Accounting Policies of Kanel Industries Ltd. Company

Mar 31, 2024

B. Material Accounting policies

I. Basis of preparation and presentation and Statement of compliance:

These standalone Financial Statements have been prepared in accordance with Indian Accounting
Standards (referred to as "Ind AS") as prescribed under Section 133 of the Companies Act, 2013 (Act) read
with Companies (Indian Accounting Standards) Rules as amended from time to time and Presentation and
disclosure requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS Compliant
Schedule III) as amended from time to time. The Company follows indirect method prescribed in Ind AS 7
- Statement of Cash Flows for presentation of its cash flows. The Financial Statements have been
prepared under historical cost convention basis except for certain financial assets and financial liabilities
which have been measured at fair value. Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. All assets and liabilities have been classified as current and non-current as per the
Company''s normal operating cycle. Based on the nature of services rendered to customers and time
elapsed between deployment of resources and the realization in cash and cash equivalents of the
consideration for such services rendered, the Company has considered an operating cycle of 12 months.
Accounting policies have been consistently applied except where a newly-issued accounting standard is
initially adopted or a revision to an existing accounting standard requires a change in the accounting
policy hitherto in use.

The Standalone Financial Statements have been presented in Indian Rupees (INR), which is the Company''s
functional currency. All values are rounded to the Lakhs except otherwise stated. All financial information
presented in INR has been rounded off to the nearest two decimals, unless otherwise stated. Due to
rounding off, the numbers presented throughout the document may not add up precisely to the totals
and percentages may not precisely reflect the absolute figures.

II. Summary of Material Accounting Policies

a) Current and non-current classification:

The Company presents assets and liabilities in the balance sheet based on current / non-current
classification. An asset is classified as current when it satisfies any of the following criteria: it is
expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating
cycle.

It is held primarily for the purpose of being traded non-Current;

• It is expected to be realized within 12 months after the reporting date; or

• It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting date.

• All other assets are classified as non-current.

It is held primarily for the purpose of being traded Current

• A liability is classified as current when it satisfies any of the following criteria:

• It is expected to be settled in the Company''s normal operating cycle;

• It is held primarily for the purpose of being traded

• It is due to be settled within 12 months after the reporting date; or the Company does not
have an unconditional right to defer settlement of the liability for at least 12 months after the
reporting date. Terms of a liability that could, at the option of the counterparty, result in its
settlement by the issue of equity instruments do not affect its classification.

• All other liabilities are classified as non-current.

• Deferred tax assets and liabilities are classified as non-current only

• The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.

• Accounting policies have been consistently applied except where a newly issued accounting
standard is initially adopted or a revision to an existing accounting standard requires a change
in the accounting policy hitherto in use.

b) Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discount and rebates
less accumulated depreciation and impairment losses, if any. Such cost includes purchase price,
borrowing cost and any cost directly attributable to bringing the assets to its working condition for its
intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate
variations attributable to the assets. In case of land the Company has availed historical cost as deemed
cost on the date of transition to Ind AS.

Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the company and the cost of the item can be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are
charged to profit or loss during the reporting period in which they are incurred.

An item of spare parts that meets the definition of ''property, plant and equipment'' is recognized as
property, plant and equipment.

Capital work in progress is stated at cost and net of accumulated impairment losses, if any. All the direct
expenditure related to implementation including incidental expenditure incurred during the period of
implementation of a project, till it is commissioned, is accounted as Capital work in progress (CWIP) and
after commissioning the same is transferred / allocated to the respective item of property, plant and
equipment. Other Indirect Expenses incurred relating to project, net of income earned during the project
development stage prior to its intended use, are considered as pre-operative expenses and disclosed
under Capital Work-in-Progress.

Pre-operating costs, being indirect in nature, are expensed to the statement of profit and loss as and
when incurred.

The present value of the expected cost for the decommissioning of an asset after its use is included in
the cost of the respective asset if the recognition criteria for a provision are met.

Property, plant and equipment are eliminated from financial statement, either on disposal or when
retired from active use. Losses arising in the case of retirement of property, plant and equipment are
recognized in the statement of profit and loss in the year of occurrence.

