Accounting Policies of Glory Films Ltd. Company

Mar 31, 2013

1 General:

Accounting Policies, not specifically referred to otherwise, are consistent and in consonance with Generally Accepted Accounting Principles except Bonus / Excreta payable to employees is accounted for on cash basis.

2 Fixed Assets:

The Gross block & additions to fixed assets are stated at cost (net of Modvat / Cenvat credit, if any) of acquisition inclusive of freight, duties, taxes and other direct incidental expenses.

3 Investments:

Investments are stated at cost.

4 Depreciation:

Depreciation has been provided at the rates prescribed for Straight Line Method in Schedule XIV to the Companies Act, 1956.

5 Sales:

Sales are accounted at net of sales tax, trade discount, fluctuations etc.

6 Inventory:

a) Stocks of raw material, packing material and consumables are valued at cost or net realizable value, whichever is lower.

b) Work In Progress is valued at average estimated cost.

c) Stocks of finished goods and saleable scarp are valued at cost.

d) The Company accounts for excise duty liability at the time of clearance of the goods from the factory premises.

7 Purchases:

The Company accounts for purchases at net of Cenvat credit received / receivable.

8 Gratuity:

Provision for gratuity has not been made on the basis of actuarial valuation. The same will be accounted in the year of resignation / termination of services of the employees concerned.

9 IPO Expenses:

The Company follows the policy of deferring write off of major IPO expenses over a period 5 years after the IPO issue. Other expenses are written off during the year when incurred.

b) Terms/ rights attached to shares

The Company has only one class of equity share having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.

a) Additional Information to Long Term Borrowings

The Long term portion of term loan are shown under long term borrowings and current maturities of the Long term borrowings are shown under the current maturities as per the disclosure requirements of the Revised Schedule VI.

Term Loans from State Bank of India and Indian Overseas Bank are secured by way of first charge on pari-passu basis on entire fixed assets both present and future. These loans are further collaterally secured by way of extension of second charge on the entire current assets of the company consisting of raw materials, stock in process, finished goods, stores & spares, other consumables and receivables with State Bank of India, Indian Overseas Bank, Dena Bank, Central Bank of India and HSBC Bank on pari passu basis.

Due to nonpayment of Term Loan the account of the company is considered as NPA by the banks. Non Provision of Interest of Rs. 492.85 lacs & 107.78 lacs on term loan of State Bank of India and Indian Overseas Bank respectively, due to this, the term loan liability is lower by Rs. 600.63 lacs with corresponding effect on loss for the year. The Company has requested for consideration of Corporate Debt Restructuring (CDR) and application has been filed with Lead bank in April 2012 and is under their consideration.

C Loan against Keyman Insurance Policy is granted from Life Insurance Corporation of India against Keyman Insurance policy Against these policies, loan was obtained based on the prevailing surrender value which is @ 90% of surrender value from LIC Of India, by assigning the policies to LIC Of India. In absence of relevant policy documents & loan documents, statement & confirmation, these details are certified by Managing Director and relied by auditor on the same.

The above facilities are secured by way of 1st pari passu charge between State bank of India, Indian Overseas Bank, Dena Bank, Central Bank of India & HSBC Bank on entire current assets of the company consisting of Raw Material, Work in Progress, Finished Goods, Stores & Spares, Other Consumables and Book Debts and 2nd charge on pari pasu between State Bank of India, Indian Overseas Bank, Dena Bank, Central Bank of India & HSBC Bank bank on the fixed assets of the company both present and future consisting of Plant & Machinery, Land & Building, Factory Furniture & Fixture along with personal guarantee of Shri Prakash Kela, Shri Yogesh Kela, Managing Director and Shri Umesh Kela, Executive Director.

Due to overdrawing in the above accounts, the banks have considered accounts as NPA. Non-provision of Interest on working capital loan for State Bank Of India for Rs. 427.02 lacs, Indian Overseas Bank for Rs. 181.25 lacs and Central Bank Of India for Rs 145.68 Lacs. Due to this working capital liability is lower by Rs. 753.95 lacs with corresponding effect on loss for the year. The Company has requested for consideration of Corporate Debt Restructuring (CDR) and application has been filed with Lead bank in April 2012 and is under their consideration.

