Accounting Policies of Mewar Polytex Ltd. Company

Mar 31, 2015

1. Company Overview

Mewar Polytex Limited was originally incorporated in 1979 as private limited company and subsequently converted in to public limited company in 1994 is listed on Bombay Stock Exchange (BSE). The Company was promoted by Mr. B. H. Bapna an engineer from University of California, to manufacture light weight PP bags for packing minerals and chemical during a period when HDPE bags were predominately used. The company is now an ISO 9001:2008 certified export house. Company is having two manufacturing units one at Mewar Industrial Area Madri established in the year 1979 and second at village Nai established in the year 1994.Company has annual consolidated production capacity of 3645 MT including lamination.

2.1 Method of Accounting:

Generally Mercantile System of Accounting is followed except payment of Bonus, interest on National Saving Certificate, Subsidy and incentives which, are accounted on Cash basis.

2.2 Inventories:

Raw material is valued at cost.

Work in progress is valued at cost.

Finished goods produced and purchased by the company are valued at lower of cost or estimated realisable value.

Wastage is valued at estimated realisable value.

Stores, Spares, Consumables are valued at cost.

Cost of Inventories is generally ascertained on FIFO basis.

Cost of finished goods is determined considering predetermined cost based on consumption of material, labour and appropriate proportion of factory overheads including depreciation and excise duty paid / payable on such goods.

2.3 Retirement Benefits:

As per Accounting Standard (AS-15) accounting for post employment benefit is covered under Defined Contribution plans. The Company's contribution towards retirement benefit scheme, viz. Provident fund and Gratuity Fund is charged against revenue each year.

The gratuity fund is administered by a trust formed for this purpose through the group gratuity scheme of Life Insurance Corporation of India and Provident fund is administered by Government.

2.4 Investment:

Investments are stated at cost.

2.5 Fixed Assets and Depreciation:

(a) Fixed Assets are stated at their original cost including incidental expenditure related to acquisition and installation less accumulated depreciation up to 31.03.2015, and exclusive of Cenvat benefit and VAT credit thereafter.

(b) Company had been providing Depreciation at the rates prescribed under schedule II of the Company Act, 2013 on WDV method for the fixed assets.

(c) Depreciation on additions to assets has been provided with reference to the month of addition / installation and in case of sale of assets up to the previous month of sale.

(d) No write off has been made in respect of leasehold land.

2.6 Sales:

(a) Sale of goods is recognized on dispatch of goods to customers. Sales include excise duty.

(b) The Income or expenses in foreign currency during the year are recorded at the rate of exchange prevailing on the dates when the relevant transaction took place. The assets and the liabilities in the foreign currencies are converted at year end exchange rates and the overall resultant Gain or Loss, if any is charged to the Profit and Loss Account.

2.7 Taxes on Income:

(a) Provision for current income tax is made on the basis of assessable income under the Income Tax Act, 1961 less advance income tax paid and TDS Credit.

(b) Deferred income tax is recognized on timing difference, between taxable income and accounting income, which originate in one period and are capable of reversal in one or more subsequent period. The tax effect is calculated on the accumulated timing differences at the year-end based on tax rates and laws enacted or substantially enacted as of the Balance Sheet date.

2.8 Foreign Exchange Rate Fluctuations:

The Income or expenses in foreign currency during the year are recorded at the rate of exchange prevailing on the dates when the relevant transaction took place. The assets and the liabilities in the foreign currencies are converted at 31st March exchange rates and the overall resultant Profit & Loss, if any, is charged to the Profit and Loss Account.

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Mar 31, 2014

1.1 Basis of preparation of financial statement

These financial statements have been prepared to comply with accounting principles generally accepted in India(Indian GAAP), The accounting standards notified under the Companies (Accounting standards) Rules 2006 and The relevant provisions of the Companies Act, 1956.

The Financial statements are prepared on accrual basis under the historical cost convention except for the payment for bonus, interest on national saving certificate, subsidy and incentives which are accounted for on cash basis. The accounting policies have been consistently applied by the company and are consistent with those used in the previous year.

1.2 Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, Provision for diminution in value is made to recognize a decline other than temporary in the value of long term investments.

