Home  »  Company  »  Supreme Tex Mart L  »  Quotes  »  Accounting Policy
Enter the first few characters of Company and click 'Go'

Accounting Policies of Supreme Tex Mart Ltd. Company

Mar 31, 2015

A Basis of Prepration of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention. The financial statements have been prepared to comply with the generally accepted Accounting Principles in India, the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 2013.

B Use of Estimates

The preparation of financial statements, in conformity with the generally accepted accounting principals, require estimates and assumptions to be made that effect the reported amount of assets and liabilities as of the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known /materialized.

C Revenue Recognition

a) Sales

Sales comprise sale of goods, services and export incentives. Revenue from sale of goods is recognized;

i) When all significant risk and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership and

ii) No significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods.

iii) The revenue in respect of Export incentives is recognized on the post export basis.

b) Interest :

Interest income is recognized on a time proportion basis taking in to account the amount outstanding.

c) Insurance and other claims:

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

D Employee Benefits:

a) Short Term Employee Benefits:

Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the profit and loss account of the year in which the related service is rendered.

b) Post Employment Benefits:

i) Defined Contribution Plans:

Provident Fund:

Contribution to Provident Fund is made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to the profit and loss account.

ii) Defined Benefit Plans Gratuity:

Provision for gratuity liability to employees is made on estimated basis and not in accordance with Accounting Standard (AS-15).

Leave Encashment:

Provision for leave encashment is made on estimated basis and not in accordance with Accounting Standard (AS-15)

E) Tangible fixed Assets:

i) Fixed Assets are stated at historical cost less accumulated depreciation.

ii) Cost of fixed assets comprises its purchase price and any attributable expenditure (both direct and indirect) for bringing an asset to its working condition for its intended use.

iii) Subsequent expenditure related to an item of fixed asset is added to book value only if increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses are charged to statement of profit and loss for the period during which such expenses are incurred.

iv) Gains of losses arising from de-recognition of fixed assets are measured as difference between net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

F) Intangible Assets:

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amount of amortization.

G) Depreciation :

i) Depreciation on fixed assets is provided on straight line method in accordance with and in the manner specified in the Schedule II to the Companies Act, 2013

ii) Depreciation on assets costing Rs.5000/- or less is charged @ 100%.

H) Amortization :

i) The leasehold land is amortized over the period of lease.

ii) Intangible assets are amortized on straight line method over their estimated useful life.

I) Inventories:

Inventories are valued at cost or net realizable value, whichever is lower. The cost, in respect of various items of inventory is assigned by using the following cost formula;

i) Raw Materials on FIFO basis plus direct expenses.

ii) Stores and spares at weighted average basis plus direct expenses.

iii) Work in process at raw material cost plus conversion cost depending upon the stage of completion.

iv) Finished Goods at raw material cost plus conversion cost, excise duty if applicable and other overheads incurred to bring the goods to their present condition and location.

j) Cenvat :

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognized in accordance with the Cenvat Credit Rules,2004.

K) Subsidy :

Government grants available to the company are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to Capital Reserve. The Government subsidy received for specific asset is reduced from the cost of the said asset.

L) Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such asset. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

M) Segment Information:

Segment information is prepared in conformity with accounting policies adopted for preparing and presenting the financial statements of the enterprises as a whole.

N) Operating Leases:

Assets acquired on leases wherein a significant portion of the risk and rewards of the ownership are retained by the lessor are classified as operating lease. Lease rental paid for such leases are recognized as expense on systematic basis over the term of lease.

O) Foreign Currency Transactions

(i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction except export sales which are recorded at a rate notified by the customs for invoice purposes as the said rate approximate the actual rate at the date of transaction. The exchange fluctuation arising as a result of negotiation of export bill is accounted for as difference in exchange rates. The amount of such differences in exchange rate is included under the head turnover.

(ii) Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items which are carried at fair value denominated in a foreign currency are reported at the exchange rate that existed when such values were determined.

