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Accounting Policies of Sumeet Industries Ltd. Company

Mar 31, 2016

Note : 1

Corporate information :

Sumeet Industries Ltd. is a Public Limited Listed Company domiciled in India and Incorporated under the provisions of the Companies Act, 1956.The Company is engaged in the business of manufacturing and Exporting Poly Propylene (Crimped & FDY) Yarn, Polyester Yarn & Polyester Chips. The company caters to both domestic and international markets.

Note : 2

Significant Accounting Policies :

Significant accounting policies adopted in the preparation and presentation of the accounts are based on accounting principal set out in Accounting Standard (AS) issued by ICAI as enumerated below:

(a) Basis of Accounting (AS 1) :

(i) The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (“Indian GAAP”) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (“the 1956 Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 (“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable, and guidelines issued by the Securities Exchange Board of India.

(ii) These accounts are prepared on the historical cost convention on an accrual basis and the accounting principles of a going concern. The company follows mercantile system of Accounting and recognizes income & expenditure on accrual basis.

(iii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

(b) Use of Estimates (AS 1) :

The preparation of financial statement requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and differences between actual results and estimates are recognized in the periods in which the results are known / materialize.

(c) Inventories (AS 2) :

(a) Stores & Spares and fuel Oil : At Cost.

(b) Raw Material : At Cost.

(c) Goods in Transit (Raw Mat.) : At Cost.

(c) Work-in-Progress : At Cost Procurement charges

(d) Finished Goods : At Cost or Net Realizable values whichever is lower.

(e) Wastage : At Net Realizable Value

Cost of inventories is ascertained on the “First-in-First-Out” basis.

(d) Cash Flow (AS 3) :

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated, accordingly.

(e) Depreciation (AS 6) :

From F.Y. 2014-15, depreciation is provided on fixed assets (except land) on written down value method as well as straight line method, asset wise respectively, as specified in the manner disclosed in the schedule II of the companies Act, 2013. Depreciation on additions/ disposals during the year has been provided on pro-rata basis with reference to the number of days utilized.

(f) Revenue Recognition (AS 9) :

Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection. Expenses and incomes, not specifically referred to otherwise consider payable and receivable respectively are accounted for on accrual basis.

Sales : Sales include packing and forwarding charges, octroi& sales-tax but excludes excise duty wherever applicable and a sale of goods is recognized on transfer of property of goods as per agreed terms.

Export Sales : These are accounted at the exchange rate prevailing on the date of invoice. These are gross of commission and include freight wherever applicable as per the terms of the sales contract.

(g) Fixed Assets (AS 10) :

Fixed Assets are stated at cost of acquisition (net of cenvat) or construction less accumulated depreciation. Cost comprises of purchase price and all other cost attributable to bringing the asset to its working condition for its intended use. An effect of Notification No. G.S.R. 225(E) to AS 11 of Companies (Accounting Standard) Amendment Rules, 2009 has been given to the carrying amount of Fixed Asset with corresponding effect to General Reserve and balance of Profit & Loss account.

(h) Foreign Currency Transactions (AS 11) :

(i) The reporting currency of the company is Indian rupees.

(ii) Sales in foreign currencies are accounted at the rate prevailing on the date of purchase of bills by the collecting bank.

(iii) Current assets in foreign currencies as at the balance sheet date (not covered above) are reconverted at the rate prevailing at the year end and the resultant net gains and losses due to exchange difference are recognized in the profit and loss account under the natural revenue heads of accounts.

(iv) In case of forward contract, foreign currency derivatives or other financial instruments that are in substance forward exchange contracts, the premium or discount arising at the inception of the contract transactions are included in determining the net profit for the year.

(v) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liabilities arising out of exchange rates at the year end are capitalized w. e. f. F.Y. 2007-08 as per Notification NO. G.S. R. 225(E) of Companies (Accounting Standard) Amendment Rules, 2009.

(i) Investments (AS 13) :

Investments are stated at cost. Investment in shares and securities are considered as long term and valued at cost. No provision for shortfall in value at the end of the year is provided for.

