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Accounting Policies of Mohite Industries Ltd. Company

Mar 31, 2018

I. Summary of accounting policies :

1) Overall considerations

The financial statements have been prepared applying the significant accounting policies and measurement basis summarized below.

2) Revenue Recognition

Revenue is measured at fair value of the consideration received or receivable and net of returns, trade allowances and rebates and amounts collected on behalf of third parties. It excludes excise duty Value Added Tax, Sales Tax, Service Tax and GST.

i) Sale of Products :

Revenue from sale of products is recognised when significant risks and rewards of ownership pass to the customers, as per the terms of the contract and when the economic benefits associated with the transactions will flow to the Company.

ii) Interest Income :

Interest incomes are recognized using the time proportion method based on the rates implicit in the transaction. Interest income is included in other income in the statement of profit and loss.

3) Property, plant and equipment

i) Freehold land is stated at historical cost. All other items of Property, Plant and Equipment are stated at cost of acquisition/construction less accumulated depreciation/amortization and impairment, if any.

Cost includes:

a) Purchase Price

b) Taxes and Duties

c) Labour cost and

d) Directly attributable overheads incurred up to the date, the asset is ready for its intended use. However, cost excludes excise duty, value added tax, service tax, and GST to the extent credit of the duty or tax is availed of.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

ii) Component Accounting :

The component of assets are capitalized only if the life of the components vary significantly and whose cost is significant in relation to the cost of the respective asset, the life of the component in assets are determined based on technical assessment and past history of replacement of such components in the assets. The carrying amount of any component accounted for as separate asset is derecognized when replaced.

iii) Other cost :

All other repairs and maintenance cost are charged to the statement of profit and loss during the reporting period in which they are incurred. Profit or Losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the Statement of Profit and Loss within other income/ (loss).

iv) Depreciation and amortization :

a) Depreciation is recognized on a straight-line basis, over the useful life of the buildings and other equipments as prescribed under Schedule II of the Companies Act, 2013.

b) Depreciation on tangible fixed assets is charged over the estimated useful life of the asset or part of the asset as evaluated on technical assessment on straight line method, in accordance with Part A of Schedule II to the Companies Act, 2013

c) On tangible fixed assets added/disposed off during the year, depreciation is charged on pro-rata basis for the period for which the asset was purchased and used.

v) Ind AS Transition :

As there is no change in the functional currency as at the date of transition, the Company has elected to adopt the carrying value of Plant, property and equipment under the erstwhile GAAP as the deemed cost for the purpose of transition to Ind AS. Capital-work-in progress, plant and equipment is stated at cost less accumulated impairment losses, if any.

4) Impairment :

At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment. Recoverable amount is the higher of an asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Reversal of impairment loss is recognised as income in the statement of profit and loss.

5) Financial Assets classification and subsequent measurement of Financial Assets :

i. Trade receivables

The Company follows ’simplified approach’ for recognition of impairment loss allowance based on life time Expected Credit Loss at each reporting date, right from its initial recognition.

ii. Derecognition of financial assets

A financial asset is derecognised only when;

a) The Company has transferred the rights to receive cash flows from the financial asset or

b) The Company retains the contractual rights to receive the cash flows of the financial asset, but expects a contractual obligation to pay the cash flows to one or more recipients.

There are no such de-recognitions.

6) Financial Liabilities:

Classification, subsequent measurement and de-recognition of financial liabilities

a. Classification

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss or at amortized cost. The Company’s financial liabilities include borrowings & trade and other payables.

b. Subsequent measurement

Financial liabilities are measured subsequently at amortized cost using the effective interest method. All interest related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.

7) Inventories

Inventories are valued at lower of cost or net realizable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale. Cost is ascertained on weighted average basis in accordance with the method of valuation prescribed by the Institute of Chartered Accountants of India.

i. Raw materials

Raw materials are valued at cost of purchase, net of duties (credit availed w.r.t taxes and duties) and includes all expenses incurred in bringing the materials to location of use.

ii. Work-in-process and Finished Goods

Work-in-process and finished goods include conversion costs in addition to the landed cost of raw materials.

iii. Stores and spares

Stores, spares and tools cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

8) Income Taxes

Tax expense recognized in the statement of profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity.

Calculation of current tax is based on tax rates in accordance with tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at reporting date.

