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Accounting Policies of Vallabh Steels Ltd. Company

Mar 31, 2015

A) Accounting Convention

The financial statements, other than the Cash Flow Statement, are prepared on accrual basis under the historical cost convention, treating the entity as a going concern and in accordance with the applicable accounting standards and relevant provisions of the Companies Act, 2013.

b) Revenue Recognition

i) Revenue from domestic sale of goods is recognized at the point of passing of title of goods to the customer which generally coincides with delivery

ii) Sale value is inclusive of excise duty paid at the time of clearance of goods but exclusive of sales tax

iii) Export sales are accounted for on the basis of the "Let Export" date.

iv) Revenue in respect of export incentives is recognized when such incentives accrue upon export of goods

c) Fixed Assets

Fixed Assets are stated at cost, net of taxes and duties subsequently recoverable from government authorities less accumulated depreciation and impairment loss, if any. Government grants relating to specific fixed assets are treated as deferred income, which is recognized in the Statement of Profit and Loss on a systematic basis over the useful life of the asset.

All costs attributable to bringing the asset to its working condition for its intended use, including financing costs till commencement of commercial production and charges on foreign exchange contracts and adjustments arising out of exchange rate variations attributable to the fixed assets are capitalized.

d) Depreciation

Pursuant to the enactment of the Companies Act 2013, the Company has applied the estimated useful lives as specified in schedule II. Accordingly the unamortized carrying value is being depreciated over the revised/remaining useful lives. The written down value of fixed assets whose lives have expired as at 1st April, 2014 have been adjusted net of taxes in the profit and loss by Rs 524.81 lacs.

e) Inventories

Inventories are valued at cost or net realizable value, whichever is lower.

Raw Material and stores are valued at cost determined on a weighted average basis.Work in process is valued at cost plus an appropriate share of overheads depending upon the stage of completion.

Finished Goods are valued taking into account the raw material cost, conversion cost and the overheads incurred to bring the goods to their present location and condition plus excise duty wherever applicable.

f) Foreign Exchange Transactions

Foreign Currency transactions are accounted for at exchange rate prevailing on the date of transaction. Premium on forward cover contracts in respect of import of raw materials is charged to the Statement of Profit and Loss over the period of contract. Amounts payable and receivable in foreign currency at the Balance Sheet date, not covered by forward contracts, are restated at the applicable exchange rate prevailing on the date of the Balance Sheet. All exchange differences, if any, arising on revenue transactions are charged/credited to the Statement of Profit and Loss.

g) Taxation

Provision for current tax is made in accordance with the provisions of the Income Tax law applicable for the relevant year. Deferred tax asset/liability is created in accordance with the requirements of Accounting Standard 22 "Accounting for taxes on Income" issued by the Institute of Chartered Accountants of India. Deferred Tax Asset is created only to the extent there is virtual certainty that future taxable income will be available against which such deferred tax asset can be realized.

In terms of the Guidance Note on "Accounting for Credit available in respect of Minimum Alternate Tax (MAT) under the Income Tax Act, 1961" issued by the Institute of Chartered Accountants of India, MAT credit is recognized as an asset only to the extent there is a convincing evidence that the company will be paying regular income tax during the specified period.

h) Employee Benefits

i) Short-term Employee Benefits

Employee benefits payable wholly within twelve months of rendering services are classified as short term employee benefits and are recognized in the period in which the employee renders the related services.

ii) Post-employment benefits Defined Benefit Plans

- Gratuity

The employee gratuity scheme is a defined benefit plan. Liability for the gratuity fund is accounted for on the basis of an actuarial valuation .The present value of defined benefit obligation as at the end of the year is determined using the Projected Unit Credit method i.e. each period of service rendered by the employee is considered to give rise to an additional unit of benefit entitlement, gradually building up the final obligation.

- Leave with Wages

The liability on account of compensated absences i.e. leave with wages is accounted for on the basis of unutilized leave standing to the credit of the employee at the close of the year.

