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Accounting Policies of Suryalakshmi Cotton Mills Ltd. Company

Mar 31, 2016

2 The legal proceedings againt M/s.Rajvir Industries Ltd., for the recovery of the balance outstanding in the books of the Company of RS,236.93 Lakhs (Previous year RS,236.93 Lakhs) are pending.

3 Three cases have been filed against the Company for amounts totaling to RS,1,348 Lakhs in respect of three cheques allegedly issued by the Company. These claims are being resisted on the plea that these cheques have been misused and in the absence of any legally enforceable debt or liability the Company has been advised that the complaints are not maintainable and no liability is likely to arise.

4 (i) Rajvir Industries Ltd., has filed an application before the Hon''ble High court of Andhra Pradesh for modification of the Order of the

High Court in the scheme of arrangement for transfer of the liability of RS,1,000 Lakhs to the Company. The application has been dismissed with costs by the High Court and the applicant has preferred an appeal before the High Court which is pending.

(ii) Rajvir Industries Limited (RIL) had also filed criminal complaint against the Company, certain Directors, Sr. Executives and the Auditor of the Company in the above matter which however was quashed by the Hon''ble High Court of A.P. RIL has preferred a special leave petition before the Hon''ble Supreme Court which is pending.

5 An order has been received from the office of DGFT Hyderabad for alleged violation of Target plus scheme to recover RS,3,807 Lakhs including interest and penalties. Apart from this a penalty of RS,25 Lakhs each on CMD and MD and RS,5 Lakhs on some other Directors of the Company has been imposed. The High Court of Andhra Pradesh has granted an interim stay of the dismissal of the appeal by the Company. The Company in compliance with the orders of the High Court has paid RS,500 Lakhs to DGFT, Hyderabad. (The Company has already paid RS,500 Lakhs to DRI in the same matter). A show cause notice on the same issue was issued by DRI. The Company has been advised that no liability is likely to arise under the notice as the allegations are unfounded and the Company is taking adequate steps to defend itself.

6 The Company carried out revaluation of its assets, i.e., Land, Buildings and Plant & Machinery in its Denim Division at Ramtek and Spinning Division at Amanagallu, by an approved valuer as of 31st March, 2014. Revaluation of Power Plant assets was not done, as it was relatively new Plant. The written up value of the assets on revaluation amounting to RS,174.58 Crores was added to the cost of the assets / Gross Block as on 31st March, 2014. The depreciation of RS,84.84 Crores upto the financial year 2013-14, RS,12.89 Crores for the financial year 2014-15 & RS,11.68 Crores for the financial year 2015-16, totaling to RS,109.41 Crores on written up value of Gross Block has been added to depreciation, and the net value RS,65.17 Crores (Previous year RS,76.85 Crores), is considered as revaluation reserve and the same will be written off as per the depreciation method followed by the Company.

15 In the opinion of the Board, the current assets and loans & advances have a value on realization in the ordinary course of business atleast equal to the amount at which they are stated.

16 Vide Notification No.30/09.07.2004 of the Central Excise Department we can opt for zero rate of duty by not taking Cenvat credit on Inputs and vide Tariff rate (Previous year under Notification No.29/09.07.2004) of Central Excise Department option can be exercised for payment of duty on Final products by taking credit on inputs and capital items. Accordingly in case of Denim Fabric and Cotton yarn the Company has opted for Zero rate of duty and not availed Cenvat credit on the purchase of inputs and capital items. In case of Polyster yarn we have taken cenvat credit on part of the raw material which are used for production of polyster yarn meant for export, and cleared the Finished Product for export on payment of duty, under refund of Central Excise cenvat vide rebate provision of Central Excise Act. In case of Readymade Garments, the Company has opted for Central Excise duty of 2% on 60% of Retail Sale Price (RSP) (without Cenvat Credit on inputs) which is made applicable on Branded readymade garments of RSP of H1,000 & above with effect from 1st March, 2016

17 There was a major fire accident in spinning department of denim division at Ramtek, Nagapur district, Maharashtra state during January, 2008, in which the Building, Plant & Machinery, Electrical Installations and stocks were totally damaged. The factory was fully insured under reinstatement policy for fixed assets and under declaration policy for stocks.


Mar 31, 2015

1 Accounting Convention :

The financial statements are prepared under historical cost convention and on accrual basis in accordance with the generally accepted accounting principles.

