Accounting Policies of Flawless Diamond (india) Ltd. Company

Mar 31, 2013

1. Basis of Accounting:-

The financial statements are prepared under the historical cost convention on accrual basis in accordance with the generally accepted accounting principles and provision of the Companies Act, 1956 as adopted consistently by the Company.

2. Useof Estimates:-

The preparation of financial statement requires the management of the Company to make estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statement of and reported amounts of income and expenses during the period. Examples of such estimate includes provision for doubtful debts, future obligation, employees retirement benefit plans, provision for income taxes, useful lives of fixed assets and intangible assets. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated. Actual results may differ from such estimates.

3. Fixed As$ete:-

All fixed assets are valued at cost less accumulated depreciation.

4. Depreciation:-

Depreciation on Fixed Assets is provided on written down value method in accordance with the Schedule XIV of the Companies Act, 1956 on pro-rata basis.

5. Inventories:-

Inventories of diamond are valued at cost on specific identification methods except in the case of inventory of Rough Diamond Rejection where the value is carried at the net realizable value. Inventories of Jewellery are valued at cost, which includes cost of material used and proportionate expenses incurred to manufacture jewellery.

6. Foreign Currency Transactions:-

(i) Transactions in foreign currencies are normally recorded at the average exchange rate prevailing during the period of transaction.

(ii) Monetary item denominated in foreign currencies at the year end and not covered by forward exchange contracts are translated at year end rates except where there is no virtual certainty of recovery of export proceeds, and those covered by forward exchange contracts are translated at the average rate ruling at the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction, such difference having been recognized over the life of the contract.

(iii) Any income or expenses on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.

7. Taxation:- ,j3jr

Provision for current tax made after taking into consideration benefits admissible under the provisions of the Income- Tax Act, 1961. Deferred tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is virtual certainty that the asset will be realized in future.

8. Employee''s Retirement Benefits:-

Company''s contribution to Provident Fund and ESIC are charged to Statement of Profit and Loss. Liability for Gratuity is determined on the Balance Sheet date and charged to Statement of Profit and Loss.

10. Revenue Recognition:-

In appropriate circumstance, revenue is recognized when no significant uncertainty as to deterrnination or realisation exists. Turnover includes sale of goods net of VAT and sales tax.

11. Contingent Liability^

These are disclosed by way of notes on the Balance Sheet date. Provision is made wherever applicable for those contingencies which are likely to materialize into liabilities after the year end till the finalization of accounts and havematerial effect on the position stated in Balance Sheet.

12. Impairment:-

At each Balance Sheet date, the Company reviews the carrying amounts of its assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of assets net selling price and value in use. In assessing value in use, the estimated future cash flow expected from the continuing use of the assets and from its disposal is discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and risks specific to the assets. Reversal of impairment loss is recognized immediately as income in the Statement of Profit and Loss.

13. Earning Per Share:-

The earning considered in ascertaining EPS comprise the Net Profit after Tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year.

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Mar 31, 2012

1. Basis of Accounting:-

The financial statements are prepared under the historical cost convention on accrual basis in accordance with the generally accepted accounting principles and provision of the Companies Act, 1956 as adopted consistently by the Company.

2. Use of Estimates:-

The preparation of financial statement requires the management of the Company to make estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statement of and reported amounts of income and expenses during the period. Examples of such estimate includes provision for doubtful debts, future obligation, employees retirement benefit plans, provision for income taxes, useful lives of fixed assets and intangible assets. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated. Actual results may differ from such estimates.

3. Fixed Assets:-

All fixed assets are valued at cost less accumulated depreciation.

4. Depreciation:-

Depreciation on Fixed Assets is provided on written down value method in accordance with the Schedule XIV of the Companies Act, 1956 on pro-rata basis.

5. Inventories:-

Inventories of diamond are valued at cost on specific identification methods except in the case of inventory of Rough Diamond Rejection where the value is carried at the net realizable value. Inventories of Jewellery are valued at cost, which includes cost of material used and proportionate expenses incurred to manufacture jewellery.

6. Foreign Currency Transactions:-

(i) Transactions in foreign currencies are normally recorded at the average exchange rate prevailing during the period of transaction.

(ii) Monetary item denominated in foreign currencies at the year end and not covered by forward exchange contracts are translated at year end rates except where there is no virtual certainty of recovery of export proceeds, and those covered by forward exchange contracts are translated at the average rate ruling at the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction, such difference having been recognized over the life of the contract.

(iii) Any income or expenses on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.

