Accounting Policies of Bhagawati Gas Ltd. Company

Mar 31, 2014

1. Basis of Accounting

i) Financial Statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 1956.

ii) The company follows the mercantile system of accounting & recognizes income & expenditure on accrual basis except those with significant uncertainties.

2. Fixed Assets

Fixed assets are stated at their cost of acquisition or construction less accumulated depreciation. Cost of acquisition or construction is inclusive of freight, duties, taxes, incidental expenses and borrowing costs related to such acquisition or construction.

3. Depreciation

Depreciation on fixed assets is provided for on the Straight Line method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956.In respect of additions or deletions made during the year, depreciation has been calculated on actual basis from the date of such additions or up to the date on which the asset has been discarded, as the case may be.

4. Inventories

Inventories have been valued at lower of cost or net realizable value. In respect of stores and spares, cost has been arrived at on FIFO basis. Scrap has been valued at estimated net realizable value.

5. Revenue Recognition

i) Revenue from sales is recognized on dispatch of goods from the factory. Sales are inclusive of excise duty but exclusive of sales tax.

ii) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

6. Foreign Currency Transactions

i) Transactions denominated in the foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

ii) Monetary items denominated in foreign currencies other than those covered by forward exchange contracts are translated in to rupee equivalent at the rates of exchange prevailing on the Balance Sheet date. In the case of forward contract the difference between the forward rate and the exchange rate on the date of transaction is recognized as income or expense over the life of the contract.

iii) All exchange differences arising on settlement/ conversion of foreign currency transactions, are recognized as income or expenses in the Profit & Loss account, except in cases where they relate to the acquisition of fixed assets, in which case they are adjusted in the carrying cost of the asset.

7. Investments

Investments are classified in to current and long term investments. Current investments are stated at the lower of cost and fair value. Long term investments are valued at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments.

8. Employee Benefits

i) Defined Contribution Plan: the Company''s contribution paid/payable for the year to defined contribution retirement benefit schemes are charged to Profit and Loss Account.

ii) Defined Benefit Plan: The Company''s liabilities towards defined benefits schemes are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Profit and Loss Account in the period of occurrence of such gains and losses.

iii) Short Term Employee Benefits: Short- term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period employee renders services.

9. Segment Reporting

The business of the company consists of manufacturing of single product i.e. Gases. Therefore the Accounting Standard (AS-17) on Segment Reporting is not applicable.

10. Leases

Finance leases or similar arrangement, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased items, are capitalized and disclosed as leased assets. Finance charges are charged directly against income.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss Account on a basis, which reflect the time pattern of such payment appropriately.

11. Earnings per Share

The earnings considered in ascertaining the company''s Earnings per Share (EPS) comprises the Net Profit or Loss for the period after tax and extra ordinary items. The basic EPS is computed on the basis of weighted average number of equity shares outstanding during the year. The number of shares for computation of diluted EPS comprises of weighted average number of equity shares considered for deriving basic EPS and also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year unless they are issued at a later date. The diluted potential equity shares are adjusted for the proceeds receivable assuming that the shares are actually issued at fair value. The number of shares and potentially dilutive shares are adjusted for shares splits/reverse share splits (consolidation of shares) and bonus shares, as appropriate.

12. Taxes on Income

Tax expense for the year comprises of current tax and deferred tax. Current taxes are computed at the current rate of tax in accordance with provisions of the Income Tax Act, 1961.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to the timing differences that result between taxable profit and the profit as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized on unabsorbed depreciation and carry forward of losses under tax laws to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Profit & Loss Account in the year of change.

13. Impairment

The carrying values of assets of the cash- generating units at each balance sheet date are reviewed for impairment. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

14. Contingent Liabilities

Contingent liabilities are determined on the basis of available information and are disclosed by way of note to accounts.