2 Fixed Assets :

Fixed Assets are stated at cost net of depreciation provided in the statements. Cost of acquisition of Fixed Assets is inclusive of all direct and indirect expenditure up to the date of commercial use.

Depreciation is provided in accordance with the Useful Life prescribed under Schedule II of the Companies Act, 2013.

3 Inventories :

Raw material and Stores and Spares valued at cost on weighted average basis. Stock-in-process and Finished Goods are valued at lower of cost or net realisable value.

The Excise Duty payable on finished / Saleable goods is accounted for on clearence of goods from the factory premises.

4 Investments :

Investments are stated at cost and diminution / increase in the value, which is permanent in nature, is provided for.

5 Contingent Liabilities and Provisions :

All Contingent liabilities are indicated by way of a note and will be paid / provided on crystalisation.

6 Retirement Benefits :

Provident Fund contribution is charged to the Profit and Loss Account as and when the contributions are due In respect of Gratuity, the Company has covered the gratuity liability by obtaining the group gratuity policy. The premium charged by Life Insurance Corporation of India is paid as stipulated and charged to Profit and Loss Account. Leave encashment provision was made as per actuarial valuation.

7 Foreign Exchange Transactions :

a) Export Sales are initially accounted at the exchange rate prevailing on the date of documentation/invoicing and the same is adjusted with the difference in the rate of exchange arising on actual receipt of proceeds in foreign exchange.

b) Earnings in foreign currency other than export sales are accounted for at the rate of conversion on the date of realisation.

c) Imports of material / capital equipment are accounted at the rates at which the actual payments are made.

d) Assets and liabilities arising out of foreign exchange transactions are translated at the rates of exchange ruling on the date of Balance Sheet and are suitably adjusted to the appropriate Revenue/Capital account.

8 Impairment of Assets :

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods, is reversed if there has been a change in the estimate of recoverable amount.

9 Sales :

Sales represents the amount receivable for goods sold including excise duty and sales tax thereon. Incentives on export sales are recognised as income on accrual basis.

10 Provision for taxation :

Provision for taxation for the year is based on tax liability computed in accordance with relevant tax rates and tax laws as at the Balance Sheet date. Provision for deferred tax is made for all timing differences arising between taxable income and accounting income at rates that have been enacted or substantively enacted as at the Balance Sheet date. Deferred tax assets are recognised only if there is a reasonable certainity that they will be realised and are reviewed for the appropriateness of their respective carrying value at each Balance Sheet date.


Mar 31, 2013

1 Accounting Convention :

The financial statements are prepared under historical cost convention and on accrual basis in accordance with the generally accepted accounting principles.

2 Fixed Assets :

Fixed assets are stated at cost net of depreciation provided in the statements. Cost of acquisition of Fixed assets is inclusive of all direct and indirect expenditure up to the date of commercial use.

depreciation is provided on straight line method in accordance with the rates prescribed under Schedule XIV of the Companies act, 1956

3 Inventories :

rawmaterial and Stores and Spares valued at cost on weighted average basis. Stock-in-process and Finished Goods are valued at lower of cost or net realisable value.

The Excise duty payable on finished / Saleable goods is accounted for on clearence of goods from the factory premises.

4 Investments :

Investments are stated at cost and diminution in the value, which is permanent in nature, is provided for.

5 Contingent Liabilities and Provisions :

all Contingent liabilities are indicated by way of a note and will be paid / provided on crystalisation.

6 Retirement Benefits :

Provident Fund contribution is charged to the Profit and loss account as and when the contributions are due

In respect of Gratuity, the Company has covered the gratuity liability by obtaining the group gratuity policy. The premium charged by life Insurance Corporation of India is paid as stipulated and charged to Profit and loss account. leave encashment provision is made as per actuarial valuation.

7 Foreign Exchange Transactions :

a) Export Sales are intially accounted at the exchange rate prevailing on the date of documentation/invoicing and the same is adjusted with the difference in the rate of exchange arising on actual receipt of proceeds in foreign exchange.

b) Earnings in foreign currency other than export sales are accounted for at the rate of conversion on the date of realisation.

c) Imports of material / capital equipment are accounted at the rates at which the actual payments are made.

d) assets and liabilities arising out of foreign exchange transactions are translated at the rates of exchange ruling on the date of Balance Sheet and are suitably adjusted to the appropriate revenue/Capital account.