(iii) The premium or discount arising at the inception of a forward exchange contracts is amortized as expense or income over the life of contract. Exchange difference on such a contract is recognized in the statement of profit and loss in the reporting period in which the exchange rate changes. Profit or loss arising on cancellation or renewal of such contract is recognized as income or expense in the period in which such profit or loss arises.

(iv) The exchange difference to the extent of loss, arising on forward contract to hedge the transactions in the nature of firm commitment and highly probable forecast transactions is recognized in the profit and loss account. The profit if any arising th ereon is igno red.

P) Accounting for taxes on income:

The accounting treatment followed for taxes on income its to provide for Current Tax and Deferred Tax. Current Tax is the aggregate amount of Income Tax Determined to be payable in respect of taxable income for a period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Q) Earning per share:

Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

R) Impairment of assets

At each balance sheet an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

S) Provisions and Contingent Liabilities

(i) Provision is recognized (for liabilities that can be measured by using a substantial degree of estimation) when:

(a) the Company has a present obligation as a result of a past event;

(b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

(c) the amount of the obligation can be reliably estimated.

(ii) Contingent liability is disclosed in case there is:

(a) Possible obligation that arises from past event and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future event not wholly within the control of the enterprise : or

(b) a present obligation arising from a past events but is not recognized

i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

ii) a reliable estimate of amount of the obligation cannot be made.


Mar 31, 2014

A) Basis of Preparation of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention. The financial statements have been prepared to comply with the Accounting Principles Generally accepted in India, the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

B) Use of Estimates:

The preparation of financial statements, in conformity with the generally accepted accounting principles, require judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities as of the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known /materialised.

C) Revenue Recognition:

a) Sales

Sales comprises of sale of goods, services and export incentives. Revenue from sale of goods is recognized;

i) When all significant risk and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership and

ii) No significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods.

iii) The revenue in respect of Export incentives is recognized on the post export basis.

b) Interest :

Interest income is recognized on a time proportion basis taking in to account the amount outstanding.

c) Insurance and other claims:

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

D) Employee Benefits:

a) Short Term Employee Benefits:

Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the profit and loss account of the year in which the related service is rendered.

b) Post Employment Benefits:

i) Defined Contribution Plans:

Provident Fund:

Contribution to Provident Fund is made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to the profit and loss account.

ii) Defined Benefit Plans

Gratuity:

Provision for gratuity liability to employees is made on the basis of actuarial valuation as at the close of the year.

Leave Encashment:

Provision for leave encashment is made on the basis of actuarial valuation as at the close of the year.

iii) The actuarial gain/loss is recognized in statement of profit and loss account.

E) Tangible fixed Assets:

i) Fixed Assets are stated at historical cost net of recoverable taxes, trade discounts and rebates less accumulated depreciation and impairment loss, if any.

ii) Cost of fixed assets comprises its purchase price, borrowing cost and any attributable expenditure (both direct and indirect) for bringing an asset to its working condition for its intended use.

iii) Subsequent expenditure related to an item of fixed asset is added to book value only if increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses are charged to statement of profit and loss for the period during which such expenses are incurred.

iv) Gains of losses arising from de-recognition of fixed assets are measured as difference between net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

F) Intangible Assets:

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amount of amortization.

G) Depreciation:

i) Depreciation on fixed assets is provided on straight line method in accordance with and in the manner specified in the schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5000/- or less is charged @ 100%.

H) Amortization:

i) The leasehold land is amortized over the period of lease.

ii) Intangible assets are amortized on straight line method over their estimated useful life.

I) Inventories:

Inventories are valued at cost or net realizable value, whichever is lower. The cost, in respect of various items of inventory is assigned by using the following cost formula;

i) Raw Materials on FIFO basis plus direct expenses.

ii) Stores and spares at weighted average basis plus direct expenses.

iii) Work in process at raw material cost plus conversion cost depending upon the stage of completion.

iv) Finished Goods at raw material cost plus conversion cost, excise duty if applicable and other overheads incurred to bring the goods to their present condition and location.

