Satguru Agro Industries Ltd. कंपली की लेखा नीति

Mar 31, 2010

A.Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, on accrual basis, in accordance with applicable mandatory accounting standards as notified by the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956 and in conformity with accounting principles generally accepted in India. Accounting Policies, not specifically referred to, are consistent and in consonance with generally accepted accounting principles.

b.Use of Estimates

The Preparation 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 revenues and expenses during the reporting period.

c. Revenue recognition

The company follows mercantile system of accounting and hence all items of income and expenditure are accounted for on accrual basis except as otherwise mentioned in this report.

Thus to say strictly that revenue is only recognized when there is a certainly of its realization and accordingly the 'Export Benefits' announced by the Govt, of India' for the year ending 31st March 2010 were accounted for as income.

Revenue is recognized when it is earned and no significant uncertainty exists as to its ultimate realization.

d.Fixed assets and capital work-in progress

Fixed Assets are stated at cost of acquisition, after reducing accumulated Depreciation. Cost is inclusive of freight, duties, levies, interest, installation charges and other incidental expenses incurred for bringing the assets to their working condition for intended use.

Expenditure related to and incurred during the Construction period of Boiler and Other Related Machinery are capitalized as part of cost and allocated to relevant Fixed Assets.

Any Expenditure in the nature of repair & maintenance of Plant & Machinery that does'not additionally increase the capacity of the Machines and which simply keeps the Plant & Machinery in order have been booked as revenue expenditure.

Any addition to Fixed Assets are accounted for by way of adding the Cost of the New Asset to the 'Gross Original Cost of the Assets' and any Sale of Assets is accounted for by way of reducing the 'Original cost of the Assets from the 'Gross Original Cost of the Assets' It is seen that the company has followed this except the accounting of Sale of Plant & Machinery during the year when Rs.12 Lacs were reduced from 'Gross Original Cost of the Assets' we were not given to understand the basis for arriving at the 'Original Cost of Rs.12 Lacs of the Plant & Machinery' which were sold of.

e. Employee Benefits :

Contributions to Provident Fund, being a Defined Contribution Plan, are accounted on accrual basis and charged to the Profit & Loss account for the year.

The Company has not defined benefit obligation in terms of Gratuity. However, it was seen that the employees have completed 5 years of service. In view of the same, Company should determine and provide for its actuarial liability towards Gratuity in terms of 'AS-15 namely Employee Benefits'. In absence of such quantification, it is not possible to determine the effect of this non-provision on the Profit/ Reserves of the Company.

f. Sales & Purchases :

Sales income is net of Sales Tax and freight, sales of products is recognized when ownership in goods is transferred as per Sale of Goods Act 1930.

Company has recorded its all purchases at net amount i.e. gross purchases less quality deduction.

g.Depreciation

Depreciation is provided on fixed assets as per the Straight Line Method at rates provided in Schedule XIV of the Companies Act, 1956 on pro-rata basis from the date assets have been put to use and accordingly :

Depreciation on Additions and deletions to assets during the year is charged to revenue pro rata to the period of their use.

The only exception to all the above is that the leased land is not being amortized uniformly over the period of lease.

When depreciable asset is sold, the profit or loss is recognized for the difference between Sale Value and Original cost as reduced by accumulated depreciation.

On this basis the profit on sale of Plant and Machinery Rs.3,22,312.

h.Inventories

The inventories are valued at cost or net realizable value, whichever is lower and the cost is arrived as follows :

Raw-materials cost is at landing cost inclusive of all attributable expenses and is computed on First in First Out basis.

Work-in progress and finished goods cost include material cost, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

i.Stock Exchange related issues :

We were stated that Company is listed on three Stock Exchanges i.e Bombay.Ahmedabad & Delhi Stock Exchanges. During the year under review Company is found to have paid listing fees of Ahmedabad Stock Exchange for the period from year 2001 to 2010. But no fees seems to have been paid w.r.t Bombay & Delhi Exchanges.We observe that at present the trading of the company's shares in the above Stock Exchanges are in suspended mode.

We have duly taken cognizance of notices received by Company from Bombay Stock Exchange which specifies defaults of company in responding to the various quarries of few of the Shareholders relating to the operations of the company.Thus we also find that company has not responded to the quarries of the Shareholders.

j.Foreign Currency transactions

During the year under review company has not carried out any foreign currency transactions.

k. Investments :

The long term investments are carried at cost, less provision for diminution other" than temporary, if any, in the value of such investments.

m.Borrowing Costs :

According to AS-16 Borrowing costs, issued by the Institute of Chartered Accountants of India, borrowing costs that are directly attributable to the acquisition of qualifying assets are capitalized for the period until the asset is ready for its intended use. A qualifying asset being, an asset that necessarily takes a substantial period of time to get ready for its intended use. Other borrowing costs are recognized as an expense in the period in which they are incurred.

n.Taxation

No provision for income tax is made during the year due to the fact that Company has incurred loss during the year under review and even there are huge brought forward losses which are available for set off with the current years income.

Deferred tax provision is also made in accordance with Accounting Standard 22 i.e. Taxes on Income issued by The Institute of Chartered Accountants of India

o.Cash Flow Statements :

The Cash Flow Statement is prepared by Indirect Method set out in Accounting Standard 3 on "Cash Flow Statement" and presents cash flow by operating, Investing and Financing activities of the company.

p.lmpairment of Assets:-

An Asset is considered as impaired in accordance with AS 28 on "Impairment of Assets"

when at the balance sheet date there are indications of impairments and the carrying amount of the asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset's net realizable value in use) In assessing the value in use, the estimated future cash flow expected from the continuing use of the asset and from its ultimate disposal are discontinued to their present values using pre determined discounting rate. The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment in the Profit And Loss Account.

q.Segment Reporting :

The Company is engaged in the business of Manufacturing Soya Crude Oil, Soya Refined Oil and such types of products. This, in the context on Accounting Standard 17 issued by the Institute of Chartered Accountants of India on "Segment Reporting" is considered to constitute a single primary business segment.

r.Contingent Liabilities :

In the opinion of the management, there is no contingent liability other than stated above and adequate provision have been made for all known liabilities, except Service Tax under GTA, interest and penalty as may arise as Company is supposed to pay Service Tax on the Transportation Service it is being rendered.

s.Earning Per Share : In fact there are no earning in'the year under review.

The Company reports basic & diluted earnings per share in accordance with Accounting Stander 20 on "Earnings per Share" .Basic earnings per share is computed by dividing the net profit for the period by the Weighted Number of Equity Shares outstanding during the period as adjusted for the effects of all dilutive potential equity shares, except where the results are anti dilutive.

t.Events occurring after Balance Sheet Date :

Events accruing after Balance Sheet Date have been considered in preparation of Financial Statement.

u.Going Concern :

Though there are accumulated losses of the company at the year end, but now the company has started making cash profits and growing and therefore the company is being viewed as a going concern and accounts have accordingly been prepared under the going concern assumption.

v.Comparatives :

Comparative Financial Information is prepared in accordance with the corresponding figure financial reporting framework set out in Auditing & Assurance Standard 25 on 'Comparatives'.Figures of the previous year are regrouped and reclassified wherever necessary to correspond to figures of the Current Years.

w.Extra ordinary Items :

There are no such items noted which are Extra Ordinary in nature and at the same time which materially affect the financial statement being certified here.

x.Prior Period Items :

There are certain Income & Expenditure items which belongs to previous years and the same have been credited or debited to the Profit & Loss of the Current Year and net total of such items is Rs. 469672/- (As Per Separate Annexure)