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Accounting Policies of Zenith Exports Ltd. Company

Mar 31, 2015

1.1 Basis of Accounting

These financial statements have been prepared under historical cost convention from books of accounts maintained on an accural basis (unless otherwise stated hereinafter) in conformity with accounting principles generally accepted in India and comply with the Accounting Standard issued by the Institute of Chartered Accountants of India and referred to Sec.129 & 133 of the Companies Act, 2013, of India. The accounting policies applied by the company are consistent with those used in the previous year.

1.2 use of estimates

The preparation of financial statements requires certain estimates and assumption to be made that effect the reported amount of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

1.3 Fixed Assets

(a) Fixed Assets are stated at the original cost of acquisition/installation. Such cost includes purchase price, incidental expenses directly related thereto and pre-operative expenses apportioned based on value. Fixed Assets are shown net of accumulated depreciation. CENVAT availed on capital goods purchased are shown at net value.

(b) Capital Work-in-Progress is stated at amount incurred upto the date of Balance Sheet.

1.4 Depreciation

(a) Depreciation is systematically allocated over the useful life of an asset as specified in Part-C of the schedule II of the Companies Act. 2013.

(b) Consequent to the enactment of Part-A of Schedule II of the Companies Act. 2013, the Company has reassessed the remaining useful life of Fixed Assets in accordance with the provisions prescribed under Schedule II. In case of assets which have completed their useful life, the carrying value (net of residual value) as on 1st April, 2014 amounting to Rs. 520.16 Lacs (net of Deferred Tax Rs.249.82 Lacs) has been recognised in Retained Earnings and in case of other assets the carrying value (net of residual value) is being depreciated over the revised remaining useful life. As a result of this change the depreciation charged for the year ended 31st March, 2015 is Lower by Rs.168.70 Lacs had the company continued with the previous rates under Companies Act, 1956.

(c) Depreciation on additions to fixed assets is provided on pro-rata basis from the date of acquisition or installation. Depreciation on assets sold, discarded, demolished or scrapped is provided up to the date on which said asset is sold, discarded, demolished or scrapped.

(d) Based on explanations given by way of Notes to Schedule II, of the Companies Act, 2013 and clarifications issued thereof, we (the Management of unit Zenith Spinners - Prop. Zenith Exports Limited) have evaluated and found that the machines used by the company are designed to work for 24 hours a day and hence such machines have been considered as a Continuous Process Plant and hence the adjustments to depreciation calculations have been made accordingly.

1.5 Investments

(a) Investments are stated at cost including expenses related thereto.

(b) Long Term Investments are stated at cost. The diminution, if any in the value of Investments is not recognised unless such diminution is considered permanent in nature.

(c) Current Investments are stated at Lower of cost or market value.

(d) Dividend is recognised when the right to receive is established.

1.6 Inventories

Inventories are valued as under

a) Raw Materials : at cost which is arrived at on average cost basis.

b) Packing Materials : at average cost basis.

c) Stores,Consumables & Spares : at average cost basis.

d) Semi-Finished Goods : at Raw Material cost and value added thereto upto the state of competion.

e) Finished Goods : at cost or net realisable value whichever is lower.

f) Waste : at estimated realisable value.

1. Short Term employee benefits

All employee benefits payable within twelve months of rendering the service are recognized in the period in which employee renders the related service.

2. Post Employment Benefits - (a) Defined Contribution plans

(i) Gratuity plan:

(a) The Company has Defined Benefit Plan for post employment benefit in the form of Gratuity for eligible employees, which is administered through a Group Gratuity Policy with Life Insurance Corporation of India (L.I.C). The Liability for the above Defined Benefit Plan is provided on the basis of an acturial valuation as carried out by L.I.C. The acturial method used for measuring the liability is the Projected Unit Credit Method.

(b) In case of Unfunded Gratuity is payable to all eligible employees of the Company on death, permanent disablement and resignation as per the provisions of the Payment of Gratuity Act or as per the Company's Scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn basic salary.

(ii) Leave Encashment:

Eligible employees can carry forward and encash leave upto death, permanent disablement and resignation subject to maximum accumulation allowed upto 15 days for employees. The Leave over and above 15 days is paid to employees as per the balance as on 31st March every year. Benefit would be paid at the time of separation based on the last drawn basic salary.

3. termination Benefits if any, are recognised as expenses to the Profit and Loss Account as and when incurred.