Defined contribution Plans

Contributions to the employees' provident fund, which is a defined contribution plan, are made in accordance with the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. Such contributions are recognized as expense in the statement of Profit & Loss in the period in which the employee has rendered the services.

i) Provisions and Contingencies:

Provision is recognized in the balance sheet when, the company has a present obligation as a result of past events and it is probable that an outflow of economic resources will be required to settle the obligations, and a reliable estimate of the amount of the obligation can be made. A disclosure by way of contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognized nor disclosed in the financial statements.

j. Investments

Long term investments are carried at cost less provisions, if any, for permanent diminution in value.

k. Cash Flow Statement

The company has prepared cash flow statement using the indirect method in compliance of accounting standard- 3, 'Cash Flow Statement' issued by the ICAI.


Mar 31, 2014

A) Accounting Convention

The financial statements, other than the Cash Flow Statement, are prepared on accrual basis under the historical cost convention treating the entity as a going concern and in accordance with the applicable Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

b) Use of Estimates

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

c) Fixed Assets

Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation and impairment loss, if any. The cost comprises purchase price/construction cost and any directly attributable cost of bringing the asset to its working condition for its intended use. The borrowing costs in respect of qualifying assets incurred till the asset is ready for its intended use are capitalized.

d) Depreciation

Depreciation on Fixed Assets is charged on the Written Down Value method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.

e) Impairment of Assets

At each Balance Sheet date, an assessment is made whether any indication exists that an asset has been impaired in terms of Accounting Standard 28 issued by the Institute of Chartered Accountants of India (ICAI). If such an 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 and charged to the Statement of Profit & Loss. The impairment loss recognized in prior accounting periods is reversed if there is a change in the estimate of recoverable amount of an asset.

f) Revenue Recognition

i) Revenue from sale of goods is recognized at the point of passing of title of the goods to the customer which generally coincides with delivery.

ii) Sale value is inclusive of excise duty paid at the time of clearance of goods but exclusive of sales tax.

iii) Export sales are accounted for on the basis of the "Let Export" date.

iv) Revenue in respect of export incentives is recognized when such incentives accrue upon export of goods.

g) Inventories

Inventories are valued at cost or net realizable value, whichever is lower after providing obsolescence, if any. The cost in respect of various items of inventories is determined as under:

i) In case of Raw Materials, Stores and Spares, at weighted average cost;

ii) In case of Work in Process, at the raw material cost plus conversion cost depending upon the stage of completion of goods;

iii) In case of Finished Goods at the raw material cost, conversion cost and other overheads incurred to bring the goods to their present location and condition plus excise duty wherever applicable;

h) Investments

Long-term investments are carried at cost less provisions, if any, for permanent diminution in value.

i) Foreign Exchange Transactions

Transactions in foreign currency are recorded at the exchange rates prevalent at the time of transaction. Foreign Currency assets and liabilities are stated at the exchange rates prevailing at the date of Balance Sheet or at forward contract rates, wherever so covered. Realized gains or losses on foreign exchange transactions, other than those relating to fixed assets, are recognized in the Statement of Profit and Loss. The difference in foreign exchange rates in the case of fixed assets is adjusted to the cost of fixed assets.

j) Accounting for Taxes on Income

Provision for current tax is made on the basis of aggregate amount of income tax actually payable for the year on the estimated taxable income computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax resulting from the timing differences between Book Profit and Tax Profit is accounted for at the enacted rate of tax to the extent that the timing differences are expected to reverse in future. Deferred Tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets in respect of unabsorbed depreciation and carried forward losses are recognized only to the extent there is a virtual certainty that future taxable income will be available to realize these assets.

k) Cash Flow Statement

The company has prepared the Cash Flow Statement using the Indirect Method in compliance of Accounting Standard 3 "Cash Flow Statement" issued by The Institute of Chartered Accountants of India.

l) Employee Benefits

i) Short-term Employee Benefits

Short-term employee benefits are recognized as an expense in the Statement of Profit & Loss in the year in which the related services are rendered by the employees.

ii) Retirement Benefits Defined Contribution Plans

Contributions to the employees'' provident fund are made in accordance with the provisions of the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952. Such contributions are charged to the Statement of Profit & Loss of the year in which the related services are rendered by the employees.