(j) Retirement Benefits (AS 15) :

Leave encashment, LTA, Medical Assistance are accounted as and when paid. The Company is a member of recognized Provident Fund scheme established by the regional Government of Gujarat. The Company is contributing 12% of Salary & Wages of eligible employees under the scheme every month. The amount of contribution is being deposited each and every month well within the time under the rules of EPF Scheme.

Provision for gratuity has been made in the accounts, only in case of those employees who have become eligible for the retirement benefits.

(k) Borrowing cost (AS 16) :

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use.

Other borrowing costs are recognized as an expense in the period in which they are accrued / incurred.

(l) Segment Accounting (AS 17) :

The requirement of segment reporting is not applicable to the company both in respect of geographical segment and product wise segment.

(m) Earning per Share (AS 20) :

Basic and Diluted earnings/(loss) per share are calculated by dividing the net profit / (loss) for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for any bonus shares issued during the year and also after the balance sheet date but before the date the financial statements are approved by the board of directors.

(n) Income Tax: (AS 22) :

Tax expenses for the year, comprising current tax and deferred tax is included in determining the net profit for the year.

(i) Current tax - Provision for current tax is made based on tax liability computed after considering tax allowances and exemptions.

(ii) Deferred tax - Deferred tax asset and liabilities are recognized for the future tax consequences of temporary difference between the carrying value of assets and liabilities and their respective tax bases, and operating loss carry forwards. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary difference are expected to be reviewed or settled.

(o) Provisions and contingent liabilities (AS 29) :

A provision is recognized when the company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.


Mar 31, 2014

The Significant accounting policies adopted in the preparation and presentation of the accounts are based on accounting principal set out in Accounting Standard (AS) issued by ICAI as enumerated below:

(a) Basis of Accounting (AS 1) : The financial statements are prepared under historical cost convention on an accrual basis. The company follows mercantile system of Accounting and recognizes income & expenditure on accrual basis.

(b) Fixed Assets (AS 10) : Fixed Assets are stated at cost of acquisition (net of cenvat) or construction less accumulated depreciation. Cost comprises of purchase price and all other cost attributable to bringing the asset to its working condition for its intended use. An effect of Notification No. G.S.R. 225(E) to AS 11 of Companies (Accounting Standard) Amendment Rules, 2009 has been given to the carrying amount of Fixed Asset with corresponding effect to General Reserve and balance of Profit & Loss account.

(c) Depreciation (AS 6) : Depreciation is provided on fixed assets (except land) on written down value method at the rates specified in schedule XIV to the Companies Act, 1956 except on trucks, addition in the vehicle from 01.04.2003, cater pillar D.G. Sets one Himson Texturising machine and all additions in plant & machinery from 01.04.2002, where depreciation has been provided on straight line methods as per schedule XIV to the Companies Act, 1956.

(d) Investments (AS 13) : Investments are stated at cost. Investment in shares and securities are considered as long term and valued at cost. No provision for shortfall in value at the end of the year is provided for.

(e) Inventories (AS 2):

(a) Stores & Spares and fuel Oil : At Cost

(b) Raw Material : At Cost

(c) Goods in Transit (Raw Mat.) : At Cost

(d) Work-in-Progress : At Cost Procurement charges

(e) Finished Goods : At Cost or Net Realizable values which ever isLower

(f) Wastage : At Net Realizable Value Cost of inventories is ascertained on the "First-in-First-Out" basis.

(f) Retirement Benefits (AS 15) : Provision for gratuity has been made in the accounts, only in case of those employees who have become eligible for the retirement benefits. Leave encashment, LTA, Medical Assistance are accounted as and when paid. The Company is a member of recognized Provident Fund scheme established by the regional Government of Gujarat. The Company is contributing 12% of Salary & Wages of eligible employees under the scheme every month. The amount of contribution is being deposited each and every month well within the time under the rules of EPF Scheme.

(g) Foreign Currency Transactions (AS 11) : In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liabilities arising out of exchange rates at the year end are capitalized w. e. f. F.Y. 2007-08 as per Notification NO. G.S. R. 225(E) of Companies (Accounting Standard) Amendment Rules, 2009.

Sales in foreign currencies are accounted at the rate prevailing on the date of purchase of bills by the collecting bank. Current assets in foreign currencies as at the balance sheet date (not covered above) are reconverted at the rate prevailing at the year end and the resultant net gains and losses are adjusted in the profit and loss account. Losses on foreign currency derivatives transactions are included in determining the net profit for the year.