8 Impairment of Assets :

an asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. an impairment loss is charged to Profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods, is reversed if there has been a change in the estimate of recoverable amount.

9 Sales :

Sales represents the amount receivable for goods sold including excise duty and sales tax thereon. Incentives on export sales are recognised as income on accrual basis.

10 Provision for taxation :

Provision for taxation for the year is based on tax liability computed in accordance with relevant tax rates and tax laws as at the Balance Sheet date. Provision for deferred tax is made for all timing differences arising between taxable income and accounting income at rates that have been enacted or substantively enacted as at the Balance Sheet date. deferred tax assets are recognised only if there is a reasonable certainity that they will be realised and are reviewed for the appropriateness of their respective carrying value at each Balance Sheet date.


Mar 31, 2012

1. Accounting Convention :

The financial statements are prepared under historical cost convention and on accrual basis in accordance with the generally accepted accounting principles.

2 Fixed Assets :

Fixed Assets are stated at cost net of depreciation provided in the statements. Cost of acquisition of Fixed Assets is inclusive of all direct and indirect expenditure up to the date of commercial use. Depreciation is provided on straight line method in accordance with the rates prescribed under Schedule XIV of the Companies Act, 1956

3 Inventories :

Raw material and Stores and Spares valued at cost on weighted average basis. Stock-in-process and Finished Goods are valued at lower of cost or net realisable value.

The Excise Duty payable on finished / Saleable goods is accounted for on clearence of goods from the factory premises.

4. Investments :

Investments are stated at cost and diminution in the value, which is permanent in nature, is provided for.

5. Contingent Liabilities and Provisions :

All Contingent liabilities are indicated by way of a note and will be paid / provided on crystalisation.

6. Retirement Benefits :

Provident Fund contribution is charged to the Profit and Loss Account as and when the contributions are due In respect of Gratuity, the Company has covered the gratuity liability by obtaining the group gratuity policy. The premium charged by Life Insurance Corporation of India is paid as stipulated and charged to Profit and Loss Account. Leave encashment provision is made as per actuarial valuation.

7. Foreign Exchange Transactions :

a) Export Sales are intially accounted at the exchange rate prevailing on the date of documentation/invoicing and the same is adjusted with the difference in the rate of exchange arising on actual receipt of proceeds in foreign exchange.

b) Earnings in foreign currency other than export sales are accounted for at the rate of conversion on the date of realisation.

c) Imports of material / capital equipment are accounted at the rates at which the actual payments are made.

d) Assets and liabilities arising out of foreign exchange transactions are translated at the rates of exchange ruling on the date of Balance Sheet and are suitably adjusted to the appropriate Revenue/Capital account.

8. Impairment of Assets :

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods, is reversed if there has been a change in the estimate of recoverable amount.

9. Sales :

Sales represents the amount receivable for goods sold including excise duty and VAT/CST thereon. Incentives on export sales are recognised as income on accrual basis.

10. Provision for taxation :

Provision for taxation for the year is based on tax liability computed in accordance with relevant tax rates and tax laws as at the Balance Sheet date. Provision for deferred tax is made for all timing differences arising between taxable income and accounting income at rates that have been enacted or substantively enacted as at the Balance Sheet date. Deferred tax assets are recognised only if there is a reasonable certainty that they will be realised and are reviewed for the appropriateness of their respective carrying value at each Balance Sheet date.


Mar 31, 2011

1 Accounting Convention :

The financial statements are prepared under historical cost convention and on accrual basis in accordance with the generally accepted accounting principles.

2 Fixed Assets :

Fixed Assets are stated at cost net of depreciation provided in the statements. Cost of acquisition of Fixed Assets is inclusive of all direct and indirect expenditure up to the date of commercial use.

Depreciation is provided on straight line method in accordance with the rates prescribed under Schedule XIV of the Companies Act, 1956.

3 Inventories :

Rawmaterial and Stores and Spares valued at cost on weighted average basis. Stock-in-process and Finished Goods are valued at lower of cost or net realisable value.

The Excise Duty payable on finished / Saleable goods is accounted for on clearance of goods from the factory premises.

4 Investments :

Investments are stated at cost and diminution in the value, which is permanent in nature, is provided for.

5 Contingent Liabilities and Provisions :

All Contingent liabilities are indicated by way of a note and will be paid / provided on crystallisation.