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Mar 31, 2010

1. BASIS OF ACCOUNTING

i) Financial Statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 1956.

ii) The company follows the mercantile system of accounting & recognizes income & expenditure on accrual basis except those with significant uncertainties.

2. FIXED ASSETS

Fixed assets are stated at their cost of acquisition or construction less accumulated depreciation. Cost of acquisition or construction is inclusive of freight, duties, taxes, incidental expenses and borrowing costs related to such acquisition or construction.

3. DEPRECIATION

Depreciation on fixed assets is provided for on the Straight Line method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956.In respect of additions or deletions made during the year, depreciation has been calculated on actual basis from the date of such additions or up to the date on which the asset has been discarded, as the case may be.

4. INVENTORIES

Inventories have been valued at lower of cost or net realizable value. In respect of stores and spares, cost has been arrived at on FIFO basis. Scrap has been valued at estimated net realizable value.

5. REVENUE RECOGNITION

i) Revenue from sales is recognized on dispatch of goods from the factory. Sales are inclusive of excise duty but exclusive of sales tax.

ii) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

6. FOREIGN CURRENCY TRANSACTIONS

i) Transactions denominated in the foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

ii) Monetary items denominated in foreign currencies other than those covered by forward exchange contracts are translated in to rupee equivalent at the rates of exchange prevailing on the Balance Sheet date. In the case of forward contract the difference between the forward rate and the exchange rate on the date of transaction is recognized as income or expense over the life of the contract.

iii) All exchange differences arising on settlement / conversion of foreign currency transactions, are recognized as income or expenses in the Profit & Loss account, except in cases where they relate to the acquisition of fixed assets, in which case they are adjusted in the carrying cost of the asset.

7. INVESTMENTS

Investments are classified in to current and long term investments. Current investments are stated at the lower of cost and fair value. Long term investments are valued at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments.

8. EMPLOYEE BENEFITS

i) Defined Contribution Plan : The companys contribution paid/payable for the year to defined contribution retirement benefit schemes are charged to Profit and Loss Account.

ii) Defined Benefit Plan : The companys liabilities towards defined benefits schemes are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognised in the Profit and Loss Account in the period of occurrence of such gains and losses.

iii) Short Term Employee Benefits : Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period employee renders services.

9. SEGMENT REPORTING

The business of the company consists of manufacturing of single product i.e. Gases. Therefore the Accounting Standard (AS-17) on Segment Reporting is not applicable.

10. LEASES

Finance leases or similar arrangement, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased items, are capitalized and disclosed as leased assets. Finance charges are charged directly against income.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased Items are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss Account on a basis, which reflect the time pattern of such payment appropriately.

11. EARNINGS PER SHARE

The earnings considered in ascertaining the companys Earnings per Share (EPS) comprises the Net Profit or Loss for the period after tax and extra ordinary items. The basic EPS is computed on the basis of weighted average number of equity shares outstanding during the year. The number of shares for computation of diluted EPS comprises of weighted average number of equity shares considered for deriving basic EPS and also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year unless they are issued at a later date. The diluted potential equity shares are adjusted for the proceeds receivable assuming that the shares are actually issued at fair value. The number of shares and potentially dilutive shares are adjusted for shares splits/reverse share splits (consolidation of shares) and bonus shares, as appropriate.

12. TAXES ON INCOME

Tax expense for the year comprises of current tax and deferred tax. Current taxes are computed at the current rate of tax in accordance with provisions of the Income Tax Act, 1961

Deferred tax assets and liabilities are recognized for future tax consequences attributable to the timing differences that result between taxable profit and the profit as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized on unabsorbed depreciation and carry forward of losses under tax laws to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Profit & Loss Account in the year of change.

13. IMPAIRMENT

The carrying values of assets of the cash-generating units at each balance sheet date are reviewed for impairment. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

14. CONTINGENT LIABILITIES

Contingent liabilities are determined on the basis of available information and are disclosed by way of note to accounts.