1.7 Foreign Currency transaction

a. Foreign Currency loans for financing fixed assets outstanding at the close of financial year are revolarised at appropriate bank exchange rate at the close of the year. The gain or loss for decrease/ increase in rupee liability due to fluctuations in rates of exchange is adjusted to carrying amount of Fixed Assets acquired out of said loans.

b. Income and Expenditure for the year are recorded as per prevailing bank rate on the date of transaction/ negotiation.

c. Current Assets and Liabilities outstanding at the close of the year ae translated/re-stated at contracted and/or appropriate bank exchange rates as on the last day of the financial year. The Loss or Gain, if any is recognised in the year of actual realisation in the Profit & Loss Account.

d. As per usual practice followed by the Company, the export sales transactions during the year are accounted for at Custom Rate and at the end of the year at Prevailing Bank Rate in respect of outstanding debtors. Difference between actual realisation at Custom Rate and/or Bank Rate are adjusted to Exchange Difference Account in Profit & Loss Account.

e. Gains or Losses on cancellation of Forward Exchange Contracts is recognised in the Profit & Loss account of the year in which they are cancelled.

1.8 Recognition of Income & expenditure

a. Export Sales are recognised on the basis of the date as mentioned in Exchange Control Declaration (GR) Form at Main Division and Weaving Division, whereas Spinning Division considers Sales on the basis of "Bill of Lading" date. Export Sales are accounted for in accounts as per monthly Custom Rate for all the Divisions and shown in the account net of export return.

b. Income & Expenditure are recognised on accrual basis.

c. Export entitlements are recognised in the Profit & Loss account when the right to receive credit as per terms of the entitlement in respect of the exports made.

d. Domestic Sales are recorded on raising bills net off discounts, return and Sales Tax.

e. Accounting for Differential Custom Duty Differential custom duty on wastage of Imported Raw Silk Yarn determined as per the Input/Output norms for EOU is accounted as and when the demand is raised by the customs authorities.

f. Revenue in respect of Job charges is recognised based on the work performed and invoiced as per terms of specific contracts.

1.9 Borrowing Costs

Borrowing Costs which are directly attributable to the acquisition/construction of fixed Assets till the time such assets are ready for intended use,are capitalised as part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred.

1.10 Impairment of Assets

The carrying amount of Assets are reviewed at each Balance Sheet date to ascertain impairment based on internal/external factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

1.11 Accounting for Cenvat Credits/service tax/Value Added Tax

Cenvat credit and Value Added Tax available on Raw materials, Packing materials, fuels, Stores & Spares, Capital goods and service tax credit on services are accounted for by reducing purchase cost of the related materials or the capital assets or the expenses respectively as the case may be.

1.12 provisions,Contingent Liabilities & Contingent Assets

Contingent liabilities are the possible obligation of the past events, the existence of which will be confirmed only by the occurrence or non-occurrence of such event in future. These are not provided for and are disclosed by way of Notes on Accounts. Contingent Assets are not provided for or disclosed.

1.13 Government Grants

Capital grants relating to specific assets are reduced from the gross value of the Fixed Assets and capital grants for Project capital subsidy are credited to Capital Reserve. Other revenue grants are credited to Profit & Loss account or deducted from the related expenses.

1.14 derivative instruments

a) The Company enters into forward foreign exchange contracts/option contracts (derivatives) to mitigate the risk of changes in foreign exchange rate on forecasted transactions. The company enters into derivative financial instruments where the counter party is a bank.Gains or losses on ineffective transactions of derivative contracts are recognised in the profit and loss account as they arose.

b) Accounting for forward foreign exchange contracts are marked to market basis and the net loss after considering the offsetting effects on the underlying contracts, is charged to the Income Statement. Net gains are ignored.


Mar 31, 2014

1. Convention

The financial statements have been prepared in accordance with generally accepted accounting principles and accounting standards issued by I.C.A.I. and as per the provisions of the Companies Act, 1956.

2. Basis of Accounting

The financial statements are prepared under historical cost convention following the accrual basis of accounting.

3. Fixed Assets

(a) Fixed Assets are stated at the original cost of acquisition/installation. Such cost includes purchase price, incidental expenses directly related thereto and pre-operative expenses apportioned based on value. Fixed Assets are shown net of accumulated depreciation. CENVAT availed on capital goods purchased are shown at net value.

(b) Capital Work-in-Progress is stated at amount incurred upto the date of Balance Sheet.

