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Accounting Policies of Vishal Fabrics Ltd. Company

Mar 31, 2015

1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENT

a) These financial statements have been prepared under the historical cost of conversion in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP), and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and referred to Section 129 & 133 of the Companies Act, 2013.

b) The Company follows the mercantile system of accounting ongoing concern basis.

1.2 USE OF ESTIMATES

The presentation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure relating to contingent assets and liabilities as at the date of financial statements are reported amounts of incomes and expenses during the period. Actual results could differ from those estimates.

1.3 FIXED ASSETS AND CAPITAL WORK IN PROGRESS

a) Fixed assets are stated at cost of acquisition or construction (net of cenvat credits). All cost relating to the acquisition and installation of fixed assets are capitalized and include borrowing costs directly attributable to construction or acquisition of fixed assets, up to the date of asset is put to use and adjustment arising out of exchange rate variation relating to liabilities attributable to those fixed assets.

b) They are stated at historical cost less depreciation.

1.4 DEPRECIATION

Depreciation on Fixed Assets is provided to the extent of depreciable amount on Straight Line Method on Plant & Machineries and Written Down Value Method on other than Plant & Machineries. Depreciation is provided based on useful life of the asset as prescribed in Schedule II to the Companies Act, 2013.

1.5 REVENUE RECOGNITION

a) Revenue from job work is recognized by the completed service contract.

b) Sales are accounted for on dispatch of goods to the customers and is exclusive of the excise, sales return rebate & discount, rate difference but inclusive of the sales tax, if any.

c) Dividend income and insurance claim has been accounted on cash b2asis.

d) Commission income, Investment, Export incentives, Int. on FDR are accounted on accrual basis.

e) Insurance claims are accounted in the year in which claim are acknowledge with insurance company.

1.6 INVENTORIES

a) Inventories of Raw materials are valued at cost, determined on FIFO basis. Cost of Raw Materials Stocks is determined so as to exclude from cost, taxes and duties, which are subsequently Recoverable from taxing authorities.

b) Stock of Work-in-progress valued at estimated cost.

1.7 INVESTMENTS

Non Current Investments are stated at cost. Provision for diminution in the value of Non Current Investments is made only if such a decline is other than temporary. Current Investments are stated at lower of Cost or Market Value, if any.

1.8 RETIREMENT BENEFITS

a) Gratuity

Liabilities in respect of Gratuity is assessed actuarially and provided accordingly.

b) Provident Fund and Leave Encashment

A liability in respect of Provident Fund & Leave Encashment is provided in the accounts on accrual basis for the period.

1.9 FOREIGN CURRENCY TRANSACTION

Transaction in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction and outstanding in respect thereof are stated at the exchange rates prevailing at the date of Balance Sheet. Exchange differences relating to Fixed Assets are adjusted to the cost of Fixed Assets. Any other exchange difference is dealt in the Profit and Loss Account.

1.10 BORROWING COST

Borrowing costs directly attributable to the acquisition and construction of qualifying fixed assets are capitalized as part of the cost of the assets, up to the date the asset is put to use. Other borrowing costs and interest on working capital are charged to revenue in the year in which they are incurred.

1.11 PRELIMINARY EXPENDITURE

Preliminary Expenditure if any, is to be apportion in five equal installments, commencing from the year in which the expenditure has been incurred.

1.12 TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized, on timing differences, being the Difference between taxable incomes and accounting income that originates in one period and are capable of reversal in one or more subsequent periods.

Minimum Alternate Tax (MAT) Credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during specified period. In the year in which the MAT credit becomes eligible, to be recognized as an asset. In accordance with recommendation contained in the guidance note issued by ICAI, said asset is created by way of credit/reversal of provisions to Profit and Loss A/c and shown as MAT Credit Entitlements in Loans and Advances. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specified period.

1.13 PRIOR PERIOD ITEMS

Prior period incomes & expenditures are treated as current year's income/expenditure.

1.14 PROVISION

A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an out flow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to present value and are determine based on best estimate required to settle the obligations at the balance sheet date these are review at each balance sheet date and adjusted to reflect the best estimates.

1.15 CASH FLOW STATEMENT

The Company has prepared cash flow statement by following an indirect method as per Accounting standard - 3 issued by ICAI.

1.16 EARNING PER SHARE

The earning considered in ascertaining the company's EPS comprises the Net Profit or Loss for the period after and extraordinary and exceptional items. The basic EPS is computed on the basis of weighted average number of equity shares outstanding during the year.

