Accounting Policies of Prashant India Ltd. Company

Mar 31, 2014

A. Basis of preparation of financial statements-

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 notified under the Companies ( Accounting Standards) Rules, 2006 ( as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention except for gratuity, leave encashment and bonus, which are charged to profit & loss account on cash basis and that is contrary to the specific provisions of the Companies Act, 1956 and also contrary to the Accounting Standard 15 issued by the Institute of Chartered Accountants of India. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

b. Going concern -

Despite the facts as mentioned herein below, accounts are continued to be prepared on ''Going Concern Basis'', in the absence of adequate essentia I data and information for compilation on an alternative basis.

The operations of Agro Division of the Company have been suspended since 1998.

The Company having incurred net losses during the current year and continuously incurring net losses/ cash losses for last several years The Net Worth of the Company has been eroded completely based on the audited Annual Financial Statements of the Company, since the year ended on 31stMarch, 1998.

The Accumulated Losses of the Company as at the end of the financial year, are far exceeding the entire Net Worth of the Company The BIFR and the Appellate Authority AAlFR have held that the Company should be wound up u/s 20(1) of SICA, 1985 vide order dt. 14-09-2006 and dt.06-12-2010 respectively. Consequently, no adjustments are made in the accounts for compilation of Accounts on an alternative basis relating to the recoverability of recorded asset amounts and in respect of likely devolvement of recorded liabilities''and contingent liabilities

b. Use of estimates -

The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions which are considered in the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of financial statements and the reported amounts'' of income and expenses for the financial period. The management believes that the estimates used in preparation of financial statements are prudent and reasonable. Future results could differ due to these estimates and differences between the actual results and the estimates are recognized in the periods in which the results are known /materialize.

c. Fixed assets -

Fixed assets are valued at cost of acquisition or construction. They are stated on historical cost basis less accumulated depreciation.

d. Depreciation -

Depreciation on fixed assets is provided on pro rata basis on straight line method at the rates prescribed under the Companies Act, 1956.

e. Inventories -

Inventories are valued at cost or market value, whichever is less.

f. Revenue recognition -

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

Sales are recognized, net of returns and trade disc ounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales exclude VAT.

The purchases and sales are shown after making adjustments for claims, rebates, rate difference, discounts, etc. received/paid as per the practice prevailing in the trade. Necessary adjustments for the same are done either by passing journal entry or rectifying the original invoice of purchase/sales and accounting the same in subsidiary books etc. with amount.NET RECEIVED or NET PAID for the particular invoice.

g. Foreign Currency Transactions -

Foreign currency transactions entered into by the Company are accounted at the exchange rate prevailing on the date of the transaction or at rat e that closely approximate the rate at the date of the transaction. Foreign currency monetary items outstanding at the Balance Sheet date are restated at the year-end rate.

-h. Earnings per share ( EPS) -

Basic earnings per share is computed by dividing the profit / (loss) after tax attributable to the equity shareholders for the period by the weighted averagenumber of equity shares outstanding during the reporting period *

i.. Contingent liabilities -

A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of whicha reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their , present value and are determined based on the 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 disclosed in the Notes.

Security -

* Consortium loans in (a) above are secured by hypothecation of all movable current assets and further secured by first charge on land-building, plant-machinery, etc. of Agro division at Bhavnagar

* Loan in (b) above is secured by first charge on all the immovable properties and also by whole of movable plant-machineries, spares, tools, accessories, both present and future, of Textile division at Palsana

* Loans in (b) and (c) above are secured by first charge on all the immovable properties and also by whole of movable plant-machineries, spares, tools and accessories, both present and future, of wind farm unit

* Loans above are further secured by personal guarantee of the directors.

Repayment terms -

All loans have become overdue for repayment since long.

Default in repayment -

There has been a continuous default in repayment of above loans and interest since Dec, 1998.

* Also refer Note No.- 7 for other details

Security -

* SBI-WCDL is secured by hypothecation of entire current assets including stocks & book debts and further secured by second charge on all the immovable properties of Textile division at Palsana

* SBI-WCDL is further secured by personal guarantee of the directors Repayment terms - SBI-WCDL repayable on demand has become overdue for repayment since long. Default in repayment - There has been a continuous default in repayment of SBI- WCDL and interest since Dec, 1998. Other details -

* The Company had been held sick industrial company under the purview of the provisions of section 3(1 )(o) of the SICA ( Special Provisions), 1985 by the BIFR on dt.20-09-2005 and has been held to be wound up u/s 20(1) of the said Act on dt.14-09-2006 and upheld by the AAIFR on dt.06-12-2010. These winding up orders are challenged by the Company, by way of civil application before the hon''ble Gujarat High Court.

