Accounting Policies of Sarthak Industries Ltd. Company

Mar 31, 2015

(a) Basis of Accounting

The financial statements are prepared as going concern under the historical cost convention on an accrual basis of accounting in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). These financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under Rule 7 of the Companies (Accounts) Rules, 2014 in respect of section 133 of the Companies Act, 2013 and other recognized accounting policies and practices. The financial statements are presented in Indian Rupees.

(b) Use of Estimates

The preparation and presentation of financial statements in conformity with Indian GAAP requires judgments, estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

(c) Revenue Recognition

The company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis in accordance with the applicable accounting standards.

Sales revenue is recognized on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated net of sales tax, VAT, trade discounts and rebates but includes excise duty.

Interest income is recognized on time proportion basis.

Dividend income on investments is accounted for as and when the right to receive the payment is established.

(d) Fixed Assets

(i) Fixed assets :-

Fixed assets (Tangible) are stated at cost of acquisition or construction, net of tax and duty credit availed if any including any cost attributable for bringing the assets to its working condition for its intended use ; less depreciation and impairment, if any (except freehold land).

(ii) Capital Expenditure :-

Assets under erection/installation are shown as "capital work in progress". Expenditure during construction period are shown as "pre- operative expenses" to be capitalized on erection/installation of the assets.

(iii) Leasehold Land

Cost of lease hold land is amortized over the period of lease

(e) Depreciation

Depreciation on fixed assets is provided in the manner as specified in Schedule II to the Companies Act, 2013. Depreciation of an asset is the difference between Original cost/revalued amount and the estimated residual value and is charged to the statement of profit and loss over the useful life of an asset on written down value method. The estimated useful life of assets and estimated residual value is taken as prescribed under Schedule II to the Companies Act, 2013.

Depreciation on additions during the year is provided on pro rata basis with reference to date of addition/installation. Depreciation on assets disposed/discarded is charged up to the date on which such asset is sold.

(f) Borrowing Cost

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

(g) Investments

Investments that are readily realizable and are intended to be held for not more than one year, are classified as current investments. All other investments are classified as non current investments. Current Investments are carried at lower of cost or market/fair value.

Non current investments are carried at cost of acquisition. However, no provision is made for diminution in the value of investments, where, in the opinion of the Board of Directors such diminution is temporary.

(h) Valuation of Inventories

Inventories are valued at lower of cost or market value on FIFO basis. Cost of inventory is generally comprises of cost of purchase, cost of conversion and other cost incurred in bringing the inventory to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as cost of finished goods and goods in transit stated at cost. Scrap are valued at net realizable value.

(i) Foreign Currency Transactions

a. All transactions in foreign currency, are recorded at the rates of exchange prevailing on the date of transaction. Any gain or loss on account of fluctuation in the rate of exchange is recognized in the statement of profit and loss.

b. Monetary items in the form of Loans, Current assets and Current liabilities in foreign currencies at the close of the year are converted in Indian currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss on account of fluctuation in the rate of exchange is recognized in the statement of profit and loss.

c. In respect of Forward Exchange contracts entered into to hedge foreign currency risks, the difference between the forward rate and the exchange rate at the inception of the contract is recognized as income or expense over the life of the contract. Further, the exchange differences arising on such contracts are recognized as income or expense along with the exchange differences on the underlying assets / liabilities.

(j) Employee Benefits

(I) Post-employment benefit plans -

i) Defined Contribution Plan - Contributions to provident fund Family Pension Fund are accrued in accordance with applicable status and deposited with appropriate authorities.

ii) Defined Benefit Plan - The company has carried out actuarial valuation of gratuity using Projected Unit Credit Method as required by Accounting Standard 15 "Employee Benefits" (Revised 2005) liability as per actuarial valuation as at year end and actuarial gains/(losses) are recognized in statement of profit and loss.

The obligation for leave encashment recognized as per actuarial valuation using Projected Unit Credit Method in the same manner as gratuity.

(II) Short term employment benefits -

The undiscounted amount of short term employee benefits expected to be paid in exchange for service rendered by employees is recognized during the period when the employees renders the service. These benefits include compensated absence also.

(k) Lease Accounting As a Lessee

Leases, where risk and reward of ownership, are significantly retained by the lessor are classified as operating leases and lease rentals thereon are charged to the statement of profit and loss over the period of lease.

As a Lessor

The Company has given assets on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.

(l) Taxes on Income

Provision for current tax is the amount of tax payable on taxable income for the year as determined in accordance with the provision of the Income tax Act, 1961.

Deferred tax is recognized on timing differences. Being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period.

Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses.

(m) Segment Accounting

(I) The company has disclosed business segment as the primary segment. Segments have been identified taking into account the type of products, the differing risks and returns and the internal reporting systems. The various segments identified by the company comprise as under :

Name of Segment Comprises of

Cylinders LPG Cylinders manufacturing and repairing

Merchant Trading Land, Skimmed Milk Powder, Coal and various commodities

By products related each segment have been included in respective segment.