6 Retirement Benefits :

Provident Fund contribution is charged to the Profit and Loss Account as and when the contributions are due. In respect of Gratuity, the Company has covered the gratuity liability by obtaining the group gratuity policy. The premium charged by Life Insurance Corporation of India is paid as stipulated and charged to Profit and Loss Account. Leave encashment provision is made as per actuarial valuation.

7 Foreign Exchange Transactions :

a) Export Sales are initially accounted at the exchange rate prevailing on the date of documentation/invoicing and the same is adjusted with the difference in the rate of exchange arising on actual receipt of proceeds in foreign exchange.

b) Earnings in foreign currency other than export sales are accounted for at the rate of conversion on the date of realisation.

c) Imports of material / capital equipment are accounted at the rates at which the actual payments are made.

d) Assets and liabilities arising out of foreign exchange transactions are translated at the rates of exchange ruling on the date of Balance Sheet and are suitably adjusted to the appropriate Revenue/Capital account.

8 Impairment of Assets :

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods, is reversed if there has been a change in the estimate of recoverable amount.

9 Sales :

Sales represents the amount receivable for goods sold including excise duty and sales tax thereon. Incentives on export sales are recognised as income on accrual basis.

10 Provision for taxation :

Provision for taxation for the year is based on tax liability computed in accordance with relevant tax rates and tax laws as at the Balance Sheet date. Provision for deferred tax is made for all timing differences arising between taxable income and accounting income at rates that have been enacted or substantively enacted as at the Balance Sheet date. Deferred tax assets are recognised only if there is a reasonable certainity that they will be realised and are reviewed for the appropriateness of their respective carrying value at each Balance Sheet date.


Mar 31, 2010

1 Accounting Convention :

The financial statements are prepared under historical cost convention and on accrual basis in accordance with the generally accepted accounting principles.

2 Fixed Assets :

Fixed Assets are stated at cost net of depreciation provided in the statements. Cost of acquisition of Fixed Assets is inclusive of all direct and indirect expenditure up to the date of commercial use.

Depreciation is provided on straight line method in accordance with the rates prescribed under Schedule XIV of the Companies Act, 1956.

3 Inventories :

Rawmaterial and Stores and Spares valued at cost on weighted average basis. Stock-in-process and Finished Goods are valued at lower of cost or net realisable value.

The Excise Duty payable on finished / Saleable goods is accounted for on clearance of goods from the factory premises.

4 Investments :

Investments are stated at cost and diminution in the value, which is permanent in nature, is provided for.

5 Contingent Liabilities and Provisions :

All Contingent liabilities are indicated by way of a note and will be paid / provided on crystallisation.

6 Retirement Benefits :

Provident Fund contribution is charged to the Profit and Loss Account as and when the contributions are due. In respect of Gratuity, the Company has covered the gratuity liability by obtaining the group gratuity policy. The premium charged by Life Insurance Corporation of India is paid as stipulated and charged to Profit and Loss Account. Leave encashment provision is made as per actuarial valuation.

7 Foreign Exchange Transactions :

a) Export Sales are intially accounted at the exchange rate prevailing on the date of documentation/invoicing and the same is adjusted with the difference in the rate of exchange arising on actual receipt of proceeds in foreign exchange.

b) Earnings in foreign currency other than export sales are accounted for at the rate of conversion on the date of realisation.

c)Imports of material / capital equipment are accounted at the rates at which the actual payments are made.

d) Assets and liabilities arising out of foreign exchange transactions are translated at the rates of exchange ruling on the date of Balance Sheet and are suitably adjusted to the appropriate Revenue/Capital account.

8 Impairment of Assets :

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods, is reversed if there has been a change in the estimate of recoverable amount.

9 Sales:

Sales represents the amount receivable for goods sold including excise duty and sales tax thereon. Incentives on export sales are recognised as income on accrual basis.

10 Provision for taxation :

Provision for taxation for the year is based on tax liability computed in accordance with relevant tax rates and tax laws as at the Balance Sheet date. Provision for deferred tax is made for all timing differences arising between taxable income and accounting income at rates that have been enacted or substantively enacted as at the Balance Sheet date. Deferred tax assets are recognised only if there is a reasonable certainity that they will be realised and are reviewed for the appropriateness of their respective carrying value at each Balance Sheet date.

11 The Company uses derivative financial instruments such as principal only swap for the purpose of cost reduction. In case of loss the transactions having protection are taken as contingent liability and where protection is knockedout, will be written off to profit & loss account.

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