J) Cenvat :

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognized in accordance with the Cenvat Credit Rules,2004.

K) Subsidy :

Government grants available to the company are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter''s contribution is credited to Capital Reserve. The Government subsidy received for specific asset is reduced from the cost of the said asset.

L) Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such asset. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

M) Segment Information:

STML operates in one single segment i.e. textile segment. The disclosure requirements as prescribed in the Accounting Standard (AS) - 17 on "Segment Reporting" issued by The Institute of Chartered Accountants of India are not applicable.

N) Operating Leases:

Assets acquired on leases wherein a significant portion of the risk and rewards of the ownership are retained by the lessor are classified as operating lease. Lease rental paid for such leases are recognized as expense on systematic basis over the term of lease.

O) Foreign Currency Transactions

(i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction except export sales which are recorded at a rate notified by the customs for invoice purposes as the said rate approximate the actual rate at the date of transaction. The exchange fluctuation arising as a result of negotiation of export bill is accounted for as difference in exchange rates. The amount of such differences in exchange rate is included under the head "Turnover."

(ii) Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items which are carried at fair value denominated in a foreign currency are reported at the exchange rate that existed when such values were determined.

(iii) The premium or discount arising at the inception of a forward exchange contracts is amortized as expense or income over the life of contract. Exchange difference on such a contract is recognized in the statement of profit and loss in the reporting period in which the exchange rate changes. Profit or loss arising on cancellation or renewal of such contract is recognized as income or expense in the period in which such profit or loss arises.

(iv) The exchange difference to the extent of loss, arising on forward contract to hedge the transactions in the nature of firm commitment and highly probable forecast transactions is recognized in the profit and loss account. The profit if any arising thereon is ignored.

P) Accounting for taxes on income:

The accounting treatment followed for taxes on income its to provide for Current Tax and Deferred Tax. Current Tax is the aggregate amount of Income Tax Determined to be payable in respect of taxable income for a period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Q) Earning per share:

Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

R) Impairment of assets

At each balance sheet, an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

S) Provisions and Contingent Liabilities

(i) Provision is recognized (for liabilities that can be measured by using a substantial degree of estimation) when:

(a) the Company has a present obligation as a result of a past event;

(b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

(c) the amount of the obligation can be reliably estimated.

(ii) Contingent liability is disclosed in case there is:

(a) Possible obligation that arises from past event and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future event not wholly within the control of the enterprise or

(b) a present obligation arising from a past events but is not recognized

i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

ii) a reliable estimate of amount of the obligation cannot be made.


Mar 31, 2013

A) Basis of Preparation of financial statements:

The financial statements are prepared on accrual basis underthe historical cost convention, in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

B) Use of Estimates:

The preparation of financial statements, in conformity with the generally accepted accounting principals, require estimates and assumptions to be made that effect the reported amount of assets and liabilities as of the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known /materialized.

C) Revenue Recognition:

a) Sales

Sales comprise sale of goods, services and export incentives. Revenue from sale of goods is recognized.

i) When all significant risk and rewards of ownership is transferred to the buyer and the Company retains no effective control of the goods transferred to a degree usually associated with ownership and

ii) No significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods.

iii) The revenue in respect of Export incentives is recognized on the post export basis.

b) Interest :

Interest income is recognized on a time proportion basis taking in to account the amount outstanding.

c) Insurance and other claims:

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

D) Employee Benefits:

a) Short Term Employee Benefits:

Short Term Employee Benefits are recognized as an expense on an undescended basis in the profit and loss account of the year in which the related service is rendered.

b) Post Employment Benefits:

i) Defined Contribution Plans:

Provident Fund:

Contribution to Provident Fund is made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to the profit and loss account.

ii) Defined Benefit Plans

Gratuity:

Provision for gratuity liability to employees is made on the basis of actuarial valuation as at the close of the year.