Depreciation on Property, Plant and Equipment is provided using written down value method on
depreciable amount. The depreciation on an item of spare part will begin when the asset is available for
use i.e. when it is in the location and condition necessary for it to be capable of operating in the manner
intended by management. In case of a spare part, as it may be readily available for use, it may be
depreciated from the date of purchase of the spare part. However, land is not depreciated. Depreciation
is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013
except in respect of the following assets, where useful life is as under:

Depreciation on additions is calculated on pro rata basis with reference to the date of addition.
Depreciation on assets sold/ discarded, during the period, has been provided up to the preceding month
of sale / discarded. The residual values, useful lives and methods of depreciation of Property, Plant and
Equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. Gains and
losses on disposals are determined by comparing proceeds with carrying amount. These are included in
profit or loss within other gains / (losses).

c) Intangible Asset:

Intangible assets are recognized when it is probable that the future economic benefits that are
attributable to the assets will flow to the company and the cost of the asset can be measured reliably.
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their fair value at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortization and accumulated
impairment losses. Internally generated intangibles, excluding capitalized development costs, are not
capitalized and the related expenditure is reflected in profit or loss in the period in which the
expenditure is incurred.

The Company assesses if useful life of an intangible asset is finite or indefinite.

d) Inventories

Items of inventories are measured at lower of cost and net realisable value after providing for
obsolescence, if any. Cost of finished goods, work-in-progress, raw materials, stores and spares, packing
materials, trading and other products are determined on first in, first out basis. Net realizable value is the
estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.

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Mar 31, 2015

(A) METHOD OF ACCOUNTING :

(i) These financial statements have been prepared under historical cost convention from books of accounts maintained on an accrual basis (unless otherwise stated hereinafter) in conformity with accounting principles generally accepted in India and comply with the Accounting Standards issued by the Institute Of Chartered Accountants Of India and referred to Section 129 and Section 133 of The Companies Act, 2013 of India. The Accounting policies applied by the company are consistent with those used in previous year.

(ii) The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis except specified below

(a) Liability of Sales Tax, Income tax for pending assessments.

(b) Employees Benefit in respect of Gratuity, Leave Encashment and Bonus.

(B) FIXED ASSETS :

(i) Tangible Fixed Assets acquired by the company are reported at acquisition value, with deduction for accumulated depreciation [ other than "freehold land " where no depreciation is charged]. The acquisition value includes purchase price, inward freight, duties, taxes and incidental expenses related to acquisition and installation and allocable pre-operative expenditure.

(ii) Intangible Fixed Assets: there is no intangible fixed assets.

(iii) There is no Capital work in progress during the year under audit.

(C) DEPRECIATION :

Depreciation has been provided based on life assigned to each asset in accordance with Schedule II of The Companies Act, 2013

(D) INVESTMENTS :

All the investments are current investments and valued at purchase cost.

(E) INVENTORIES :

The cost of various categories of Inventory is determined as follows.

1. Raw material and packing material : At Cost including local taxes (Net of setoff)

Or Net realizable value, whichever is lower

2. Stock in Process : At Cost or Net realizable Value, whichever is lower

3. Stock of Finished Goods : At Cost or Net realizable Value, whichever is lower

4. Consumable stores and spares : At Cost or Net realizable Value, whichever is lower

5. Scrap : At Net realizable Value

Cost of raw material and packing material are determined in using FIFO method. Cost of Finished goods and stock in process include cost of raw material and packing materials, cost of conversion and other cost incurred in bringing inventories to the present location and condition. Accounting policy for inventory applied to the extent applicable to present business operation of the company.

(F) REVENUE RECOGNITION :

(i) SALES - Sales are exclusive of all the duty, forwarding charges. (ii) Dividend income are realized on cash basis. (iii) Interest Income from Bank Fixed Deposit accounted on receipt basis.

(G) RETIREMENT BENEFITS :

Gratuity, other ex-gratia benefits and leave encashment are accounted on cash basis. Provisions for Provident Fund, Super annotation, pension and ESIC are not applicable to the company as number of employees are below statutory limit.

(H) TAXATION :

Current Tax provision not done by the company. Management is arranging to file all income tax pending returns and at that time current tax provision will be workout.

Deferred tax assets arising on account of brought forward business losses including unabsorbed depreciation are recognized only when there is virtual certainty supported by convincing evidence that such assets will be realized. Deferred tax assets arising on temporary timing difference are recognized only if there is reasonable certainty of realization.

(I) Value Added Tax(VAT) :

VAT payable of finished goods is accounted net of setoff i.e. VAT payable on finished goods less VAT paid on inputs.