(h) Excise duty : The liability of excise duty amounting to Rs. 6,63,26,344/- has been provided for the goods manufactured but not cleared as on 31.3.2014, the effect of which on profit and loss account of the year is Nil.

(i) Revenue Recognition (AS 9) : Expenses and incomes, not specifically referred to otherwise consider payable and receivable respectively are accounted for on accrual basis.

Sales : Sales include packing and forwarding charges, octroi & sales-tax but excludes excise duty wherever applicable and a sale of goods is recognized on transfer of property of goods as per agreed terms.

Export Sales : These are accounted at the exchange rate prevailing on the date of invoice. These are gross of commission and include freight wherever applicable as per the terms of the sales contract.

(j) Cenvat on Inputs : The purchase cost of raw materials is shown net of excise duty and utilized amount of CENVAT on raw material consumed has been debited to CENVAT Account.

(k) Borrowing cost (AS 16): Borrowing costs that are directly attributable to the acquisition or construction of fixed assets are capitalized as a part of the cost of asset. Other borrowing costs are recognized as an expense in the period in which they are accrued / incurred.

(I) Income Tax (AS 22) : Tax expenses for the year, comprising current tax and deferred tax is included in determining the net profit for the year. Deferred tax asset and liabilities are recognized for the future tax consequences of temporary difference between the carrying value of assets and liabilities and their respective tax bases, and operating loss carry forwards. Deferred tax assets are recognized subject to management''s judgment that realization is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary difference are expected to be reviewed or settled.

(m) Segment Accounting (AS 17) : The requirement of segment reporting is not applicable to the company both in respect of geographical segment and product wise segment.

(n) Quantity discount, Rate difference, Rebate and interest are accounted as and when settled. It is general practice prevailing in this type of industry.


Mar 31, 2013

Significant accounting policies adopted in the preparation and presentation of the accounts are based on accounting principal set out in Accounting Standard (AS) issued by ICAI as enumerated below:

(a) Basis of Accounting (AS 1): The financial statements are prepared under historical cost convention on an accrual basis. The company follows mercantile system of Accounting and recognizes income & expenditure on accrual basis.

(b) Fixed Assets (AS 10) : Fixed Assets are stated at cost of acquisition (net of cenvat) or construction less accumulated depreciation. Cost comprises of purchase price and all other cost attributable to bringing the asset to its working condition for its intended use. An effect of Notification No. G.S.R. 225(E) to AS 11 of Companies (Accounting Standard) Amendment Rules, 2009 has been given to the carrying amount of Fixed Assetwith corresponding effect to General Reserve and balance of Profit&Loss account.

(c) Depreciation (AS 6): Depreciation is provided on fixed assets (except land) on written down value method at the rates specified in schedule XIV to the companies Act, 1956 except on trucks, addition in the vehicle from 01.04.2003, cater pillar D.G. Sets one Himson Text rising machine and all additions in plant & machinery from 01.04.2002, where depreciation has been provided on straight line methods as per schedule XIV to the companies Act, 1956.

(d) Investments (AS 13): Investments are stated at cost. Investment in shares and securities are considered as long term and valued at cost. No provision for shortfall in value at the end of the year is provided for.

(e) Inventories (AS 2):

(a) Stores & Spares and fuel Oil : AtCostorNetRealizablevalueswhicheverislower

(b) RawMaterial : AtCostorNetRealizablevalueswhicheverislower

(c) Goods in Transit (Raw Mat.) : AtCost

(d) Work-in-Progress : At Cost Procurement charges

(e) FinishedGoods : AtCostorNetRealizablevalueswhicheverisLower

(f) Wastage : At Net Realizable Value Cost of inventories is ascertained on the "First-in-First-Out" basis.

(f) Retirement Benefits (AS 15): Provision for gratuity has been made in the accounts, only in case of those employees who have become eligible for the retirement benefits. Leave encashment, LTA, Medical Assistance are accounted as and when paid. The Company is a member of recognized Provident Fund scheme established by the regional Government of Gujarat. The Company is contributing 12% of Salary & Wages of eligible employees under the scheme every month. The amount of contribution is being deposited each and every month well within the time under the rules of EPF Scheme.