4. Depreciation

(a) Depreciation on fixed assets has been provided on the assets of Main Division at Kolkata on "Written down value method", for the Spinning Division at Ahmedabad and Weaving Division at Mysore on "Straight line method" at the rates as prescribed in Schedule XIV to the Companies Act, 1956 on prorata basis and the relevant accounting standard issued by the Institute of Chartered Accountants of India.In Spinning Division Plant & Machineries have been considered to be continuous process plant as defined in the said Schedule & on technical assessment and depreciation has been provided accordingly. In Weaving Division Depreciation has been charged on shift basis wherever applicable.

(b) Leasehold land are being amortised over the period of lease.

(c) Assets costing upto Rs. 0.05 Lacs are depreciated fully in the year of purchase/capitalisation.

(d) Depreciation is being provided prospectively over the residual life of the assets revolarised due to foreign exchange fluctuation wherever applicable.

5. Investments

(a) Investments are stated at cost including expenses related thereto.

(b) Long Term Investments are stated at cost. The diminution, if any in the value of Investments is not recognised unless such diminution is considered permanent in nature.

(c) Current Investments are stated at Lower of cost or market value.

(d) Dividend is recognised when the right to receive is established.

6. Inventories

Inventories are valued as under

a) Raw Materials : at cost which is arrived at on average cost basis.

b) Packing Materials : at average cost basis.

c) Stores, Consumables & Spares : at average cost basis.

d) Semi-Finished Goods : at Raw Material cost and value added thereto upto the state of completion.

e) Finished Goods : at cost or net realisable value whichever is lower.

f) Waste : at estimated realisable value.

7. Employee Benefits

1. Short Term employee benefits

All employee benefits payable within twelve months of rendering the service are recognized in the period in which employee renders the related service.

2. Post Employment Benefits

(a) Defined Contribution plans Gratuity Plan:

Gratuity is payable to all eligible employees of the Company on death, permanent disablement and resignation as per the provisions of the Payment of Gratuity Act or as per the Company''s Scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn basic salary.

Leave Encashment:

Eligible employees can carry forward and encash leave upto death, permanent disablement and resignation subject to maximum accumulation allowed upto 15 days for employees. The Leave over and above 15 days is paid to employees as per the balance as on 31st March every year. Benefit would be paid at the time of seperation based on the last drawn basic salary.

(b) Defined Benefit Obligation Plans

The present value of the obligation under such plans, is determined based on an actuarial valuation, using the projected Unit Credit Actuarial Method, carried out (approximately) at the close of the year. Actuarial gains and losses arising on such valuation are recognised immediately in the Profit and Loss Account.

3. Termination Benefits are charged to the Profit and Loss Account in the year in which they are incurred.

8. Foreign Currency Transaction

a. Foreign Currency loans for financing fixed assets outstanding at the close of financial year are revolarised at appropriate bank exchange rate at the close of the year. The gain or loss for decrease/increase in rupee liability due to fluctuations in rates of exchange is adjusted to carrying amount of Fixed Assets acquired out of said loans.

b. Income and Expenditure for the year are recorded as per prevailing bank rate on the date of transaction/ negotiation.

c. Current Assets and Liabilities outstanding at the close of the year are translated/re-stated at contracted and/or appropriate bank exchange rates as on the last day of the financial year. The Loss or Gain, if any is recognised in the year of actual realisation in the Profit & Loss Account.

d. As per usual practice followed by the Company, the export sales transactions during the year are accounted for at Custom Rate and at the end of the year at Prevailing Bank Rate in respect of outstanding debtors. Difference between actual realisation at Custom Rate and/or Bank Rate are adjusted to Exchange Difference Account in Profit & Loss Account.

e. Gains or Losses on cancellation of Forward Exchange Contracts is recognised in the Profit & Loss account of the year in which they are cancelled.

9. Recognition of Income & Expenditure

a. Export Sales are recognised on the basis of the date as mentioned in Exchange Control Declaration (GR) Form at Main Division and Weaving Division, whereas Spinning Division considers Sales on the basis of "Bill of Lading" date. Export Sales are accounted for in accounts as per monthly Custom Rate for all the Divisions and shown in the account net of export return.

b. Income & Expenditure are recognised on accrual basis.

c. Export entitlements are recognised in the Profit & Loss account when the right to receive credit as per terms of the entitlement in respect of the exports made.

d. Domestic Sales are recorded on raising bills net off discounts, return and Sales Tax.

e. Accounting for Differential custom duty

Differential custom duty on wastage of Imported Raw Silk Yarn determined as per the Input/Output norms for EOU is accounted as and when the demand is raised by the customs authorities.

f. Revenue in respect of Job charges is recognised based on the work performed and invoiced as per terms of specific contracts.

