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Accounting Policies of Sri Nachammai Cotton Mills Ltd. Company

Jun 30, 2014

(In the order of applicability of Accounting Standards)

AS - 1 Disclosure and Basis of Accounting

(i) The Financial Statements have been prepared under the Historical cost convention in accordance with the provisions of the Companies Act, 1956. The Company has complied with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable.

(ii) The Company has been consistently following the accrual basis of accounting in respect of its Income and Expenditure.

(iii) The Accounts are prepared on the basis of going concern concept only.

AS - 2 Valuation of Inventories

Inventories are valued at lower of cost and net realisable value, where

a) Cost of Raw materials is determined on specific identification method.

b) Stock of stores, spares and packing materials is determined on weighted average method.

c) Finished goods and work in progress is determined under FIFO method where cost includes conversion and other costs incurred in bringing the inventories to their present location and condition.

AS - 3 Cash Flow Statement

Cash flows are reported using the indirect method, where by the profit before tax is adjusted for the effect 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 equivalent 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.

AS - 6 Depreciation Accounting

Depreciation on Fixed Assets has been provided as per Schedule XIV of the Companies Act, 1956 adopting the methods as under:

i) On Assets acquired before 01.04.1990 - Written Down Value Method.

ii) On Assets acquired from 01.04.1990 - Straight Line Method

iii) In respect of all assets purchased or sold during the year, depreciation has been provided at the above rates on pro-rata basis from the date of purchase / to the date of sale including assets whose cost is below Rs.5,000/-.

AS - 9 Revenue Recognition

i) Revenue from sale transactions is recognized as and when the property in the goods sold is transferred to the buyer for a definite consideration. Revenue from service transactions are recognised on the completion of the contract at the contracted rate and when there is no uncertainty regarding the amount of consideration or collectability.

ii) Other Income except dividend is accounted on accrual basis.

iii) Sales as reported are exclusive of Sales Tax (VAT), Insurance and Transport charges.

AS - 10 Fixed Assets

The cost of fixed assets is shown at historical cost of acquisition including installation, commissioning less accumulated depreciation.

AS - 11 Foreign Currency Transactions

Foreign currency transactions are recorded at the prevailing exchange rates at the time of initial recognition. Exchange differences are recognized as income or expense in the Profit and Loss account. Outstanding balances of monetary items denominated in foreign currency are restated at closing exchange rates and recognised as income or expenses in the Profit and Loss account in other cases. The premium on discount arising at the inception of forward exchange contracts is accounted as income or expense over the life of the contract. Any profit or loss arising on cancellation or renewal exchange contract is recognized as income or as expense in the period in which they arise.

AS - 13 Accounting for Investments

Long term investments are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of long term investments.

AS - 15 Employee Benefits

Short term employee benefits (other than termination benefits) which are payable within 12 months after the end of the period in which the employees render service are accounted on accrual basis.

Defined Contribution Plans

Company''s contributions paid / payable during the year to Provident Fund is recognized in the Profit and Loss account.

Defined Benefit Plans

Company''s Liabilities towards gratuity is determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits becomes vested. Actuarial gains or losses are recognized immediately in the statement of profit and loss account as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate.

AS - 16 Borrowing Costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets. Aqualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as expenses in the period in which they are incurred.

AS -19 Lease

Lease, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating lease. Operating lease payments are recognized as an expense in the profit and loss account on a straight line basis over the lease term.

AS - 20 Earnings per Share

The Earnings considered in ascertaining the Company''s earnings per share comprise of Net Profit after tax.

AS - 22 Accounting for taxes on Income

Deferred Tax resulting from timing differences between book and tax profits is accounted under liability method at enacted as substantively enacted rate as on the balance sheet date. Deferred tax asset, other than those arising on account of unabsorbed depreciation or carried forward of losses under tax loss, are recognised and carried forward subject to consideration of prudence only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

Deferred tax asset, arising on account of unabsorbed depreciation or carried forward of losses under tax loss, are recognised and carried forward subject to consideration of prudence only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised.

Current tax is determined at the amount of tax payable in respect of estimated taxable income for the year.

AS - 28 Impairment of Assets

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

AS - 29 Provisions, Contingent liability and Contingent Assets

a) Provisions involving degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources.

b) Contingent liabilities are disclosed by way of notes to accounts. Provision is made if it becomes probable that an outflow of future economic benefits will be required for an item previously dealt with as a contingent liability.

c) Contingent liability under various fiscal laws includes those in respect of which the Company / Department is in appeal.

Others : Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to the estimates is recognized prospectively.

