Accounting Policies of Zenith Fibres Ltd. Company

Mar 31, 2016

NOTES FORMING PART OF FINANCIAL STATEMENTS

1. A. Corporate Information:

Zenith Fibres Limited ("the Company") is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange Limited. The Company is engaged in manufacturing of PP Staple Fibre and Yarn and caters to domestic as well as international markets

B. SIGNIFICANT ACCOUNTING POLICIES:

a) Accounting Convention:

The Financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Companies Act,2013 and other relevant provisions of the Companies Act,2013("the 2013 Act"), as applicable. The financial statements have been prepared under the historical cost convention on an accrual basis except otherwise stated. In the preparation of the financial statements, the accounting policies have been consistently applied with those in the previous year.

Use of estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and he results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

b) Fixed Assets

i. Fixed Assets are stated at cost, less accumulated depreciation and impairment loss if any (except on free hold land).

ii. Cost of Fixed Assets includes all incidental costs until the assets are ready for their intended use.

iii. Cost of Fixed Assets not ready to use as on the Balance Sheet date are disclosed under "Capital Work in Progress" and Advances paid towards acquisition of fixed assets outstanding as at Balance Sheet date are disclosed as Capital Advances under loans and advances.

iv. Cenvat credit availed for excise duty and countervailing duty availed for customs duty payments made on fixed assets is reduced from the cost of fixed assets.

v. Depreciation is calculated on useful lives of Assets after reducing 5% residual value of the original cost of each Asset as per Schedule II of the Companies Act 2013. However, the useful lives of following assets are different from the life specified in Part C of Schedule II based on Technical Advise.

	Name of Assets	Life as per Schedule II	Life as per Technical Advise
(1)	Plant & Machinery	25 Years	Between 10 and 20 Years

vi. Intangible assets are stated at the consideration paid for acquisition less accumulated amortization and impairment losses.

vii. Impairment of Assets - The carrying amounts of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss in recognized to the extent of carrying amount is greater than the recoverable amount of the asset. Recoverable amount is the higher of net selling price and value in use.

c) Investments

Investments made by the company are intended to be held for more than a year and are classified as non-current

investments. The same are valued at cost.

d) Inventory

i. Stock of finished goods is valued at lower of cost and net realizable value. Cost includes raw material cost, excise duty, other manufacturing expenses and depreciation.

ii. All other stocks are valued at cost or net realizable value, whichever is lower. The cost includes expenses incurred in bringing them to present location and condition excluding excise duty. The cost formula used is weighted average.

e) Sales

Revenue Recognition:

Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.

i. Sales are inclusive of excise duty and exclusive of discounts and returns.

ii. Sales revenue is recognized at the time of dispatch of materials.

iii. Other Income

Interest: Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

Other Income: The amounts receivable from various agencies are accounted on accrual basis to the extent it is possible to ascertain the income with reasonable accuracy.

Insurance Claims: Revenue is recognized on actual receipt basis.

f) Value of Import Entitlements is accounted for by reduction from cost of raw materials in the year of export.

g) Employee Benefits

Contribution to Provident Fund is charged to accounts on accrual basis. Provision for Leave Encashment and Gratuity has been made on the basis of actuarial valuation.

h) Foreign Currency Transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of transaction. Gain or Loss arising out of subsequent fluctuations is accounted for on actual payment or realization.

ii. Monetary items denominated in foreign currency as at the Balance Sheet date other than those covered by forward contracts, are converted at exchange rates prevailing on that date and those covered by forward contract are converted at Contracted Rate.

iii. Exchange differences relating to fixed assets are adjusted in the cost of assets. Any other exchange differences are dealt with in the profit & loss account.

iv. Forward Exchange Contracts:

The Company uses foreign currency forward contracts to hedge its risk associated with foreign currency fluctuations relating to certain firm commitments.