10. Borrowing Costs

Borrowing Costs which are directly attributable to the acquisition/construction of fixed Assets till the time such assets are ready for intended use, are capitalised as part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred.

11. Impairment of Assets

The carrying amount of Assets are reviewed at each Balance Sheet date to ascertain impairment based on internal/external factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

12. Accounting for Cenvat Credits/Service Tax/Value Added Tax

Cenvat credit and Value Added Tax available on Raw materials, Packing materials, fuels, Stores & Spares, Capital goods and service tax credit on services are accounted for by reducing purchase cost of the related materials or the capital assets or the expenses respectively as the case may be.

13. Provisions,Contingent Liabilities & Contingent Assets

Contingent liabilities are the possible obligation of the past events, the existence of which will be confirmed only by the occurrence or non-occurrence of such event in future. These are not provided for and are disclosed by way of Notes on Accounts. Contingent Assets are not provided for or disclosed.

14. Government Grants

Capital grants relating to specific assets are reduced from the gross value of the Fixed Assets and capital grants for Project capital subsidy are credited to Capital Reserve. Other revenue grants are credited to Profit & Loss account or deducted from the related expenses.

15. Derivative Instruments

a) The Company enters into forward foreign exchange contracts/option contracts (derivatives) to mitigate the risk of changes in foreign exchange rate on forecasted transactions. The company enters into derivative financial instruments where the counter party is a bank. Gains or losses on ineffective transactions of derivative contracts are recognised in the profit and loss account as they arose.

b) Accounting for forward foreign exchange contracts are marked to market basis and the net loss after considering the offsetting effects on the underlying contracts, is charged to the Income Statement Net gains are ignored.


Mar 31, 2012

4.1 Convention

The financial statements have been prepared in accordance with generally accepted accounting principles and accounting standards issued by I.C.A.I. and as per the provisions of the Companies Act, 1956.

1.2 Basis of Accounting

The financial statements are prepared under historical cost convention following the accrual basis of accounting.

1.3 Fixed Assets

a. Fixed Assets are stated at the original cost of acquisition / installation. Such cost includes purchase price, incidental expenses directly related thereto and pre-operative expenses apportioned based on value. Fixed Assets are shown net of accumulated depreciation. CENVAT availed on capital goods purchased are shown at net value.

b. Capital Work-in-Progress is stated at amount incurred upto the date of Balance Sheet.

1.4 Depreciation

a. Depreciation on fixed assets has been provided on the assets of Main Division at Kolkata on "Written down value method", for the Spinning Division at Ahmedabad and Weaving Division at Mysore on "Straight line method" at the rates as prescribed in Schedule XIV to the Companies Act, 1956 on prorata basis and the relevant accounting standard issued by the Institute of Chartered Accountants of India. In Spinning Division Plant & Machineries have been considered to be continuous process plant as defined in the said Schedule & on technical assessment and depreciation has been provided accordingly. In Weaving Division Depreciation has been charged on shift basis wherever applicable.

b. Leasehold land are being amortised over the period of lease.

c. Assets costing upto Rs. 0.05 lacs are depreciated fully in the year of purchase/capitalisation.

d. Depreciation is being provided prospectively over the residual life of the assets revolarised due to foreign exchange fluctuation wherever applicable.

1.5 Investments

a. Investments are stated at cost including expenses related thereto.

b. Long Term Investments are stated at cost. The diminution, if any in the value of Investments is not recognised unless such diminution is considered permanent in nature.

c. Current Investments are stated at Lower of cost or market value.

d. Dividend is recognised when the right to receive is established.

1.6 Inventories

Inventories are valued as under :-

a) Raw Materials : at cost which is arrived at on average cost basis

b) Packing Materials : at average cost basis

c) Stores, Consumables & Spares : at average cost basis

d) Semi-Finished Goods : at Raw Material cost and value added thereto upto the state of completion

e) Finished Goods : at cost or net realisable value whichever is lower

f) Waste : at estimated realisable value

26.7 Employee Benefits

1. Short Term employee benefits

All employee benefits payable within twelve months of rendering the service are recognized in the period in which employee renders the related service.

2. Post Employment Benefits

a. Defined Contribution plans Gratuity Plan :

Gratuity is payable to all eligible employees of the Company on death, permanent disablility and resignation as per provisions of the Payment of Gratuity Act or as per the Company's Scheme whichever is more beneficial. Benefit would be paid at the time of seperation based on the last drawn basic salary.