Deferred tax expense or benefit is recognised on timing differences being the difference between taxable income and accounting income that originate in one period and is likely to reverse in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets.

9) Post-employment benefits and short-term employee benefits

i. Short term obligations:

Short term obligations are those that are expected to be settled fully within 12 months after the end of the reporting period. They are recognised up to the end of the reporting period at the amounts expected to be paid at the time of settlement.

ii. Other long term employee benefits obligations:

The liabilities for earned leave are not expected to be settled wholly within 12 months after end of the period in which the employees render the related service. They are, therefore, recognised and provided for at the present value of the expected future payments to be made in respect of services provided by employee up to the end of reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

iii. Post-employment obligation:

The Company operates the following post-employment schemes :

a) Defined contribution plan such as Gratuity & provident fund

- Gratuity obligation :

The company has created The Employees Group Gratuity fund which has taken gratuity cum life insurance policy from LIC of India. Premium on said policy is calculated by LIC & Conveyed to us on the basic of Project unit credit Method. The same is accounted for in books of accounts.

- Provident Fund :

The eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees salary. The provident fund contributions are made to EPFO.

- Bonus Payable :

The Company recognises a liability and an expense for bonus. The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

10) Provisions and contingent liabilities

i. Provisions :

A Provision is recorded when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated.

ii. Contingent liabilities :

Whenever there is possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because (a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (b) the amount of the obligation cannot be measured with sufficient reliability are considered as contingent liability. Following are the Contingent Liabilities which are not accounting for in books of account.

11) Earnings per share :

The company presents the basic and diluted EPS data. Basic and diluted EPS is computed by dividing the profit for the period attributable to the shareholders of the company by the weighted average number of shares outstanding during the period .

12) Cash and Cash equivalents and Cash Flow Statement :

Statement of cash flow is prepared segregating the cash flow into operating, investing and financing activities. Cash Flow from Operating activity is reported using indirect method adjusting the net profit for the effects of

I) changes during the period in inventories and operating receivables/ payables transactions of non-cash nature.

ii) Non Cash items such as depreciation, provision, deferred tax unrealized foreign currency gains and losses and undistributed profits of associates.

iii) All other items for which cash effects are investing and financing cash flows.

13) Segment reporting :

Segment have been identified on the basis of Ind Accounting Standard on Segment Reporting

14) Borrowing costs:

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred under finance costs.

Apart from above no significant transactions took place with related parties during the year. There are no write offs/write backs of any amount of any of the related party during the year .

III) Significant management judgment in applying accounting policies and estimation of uncertainty While preparing the financial statements, management has made a number of judgments, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

(1) Significant management judgment

The following are significant management judgments in applying the accounting policies of the Company that have significant effect on the financial statements.

(2) Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can be utilized. In addition, careful judgment is exercised in assessing the impact of any legal or economic limits or uncertainties in various tax issues.

(3) Estimation of uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is mentioned below. Actual results may be different.

a. Impairment of non-financial assets

In assessing impairment, management has estimated economic usefulness of the assets, the recoverable amount of each asset or cash- generating units based on expected future cash flows and use of an interest rate to discount them. Estimation of uncertainty relates to assumptions about economically future operating cash flows and the determination of a suitable discount rate.

b. Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of assets including Intangible Assets.

c. Inventories

Management has carefully estimated the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by market-driven changes.

d. Current and non-current classification

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.


Mar 31, 2016

i) Basic of Accounting

These financial statements 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, as applicable. The financial statements have been prepared under the historical cost convention on accrual basis.

ii) Inventories

Raw materials are carried at the lower of cost and net realizable value. Cost is determined on a FIFO basis. Purchased goods-in-transit are carried at cost. Work-in-progress is carried at the lower of cost and net realizable value. Stores and spare parts are carried at lower of cost and net realizable value. Finished goods produced or purchased by the Company are carried at lower of cost and net realizable value. Cost includes direct material and labour cost and a proportion of manufacturing overheads.

iii) Use of Estimates

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expense during the year. Examples of such estimates include provisions for doubtful receivables, employee benefits, provision for income taxes, accounting for contract costs expected to be incurred, the useful lives of depreciable fixed assets and provision for impairment. Future results could differ due to changes in these estimates and the difference between the actual result and the estimates are recognized in the period in which the results are known / materialize.

