Mar 31, 2016
Company Overview:
Supreme Tex Mart Ltd (STML) is an integrated textile organization based at Ludhiana. STML manufactures various type of yarns and garments for customers in domestic and international markets.
1. SIGNIFICANT ACCOUNTING POLICIES
A) Basis of Preparation of financial statements:
The financial statements are prepared on accrual basis under the historical cost convention. The financial statements have been prepared to comply with the generally accepted Accounting Principles in India, the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 2013.
B) Use of Estimates:
The preparation of financial statements, in conformity with the generally accepted accounting principals, require estimates and assumptions to be made that effect the reported amount of assets and liabilities as of the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known /materialized.
C) Revenue Recognition:
a) Sales
Sales comprise sale of goods, services and export incentives. Revenue from sale of goods is recognized;
i) When all significant risk and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership and
ii) No significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods.
iii) The revenue in respect of Export incentives is recognized on the post export basis.
b) Interest :
Interest income is recognized on a time proportion basis taking in to account the amount outstanding.
c) Insurance and other claims:
Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.
D) Employee Benefits:
a) Short Term Employee Benefits:
Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the profit and loss account of the year in which the related service is rendered.
b) Post Employment Benefits:
i) Defined Contribution Plans:
Provident Fund:
Contribution to Provident Fund is made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to the profit and loss account.
ii) Defined Benefit Plans Gratuity:
Provision for gratuity liability to employees is made on estimated basis and not in accordance with Accounting Standard (AS-15)
Leave Encashment:
Provision for leave encashment is made on estimated basis and not in accordance with Accounting Standard (AS-15)
E) Tangible fixed Assets:
i) Fixed Assets are stated at historical cost less accumulated depreciation.
ii) Cost of fixed assets comprises its purchase price and any attributable expenditure
(both direct and indirect) for bringing an asset to its working condition for its intended use.
iii) Subsequent expenditure related to an item of fixed asset is added to book value only if increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses are charged to statement of profit and loss for the period during which such expenses are incurred.
iv) Gains of losses arising from de-recognition of fixed assets are measured as difference between net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
F) Intangible Assets:
Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amount of amortization.
G) Depreciation:
i) Depreciation on fixed assets is provided on straight line method in accordance with and in the manner specified in the Schedule II to the Companies Act, 2013
ii) Depreciation on assets costing Rs,.5000/- or less is charged @ 100%.
H) Amortization:
i) The leasehold land is amortized over the period of lease.
ii) Intangible assets are amortized on straight line method over their estimated useful life.
I) Inventories:
Inventories are valued at cost or net realizable value, whichever is lower. The cost, in respect of various items of inventory is assigned by using the following cost formula;
i) Raw Materials on FIFO basis plus direct expenses.
ii) Stores and spares at weighted average basis plus direct expenses.
iii) Work in process at raw material cost plus conversion cost depending upon the stage of completion.
iv) Finished Goods at raw material cost plus conversion cost, excise duty if applicable and other overheads incurred to bring the goods to their present condition and location.
J) Cenvat :
Cenvat credit of excise duty paid on inputs, capital assets and input services is recognized in accordance with the Cenvat Credit Rules,2004.
K) Subsidy :
Government grants available to the company are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoters contribution is credited to Capital Reserve. The Government subsidy received for specific asset is reduced from the cost of the said asset.
L) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such asset. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
M) Segment Information:
Segment information is prepared in conformity with accounting policies adopted for preparing and presenting the financial statements of the enterprises as a whole.
N) Operating Leases:
Assets acquired on leases wherein a significant portion of the risk and rewards of the ownership are retained by the lessor are classified as operating lease. Lease rental paid for such leases are recognized as expense on systematic basis over the term of lease.
O) Foreign Currency Transactions
(i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction except export sales which are recorded at a rate notified by the customs for invoice purposes as the said rate approximate the actual rate at the date of transaction. The exchange fluctuation arising as a result of negotiation of export bill is accounted for as difference in exchange rates. The amount of such differences in exchange rate is included under the head turnover.
(ii) Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items which are carried at fair value denominated in a foreign currency are reported at the exchange rate that existed when such values were determined.
(iii) The premium or discount arising at the inception of a forward exchange contracts is amortized as expense or income over the life of contract. Exchange difference on such a contract is recognized in the statement of profit and loss in the reporting period in which the exchange rate changes. Profit or loss arising on cancellation or renewal of such contract is recognized as income or expense in the period in which such profit or loss arises.
(iv) The exchange difference to the extent of loss, arising on forward contract to hedge the transactions in the nature of
firm commitment and highly probable forecast transactions is recognized in the profit and loss account. The profit if any arising thereon is ignored.
P) Accounting for taxes on income:
The accounting treatment followed for taxes on income its to provide for Current Tax and Deferred Tax. Current Tax is the aggregate amount of Income Tax Determined to be payable in respect of taxable income for a period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
Q) Earning per share:
Basic earning per share is computed 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. Diluted earning per share is computed by taking into account the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.
R) Impairment of assets
At each balance sheet an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.
S) Provisions and Contingent Liabilities
(i) Provision is recognized (for liabilities that can be measured by using a substantial degree of estimation) when:
(a) the Company has a present obligation as a result of a past event;
(b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and
(c) the amount of the obligation can be reliably estimated.
(ii) Contingent liability is disclosed in case there is:
(a) Possible obligation that arises from past event and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future event not wholly within the control of the enterprise : or
(b) a present obligation arising from a past events but is not recognized
i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
ii) a reliable estimate of amount of the obligation cannot be made.
b. Terms/rights attached to equity shares
The company has one class of equity shares having a par value of Rs, 5 per share. Each holder of equity shares is entitled to one vote per share.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholder.