Non-provision of interest on loan facilities from HSBC Bank computed on 10% basis Rs. 29.90 lacs for the year and Interest for earlier year Rs. 29.90 lacs. Due to this Loan from HSBC Bank is lower by Rs. 59.80 lacs with corresponding effect on loss for the year.

II Unsecured Loan

a) from Banks

i) DBS Bank - Sale Bill Discounting facility

ii) Kotak Mahindra Bank

The working capital loan due to Kotak Mahindra Bank was repaid on 31/12/2011. On 31/12/2011 Kotak Mahindra Bank has transferred outstanding Letter of Credit (L/c) amounting to working capital account. The lead bank i.e. State Bank of India has considered outstanding L/c amount as unsecured facility and filed charge accordingly on 21/02/2012. In view of this outstanding amount due to Kotak Mahindra Bank is considered as unsecured loan.

Kotak Mahindra Bank, HSBC Bank & DBS Bank and 4 of its creditors have filed winding up petition with the High Court against the company.

Kotak Mahindra Bank & HSBC Bank have also filed Recovery case with DRT Mumbai against the Company.

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Mar 31, 2012

1 General:

Accounting Policies, not specifically referred to otherwise, are consistent and in consonance with Generally Accepted Accounting Principles except Bonus / Exgratia payable to employees is accounted for on cash basis.

2 Fixed Assets:

The Gross block & additions to fixed assets are stated at cost (net of Modvat / Cenvat credit, if any) of acquisition inclusive of freight, duties, taxes and other direct incidental expenses.

3 Investments:

Investments are stated at cost.

4 Depreciation:

Depreciation has been provided at the rates prescribed for Straight Line Method in Schedule XIV to the Companies Act, 1956.

5 Sales:

Sales are accounted at net of sales tax, trade discount, fluctuations etc.

6 Inventory:

a) Stocks of raw material, packing material and consumables are valued at cost or net realizable value, whichever is lower.

b) Work In Progress is valued at average estimated cost.

c) Stocks of finished good and saleable scarp are valued at cost.

d) The Company accounts for excise duty liability at the time of clearance of the goods from the factory premises.

7 Purchases:

The Company accounts for purchases at net of Cenvat credit received / receivable.

8 Gratuity:

Provision for gratuity has not been made on the basis of actuarial valuation. The same will be accounted in the year of resignation / termination of services of the employees concerned.

9 IPO Expenses:

The Company follows the policy of deferring write off of major IPO expenses over a period 5 years after the IPO issue. Other expenses are written off during the year when incurred.

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Mar 31, 2010

1 General:

Accounting Policies, not specifcally referred to otherwise, are consistent and in consonance with Generally Accepted Accounting Principles.

2 Fixed Assets:

The Gross block & additions to fixed assets are stated at cost (net of Modvat / Cenvat credit, if any) of acquisition inclusive of freight, duties, taxes and other direct incidental expenses.

3 Investments:

Investments are stated at cost.

4 Depreciation:

Depreciation has been provided at the rates prescribed for Straight Line Method in Schedule XIV to the Companies Act, 1956.

5 Sales:

Sales are accounted at net of excise duty, sales tax, trade discount, fuctuations etc. Excise duty and sales tax are accounted separately as liability. Sale also includes delay compensation received, trading sales and sale of printing cylinders.

6 Dividend income:

Dividend receivable on investments is accounted on receipt basis.

7 Inventory:

a) Stocks of raw material, packing material and consumables are valued at cost or net realisable value, whichever is lower.

b) Work In Progress is valued at cost.

c) Stocks of fnished good and saleable scarp are valued at cost.

d) The Company accounts for excise duty liability at the time of clearance of the goods from the factory premises.

8 Purchases:

The Company accounts for purchases at net of Cenvat credit received / receivable.

9 Gratuity:

Provision for gratuity has not been made on the basis of acturial valuation. The same will be accounted in the year of resignation / termination of services of the employees concerned.

10 Bonus / Exgratia payable to employees:

Bonus / Exgratia payable to employees is accounted for on cash basis.

11 IPO Expenses:

The Company follows the policy of deferring write off of major IPO expenses over a period 5 years afiter the IPO issue. Other expenses are written off during the year when incurred.