7. Taxation:-

Provision for current tax made after taking into consideration benefits admissible under the provisions of the Income-Tax Act, 1961. Deferred tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to extent that there is virtual certainty that the asset will be realized in future.

8. Government Grant

Subsidies granted by the Government for providing employment in notified area are recognized as Other Operating Income in accordance with the relevant terms and conditions of the scheme.

9. Employee's Retirement Benefits:-

Company's contribution to Provident Fund and ESIC are charged to Statement of Profit and Loss. Liability for Gratuity is determined on the Balance Sheet date and charged to Statement of Profit and Loss.

10. Revenue Recognition:-

In appropriate circumstance, revenue is recognized when no significant uncertainty as to determination or realisation exists. Turnover includes sale of goods net of VAT and sales tax.

11. Contingent Liability:-

These are disclosed by way of notes on the Balance Sheet date. Provision is made wherever applicable for those contingencies which are likely to materialize into liabilities after the year end till the finalization of accounts and have material effect on the position stated in Balance Sheet.

12. Impairment:-

At each Balance Sheet date, the Company reviews the carrying amounts of its assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of assets net selling price and value in use. In assessing value in use, the estimated future cash flow expected from the continuing use of the assets and from its disposal is discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and risks specific to the assets. Reversal of impairment loss is recognized immediately as income in the Statement of Profit and Loss.

13. Earnings Per Share:-

The earning considered in ascertaining EPS comprise the Net Profit after Tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year.

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Mar 31, 2010

1. Basis of Accounting:-

The financial statements are prepared under the historical cost convention on accrual basis in accordance with the generally accepted accounting principles and provision of the Companies Act, 1956 as adopted consistently by the Company.

2. Use of Estimates:-

The preparation of financial statement requires the management of the Company to make estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statement of and reported amounts of income and expenses during the period. Examples of such estimate includes provision for doubtful debts, future obligation, employees retirement benefit plans, provision for income taxes, useful lives of fixed assets and intangible assets. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated. Actual results may differ from such estimates.

3. Fixed Assets:-

All fixed assets are valued at cost less accumulated depreciation.

4. Depreciation:-

Depreciation on Fixed Assets is provided on written down value method in accordance with the Schedule XIV of the Companies Act, 1956 on pro-rata basis.

5. Inventories:-

Inventories of diamond are valued at cost on specific identification method. Inventories of jewellery are valued at cost, which includes cost of material used and proportionate expenses incurred to manufacture jewellery.

6. Foreign Currency Transactions:-

(i) Transactions in foreign currencies are normally recorded at the average exchange rate prevailing during the period of transaction.

(ii) Monetary item denominated in foreign currencies at the year end and not covered by forward exchange contracts are translated at year end rates and those covered by forward exchange contracts are translated at the average rate ruling at the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction, such difference having been recognized over the life of the contract.

(iii) Any income or expenses on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss Account.

7. Taxation:-

Provision for current tax made after taking into consideration benefits admissible under the provisions of the Income- Tax Act, 1961.

Minimum Alternative Tax (MAT) paid in accordance to the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax after the tax holiday period.

Deferred tax expense or benefit is recognized on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. 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.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets.

8. Lease Accounting:-

Leasing where substantially all the risks and benefits of ownership are retained by the leaser, are classified as operating leases. Operating lease expenses/ income is recognized in the Profit and Loss Account on a straight line basis over the period of lease term.

9. Employees Retirement Benefits: -

Companys contribution to Provident Fund and ESIC are charged to Profit and Loss Account. Liability for Gratuity is determined on the Balance Sheet date and charged to Profit and Loss Account.

10. Revenue Recognition:-

In appropriate circumstance, revenue is recognized when no significant uncertainty as to determination or realisation exists. Turnover includes sale of goods net of VAT and sales tax.

11. Contingent Liability:-

These are disclosed by way of notes on the Balance Sheet date. Provision is made wherever applicable for those contingencies which are likely to materialise into liabilities after the year end till the finalization of accounts and have material effect on the position stated in Balance Sheet.

12. Impairment:-

At each Balance Sheet date, the Company reviews the carrying amounts of its assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of assets net selling price and value in use. In assessing value in use, the estimated future cash flow expected from the continuing use of the assets and from its disposal is discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and risks specific to the assets. Reversal of impairment loss is recognized immediately as income in the Profit and Loss Account.

13. Earning Per Share:-

The earning considered in ascertaining EPS comprise the Net Profit after Tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year.