iv) Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation / amortization as per Schedule II of Companies Act, 2013. Costs include all expenses incurred to bring the asset to its present location and condition.

v) Depreciation

In respect of fixed assets (other than freehold land and capital work-in-progress) acquired during the year, depreciation / amortization is charged on a straight line basis so as to write-off the cost of the assets over the useful lives as prescribed in Schedule II of Companies Act, 2013.

vi) Revenue Recognition Sales

Sales are accounted for on when the sign cant risks and rewards of ownership are transferred to the buyer. Other Income

The Company recognizes income (including rent etc.) on accrual basis. However, where the ultimate collection of the same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty.

vii) Leases

Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such a lease is capitalized at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is recognized for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognized as operating leases. Lease rentals under operating leases are recognized in the statement of profit and loss.

viii) Impairment

At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment. Recoverable amount is the higher of an asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Reversal of impairment loss is recognised as income in the statement of profit and loss.

ix) Investments

Long-term investments and current maturities of long-term investments are stated at cost, less provision for other than temporary diminution in value. Current investments, except for current maturities of long-term investments, comprising investments in mutual funds, government securities and bonds are stated at the lower of cost and fair value.

x) Employee benefits

(i) Post-employment benefit plans

Contributions to defined contribution retirement benefit schemes are recognized as expense when employees have rendered services entitling them to such benefits.

(ii) Other employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave and performance incentives.

xi) Provision for Taxation

Current income tax expense comprises taxes on income from operations in India. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax in future period. Accordingly, MAT is recognized as an asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with it will fructify.

Deferred tax expense or benefit is recognized on timing differences being the difference between taxable income and accounting income that originate in one period and is likely to reverse in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

xii) Foreign currency transactions

Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date and exchange gains and losses are recognized in the statement of profit and loss. Foreign currency non-monetary assets are converted at exchange rates prevailing on the date of the transaction.

xiii) Provisions, Contingent liabilities and Contingent assets

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognized in the financial statements. A contingent asset is neither recognized nor disclosed in the financial statements.

xiv) Cash and cash equivalents

The Company considers all highly liquid financial instruments, which are readily convertible into known amount of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents.


Mar 31, 2014

I) Basic of Accounting:

The financial statements are prepared on accrual basis under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India, and in compliance with the Accounting Standards referred to in Section 211 (3C) and requirements of the Companies Act, 1956.

ii) Fixed Assets:

Fixed assets are stated at cost of acquisition, including interest during construction period if any, less accumulated depreciation.

iii) Investments:

Non Current Investments are carried at cost less provision, if any, for diminution in value other than temporary nature. Current investments are carried atlowerofcostormarketvalue.

iv) Inventories:

Inventories are valued as under-

a] Stock of cotton, stores, spares, packing material at lower of cost and market value.

b] Stock in process at lower of cost and market value.

c] Finished Yarn at lower of cost and market value.

d] Cotton waste at net realizable value.

v) Income Recognition:

The income is generally accounted for on accrual basis.

vi) Depreciation :

Depreciation for the current financial year is provided on ''Straight Line Method'' at the rates prescribed under Schedule XIV ofthe CompaniesAct, 1956.

vii) Foreign Exchange Transactions:

a] Transactions in foreign currency are recorded at actual exchange rates applied by the bankers of the company.

b] Receivables, balances in bank and payables denominated in foreign currency outstanding at the end of the year are translated at closing rates.

viii) Excise Duty:

Since the excise duty rate applicable to Company''s product is zero percent, no provision is required to be made in the accounts for excise duty payable on goods manufactured and lying in the factory premises.

ix) Provision for Taxation:

Provision for taxation is made attherates applicable under the IncomeTaxAct, 1961 after claiming deduction allowable under its various provisions. Deferred Tax has not been recognized as a matter of prudence in absence of reasonable certainty of income in near future.


Mar 31, 2013

I) Basic of Accounting :

The financial statements are prepared on accrual basis under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India, and in compliance with the Accounting Standards referred to in Section 211 (3C) and requirements of the Companies Act, 1956.

ii) Fixed Assets :

Fixed assets are stated at cost of acquisition, including interest during construction period if any, less accumulated depreciation.

iii) Investments :

Non Current Investments are carried at cost less provision, if any, for diminution in value other than temporary nature.