a. Indian rupee term loan amounting to Rs, 8400.00 lacs from State Bank of India carries interest @ 13.10% p.a. net of TUFS subsidy. The loan is repayable in 96 monthly installments, which consists 30 monthly installments of Rs, 42.00 lacs each, next 30 month installments of Rs, 98.00 lacs each, next 35 monthly installments of Rs,116.66 lacs each and last one monthly installment of Rs,116.90 lacs along with interest. These installments have been started from 01.12.2010. *
b. Indian rupee term loan amounting to Rs, 7500.00 from Punjab National Bank has been restructured w.e.f 01.07.2014 The original rate of interest with repayment schedule and revised rate of interest with repayment schedule is given below :
I. Indian rupee term loan amounting to Rs,1560.00 lacs from Punjab National Bank carries interest @ 11.50% p.a. raise during 2014-15 on account of Interest on Working Capital Limit with Bank The loan is repayable in 96 monthly installments, which consists 9 monthly installments of Rs,1.73 lacs each, next 12 monthly installments of Rs,6.50 lacs each, next 12 monthly installments of Rs,11.70 lacs each, next 12 monthly installments of Rs,15.60 lacs each, next 12 monthly installments of Rs,18.20 lacs each, next 12 monthly installment of Rs,22.75 lacs each, next 24 monthly installment of Rs,23.40 lacs each, next 3 monthly installment of Rs,28.60 lacs each commencing from 01.07.2016 and interest on this term loan of Rs, 1560.00 lacs will also be funded till 30.06.2016 by raising another term loan and repayment will commence from 01.07.2016 *
j. Indian rupee term loan amounting toRs,1229.00 lacs from Punjab National Bank carries interest @ 11.50% p.a. raise during 2014-15 by funding Interest on Term Loans with Bank of Rs,8850.00 lacs, amount of this term loan of Rs,1229.00 Lacs will further increase by funding interest on existing term loans of Rs,8850.00 lacs till 31.12.2015. Then after repayments will starts from 01.07.2016 as per below repayment schedule :
k. Indian rupee term loan amounting toRs,142.47 lacs from Allahabad Bank carries interest @ 14.35% p.a. raise during 2014
15 by funding Interest on Term Loans with Bank of Rs,2545.00 lacs, amount of this term loan of Rs,142.47 Lacs will further increase by funding interest on existing term loans of Rs,2545.00 lacs till 31.12.2015. Then after repayments will starts from
01.07.2016 as per below repayment schedule :
l. Indian rupee term loan amounting toRs,210.00 lacs from Punjab & Sind Bank carries interest @ 11.50% p.a. raise during 2014-15 on account of Interest on Working Capital Limit with Bank The loan is repayable in 96 monthly installments, which consists 9 monthly installments of0.23 lacs each, next 12 monthly installments of Rs,0.88 lacs each, next 12 monthly installments of Rs,1.57 lacs each, next 12 monthly installments of Rs,2.10 lacs each, next 12 monthly installments of Rs,2.45 lacs each, next 12 monthly installment of Rs,3.06 lacs each, next 24 monthly installment of Rs,3.15 lacs each, next 3 monthly installment of Rs,3.85 lacs each commencing from 01.07.2016.
m. Indian rupee term loan amounting toRs,48.00 lacs from Punjab & Sind Bank carries interest @ 11.50% p.a. raise during 2014-15 on account of Interest on term loan with Bank of Rs,210.00 lacs, amount of this term loan of Rs,48.00 Lacs will further increase by funding interest on term loan of Rs,210.00 lacs till 30.06.2016. Then after repayments will starts from 01.07.2016 as per below repayment schedule :
n. Indian rupee term loan amounting toRs,1092.00 lacs from IDBI Bank carries interest @ 11.50% p.a. raise during 2014-15 on account of Interest on Working Capital Limit with Bank, amount of this term loan will be raised to Rs,1500.00 lacs in 2015
16. Then loan will be repayable in 96 monthly installments, which consists 9 monthly installments of1.67 lacs each, next 12 monthly installments of Rs,6.25 lacs each, next 12 monthly installments of Rs,11.25 lacs each, next 12 monthly installments of Rs,15.00 lacs each, next 12 monthly installments of Rs,17.50 lacs each, next 12 monthly installment of Rs,21.88 lacs each, next 24 monthly installment of Rs,22.50 lacs each, next 3 monthly installment of Rs,27.50 lacs each commencing from 01.07.2016.
o. Other loan and advance represents term loan on vehicles. Loan from ICICI Bank is taken during the financial year 2015
16 and carries interest @10.24% p.a. The loan is repayable in 34 monthly installments of Rs,0.64 lacs & last installement of Rs,0.56 lacs including interest. Another loan from Daimler Financial Services is taken during the financial year 2015-16 and carries interest @8.99% p.a. The loan is repayable in 36 monthly installments of Rs,0.95 lacs including interest. These loans are secured by way of hypothecation of respective vehicle. Further the loans have been guaranteed by the personal guarantee of Managing Director of the company.
(c) The Income Tax Assessments of the company have been completed upto the assessment year (A.Y.) 2013-14 for which no demand has been created. However assessment for the A.Y 2014-15 are still pending.
(d) The Company has filed an appeal against the order of AETC, ICC before Joint director cum Deputy Excise and Taxation commissioner (Appeal) against imposition of Penalty of Rs, 2.33 lacs.
(e) The Company has filed an appeal against the order of Assistant Commissioner Central Excise division before Commissioner (Appeal) against collection of Service tax of Rs, 0.88 lacs along with interest and penalty of ''0.94 lacs.
Mar 31, 2015
A Basis of Prepration of financial statements:
The financial statements are prepared on accrual basis under the
historical cost convention. The financial statements have been prepared
to comply with the generally accepted Accounting Principles in India,
the Accounting Standards notified under the Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Companies
Act, 2013.
B Use of Estimates
The preparation of financial statements, in conformity with the
generally accepted accounting principals, require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities as of the date of financial statements and the reported
amount of revenue and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known /materialized.
C Revenue Recognition
a) Sales
Sales comprise sale of goods, services and export incentives. Revenue
from sale of goods is recognized;
i) When all significant risk and rewards of ownership is transferred to
the buyer and the company retains no effective control of the goods
transferred to a degree usually associated with ownership and
ii) No significant uncertainty exists regarding the amount of
consideration that will be derived from the sale of goods.
iii) The revenue in respect of Export incentives is recognized on the
post export basis.
b) Interest :
Interest income is recognized on a time proportion basis taking in to
account the amount outstanding.
c) Insurance and other claims:
Revenue in respect of claims is recognized when no significant
uncertainty exists with regard to the amount to be realized and the
ultimate collection thereof.
D Employee Benefits:
a) Short Term Employee Benefits:
Short Term Employee Benefits are recognized as an expense on an
undiscounted basis in the profit and loss account of the year in which
the related service is rendered.
b) Post Employment Benefits:
i) Defined Contribution Plans:
Provident Fund:
Contribution to Provident Fund is made in accordance with the
provisions of the Employees Provident Fund and Miscellaneous Provisions
Act, 1952 and is charged to the profit and loss account.
ii) Defined Benefit Plans Gratuity:
Provision for gratuity liability to employees is made on estimated
basis and not in accordance with Accounting Standard (AS-15).
