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Accounting Policies of VTX Industries Ltd. Company

Mar 31, 2014

I. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles, and the provisions of the Companies Act, 1956 as adopted consistently the Company.

II. USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted principles requires estimates and assumptions to be made which would affect the assets, liabilities, revenues and expenses during the reporting period. Such estimates are revised ongoing basis as a result of new information, or subsequent development. Differences between the actual results and estimates are recognized in the period in which the results are known/materialized.

III. FIXED ASSETS

A. Tangible Assets:

Fixed assets are stated at original cost net of Tax/duty credits availed, if any, less accumulated depreciation, accumulated amortization and cumulative impairment. Cost includes preoperative expenses (net of income accrued) and all expenses related to acquisition and installation of the concerned assets and those incurred upto the date of commercial production.

B. Intangible Assets:

Expenditure incurred in respect of acquisition and development of designs, - patents and other intangibles up to the date of commercialization are recognized as intangible assets if it is identifiable, capable of being controlled and from which future economic benefits are expected to flow to the enterprise. Intangible assets are stated at cost net of tax/duty credits availed, if any, less accumulated amortization and cumulative impairment.

IV. IMPAIRMENT OF ASSETS

As at each Balance sheet date, the carrying amount of assets is tested for impairment so as to determine.

(i) The extent of recognition of impairment loss, if any, required or

(ii) The reversal, if any, required of impairment loss recognized in previous periods.

Where the carrying amount of an asset exceeds,its recoverable amount; such excess is recognized as impairment loss and charged to the statement of profit and loss.

V. BORROWING COSTS

(i) Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets. Other borrowing costs are recognized as expense in the period in they are incurred.

(ii) A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

VI. DEPRECIATION AND AMORTIZATION

1) Depreciation on Fixed assets is charged as under:

a) On plant & Machinery of Spinning and Processing division acquired on or after 1.4.1993 and on Wind mills on SLM basis as per Schedule XTV as a continuous process plant. On all other plant and machinery acquired on or after 1.4.1993 at general SLM rates as per Schedule XIV.

b) On Buildings on SLM basis as per Schedule XIV rates.

c) On all other assets (Including plant and machinery acquired on or before 1.4.1993) on WDV basis at Schedule XIV rates.

2) Depreciation on additions and deletions of the fixed assets are charged pro-rata basis.

3) Amortization on intangible assets is charged equally over the estimated useful life of the asset, not exceeding three years, commencing from the year of commercialization. The useful life is estimated based on the evaluation of future economic benefits expected to flow from such assets.

VII. INVESTMENTS

(i) Current investments are carried at lower of cost and fair value. Unquoted investments are carried at cost.

(ii) Long term investments are carried at cost. However provisions for diminution to recognize a decline, other temporary in the value of investments is made.

VIII. INVENTORIES

Inventories are valued at lower of cost or net realizable value.

Finished Goods - Yarn, Madeups and Waste at weighted average cost or net realizable value whichever is lower.

Raw Materials, Stock in Process, Stores and spares and canteen stock at weighted average cost.

IX. REVENUE RECOGNITION

The Company recognizes income and expenditure on accrual basis and recorded in the financial statements to the period to which they relate. Revenue from sale transaction is recognized as and when significant risks and rewards attached to ownership in the goods is transferred to the buyer. Revenue from service transactions is recognized on the completion of the contract. Dividend from Investments, Export incentives under Duty Entitlement Pass Book ["DEPB"] Scheme and Duty Drawback Scheme are recognized when the right to receive payment / credit is established and no significant uncertainty as to measurability or collectability exists.

X. FOREIGN CURRENCY TRANSACTIONS

(i) All Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transaction.

(ii) Foreign currency monetary assets and liabilities at reporting date are realigned to the exchange rate prevailing at the said date and difference on realignment is recognized in the Profit & Loss Account.

(iii) Exchange difference arising on the date of settlement is recognized as income or expense in the period in which they arise.

(iv) Premium/ discount in respect of Forward Contracts are amortized as expense / income over the period of contract.

(v) Non-monetary foreign currency items are carried at Cost.

XI. EMPLOYEE BENEFITS

(a) Short-term employee benefits are recognized as an expense at the nominal values in the profit and loss account of the year in which the related service is rendered.

