Accounting Policies of Saffron Industries Ltd. Company

Mar 31, 2013

A. Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention and on accrual basis

B. Fixed Assets:

i) Fixed assets are stated at cost, alongwith costs directly attributable to bring the asset to their working condition. The MODVAT Credit available on fixed assets in respect of Paper Plant and Kraft Upgradation Plant were deducted from cost of the respective assets. Fixed Assets acquired for Power Project and for upgradation of existing plant, are stated at cost inclusive of excise duty.

ii) Depreciation has been provided in the manner and at the rates specified in the Schedule XIV of the Companies Act, 1956, on straight line method.

C. Sales-tax:

The unit is eligible for incentives under the Package Scheme of Incentives 1993, of the State Government. Considering the incentives availed so far, the company is liable for payment of tax on part of its turnover. Sales tax refunds and set off, available are accounted for on accrual basis.

D. Inventories:

Inventories comprising of raw materials, chemicals, packing materials, goods in process and finished products have been valued at lower of cost (exclusive of Excise Duty) or net realisable value. The consumables have been valued at cost.

E. Deferred Tax Liability :

No Provision has been made in respect of Deferred Tax Asset calulated as per Accounting Standard 22, of about Rs. 390000 hundreds (Last year Rs. 270000 hundreds), arising due to timing differences in the depreciation charged under the Income Tax Act, 1961 and that charged under the Companies Act, 1956, and unabsorbed loss brought forward in view of the profitability trends, the amount of Unabsorbed Depreciation available and the liability of the company for payment of income tax in near future.

F. Revenue Recognition :

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection

G. Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of Such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account.

H. Provisions, Contingent Liabilities and Contingent Assets :

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resource. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements

I. General :

1. . Name of the company has been changed to Saffron Industires Limited with effect from September 10, 2011 Formerly it was known as Madhyadesh Papers Limited.

2. Armajor fire broke out at company''s factory situated at Tehsil Saoner, District Nagpur, on May 27, 2012, destroying the factory building, machinery, stock and other valuables. The company has lodged insurance claims for the losses. The company has written off stock of raw materials & finished goods amountion to Rs. 50000.00 hundreds on the basis of claim lodged by the Company to the insurers. This amount of Rs.448773.85 hundreds is shown as insurance claim receivable underthe head Other Advances & Deposits in the Balance Sheet.

3. Other accounting policies of the Company are company are consistent with generally accepted accounting policies

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Mar 31, 2012

A. Basis of Preparation of Financial Statements:

The Hnancia, statements are prepared under the historical cos, convention and on accrual basis.

B. Fixed Assets:

i) Fixed assets are stated at cost, along with costs directly attributable to bring the assets to their working condition. The MODVAT credit available on fixed assets in respect of paper plant and Kaft Purgation plant were deducted from cost of the respective of the Fixed Assets acquired for power project and for up gratin of existing plant, are stated at cost inclusive of excise duty.

ii) Depreciation has been provided in the manner and at the rates specified in the schedule XIV of the Companies Act, 1956, on straight line method.

C. Sales-tax:

The unit is eligible for incentives under the package scheme of incentives 1993, of the state government. Considering the incentives availed so far, the company is liable for payment of tax on part of its turnover. Sales tax refunds and set off, available are accounted for on accrual basis.

D. Inventories:

Inventories comprising of raw materials, chemicals, packing materials, goods in progress and finished products have been valued at lower of cost (exclusive of Excise Duty) or net realisable value. The consumables have been valued at cost.

E. Deferred Tax Liability :

No provision has been made in respect of Differed Tax Asset calculated as per Accounting standards 22, of about Rs. 27000 thousands ( last year Rs. 25000 thousand), arising due to timing differences in the depreciation charged under the Income Tax Act, 1961 and that charged under the Companies Act, 1956, and unabsorbed loss brought forward in view of the profitability trends, the amount of unabsorbed Depreciation available and the liability of the company for payment of income tax in near future.

F. Revenue Recognition:

Revenue is recognized only when it can be reliably measures and it is reasonable to expect ultimate collation.

G. Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intends use. All other borrowing costs are charged to Profit and Loss account.

H. Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resource. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements

I. General :

1. Name of the company has been changed to Saffron Industries Limited with effect from September 10, 2011 Formerly it was known as Madhyadesh Papers Limited.

2. Other accounting policies of the Company are company are consistent with generally accepted accounting policies

The above loans are secured against first charge (pari- passu) over all the assets of the Company, Presents & future and joint and several and personal guarantees of Navabharat Press Ltd. Bionova Paper Crafts Pvt. Madhyadesh Press Pvt. Ltd. and Navabharat Press, Nagpur) fixed Deposits with Banks include deposits of Rs.1701.48 thousands(Previous Year Rs.2104.48 thousand with maturity of more than 12 months)

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Mar 31, 2011

A. Method of Accounting :

The accounts are prepared under the historical cost convention and on accrual basis.