Leave Encashment:
Provision for leave encashment is made on estimated basis and not in
accordance with Accounting Standard (AS-15)
E) Tangible fixed Assets:
i) Fixed Assets are stated at historical cost less accumulated
depreciation.
ii) Cost of fixed assets comprises its purchase price and any
attributable expenditure (both direct and indirect) for bringing an
asset to its working condition for its intended use.
iii) Subsequent expenditure related to an item of fixed asset is added
to book value only if increases the future benefits from the existing
asset beyond its previously assessed standard of performance. All other
expenses are charged to statement of profit and loss for the period
during which such expenses are incurred.
iv) Gains of losses arising from de-recognition of fixed assets are
measured as difference between net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
F) Intangible Assets:
Intangible assets are stated at cost of acquisition net of recoverable
taxes less accumulated amount of amortization.
G) Depreciation :
i) Depreciation on fixed assets is provided on straight line method in
accordance with and in the manner specified in the Schedule II to the
Companies Act, 2013
ii) Depreciation on assets costing Rs.5000/- or less is charged @ 100%.
H) Amortization :
i) The leasehold land is amortized over the period of lease.
ii) Intangible assets are amortized on straight line method over their
estimated useful life.
I) Inventories:
Inventories are valued at cost or net realizable value, whichever is
lower. The cost, in respect of various items of inventory is assigned
by using the following cost formula;
i) Raw Materials on FIFO basis plus direct expenses.
ii) Stores and spares at weighted average basis plus direct expenses.
iii) Work in process at raw material cost plus conversion cost
depending upon the stage of completion.
iv) Finished Goods at raw material cost plus conversion cost, excise
duty if applicable and other overheads incurred to bring the goods to
their present condition and location.
j) Cenvat :
Cenvat credit of excise duty paid on inputs, capital assets and input
services is recognized in accordance with the Cenvat Credit Rules,2004.
K) Subsidy :
Government grants available to the company are recognized when there is
a reasonable assurance of compliance with the conditions attached to
such grants and where benefits in respect thereof have been earned and
it is reasonably certain that the ultimate collection will be made.
Government subsidy in the nature of promoter's contribution is credited
to Capital Reserve. The Government subsidy received for specific asset
is reduced from the cost of the said asset.
L) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of such asset. Qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are recognized as an expense in the period in which
they are incurred.
M) Segment Information:
Segment information is prepared in conformity with accounting policies
adopted for preparing and presenting the financial statements of the
enterprises as a whole.
N) Operating Leases:
Assets acquired on leases wherein a significant portion of the risk and
rewards of the ownership are retained by the lessor are classified as
operating lease. Lease rental paid for such leases are recognized as
expense on systematic basis over the term of lease.
O) Foreign Currency Transactions
(i) Foreign currency transactions are recorded on initial recognition
in the reporting currency, by applying to the foreign currency amount
the exchange rate between the reporting currency and the foreign
currency at the date of the transaction except export sales which are
recorded at a rate notified by the customs for invoice purposes as the
said rate approximate the actual rate at the date of transaction. The
exchange fluctuation arising as a result of negotiation of export bill
is accounted for as difference in exchange rates. The amount of such
differences in exchange rate is included under the head turnover.
(ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. Non-monetary items
which are carried at fair value denominated in a foreign currency are
reported at the exchange rate that existed when such values were
determined.
(iii) The premium or discount arising at the inception of a forward
exchange contracts is amortized as expense or income over the life of
contract. Exchange difference on such a contract is recognized in the
statement of profit and loss in the reporting period in which the
exchange rate changes. Profit or loss arising on cancellation or
renewal of such contract is recognized as income or expense in the
period in which such profit or loss arises.
(iv) The exchange difference to the extent of loss, arising on forward
contract to hedge the transactions in the nature of firm commitment and
highly probable forecast transactions is recognized in the profit and
loss account. The profit if any arising th ereon is igno red.
P) Accounting for taxes on income:
The accounting treatment followed for taxes on income its to provide
for Current Tax and Deferred Tax. Current Tax is the aggregate amount
of Income Tax Determined to be payable in respect of taxable income for
a period. Deferred Tax is the tax effect of timing differences between
taxable income and accounting income that originate in one period and
are capable of reversal in one or more subsequent periods.
Q) Earning per share:
Basic earning per share is computed 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. Diluted
earning per share is computed by taking into account the weighted
average number of equity shares outstanding during the period and the
weighted average number of equity shares which would be issued on
conversion of all dilutive potential equity shares into equity shares.
R) Impairment of assets
At each balance sheet an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss i.e. the amount by which the carrying amount of an
asset exceeds its recoverable amount is provided in the books of
account.
S) Provisions and Contingent Liabilities
(i) Provision is recognized (for liabilities that can be measured by
using a substantial degree of estimation) when:
(a) the Company has a present obligation as a result of a past event;
(b) a probable outflow of resources embodying economic benefits is
expected to settle the obligation; and
(c) the amount of the obligation can be reliably estimated.
(ii) Contingent liability is disclosed in case there is:
(a) Possible obligation that arises from past event and existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future event not wholly within the control of the
enterprise : or
(b) a present obligation arising from a past events but is not
recognized
i) when it is not probable that an outflow of resources embodying
economic benefits will be required to settle the obligation; or
ii) a reliable estimate of amount of the obligation cannot be made.
Mar 31, 2014
A) Basis of Preparation of financial statements:
The financial statements are prepared on accrual basis under the
historical cost convention. The financial statements have been prepared
to comply with the Accounting Principles Generally accepted in India,
the Accounting Standards notified under the Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Companies
Act, 1956.
B) Use of Estimates:
The preparation of financial statements, in conformity with the
generally accepted accounting principles, require judgments, estimates
and assumptions to be made that affect the reported amount of assets
and liabilities as of the date of financial statements and the reported
amount of revenue and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known /materialised.
C) Revenue Recognition:
a) Sales
Sales comprises of sale of goods, services and export incentives.
Revenue from sale of goods is recognized;
i) When all significant risk and rewards of ownership is transferred to
the buyer and the company retains no effective control of the goods
transferred to a degree usually associated with ownership and
ii) No significant uncertainty exists regarding the amount of
consideration that will be derived from the sale of goods.
iii) The revenue in respect of Export incentives is recognized on the
post export basis.
b) Interest :
Interest income is recognized on a time proportion basis taking in to
account the amount outstanding.
c) Insurance and other claims:
Revenue in respect of claims is recognized when no significant
uncertainty exists with regard to the amount to be realized and the
ultimate collection thereof.
D) Employee Benefits:
a) Short Term Employee Benefits:
Short Term Employee Benefits are recognized as an expense on an
undiscounted basis in the profit and loss account of the year in which
the related service is rendered.
b) Post Employment Benefits:
i) Defined Contribution Plans:
Provident Fund:
Contribution to Provident Fund is made in accordance with the
provisions of the Employees Provident Fund and Miscellaneous Provisions
Act, 1952 and is charged to the profit and loss account.
ii) Defined Benefit Plans
Gratuity:
Provision for gratuity liability to employees is made on the basis of
actuarial valuation as at the close of the year.