The Company does not use derivative financial instruments for speculative purposes.

i) Custom duty on goods stored in bonded warehouse is accounted for at the time of clearance. j) Taxation

i. The provision for current tax is ascertained on the basis of assessable profit computed in accordance with provisions of the Income Tax Act, 1961.

ii. Deferred tax is recognized (subject to the consideration of prudence) on timing differences (being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods).

k) Operating leases

Lease charges paid for operating leases are charged to profit and loss account on straight line basis over the lease term.

l) Earnings per Share:

Basic earnings per share are calculated by dividing the net profit or loss after tax for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

m) Cash and Cash Equivalents:

Cash and Cash Equivalents in balance sheet comprise cash at bank and in hand and fixed deposits with banks.

---

Mar 31, 2015

A) Fixed Assets

i. Tangible Assets are stated at cost, less accumulated depreciation and impairment loss (if any).

ii. Cost of Fixed Assets includes all incidental costs until the assets are ready for their intended use.

iii. Cost of Fixed Assets not ready to use as on the Balance sheet date are disclosed under "Capital Work in Progress" and Advances paid towards acquisition of fixed assets outstanding as at Balance Sheet date are disclosed as Capital Advances under loans and advances.

iv. Depreciation is calculated on useful lives of Assets after reducing 5% residual value of the original cost of each Asset as per Schedule II of the Companies Act, 2013. However the useful lives of following assets are different from the life specified in Part C of Schedule II based on Technical Advise.

v. Impairment of Assets - The carrying amounts of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss in recognized to the extent of carrying amount is greater than the recoverable amount of the asset. Recoverable amount is the higher of net selling price and value in use.

b) Investments

Investments made by the Company are intended to be held for more than a year and are classified as non-current investments. The same are valued at cost.

c) Inventory

i. Stock of finished goods is valued at lower of cost and net realizable value. Cost includes raw material cost, excise duty, other manufacturing expenses and depreciation.

ii. All other stocks are valued at cost or net realizable value, whichever is lower. The cost includes expenses incurred in bringing them to present location and condition excluding excise duty. The cost formula used is weighted average.

d) Sales

i. Sales are inclusive of excise duty and exclusive of discounts and returns.

ii. Sales revenue is recognized at the time of dispatch of materials.

e) Value of Import Entitlements is accounted for by reduction from cost of raw materials in the year of export.

f) Employee Benefits

Contribution to Provident Fund is charged to accounts on accrual basis. Provision for leave encashment and gratuity has been made on the basis of actuarial valuation.

g) Foreign Currency Transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of transaction. Gain or loss arising out of subsequent fluctuations is accounted for on actual payment or realization.

ii. Monetary items denominated in foreign currency as at the Balance Sheet date other than those covered by forward contracts, are converted at exchange rates prevailing on that date and those covered by forward contract are converted at Contracted Rate.

iii. Exchange differences relating to fixed assets are adjusted in the cost of assets. Any other exchange differences are dealt with in the profit & loss account.

iv. Forward Exchange Contracts:

The Company uses foreign currency forward contracts to hedge its risk associated with foreign currency fluctuations relating to certain firm commitments.

The Company does not use derivative financial instruments for speculative purposes.

h) Custom duty on goods stored in bonded warehouse is accounted for at the time of clearance.

i) Taxation

i. The provision for current tax is ascertained on the basis of assessable profit computed in accordance with provisions of the Income Tax Act, 1961.

ii. Deferred tax is recognized (subject to the consideration of prudence) on timing differences (being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods).

j) Operating leases

Lease charges paid for operating leases are charged to profit and loss account on straight line basis over the lease term.

---

Mar 31, 2013

A) Fixed Assets

i. Fixed Assets are stated at cost, less accumulated depreciation and impairment loss (if any)

ii. Cost of Fixed Assets includes all incidental costs until the assets are ready for their intended use

iii. Cost of Fixed Assets not ready to use as on the Balance sheet date are disclosed under " Capital Work in progress" and Advances paid towards acquisition of fixed assets outstanding as at Balance Sheet date are disclosed as Capital Advances under Long term loan and advances.

iv Depreciation is calculated by Straight Line Method at rates prescribed under the Schedule XIV of the Companies Act, 1956. In respect of additions during the year, it is calculated on pro-rata basis from the month of addition.