1.17 CONTINGENT LIABILITIES

Contingent Liabilities are determined on the basis of available information and explanations given to us and are disclosed by way of note to the accounts.


Mar 31, 2014

1.1 BASIS OF ACCOUNTING

(a) Financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the companies Act, 1956.

(b) The Company follows the mercantile system of accounting on a going concern basis.

1.2 Use of Estimate

The presentation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure relating to contingent assets and liabilities as at the date of financial statements are reported amounts of incomes and expenses during the period. Actual results could differ from those estimates.

1.3 FIXED ASSETS AND CAPITAL WORK IN PROGRESS

a) Fixed assets are stated at cost of acquisition or construction (net of cenvat credits). All cost relating to the acquisition and installation of fixed assets are capitalized and include borrowing costs directly attributable to construction or acquisition of fixed assets, up to the date of asset is put to use and adjustment arising out of exchange rate variation relating to liabilities attributable to those fixed assets.

b) They are stated at historical cost less depreciation.

1.4 DEPRECIATION

The company is providing depreciation at the rates provided on Straight Line Method basis on plant & machinery and on assets other than plant & machineries provided at the WDV rates as per the schedule XIV of The Companies Act, 1956 from the date of actual put to use i.e. on priority basis.

1.5 REVENUE RECOGNITION

a) Revenue from job work is recognized by the completed service contract.

b) Sales are accounted for on dispatch of goods to the customers and is exclusive of the Excise, sales return rebate & discount, rate difference but inclusive of the sales tax, if any.

c) Dividend income and insurance claim has been accounted on cash basis.

d) Commission income, profit on sale of Assets, Investment, Export incentives, Int. on FDR are accounted on accrual basis.

1.6 INVENTORIES

a) Inventories of Raw materials are valued at cost, determined on FIFO basis. Cost of Raw Materials Stocks is determined so as to exclude from cost, taxes and duties, which are subsequently Recoverable from taxing authorities.

b) Stock of Work-in-progress valued at estimated cost.

1.7 INVESTMENTS

Long Term Investments are stated at cost less permanent diminution if any.

1.8 RETIREMENT BENEFITS

a) GRATUITY

Liabilities in respect of Gratuity is assessed actuarially and provided accordingly.

b) PROVIDENT FUND AND LEAVE ENCASHMENT

A liability in respect of Provident Fund & Leave Encashment is provided in the accounts on accrual basis for the period.

1.9 FOREIGN CURRENCY TRANSACTION

Transaction in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction and outstanding in respect thereof are stated at the exchange rates prevailing at the date of Balance Sheet. Exchange differences relating to Fixed Assets are adjusted to the cost of Fixed Assets. Any other exchange difference is dealt in the Profit and Loss Account.

1.10 BORROWING COST

Borrowing costs directly attributable to the acquisition and construction of qualifying fixed assets are capitalized as part of the cost of the assets, up to the date the asset is put to use. Other borrowing costs and interest on working capital are charged to revenue in the year in which they are incurred.

1.11 PRELIMINARY EXPENDITURE

Preliminary Expenditure if any, is to be apportion in five equal installments, commencing from the year in which the expenditure has been incurred.

1.12 TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized, on timing differences, being the Difference between taxable incomes and accounting income that originates in one period and are capable of reversal in one or more subsequent periods.

Minimum Alternate Tax (MAT) Credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during specified period. In the year in which the MAT credit becomes eligible, to be recognized as an asset. In accordance with recommendation contained in the guidance note issued by ICAI, said asset is created by way of credit/reversal of provisions to Profit and Loss A/c and shown as MAT Credit Entitlements in Loans and Advances. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specified period.

1.13 PRIOR PERIOD ITEMS

Prior period incomes & expenditures are treated as current year''s income/expenditure.

1.14 PROVISION :

A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an out flow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to present value and are determine based on best estimate required to settle the obligations at the balance sheet date these are review at each balance sheet date and adjusted to reflect the best estimates.

1.15 CASH FLOW STATEMENT:

The Company has prepared cash flow statement by following an indirect method as per Accounting standard - 3 issued by ICAI.

1.16 EARNING PER SHARE:

The earning considered in ascertaining the company''s EPS comprises the Net Profit or Loss for the period after and extraordinary items. The basic EPS is computed on the basis of weighted average number of equity shares outstanding during the year.

1.17 CONTINGENT LIABILITIES

Contingent Liabilities are determined on the basis of available information and explanations given to us and are disclosed by way of note to the accounts.

 
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