Leave Encashment:

Provision for leave encashment is made on the basis of actuarial valuation as at the close of the year_____

iii) The actuarial gain/loss is recognized in statement of profit and loss account.

E) Tangible fixed Assets:

i) Fixed Assets are stated at historical cost less accumulated depreciation.

ii) Cost of fixed assets comprises its purchase price and any attributable expenditure

(both direct and indirect) for bringing an asset to its working condition for its intended use.

iii) Subsequent expenditure related to an item of fixed asset is added to book value only if increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses are charged to statement of profit and loss for the period during which such expenses are incurred.

iv) Gains of losses arising from de-recognition of fixed assets are measured as difference between net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

F) Intangible Assets:

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amount of amortization.

G) Depreciation:

i) Depreciation on fixed assets is provided on straight line method in accordance with and in the manner specified in the schedule XIV to the Companies Act, 1956. ii) Depreciation on assets costing Rs..50007- or less is charged @ 100%.

H) Amortization:

i) The leasehold land is amortized over the period of lease.

ii) Intangible assets are amortized on straight line method over their estimated useful life.

I) Inventories:

Inventories are valued at cost or net realizable value, whichever is lower. The cost, in respect of various items of inventory is assigned by using the following cost formula; i) Raw Materials on FIFO basis plus direct expenses. ii) Stores and spares at weighted average basis plus direct expenses.

iii) Work in process at raw material cost plus conversion cost depending upon the stage of completion. iv) Finished Goods at raw material cost plus conversion cost, excise duty if applicable and other overheads incurred to bring the goods to their present condition and location.

J) Cenvat:

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognized in accordance with the Cenvat Credit Rules,2004.

K) Subsidy:

Government grants available to the Company are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter''s contribution is credited to Capital Reserve. The Government subsidy received for specific asset is reduced from the cost of the said asset.

L) Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such asset. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

M) Segment Information:

Segment information is prepared in conformity with accounting policies adopted for preparing and presenting the financial statements of the enterprises as a whole.

N) Operating Leases:

Assets acquired on leases wherein a significant portion of the risk and rewards of the ownership are retained by the lessor are classified as operating lease. Lease rental paid for such leases are recognized as expense on systematic basis overthe term of lease.

O) Foreign Currency Transactions

(i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction except export sales which are recorded at a rate notified by the customs for invoice purposes as the said rate approximate the actual rate at the date of transaction. The exchange fluctuation arising as a result of negotiation of export bill is accounted for as difference in exchange rates. The amount of such differences in exchange rate is included underthe head turnover.

(ii) Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items which are carried at fair value denominated in a foreign currency are reported at the exchange rate that existed when such values were determined.

(iii) The premium or discount arising at the inception of a forward exchange contracts is amortized as expense or income over the life of contract. Exchange difference on such a contract is recognized in the statement of profit and loss in the reporting period in which the exchange rate changes. Profit or loss arising on cancellation or renewal of such contract is recognized as income or expense in the period in which such profit or loss arises.

(iv) The exchange difference to the extent of loss, arising on forward contract to hedge the transactions in the nature of firm commitment and highly probable forecast transactions is recognized in the profit and loss account. The profit if any arising thereon is ignored.

P) Accounting for taxes on income:

The accounting treatment followed for taxes on income its to provide for Current Tax and Deferred Tax. Current Tax is the aggregate amount of Income Tax Determined to be payable in respect of taxable income for a period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Q) Earning per share:

Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

R) Impairment of assets

At each balance sheet an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i .e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

S) Provisions and Contingent Liabilities

(i) Provision is recognized (for liabilities that can be measured by using a substantial degree of estimation) when:

(a) the Company has a present obligation as a result of a past event;

(b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

(c) the amount of the obligation can be reliably estimated.