Leave Encashment:
Provision for leave encashment is made on the basis of actuarial
valuation as at the close of the year.
iii) The actuarial gain/loss is recognized in statement of profit and
loss account.
E) Tangible fixed Assets:
i) Fixed Assets are stated at historical cost net of recoverable taxes,
trade discounts and rebates less accumulated depreciation and
impairment loss, if any.
ii) Cost of fixed assets comprises its purchase price, borrowing cost
and any attributable expenditure (both direct and indirect) for
bringing an asset to its working condition for its intended use.
iii) Subsequent expenditure related to an item of fixed asset is added
to book value only if increases the future benefits from the existing
asset beyond its previously assessed standard of performance. All other
expenses are charged to statement of profit and loss for the period
during which such expenses are incurred.
iv) Gains of losses arising from de-recognition of fixed assets are
measured as difference between net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
F) Intangible Assets:
Intangible assets are stated at cost of acquisition net of recoverable
taxes less accumulated amount of amortization.
G) Depreciation:
i) Depreciation on fixed assets is provided on straight line method in
accordance with and in the manner specified in the schedule XIV to the
Companies Act, 1956.
ii) Depreciation on assets costing Rs. 5000/- or less is charged @
100%.
H) Amortization:
i) The leasehold land is amortized over the period of lease.
ii) Intangible assets are amortized on straight line method over their
estimated useful life.
I) Inventories:
Inventories are valued at cost or net realizable value, whichever is
lower. The cost, in respect of various items of inventory is assigned
by using the following cost formula;
i) Raw Materials on FIFO basis plus direct expenses.
ii) Stores and spares at weighted average basis plus direct expenses.
iii) Work in process at raw material cost plus conversion cost
depending upon the stage of completion.
iv) Finished Goods at raw material cost plus conversion cost, excise
duty if applicable and other overheads incurred to bring the goods to
their present condition and location.
J) Cenvat :
Cenvat credit of excise duty paid on inputs, capital assets and input
services is recognized in accordance with the Cenvat Credit Rules,2004.
K) Subsidy :
Government grants available to the company are recognized when there is
a reasonable assurance of compliance with the conditions attached to
such grants and where benefits in respect thereof have been earned and
it is reasonably certain that the ultimate collection will be made.
Government subsidy in the nature of promoter''s contribution is credited
to Capital Reserve. The Government subsidy received for specific asset
is reduced from the cost of the said asset.
L) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of such asset. Qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are recognized as an expense in the period in which
they are incurred.
M) Segment Information:
STML operates in one single segment i.e. textile segment. The
disclosure requirements as prescribed in the Accounting Standard (AS) -
17 on "Segment Reporting" issued by The Institute of Chartered
Accountants of India are not applicable.
N) Operating Leases:
Assets acquired on leases wherein a significant portion of the risk and
rewards of the ownership are retained by the lessor are classified as
operating lease. Lease rental paid for such leases are recognized as
expense on systematic basis over the term of lease.
O) Foreign Currency Transactions
(i) Foreign currency transactions are recorded on initial recognition
in the reporting currency, by applying to the foreign currency amount
the exchange rate between the reporting currency and the foreign
currency at the date of the transaction except export sales which are
recorded at a rate notified by the customs for invoice purposes as the
said rate approximate the actual rate at the date of transaction. The
exchange fluctuation arising as a result of negotiation of export bill
is accounted for as difference in exchange rates. The amount of such
differences in exchange rate is included under the head "Turnover."
(ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. Non-monetary items
which are carried at fair value denominated in a foreign currency are
reported at the exchange rate that existed when such values were
determined.
(iii) The premium or discount arising at the inception of a forward
exchange contracts is amortized as expense or income over the life of
contract. Exchange difference on such a contract is recognized in the
statement of profit and loss in the reporting period in which the
exchange rate changes. Profit or loss arising on cancellation or
renewal of such contract is recognized as income or expense in the
period in which such profit or loss arises.
(iv) The exchange difference to the extent of loss, arising on forward
contract to hedge the transactions in the nature of firm commitment and
highly probable forecast transactions is recognized in the profit and
loss account. The profit if any arising thereon is ignored.
P) Accounting for taxes on income:
The accounting treatment followed for taxes on income its to provide
for Current Tax and Deferred Tax. Current Tax is the aggregate amount
of Income Tax Determined to be payable in respect of taxable income for
a period. Deferred Tax is the tax effect of timing differences between
taxable income and accounting income that originate in one period and
are capable of reversal in one or more subsequent periods.
Q) Earning per share:
Basic earning per share is computed 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. Diluted
earning per share is computed by taking into account the weighted
average number of equity shares outstanding during the period and the
weighted average number of equity shares which would be issued on
conversion of all dilutive potential equity shares into equity shares.
R) Impairment of assets
At each balance sheet, an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss i.e. the amount by which the carrying amount of an
asset exceeds its recoverable amount is provided in the books of
account.
S) Provisions and Contingent Liabilities
(i) Provision is recognized (for liabilities that can be measured by
using a substantial degree of estimation) when:
(a) the Company has a present obligation as a result of a past event;
(b) a probable outflow of resources embodying economic benefits is
expected to settle the obligation; and
(c) the amount of the obligation can be reliably estimated.
(ii) Contingent liability is disclosed in case there is:
(a) Possible obligation that arises from past event and existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future event not wholly within the control of the
enterprise or
(b) a present obligation arising from a past events but is not
recognized
i) when it is not probable that an outflow of resources embodying
economic benefits will be required to settle the obligation; or
ii) a reliable estimate of amount of the obligation cannot be made.
Mar 31, 2013
A) Basis of Preparation of financial statements:
The financial statements are prepared on accrual basis underthe
historical cost convention, in accordance with the generally accepted
accounting principles in India and the provisions of the Companies Act,
1956.
B) Use of Estimates:
The preparation of financial statements, in conformity with the
generally accepted accounting principals, require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities as of the date of financial statements and the reported
amount of revenue and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known /materialized.
C) Revenue Recognition:
a) Sales
Sales comprise sale of goods, services and export incentives. Revenue
from sale of goods is recognized.
i) When all significant risk and rewards of ownership is transferred to
the buyer and the Company retains no effective control of the goods
transferred to a degree usually associated with ownership and
ii) No significant uncertainty exists regarding the amount of
consideration that will be derived from the sale of goods.
iii) The revenue in respect of Export incentives is recognized on the
post export basis.
b) Interest :
Interest income is recognized on a time proportion basis taking in to
account the amount outstanding.
c) Insurance and other claims:
Revenue in respect of claims is recognized when no significant
uncertainty exists with regard to the amount to be realized and the
ultimate collection thereof.