v. Impairment of Assets - The carrying amounts of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss in recognized to the extent of carrying amount is greater than the recoverable amount of the asset. Recoverable amount is the higher of net selling price and value in use.

b) Investments

Investments made by the company are intended to be held for more than a year and are classified as noncurrent Investments. The same are valued at cost.

c) Intangible assets are valued at cost, less accumulated amortization and impairment loss (if any). Computer software is amortized over the useful life of 6 years (as estimated by the Management).

d) Inventory

i. Stock of finished goods is valued at lower of cost and net realizable value. Cost includes raw material cost, excise duty, other manufacturing expenses and depreciation.

ii. All other stocks are valued at cost or net realizable value, whichever is lower. The cost includes expenses Incurred in bringing them to present location and condition excluding excise duty. The cost formula used is weighted average.

e) Sales

i. Sales are inclusive of excise duty and exclusive of discounts and returns.

ii. Sales revenue is recognized at the time of dispatch of materials.

f) Value of Import Entitlements is accounted for by reduction from cost of raw materials in the year of export

g) Employee Benefits

Contribution to Provident Fund is charged to accounts on accrual basis. Provision for leave encashment and gratuity has been made on the basis of actuarial valuation.

h) Foreign Currency Transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of transaction. Gain or loss arising out of subsequent fluctuations is accounted for on actual payment or realization.

ii- Monetary items denominated in foreign currency as at the Balance Sheet date other than those covered by forward contracts, are converted at exchange rates prevailing on that date and those covered by forward contract are converted at Contracted Rate.

iii- Exchange differences relating to fixed assets are adjusted in the cost of assets. Any other exchange differences are dealt with in the profit & loss account.

iv. Forward Exchange Contracts :

The Company uses foreign currency forward contracts to hedge its risk associated with foreign currency fluctuations relating to certain firm commitments.

The Company does not use derivative financial instruments for speculative purposes.

i) Custom duty on goods stored in bonded warehouse is accounted for at the time of clearance.

j) Taxation

i. The provision for current tax is ascertained on the basis of assessable profit compute in accordance with provisions of teh Income Tax Act. 1961. jj. Deferred tax is recognized (subject to the consideration of prudence) on timing differences (being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods).

k) Operating leases - Lease charges paid for operating leases are charged to profit and loss account on straight line basis over the lease term.

The Company has issued only one class of equity shares having a par value of Rs. 10 per share. Each holder of Equity Shares is entitled to one vote per share. The Company declares and pays dividend in the Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the Annual General Meeting.

* None of the items exceeds 1 % of revenue for qualification.

---

Mar 31, 2012

A) Fixed Assets

i. Fixed Assets are stated at cost, less accumulated depreciation and impairment loss (if any)

ii. Cost of Fixed Assets includes all incidental costs until the assets are ready for their intended use.

iii. Cost of Fixed Assets not ready to use as on the Balance sheet date are disclosed under "Capital Work in Progress" and Advances paid towards acquisition of fixed assets outstanding as at Balance Sheet date are disclosed as Capital Advances under Long term loan and advances.

iv. Depreciation is calculated by Straight Line Method at rates prescribed under the Schedule XIV of the Companies Act, 1956. In respect of additions during the year, it is calculated on pro-rata basis from the month of addition.

v. Impairment of Assets - The carrying amounts of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss is recognized to the extent of carrying amount is greater than the recoverable amount of the asset. Recoverable amount is the higher of net selling price and value in use.

b) Intangible assets are valued at cost, less accumulated amortization and impairment loss (if any). Computer software is amortized over the useful life of 6 years (as estimated by the Management).

c) Inventory

i. Stock of finished goods is valued at lower of cost and net realizable value. Cost includes raw material cost, excise duty, other manufacturing expenses and depreciation.

ii. All other stocks are valued at cost or net realizable value, whichever is lower. The cost includes expenses incurred in bringing them to present location and condition excluding excise duty. The cost formula used is weighted average.