(ii) Contingent liability is disclosed in case there is:

(a) Possible obligation that arises from past event and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future event not wholly within the control of the enterprise: or

(b) a present obligation arising from a past events but is not recognized

iii) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

iv) a reliable estimate of amount of the obligation cannot be made.


Mar 31, 2012

A) Basis of Preparation of financial statements

The financial statements are prepared on accrual basis under the historical cost convention, in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

Presentation and disclosure of financial statements

During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

B) Use of Estimates

The preparation of financial statements, in conformity with the generally accepted accounting principals, require estimates and assumptions to be made that effect the reported amount of assets and liabilities as of the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known /materialized.

C) Revenue Recognition

a) Sales

Sales comprise sale of goods, services and export incentives. Revenue from sale of goods is recognized;

i) When all significant risk and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership and

ii) No significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods.

iii) The revenue in respect of Export incentives is recognized on the post export basis.

b) Interest

Interest income is recognized on a time proportion basis taking in to account the amount outstanding.

c) Insurance and other claims

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

D) Employee Benefits

a) Short Term Employee Benefits :

Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the profit and loss account of the year in which the related service is rendered.

b) Post Employment Benefits

i) Defined Contribution Plans Provident Fund

Contribution to Provident Fund is made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to the profit and loss account.

ii) Defined Benefit Plans Gratuity

Provision for gratuity liability to employees is made on the basis of actuarial valuation as at the close of the year.

Leave Encashment

Provision for leave encashment is made on the basis of actuarial valuation as at the close of the year.

iii) The actuarial gain/loss is recognized in statement of profit and loss account.

E) Tangible fixed Assets

i) Fixed Assets are stated at historical cost less accumulated depreciation.

ii) Cost of fixed assets comprises its purchase price and any attributable expenditure (both direct and indirect) for bringing an asset to its working condition for its intended use.

iii) Subsequent expenditure related to an item of fixed asset is added to book value only if increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses are charged to statement of profit and loss for the period during which such expenses are incurred.

iv) Gains or losses arising from de-recognition of fixed assets are measured as difference between net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

F) Intangible Assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amount of amortization.

G) Depreciation

i) Depreciation on fixed assets is provided on straight line method in accordance with and in the manner specified in the schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5000/- or less is charged @ 100%.

H) Amortization

i) The leasehold land is amortized over the period of lease.

ii) Intangible assets are amortized on straight line method over their estimated useful life.

I) Inventories

Inventories are valued at cost or net realizable value, whichever is lower. The cost, in respect of various items of inventory is assigned by using the following cost formula;

i) Raw Materials on FIFO basis plus direct expenses.

ii) Stores and spares at weighted average basis plus direct expenses.

iii) Work in process at raw material cost plus conversion cost depending upon the stage of completion.

iv) Finished Goods at raw material cost plus conversion cost, excise duty if applicable and other overheads incurred to bring the goods to their present condition and location.

J) Cenvat

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognized in accordance with the Cenvat Credit Rules,2004.

K) Subsidy

Government grants available to the company are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to Capital Reserve. The Government subsidy received for specific asset is reduced from the cost of the said asset.

L) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such asset. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

M) Segment Information

Segment information is prepared in conformity with accounting policies adopted for preparing and presenting the financial statements of the enterprises as a whole.

N) Operating Leases

Assets acquired on leases wherein a significant portion of the risk and rewards of the ownership are retained by the lessor are classified as operating lease. Lease rental paid for such leases are recognized as expense on systematic basis over the term of lease.

