Accounting Policies of Aqua Logistics Ltd. Company

Mar 31, 2012

A. Basis of preparation of financial statements:

The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act 1956. The Financial Statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in reporting and disclosure policies explained hereunder.

b. Change in Financial reporting Format under revised Schedule VI of the Companies Act, 1956:

During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company for the preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

c. Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period.

Although these estimates are based upon the management's best knowledge of current events and actions, actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and if material their effects are disclosed in the notes to the financial statements.

d. Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be readily measured. Income from operations mainly comprises of Income from the following heads namely International Freight Forwarding, Customs House Agency works, Warehousing etc, representing the gross value of services rendered by the company to its customers. It also includes income from foreign branches which are based on the statement of accounts received from the agents. Income is accounted when service is completed in accordance with the contracts entered into with the customers.

Interest is recognised using time proportion method based on the rates implicit in the transaction. Interest income is included under the head "Other Income" in the Statement of Profit and Loss.

e. Fixed Assets:

Fixed Assets are stated at acquisition cost less accumulated depreciation and impairment losses if any. Direct costs are capitalized until the fixed assets are ready for use. Computer equipment includes bought out software.

Capital work in Progress is stated as Cost.

f. Depreciation and amortization:

Depreciation on fixed assets is provided under the straight line method. The depreciation rates prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. Depreciation on additions to fixed assets has been calculated on pro-rata basis. Individual low cost assets (acquired for Rs. 5,000/= or less) are fully depreciated in the year of acquisition. The Company has used the following rates to provide depreciation

g. Impairment of Assets:

The carrying amount of assets are reviewed at each Balance Sheet date if there is any indication of impairments based on internal and external factors. An impairment loss is recognized whenever the carrying amount of asset exceeds its recoverable amount. Recoverable amount is the greater of the assets' net selling price and the value in use. In assessing the value in use the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

h. Inventories:

The company is in the business of rendering services and hence does not hold any inventories.

i. Foreign Currency Transactions:

i. Transactions in foreign currency are recorded at the rates prevailing on the date of the transaction. Gain / Loss on exchange due to fluctuation in exchange rate arising out of payment / realization during the year has been dealt with in the Statement of Profit and Loss.

ii. Monetary assets and liabilities denominated in foreign currency other than Bank balances with Euram bank held in U.S. Dollars as at the balance sheet date are translated at the exchange rates prevailing at the year-end. As a matter of prudence exchange gain on restatement of Bank balances in Euram bank has not been recognized due to subsequent and anticipated deployment in the same currency. All other fluctuation gains/losses on monetary assets and liabilities and the resultant exchange differences are recognized in the Statement of Profit and Loss.

iii. In respect of advances paid in foreign currency out of bank balances held in overseas bank accounts towards advances for acquisition of capital assets outside India, the Company has not recognized exchange differences arising on account of the same to be accumulated in long term foreign currency Monetary Items Translation Reserve Pending completion of the acquisition of the capital asset in accordance with the notification no GSR 913(E) dated December 29, 2011 issued by the Ministry of Corporate Affairs. The company would reinstate the exchange gain or loss on completion of the capital asset acquisition in the coming financial year. The same does not have an impact of the profits of the company for the current year.

j. Investments:

Trade investments are the investments made to enhance the Company's business interests. Investments are either classified as current or long term based on Management's intention at the time of purchase. Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. Current investments are carried at the lower of cost and fair value of each investment individually. Long term investments are carried at cost less provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment. On disposal of an investment, the difference between it's carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

k. Employee Benefits:

Contributions to defined contribution scheme such as Provident Fund are charged to Statement of Profit and Loss as incurred. Provision for Gratuity is made based on estimated accrued liability as at the Balance Sheet date. Bonus and leave encashment are provided on accrual basis.

l. Deferred Revenue Expenditure

The company had incurred expenditure towards advertisement and publicity to the build the brand of the company in logistics space. In the opinion of the management the benefit of this exercise is expected to accrue over an extended period and is not exhausted in the period in which the same was incurred. Such major expenditure has been treated as deferred revenue expenditure and is being charged to Statement of Profit and Loss over a period of 5 years commencing from the accounting year 2010-11. Accordingly, one fifth of the amount held under Unamortised Deferred Revenue Expenditure has been charged to Statement of Profit and Loss during the year.