(II) Segment revenue, segment results, segment assets and segment liabilities include respective amounts directly identified with the segment and also an allocation on reasonable basis of amounts not directly identified. The expenses which are not directly relatable to the business segment are shown as unallocable corporate cost. Assets and liabilities that can not be allocated are shown as unallocable corporate assets and liabilities respectively.

(n) Impairment of Assets

An assets is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

(o) Provision, Contingent Liabilities and Contingent Assets

Provision 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 an outflow of resources will be required to settle the obligation and a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liabilities are not recognized but disclosed in the financial statements.

Contingent assets are neither recognized nor disclosed in the financial statements.

(p) Cash Flow Statement

Cash flows are reported using indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow from operating, investing and financing activities of the company are segregated based on the available information.

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Mar 31, 2014

Basis of Accounting

The financial statements are prepared as going concern under the historical cost convention on an accrual basis of accounting in accordance with the Generally Accepted Accounting Principles (GAAP), Accounting Standards Issued by the Institute of Chartered Accountants of India, as applicable, and the relevant provisions of the Companies Act, 1956.

Use of Estimates

The preparation and presentation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates and difference between actual results and estimates are recognized in the period in which the results are known/materialize.

Revenue Recognition

The company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis in accordance with the applicable accounting standards.

Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated net of sales tax, VAT, trade discounts and rebates but includes excise duty.

Interest income is recognised on time proportion basis.

Dividend income on investments is accounted for as and when the right to receive the payment is established.

FIXED ASSETS :- (i) Fixed assets :-

Fixed assets (Tangible assets) are stated at cost of acquisition or construction net of tax and duty credit availed if any including any cost attributable for bringing the assets to its working condition for its intended use ; less including any cost attributable for bringing the assets to its working condition for its intended use ; less accumulated depreciation (except freehold land).

(ii) Capital Expenditure :-

Assets under erection/installation are shown as "capital work in progress". Expenditure during construction period are shown as "pre-operative expenses" to be capitalized on erection/installation of the assets.

(iii) Leasehold Land

Cost of lease hold land is amortised over the period of lease.

Depreciation

Depreciation is provided on written down value method at the rates and in the manner prescribed under schedule XIV to the Companies Act, 1956. Depreciation on assets added/disposed of during the year has been provided on pro-rate basis with reference to the month of addition/disposal.

In respect of addition / extensions forming integral part of existing assets and on revised carrying amount of the assets indentified as impaired, depreciation has been provided over residual life of the respective fixed assets.

Borrowing Cost

Borrowing costs attributable to acquisition and construction of qualifying assets are capitalised as a part of the cost of such assets upto the date when such assets is ready for its intended use. Other borrowing costs are charged to statement of profit and loss.

Investments

Investments that are readily realisable and are intended to be held for not more than one year, are classified as current investments. All other investments are classified as non current investments. Current Investments are carried at lower of cost or market/fair value.

Non current investments are carried at cost of acquisition. However, no provision is made for diminution in the value of investments, where, in the opinion of the Board of Directors such diminution is temporary.

Valuation of Inventories

Inventories are valued at lower of cost or market value on FIFO basis. Cost of inventory is generally comprise of cost of purchase, cost of conversion and other cost incurred in bringing the inventory to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as cost of finished goods and goods in transit stated at cost. Scrap are valued at net realisable value.

Foreign Currency Transactions

a. All transactions in foreign currency, are recorded at the rates of exchange prevailing on the date of transaction. Any gain or loss on account of fluctuation in the rate of exchange is recognized in the statement of profit and loss.

b. Monetary items in the form of Loans, Current assets and Current liabilities in foreign currencies at the close of the year are converted in Indian currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss on account of fluctuation in the rate of exchange is recognized in the statement of profit and loss.

c. In respect of Forward Exchange contracts entered into to hedge foreign currency risks, the difference between the forward rate and the exchange rate at the inception of the contract is recognized as income or expense over the life of the contract. Further, the exchange differences arising on such contracts are recognized as income or expense along with the exchange differences on the underlying assets / liabilities.

Employee Benefits

(a) Post-employment benefit plans.

i) Defined Contribution Plan - Contributions to provident fund Family Pensiion Fund are accrued in accordance with applicable status and deposited with appropriate authorities.

ii) Defined Benefit Plan - The company has carried out actuarial valuation of gratuity using Projected Unit Credit Method as required by Accounting Standard 15 "Employee Benefits" (Revised 2005) liability as per actuarial valuation as at year end is recognized in statement of profit and loss.

The obligation for leave encashment recognized as per actuarial valuation using Projected Unit Credit Method in the same manner as gartuity.

(b) Short term employment benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for service rendered by employees is recognised during the period when the employees renders the Lease Accounting

As a Lessee

Leases, where risk and reward of ownership, are significantly retained by the lessor are classified as operating leases and lease rentals thereon are charged to the statement of profit and loss over the period of lease.

As a Lessor

The Company has given assets on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.

Taxes on Income

Provision for current tax is the amount of tax payable on taxable income for the year as determined in accordance with the provision of the Income tax Act, 1961.

Deferred tax is recognized on timing differences.Being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period.

Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recongnized if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

Segment Accounting

(1) The company has disclosed business segment as the primary segment. Segments have been identified taking into account the type of products, the differing risk and returns and the internal reporting systems. The various segments identified by the company comprise as under :

Name of Segment Comprises of

Cylinders LPG Cylinders manufacturing and repairing

Merchant Trading Land, Skimmed Milk Powder, Coal and various commodities By products related each segment have been included in respective segment.

(2) Segment revenue, segment results, segment assets and segment liabilities include respective amounts directly identified with the segment and also an allocation on reasonable basis of amounts not directly identified The expenses which are not directly relatable to the business segment are shown as unallocable corporate cost. Assets and liabilities that can not be allocated between the unallocable corporate assets and liabilities respectively.

Impairment of Assets

An assets is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

Provision, Contingent Liabilities and Contingent Assets

Provision 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 resources. Contingent liabilities are not recognized but are disclosed in the financial statements. Contingent assets are neither recognized nor disclosed in the financial statements.

Cash Flow Statement

Cash flows are reported using indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow from operating, investing and financing activities of the company are segregated based on the available information.

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Mar 31, 2010

A) ACCOUNTING CONVENTION

The accounts have been prepared in accordance with the historical cost convention.

b) REVENUE RECOGNITION

The company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis in accordance with the applicable accounting standards.

c) SALES

Sales are inclusive of income from services, excise duty and net off trade discount and rebate.

d) FIXED ASSETS (i) Fixed assets :- Fixed assets are stated at cost of acquisition or construction net of tax and duty credit availed if any including any cost attributable for bringing the assets to its working condition for its intended use ; less accumulated depreciation (except freehold land).

(ii) Capital Expenditure :- Assets under erection/installation and advance given for capital expenditure are shown as "capital work in progress". Expenditure during construction period are shown as "pre-operative expenses" to be capitalized on erection/installation of the assets.

e) DEPRECIATION

Depreciation is provided on written down value method at the rates and in the manner prescribed under schedule XIV to the Companies Act, 1956. Depreciation on assets added/disposed of during the year has been provided on pro-rate basis with reference to the month of addition/disposal.

f) BORROWING COST

Borrowing costs attributable to acquisition and construction of assets are capitalised as a part of the cost of such assets upto the date when such assets is ready for its intended use. Other borrowing costs are charged to profit and loss accounts.

g) INVESTMENTS

Investment are classified into current and long term investments. Long term investments are valued at cost. No provision is made for diminution in the value of long term investments where in the opinion of the board of directors such diminution is temporary. Quoted current investments are stated at lower of cost or market price.

h) VALUATION OF INVENTORIES

Inventories, other than scrap, are valued at lower of cost or net realisable value on FIFO basis. The cost of manufactured products is arrived at including therein direct costs, appropriate overheads, cost of trading items is arrived at FIFO basis & includes therein cost of purchases and other cost of acquisition attributable thereto. Scrap are valued at net realisable valus.

i) FOREIGN CURRENCY TRANSACTIONS

a. Transaction in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Current assets and current liabilities not covered by forward exchange contact are translated at year end exchange rates and any gain/loss on account of fluctuation in the rate of exchange is recognized in the

Profit and Loss account. In case of sale and purchase, the same is included under the respective heads.

b. Loans in foreign currency outstanding at the close of the year are expressed in Indian currency at the appropriate rates of exchange prevailing on the date of Balance Sheet.

c. Premium/discount in respect of forward foreign exchange contract is recognized over the life of the contract.

j) EMPLOYEE BENEFITS

(a) Post-employment benefit plans.

i) Defined Contribution Plan - Contributions to provident fund Family Pensiion Fund are accrued in accordance with applicable status and deposited with appropriate authorities.

ii) Defined Benefit Plan - The liability in respect of gratuity is determined using actuarial valuation carried out as at balance sheet date. Actuarial gains and losses are recognised in full in Profit & Loss Account for the year which they occur.

(b) Short term employment benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for service rendered by employees is recognised during the period when the employees renders the service. These benefits include compensated absence also.

k) TAXES ON INCOME Provision for current tax is the amount of tax payable on taxable income for the year as determined in accordance with the provision of the Income tax Act, 1961.

Deferred tax is recognized on timing differences.Being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recongnized if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

l) SEGMENT ACCOUNTING

(1) The company has disclosed business segment as the primary segment. Segments have been identified taking into account the type of products, the differing risk and returns and the internal reporting systems. The various segments identified by the company comprise as under :

Name of Segment Comprises of

Cylinders LPG Cylinders manufacturing and repairing

Merchant Trading Vegetable - Crude Oil and Refined Oils

Skimmed Milk Powder, Coal By products related each segment have been included in respective segment.

(2) Segment revenue, segment results, segment assets and segment liabilities include respective amounts

directly identified with the segment and also an allocation on reasonable basis of amounts not directly identified The expenses which are not directly relatable to the business segment, are sh the segments Are shown as corporate cost. Assets and liabilities that can not be allocated be unallocable corporate assets and liabilities respectively.

m) IMPAIRMENT OF ASSETS

An assets is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.