrual basis of accounting. The statements comply with the Accounting Standards prescribed by the ICAI and also comply with Section 211(3) (c) of the Companies Act 1956. The accounts are prepared as a going concern.

a) Revenue Recognition :

All Income and Expenditure are accounted on accrual basis.

b) Inventories:

(a) Raw Materials, Stock of Stores and Spares are valued at weighted average cost. The cost for this purpose comprise of direct cost of material and any expenses incurred for bringing them to the present condition.

(b) Work in Progress and finished goods are valued at the lower of the cost or net realizable value whichever is less. Cost for this purpose comprise of raw material cost and appropriate overheads incurred for bringing them to the present condition.

c) Debtors : Sundry debtors are stated at Net Realizable Values.

d) Employee Benefits : Gratuity and Retirement Benefits are accounted on cash basis.

e) Sales : Sales of goods are recognized based on the invoices raised.

f) Foreign Currency Transactions :

The foreign currency transactions are converted into Indian Rupees at the rate of exchange prevailing on the date of Transactions.

The foreign currency monetary items consisting of trade receivables has been accounted as income / expense as per Accounting Standard 11 (Revised 2003) on "Accounting for effects of Changes in Foreign Exchange Rates " issued by ICAI.

g) Taxation :

i) Provision for current tax is made with reference to taxable income computed for the Accounting Year by applying the tax rates as applicable.

ii) Deferred Tax calculated in respect of all timing differences on a liability method as per AS-22.

h) Investments:

Investments in subsidiaries are valued at cost.

a. The accounts have been prepared on the accrual basis of accounting, under historical cost convention and in accordance with the generally accepted accounting principles, Companies Accounting Standards notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and the provisions of Companies Act, 1956, except where otherwise stated.

b. Principles of consolidation

The Consolidated Financial Statements include the Financial Statements of Sri Arumuga Enterprise Limited and its subsidiaries, namely Sri Mahasakthi Mills Limited and Sri Arumuga Cottspin Private Limited.

The Consolidated Financial Statements have been prepared on the following basis:

i. The Financial Statements of the Parent Company and its Subsidiary Companies have been consolidated on a line-by-line basis, by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealized profit or losses.

ii. The Consolidated Financial Statements are prepared by adopting Uniform Accounting policies.

iii. The Financial statements of the following subsidiaries have been incorporated for consolidation.

Name of the Country of Proportion of

Subsidiary Incorporation ownership interest (%)

Sri Mahasakthi Mills Ltd India 100%

Sri Arumuga Cottspin

Private Limited India 100%

c. Income :

i. Refunds from government department are accounted for on receipt basis.

ii. Sales/Purchase of shares is accounted based on Brokers Contract

Note/Company''s Debit Note.

iii. Commission income is accounted on the basis of Bill/ Debit Note raised.

iv. Sale of goods is recognized based on the invoice raised.

d. Expenditure :

Revenue expenses are accounted on accrual basis.

e. Fixed Assets:

Fixed Assets are stated at historical cost of acquisition, installation and commissioning less accumulated depreciation and modvat benefits on capital goods. Depreciation is charged on straight-line method at the rates prescribed under Schedule XIV of the Companies Act, 1956.

f. Inventories:

Raw materials are valued at cost. Work-in-progress and finished goods are valued at selling price or net realizable value whichever is lower. Stores and spares are valued at cost.

g. Retirement Benefits:

Retirement benefits are accounted on actual payment basis.

h. Cash Flow Statements:

Cash Flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. Cash and cash equivalents include cash on hand and balances with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the company.

i. Provision for Taxation:

i. Provision for current tax has been made in accordance with the Income Tax Act, 1961.

ii. Deferred Tax is recognized on timing differences being the differences between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent period, at the current rate of tax.

j. 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, require 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.


Mar 31, 2012

A) General :

The Financial Statements are prepared under the historical cost convention, on the accrual basis of accounting. The statements comply with the Accounting Standards (AS) prescribed by the ICAI and also comply with Section 211(3)(c) of the Companies Act 1956. The accounts are prepared as a going concern.

b) Revenue recognition :

All Income and Expenditure are accounted on accrual basis.

c) Current assets :

(i) Employee Benefits: Gratuity and retirement benefits are accounted on cash basis.

(ii) Debtors: Sundry debtors are stated at net realizable values.

d) Foreign currency transactions :

There were no transactions involving foreign currency during the year.

e) Sales :

Sales of goods are recognized based on the invoices raised.

f) Deferred tax :

Deferred tax calculated in respect of all timing differences on a liability method as per AS-22.

g) Investments: Investments are valued at cost.

1. Requirement under Accounting Standard 15 is not applicable as there are no employees.

2. As per the information available with the company there are no dues outstanding for more than 45 days as on 31st March 2012 to Small & Micro Enterprises as defined under Micro, Small and Medium Enterprise Development (MSMED) Act, 2006.

List of Related Parties

- Key Managerial Persons:

Sri T Rajkumar, Chairman & Managing Director

Sri K Dhanakumar, Director

- Associated Enterprises

Imperial Spirits Limited

Nethravathi Distilleries Private Limited

Imperial Spirits and Wine Private Limited

Sri Arumuga Cottspin Private Limited

Sri Arumuga Sugars Limited

Sri Mahasakthi Mills Limited

3. The Revised Schedule VI is effective from 1st April 2011 for the preparation of financial statements. This has seriously impacted the disclosure and presentation of financial statements. Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year''s disclosure / presentation.


Mar 31, 2010

A. The accounts have been prepared on the accrual basis of accounting, under historical cost convention and in accordance with the generally accepted accounting principles, Companies Accounting Standards notified by the Central Government under the Companies (Accounting Standards) Rules, 2006 and the provisions of Companies Act, 1956, except where otherwise stated.

b. Income :

i. Refunds from government department are accounted for on receipt basis.

ii. Sales/Purchase of shares are accounted based on Brokers Contract Note/Companys Debit Note.

iii. Commission income is accounted on the basis of Bills / Debit Notes raised.

iv. Sale of goods are recognized bases on the invoice raised.

c. Expenditure :

Revenue expenses are accounted on accrual basis.

d. Retirement Benefits:

Retirement benefits are accounted on actual payment basis.

g. Provision for Taxation:

i. Provision for current tax has been made in accordance with the Income Tax Act, 1961.

ii. Deferred Tax is recognized on timing differences being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period, at the current rate of tax.

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, require 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.

 
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