(J) PROVISIONS & CONTINGENCIES :

A provision is recognized when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligations, in respect of which reliable estimate can be made. These are reviewed at each balance sheet and adjusted to reflect the current best estimate. Contingent liabilities are not recognized but are disclosed in the notes to the Financial Statements to the extent of details available, if any. A contingent Assets is neither recognized nor disclosed.

(K) PROVISION FOR BAD AND DOUBTFUL DEBTS :

Provision for bad and doubtful debt has been made as per management's option and their decision, if any.

(L) CASH FLOW STATEMENT :

Cash Flow are reported using the indirect method, whereby profit (loss) before tax is adjusted for the effect of transactions of a non-cash nature and any income due to writing-off liabilities of the company and any expenses due to provision for bad debts have been considered as extra ordinary item.

Cash and Cash equivalents presented in the Cash flow statement consist of cash on hand and balance with banks including dormant bank accounts and No lien bank accounts [ read with Notes no 26] .

(M) IMPAIRMENT OF ASSETS :

Impairment losses, if any, are recognized in accordance with the Accounting Standard 28 issued in this regard by the Institute Of Chartered Accountants Of India.

(N) BORROWING COST :

Borrowing cost attributable to acquisition, construction or production of qualifying assets are capitalized as part of the cost of that assets, till the assets is ready for use. Other Borrowing costs are recognized as an expense in the period in which these are incurred.

(O) PRELIMINARY EXPENSES :

Preliminary expenses and Share issue expenses have been amortized over a period of years as defined in section 35D of Income Tax Act, 1961.

(P) EARNING PER SHARE :

The Basic and Diluted Earnings Per Share ( EPS) is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.

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Mar 31, 2014

(A) METHOD OF ACCOUNTING :

(i) The Financial Statements have been prepared to comply in all material respects with the Notified Accounting Standards by The Companies Accounting Standard Rules, 2006 and the relevant provisions of the Companies Act, 1956. The accounts are prepared on historical cost basis and on the principles of a going concern.

(ii) The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis except specified below

(a) Liability of Sales Tax, Income tax for pending assessments.

(b) Employees Benefit in respect of Gratuity, Leave Encashment and Bonus.

(B) USE OF ESTIMATES :

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual result and estimates are recognised in the period in which the results are known / materialised.

(C) FIXED ASSETS :

(i) Tangible Fixed Assets acquired by the company are reported at acquisition value, with deduction for accumulated depreciation [ other than "freehold land " where no depreciation is charged]. The acquisition value includes purchase price, inward freight, duties, taxes and incidental expenses related to acquisition and installation and allocable pre-operative expenditure.

(ii) Intangible Fixed Assets: there is no intangible fixed assets.

(iii) There is no Capital work in progress during the year under audit.

(D) DEPRECIATION :

Depreciation has been provided on the assets in accordance with Section 205(2) of the Companies Act, 1956 on written down value method at the rates prescribed under Schedule XIV to the Companies Act, 1956. Depreciation on Plant & Machinery at Naroda unit has been provided for normal Wear & tear though it has been inoperative throughout the year.

(E) INVESTMENTS :

All the investments are current investments and valued at purchase cost.

(F) INVENTORIES :

Raw Materials and finished goods are valued at cost or net realizable value whichever is lower.

(G) REVENUE RECOGNITION :

(i) SALES - Sales are exclusive of all the duty, forwarding charges. (ii) Dividend income are realized on cash basis. (iii) Commodities settlement income/charges recognize on settlement of dues.(iv) Interest Income from Bank Fixed Deposit accounted on cash basis. (v) Rent Income is accounted on accrual basis.

(H) RETIREMENT BENEFITS :

Gratuity, other ex-gratia benefits and leave encashment are accounted on cash basis. Provisions for Provident Fund, Super annuation, pension and ESIC are not applicable to the company as number of employees are below statutory limit.

(I) TAXATION :

Current Tax provision not done by the company. Management is arranging to file all income tax pending returns and at that time current tax provision will be workout.

Deferred tax assets arising on account of brought forward business losses including unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that

such assets will be realised. Deferred tax assets arising on temporary timing difference are recognised only if there is reasonable certainty of realisation.

(J) PROVISIONS &CONTINGENCIES :

A provision is recognized when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligations, in respect of which reliable estimate can be made. These are reviewed at each balance sheet and adjusted to reflect the current best estimate. Contingent liabilities are not recognised but are disclosed in the notes to the Financial Statements to the extent of details available. A contingent Assets is neither recognised nor disclosed.

