Sarita Synthetics and Industries Ltd. कंपली की लेखा नीति

Mar 31, 2009

1. Basis of Financial Statements

1.1. Financial Statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles and the Provisions of the Companies Act 1956.

1.2 The Company follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

2. Fixed Assets and Depreciation

2.1 Fixed Assets are stated at cost. All costs directly attributable to bringing the assets to their working conditions for the intended use, including the financing costs and trial run expenses till the commencement of commercial production, are capitalized.

2.2 Depreciation is provided under straight line method as per section 205 read with schedule XIV of the Companies Act., 1956 for the actual number of days the assets were put into use.

2.3 In respect of Assets given on lease, depreciation is provided on straight-line method at the rates and in the manner prescribed in Scheduled XIV of Companies Act, 1956.

3. Investments:

Investments that are readily realizable and intended to be held not more than a year are classified as current investment. All other investments are classified as long term investments. Current investments are carried at the lower of cost and fair value. Long term investments are carried at cost. However provision for diminution in value is made to recognize a decline other than temporary in the value of such investments.

4. Sundry Debtors, Loans and Advances, receivables and payables

Balances under sundry debtors, loans and advances and other receivables and payables for material supplies, stores and spares represent aggregate value of receivables and payables including those trans ferred to other company for recovery/payment and are subject to confirmation by respective parties.

5. Inventories

5.1 Raw material and Stores & Spares are valued at cost.

5.2 Finished goods are valued at cost or net realizable value whichever is less, exclusive of Excise Duty and VAT.

5.3 Work in progress is valued at cost.

5.4 Stock-in-trade and conversion stock valued at cost or market price whichever is less.

6. Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying asset are capitalised as part of the cost of such asset till the capitalisation of asset. All other borrowing costs are charged to revenue.

7. Foreign Exchange Transactions

a. Foreign currency transactions are recorded 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.

b. Foreign Currency Loans remaining unsettled at the end of the year are valued at Year-end rate.

c. Gain or loss on foreign Exchange transactions relating to Revenue Items is transferred to respective accounts in profit and loss account.

d. The exchange fluctuations in loans incurred for acquisition of fixed assets are adjusted to the cost of fixed assets.

8. Production:

Production includes fabric converted at third party facilities if any and excludes production done on Job work basis for others.

9. Revenue Recognition

a) Sales represent amount realized or realizable for goods sold including Excise Duty, exclusive of VAT thereon and excludes issues for self-consumption after deduction of return and discounts there on.

b) The Value for units produced during the year by windmill, which were self consumed has been considered at average cost of Electricity purchased from EPDCL.

10. Purchases

All purchases are considered after approval of the stocks and after deduction of returns and discounts received there on.

11. Employees Benefits

Short term employee benefits are measured as cost. Long term employee benefits and post employment benefits are measured annually on a discounted basis by the projected unit method on the basis of third party actuarial valuation. Contributions to Provident Fund, a defined contribution plan are made in accordance with the statue, are recognized as an expense when employees have rendered service entitling them to the contributions.

The Cost of providing leave encashment and gratuity, defined benefit plans, are determined using the Projected Unit Credit Method. On the basis of actuarial valuations carriedout by the third party actuary at each balance sheet date. The leave encashment and gratuity benefit obligations are recognized in the balance sheet represents value of the obligation as per discounted present value. Actuarial gains and losses are recognized immediately in the Profit and Loss Account. The leave encashment is recognized on cash basis.

The provision to Leave encashment will be made yearly based on valuation done actuary and the same will be paid succeeding year

12. Sales tax deferment:

The Government of Andhra Pradesh had extended to the company the incentive of sales tax deferral scheme pursuant to which the sales tax attributable to the sales effected out of production at Anthakapalli village is deferred. The deferred sales tax of each year is payable after expiry of deferment period of 10 years. The total deferred tax amount as on 31.03.2009 is Rs.301.06 Lakhs. Out of the same, amount due for re- payment is Rs.188.07 Lakhs (Previous year Rs.131.58 Lakhs).