VAT

a) The value of VAT benefits is being reduced from the value of purchase of materials

b) The value of benefits eligible in respect of Capital items is reduced from the cost and depreciation is calculated accordingly.


Jun 30, 2013

In the order of applicability of Accounting Standards) AS -1 Disclosure and Oasis of Accounting (i) The Financial Statements have been prepared under the Historical cost convention in accordance with, (he provisions of the Companies Act, 1956. The Company has complied with the Accounting Standards- prescribed in the Companies (Accounting Standards) Rules. 2006 issued by 13iq Conlral Govommonl, in consirllafiDn wllh Iho National Advisory Commutes on Accounting

SttmdardB. to Ihocaiont appl jwblu. (il) The Company has been consistently following the accrual basis of accounting in respect nf its Income and Expenditure. (iii) Trie Account are prepared an the basis of going concern concept only, AS - 2 Valuation of Inventories

Inventon''os are valued at lower of cost and net realisable value, whore

a) Cost of Raw materials is dete-nniiied on specific IdentJlBcaGon method.

b) Stock of stores, spares and packing materials is determined on weighted average melhcd.

c) Finished goods and wmk In progress In dole*mined under FIFO method where cost includes conversion and oliier oasis incurrod In Bringing ihu inventories to their present location and condition,

AS - 3. Cash Flow Statement

Cash tows are reported using the indirect method, where by the prof it before tax is adjusted for (he effect of transactions of a rum cash nature, any deferrals or accruals of past or liilura operating nnsti rcoaipls or ptfyftenta and Horns ol income or espouse associated uaUi investing or linancing cash flows. Cash ur>d cash equivalent include cash on hand and balances wild banks in current and deposit accounlsvrith necessary discfosureof cash and cash equi valenlbalances lhat are not available for use by the company.

AS - G Depredation Accounting

provided asper Schauuta XIV of the Companies Act, 1956 adapting the met hoda asunder:

I) On Assets aoquifod before 01.04.1990 - Wriltori Dawn Value Mnlhod.

ii} On Assels acqu! red from 01,04,1990 - Slrajght Lins Method

iii) In respect of nil niseis purchased or sofd du ring the year. depreciation has been provided at the above rates en pro-rata basis from ¦ Uie dale of pgrtl i ase i to the data of sale Including assets whose cost is Wow R&,5,0QOA,

A3 - 9 Revenue Recognition

i) Revenue from sale liansaclwns is recognized as and when Ihu property in the goods sold is transferred to trie buyer for a definite consideration. Revenue from service transactions arc recognised an ihe completion cf Hie contract at the contracted rate and when Ihoiolsnb uncertainly regarding lliearriountolcpnslderauon orcollectability.

11} Other income excepl dividend is accounted on accrual basis,

iii) Sales as reported are exctusive of Sates Tax (VAT), Insurance and Transport charges,

AS -10 Fixed Assets i The cost of fixed assets Is shown al historical cost of acquisition Including installation, commissioning loss accumulated doprtitialiQA

AS - H Foreign Currency Transections

Foreign currency transactions are recorded at ihe prevailing exchange rates at ihetimo of initial recognition, Exchange differences are ropngnized as income w ex pensa in the Profit and Loss account. Outstanding bai snees of monetary Items denominated in foreign cunoiicy are restated at ctosi rtQ oxch ango rates and roocgni&ot! as Income or oxponsos in tho Profit and Loss account in ChUhOC cases, The prtsnlum on discount arising; at toe Inception of forward exchange oonlracts is accounted as income or expense over the I ile of the contract. Any profit orloss arising en cancelation or rone v/al exchange contract is recognteed as income of as expense i n theperiod in which UiQyjrise.

AS -13 Accounting for Invo&lmcnts

Lang term investments are stated at cost. Aorovlslon for diminution, if any, is mado to recognise a decline, other than tern poraiy, in the value of long term investments.

AS -15 Employee- Benefits

Short tonn emptayeo benefits (other than termination bontfils) which ate payable wilhl n 2 months niter llirj end of Uio period in willed Uw employees icndor series aro accounted on accrual basis.


Jun 30, 2012

(i) The Financial Statements have been prepared under the Historical cost convention in accordance with the provisions of the Companies Act, 1956. The Company has complied with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable.

(ii) The Company has been consistently following the accrual basis of accounting in respect of its Income and Expenditure.

(iii) The Accounts are prepared on the basis of going concern concept only. AS-2: VALUATION OF INVENTORIES:

Inventories are valued at lower of cost and net realisable value, where

a) Cost of Raw materials is determined on specific identification method.

b) Stock of stores, spares and packing materials is determined on weighted average method.

c) Finished goods and work in progress is determined under FIFO method where cost includes conversion and other costs incurred in bringing the inventories to their present location and condition.