Leave Encashment :

Eligible Employees can carry forward and encash leave upto death, permanent disablility and resignation subject to maximum accumulation allowed upto 15 days for employees. The Leave over and above 15 days is paid to employees as per the balance as on 31st March every year. Benefit would be paid at the time of seperation based on the last drawn basic salary.

b. Defined Benefit Obligation Plans :

The present value of the obligation under such plans, is determined based on an actuarial valuation, using the projected Unit Credit Actuarial Method, carried out (approximately) at the close of the year. Actuarial gains and losses arising on such valuation are recognised immediately in the Profit & Loss Account.

3. Termination Benefits are charged to the Profit and Loss Account in the year in which they are incurred.

4 Foreign Currency Transaction

a. Foreign Currency loans for financing fixed assets outstanding at the close of financial year are revolarised at appropriate bank exchange rate at the close of the year. The gain or loss for decrease / increase in rupee liability due to fluctuations in rates of exchange is adjusted to carrying amount of Fixed Assets acquired out of said loans.

b. Income and Expenditure for the year are recorded as per prevailing bank rate on the date of transaction / negotiation.

c. Current Assets and Liabilities outstanding at the close of the year are translated / re-stated at contracted and / or appropriate bank exchange rates as on the last day of the financial year. The Loss or Gain, if any is recognised in the year of actual realisation in the Profit & Loss Account.

d. As per usual practice followed by the Company, the export sales transactions during the year are accounted for at Custom Rate and at the end of the year on Prevailing Bank Rate in respect of outstanding debtors. Difference between actual realisation of Custom Rate and/or Bank Rate are adjusted to Exchange Difference Account in Profit & Loss Account.

e. Gains or Losses on cancellation of Forward Exchange Contracts is recognised in the Profit & Loss Account of the year in which they are cancelled.

5 Recognition of Income & Expenditure

a. Export Sales are recognised on the basis of the date as mentioned in Exchange Control Declaration (GR) Form at Main Division and Weaving Division, whereas Spinning Division considers Sales on the basis of "Bill of Lading" date. Export Sales are accounted for in accounts as per monthly Custom Rate for all the Divisions and shown in the account net of export return.

b. Income & Expenditure are recognised on accrual basis.

c. Export entitlements are recognised in the Profit & Loss account when the right to receive credit as per terms of the entitlement in respect of the exports made.

d. Domestic Sales are recorded on raising bills net off discounts, return and Sales Tax.

e. Accounting for Differential custom duty

Differential custom duty on wastage of Imported Raw Silk Yarn determined as per the Input/ Output norms for EOU is accounted as and when the demand is raised by the customs authorities.

f. Revenue in respect of Job charges is recognised based on the work performed and invoiced as per terms of specific contracts.

6. Borrowing Costs

Borrowing Costs which are directly attributable to the acquisition/construction of Fixed Assets till the time such assets are ready for intended use, are capitalised as part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred.

7. Impairment of Assets

The carrying amount of Assets are reviewed at each Balance Sheet date to ascertain impairment based on internal/external factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

8. Accounting for Cenvat Credits/Service Tax/Value Added Tax Cenvat credit and Value Added Tax available on Raw materials, Packing materials, fuels, Stores & Spares, Capital goods and service tax credit on services are accounted for by reducing purchase cost of the related materials or the capital assets or the expenses respectively as the case may be.

9. Provisions, Contingent Liabilities & Contingent Assets

Contingent Liabilities are the possible obligation of the past events, the existence of which will be confirmed only by the occurance or non-occurance of such event in future. These are not provided for and are disclosed by way of Notes on Accounts. Contingent Assets are not provided for or disclosed.

10. Government Grants

Capital grants relating to specific assets are reduced from the gross value of the Fixed Assets and capital grants for Project capital subsidy are credited to Capital Reserve. Other revenue grants are credited to Profit & Loss account or deducted from the related expenses.

11. Derivative Instruments

a) The Company enters into forward foreign exchange contracts / option contracts (derivatives) to mitigate the risk of changes in foreign exchange rate on forecasted transactions. The Company enters into derivative financial instruments where the counterparty is a bank. Gains or losses on ineffective transactions of derivative contracts are recognised in the profit and loss account as they arose.

b) Accounting for forward foreign exchange contracts are marked to market basis and the net loss after considering the offsetting effects on the underlying contracts, is charged to the Income Statement. Net gains are ignored.

 
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