D) Employee Benefits:
a) Short Term Employee Benefits:
Short Term Employee Benefits are recognized as an expense on an
undescended basis in the profit and loss account of the year in which
the related service is rendered.
b) Post Employment Benefits:
i) Defined Contribution Plans:
Provident Fund:
Contribution to Provident Fund is made in accordance with the
provisions of the Employees Provident Fund and Miscellaneous Provisions
Act, 1952 and is charged to the profit and loss account.
ii) Defined Benefit Plans
Gratuity:
Provision for gratuity liability to employees is made on the basis of
actuarial valuation as at the close of the year.
Leave Encashment:
Provision for leave encashment is made on the basis of actuarial
valuation as at the close of the year_____
iii) The actuarial gain/loss is recognized in statement of profit and
loss account.
E) Tangible fixed Assets:
i) Fixed Assets are stated at historical cost less accumulated
depreciation.
ii) Cost of fixed assets comprises its purchase price and any
attributable expenditure
(both direct and indirect) for bringing an asset to its working
condition for its intended use.
iii) Subsequent expenditure related to an item of fixed asset is added
to book value only if increases the future benefits from the existing
asset beyond its previously assessed standard of performance. All other
expenses are charged to statement of profit and loss for the period
during which such expenses are incurred.
iv) Gains of losses arising from de-recognition of fixed assets are
measured as difference between net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
F) Intangible Assets:
Intangible assets are stated at cost of acquisition net of recoverable
taxes less accumulated amount of amortization.
G) Depreciation:
i) Depreciation on fixed assets is provided on straight line method in
accordance with and in the manner specified in the schedule XIV to the
Companies Act, 1956. ii) Depreciation on assets costing Rs..50007- or
less is charged @ 100%.
H) Amortization:
i) The leasehold land is amortized over the period of lease.
ii) Intangible assets are amortized on straight line method over their
estimated useful life.
I) Inventories:
Inventories are valued at cost or net realizable value, whichever is
lower. The cost, in respect of various items of inventory is assigned
by using the following cost formula; i) Raw Materials on FIFO basis
plus direct expenses. ii) Stores and spares at weighted average basis
plus direct expenses.
iii) Work in process at raw material cost plus conversion cost
depending upon the stage of completion. iv) Finished Goods at raw
material cost plus conversion cost, excise duty if applicable and other
overheads incurred to bring the goods to their present condition and
location.
J) Cenvat:
Cenvat credit of excise duty paid on inputs, capital assets and input
services is recognized in accordance with the Cenvat Credit Rules,2004.
K) Subsidy:
Government grants available to the Company are recognized when there is
a reasonable assurance of compliance with the conditions attached to
such grants and where benefits in respect thereof have been earned and
it is reasonably certain that the ultimate collection will be made.
Government subsidy in the nature of promoter''s contribution is credited
to Capital Reserve. The Government subsidy received for specific asset
is reduced from the cost of the said asset.
L) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of such asset. Qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are recognized as an expense in the period in which
they are incurred.
M) Segment Information:
Segment information is prepared in conformity with accounting policies
adopted for preparing and presenting the financial statements of the
enterprises as a whole.
N) Operating Leases:
Assets acquired on leases wherein a significant portion of the risk and
rewards of the ownership are retained by the lessor are classified as
operating lease. Lease rental paid for such leases are recognized as
expense on systematic basis overthe term of lease.
O) Foreign Currency Transactions
(i) Foreign currency transactions are recorded on initial recognition
in the reporting currency, by applying to the foreign currency amount
the exchange rate between the reporting currency and the foreign
currency at the date of the transaction except export sales which are
recorded at a rate notified by the customs for invoice purposes as the
said rate approximate the actual rate at the date of transaction. The
exchange fluctuation arising as a result of negotiation of export bill
is accounted for as difference in exchange rates. The amount of such
differences in exchange rate is included underthe head turnover.
(ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. Non-monetary items
which are carried at fair value denominated in a foreign currency are
reported at the exchange rate that existed when such values were
determined.
(iii) The premium or discount arising at the inception of a forward
exchange contracts is amortized as expense or income over the life of
contract. Exchange difference on such a contract is recognized in the
statement of profit and loss in the reporting period in which the
exchange rate changes. Profit or loss arising on cancellation or
renewal of such contract is recognized as income or expense in the
period in which such profit or loss arises.
(iv) The exchange difference to the extent of loss, arising on forward
contract to hedge the transactions in the nature of firm commitment and
highly probable forecast transactions is recognized in the profit and
loss account. The profit if any arising thereon is ignored.
P) Accounting for taxes on income:
The accounting treatment followed for taxes on income its to provide
for Current Tax and Deferred Tax. Current Tax is the aggregate amount
of Income Tax Determined to be payable in respect of taxable income for
a period. Deferred Tax is the tax effect of timing differences between
taxable income and accounting income that originate in one period and
are capable of reversal in one or more subsequent periods.
Q) Earning per share:
Basic earning per share is computed 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. Diluted
earning per share is computed by taking into account the weighted
average number of equity shares outstanding during the period and the
weighted average number of equity shares which would be issued on
conversion of all dilutive potential equity shares into equity shares.
R) Impairment of assets
At each balance sheet an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss i .e. the amount by which the carrying amount of an
asset exceeds its recoverable amount is provided in the books of
account.
S) Provisions and Contingent Liabilities
(i) Provision is recognized (for liabilities that can be measured by
using a substantial degree of estimation) when:
(a) the Company has a present obligation as a result of a past event;
(b) a probable outflow of resources embodying economic benefits is
expected to settle the obligation; and
(c) the amount of the obligation can be reliably estimated.
(ii) Contingent liability is disclosed in case there is:
(a) Possible obligation that arises from past event and existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future event not wholly within the control of the
enterprise: or
(b) a present obligation arising from a past events but is not
recognized
iii) when it is not probable that an outflow of resources embodying
economic benefits will be required to settle the obligation; or
iv) a reliable estimate of amount of the obligation cannot be made.
Mar 31, 2012
A) Basis of Preparation of financial statements
The financial statements are prepared on accrual basis under the
historical cost convention, in accordance with the generally accepted
accounting principles in India and the provisions of the Companies Act,
1956.
Presentation and disclosure of financial statements
During the year ended 31st March 2012, the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the company, for
preparation and presentation of financial statements. The adoption of
revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However it
has significant impact on presentation and disclosures made in the
financial statements. The company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
B) Use of Estimates
The preparation of financial statements, in conformity with the
generally accepted accounting principals, require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities as of the date of financial statements and the reported
amount of revenue and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known /materialized.