(b) Post employment and other long-term benefits, which are defined benefit plans are recognized as an expense in the profit and loss account for the year in which the employee has rendered service. The expense is recognized based on the present value of the obligation determined on actuarial basis. The liability is assessed using Projected Unit Credit (PUC) actuarial method. Actuarial gains & losses are charged to the profit and loss account.

(c) Payments to defined contribution schemes are charged as expense as and when incurred.

(d) There is no scheme for encashment of unavailed leave on retirement since the unavailed earned leave is settled annually and accounted on payment.

XII. TAXES ON INCOME

(i) Taxes on income are accrued in the same period as the revenue and expenses to which they relate.

(ii) Current Tax on income for the period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

(iii) Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

(iv) Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

XIII. PRIOR PERIOD ITEMS

Expenses/Income which arise in the current period as a result of errors or omissions of one or more periods are included in the determination of net profit or loss for the current period and are disclosed by way of Notes to the Accounts.

XIV. EXTRAORDINARY ITEMS

Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the company and, therefore, are not expected to recur frequently or regularly and are disclosed by way of Notes to the Accounts.

XV. PROVISIONS, CONTINGENT LIABILITIES AND ASSETS

(i) Provision is recognized in respect of present obligations requiring settlement by outflow of resources and of which a reliable estimate on the amount of obligation could be made.

(ii) Contingent liability is not recognized and disclosed unless the possibility of outflow of resources embodying economic benefit is remote. Possibility obligation that arises from past events and the existence of which is subject to occurrence or non occurrence of uncertain future event/s is disclosed.

(iii) Contingent assets are neither recognized nor disclosed in the financial statements.

XVI. GOVERNMENT GRANTS:

The company recognizes Government grants only when there is reasonable assurance that the conditions attached to them shall be complied with and the grants will be received. Grants relating to fixed assets are shown as deduction from the gross value of the assets. Grants related to revenue is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. The capital grants towards promoters contribution is recognized as capital reserve.

XVII.LEASE

Lease payments on assets taken on lease are recognized as an expense on a straight line basis over the lease term.


Mar 31, 2013

I. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles, and the provisions of the Companies Act, 1956 as adopted consistently the Company.

II. USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted principles requires estimates and assumptions to be made which would affect the assets, liabilities, revenues and expenses during the reporting period. Such estimates are revised ongoing basis as a result of new information, or subsequent development. Differences between the actual results and estimates are recognized in the period in which the results are known /materialized.

III. FIXED ASSETS

A. Tangible Assets:

Fixed assets are stated at original cost net of Tax/duty credits availed, if any, less accumulated depreciation, accumulated amortization and cumulative impairment. Cost includes preoperative expenses (net of income accrued) and all expenses related to acquisition and installation of the concerned assets and those incurred upto the date of commercial production.

B. Intangible Assets:

Expenditure incurred in respect of acquisition and development of designs, patents, and other intangibles up to the date of commercialization are recognized as intangible assets if it is identifiable, capable of being controlled and from which future economic benefits are expected to flow to the enterprise. Intangible assets are stated at cost net of tax/duty credits availed, if any, less accumulated amortization and cumulative impairment.

IV. IMPAIRMENT OF ASSETS

As at each Balance sheet date, the carrying amount of assets is tested for impairment so as to determine

(i) The extent of recognition of impairment loss, if any, required or

(ii) The reversal, if any, required of impairment loss recognized in previous periods.

Where the carrying amount of an asset exceeds its recoverable amount; such excess is recognized as impairment loss and charged to the statement of profit and loss.

V. BORROWING COSTS

(i) Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets. Other borrowing costs are recognized as expense in the period in they are incurred.

(ii) A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

VI. DEPRECIATION AND AMORTIZATION

1) Depreciation on Fixed assets is charged as under:

a) On plant & Machinery of Spinning and Processing division acquired on or after 1.4.1993 and on Wind mills on SLM basis as per Schedule XIV as a continuous process plant. On all other plant and machinery acquired on or after 1.4.1993 at general SLM rates as per Schedule XIV.

b) On Buildings on SLM basis as per Schedule XIV rates.

c) On all other assets (Including plant and machinery acquired on or before 1.4.1993) on WDV basis at Schedule XIV rates.

2) Depreciation on additions and deletions of the fixed assets are charged pro-rata basis.

3) Amortization on intangible assets is charged equally over the estimated useful life of the asset, not exceeding three years, commencing from the year of commercialization. The useful life is estimated based on the evaluation of future economic benefits expected to flow from such assets.

