Accounting Policies of Evinix Industries Ltd. Company

Mar 31, 2011

Basis of accounting

The financial statements have been prepared under the historical cost convention on accrual basis of accounting, on a going concern basis and in accordance with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006, issued by the Central Government and other pronouncements of the Institute of Chartered Accountants of India (ICAI), and the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India, to the extent applicable.

Use of estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

Revenue Recognisition

Revenue from sale is recognized on transfer of ownership to the customer. Revenue includes excise duty and is shown net of value added tax and applicable discounts and allowances and short receipt in Export Sales. The effect of exchange rate fluctuations is also given in Revenue. The Excise duty paid is shown distinctly as expense.

Fixed Assets and Depreciation

Fixed assets including the expenses incurred on improvement and furnishing of rented premises in Retail division are stated at cost less accumulated depreciation and impairment loss, if any. The cost of Assets comprises of purchase price and directly attributable expenses of bringing the assets to their working condition for intended use.

Depreciation on Fixed assets is provided using the straight-line method and at the rates specified in Schedule XIV to the Companies Act, 1956. As per policy of the company the depreciation at full rate is provided on the addition made upto 30th September and at half rate for the addition made after 30th September.

Inventories (as valued and certified by the Management of the Company) Raw Materials, Packing materials and Accessories, Stores and spare parts and traded goods are valued at cost.

Semi Finished Goods (Work in Progress) is valued at 60% of the selling price (which method is consistently followed and which is deemed to be the cost of such good).

Finished Goods is valued at 75% of selling price (which method is consistently followed and which is deemed to be the cost of such goods).

Employees Benefits

Provision for Gratuity and Leave Encashment has been made on the basis of estimates made by management. Provision for payment of Bonus has been provided at the minimum rate as prescribed in the provisions of The Payment of Bonus Act, 1965.

The Contribution made towards Provident Fund, Employees State Insurance and Labour Welfare Fund is charged to revenue every year.

Miscellaneous Expenditure

Preliminary expenses, deferred revenue expenses and pre-operative expenses are amortized over a period of ten year.

Foreign Currency Transactions

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. The Exchange rate differences arising on foreign currency transactions are accounted for at the date of settlement of the transaction. Any income or expense arising out of such differences in exchange rates is grouped in the relevant head to which it relates.

The company has entered into forward forex trading to partly hedge its exposure to movements in foreign exchange rates. These transactions are not used for speculation purposes. The resultant gain during the year has been grouped under head Other Income.

Taxes on income

Provision is made for deferred tax for timing differences arising between taxable income and accounting income at current tax rates.

The current tax provision is only MAT tax which is made on estimate basis. No regular current tax is payable due to exemption available for the profit earned by NSEZ unit.

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Mar 31, 2010

METHOD OF ACCOUNTING

The financial statements have been prepared under the historical cost convention on accrual basis of accounting, on a going concern basis and in accordance with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006, issued by the Central Government and other pronouncements of the Institute of Chartered Accountants of India (ICAI), and the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India, to the extent applicable

- USE OF ESTIMATES

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

- REVENUE RECOGNISITION

Revenue from sale is recognized on transfer of ownership to the customer. Revenue includes excise duty and is shown net of value added tax and applicable discounts and allowances and short receipt in Export Sales. The effect of exchange rate fluctuations is also given in Revenue. The Excise duty is shown distinctly.

- FIXED ASSETS AND DEPRECIATION

Fixed assets including the expenses incurred on improvement and furnishing of rented premises in Retail division are stated at cost less accumulated depreciation and impairment loss, if any. The cost of Assets comprises of purchase price and directly attributable expenses of bringing the assets to their working condition for intended use.

Capital Work in Progress indicates advances made for acquisition of capital assets. Depreciaion on Fixed assets is provided using the straight-line method and at the rates specified in Schedule XIV to the Companies Act, 1956. As per policy of the company the depreciation at full rate is provided on the addition made upto 30th September and at half rate for the addition made after 30th September.

- INVENTORIES (AS VALUED AND CERTIFIED BY THE MANAGEMENT OF THE COMPANY)

Raw Materials, Packing materials and Accessories, Stores and spare parts and Traded goods are valued at cost. The raw material given for Job work (though shown under WIP) has also been valued at cost.

Semi Finished Goods (Work in Progress) is valued at 60% of the selling price (which method is consistently followed and which is deemed to be the cost of such goods).

Finished Goods is valued at 75% of selling price (which method is consistently followed and which is deemed to be the cost of such goods).

- EMPLOYEES BENEFITS

Provision for Gratuity and Leave Encashment has been made on the basis of estimates made by management. Provision for payment of Bonus has been provided at the minimum rate as prescribed in the provisions of The Payment of Bonus Act, 1965.

The Contribution made towards Provident Fund, Employees State Insurance and Labour Welfare Fund is charged to revenue every year.

- MISCELLANEOUS EXPENDITURE

Preliminary expenses, deferred revenue expenses and pre-operative expenses are amortized over a period of ten years.

- FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. The Exchange rate differences arising on foreign currency transactions are accounted for at the date of settlement of the transaction. Any income or expense arising out of such differences in exchange rates is grouped in the relevant head to which it relates.

The company uses foreign exchange forward contracts and option to hedge its exposure to movements in foreign exchange rates. These foreign exchange forward contracts and options are not used for trading or speculation purposes. The resultant gain or loss from these transactions are recognized in the Profit & Loss Account.

- TAXES ON INCOME

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at current tax rates. During the year it was deferred tax asset and has been shown as negative figure against the title Deferred Tax Liability.

Provision for current tax has been made on estimated basis taking into account the income of exempted undertaking.