C) Revenue Recognition
a) Sales
Sales comprise sale of goods, services and export incentives. Revenue
from sale of goods is recognized;
i) When all significant risk and rewards of ownership is transferred to
the buyer and the company retains no effective control of the goods
transferred to a degree usually associated with ownership and
ii) No significant uncertainty exists regarding the amount of
consideration that will be derived from the sale of goods.
iii) The revenue in respect of Export incentives is recognized on the
post export basis.
b) Interest
Interest income is recognized on a time proportion basis taking in to
account the amount outstanding.
c) Insurance and other claims
Revenue in respect of claims is recognized when no significant
uncertainty exists with regard to the amount to be realized and the
ultimate collection thereof.
D) Employee Benefits
a) Short Term Employee Benefits :
Short Term Employee Benefits are recognized as an expense on an
undiscounted basis in the profit and loss account of the year in which
the related service is rendered.
b) Post Employment Benefits
i) Defined Contribution Plans Provident Fund
Contribution to Provident Fund is made in accordance with the
provisions of the Employees Provident Fund and Miscellaneous Provisions
Act, 1952 and is charged to the profit and loss account.
ii) Defined Benefit Plans Gratuity
Provision for gratuity liability to employees is made on the basis of
actuarial valuation as at the close of the year.
Leave Encashment
Provision for leave encashment is made on the basis of actuarial
valuation as at the close of the year.
iii) The actuarial gain/loss is recognized in statement of profit and
loss account.
E) Tangible fixed Assets
i) Fixed Assets are stated at historical cost less accumulated
depreciation.
ii) Cost of fixed assets comprises its purchase price and any
attributable expenditure (both direct and indirect) for bringing an
asset to its working condition for its intended use.
iii) Subsequent expenditure related to an item of fixed asset is added
to book value only if increases the future benefits from the existing
asset beyond its previously assessed standard of performance. All
other expenses are charged to statement of profit and loss for the
period during which such expenses are incurred.
iv) Gains or losses arising from de-recognition of fixed assets are
measured as difference between net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
F) Intangible Assets
Intangible assets are stated at cost of acquisition net of recoverable
taxes less accumulated amount of amortization.
G) Depreciation
i) Depreciation on fixed assets is provided on straight line method in
accordance with and in the manner specified in the schedule XIV to the
Companies Act, 1956.
ii) Depreciation on assets costing Rs. 5000/- or less is charged @ 100%.
H) Amortization
i) The leasehold land is amortized over the period of lease.
ii) Intangible assets are amortized on straight line method over their
estimated useful life.
I) Inventories
Inventories are valued at cost or net realizable value, whichever is
lower. The cost, in respect of various items of inventory is assigned
by using the following cost formula;
i) Raw Materials on FIFO basis plus direct expenses.
ii) Stores and spares at weighted average basis plus direct expenses.
iii) Work in process at raw material cost plus conversion cost
depending upon the stage of completion.
iv) Finished Goods at raw material cost plus conversion cost, excise
duty if applicable and other overheads incurred to bring the goods to
their present condition and location.
J) Cenvat
Cenvat credit of excise duty paid on inputs, capital assets and input
services is recognized in accordance with the Cenvat Credit Rules,2004.
K) Subsidy
Government grants available to the company are recognized when there is
a reasonable assurance of compliance with the conditions attached to
such grants and where benefits in respect thereof have been earned and
it is reasonably certain that the ultimate collection will be made.
Government subsidy in the nature of promoter's contribution is credited
to Capital Reserve. The Government subsidy received for specific asset
is reduced from the cost of the said asset.
L) Borrowing Costs
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of such asset. Qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are recognized as an expense in the period in which
they are incurred.
M) Segment Information
Segment information is prepared in conformity with accounting policies
adopted for preparing and presenting the financial statements of the
enterprises as a whole.
N) Operating Leases
Assets acquired on leases wherein a significant portion of the risk and
rewards of the ownership are retained by the lessor are classified as
operating lease. Lease rental paid for such leases are recognized as
expense on systematic basis over the term of lease.
O) Foreign Currency Transactions
i) Foreign currency transactions are recorded on initial recognition in
the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction except export sales which are recorded
at a rate notified by the customs for invoice purposes as the said rate
approximate the actual rate at the date of transaction. The exchange
fluctuation arising as a result of negotiation of export bill is
accounted for as difference in exchange rates. The amount of such
differences in exchange rate is included under the head turnover.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. Non-monetary items
which are carried at fair value denominated in a foreign currency are
reported at the exchange rate that existed when such values were
determined.
iii) The premium or discount arising at the inception of a forward
exchange contracts is amortized as expense or income over the life of
contract. Exchange difference on such a contract is recognized in the
statement of profit and loss in the reporting period in which the
exchange rate changes. Profit or loss arising on cancellation or
renewal of such contract is recognized as income or expense in the
period in which such profit or loss arises.
iv) The exchange difference to the extent of loss, arising on forward
contract to hedge the transactions in the nature of firm commitment and
highly probable forecast transactions is recognized in the profit and
loss account. The profit if any arising thereon is ignored.
P) Accounting for taxes on income
The accounting treatment followed for taxes on income its to provide
for Current Tax and Deferred Tax. Current Tax is the aggregate amount
of Income Tax Determined to be payable in respect of taxable income for
a period. Deferred Tax is the tax effect of timing differences between
taxable income and accounting income that originate in one period and
are capable of reversal in one or more subsequent periods.
Q) Earning per share
Basic earning per share is computed 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. Diluted
earning per share is computed by taking into account the weighted
average number of equity shares outstanding during the period and the
weighted average number of equity shares which would be issued on
conversion of all dilutive potential equity shares into equity shares.
R) Impairment of assets
At each balance sheet an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss i.e. the amount by which the carrying amount of an
asset exceeds its recoverable amount is provided in the books of
account.
S) Provisions and Contingent Liabilities
(i) Provision is recognized (for liabilities that can be measured by
using a substantial degree of estimation) when:
a) The Company has a present obligation as a result of a past event;
b) A probable outflow of resources embodying economic benefits is
expected to settle the obligation: and
c) The amount of the obligation can be reliably estimated.
(ii) Contingent liability is disclosed in case there is:
a) Possible obligation that arises from past event and existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future event not wholly within the control of the
enterprise : or
b) a present obligation arising from a past events but is not
recognized
i) when it is not probable that an outflow of resources embodying
economic benefits will be required to settle the obligation; or
ii) a reliable estimate of amount of the obligation cannot be made.