VII. INVESTMENTS

(i) Current investments are carried at lower of cost and fair value. Unquoted investments are carried at cost.

(ii) Long term investments are carried at cost. However provisions for diminution to recognize a decline, other temporary in the value of investments is made.

VIII. INVENTORIES

Inventories are valued at lower of cost or net realizable value.

Finished Goods - Yarn, Madeups and Waste at weighted average cost or net realizable value whichever is lower.

Raw Materials, Stock in Process, Stores and spares and canteen stock at weighted average cost.

IX. REVENUE RECOGNITION

The Company recognizes income and expenditure on accrual basis and recorded in the financial statements to the period to which they relate. Revenue from sale transaction is recognized as and when significant risks and rewards attached to ownership in the goods is transferred to the buyer. Revenue from service transactions is recognized on the completion of the contract. Dividend from Investments, Export incentives under Duty Entitlement Pass Book ["DEPB"] Scheme and Duty Drawback Scheme are recognized when the right to receive payment / credit is established and no significant uncertainty as to measurability or collectability exists.

X. FOREIGN CURRENCY TRANSACTIONS

(i) All Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transaction.

(ii) Foreign currency monetary assets and liabilities at reporting date are realigned to the exchange rate prevailing at the said date and difference on realignment is recognized in the Profit & Loss Account.

(iii) Exchange difference arising on the date of settlement is recognized as income or expense in the period in which they arise.

(iv) Premium/ discount in respect of Forward Contracts are amortized as expense / income over the period of contract.

(v) Non-monetary foreign currency items are carried at Cost.

XI. EMPLOYEE BENEFITS

(a) Short-term employee benefits are recognized as an expense at the nominal values in the profit and loss account of the year in which the related service is rendered.

(b) Post employment and other long-term benefits, which are defined benefit plans are recognized as an expense in the profit and loss account for the year in which the employee has rendered service. The expense is recognized based on the present value of the obligation determined on actuarial basis. The liability is assessed using Projected Unit Credit (PUC) actuarial method. Actuarial gains & losses are charged to the profit and loss account.

(c) Payments to defined contribution schemes are charged as expense as and when incurred.

(d) There is no scheme for encashment of unavailed leave on retirement since the unavailed earned leave is settled annually and accounted on payment.

XII. TAXES ON INCOME

(i) Taxes on income are accrued in the same period as the revenue and expenses to which they relate.

(ii) Current Tax on income for the period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

(iii) Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

(iv) Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

XIII. PRIOR PERIOD ITEMS

Expenses/Income which arise in the current period as a result of errors or omissions of one or more periods are included in the determination of net profit or loss for the current period and are disclosed by way of Notes to the Accounts.

XIV. EXTRAORDINARY ITEMS

Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the company and, therefore, are not expected to recur frequently or regularly and are disclosed by way of Notes to the Accounts.

XV. PROVISIONS, CONTINGENT LIABILITIES AND ASSETS

(i) Provision is recognized in respect of present obligations requiring settlement by outflow of resources and of which a reliable estimate on the amount of obligation could be made.

(ii) Contingent liability is not recognized and disclosed unless the possibility of outflow of resources embodying economic benefit is remote. Possibility obligation that arises from past events and the existence of which is subject to occurrence or non occurrence of uncertain future event/s is disclosed.

(iii) Contingent assets are neither recognized nor disclosed in the financial statements.

XVI. GOVERNMENT GRANTS:

The company recognizes Government grants only when there is reasonable assurance that the conditions attached to them shall be complied with and the grants will be received. Grants relating to fixed assets are shown as deduction from the gross value of the assets. Grants related to revenue is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. The capital grants towards promoters contribution is recognized as capital reserve.

XVII.LEASE

Lease payments on assets taken on lease are recognized as an expense on a straight line basis over the lease term.


Mar 31, 2012

I. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles, and the provisions of the Companies Act, 1956 as adopted consistently the Company.

II. USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted principles requires estimates and assumptions to be made which would affect the assets, liabilities, revenues and expenses during the reporting period. Such estimates are revised ongoing basis as a result of new information, or subsequent development. Differences between the actual results and estimates are recognized in the period in which the results are known /materialized.

