Accounting Policies of Ashco Niulab Industries Ltd. Company

Mar 31, 2012

1.1 Basis of preparation of financial statements:

The financial statements are prepared on an accrual basis under the historical cost convention and are in accordance with the generally accepted accounting principles in India, the applicable accounting standards issued by the Companies Accounting Standards Rules, 2006 and the provisions of the Companies Act, 1956.

1.2 Presentation and disclosure of financial statements

During the year ended 31st March 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the company, for 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 disclosure made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

1.3 Fixed Assets:

(i) Fixed Assets are stated at historical cost less accumulated depreciation/amortization and impairment loss, if any. The cost is inclusive of freight, installation cost, duties, taxes, financing cost and other incidental expenses but net of Modvat/Cenvat.

(ii) Capital Work in Progress is carried at cost, comprising of direct tax, attributable interest and related incidental expenditure. The advances given for acquiring fixed assets are shown under Capital Work in Progress.

1.4 Depreciation:

Depreciation on all assets (except on Assets acquired on merger with Niulab Equipment Company Private Limited) are provided on written down value method and pro-rata in respect of acquisitions or disposals during the year at the rates prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on all assets acquired on merger of Niulab Equipment Company Private Limited are provided on straight line method and pro-rata in respect of acquisitions or disposals during the year at the rates prescribed in Schedule XIV of the Companies Act, 1956.

1.5 Revenue Recognition:

Revenue is recognized on transfer of significant risk and reward in respect of ownership. Sale of goods is recognized on dispatch of goods to customer except consignment sales, which is recognized only when goods are sold to third party. Sales are exclusive of sales tax where applicable and net of returns, claims and discount etc. Service charges are recognized proportionately over the period in which services are rendered and exclusive of service tax where applicable. Commission Income is recognized on accrual basis. The dividend income from investment is recognized when the owner''s right to receive payment is established and interest income is accounted on time proportion basis.

Amortization of Goodwill

Goodwill raised on Amalgamation is amortized over a period of 5 years.

1.6 Impairment

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been change in the estimate of recoverable amount.

1.7 Investments

Current investments are carried at the lower of cost and quoted/fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

1.8 Inventory:

Inventories are valued at Cost or Net Realisable Value, whichever is lower. Cost is arrived by using First-In First-Out (FIFO) formula and includes all cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. Inventories of under production film are valued at actual amount spent, which includes amount paid, bills settled and advances paid for which bill are awaited. The amount incurred during the year is capitalized by allocating into the various projects under production.

1.9 Debtors and Creditors

Debit and Credit balances of same parties are stated on Net basis

2.00 Customs Duty

Customs Duty on goods lying in the customs bonded warehouse are provided for and included in the valuation of inventory.

2.1 Retirement Benefits

(i) Contribution to Provident Fund and Family Pension Scheme is charged to Revenue.

(ii) Payment of Gratuity and Leave Encashment are accounted for on cash basis.

2.2 Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as expenses in the period in which they are incurred.

2.3 Foreign Exchange Transactions:

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Foreign currency monetary assets and liabilities are translated at the year end exchange rates. Exchange differences arising on settlement or translation of monetary items are recognized as income or expenses in the year in which they arise, except in respect of liabilities for the acquisition of fixed assets, in which case they are adjusted in the carrying cost of such assets.

2.4 Leases:

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased term, are classified as operating leases. Operating lease rentals payable are charged as rent in profit and loss account.

2.5 Taxes on Income:

Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods and are measured using relevant enacted tax rates. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future in accordance with Accounting Standard 22 on "Accounting for Taxes on Income".

Provision is made for Income Tax as per the provisions of The Income Tax Act, 1961 and the rules made thereunder.

2.6 Provision, Contingent Liabilities and Contingent Assets

Provisions comprise liabilities of uncertain timing or amount. Provisions are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

Contingent Liabilities are disclosed by way of Notes to Accounts.

