Vishal Exports Overseas Ltd. कंपली की लेखा नीति

Sep 30, 2009

(a) ACCOUNTING CONVENTION

1. The financial statements are prepared under the historical cost convention.

2. The Company follows the mercantile system of Accounting and recognizes the income and Expenditure on the accrual basis except those with significant uncertainties.

3. These statements have been generally prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements of the Companies Act, 1956 except in some cases the accounting standard/ generally accepted principles are not applied.

4. In view of income from power generation and income from export benefit entitlements, the company is considered as Going Concern. Please refer note No. 2 in Notes on Accounts in Schedule 18.

(b) FIXED ASSETS

Fixed assets are valued at cost less accumulated depredation till date. Cost includes all the expenses incurred for acquisition of assets. Interest on borrowed funds, if any, used to finance the acquisition of fixed assets is capitalized up to the date the assets are ready for commercial use. Sale of Fixed Assets is accounted by charging depreciation upto the last date of usage of Fixed Asset and profit /loss is accounted for considering the cost less depredation and its realization. Please refer note No. 3 in Notes on Accounts in Schedule 18.

(c) DEPRECIATION

Depredation on Fixed Assets is provided on straight-line method at the rates and in the manner specified in schedule XIV to the Companies Act, 1956 read with the relevant circulars issued by the Department of Company affairs, from time to time. However, based on technical opinion windmill is considered as a continuous process plant and depreciation is provided at the rate applicable thereto. Please refer note No. 3 in Notes on Accounts in Schedule 18.

(d) INVESTMENTS

Long term Investments are stated at cost of acquisition. Provision for diminution in the value of such investments is made only if such a decline is other than temporary in nature in the opinion of the management. Current investments are carried at the lower of cost or quoted/fair value.

(e) INVENTORIES

Inventories are valued on FIFO basis and are stated at cost or net realizable value, whichever is lower. Licenses on hand are valued on the basis of EXIM policy norms / entitlements.

(f) CUSTOMS DUTY

As per the normal practice, Customs Duty on goods is accounted at the time of clearance.

(g) REVENUE RECOGNITION

1. Sale of goods are recognized on shipment or dispatch to customer basis. Sales comprise of sales of goods and export licenses including all type of levies, wherever applicable.

2. Export incentives under various scheme promoted by Government of India has been recognized on the basis of export affected during the accounting year as well as on the basis of circulars/notifications issued by Competent authority from time to time.

3. Income on Sale of Electricity Generated has been recognized on the basis of actual units generated and transmitted to the purchasers.

4. Export Sales are accounted for on the basis of the date of Bill of Lading or Let Export - stamp. It includes exchange difference on realizations.

5. Interest Income from investments is recognized on accrual basis.

6. Dividend income from investments is recognized only on the basis of actual receipt.

7. Claims towards the shortfall in electricity generation are recognized on the basis of mutual understanding with the supplier of WTG. Please refer note No. 7 in Notes on Accounts in Schedule 18.

(h) FOREIGN CURRENCY TRANSACTIONS

1. Transactions in foreign currency are recorded at the exchange rates prevailing on the date of transaction, subject to following :

Export sales are accounted for at the rate as on the date of negotiation or collection or at forward contract rates, wherever applicable.

2. Imports are accounted for at contracted or actual rate, wherever applicable.

3. All monetary items dominated in foreign currency outstanding at the year end are translated at the rate of exchange prevailing at the year end and profit or loss thereon recognized in the profit and loss account.

4. To hedge the risk associated with the foreign currency transactions, company used foreign currency forward contracts and other derivative instruments dominated in foreign currency as a part of the companys risk management policy and strategy.

5. In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of contracts is recognized as income or expenses over the life of the contract.

(i) RETIREMENT BENEFITS

1. Gratuity provision is made as per the actuarial valuation at the year end.

2. The Company accounts for Provident Fund Contributions as per the provisions of Employees Provident Fund and Miscellaneous Provisions Act, 1952

3. The company follows the practice of providing for leave encashment as and when becomes due for payment.

(j) BORROWING COSTS

Borrowing cost directly attributable to the acquisition or construction of qualifying assets are capitalized. Other borrowing costs are recognized as expenses in the period in which they are incurred.

(k) CONTINGENT LIABILITIES:

The liabilities which are of contingent in nature have been disclosed at their estimated value in the Notes to the account.

(I) TAXATION

(i) Provision for current tax is made and reflected in the accounts on the basis of estimated tax liability considering provisions under Income Tax Act,1961

(ii) Deferred Tax Liability resulting from "timing difference" between book and taxable profit is accounted for using the tax rate and laws that have been enacted or substantially enacted or proposed to be enacted as on the balance sheet date. Deferred Tax assets are recognised to the extent there is reasonable certainty that these assets can be realised in future. Please refer note No. 5 in Notes on Accounts in Schedule 18.

(m) INSURANCE CLAIMS

Claims and refunds which can be ascertained with substantial accuracy are accounted for on acceptance basis and the rest of the claims are accounted for on actual receipt basis.

(n) PRELIMINARY EXPENSES

Preliminary Expenses are amortized over a period of five years.

(o) COMMODITY HEDGING TRANSACTIONS

The commodity hedging contracts are accounted on the date of their settlement and realized gain/ loss in respect of settled contracts are recognized in the Profit and Loss account, together with the underlying transactions. In case of unsettled contracts, mark to mark position is recognized in the case of losses and ignored in case of profits, considering conservative principle.

(p) IMPAIRMENT OF ASSETS

The carrying amounts of the Companys assets are reviewed at each Balance Sheet date. If any indication of impairment exists, an impairment loss is recognized to the excess of carrying amount over the estimated recoverable amount.