(g) Foreign Currency Transactions (AS 11) : In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liabilities arising out of exchange rates at the year end are capitalized w e. f. FY 2007-08 as per Notification NO. G.S. R. 225(E) of Companies (Accounting Standard) Amendment Rules, 2009.

Sales in foreign currencies are accounted at the rate prevailing on the date of purchase of bills by the collecting bank. Current assets in foreign currencies as at the balance sheet date (not covered above) are reconverted at the rate prevailing at the year end and the resultant net gains and losses are adjusted in the profit and loss account. Losses on foreign currency derivatives transactions are included in determining the net profitforthe year.

(h) Excise duty: The liability of excise duty amounting to Rs. 6,43,04,055/- has been provided for the goods manufactured but not cleared as on 31.03.2013, the effect of which on profit and loss account of the year is Nil.

0) Revenue Recognition (AS 9) : Expenses and incomes, not specifically referred to otheiwise consider payable and receivable respectively are accounted for on accrual basis.

Sales : Sales include packing and forwarding charges, octroi & sales-tax but excludes excise duty wherever applicable and a sale of goods is recognized on transfer of property of goods as per agreed terms.

Export Sales : These are accounted at the exchange rate prevailing on the date of invoice. These are gross of commission and includefreightwhereverapplicable as per the terms ofthe sales contract.

(k) Cenvat on Inputs : The purchase cost of raw materials is shown net of excise duty and utilized amount of CENVATon raw material consumed has been debited to CENVAT Account.

(I) Borrowing cost (AS 16): Borrowing costs that are directly attributable to the acquisition or construction of fixed assets are capitalized as a part of the cost of asset. Other borrowing costs are recognized as an expense in the period in which they are accrued / incurred.

(m) Income Tax : (AS 22) : Tax expenses for the year, comprising current tax and deferred tax is included in determining the net profit for the year. Deferred tax asset and liabilities are recognized for the future tax consequences of temporary difference between the carrying value of assets and liabilities and their respective tax bases, and operating loss carry forwards. Deferred tax assets are recognized subject to management''s judgment that realization is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary difference are expected to be reviewed orsettled.

(n) Segment Accounting (AS 17 ) : The requirement of segment reporting is not applicable to the company both in respect ofgeographical segment and product wise segment.

(O) Quantity discount, Rate difference, Rebate and interest are accounted as and when settled. It is general practice prevailing in this type of industry.


Mar 31, 2012

(a) Basis of Accounting (AS 1) : The financial statements are prepared under historical cost convention on an accrual basis. The company follows mercantile system of Accounting and recognizes income & expenditure on accrual basis.

(b) Fixed Assets (AS 10) : Fixed Assets are stated at cost of acquisition (net of cenvat) or construction less accumulated depreciation. Cost comprises of purchase price and all other cost attributable to bringing the asset to its working condition for its intended use. An effect of Notification No. G.S.R. 225(E) to AS 11 of Companies (Accounting Standard) Amendment Rules, 2009 has been given to the carrying amount of Fixed Asset with corresponding effect to General Reserve and balance of Profit & Loss account.

(c) Depreciation (AS 6) : Depreciation is provided on fixed assets (except land) on written down value method at the rates specified in schedule XIV to the companies Act, 1956 except on trucks, addition in the vehicle from 01.04.2003, cater pillar D.G. Sets one Himson Texturising machine and all additions in plant & machinery from 01.04.2002, where depreciation has been provided on straight line methods as per schedule XIV to the companies Act, 1956.

(d) Investments (AS 13) : Investments are stated at cost. Investment in shares and securities are considered as long term and valued at cost. No provision for shortfall in value at the end of the year is provided for

(e) Inventories (AS 2) :

(a) Stores & Spares and fuel Oil : At Cost

(b) Raw Material : At Cost

(c) Goods in Transit (Raw Mat.) : At Cost.

(c) Work-in-Progress : At Cost Procurement charges

(d) Finished Goods : At Cost or Net Realizable values whichever is Lower

(e) Wastage : At Net Realizable Value Cost of inventories is ascertained on the "First-in-First-Out" basis.