Contingent Assets are not recognized in the financial statements.

2.7 The financial statements have been drawn up from October 1, 2011 to March 31, 2012.

2.8 Current period figures are not comparable with the previous year, as the current period is for 6 months as against the previous period of 18 months.

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Mar 31, 2010

A) Basis of preparation of Financial Statements

The financial statements are prepared on an accrual basis under the historical cost convention and are in accordance with the generally accepted accounting principles in India, the applicable accounting standards issued by the Companies Accounting Standards Rules, 2006 and the provisions of the Companies Act, 1956.

b) Revenue Recognition

Revenue is recognized on transfer of significant risk and reward in respect of ownership. Sale of goods is recognized on dispatch of goods to customer except consignment sales, which is recognized only when goods are sold to third party. Sales are exclusive of sales tax where applicable and net of returns, claims and discount etc. Service charges are recognized proportionately over the period in which services are rendered and exclusive of service tax where applicable. Commission Income is recognized on accrual basis. The dividend income from investment is recognized when the owner’s right to receive payment is established and interest income is accounted on time proportion basis.

c) Fixed Assets

(i) Fixed Assets are stated at historical cost less accumulated depreciation/amortization and impairment loss, if any. The cost is inclusive of freight, installation cost, duties, taxes, financing cost and other incidental expenses but net of Modvat/Cenvat.

(ii) Capital Work in Progress is carried at cost, comprising of direct tax, attributable interest and related incidental expenditure. The advances given for acquiring fixed assets are shown under Capital Work in Progress.

d) Depreciation

Depreciation on all assets (except on Assets acquired on merger with Niulab Equipment Company Pvt. Ltd.) are provided on written down value method and pro- rata in respect of acquisitions or disposals during the year at the rates prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on all assets acquired on merger of Niulab Equipment Company Pvt. Ltd. are provided on straight line method and pro-rata in respect of acquisitions or disposals during the year at the rates prescribed in Schedule XIV of the Companies Act, 1956.

e) Amortization of Goodwill

Goodwill raised on amalgamation is amortized over a period of 5 years.

f) Impairment

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been change in the estimate of recoverable amount.

g) Investments

Current investments are carried at the lower of cost and quoted/fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

h) Inventories

Inventories are valued at Cost or Net Realisable Value, whichever is lower. Cost is arrived by using First-In First-Out (FIFO) formula and includes all cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. Inventories of under production film are valued at actual amount spent, which includes amount paid, bills settled and advances paid for which bill are awaited. The amount incurred during the year is capitalized by allocating into the various projects under production.

i) Debtors and Creditors

Debit and Credit balances of same parties are stated on Net basis

j) Excise and Custom Duty

Excise Duty in respect of finished goods lying in factory premises and Custom Duty on goods lying in the customs bonded warehouse are provided for and included in the valuation of inventory.

k) Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

l) Retirement Benefits

i) Contribution to Provident Fund and Family

Pension Scheme is charged to Revenue. ii) Payment of Gratuity and Leave Encashment are

accounted for on cash basis.

m) Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Foreign currency monetary assets and liabilities are translated at the year end exchange rates. Exchange differences arising on settlement or translation of monetary items are recognized as income or expenses in the year in which they arise, except in respect of liabilities for the acquisition of fixed assets, in which case they are adjusted in the carrying cost of such assets.

n) Leases

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased term, are classified as operating leases. Operating lease rentals payable are charged as rent in profit and loss account.

o) Tax Expenses

Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods and are measured using relevant enacted tax rates. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future in accordance with Accounting Standard 22 on "Accounting for Taxes on Income”" Provision is made for Income Tax as per the provisions of The Income Tax Act, 1961 and the rules made thereunder.

p) Provision, Contingent Liabilities and Contingent Assets

Provisions comprise liabilities of uncertain timing or amount. Provisions are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are disclosed by way of Notes to Accounts.

Contingent Assets are not recognized in the financial statements.