O) Foreign Currency Transactions

i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction except export sales which are recorded at a rate notified by the customs for invoice purposes as the said rate approximate the actual rate at the date of transaction. The exchange fluctuation arising as a result of negotiation of export bill is accounted for as difference in exchange rates. The amount of such differences in exchange rate is included under the head turnover.

ii) Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items which are carried at fair value denominated in a foreign currency are reported at the exchange rate that existed when such values were determined.

iii) The premium or discount arising at the inception of a forward exchange contracts is amortized as expense or income over the life of contract. Exchange difference on such a contract is recognized in the statement of profit and loss in the reporting period in which the exchange rate changes. Profit or loss arising on cancellation or renewal of such contract is recognized as income or expense in the period in which such profit or loss arises.

iv) The exchange difference to the extent of loss, arising on forward contract to hedge the transactions in the nature of firm commitment and highly probable forecast transactions is recognized in the profit and loss account. The profit if any arising thereon is ignored.

P) Accounting for taxes on income

The accounting treatment followed for taxes on income its to provide for Current Tax and Deferred Tax. Current Tax is the aggregate amount of Income Tax Determined to be payable in respect of taxable income for a period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Q) Earning per share

Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

R) Impairment of assets

At each balance sheet an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

S) Provisions and Contingent Liabilities

(i) Provision is recognized (for liabilities that can be measured by using a substantial degree of estimation) when:

a) The Company has a present obligation as a result of a past event;

b) A probable outflow of resources embodying economic benefits is expected to settle the obligation: and

c) The amount of the obligation can be reliably estimated.

(ii) Contingent liability is disclosed in case there is:

a) Possible obligation that arises from past event and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future event not wholly within the control of the enterprise : or

b) a present obligation arising from a past events but is not recognized

i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

ii) a reliable estimate of amount of the obligation cannot be made.


Mar 31, 2011

A) Basis of Preparation of financial statements:

The accounts are prepared on accrual basis under the historical cost convention in accordance with the accounting standards referred to in subsection (3C) of section 211 and other relevant provisions of the Companies Act, 1956.

b) Use Of Estimates:

The preparation of financial statements, in conformity with the generally accepted accounting principals, require estimates and assumptions to be made that effect the reported amount of assets and liabilities as of the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results materialize.

c) Revenue Recognition:

1) Sales

Sales comprise sale of goods, services and export incentives. Revenue from sale of goods is

recognized;

i) when all significant risk and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership and

ii) No significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods.

iii) The revenue in respect of Export incentives is recognized on the post export basis.

2) Interest: '

Interest income is recognized on a time proportion basis taking in to account the amount outstanding.

3) Insurance and other claims:

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d) Employee Benefits:

(a) Short Term Employee Benefits:

Short Term Employee Benefits are recognized as an expenses on an undiscounted basis in the profit and loss account of the year in which the related service is rendered.

(b) Post Employment Benefits: i) Defined Contribution Plans:

Provident Fund:

Contribution to Provident Fund is made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to the profit and loss account. ii) Defined Benefit Plans

(1.1) Gratuity:

Provision for gratuity liability to employees is made on the basis of actuarial valuation as at the close of the year.

(1.2) Leave Encashment:

Provision for leave encashment is made on the basis of actuarial valuation as at the close of the year. iii) The actuarial gain/loss is recognized in statement of profit and loss account.

e) Fixed Assets:

i) Fixed Assets are stated at historical cost less accumulated depreciation.

ii) Cost of fixed assets comprises its purchase price and any attributable expenditure (both direct and indirect) for bringing an asset to its working condition for its intended use.

f) Intangible Assets:

Intangible assets are stated at cost less accumulated amount of amortization.

g) Depreciation:

i) Depreciation is provided on straight line method in accordance with and in the manner specified in the schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs.50007- or less is charged @ 100%.

h) Amortization:

i) The leasehold land is amortized over the period of lease.

ii) Intangible assets are amortized on straight line method over their estimated useful life.

i) Inventories:

Inventories are valued at cost or net realizable value, whichever is lower. The cost, in respect of various items of inventory is assigned by using the following cost formula;

i) Raw Materials on FIFO basis plus direct expenses.

ii) Stores and spares at weighted average basis plus direct expenses.