(f) Retirement Benefits (AS 15) : Provision for gratuity has been made in the accounts, only in case of those employees who have become eligible for the retirement benefits. Leave encashment, LTA, Medical Assistance are accounted as and when paid. The Company is a member of recognized Provident Fund scheme established by the regional Government of Gujarat. The Company is contributing 12% of Salary & Wages of eligible employees under the scheme every month. The amount of contribution is being deposited each and every month well within the time under the rules of EPF Scheme.

(g) Foreign Currency Transactions (AS 11) : In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liabilities arising out of exchange rates at the year end are capitalized w e. f. FY 2007-08 as per Notification NO. GS. R. 225(E) of Companies (Accounting Standard) Amendment Rules, 2009.

Sales in foreign currencies are accounted at the rate prevailing on the date of purchase of bills by the collecting bank. Current assets in foreign currencies as at the balance sheet date (not covered above) are reconverted at the rate prevailing at the year end and the resultant net gains and losses are adjusted in the profit and loss account. Losses on foreign currency derivatives transactions are included in determining the net profit for the year.

(h) Excise duty : The liability of excise duty amounting to Rs. 98,08,848/- has been provided for the goods manufactured but not cleared as on 31.3.2012, the effect of which on profit and loss account of the year is Nil.

(i) Revenue Recognition (AS 9) : Expenses and incomes , not specifically referred to otherwise consider payable and receivable respectively are accounted for on accrual basis.

Sales : Sales include packing and forwarding charges, octroi & sales-tax but excludes excise duty wherever applicable and a sale of goods is recognized on transfer of property of goods as per agreed terms.

Export Sales : These are accounted at the exchange rate prevailing on the date of invoice. These are gross of commission and include freight wherever applicable as per the terms of the sales contract.

(j) Cenvat on Inputs : The purchase cost of raw materials is shown net of excise duty and utilized amount of CENVAT on raw material consumed has been debited to CENVAT Account.

(k) Borrowing cost (AS 16) : Borrowing costs that are directly attributable to the acquisition or construction of fixed assets are capitalized as a part of the cost of asset. Other borrowing costs are recognized as an expense in the period in which they are accrued / incurred.

(l) Income Tax: (AS 22): Tax expenses for the year, comprising current tax and deferred tax is included in determining the net profit for the year. Deferred tax asset and liabilities are recognized for the future tax consequences of temporary difference between the carrying value of assets and liabilities and their respective tax bases, and operating loss carry forwards. Deferred tax assets are recognized subject to management's judgment that realization is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary difference are expected to be reviewed or settled.

(m) Segment Accounting (AS 17) : The requirement of segment reporting is not applicable to the company both in respect of geographical segment and product wise segment.

(n) Quantity discount, Rate difference, Rebate and interest are accounted as and when settled. It is general practice prevailing in this type of industry.


Mar 31, 2011

Significant accounting policies adopted in the preparation and presentation of the accounts are based on accounting principal set out in Accounting Standard (AS) issued by ICAI as enumerated below:

(a) Basis of Accounting (AS 1) : The financial statements are prepared under historical cost convention on an accrual basis. The company follows mercantile system of Accounting and recognizes income & expenditure on accrual basis.

(b) Fixed Assets (AS 10) : Fixed Assets are stated at cost of acquisition (net of cenvat) or construction less accumulated depreciation. Cost comprises of purchase price and all other cost attributable to bringing the asset to its working condition for its intended use. An effect of Notification No. G.S.R. 225(E) to AS 11 of Companies (Accounting Standard) Amendment Rules, 2009 has been given to the carrying amount of Fixed Asset with corresponding effect to General Reserve and balance of Profit & Loss account.

(c) Depreciation (AS 6) : Depreciation is provided on fixed assets (except land) on written down value method at the rates specified in schedule XIV to the Companies Act, 1956 except on trucks, addition in the vehicle from 01.04.2003, cater pillar D.G. Sets one Himson Texturising machine and all additions in plant & machinery from 01.04.2002, where depreciation has been provided on straight line methods as per schedule XIV to the Companies Act, 1956.

(d) Investments (AS 13) : Investments are stated at cost. Investment in shares and securities are considered as long term and valued at cost. No provision for shortfall in value at the end of the year is provided for.