(K) PROVISION FOR BAD AND DOUBTFUL DEBTS :

Provision for bad and doubtful debt has been made as per management''s option and their decision, if any.

(L) CASH FLOW STATEMENT :

Cash Flow are reported using the indirect method, whereby profit (loss) before tax is adjusted for the effect of transactions of a non-cash nature and any income due to writing-off liabilities of the company and any expenses due to provision for bad debts have been considered as extra ordinary item.

Cash and Cash equivalents presented in the Cash flow statement consist of cash on hand and demand deposits with bank and balance with dormant bank accounts [ read with Notes no 26] .

(M) IMPAIRMENT OF ASSETS :

Impairment loss is charged to the profit and loss account in the period in which, an asset is identified as impaired, when the carrying value of the asset exceeds its recoverable value. The impairment loss recognized in the prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

(N) BORROWING COST :

Borrowing cost attributable to acquisition, construction or production of qualifying assets are capitalized as part of the cost of that assets, till the assets is ready for use. Other Borrowing costs are recognized as an expense in the period in which these are incurred.

(O) PRELIMINARY EXPENSES :

Preliminary expenses and Share issue expenses have been amortized over a period of years as defined in section 35D of Income Tax Act, 1961.

(P) EARNING PER SHARE :

The Basic and Diluted Earning Per Share ( EPS) is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.

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Mar 31, 2013

(A) METHOD OF ACCOUNTING :

i) The accounts are prepared on historical cost basis and on the principles of a going concern.

ii) The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis except specified below

(a) Liability of Sales Tax, Income tax for pending assessments.

(b) Employees Benefit in respect of Gratuity, Leave Encashment and Bonus.

(B) FIXED ASSETS :

(i) Tangible Fixed Assets acquired by the company are reported at acquisition value, with deduction for accumulated depreciation [ other than "freehold land " where no depreciation is charged]. The acquisition value includes purchase price, inward freight, duties, taxes and incidental expenses related to acquisition and installation and allocable pre-operative expenditure.

(ii) Intangible Fixed Assets: there is no intangible fixed assets.

(iii) There is no Capital work in progress during the year under audit.

(C) DEPRECIATION :

Depreciation has been provided on the assets at written down value method at the rates prescribed under Schedule XIV to the Companies Act, 1956. Depreciation on Plant & Machinery at Naroda unit has been provided for normal Wear & tear though it has been inoperative throughout the year.

(D) INVESTMENTS :

All the investments are current investments and valued at purchase cost.

(E) INVENTORIES :

There are no closing stock of Finished Goods, Raw Material and any WIP at year end.

(F) REVENUE RECOGNITION :

i. Revenue / Income and Cost / Expenditure are accounted for on accrual basis

ii. Vatav / Kasar income are recognised due to writing off long outstanding dormant accounts under managements'' decision.

iii. Rent Income recognised on accrual basis.

iv. Interest Income others accounted on basis of TDS credited in our account on basis of form 26AS though respective deposits with Uttar Gujarat Vij Co. Ltd have been transferred to other parties on transfer of plants in previous years.

(G) RETIREMENT BENEFITS :

1) The company has terminated its permanent staff due to close down of manufacturing activities of the company and decided to appoint one or two assistant on retainership salary basis. Gratuity and other ex- gratia benefits are not accounted at this stage.

2) Company has no Leave encashment scheme as a part of retirement benefits scheme. The employees of the company are entitled to en cash their un availed leave accrued during course of their employment in accordance with the company''s rules and regulations. The same are accounted in the books of accounts as and when claimed.

(H) TAXATION :

Current Tax provision not done by the company. Management is arranging to file all income tax pending returns and at that time current tax provision will be workout.

Deferred tax assets arising on account of brought forward business losses including unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised. Deferred tax assets arising on temporary timing difference are recognised only if there is reasonable certainty of realisation.

(I) PROVISIONS & CONTINGENCIES :

A provision is recognized when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligations, in respect of which reliable estimate can be made. These are reviewed at each balance sheet and adjusted to reflect the current best estimate. Contingent liabilities are not recognised but are disclosed in the notes to the Financial Statements to the extent of details available. A contingent Assets is neither recognised nor disclosed.

(J) PROVISION FOR BAD AND DOUBTFUL DEBTS :

Provision for bad and doubtful debt has been made as per management''s option and their decision, if any.

(K) CASH FLOW STATEMENT :

Cash Flow are reported using the indirect method, whereby profit (loss) before tax is adjusted for the effect of transactions of a non-cash nature and any income due to writing-off liabilities of the company and any expenses due to provision for bad debts have been considered as extra ordinary item.