Mar 31, 2011
A) Basis of Preparation of financial statements:
The accounts are prepared on accrual basis under the historical cost
convention in accordance with the accounting standards referred to in
subsection (3C) of section 211 and other relevant provisions of the
Companies Act, 1956.
b) Use Of Estimates:
The preparation of financial statements, in conformity with the
generally accepted accounting principals, require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities as of the date of financial statements and the reported
amount of revenue and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results materialize.
c) Revenue Recognition:
1) Sales
Sales comprise sale of goods, services and export incentives. Revenue
from sale of goods is
recognized;
i) when all significant risk and rewards of ownership is transferred to
the buyer and the company retains no effective control of the goods
transferred to a degree usually associated with ownership and
ii) No significant uncertainty exists regarding the amount of
consideration that will be derived from the sale of goods.
iii) The revenue in respect of Export incentives is recognized on the
post export basis.
2) Interest: '
Interest income is recognized on a time proportion basis taking in to
account the amount outstanding.
3) Insurance and other claims:
Revenue in respect of claims is recognized when no significant
uncertainty exists with regard to the amount to be realized and the
ultimate collection thereof.
d) Employee Benefits:
(a) Short Term Employee Benefits:
Short Term Employee Benefits are recognized as an expenses on an
undiscounted basis in the profit and loss account of the year in which
the related service is rendered.
(b) Post Employment Benefits: i) Defined Contribution Plans:
Provident Fund:
Contribution to Provident Fund is made in accordance with the
provisions of the Employees Provident Fund and Miscellaneous Provisions
Act, 1952 and is charged to the profit and loss account. ii) Defined
Benefit Plans
(1.1) Gratuity:
Provision for gratuity liability to employees is made on the basis of
actuarial valuation as at the close of the year.
(1.2) Leave Encashment:
Provision for leave encashment is made on the basis of actuarial
valuation as at the close of the year. iii) The actuarial gain/loss is
recognized in statement of profit and loss account.
e) Fixed Assets:
i) Fixed Assets are stated at historical cost less accumulated
depreciation.
ii) Cost of fixed assets comprises its purchase price and any
attributable expenditure (both direct and indirect) for bringing
an asset to its working condition for its intended use.
f) Intangible Assets:
Intangible assets are stated at cost less accumulated amount of
amortization.
g) Depreciation:
i) Depreciation is provided on straight line method in accordance with
and in the manner specified in the schedule XIV to the Companies Act,
1956.
ii) Depreciation on assets costing Rs.50007- or less is charged @ 100%.
h) Amortization:
i) The leasehold land is amortized over the period of lease.
ii) Intangible assets are amortized on straight line method over their
estimated useful life.
i) Inventories:
Inventories are valued at cost or net realizable value, whichever is
lower. The cost, in respect of various items of inventory is assigned
by using the following cost formula;
i) Raw Materials on FIFO basis plus direct expenses.
ii) Stores and spares at weighted average basis plus direct expenses.
Hi) Work in process at raw material cost plus conversion cost depending
upon the stage of
completion.
iv) Finished Goods at raw material cost plus conversion cost, excise
duty if applicable and
other overheads incurred to bring the goods to their present condition
and location.
j) Cenvat:
Cenvat credit of excise duty paid on inputs, capital assets and input
services is recognized in accordance with the Cenvat Credit Rules,2004.
k) Subsidy:
Government grants available to the company are recognized when there is
a reasonable assurance of compliance with the conditions attached to
such grants and where benefits in respect thereof have been earned and
it is reasonably certain that the ultimate collection will be made.
Government subsidy in the nature of promoter's contribution is credited
to Capital Reserve. The Government subsidy received for specific asset
is reduced from the cost of the said asset.
I) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of such asset. Qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are recognized as an expense in the period in which
they are incurred.
m) Segment Information:
Segment information is prepared in conformity with accounting policies
adopted for preparing and presenting the financial statements of the
enterprises as a whole.
n) Operating Leases:
Assets acquired on leases wherein a significant portion of the risk and
rewards of the ownership are retained by the lessor are classified as
operating lease. Lease rental paid for such a leases are recognized as
an expense on systematic basis over the term of lease.
o) Foreign Currency Transactions
(i) Foreign currency transactions are recorded on initial recognition
in the reporting currency, by applying to the foreign currency amount
the exchange rate between the reporting currency and the foreign
currency at the date of the transaction except export sales which are
recorded at a rate notified by the customs for invoice purposes as the
said rate approximate the actual rate at the date of transaction. The
exchange fluctuation arising as a result of negotiation of export bill
is accounted for as difference in exchange rates. The amount of such
differences in exchange rate is included under the head turnover.
(ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. Non-monetary items
which are carried at fair value denominated in a foreign currency are
reported at the exchange rate that existed when such values were
determined.
(iii) The premium or discount arising at the inception of a forward
exchange contracts is amortised as expense or income over the life of
contract. Exchange difference on such a contract is recognized in the
statement of profit and loss in the reporting period in which the
exchange rate change. Profit or loss arising on cancellation or renewal
of such contract is recognized as income or expense in the period in
which such profit or loss arises.
(iv) The exchange difference to the extent of loss, arising on forward
contract to hedge the transactions in the nature of firm commitment and
highly probable forecast transactions is recognized in the profit and
loss account. The profit if any arising thereon is ignored.
p) Accounting for taxes on income:
The accounting treatment followed for taxes on income its to provide
for Current Tax and Deferred Tax. Current Tax is the aggregate amount
of Income Tax Determined to be payable in respect of taxable income for
a period. Deferred Tax is the tax effect of timing differences between
taxable income and accounting income that originate in one period and
are capable of reversal in one or more subsequent periods.
q) Earning per share:
Basic earning per share is computed 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. Diluted
earning per share is computed by taking into account the weighted
average number of equity shares outstanding during the period and the
weighted average number of equity shares which would be issued on
conversion of all dilutive potential equity shares into equity shares.
r) Impairment of assets
At each balance sheet an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss i.e. the amount by which the carrying amount of an
asset exceeds its recoverable amount is provided in the books of
account. '
s) Provisions and Contingent Liabilities
(i) Provision is recognized (for liabilities that can be measured by
using a substantial degree of estimation) when:
(a) the Company has a present obligation as a result of a past event;
(b) a probable outflow of resources embodying economic benefits is
expected to settle the obligation; and
(c) the amount of the obligation can be reliably estimated. (ii)
Contingent liability is disclosed in case there is:
(a) Possible obligation that arises from past event and existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future event not wholly within the control of the
enterprise: or
(b) a present obligation arising from a past events but is not
recognized
i) when it is not probable that an outflow of resources embodying
economic benefits will be required to settle the obligation; or
ii) a reliable estimate of amount of the obligation cannot be made.