Defined Benefit Plans

- Gratuity

Liability in respect of Gratuity is accounted for on the basis of an actuarial valuation. The present value of defined benefit obligation as at the end of the year is determined using the Projected Unit Credit method i.e. each period of service rendered by the employee is considered to give rise to an additional unit of benefit entitlement, gradually building up the final obligation.

- Leave with Wages

Liability in respect of leave with wages is accounted for by making provision on actual basis on the unutilized leaves standing credit to the employee.

m) Contingent Liabilities

No provision is made for liabilities that are contingent in nature, unless it is probable that future events will confirm that an asset has been impaired or a liability incurred as at the Balance Sheet date and a reasonable estimate of the resulting loss can be made. However, all known, material contingent liabilities are disclosed by way of separate notes.


Mar 31, 2013

A) Accounting Convention

The financial statements, other than the Cash Flow Statement, are prepared on accrual basis under the historical cost convention treating the entity as a going concern and in accordance with the applicable Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

b) Fixed Assets

Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation and impairment loss, if any. The cost comprises purchase price/construction cost and any directly attributable cost of bringing the asset to its working condition for its intended use. The borrowing costs in respect of qualifying assets incurred till the asset is ready for its intended use are capitalized.

c) Depreciation

Depreciation on Fixed Assets is charged on the Written Down Value method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.

d) Impairment of Assets

At each Balance Sheet date, an assessment is made whether any indication exists that an asset has been impaired in terms of Accounting Standard 28 issued by the Institute of Chartered Accountants of India (ICAI). If such an 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 and charged to the Statement of Profit & Loss. The impairment loss recognized in prior accounting periods is reversed if there is a change in the estimate of recoverable amount of an asset.

e) Revenue Recognition

i) Revenue from sale of goods is recognized at the point of passing of title of the goods to the customer which generally coincides with delivery. ii) Sale value is inclusive of excise duty paid at the time of clearance of goods but exclusive of sales tax. iii) Export sales are accounted for on the basis of the "Let Export" date. iv) Revenue in respect of export incentives is recognized when such incentives accrue upon export of goods.

f) Inventories

Inventories are valued at cost or net realizable value, whichever is lower after providing obsolescence, if any. The cost in respect of various items of inventories is determined as under: i) In case of Raw Materials, Stores and Spares, at weighted average cost;

ii) In case of Work in Process, at the raw material cost plus conversion cost depending upon the stage of completion of goods; iii) In case of Finished Goods at the raw material cost, conversion cost and other overheads ncurred to bring the goods to their present location and condition

g) Investments

Long-term investments are carried at cost less provisions, if any, for permanent diminution in value.

h) Foreign Exchange Transactions

Transactions in foreign currency are recorded at the exchange rates prevalent at the time of transaction. Foreign Currency assets and liabilities are stated at the exchange rates prevailing at the date of Balance Sheet or at forward contract rates, wherever so covered. Realized gains or losses on foreign exchange transactions, other than those relating to fixed assets, are recognized in the Statement of Profit and Loss. The difference in foreign exchange rates in the case of fixed assets is adjusted to the cost of fixed assets.

i) Accounting for Taxes on Income

Provision for current tax is made on the basis of aggregate amount of income tax actually payable for the year on the estimated taxable income computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax resulting from the timing differences between Book Profit and Tax Profit is accounted for at the enacted rate of tax to the extent that the timing differences are expected to reverse in future. Deferred Tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets in respect of unabsorbed depreciation and carried forward losses are recognized only to the extent there is a virtual certainty that future taxable income will be available to realize these assets.

j) Employee Benefits

i) Short-term Employee Benefits

Short-term employee benefits are recognized as an expense in the Statement of Profit & Loss in the year in which the related services are rendered by the employees.

ii) Retirement Benefits

Defined Contribution Plans

Contributions to the employees'' provident fund are made in accordance with the provisions of the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952. Such contributions are charged to the Statement of Profit & Loss of the year in which the related services are rendered by the employees.