Cash and Cash equivalents presented in the Cash flow statement consist of cash on hand and demand deposits with bank and balance with dormant bank accounts [ read with Notes no 5].

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Mar 31, 2010

(A) METHOD OF ACCOUNTING

i) The Financial Statement are prepared under historical cost convention and on

accrual basis.

ii) The company generally follows mercantile system of accounting and recognizes

significant items of income and expenditure on accrual basis except specified below

(a) Liability of Sales Tax, Income tax for pending assessments.

(b) Employees Benefit in respect of Gratuity Leave Encashment and Bonus.

(B) FIXED ASSETS

Fixed Assets are accounted at cost inclusive of inward freight, duties, taxes and incidental expenses related to acquisition and installation and allocable pre-operative expenditure.

(C) DEPRECIATION

Depreciation has been provided on the assets at written down value method at the rates prescribed under Schedule XIV to the Companies Act, 1956. Depreciation on Plant & Machinery at Naroda unit has been provided for normal Wear & tear though it has been inoperative throughout the year.

(D) INVESTMENTS

All the investments are current investments and valued at purchase cost.

(E) INVENTORIES

There are no closing stock of Finished Goods. Raw Material and any WIP at year end.

(F) REVENUE RECOGNITION

i. Vatav / Kasar income are recognised on settlement of Account due to earlier years

differences. ii. Other Income is accounted on receipt of payment relating to Sale of Fixed Assets in

earlier year.

(G) RETIREMENT BENEFITS

1) Gratuity and other ex-gratia benefits are accounted on cash basis and hence no provision for accrued gratuity has been made.

2) Company has no Leave encashment scheme as a part of retirement benefits scheme. The employees of the company are entitled to en cash their un availed leave accrued during course of their employment in accordance with the companys rales and regulations. The same are accounted in the books of accounts as and when claimed.

(H) TAXATION

Deferred tax assets arising on account of brought forward business losses including unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised. Deferred tax assets arising on temporary timing difference are recognised only if there is reasonable certainty of realisation.

(I) CONTINGENT LIABILITIES

All contingent liabilities are disclosed to the extent of details available.

(J) PROVISION FOR BAD AND DOUBTFUL DEBTS

Provision for bad and doubtful debt has been made as per managements option and their decision, if any.

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Mar 31, 2009

(A) METHOD OF ACCOUNTING

i) The Financial Statement are prepared under historical cost convention and on accrual basis.

ii) The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis except specified below

(a) Liability of Sales Tax, Income tax for pending assessments.

(b) Employees Benefit in respect of Gratuity, Leave Encashment and Bonus.

(B) FIXED ASSETS

Fixed Assets are accounted at cost inclusive of inward freight, duties, taxes and incidental expenses related to acquisition and installation and allocable pre-operative expenditure.

(C) DEPRECIATION

Depreciation has been provided on the assets at written down value method at the rates prescribed under Schedule XIV to the Companies Act, 1956. Depreciation on Plants Machinery at Naroda unit has been provided for normal Wear & tear though it has been inoperative throughout the year.

(D) INVESTMENTS

All the investments are current investments and valued at purchase cost.

(E) INVENTORIES

There are no closing stock of Finished Goods, Raw Material and any Wl P at year end.

(F) REVENUE RECOGNITION

i. Vatav / Kasar income are recognised on settlement of Account.

ii. Income from Jobwork / Processing are recognised on raise of Debit Note.

iii. Interest Income is accounted on Accrual Basis.

iv. Brokerage Income is accounted on raise of Debit note.

(G) RETIREMENT BENEFITS

1) Gratuity and other ex-gratia benefits are accounted on cash basis and hence no provision for accrued gratuity has been made.

2) Company has no Leave encashment scheme as a part of retirement benefits scheme. The employees of the company are entitled to en cash their un availed leave accrued during course of their employment in accordance with the companys rules and regulations. The same are accounted in the books of accounts as and when claimed.

(H) TAXATION

Deferred tax assets arising on account of brought forward business losses including unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised. Deferred tax assets arising on temporary timing difference are recognised only if there is reasonable certainty of realisation.

(I) CONTINGENT LIABILITIES

All contingent liabilities are disclosed to the extent of details available.

(J) PROVISION FOR BADAND DOUBTFULDEBTS

Provision for bad and doubtful debt has been made as per managements option and their •decision, if any.