III. FIXED ASSETS

A. Tangible Assets:

Fixed assets are stated at original cost net of Tax/duty credits availed, if any, less accumulated depreciation, accumulated amortization and cumulative impairment. Cost includes preoperative expenses (net of income accrued) and all expenses related to acquisition and installation of the concerned assets and those incurred upto the date of commercial production.

B. Intangible Assets:

Expenditure incurred in respect of acquisition and development of designs, patents and other intangibles up to the date of commercialization are recognized as intangible assets if it is identifiable, capable of being controlled and from which future economic benefits are expected to flow to the enterprise. Intangible assets are stated at cost net of tax/duty credits availed, if any, less accumulated amortization and cumulative impairment.

IV. IMPAIRMENT OF ASSETS

As at each Balance sheet date, the carrying amount of assets is tested for impairment so as to determine

(i) The extent of recognition of impairment loss, if any, required or

(ii) The reversal, if any, required of impairment loss recognized in previous periods.

Where the carrying amount of an asset exceeds its recoverable amount; such excess is recognized as impairment loss and charged to the Statement of . Profit and Loss.

V. BORROWING COSTS

(i) Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets. Other borrowing costs are recognized as expense in the period in they are incurred.

(ii) A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

VI. DEPRECIATION AND AMORTIZATION

1) Depreciation on Fixed assets is charged as under:

a) On plant & Machinery of Spinning and Processing division acquired on or after 1.4.1993 and on Wind mills on SLM basis as per Schedule XIV as a continuous process plant.

On all other plant and machinery acquired on or after 1.4.1993 at general SLM rates as per Schedule XIV.

b) On Buildings on SLM basis as per Schedule XIV rates.

c) On all other assets (Including plant and machinery acquired on or before 1.4.1993) on WDV basis at Schedule XIV rates.

2) Depreciation on additions and deletions of the fixed assets are charged pro-rata basis.

3) Amortization on intangible assets is charged equally over the estimated useful life of the asset, not exceeding three years, commencing from the year of commercialization. The useful life is estimated based on the evaluation of future economic benefits expected to flow from such assets.

VII. INVESTMENTS

(i) Current investments are carried at lower of cost and fair value. Unquoted investments are carried at cost.

(ii) Long term investments are carried at cost. However provisions for diminution to recognize a decline, other temporary in the value of investments is made.

VIII. INVENTORIES

Inventories are valued at lower of cost or net realizable value.

Finished Goods - Yarn, Madeups and Waste at weighted average cost or net realizable value whichever is lower.

Raw Materials, Stock in Process, Stores and spares and canteen stock at weighted average cost.

IX. REVENUE RECOGNITION

The Company recognizes income and expenditure on accrual basis and recorded in the financial statements to the period to which they relate. Revenue from sale transaction is recognized as and when significant risks and rewards attached to ownership in the goods is transferred to the buyer. Revenue from service transactions is recognized on the completion of the contract. Dividend from Investments, Export incentives under Duty Entitlement Pass Book ["DEPB"] Scheme and Duty Drawback Scheme are recognized when the right to receive payment / credit is established and no significant uncertainty as to measurability or collectability exists.

X. FOREIGNCURRENCY TRANSACTIONS

(i) All Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transaction.

(ii) Foreign currency monetary assets and liabilities at reporting date are realigned to the exchange rate prevailing at the said date and difference on realignment is recognized in the Statement of Profit & Loss.

(iii) Exchange difference arising on the date of settlement is recognized as income or expense in the period in which they arise.

(iv) Premium / discount in respect of Forward Contracts are amortized as expense / income over the period of contract.

(v) Non-monetary foreign currency items are carried at Cost.

XI. EMPLOYEE BENEFITS

(a) Short-term employee benefits are recognized as an expense at the nominal values in the profit and loss account of the year in which the related service is rendered.

(b) Post employment and other long-term benefits, which are defined benefit plans are recognized as an expense in the profit and loss account for the year in which the employee has rendered service. The expense is recognized based on the present value of the obligation determined on actuarial basis. The liability is assessed using Projected Unit Credit (PUC) actuarial method. Actuarial gains & losses are charged to the profit and loss account.

(c) Payments to defined contribution schemes are charged as expense as and when incurred.

(d) There is no scheme for encashment of unavailed leave on retirement since the unavailed earned leave is settled annually and accounted on payment.

XII. TAXES ON INCOME

(i) Taxes on income are accrued in the same period as the revenue and expenses to which they relate.