Defined Benefit Plans

Liability in respect of Gratuity is accounted for on the basis of an actuarial valuation. The present value of defined benefit obligation as at the end of the year is determined using the Projected Unit Credit method i.e. each period of service rendered by the employee is considered to give rise to an additional unit of benefit entitlement, gradually building up the final obligation.

k) Contingent Liabilities

No provision is made for liabilities that are contingent in nature, unless it is probable that future events will confirm that an asset has been impaired or a liability incurred as at the Balance Sheet date and a reasonable estimate of the resulting loss can be made. However, all known, material contingent liabilities are disclosed by way of separate notes.


Mar 31, 2011

A) Accounting Convention

The financial statements, other than the cash flow statement, are prepared on accrual basis under the historical cost convention treating the entity as a going concern and in accordance with the applicable Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

b) Fixed Assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation and impairment loss, if any. The cost comprises purchase price/construction cost and any directly attributable cost of bringing the asset to its working condition for its intended use. The borrowing costs in respect of qualifying assets incurred till the asset is ready for its intended use are capitalized

c) Depreciation

Depreciation on fixed assets is charged on the written down value method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.

d) Impairment of Assets

At each balance sheet date, an assessment is made whether any indication exists that an asset has been impaired in terms of Accounting Standard 28 issued by Institute of Chartered Accountants of India (ICAI). If such an 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 and charged to the Profit & Loss Account. The impairment loss recognized in prior accounting periods is reversed if there is a change in the estimate of recoverable amount of an asset.

e) Revenue Recognition

a) Revenue from sale of goods is recognized at the point of passing of title of the goods to the customer which generally coincides with delivery.

b) Sale value is inclusive of excise duty paid at the time of clearance of goods but exclusive of sales tax.

c) Export sales are accounted for on the basis of the "Let Export" date.

d) Revenue in respect of export incentives is recognized when such incentives accrue upon export of goods.

f) Inventories

Inventories are valued at cost or net realizable value, whichever is lower after providing obsolescence, if any. The cost in respect of various items of inventory is determined as under:

a) In case of raw materials, stores and spares, at weighted average cost;

b) In case of work in process, at the raw material cost plus conversion cost depending upon the stage of completion of goods;

c) In case of finished goods at the raw material cost, conversion cost and other overheads incurred to bring the goods to their present location and condition

g) Investments

Long-term investments are carried at cost less provisions, if any, for permanent diminution in value. Current investments are carried at lower of cost or fair value.

h) Foreign Exchange Transactions

Transactions in foreign currency are recorded at the exchange rates prevalent at the time of transaction. Foreign Currency assets and liabilities are stated at the exchange rates prevailing at the date of Balance Sheet or at forward contract rates, wherever so covered. Realized gains or losses on foreign exchange transactions, other than those relating to fixed assets, are recognized in the Profit and Loss Account. The difference in foreign exchange rates in the case of fixed assets is adjusted to the cost of fixed assets.

i) Accounting for taxes on Income

Provision for current tax is made on the basis of aggregate amount of income tax actually payable for the year on the estimated taxable income computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax resulting from the timing differences between book profit and tax profit is accounted for at the enacted rate of tax to the extent that the timing differences are expected to reverse in future. Deferred Tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets in respect of unabsorbed depreciation and carried forward losses are recognized only to the extent there is a virtual certainty that future taxable income will be available to realize these assets.

j) Employee benefits

1. Short-term employee benefits

Short-term employee benefits are recognized as an expense in the Profit & Loss account in the year in which the related services are rendered by the employees.

2. Retirement benefits Defined contribution plans

Contributions to the employees' provident fund are made in accordance with the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. Such contributions are charged to the Profit & Loss account of the year in which the related services are rendered by the employees.

Defined benefit plans Gratuity

Liability in respect of gratuity is accounted for on the basis of an actuarial valuation. The present value of defined benefit obligation as at the end of the year is determined using the Projected Unit Credit method i.e. each period of service rendered by the employee is considered to give rise to an additional unit of benefit entitlement, gradually building up the final obligation.

k) Contingent Liabilities

No provision is made for liabilities that are contingent in nature, unless it is probable that future events will confirm that an asset has been impaired or a liability incurred as at the balance sheet date and a reasonable estimate of the resulting loss can be made. However, all known, material contingent liabilities are disclosed by way of separate notes.

 
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