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Mar 31, 2009

1. BASIS OF ACCOUNTING

i) Financial Statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 1956.

ii) The Company follows the mercantile system of accounting & recognizes income & expenditure on accrual basis except those with significant uncertainties.

2. FIXED ASSETS

Fixed assets are stated at their cost of acquisition or construction less accumulated depreciation. Cost of acquisition or construction is inclusive of freight, duties, taxes, incidental expenses and borrowing costs related to such acquisition or construction.

3. DEPRECIATION

Depreciation on fixed assets is provided for on the Straight Line method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. In respect of additions or deletions made during the year, depreciation has been calculated on actual basis from the date of such additions or up to the date on which the asset has been discarded, as the case may be.

4. INVENTORIES

Inventories have been valued at lower of cost or net realizable value. In respect of stores and spares, cost has been arrived at on FIFO basis. Scrap has been valued at estimated net realizable value.

5. REVENUE RECOGNITION

i) Revenue from sales is recognized on dispatch of goods from the factory. Sales are inclusive of excise duty but exclusive of sales tax.

ii) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

6. FOREIGN CURRENCY TRANSACTIONS

i) Transactions denominated in the foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

ii) Monetary items denominated in foreign currencies other than those covered by forward exchange contracts are translated in to rupee equivalent at the rates of exchange prevailing on the Balance Sheet date. In the case of forward contract the difference between the forward rate and the exchange rate on the date of transaction is recognized as income or expense over the life of the contract.

Hi) All exchange differences arising on settlement / conversion of foreign currency transactions, are recognized as income or expenses in the Profit & Loss account, except in cases where they relate to the acquisition of fixed assets, in which case they are adjusted in the carrying cost of the asset.

7. INVESTMENTS

Investments are classified in to current and long term investments. Current investments are stated at the lower of cost and fair value. Long term investments are valued at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments.

8. EMPLOYEE BENEFITS:

a) Defined Contribution plan: Companys contribution paid/payable for the year to defined contribution retirement benefit schemes are charged to Profit and Loss Account.

b) Defined Benefit Plan: Companys liabilities towards defined benefits schemes are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recogniesed in the Profit and Loss account in the period of occurrence of such gains and losses.

c) Short Term Employee Benefits: Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period employee renders services.

9. SEGMENT REPORTING

The business of the company consists of Manufacturing of Single Product i.e. Gases. Therefore the Accounting Standard (AS-17), Segment Reporting is not applicable.

10. LEASES

Finance leases or similar arrangement, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased items, are capitalized and disclosed as leased assets. Finance charges are charged directly against income.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss Account on a basis, which reflect the time pattern of such payment appropriately.

11. EARNINGS PER SHARE

The earnings considered in ascertaining the companys Earnings per Share (EPS) comprises the Net Profit or Loss for the period after tax and extra ordinary items. The basic EPS is computed on the basis of weighted average number of equity shares outstanding during the year. The number of shares for computation of diluted EPS comprises of weighted average number of equity shares considered for deriving basic EPS and also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year unless they are issued at a later date. The diluted potential equity shares are adjusted for the proceeds receivable assuming that the shares are actually issued at fair value. The number of shares and potentially dilutive shares are adjusted for shares splits/reverse share splits (consolidation of shares) and bonus shares, as appropriate.

12. TAXES ON INCOME

Tax expense for the year comprises of current tax and deferred tax. Current taxes are measured at the current rate of tax in accordance with provisions of the Income Tax Act, 1961.

Deferred tax Assets and Liabilities are recognized for future tax consequences attributable to the timing differences that result between taxable profit and the profit as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized on unabsorbed depreciation and carry forward of losses under tax laws to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Profit & Loss Account in the year of change.

13. IMPAIRMENT

The carrying values of assets of the cash-generating units at each balance sheet date are reviewed for impairment. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

14. CONTINGENT LIABILITIES

Contingent liabilities are determined on the basis of available information and are disclosed by way of note to accounts.