Hi) Work in process at raw material cost plus conversion cost depending upon the stage of

completion.

iv) Finished Goods at raw material cost plus conversion cost, excise duty if applicable and

other overheads incurred to bring the goods to their present condition and location.

j) Cenvat:

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognized in accordance with the Cenvat Credit Rules,2004.

k) Subsidy:

Government grants available to the company are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to Capital Reserve. The Government subsidy received for specific asset is reduced from the cost of the said asset.

I) Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such asset. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

m) Segment Information:

Segment information is prepared in conformity with accounting policies adopted for preparing and presenting the financial statements of the enterprises as a whole.

n) Operating Leases:

Assets acquired on leases wherein a significant portion of the risk and rewards of the ownership are retained by the lessor are classified as operating lease. Lease rental paid for such a leases are recognized as an expense on systematic basis over the term of lease.

o) Foreign Currency Transactions

(i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction except export sales which are recorded at a rate notified by the customs for invoice purposes as the said rate approximate the actual rate at the date of transaction. The exchange fluctuation arising as a result of negotiation of export bill is accounted for as difference in exchange rates. The amount of such differences in exchange rate is included under the head turnover.

(ii) Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items which are carried at fair value denominated in a foreign currency are reported at the exchange rate that existed when such values were determined.

(iii) The premium or discount arising at the inception of a forward exchange contracts is amortised as expense or income over the life of contract. Exchange difference on such a contract is recognized in the statement of profit and loss in the reporting period in which the exchange rate change. Profit or loss arising on cancellation or renewal of such contract is recognized as income or expense in the period in which such profit or loss arises.

(iv) The exchange difference to the extent of loss, arising on forward contract to hedge the transactions in the nature of firm commitment and highly probable forecast transactions is recognized in the profit and loss account. The profit if any arising thereon is ignored.

p) Accounting for taxes on income:

The accounting treatment followed for taxes on income its to provide for Current Tax and Deferred Tax. Current Tax is the aggregate amount of Income Tax Determined to be payable in respect of taxable income for a period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

q) Earning per share:

Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

r) Impairment of assets

At each balance sheet an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account. '

s) Provisions and Contingent Liabilities

(i) Provision is recognized (for liabilities that can be measured by using a substantial degree of estimation) when:

(a) the Company has a present obligation as a result of a past event;

(b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

(c) the amount of the obligation can be reliably estimated. (ii) Contingent liability is disclosed in case there is:

(a) Possible obligation that arises from past event and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future event not wholly within the control of the enterprise: or

(b) a present obligation arising from a past events but is not recognized

i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

ii) a reliable estimate of amount of the obligation cannot be made.




Mar 31, 2010

A) ACCOUNTING CONVENTIONS:

The accounts are prepared on accrual basis under the historical cost convention in accordance with the accounting standards referred to in subsection (3C) of section 211 and other relevant provisions of the Companies Act, 1956.

b) USE OF ESTIMATES:

The preparation of financial statements, in conformity with the generally accepted accounting principals, require estimates and assumptions to be made that effect the reported amount of assets and liabilities as of the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results materialize.

c) REVENUE RECOGNITION:

i) The revenue in respect of sale is recognized:

a) when all significant risk and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership and

b) No significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods.

ii) The revenue in respect of Export incentives is recognized on the post export basis. iii) Insurance and other claims are recognized when there exists no significant uncertainty with regard to the amount to be realized and the ultimate collection thereof.

d) FIXED ASSETS:

Fixed Assets are stated at historical cost less accumulated amount of depreciation.

e) INTANGIBLE ASSETS:

Intangible assets are stated at cost less accumulated amount of amortization.

f) DEPRECIATION/AMORTIZATION:

i) Depreciation on fixed assets is provided on straight line method in accordance with and in the manner specified in the schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs.50007- or less is charged @ 100%.

iii) The leasehold land is amortized overthe period of lease.

iv) Intangible assets are amortized on straight line method over their estimated useful life.