(ii) Current Tax on income for the period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

(iii) Deferred tax is recognized on timing differences between the accounting income and. the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

iv) Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

XIII. PRIOR PERIOD ITEMS

Expenses/Income which arise in the current period as a result of errors or omissions of one or more periods are included in the determination of net profit or loss for the current period and are disclosed by way of Notes to the Accounts.

XIV. EXTRAORDINARY ITEMS

Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the company and, therefore, are not expected to recur frequently or regularly and are disclosed by way of Notes to the Accounts.

XV. PROVISIONS, CONTINGENT LIABILITIES AND ASSETS

(i) Provision is recognized in respect of present obligations requiring settlement by outflow of resources and of which a reliable estimate on the amount of obligation could be made.

(ii) Contingent liability is not recognized and disclosed unless the possibility of outflow of resources embodying economic benefit is remote. Possibility obligation that arises from past events and the existence of which is subject to occurrence or non occurrence of uncertain future event/s is disclosed.

(iii) Contingent assets are neither recognized nor disclosed in the financial statements.

XVI. GOVERNMENT GRANTS:

The company recognizes Government grants only when there is reasonable assurance that the conditions attached to them shall be complied with and the grants will be received. Grants relating to fixed assets are shown as deduction from the gross value of the assets. Grants related to revenue is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. The capital grants towards promoters contribution is recognized as capital reserve.

XVII. LEASE

Lease payments on assets taken on lease are recognized as an expense on a straight line basis over the lease term.


Mar 31, 2011

I. METHOD OF ACCOUNTING

The financial statements are prepared under historical cost convention and on accrual basis and in accordance with provisions of the Companies Act, 1956, and accounting principles generally accepted in India and comply with the Accounting Standards prescribed by The Companies (Accounting Standards) Rules 2006 issued by the Government of India to the extent applicable. The accounting is on the basis of a going concern concept.

II. USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known /materialized.

III. FIXED ASSETS

1) Fixed assets are stated at historical cost net of CENVAT / VAT including appropriate direct and allocated pre-operative expenses.

2) Depreciation on Fixed assets is charged as under:

a) On plant & Machinery of Spinning and Processing division acquired on or after 1.4.1993 and on Wind mills on SLM basis as per Schedule XIV as a continuous process plant. On all other plant and machinery acquired on or after 1.4.1993 at general SLM rates as per Schedule XIV.

b) On Buildings on SLM basis as per Schedule XIV rates.

c) On all other assets (Including plant and machinery acquired on or before 1.4.1993) on WDV basis at Schedule XIV rates.

3) Depreciation on additions and deletions of the fixed assets are charged pro-rata basis.

IV. INVESTMENTS

Long Term Investments are carried at cost inclusive of all expenses incidental to acquisition. Provision for diminution in value of long term investments is made only if such a decline is other than temporary in nature in the opinion of the management. Such diminution, if temporary, in the opinion of the management is not recognized.

V. INVENTORIES

Inventories are valued as under:

Finished Goods - Yarn, Madeups and Waste at weighted average cost or net realizable value whichever is lower.

Raw Materials, Stock in Process, Stores and spares and canteen stock at weighted average cost.

VI. REVENUE RECOGNITION

Income and Expenditure are recognized and accounted on accrual basis as and when they are earned or incurred. Revenue from sale transaction is recognized as and when significant risks and rewards attached to ownership in the goods is transferred to the buyer. Revenue from service transactions is recognized on the completion of the contract. Dividend from

Investments, Export incentives under Duty Entitlement Pass Book ["DEPB"] Scheme and Duty Drawback Scheme are recognized when the right to receive payment / credit is established and no significant uncertainty as to measurability or collectability exists.

VII. EMPLOYEE BENEFITS

Short Term employee benefits (other than termination benefits) which are payable within 12 months after the end of the period in which the employees rendered service are accounted on accrual basis.

Defined Contribution Plans

Company's contribution paid /payable during the year to Provident Fund and ESIC are recognized in the profit and loss account.

Defined Benefit Plans

Company's liabilities towards gratuity is determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits becomes vested. Actuarial gains or losses are recognized immediately in the statement of profit and loss account as income or expenses. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on government bonds where the currency and terms of the government bonds are consistent with currency and estimated terms of the defined benefit obligations. The expected return on plan assets is based on market expectations at the beginning of the period for returns over the entire life of the related obligations.