(e) Inventories (AS 2) :

(a) Stores & Spares and fuel Oil : At Cost.

(b) Raw Material : At Cost.

(c) Goods in Transit (Raw Mat.) : At Cost.

(d) Work-in-Progress : At Cost Procurement charges

(e) Finished Goods : At Cost or Net Realizable values whichever is Lower

(f) Wastage : At Net Realizable Value Cost of inventories is ascertained on the "First-in-First-Out" basis.

(f) Retirement Benefits (AS 15) : Provision for gratuity has been made in the accounts, only in case of those employees who have become eligible for the retirement benefits. Leave encashment, LTA, Medical Assistance are accounted as and when paid. The Company is a member of recognized Provident Fund scheme established by the regional Government of Gujarat. The Company is contributing 12% of Salary & Wages of eligible employees under the scheme every month. The amount of contribution is being deposited each and every month well within the time under the rules of EPF Scheme.

(g) Foreign Currency Transactions (AS 11) : In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liabilities arising out of exchange rates at the year end are capitalised w.e.f. FY. 2007-08 as per Notification No. G.S. R. 225(E) of Companies (Accounting Standard) Amendment Rules, 2009.

Sales in foreign currencies are accounted at the rate prevailing on the date of purchase of bills by the collecting bank. Current assets in foreign currencies as at the balance sheet date (not covered above) are reconverted at the rate prevailing at the year end and the resultant net gains and losses are adjusted in the profit and loss account. Losses on foreign currency derivatives transactions are included in determining the net profit for the year.

(h) Excise duty : The liability of excise duty amounting to Rs. 69,75,249/- has been provided for the goods manufactured but not cleared as on 31.3.2011, the effect of which on profit and loss account of the year is Nil.

(i) Revenue Recognition (AS 9) : Expenses and incomes, not specifically referred to otherwise consider payable and receivable respectively are accounted for on accrual basis.

Sales : Sales include packing and forwarding charges, octroi & sales-tax but excludes excise duty wherever applicable and a sale of goods is recognized on transfer of property of goods as per agreed terms.

Export Sales : These are accounted at the exchange rate prevailing on the date of invoice. These are gross of commission and include freight wherever applicable as per the terms of the sales contract.

(j) Cenvat on Inputs : The purchase cost of raw materials is shown net of excise duty and utilized amount of CENVAT on raw material consumed has been debited to CENVAT Account.

(k) Borrowing cost (AS 16) : Borrowing costs that are directly attributable to the acquisition or construction of fixed assets are capitalized as a part of the cost of asset. Other borrowing costs are recognized as an expense in the period in which they are accrued / incurred.

(l) Income Tax : (AS 22) : Tax expenses for the year, comprising current tax and deferred tax is included in determining the net profit for the year. Deferred tax asset and liabilities are recognized for the future tax consequences of temporary difference between the carrying value of assets and liabilities and their respective tax bases, and operating loss carry forwards. Deferred tax assets are recognised subject to management's judgment that realization is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary difference are expected to be reviewed or settled.

(m)Segment Accounting ( AS 17 ) : The requirement of segment reporting is not applicable to the company both in respect of geographical segment and product wise segment.

(n) Quantity discount, Rate difference, Rebate and interest are accounted as and when settled. It is general practice prevailing in this type of industry.


Mar 31, 2010

(a) Basis of Accounting ( AS 1 ) : The financial statements are prepared under historical cost convention on an accrual basis. The company follows mercantile system of Accounting and recognizes income & expenditure on accrual basis.

(b) Fixed Assets ( AS 10 ) : Fixed Assets are stated at cost of acquisition (net of cenvat) or construction less accumulated depreciation. Cost comprises of purchase price and all other cost attributable to bringing the asset to its working condition for its intended use. An effect of Notification No. G.S.R. 225(E) to AS 11 of Companies (Accounting Standard) Amendment Rules, 2009 has been given to the carrying amount of Fixed Asset with corresponding effect to General Reserve and balance of Profit & Loss account.

