A) MATERIAL ACCOUNTING POLICIES INFORMATION
I. Information:
Pashupati Cotspin Ltd is a listed company incorporated
in India. The Company is engaged in Cotton Ginning and
manufacture, processing of yarn.
II. Basis of Preparation:
The financial statements of the company have been prepared
in accordance with the Generally Accepted Accounting
Principles in India (Indian GAAP). The company has
prepared these financial statements to comply in all material
respects. The financial statements have been prepared on
accrual basis and under the historical cost convention. The
accounting policies adopted in preparation of financial
statements are consistent with those of previous year.
III. Use of Estimates:
The presentation of financial statements in conformity with
the GAAP requires estimates and assumptions to be made
that affect the reported amount of assets and liabilities
on the date of the financial statements and the reported
amount of revenues and expenses during the reporting
period. Difference between the actual result and estimates
is recognized in the period in which the results are known
/ materialized.
IV. Property Plant & Equipments:
Property Plant & Equipments are stated at Cost or at
Revalued Amount, net of GST Credit less Accumulated
Depreciation. All costs including financing costs till
commencement of commercial production and Exchange
rate variations relating to the Borrowing are capitalized /
adjusted to the Property Plant & Equipments.
V. Depreciation:
i. Depreciation on Property Plant & Equipments is
provided on the Straight Line Method (SLM) Method
on the basis of Useful Life prescribed in Schedule II to
the Companies Act, 2013.
ii. Depreciation on additions to the Property Plant
& Equipment and the assets sold or disposed off,
during the year is provided on pro-rata basis, at
their respective rates with reference to the date of
acquisition/installation or date of sale/disposal.
VI. Inventories:
(Inventories were taken as valued & certified by the partners.)
a) Raw Material - At lower of Cost or Net Realizable Value.
b) Stock in Progress - At lower of Cost or Net
Realizable Value.
c) Finished Goods - At lower of Cost or Net
Realizable Value.
d) Stores, Spares, Lubricants - At lower of Cost or Net
Realizable Value.
e) Material In Transit - At Cost
f) Waste (Cotton and Yarn) - At Net Realizable value
VII. Foreign Currency Transactions:
(a) Foreign currency transactions are accounted for
at the exchange rate prevailing on the date of the
transaction. All monetary foreign currency assets
and liabilities are converted at the exchange rates
prevailing on the date of the balance sheet. All
exchange differences other than those relating
to the acquisition of Property Plant & Equipments
from outside India are dealt with in the statement
of profit and loss. Exchange gain or loss relating to
Property Plant & Equipments acquired from outside
India is adjusted in the cost of respective Property
Plant & Equipments.
(b) In case of forward contracts, the gain / loss on contracts
are treated as periodical expense or revenue. Any
profit or loss arising on the cancellation or renewal of
a forward exchange contract is recognized as income
or expense for the year, except in case of a forward
exchange contract relating to liabilities incurred for
acquiring Property Plant & Equipments from outside
India, in which case, such profit or loss is adjusted in
the cost of Property Plant & Equipments.
(c) Exchange difference is calculated as the difference
between the foreign currency amount of the
contract translated at the exchange rate at the
reporting date, or the settlement date where the
transaction is settled during the reporting period,
and the corresponding foreign currency amount
translated at the later of the date of inception of the
forward exchange contract and the last reporting
date. Such exchange differences are recognized
in the statement of profit and loss in the reporting
period in which the exchange rates change.
VIII. Retirement Benefits:
(a) The company has made provision of Gratuity liability
of employees on basis of actuarial valuation report.
(b) Leave encashment has been charged to the Revenue
Account on the basis of policy of the company.
(c) The company contribution to Provident Fund is
charged to Revenue Account.
IX. Borrowing Cost:
Borrowing costs that are attributable to the acquisition
or construction of qualifying assets are capitalized as
part of the cost of such assets. A qualifying asset is one
that necessarily takes substantial period of time to get
ready for its intended use. All other borrowing costs are
charged to revenue.
X. Revenue Recognition:
Income and Expenditure are recognized and accounted
on Accrual Basis. Revenue from Sale of goods is recognized
on delivery of the goods, when all significant contractual
obligations have been satisfied, the property in the goods
is transferred for a price, significant risks and rewards of
ownership are transferred to customers & no effective
ownership is retained However;
a) Revenue in respect of insurance/other claims etc. is
recognized only when it is reasonably certain that the
ultimate collection will be made.
b) Dividend income is recognized when the right to
receive is established.
c) Interest income is recognized on a time proportion
basis taking into account the amount outstanding
and the applicable rate of interest.
d) Interest received on delayed payment is accounted
on receipt basis.
e) Lease Rent Income is recognized on accrual basis as
per the terms of the Agreement.
f) All benefits, claims, entitlements etc. under TUF
subsidy, Goods & Service Tax, Electricity, Government
Textile Policy Benefits are recognized as per the terms
of the scheme and on accrual basis.
XI. Segment Accounting:
The company manufactures and deals in single product i.e.
Cotton Yarn only and therefore, Accounting Standard 17 on
Segment Reporting is not applicable.
XII. Investments:
Long Term Investments are carried at cost. Temporary
diminution in value of such investments, if any, is ignored.
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