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Mar 31, 2012

A. Method of accounting -

The financial statements are prepared under the historical cost convention and in accordance with the Generally Accepted Accounting Principles. The Company has been following accrual system of accounting both as to income and expenditure except for gratuity, leave encashment and bonus, which are charged to profit & loss account on cash basis and that is contrary to the specific provisions of the Companies Act, 1956 and also contrary to the Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b. Going concern

Despite the facts as mentioned herein below, accounts are continued to be prepared on 'Going Concern Basis', in the absence of adequate essential data and information for compilation on an alternative basis.

- The operations of Agro division of the company have been suspended since 1998.

- The company having incurred net losses during the current year and continuously incurring cash losses for last several years

- The Net Worth of the Company has been eroded completely based on the Audited Annual Financial Statements of the company since the year ended on 31st March, 1998.

- The Accumulated Losses of the company as at the end of the financial year, are far exceeding the entire Net Worth of the company

- The BIFR and the Appellate Authority AAIFR have held that the company should be wound up u/s 20(1) of SICA, 1985 vide order dt. 14-09-2006 and dt.06-12-2010 respectively. (Also refer note no. 17 )

Consequently, no adjustments are made in the accounts for compilation of Accounts on an alternative basis relating to the recoverability of recorded asset amounts and in respect of likely development of recorded liabilities and contingent liabilities.

c. Fixed Assets -

All fixed assets are stated at cost of acquisition or construction. They are stated on historical cost basis less accumulated depreciation.

d. Depreciation -

Depreciation on fixed assets is provided on straight line method on pro rata basis as per the rates prescribed under the Companies Act, 1956. (Please also refer note no. 8)

e. Investments -

Investments are stated at cost of acquisition.

f. Inventories -

Inventories are valued at cost or market value, whichever is less.

g. Revenue Recognition -

The purchases and sales are shown after making adjustments for claims, rebates, rate difference, discounts, etc. received/paid as per the practice prevailing in the trade. Necessary adjustments for the same is done either by passing journal entry or rectifying the original invoice of purchase/sales and accounting the same in subsidiary books etc. with amount NET RECEIVED or NET PAID for the particular invoice.

h. Contingent liabilities -

These are disclosed in the notes on accounts. Provision is made in the accounts in respect of contingencies which are likely to materialise into liabilities after the year till the approval of accounts by the Board of Directors and which have material effect on the position stated in the Balance Sheet.

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Mar 31, 2010

A. Method of accounting -

The financial statements are prepared under the historical cost convention and in accordance with the Generally Accepted Accounting Principles. The Company has been following accrual system of accounting both as to income and expenditure except for gratuity, leave encashment and bonus, which are charged to profit & loss account on cash basis and that is contrary to the specific provisions of the Companies Act, 1956 and also contrary to the Accounting Standard 15 issued by the Institute of Chartered Accountants of India.

b. Going concern -

Despite the facts as mentioned herein below, accounts are continued to be prepared on, Going Concern Basis, in the absence of adequate essential data and information for compilation on an alternative basis.

- The operations of Agro division of the company have been suspended since 1998,

- Although there has been cash profit earned during the current year, the company had been continuously incurring cash losses for last several years

- The Net Worth of the Company has been eroded completely based on the Audited Annual Financial Statements of the company since the year ended on 31st March, 1998.

- The Accumulated Losses of the company as at the end of the financial year, are far exceeding the entire Net Worth of the company

- The BIFR has held that the company should be Wound up u/s 20(1) of S1CA, 1985 vide order dt. 14-09-2006. (Also refer note no. 17 ) Consequently, no adjustments are made in the accounts for compilation of Accounts on an alternative bases relating to the recoverability of recorded asset amounts and in respect of likely devolvement of recorded liabilities and contingent liabilities.

c. Fixed Assets -

All fixed assets are stated at cost of acquisition or construction. They are stated on historical cost basis less accumulated depreciation.

d. Depreciation-

Depreciation on fixed assets is provided on straight line method on pro rata basis as per the rates prescribed under the Companies Act, 1956. (Please also refer note no. 8)

e. Investments -

Investments are stated at cost of acquisition.

f. Inventories -

Inventories are valued at cost or market value, whichever is less.

g. Revenue Recognition -

The purchases and sales are shown after making adjustments for claims, rebates, rate difference, discounts, etc. received/paid as per the practice prevailing in the trade. Necessary adjustments for the same is done either by passing journal entry or rectifying the original invoice of purchase/sales and accounting the same in subsidiary books etc. with amount NET RECEIVED or NET PAID for the particular invoice.

h. Contingent liabilities -

These are disclosed in the notes on accounts. Provision is made in the accounts in respect of contingencies which are likely to materialise into liabilities after the year till the approval of accounts by the Board of Directors and which have material effect on the position stated in the Balance Sheet.