d) Sales

i. Sales are inclusive of excise duty and exclusive of discounts and returns, ii.Sales revenue is recognized at the time of dispatch of materials.

e) Value of Import Entitlements is accounted for by reduction from cost of raw materials in the year of export.

f) Employee Benefits

Contribution to Provident Fund is charged to accounts on accrual basis. Provision for leave encashment and gratuity has been made on the basis of actuarial valuation.

g) Foreign Currency Transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of transaction. Gain or loss arising out of subsequent fluctuations is accounted for on actual payment or realization.

ii. Monetary items denominated in foreign currency as at the Balance Sheet date other than those covered by forward contracts, are converted at exchange rates prevailing on that date and those covered by forward contract are covered at Contracted Rate.

iii. Exchange differences relating to fixed assets are adjusted in the cost of assets. Any other exchange differences are dealt with in the profit & loss account.

iv. Forward Exchange Contracts :

The Company uses foreign currency forward contracts to hedge its risk associated with foreign currency fluctuations relating to certain firm commitments.

The Company does not use derivative financial instruments for speculative purposes.

h) Custom duty on goods stored in bonded warehouse is accounted for at the time of clearance.

I) Taxation

i. The provision for current tax is ascertained on the basis of assessable profit computed in accordance with provisions of the Income Tax Act, 1961.

ii. Deferred tax is recognized (subject to the consideration of prudence) on timing differences (being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods).

j) Operating leases - Lease charges paid for operating leases are charged to profit and loss account on straight line basis over the lease term.

The Company has issued only one class of equity shares having a par value of Rs.10 per share. Each holder of Equity Share is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the Annual General Meeting.

---

Mar 31, 2010

A. Fixed Assets

i. Fixed Assets are stated at cost, less accumulated depreciation and impairment loss (if any)

ii. Cost of Fixed Assets includes all incidental costs until the assets are ready for their intended use.

iii. Depreciation is calculated by Straight Line Method at rates prescribed under the Schedule XIV of the Companies Act, 1956. In respect of additions during the year, it is calculated on pro-rata basis from the month of addition.

iv. Impairment of Assets - The carrying amounts of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss is recognised to the extent of carrying amount is greater than the recoverable amount of the asset. Recoverable amount is the higher of net selling price and value in use.

b. Intangible assets are valued at cost, less accumulated amortisation and impairment loss (if any). Computer software is amortised over the useful life of 6 years (as estimated by the Management).

c. Inventory

i. Stock of finished goods is valued at lower of cost and net realisable value. Cost includes raw material cost, excise duty, other manufacturing expenses and depreciation.

ii. All other stocks are valued at cost or net realisable value, whichever is lower. The cost includes expenses incurred in bringing them to present location and condition excluding excise duty. The cost formula used is weighted average.

d. Sales

i. Sales are inclusive of excise duty and exclusive of discounts and returns. ii. Sales revenue is recognised at the time of despatch of materials.

e. Value of Import Entitlements is accounted for by reduction from cost of raw materials in the year of export.

f Employee Benefits

Contribution to Provident Fund is charged to accounts on accrual basis. Provision for leave encashment and gratuity has been made on the basis of actuarial valuation.

g. Foreign Currency Transactions

i. Foreign currency transactions are recorded at the exchange rates prevailing on the date of transaction. Gain or loss arising out of subsequent fluctuations is accounted for on actual payment or realization.

ii. Monetary items denominated in foreign currency as at the Balance Sheet date are converted at exchange rates prevailing on that date.

iii. Exchange differences relating to fixed assets are adjusted in the cost of assets. Any other exchange differences are dealt with in the profit & loss account.

h. Custom duty on goods stored in bonded warehouse is accounted for at the time of clearance.

i. Taxation

i. The provision for current tax is ascertained on the basis of assessable profit computed in accordance with provisions of the Income Tax Act, 1961.

ii. Deferred tax is recognised (subject to the consideration of prudence) on timing differences (being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.)

j. Operating leases - Lease charges paid for operating leases are charged to profit and loss account on straight line basis over the lease term.