Note - 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
a) The financial Statements have been prepared under the historical cost convention of the basis of “Accrual Concept” and in accordance with generally accepted accounting and principles and the accounting standards referred under the companies Act 2013 as adopted consistently by the company.
b) The Company generally follows mercantile system of accounting recognizes significant items of income and expenditure on accrual basis. The claims rate difference, Discounts interest on Debtors and creditors, gratuity & leave enchantment is unascertainable and accounted for as and when settled.
2. FIXED ASSETS AND DEPRECIATION
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a) Fixed assets are stated at cost at acquisition including freight, excise local taxes and incidental expenses less accumulated depreciation.
b) Depreciation on Fixed Assets i.e. provided on straight-line method at the rate and in manner prescribed in schedule XIV to companies Act, 2013 except in case of Looms under the group Plant & Machinery the life has been taken as 20 years instead of 15 years as opined and decided by the management of the company.
c) Depreciation on addition to assets or on sale/discernment assets, is calculated pro-rate from the date of such addition or up to the of such sale/discernment, as the case may be;
d) Expenditure incidental to the expansion are accounted for in accordance with the conduce note on “Treatment of expenditure during construction period” issued by the Institute of the Chartered Accountants of India. The said expenditure is allocated to fixed assets in the year of commencement of the commercial production.
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4. INVENTORY
Inventories valuation has been done on following basis.
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A. Raw Material
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At Cost
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B. Work in Progress
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At Estimated Cost
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C. Finish Goods
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At Cost or net realizable value whichever is lower.
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D. Store & Spares
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At Cost
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E. Packing Material
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At Cost
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5. INVESTMENT
Investments are stated at cost if any.
6. TAXATION
Provision for current tax has been made on the basis income for the current accounting year as per the provision of Income tax Act, 1961.
The deferred tax for timing difference between the book and tax profits for the year is account for using the tax rates and laws that have been substantially enacted as of the Balance Sheet date. Deferred tax liabilities arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.
7. REVENUE RECOGNITION
Income and expenditure are accounted for on accrual basis except certain items like interest, rebate, discounts and claims on sales and insurance claims, etc where there is no reasonable certainty regarding the amount and or its collectability/ recognition.
8. MISC. EXPENDITURE -
Preliminary expenses have been written of in 5 years.
9. EMPLOYEE RETIREMENT BENEFITS
a) The liabilities in respect of gratuity has been not accounted as no one of the employees has completed qualified period of services to be entitled for gratuity as per policy of the company. The gratuity has been provided as and when paid.
b) Contribution to provided fund and superannuating scheme accruing during each year as per the schemes are charges to profit and loss account.
10. CONTINGENT LIABILITIES
As explained by the Company that there is no contingent liability.
11. TREATMENT OF EXPENDITURE DURING CONSTRUCTION PERIOD
a) Pre-Operative expenses incurred on the new project/expansions are being determined separately and capitalized on the fixed assets acquired.
b) Expenses incurred for installation, completion of construction and combining of plant capitalized during the year.
1 2. IMPAIRMENT OF ASSETS
Factors giving rise to any indication of any impairment of the carrying amount of the company’s assets are appraised at each balance sheet date to determined and provide/revert an impairment loss following the Accounting Standard AS-28 for impairment of assets. No impairment loss/ profit have been recognized during this year.
1 3. TRANSACTION IN FOREIGN CURRENCY ITEMS
Foreign currency transaction in respect of fixed asset are restated at the exchange rate prevailing in the market at the end and the increase / decrease arising out of it is adjusted to the P&L account as per principles of Revised AS - 11 issued by ICAI. Foreign currency debtors are readjusted at the Balance Sheet date as per Revised AS -11 issued by ICAI.
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