Accounting Policies of Penta Gold Ltd. Company

Mar 31, 2018

Significant Accounting Policies for the period ended on 31^st March, 2018 (A to P...) A. Basis of preparation of Financial Statements:

(a) Basis of Preparation - These financial statements have been prepared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standards prescribed under Section 133 of the Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and other accounting principles generally accepted in India, to the extent applicable.

(b) Use of Estimates - The preparation of the financial statements entail the management to make certain estimates and assumptions that affect the facts and figures reported. Disparities between actual result and estimates are recognized in the period in which they materialize.

(c) Method of Accounting - The Company generally follows the accrual method of accounting subject to the extent of determinability of accruals and keeping the materiality concept in view. All assets and liabilities are classified into current and noncurrent, based on the criteria of realization or settlement within twelve months period from the balance sheet date.

B. Revenue Recognition:

(a) Revenue is recognized net of sales tax and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognized to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(b) Interest on fixed deposits with bank is accounted on accrual basis. Revenue is generally recognized on accrual basis.

C. Fixed Assets and Depreciation:

(a) The fixed assets are shown at their cost of acquisition including any attributable costs. None of the fixed assets have been revalued during the period.

(b) The management has physically verified the fixed assets during the period and no material discrepancies have been noticed on such verification.

(c) Depreciation is provided on pro-rata basis on the period of usage of the assets. Depreciation is provided on written down value basis at the rates prescribed under Schedule II to the Companies Act, 2013.

D. Investments:

(a) Current investments are valued at the lower of cost and fair value as at the Balance Sheet date.

(b) Investments in mutual fund are considered as current investments.

(c) Non-Current investments are carried at cost. However, when there is a decline, other than temporary, in the value of the long-term investment, the carrying amount is reduced to recognize the decline.

E. Inventories:

(a) The closing inventories of raw materials are valued at lower of cost (inclusive of all costs attributable) and net realizable value on FIFO basis. Raw materials held for use in the production of finished goods are not written down below cost in cases where the finished goods are expected to be sold at or above cost.

(b) The closing inventories of finished goods and trading goods are valued at lower of cost (inclusive of all costs attributable) and market value on FIFO basis.

F. Retirement Benefits:

The management is of the opinion that no provisions for employees retirement benefits are required to be made.

G. Prior Period Items:

The Company follows the accrual system of accounting barring the effects and outcome of the provision for expenses which is made on the basis of the materiality concept and wherever ascertainable and treatment of certain items on receipt basis, as stated earlier.

H. Expenses:

Certain payments like the use of mobile phones, vehicles, club memberships, subscriptions to certain agencies/institutions, traveling etc., incurred by the directors and/or family members, are being provided to the directors, as the size and nature of business necessitates the use of these facilities, and are wholly for the purpose and business of the Company. The management confirms the propriety of these expenses/payments and of the debits given to the respective account heads.

I. Borrowing Costs:

Generally the borrowing costs attributable to acquisition and construction of assets are capitalized as a part of the cost of such asset up to the date when such asset is ready for its intended use. Other borrowing costs are charged to the profit and loss account.

J. Foreign Currency Transactions:

(a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

(b) Monetary items denominated in foreign currencies at the end of the period are restated at the exchange rate prevailing at the end of period.

(c) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.

K. Earnings Per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all diluting potential equity shares.

L. Hedge Transactions:

(a) The Company in accordance with its risk management policies and procedures has entered into currency option and commodity option forward contracts to manage its exposure in commodity and currency rates by way of hedging.

(b) These contracts are for a period between one day and three months.

(c) The commodities futures & currency futures contracts are initially valued at their transaction price and are marked to market on a daily basis. The open derivative contracts as on the balance sheet date are valued at their notional cut off prices.

M. Impairment of Assets:

An asset is treated as impaired when the carrying cost of an asset exceeds its realizable or recoverable value. An impairment loss (if any), is charged to the statement of profit and loss of the period in which any asset is identified as impaired. During the period none of the assets were identified by the management as impaired.

N. Tax Expense

(a) Current Tax - Tax expense for the period, comprising of current tax (including MAT) and deferred tax are charged to the profits for the period. Current tax is measured at the amount expected to be paid to the revenue authorities in accordance with the prevailing tax laws. Minimum alternate tax (MAT) paid is recognized as an asset as it shall accrue future benefit in the form of a set off against current tax expense.

(b) Deferred Tax - Pursuant to AS 22 - “Accounting for Taxes on Income”, the Company computes the deferred tax arising on account of temporary timing differences between the taxable income and accounting income that originates in one period and is capable of being reversed in one or more subsequent periods, using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. The net deferred tax liability (DTL) is charged to the profits, whereas a deferred tax asset (DTA) is recognized and carried forward only to the extent there is a reasonable certainty of future taxable profits to realize such DTA.

O. Contingent Liability & Subsequent Events:

All disputed and/or contingent liabilities are either provided for or disclosed as such, on the basis of mutual acceptances or depending on the management’s perception of its potential outcome. The management has taken adequate steps to provide sufficiently for all known, anticipated or contingent liabilities. Events occurring after the balance sheet date up to the date of adoption of the financial statements, having a material bearing are considered while preparing the financial statements.

P. Segment Reporting:

The Company is primarily engaged in only segment of Gold Jewellery which comprises of studded gold Jewellery and plain gold Jewellery. This represents a primary segment. The secondary segmental reporting is on the basis of the geographical location of its customers.