(c) Depreciation ( AS 6 ) : Depreciation is provided on fixed assets (except land) on written down value method at the rates specified in schedule XIV to the Companies Act, 1956 except on trucks, addition in the vehicle from 01.04.2003, cater pillar D.G. Sets one Himson Texturising machine and all additions in plant & machinery from 01.04.2002, where depreciation has been provided on straight line methods as per schedule XIV to the Companies Act, 1956.

(d) Investments ( AS 13 ) : Investments are stated at cost. Investment in shares and securities are considered as long term and valued at cost. No provision for shortfall in value at the end of the year is provided for.

(e) Investment in Subsidiary Company ( AS 23 ) : The company has made an investment of Rs. One crore in wholly subsidiary company named M/s. Somani Industries ( Nepal ) Pvt. Limited. At present, the company has stopped all of its business activities in Nepal due to political unrest. During the year under review, the company has settled its investment against unsecured loan from the subsidiary and the balance amount i. e. loss of Rs. 33.28 lacs is transferred to Profit & Loss A/c.

(f) Inventories : ( AS 2 ) :

(A) Stores & Spares and Fuel Oil : At Cost

(b) Raw Material : At Cost

(c) Goods in Transit (Raw Mat.) : At Cost

(d) Work-in-Progress : At Cost + Procurement charges

(e) Finished Goods : At Cost or Net Realizable values whichever is lower.

(f) Wastage : At Net Realizable Value Cost of inventories is ascertained on the “First-in-First-Out” basis.

(g) Retirement Benefits ( AS 15 ) : Provision for gratuity has been made in the accounts, only in case of those employees who have become eligible for the retirement benefits. Leave encashment, LTA, Medical Assistance are accounted as and when paid. The Company is a member of recognized Provident Fund scheme established by the regional Government of Gujarat. The Company is contributing 12% of Salary & Wages of eligible employees under the scheme every month. The amount of contribution is being deposited each and every month well within the time under the rules of EPF Scheme.

(h) Foreign Currency Transactions ( AS 11 ) :

In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liabilities arising out of exchange rates at the year end are capitalised w.e.f. F.Y. 2007-08 as per Notification NO. G.S. R. 225(E) of Comapanies (Accounting Standard) Amendment Rules, 2009.

Sales in foreign currencies are accounted at the rate prevailing on the date of purchase of bills by the collecting bank. Current assets in foreign currencies as at the balance sheet date (not covered above) are reconverted at the rate prevailing at the year end and the resultant net gains and losses are adjusted in the profit and loss account. Losses on foreign currency derivatives transactions are included in determining the net profit for the year. (i) Excise duty: The liability of excise duty amounting to Rs. 61,97,746/- has been provided for the goods manufactured but not cleared as on 31.3.2010, the effect of which on profit and loss account of the year is Nil.

(j) Revenue Recognition ( AS 9 ) : Expenses and incomes, not specifically referred to otherwise consider payable and receivable respectively are accounted for on accrual basis.

Sales : Sales include packing and forwarding charges, octroi & sales-tax but excludes excise duty wherever applicable and a sale of goods is recognized on transfer of property of goods as per agreed terms.

Export Sales : These are accounted at the exchange rate prevailing on the date of invoice. These are gross of commission and include freight wherever applicable as per the terms of the sales contract.

(k) Cenvat on Inputs: The purchase cost of raw materials is shown net of excise duty and utilized amount of CENVAT on raw material consumed has been credited to Excise Expenses Account.

(l) Borrowing cost ( AS 16 ) : Borrowing costs that are directly attributable to the acquisition or construction of fixed assets are capitalized as a part of the cost of asset. Other borrowing costs are recognized as an expense in the period in which they are accrued / incurred.

(m) Income Tax : ( AS 22 ) : Tax expenses for the year, comprising current tax and deferred tax is included in determining the net profit for the year. Deferred tax asset and liabilities are recognized for the future tax consequences of temporary difference between the carrying value of assets and liabilities and their respective tax bases, and operating loss carry forwards. Deferred tax assets are recognised subject to managements judgment that realization is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary difference are expected to be reviewed or settled.

(n) Segment Accounting ( AS 17 ) : The requirement of segment reporting is not applicable to the company both in respect of geographical segment and product wise segment.

(0) Quantity discount, Rate difference, Rebate and interest are accounted as and when settled. It is general practice prevailing in this type of industry.

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