There is no scheme for encashment of unavailed leave on retirement since unavailed earned leave is settled annually and accounted on payment.

VIII. BORROWING COST

Interest and other incidental preoperative costs in connection with the borrowing of the funds to the extent related /attributed to the acquisition/ construction of qualifying fixed assets/project are capitalised up to the date when such assets/project are ready for its intended use and other borrowing costs are charged to Profit and Loss Account.

IX TAXES ON INCOME

Current Tax is determined as per the provisions of the Income tax act 1961 in respect of taxable income for the year and based on the expected outcome of assessment/appeals.

Deferred Tax assets and liabilities are recognized on timing differences between accounting income and taxable income that originate in one period and are capable or reversal in one or more subsequent period and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets, other than those arising on account of unabsorbed depreciation or carried forward business losses under tax laws, are recognized and carried forward subject to consideration or prudence only to the extent that there is reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

Deferred tax assets arising on account of unabsorbed depreciation or carried forward business losses are recognized only when there is virtual certainty with convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be related and only to the extent that there are deferred tax liabilities offsetting them.

X. FOREIGN CURRENCY TRANSACTIONS

Foreign currency transactions are recorded at the rates prevailing at the date of transaction. Exchange difference arising on final settlement are recognized as income or expenses in the year in which they arise. Outstanding balances before final settlement are converted at the exchange rates on the last date of the financial year and difference adjusted in revenue account where material.

XI. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying amount of the asset exceeds its estimated recoverable value. Carrying amounts of fixed assets are reviewed at each balance sheet date to determine indications of impairment, if any, of those assets. If any such indication exists, the recoverable amount of the asset is estimated and an impairment loss equal to the excess of the carrying amount over its recoverable value is recognized as an impairment loss. The impairment loss, if any, recognized in prior accounting period is reversed if there is a change in estimate of recoverable amount.

XII. DEFERRED REVENUE EXPENDITURE

a) New product development expenditure is amortized over a period of 3 years commencing from the year following the year of expenditure.

b) Pre-operative expenses related to integrated project are accumulated for capitalization on commissioning of the project.

XIII. CASH FLOW STATEMENT

Cash Flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transaction of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payment and items of income or expense associated with investing or financing cash flows. Cash and cash equivalents include cash on hand and balance with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the Company.

XIV. EARNINGS PER SHARE

Basic Earning per share is calculated by dividing the Net Profit after tax attributable to the shareholders by the weighted average number of Equity Shares outstanding during the year.

XV. EXPENDITURE ON CONSTRUCTION PERIOD

Pre-operative expenditure incurred on projects / assets during the construction/ implementation net of pre-operative income, if any, is capitalized and apportioned to projects/ assets on commissioning.

XVI. CONTINGENT LIABILITIES:

Contingent liabilities as defined in accounting standard 29 are disclosed in the notes to accounts. Provisions is made if it became probable that an outflow of future economic benefits will be required for an item previously dealt with it as a contingent liability

XVII. GOVERNMENT GRANTS:

The Company recognizes Government grants only when there is reasonable assurance that the conditions attached to them shall be complied with and the grants will be received. Grants relating to fixed assets are shown as deduction from the gross value of the assets. Grants related to revenue is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. The capital grants towards promoters contribution is recognized as capital reserve.


Mar 31, 2010

I. METHOD OF ACCOUNTING

The financial statements are prepared under historical cost convention and on accrual basis and in accordance with provisions of the Companies Act 1956 and accounting principles generally accepted in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 issued by the Government of India to the extent applicable. The accounting is on the basis of a going concern concept.

II. USE OF ESTIMATES

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

III. FIXED ASSETS

1) Fixed assets are stated at historical cost net of CENVAT /VAT including appropriate direct and allocated pre-operative expenses.

2) Depreciation on Fixed assets is charged as under:

a) On Plant & Machinery of Spinning and Processing division acquired on or after 1.4.1993 and on Wind mills on SLM basis as per Schedule XIV as a continuous process plant. On all other plant and machinery acquired on or after 1.4.1993 at general SLM rates as per Schedule XIV.

b) On Buildings on SLM basis as per Schedule XIV rates.

c) On all other assets (including Plant & machinery acquired on or before 1.4.1993) on WDV basis at schedule XIV rates

3) Depreciation on additions and deletions of the fixed assets are charged pro - rata.