g) EXPENDITURE INCURRED DURING CONSTRUCTION PERIOD:

The indirect expenses incurred on the acquisition, construction of fixed assets upto the date of completion of fixed assets are capitalized on various categories of fixed assets on proportionate basis. h) BORROWING COSTS:

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

I) INVENTORIES:

Inventories are valued at cost or net realizable value, whichever is lower. The cost, in respect of various items of inventory is assigned by using the following cost formula:

i) Raw Materials on FIFO basis plus direct expenses.

ii) Stores and spares at weighted average basis plus direct expenses.

iii) Work in process at raw material cost plus conversion cost depending upon the stage of completion.

iv) Finished Goods at raw material cost plus conversion cost, excise duty if applicable and other overheads incurred to bring the goods to their present condition and location.

j) CENVAT:

Cenvat credit on excise duty paid goods is accounted for by reducing the purchase cost of the related goods.

k) FOREIGN CURRENCYTRANSACTIONS

I) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction except export sales which are recorded at a rate notified by the customs for invoice purposes as the said rate approximate the actual rate at the date of transaction. The exchange fluctuation arising as a result of negotiation of export bill is accounted for as difference in exchange rates. The amount of such differences in exchange rate is included under the head turnover.

ii) Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items which are carried at fair value denominated in a foreign currency are reported at the exchange rate that existed when such values were determined.

iii) The premium or discount arising at the inception of a forward exchange contracts is amortised as expense or income over the life of contract. Exchange difference on such a contract is recognized in the statement of profit and loss in the reporting period in which the exchange rate change. Profit or loss arising on cancellation or renewal of such contract is recognized as income or expense in the period in which such profit or loss arises.

iv) The exchange difference to the extent of loss, arising on forward contract to hedge the transactions in the nature of firm commitment and highly probable forecast transactions is recognized in the profit and loss account. The profit if any arising thereon is ignored.

l) SUBSIDY:

Government grants available to the company are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoters contribution is credited to Capital Reserve. The Government subsidy received for specific asset is reduced from the cost of the said asset.

m) EMPLOYEE BENEFITS:

a) Short Term Employee Benefits:

Short Term Employee Benefits are recognized as an expenses on an undiscounted basis in the profit and loss account of the year in which the related service is rendered.

(b) Post Employment Benefits:

i) Defined Contribution Plans:

Provident Fund:

Contribution to Provident Fund is made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to the profit and loss account.

ii) Defined Benefit Plans

(1.1) Gratuity:

Provision for gratuity liability to employees is made on the basis of actuarial valuation as at the close of the year.

(1.2) Leave Encashment:

Provision for leave encashment is made on the basis of actuarial valuation as at the close of the year.

(c) The actuarial gain/loss is recognized in statement of profit and loss account.

n) ACCOUNTING FOR TAXES ON INCOME:

Provision for taxation comprises of current tax and deferred tax. Current Tax is the amount of income tax determined to be payable in respect of taxable income for a period. Deferred tax is the tax effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

o) IMPAIRMENT OF ASSETS

At each balance sheet an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

p) . PROVISION AND CONTINGENT LIABILITIES

i) Provisions are recognised for liabilities that can be measured by using a substantial degree of estimation, when:

a) the Company has a present obligation as a result of a past event;

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated. ii) Contingent liability is disclosed in case of there is:

a) a present obligation arising from a past event when i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation ii) a reliable estimate of amount of the obligation cannot be made or

b) a possible obligation that arises from past events and existence of which will be confirmed only by occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise.

q) LEASES:

Assets acquired on leases wherein a significant portion of the risk and rewards of the ownership are retained by the lessor are classified as operating lease. Lease rental paid for such a leases are recognized as an expense on systematic basis overthe term of lease.

r) EARNING PER SHARE:

Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

Diluted earning per share is computed by taking into account the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

 
Subscribe now to get personal finance updates in your inbox!