m. Intangible Assets:

Depreciation on Custom House Agency Licence is not being provided. Since the company has the intention of being in business, well beyond 10 years, and the logistics business cannot be carried on without the C.H.A licence, the useful life of the asset will exceed the rebuttable presumption of 10 years under Accounting Standard 26 on Intangible Assets.

n. Borrowing costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as a 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.

o. Taxation:

Provision for current tax is made based on the tax payable under the current provisions of the tax laws applicable in the jurisdiction where the income is assessable and after considering the Double Taxation Avoidance Agreement with the respective countries. Deferred tax on timing differences between taxable income and accounting income is accounted for, using the tax rates and tax laws enacted as on the Balance Sheet date.

p. Cash and cash equivalents:

Cash and cash equivalents comprise of Cash in hand, Balances in Current account and deposit accounts (including interest accrued on deposits) with Banks. The Company considers all highly liquid investments with a remaining maturity, at the date of purchase, of three months or less and that are readily convertible to known amounts of cash, to be cash equivalents.

q. Provisions:

Provisions are recognized when the Company has a present obligation, as a result of past events, for which it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of obligation. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

r. Contingencies:

Liabilities which are material and whose future outcomes cannot be ascertained with reasonable certainty are treated as contingent. The Company does not recognize a contingent liability but discloses its existence in the financial statements. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

s. Earnings Per Share:

The Company reports basic and diluted earnings per share in accordance with the Accounting Standard 20 issued by the Institute of Chartered Accountants of India. Basic earnings per share are computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit or loss for the year by the weighted average number of equity share outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.

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Mar 31, 2011

1. System of Accounting

a)The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act 1956.

b)The financial statements have been prepared under the historical cost convention on accrual basis of accounting. The accounting policies have been consistently applied by the Company and are in line with those used last year.

2. Fixed Assets

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any. Cost comprises of the purchase price and any cost attributable bringing the asset to its working condition for its intended use. Capital work in progress is stated at cost.

3. Depreciation/ Amortization/ Impairment

a) Depreciation is provided on fixed assets on straight line basis in accordance with the rates prescribed in Schedule XIV of the Companies Act 1956.

b) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal and external factors. An impairment loss is recognized wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the assets' net selling price and the value in use. In assessing value in use the estimated future cash fows are discounted to their present value at the weighted average cost of capital

4. Investments

Investments are classified into long-term investments and current investments. Long term investments are carried at cost. Provision for diminution in value of such investments is made only if such a decline is other than temporary. Current investments are valued at cost.

5. Inventories

The company is in the business of rendering services and hence does not hold any inventories.

6. Foreign Currency Transactions

a) Transactions in foreign currency are recorded at the rates prevailing on the date of the transaction. Gain/ loss on exchange due to fuctuation in exchange a rate arising out of payment / realization during the year has been dealt with in the Profit and Loss account

b) Monetary assets and liabilities denominated in foreign currency as at the balance sheet date are translated at the exchange rates prevailing at the year end; the resultant exchange differences are recognized in the profit and loss account except in case of exchange differences arising on translation of non monetary items which form part of Company's net investment which is accumulated in a 'Foreign Currency translation reserve' until its disposal.

7. Employee Benefits

Contributions to defined contribution schemes such as provident fund are charged to profit and loss account as incurred. Provision for Gratuity is made based on estimated accrued liability as at the Balance Sheet date. Bonus and Leave encashment are provided on accrual basis.

8. Deferred Revenue Expenditure

The Company has incurred expenditure towards advertisement and publicity to build the brand of the company in logistics space. In the opinion of the management, the benefit of this exercise is expected to accrue over an extended period and is not exhausted during the period covered by the Profit and Loss Account and such major expenditure has been treated as deferred revenue expenditure and would be charged to profit and loss account over a period of fve years commencing from the current accounting year 2010-2011.

9. Share Issue Expenses

The company successfully completed issue of Global Depository Receipts (GDRs) during the year and the expenses incurred in connection with the said issue are adjusted against securities premium account.

10. Intangible Asset

Depreciation on Customs House Agency License is not being provided. Since the company has the intention of being in business, well beyond 10 years, and the logistics business cannot be carried on without the C.H.A. license, the useful life of the asset will exceed the rebuttable presumption of 10 years under AS 26 on Intangible Assets.

11. Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will fow to the Company and the revenue can be readily measured. Income from operations mainly comprises of Income from the following heads namely International Freight Forwarding, Customs House Agency works, Warehousing etc. representing the gross value of services rendered by the company to its customers. It also includes income from foreign branches which are based on the statement of accounts received from the agents. Income is accounted when services are completed in accordance with the contracts entered into with the customers.

12. Accounting for taxes on income

a) Provision for current tax is made based on the tax payable under the current provisions of the tax laws applicable in the jurisdiction where the income is assessable and after considering the Double Taxation Avoidance Agreement with the respective countries.

b) Deferred tax on timing differences between taxable income and accounting income is accounted for, using the tax rates and tax laws enacted as on the Balance Sheet date.

13. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as a 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.

14. Provisions

a) A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outfow of resources will be required to settle the obligation in respect of which reliable estimates can be made.

b) Provisions are not discounted to its present value and are determined based on best management estimates required to settle the obligations at the balance sheet date. These are reviewed at each balance sheet date and adjusted to refect the current best management estimates.

15. Segment Reporting

The company is engaged in only one segment of business which is International Freight Forwarding and Customs House Agency work the risk and returns of which are similar.

16. Use of Estimates

The preparation of financial statements in conformity with the generally accepted accounting principles 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 are recognized in the period in which the results are known/ materialized.

17. Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of Notes to financial statements.

18. Earnings Per Share

The company reports basic and diluted earnings per share in accordance with Accounting Standard 20. Basic earnings per share are computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit or loss for the year by the weighted average number of Equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.

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Mar 31, 2010

1. System of Accounting

a) The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act 1956.

b) The financial statements have been prepared under the historical cost convention on accrual basis of accounting. The accounting policies have been consistently applied by the Company and are in line with those used last year.

2. Fixed Assets

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any. Cost comprises of the purchase price and any cost attributable bringing the asset to its working condition for its intended use.

3. Depreciation/ Amortization/ Impairment

a) Depreciation is provided on fixed assets on straight line basis in accordance with the rates prescribed in Schedule XIV of the Companies Act 1956.

b) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal and external factors. An impairment loss is recognized wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the assets’ net selling price and the value in use. In assessing value in use the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

4. Investments

Investments include Rs. 13,00,000 advanced to Magnus Logistics Private Limited as Equity Share Capital contribution pending allotment of shares by the company.

5. Inventories

The company is in the business of rendering services and hence does not hold any inventories.

6. Foreign Currency Transactions

a) Transactions in foreign currency are recorded at the rates prevailing on the date of the transaction.

b) Gain/ loss on exchange due to fluctuation in exchange rate arising out of payment / realization during the year has been dealt with in the Profit and Loss account.

c) Monetary assets and liabilities in foreign currency at the balance sheet date are restated at the exchange rates prevailing at the year end. Gain/ loss on exchange are dealt with in the Profit and Loss account.

7. Employee Benefits

Contributions to defined contribution schemes such as provident fund are charged to profit and loss account as incurred. Provision for Gratuity is made based on estimated accrued liability as at the Balance Sheet date.

8. Deferred Revenue Expenditure

The Company has incurred expenditure of Rs. 25,202,360/- during the current financial year towards advertisement and publicity to build the brand of the company in logistics space. In the opinion of the management, the benefit of this exercise is expected to accrue over an extended period and is not exhausted during the period covered by the Profit and Loss Account and such major expenditure has to be treated as deferred revenue expenditure and the total expenditure incurred up to 31st March, 2010 amounting to Rs. 393,981,658 would be charged to profit and loss account over a period of 5 years commencing from accounting year 2010-2011.

9. Share Issue Expenses

Expenses incurred in connection with issue of share capital is net of interest earned on surplus funds out of issue proceeds and adjusted against securities premium account.

10. Intangible Asset

Depreciation on Customs House Agency License is not being provided. Since the company has the intention of being in business, well beyond 10 years, and the logistics business cannot be carried on without the C.H.A. license, the useful life of the asset will exceed the rebuttable presumption of 10 years under AS 26 on Intangible Assets.

12. Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be readily measured. Income from operations mainly comprises of Income from the following heads namely International Freight Forwarding, Customs House Agency works, Warehousing etc. representing the gross value of services rendered by the company to its customers. It also includes income from foreign branches which are based on the statement of accounts received from the agents. Income is accounted when services are completed in accordance with the contracts entered into with the customers.

13. Accounting for taxes on income

a) Provision for current tax is made based on the tax payable under the current provisions of the tax laws applicable in the jurisdiction where the income is assessable and after considering the Double Taxation Avoidance Agreement with the respective countries.

b) Deferred tax on timing differences between taxable income and accounting income is accounted for, using the tax rates and tax laws enacted as on the Balance Sheet date.

14. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as a 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.

15. Provisions

a) A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which reliable estimates can be made.

b) Provisions are not discounted to its present value and are determined based on best management estimates required to settle the obligations at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best management estimates.

16. Segment Reporting

The company is engaged in only one segment of business which is International Freight Forwarding and Customs House Agency work the risk and returns of which are similar.

17. Use of Estimates

The preparation of financial statements in conformity with the generally accepted accounting principles 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 are recognized in the period in which the results are known/ materialized.

18. Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of Notes to financial statements.

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Mar 31, 2009

1. System of Accounting

a) The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act 1956.

b) The financial statements have been prepared under the historical cost convention on accrual basis of accounting. The accounting policies have been consistently applied by the Company and are in line with those used last year.

2. Fixed Assets

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any. Cost comprises of the purchase price and any cost attributable bringing the asset to its working condition for its intended use

3. Depreciation/ Amortization/ Impairment

a) Depreciation is provided on fixed assets on straight line basis in accordance with the rates prescribed in Schedule XIV of the Companies Act 1956.

b) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal and external factors. An impairment loss is recognized wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and the value in use. In assessing value in use the estimated future cash flows are discounted to their present value at the weighted average cost of capital

4. Investments

a) Investments include Rs. 46,325,000 advanced to Aqua Management Consultancy Group Private Limited and Rs. 37,500,000 advanced to Aqua Specialized Transport Private Limited as Equity Share Capital contribution pending allotment of shares by the respective companies.

b) No provision has been made in respect of book value and the market value of the quoted investments. The Directors of the opinion that the diminution of value of quoted investments is not permanent and there is estimated appreciation in the value of certain unquoted investments.

5, inventories

The company is in the business of rendering services and hence does not hold any inventories.

8. Foreign Currency Transactions

a) Transactions in foreign currency are recorded at the rates prevailing on the date of the transaction.

b) Gain/ loss on exchange due to fluctuation in exchange a rate arising out of payment / realization during the year has been dealt with in the Profit and Loss account

c) Monetary assets and liabilities in foreign currency at the balance sheet date are restated at the exchange rates prevailing at the year end. Gain/ loss on exchange are deal! with in the Profit and Loss account

7. Employee Benefits

Contributions to defined contribution schemes such as provident fund are charged to profit and loss account as incurred. Provision for Gratuity is made based on estimated accrued liability as at the Balance Sheet date.

8. Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be readily measured. Income from operations mainly comprises of Income from the following heads namely International Freight Forwarding, Customs House Agency works. Warehousing etc. representing the gross value of services rendered by the company to its customers. Income is accounted when services are completed in accordance with the contracts entered into with the customers,

9. Accounting for taxes on income

a) Provision for current tax is made based on the tax payable under the current provisions of the Income Tax Act 1951. Provision for taxation on overseas branches (Malaysia) is based on the taxation rates prevailing in Malaysia.

b) Tax on fringe benefits is measured at the specified rates on the value of fringe benefits in accordance with the provisions of Section 115VVC of the Income Tax Act, 1981.

c) Deferred tax on timing differences between taxable income and accounting income is accounted for. using the tax rates and tax laws enacted as on the Balance Sheet date. ^^^Fr^x

10. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as a 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

11. Provisions

a) A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which reliable estimates can be made.

b) Provisions are not discounted to its present value and are determined based on best management estimates required to settle the obligations at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best management estimates.

12. Segment Reporting

The company is engaged in only one segment of business which is International Freight Forwarding and Customs House Agency work the risk and returns of which are similar.

13. Use of Estimates

The preparation of financial statements in conformity with the generally accepted accounting principles 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 are recognized in the period in which the results are known/ materialized.

14. Contingencies

Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of Notes to financial statements.