Current investments are carried at lower of cost or market value.

iv) Inventories :

Inventories are valued as under- a] Stock of cotton, stores, spares, packing material at lower of cost and market value.

b] Stock in process at lower of cost and market value.

c] Finished Yarn at lower of cost and market value.

d] Cotton waste at net realizable value.

v) Income Recognition :

The income is generally accounted for on accrual basis.

vi) Depreciation :

Depreciation for the current financial year is provided on ‘Straight Line Method’ at the rates prescribed under Schedule XIV of the Companies Act, 1956.

vii) Foreign Exchange Transactions :

a] Transactions in foreign currency are recorded at actual exchange rates applied by the bankers of the company.

b] Receivables, balances in bank and payables denominated in foreign currency outstanding at the end of the year are translated at closing rates.

viii) Excise Duty :

Since the excise duty rate applicable to Company’s product is zero percent, no provision is required to be made in the accounts for excise duty payable on goods manufactured and lying inthe factory premises.

ix) Provision for Taxation :

Provision for taxation is made at the rates applicable under the Income Tax Act, 1961 after claiming deduction allowable under its various provisions.


Mar 31, 2012

(i) Basic of Accounting

The Financial Statements are prepared on accrual basis under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India, and in compliance with the Accounting Standards referred to in Section 211 (3C) and requirements of the Companies Act, 1956.

(ii) Fixed Assets:

Fixed assets are stated at cost of acquisition, including interest during construction period if any, less accumulated depreciation.

(iii) Investments:

Non Current Investments are carried at cost less provision, if any, for diminution in value other than temporary nature.

Current investments a re carried at lower of cost or ma rket value.

(iv) Inventories :

Inventories are valued as under:

[a] Stock of cotton, stores, spares, packing material at lower of cost and market value.

[b] Stock in process - at lower of cost and market value.

[c] Finished Yarn at lower of cost and market value.

[d] Cotton waste at net realizable value.

(v) Income Recognition :

The income is generally accounted for on accrual basis.

(vi) Depreciation :

Depreciation for the current financial year is provided on 'Straight Line Method' at the rates prescribed under Schedule XIV of the Companies Act, 1956.

(vii) Foreign Exchange Transactions :

[a] Transactions in foreign currency are recorded at actual exchange rates applied by the bankers of the Company.

[b] Receivables, balances in bank and payables denominated in foreign currency outstanding at the end of the year are translated at closing rates.

(viii) Excise Duty:

Since the excise duty rate applicable to Company's product is zero percent, no provision is required to be made in the accounts for excise duty payable on goods manufactured and lying in the factory premises.

(ix) Provision for Taxation:

Provision for taxation is made at the rates applicable under the Income Tax Act, 1961 after claiming deduction allowable under its various provisions.


Mar 31, 2010

1. Accounting Convention:

The financial statements are prepared on accrual basis under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India, and in compliance with the Accounting Standards referred to in Section 211 (3C) and requirements of the Companies Act, 1956.

2. Fixed Assets:

Fixed assets are stated at cost of acquisition, including interest during construction period if any, less accumulated depreciation.

3. Investments:

Long-term investments are carried at cost less provision, if any, for diminution in value other than temporary. Current investments are carried at lower of cost or market value.

4. Inventories:

Inventories are valued as under:

[a] Stock of cotton, stores, spares, packing material at lower at cost and market value.

[b] Stock in process — Yarn manufacturing at lower of cost and market value.

[c] Finished Yarn at lower of cost and market value.

[d] Cotton waste at net realizable value.

5. Income recognition:

The income is generally accounted for on accrual basis.

6. Depreciation:

Depreciation for the current financial year is provided on Straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956.

7. Foreign Exchange Transactions:

[a] Transactions in foreign currency are recorded at actual exchange rates applied by the bankers of the Company.

[b] Receivables, balances in bank and payables denominated in foreign currency outstanding at the end of the year are translated at closing rates.

8. Excise Duty:

Since the excise duty rate applicable to Companys product is zero percent, no provision is required to be made in the accounts for excise duty payable on goods manufactured and lying in the factory premises.

9. Provision for taxation:

Provision for taxation is made at the rates applicable under the Income Tax Act, 1961 after claiming deduction allowable under its various provisions.

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