Mar 31, 2010
A) ACCOUNTING CONVENTIONS:
The accounts are prepared on accrual basis under the historical cost
convention in accordance with the accounting standards referred to in
subsection (3C) of section 211 and other relevant provisions of the
Companies Act, 1956.
b) USE OF ESTIMATES:
The preparation of financial statements, in conformity with the
generally accepted accounting principals, require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities as of the date of financial statements and the reported
amount of revenue and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results materialize.
c) REVENUE RECOGNITION:
i) The revenue in respect of sale is recognized:
a) when all significant risk and rewards of ownership is transferred to
the buyer and the company retains no effective control of the goods
transferred to a degree usually associated with ownership and
b) No significant uncertainty exists regarding the amount of
consideration that will be derived from the sale of goods.
ii) The revenue in respect of Export incentives is recognized on the
post export basis. iii) Insurance and other claims are recognized when
there exists no significant uncertainty with regard to the amount to be
realized and the ultimate collection thereof.
d) FIXED ASSETS:
Fixed Assets are stated at historical cost less accumulated amount of
depreciation.
e) INTANGIBLE ASSETS:
Intangible assets are stated at cost less accumulated amount of
amortization.
f) DEPRECIATION/AMORTIZATION:
i) Depreciation on fixed assets is provided on straight line method in
accordance with and in the manner specified in the schedule XIV to the
Companies Act, 1956.
ii) Depreciation on assets costing Rs.50007- or less is charged @ 100%.
iii) The leasehold land is amortized overthe period of lease.
iv) Intangible assets are amortized on straight line method over their
estimated useful life.
g) EXPENDITURE INCURRED DURING CONSTRUCTION PERIOD:
The indirect expenses incurred on the acquisition, construction of
fixed assets upto the date of completion of fixed assets are
capitalized on various categories of fixed assets on proportionate
basis. h) BORROWING COSTS:
Borrowing costs that are directly attributable to the acquisition,
construction, or production of a qualifying asset are capitalized as
part of the cost of such asset. Qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs are recognized as an expense in
the period in which they are incurred.
I) INVENTORIES:
Inventories are valued at cost or net realizable value, whichever is
lower. The cost, in respect of various items of inventory is assigned
by using the following cost formula:
i) Raw Materials on FIFO basis plus direct expenses.
ii) Stores and spares at weighted average basis plus direct expenses.
iii) Work in process at raw material cost plus conversion cost
depending upon the stage of completion.
iv) Finished Goods at raw material cost plus conversion cost, excise
duty if applicable and other overheads incurred to bring the goods to
their present condition and location.
j) CENVAT:
Cenvat credit on excise duty paid goods is accounted for by reducing
the purchase cost of the related goods.
k) FOREIGN CURRENCYTRANSACTIONS
I) Foreign currency transactions are recorded on initial recognition in
the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction except export sales which are recorded
at a rate notified by the customs for invoice purposes as the said rate
approximate the actual rate at the date of transaction. The exchange
fluctuation arising as a result of negotiation of export bill is
accounted for as difference in exchange rates. The amount of such
differences in exchange rate is included under the head turnover.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. Non-monetary items
which are carried at fair value denominated in a foreign currency are
reported at the exchange rate that existed when such values were
determined.
iii) The premium or discount arising at the inception of a forward
exchange contracts is amortised as expense or income over the life of
contract. Exchange difference on such a contract is recognized in the
statement of profit and loss in the reporting period in which the
exchange rate change. Profit or loss arising on cancellation or renewal
of such contract is recognized as income or expense in the period in
which such profit or loss arises.
iv) The exchange difference to the extent of loss, arising on forward
contract to hedge the transactions in the nature of firm commitment and
highly probable forecast transactions is recognized in the profit and
loss account. The profit if any arising thereon is ignored.
l) SUBSIDY:
Government grants available to the company are recognized when there is
a reasonable assurance of compliance with the conditions attached to
such grants and where benefits in respect thereof have been earned and
it is reasonably certain that the ultimate collection will be made.
Government subsidy in the nature of promoters contribution is credited
to Capital Reserve. The Government subsidy received for specific asset
is reduced from the cost of the said asset.
m) EMPLOYEE BENEFITS:
a) Short Term Employee Benefits:
Short Term Employee Benefits are recognized as an expenses on an
undiscounted basis in the profit and loss account of the year in which
the related service is rendered.
(b) Post Employment Benefits:
i) Defined Contribution Plans:
Provident Fund:
Contribution to Provident Fund is made in accordance with the
provisions of the Employees Provident Fund and Miscellaneous Provisions
Act, 1952 and is charged to the profit and loss account.
ii) Defined Benefit Plans
(1.1) Gratuity:
Provision for gratuity liability to employees is made on the basis of
actuarial valuation as at the close of the year.
(1.2) Leave Encashment:
Provision for leave encashment is made on the basis of actuarial
valuation as at the close of the year.
(c) The actuarial gain/loss is recognized in statement of profit and
loss account.
n) ACCOUNTING FOR TAXES ON INCOME:
Provision for taxation comprises of current tax and deferred tax.
Current Tax is the amount of income tax determined to be payable in
respect of taxable income for a period. Deferred tax is the tax effect
of timing differences between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods.
o) IMPAIRMENT OF ASSETS
At each balance sheet an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss i.e. the amount by which the carrying amount of an
asset exceeds its recoverable amount is provided in the books of
account.
p) . PROVISION AND CONTINGENT LIABILITIES
i) Provisions are recognised for liabilities that can be measured by
using a substantial degree of estimation, when:
a) the Company has a present obligation as a result of a past event;
b) a probable outflow of resources embodying economic benefits is
expected to settle the obligation; and
c) the amount of the obligation can be reliably estimated. ii)
Contingent liability is disclosed in case of there is:
a) a present obligation arising from a past event when i) it is not
probable that an outflow of resources embodying economic benefits will
be required to settle the obligation ii) a reliable estimate of amount
of the obligation cannot be made or
b) a possible obligation that arises from past events and existence of
which will be confirmed only by occurrence or non occurrence of one or
more uncertain future events not wholly within the control of the
enterprise.
q) LEASES:
Assets acquired on leases wherein a significant portion of the risk and
rewards of the ownership are retained by the lessor are classified as
operating lease. Lease rental paid for such a leases are recognized as
an expense on systematic basis overthe term of lease.
r) EARNING PER SHARE:
Basic earning per share is 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.
Diluted earning per share is computed by taking into account the
weighted average number of equity shares outstanding during the period
and the weighted average number of equity shares which would be issued
on conversion of all dilutive potential equity shares into equity
shares.