AS - 3: CASH FLOW STATEMENT:

Cash flows are reported using the indirect method, where by the profit before tax is adjusted for the effect 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 equivalentindude 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.

AS - 5: NET PROFIT / LOSS FORTHE PERIOD AND PRIOR PERIOD ITEMS:

All items of income and expenses pertaining to the year are included in arriving at the net profit for the year, unless specifically mentioned elsewhere in the financial statement or as required by Accounting Standards.

AS-6: DEPRECIATION ACCOUNTING:

Depreciation on Fixed Assets has been provided as per Schedule XIV of the Companies Act, 1956 adopting the methods as under: i) On Assets acquired before 01.04.1990-Written Down Value Method. ii) On Assets acquired from 01.04.1990 - Straight Line Method.

iii) In respect of all assets purchased or sold during the year, depreciation has been provided at the above rates on pro-rata basis from the date of purchase/to the dateof sale including assets whose cost is below Rs.5,000/-.

AS-9: REVENUE RECOGNITION:

a) Revenue from sale transactions is recognized as and when the property in the goods sold is transferred to the buyer for a definite consideration. Revenue from service transactions are recognised on the completion of the contract at the contracted rate and when there is no uncertainty regarding the amount of consideration or collectability.

b) Other Income except dividend is accounted on accrual basis.

c) Sales as reported are exclusive of Sales Tax (VAT), Insurance and Transport charges. AS-10: FIXED ASSETS:

The cost of Fixed Assets is shown at historical cost of acquisition including installation, commissioning less accumulated depreciation. AS-11:FOREIGNCURRENCYTRANSACTIONS: Foreign currency transactions are recorded at the prevailing exchange rates at the time of initial recognition. Exchange differences are recognized as income or expense in the profit and loss account. Outstanding balances of monetary items denominated in foreign currency are restated at closing exchange rates and recognised as income or expenses in the profit and loss account in othercases. The premium on discount arising at the inception of forward exchange contracts is accounted as income or expense over the life of the contract. Any profit or loss arising on cancellation or renewal exchange contract is recognized as income or as expense in the period in which they arise. AS -13: ACCOUNTING FOR INVESTMENTS:

Long term investments are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of long term investments.

AS -15: EMPLOYEE BENEFITS:

Short term employee benefits (other than termination benefits) which are payable within 12 months after the end of the period in which the employees render service are accounted on accrual basis. Defined Contribution Plans Company'scontributionspaid/payableduringtheyeartoProvidentFund isrecognized inthe profit and loss account. Defined Benefit Plans Company's Liabilities towards gratuity is determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits becomes vested. Actuarial gains or losses are recognized immediately in the statement of profit and loss account as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate,

AS -16: BORROWING COSTS:

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as expenses in the period in which they are incurred.

AS-19: LEASE:

Lease, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating lease. Operating lease payments are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

AS-20: EARNINGS PER SHARE:

The Earnings considered in ascertaining the Company's earning per share comprise of Net Profit after tax and include post tax adjustments of prior period and extra-ordinary items.

AS-22: ACCOUNTING FOR TAXES ON INCOME:

Deferred Tax resulting from timing differences between book and tax profits is accounted under liability method at enacted as substantively enacted rate as on the balance sheet date. Deferred tax asset, other than those arising on account of unabsorbed depreciation or carried forward of losses undertax loss, are recognised and carried forward subject to consideration of prudence only to the extent that there is reasonable certainty that sufficient future taxable income will be' available against which such deferred tax asset can be realized.

Deferred tax asset, arising on account of unabsorbed depreciation or carried forward of losses under tax loss, are recognised and carried forward subject to consideration of prudence only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. Current tax is determined at the amount of tax payable in respect of estimated taxable income for the year.

AS - 28: IMPAIRMENT OF ASSETS:

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

AS-29: PROVISIONS, CONTINGENT LIABILITY AND CONTINGENT ASSETS:

a) Provisions involving degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources.

b) Contingent liabilities are disclosed by way of notes to accounts. Provision is made if it becomes probable that an outflow of future economic benefits will be required for an item previously dealt with as a contingent liability.

c) Contingent liability under various fiscal laws includes those in respect of which the Company / Department is in appeal.


Jun 30, 2009

AS 1: DISCLOSURE AND BASIS OF ACCOUNTING:

(i) The Financial Statements have been prepared under the Historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956. The Company has complied with the Accounting Standards Prescribed by the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable.

(ii) The Company has been consistently following the accrual basis of accounting in respect of its Income and Expenditure.

(iii) The Accounts are prepared on the basis of going concern concept only. AS 2: VALUATION OF INVENTORIES.