B. Fixed Assets:

i) Fixed assets are stated at cost, alongwith costs directly attributable to bring the asset to their working condition. The MODVAT Credit available on fixed assets in respect of Paper Plant and Kraft Upgradation Plant were deducted from cost of the respective assets. Fixed Assets acquired for Power Project and for upgradation of existing plant, are stated at cost inclusive of excise duty.

ii) Depreciation has been provided in the manner and at the rates specified in the Schedule XIV of the Companies Act, 1956, on straight line method.

C. Sales-tax:

The unit is eligible for incentives under the Package Scheme of Incentives 1993, of the State Government. In view of this the company is exempt from payment of sales tax. Sales tax refunds and set off, available is accounted for on accrual basis.

D. Inventories:

Inventories comprising of raw materials, chemicals, packing materials, goods in process and finished products have been valued at lower of cost (inclusive of Excise Duty) or net realisable value. The consumables have been valued at cost.

E. Deferred Tax Liability :

No Provision has been made in respect of Deferred Income tax liability calculated as per Accounting Standard 22, of about Rs. 250 lacs (Last year Rs. 210 lacs), arising due to timing differences in the depreciation charged under the Income Tax Act, 1961 and that charged under the Companies Act, 1956, and unabsorbed loss brought forward in view of the profitability trends, the amount of Unabsorbed Depreciation available and the liability of the company for payment of income tax in near future.

F. General :

Other accounting policies of the Company are consistent with generally accepted accounting policies.

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Mar 31, 2010

A. Method of Accounting :

The accounts are prepared under the historical cost convention and on accrual basis.

B. Fixed Assets:

i) Fixed assets are stated at cost, alongwith costs directly attributable to bring the asset to their working condition. The MODVAT Credit available on fixed assets in respect of Paper Plant and Kraft Upgradation Plant were deducted from cost of the respective assets. Fixed Assets acquired for Power Project and for upgradation of existing plant, are stated at cost inclusive of excise duty.

ii) Depreciation has been provided in the manner and at the rates specified in the Schedule XIV of the Companies Act, 1956, on straight line method.

C. Sales-tax:

The unit is eligible for incentives under the Package Scheme of Incentives 1993, of the State Government. In view of this the company is exempt from payment of sales tax. Sales tax refunds and set off, available is accounted for on accrual basis. However, that up to the year ended on March 31,2005 these were accounted for, on completion of assessment.

D. Inventories:

Inventories comprising of raw materials, chemicals, packing materials, goods in process and finished products have been valued at lower of cost (inclusive of Excise Duty) or net realisable value. The consumables have been valued at cost.

E. Deferred Tax Liability :

No Provision has been made in respect of Deferred Income tax liability calculated as per Accounting Standard 22, of about Rs. 210 lacs (Last year Rs. 260 lacs), arising due to timing differences in the depreciation charged under the Income Tax Act 1961 and that charged under the Companies Act, 1956, and unabsorbed loss brought forward in view of the profitability trends, the amount of Unabsorbed Depreciation available and the liability of the company for payment of income tax in near future.

F. General :

Other accounting policies of the Company are consistent with generally accepted accounting policies.

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Mar 31, 2009

A. Method of Accounting :

The accounts are prepared under the historical cost convention and on accrual basis.

B. Fixed Assets :

i) Fixed assets are stated at cost, alongwith costs directly attributable to bring the asset to their working condition. The MODVAT Credit available on fixed assets in respect of Paper Plant and Kraft Upgradation Plant were deducted from cost of the respective assets. Fixed Assets acquired for Power Project and for upgradation of existing plant, are stated at cost inclusive of excise duty.

iii) Depreciation has been provided in the manner and at the rates specified in the Schedule XIV of the Companies Act, 1956, on straight line method.

C. Sales-tax:

The unit is eligible for incentives under the Package Scheme of Incentives 1993, of the State Government. In view of this the company is exempt from payment of sales tax. Sales tax refunds and set off, available is accounted for on accrual basis. However, that up to the year ended on March 31, 2005 these were accounted for, on completion of assessment.

D. Inventories:

Inventories comprising of raw materials, chemicals, packing materials, goods in process and finished products have been valued at lower of cost (inclusive of Excise Duty) or net realisable value. The consumables have been valued at cost.

E. Deferred Tax Liability :

No Provision has been made in respect of Deferred Income tax liability calculated as per Accounting Standard 22, of about Rs.260 lacs (Last year Rs. 270 lacs), arising due to timing differences in the depreciation charged under the Income Tax Act, 1961 and that charged under the Companies Act, 1956, and unabsorbed loss brought forward in view of the trends, the amount of unabsorbed Depreciation available and the liability of the company for payment of income tax in near future.

F. General:

Other accounting policies of the Company are consistent with generally accepted accounting policies.