IV. INVESTMENTS

Long Term Investments are carried at cost inclusive of all expenses incidental to acquisition. Provision for diminution in value of Long Term Investments is made only if such a decline is other than temporary in nature in the opinion of the management. Such diminution, if temporary, in the opinion of the management is not recognized.

V. INVENTORIES

Inventories are valued as under:

Finished Goods - Yarn, Made ups and Waste at weighted average cost or net realisable value whichever is lower.

Raw Materials, Stock in process, stores and spares and canteen stock at weighed average cost.

VI. REVENUE RECOGNITION

Income and Expenditure are recognized and accounted on accrual basis as and when they are earned or incurred. Revenue from sale transaction is recognized as and when significant risks and rewards attached to ownership in the goods is transferred to the buyer. Revenue from service transactions is recognized on the completion of the contract. Dividend from investments, Export incentives under Duty Entitlement Pass Book ["DEPB"] Scheme and Duty Drawback Scheme are recognized when the right to receive payment / credit is established and no significant uncertainty as to measurability or collectability exists.

VII. EMPLOYEE BENEFITS

Short term employee benefits (other than termination benefits) which are payable within 12 months after the end of the period in which the employees rendered service are accounted on accrual basis.

Defined Contribution Plans

Companys contribution paid/payable during the year to Provident Fund and ESIC are recognized in the profit and loss account.

Defined Benefit Plans

Companys liabilities towards gratuity is determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits becomes vested. Actuarial gains or losses are recognized immediately in the statement of profit and loss account as income or expenses. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on government bonds where the currency and terms of the government bonds are consistent with currency and estimated terms of the defined benefit obligations. The expected return on plan assets is based on market expectations at the beginning of the period for returns over the entire life of the related obligations.

There is no scheme for encashment of unavailed leave on retirement since unavailed earned leave is settled annually and accounted on payment.

VIII. BORROWING COST

Interest and other incidental preoperative costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets/project are capitalized up to the date when such assets/project are ready for its intended use and other borrowing costs are charged to Profit and Loss Account.

IX. TAXES ON INCOME

Current tax is determined as per the provisions of the Income tax Act, 1961 in respect of taxable income for the year and based on the expected outcome of assessment / appeals.

Deferred Tax assets and liabilities are recognized on timing differences between accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent period and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets, other than those arising on account of unabsorbed depreciation or carried forward business losses under tax laws, are recognized and carried forward subject to consideration of prudence only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets arising on account of unabsorbed depreciation or carried forward business losses are recognised only when there is virtual certainty with convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realised.

X. FOREIGN CURRENCY TRANSACTIONS

Foreign currency transactions are recorded at the rates prevailing at the date of transaction. Exchange differences arising on final settlement are recognized as income or expenses in the year in which they arise. Outstanding balances before final settlement are converted at the exchange rates on the last date of the financial year and difference adjusted in revenue account where material.

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.

XI. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying amount of the asset exceeds its estimated recoverable value. Carrying amounts of fixed assets are reviewed at each balance sheet date to determine indications of impairment, if any, of those assets. If any such indication exists, the recoverable amount of the asset is estimated and an impairment loss equal to the excess of the carrying amount over its recoverable value is recognized as an impairment loss. The impairment loss, if any, recognized in prior accounting period is reversed if there is a change in estimate of recoverable amount.

XII. DEFERRED REVENUE EXPENDITURE

a) New product development expenditure is amortised over a period 3 years commencing from the year following the year of expenditure.

b) Pre-operative expenses related to the integrated project are accumulated for capitalization on commissioning of the project.

XIII. CASH FLOW STATEMENT:

Cash Flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. Cash and cash equivalents include cash on hand and balance with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the company.

XIV. CONTINGENT LIABILITIES:

Contingent Liabilities as defined in Accounting Standard 29 are disclosed in the notes to accounts. Provision is made if it became probable that an outflow of future economic benefits will be required for an item previously dealt with it as a contingent liability.

XV. EARNINGS PER SHARE

Basic Earnings per share is calculated by dividing the Net Profit after tax attributable to the shareholders by the weighted average number of equity shares outstanding during the year.

XVI. EXPENDITURE DURING CONSTRUCTION PERIOD

Pre-operative expenditure incurred on projects / assets during the construction / implementation is capitalized and apportioned to projects / assets on commissioning

 
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