Inventories are valued at lower of cost and net realisable value, where

a) Cost of Raw materials is determined on specific identification method.

b) Stock of stores, spares and packing materials is determined on weighted average method.

c) Finished goods and work in progress is determined under FIFO method where cost includes conversion and other costs incurred in bringing the inventories to their present location and condition.

AS 3: CASH FLOW STATEMENT:

Cash flows are reported using the indirect method, where by the profit before tax is adjusted for the effect 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 equivalent include cash on hand and balances with banks in current and deposit accounts with necessary disclosure of cash equivalent balances that are not available for use by the company.

AS 5: NET (LOSS) / PROFIT FOR THE PERIOD AND PRIOR PERIOD ITEMS:

a) All items of income and expenses in the period are included in arriving at the net loss for the year, unless specifically mentioned elsewhere in the financial statement or is required by an Accounting Standard.

b) Prior year items are disclosed separately in the Profit 6 Loss Account below the line.

AS 6: DEPRECIATION ACCOUNTING:

Depreciation on Fixed Assets has been provided as per Schedule XIV of the Companies Act,1956 adopting the methods as under:

i) On Assets acquired before 01.04.1990 - Written Down Value Method.

ii) On Assets acquired from 01.04.1990 - Straight Line Method

iii) In respect of all assets purchased or sold during the year, depreciation has been provided at the above rates on pro- rata basisfrom the date of purchase/to the date of sale including assets whose cost is below Rs. 5,000/-.

AS 9: REVENUE RECOGNITION:

a) Revenue from sale transactions is recognized as and when the goods sold is transferred to the buyer for a definite consideration.

b) Other Income except dividend is accounted on accrual basis.

c) Sales as reported are exclusive of Sales Tax (VAT), Insurance and Transport charges. AS 10: FIXED ASSETS:

Fixed Assets are shown at historical cost of acquisition including installation, commissioning less accumulated depreciation AS 11:

FOREIGN CURRENCY TRANSACTIONS:

Foreign currency transactions are recorded at the prevailing exchange rates at the time of initial recognition. Exchange differences are recognized as income or expense in the profit and loss account. Outstanding balances of monetary items denominated in foreign currency are restated at closing exchange rates and recognised as income or expenses in the profit and loss account in other cases.

The premium on discount arising at the inception of forward exchange contracts is accounted as income or expense over the life of the contract. Any profit or loss arising on cancellation or renewal exchange contract is recognized as income or as expense in the period in which they arise.

AS 13: ACCOUNTING FOR INVESTMENTS:

Long term investments are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of long term investments.

AS 15: EMPLOYEE BENEFITS:

Short term employee benefits (other than termination benefits) which are payable within 12 months after the end of the period in which the employees render service are accounted on accrual basis. Defined Contribution Plans

Companys contributions paid / payable during the year to Provident Fund is recognized in the profit and loss account. Defined Benefit Plans Companys Liabilities towards gratuity are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits becomes vested. Actuarial gains or losses are recognized immediately in the statement of profit and loss account as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on government bonds where the currency and terms of the government bonds consistent with the currency and estimated terms of the defined benefit obligations.

AS 16:BORROWINGCOSTS:

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as expenses in the period in which they are incurred.

AS 19: LEASE:

Lease, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating lease. Operating lease payments are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

AS 20: EARNINGS PER SHARE:

The Earnings considered in ascertaining the Companys earning per share comprise of Net Profit after tax and include post tax adjustments of prior period and extra-ordinary items.

AS 22: ACCOUNTING FORTAXES ON INCOME:

Deferred Tax resulting from timing differences between book and tax profits is accounted under liability method at enacted as substantially enacted rate as on the balance sheet date. Deferred tax asset, other than those arising on account of unabsorbed depreciation or carried forward of losses under tax loss, are recognised and carried forward subject to consideration of prudence only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

Deferred tax asset, arising on account of unabsorbed depreciation or carried forward of losses under tax loss, are recognised and carried forward subject to consideration of prudence only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. Current tax is determined at the amount of tax payable in respect of estimated taxable income for the year.

AS 28: IMPAIRMENT OF ASSETS:

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

AS 29: PROVISIONS, CONTINGENT LIABILITY AND CONTINGENT ASSETS:

a) Provisions involving degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources.

b) Contingent liabilities are disclosed by way of notes to accounts. Provision is made if it becomes probable that an outflow of future economic benefits will be required for an item previously dealt with as a contingent liability.

c) Contingent liability under various fiscal laws includes those in respect of which the Company/Department is in appeal.

USE OF ESTIMATES:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to the estimates is recognized prospectively.

 
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