1.3 Retirement Benefits

As per Accounting Standard (AS-15) accounting for post employment benefit is covered under Defined Contribution plans. The Company''s contribution towards retirement benefit scheme, viz. Provident fund and Gratuity Fund is charged against revenue each year.

The gratuity fund is administered by a trust formed for this purpose through the group gratuity scheme of Life Insurance Corporation of India and Provident fund is administered by Government.

1.4 Fixed Assets Tangible assets-

Tangible assets are stated at cost net of recoverable taxes, trade discounts and rebates and include amounts added on revaluation, less accumulated depreciation and impairment loss, if any. The

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cost of tangible assets comprises its purchase price, borrowing cost and any cost directly attributable to bringing the asset 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.

Subsequent expenditure related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing assets beyond its previously assessed standard of performance.

Projects under which assets are not ready for their intended use are shown as Capital Work-in- Process.

Intangible Assets-

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization/depletion and impairment loss, if any. The cost comprises purchase price, borrowing cost, and any cost directly attributable to bringing the asset to its working condition for the intended use and net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets.

1.5 Depreciation

i) Depreciation on fixed assets is provided on the written down value method at the rates based on the estimated useful life of the assets, estimated by the management which is in accordance with the rates specified in Schedule IX of the Companies Act,1956. Depreciation on fixed assets added/disposed of during the year is provided on pro-rata basis with respect to month of acquisition /disposal.

ii) No write off has been made in respect of leasehold land.

1.6 Inventories

Raw materials, components, stores, spares and consumables are valued at lower of cost and net realizable value.

Work-in-Progress and cost of finished goods produced and purchased by the company are valued at lower of cost and net realizable value.

Cost includes direct material and pre-determined cost of conversion.

Wastage is valued at estimated realizable value.

1.7 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefit will flow to the group and revenue can be reliably measured.

i) Sale of Goods

Revenue is recognized on the date of dispatch to customers. Export sales are booked at the rate of exchange on the date of dispatch and loss/gain arise on actual realization charged to profit and loss account in the name of exchange rate fluctuation. It includes excise duty but excludes Value Added Tax/Sales Tax. Excise duty deducted from turnover (gross) is the amount that is included in the amount of turnover (gross) and not the entire amount of liability that arose during the year.

ii) Interest

Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

1.8 Taxes on Income

(a) Provision for current income tax is made on the basis of assessable income under the Income Tax Act, 1961 less advance income tax paid and TDS Credit.

(b) Deferred income tax is recognized on timing difference, between taxable income and accounting income, which originate in one period and are capable of reversal in one or more subsequent period. The tax effect is calculated on the accumulated timing differences at the year-end based on tax rates and laws enacted or substantially enacted as of the Balance Sheet date.

1.9 Foreign Currency Transactions

i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

iii) Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting group''s monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or expenses in the year in which they arise.

The assets and liabilities in the foreign currencies are converted on exchange rates prevailing at the end of the year and the resultant profit or loss is charged to the Statement of Profit and Loss.

Note :

Term Loan : 1. Exclusive charge over entire Plant and Machinery and fixed assets (both present and future) and equitable mortgage together with all building structure thereon of the company and personal guarantee of Mr. B. H. Bapna, Mr. Vinod Bafna and Mr. Sandeep Bapna.

NOTE : The disclosures relating to Micro, Small and Medium Enterprises has been furnished to the extent such parties have been identified on the basis of the intimation received from the suppliers regarding their status under the Micro, Small and Medium Development Act, 2006 (the Act). There is no interest paid/payable as at March 31,2014

Particulars of securities-Term Loans and Other Loans

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Mar 31, 2013

1.1 Method of Accounting:

Generally Mercantile System of Accounting is followed except payment of Bonus, interest on National Saving Certificate, Subsidy and incentives which, are accounted on Cash basis.

1.2 Inventories:

Raw material is valued at cost.

Work in progress is valued at cost.

Finished goods produced and purchased by the company are valued at lower of cost or estimated realisable value.

Wastage is valued at estimated realisable value.

Stores, Spares, Consumables are valued at cost.

Cost of Inventories is generally ascertained on FIFO basis.

Cost of finished goods is determined considering predetermined cost based on consumption of material, labour and appropriate proportion of factory overheads including depreciation and excise duty paid / payable on such goods.

1.3 Retirement Benefits:

As per Accounting Standard (AS-15) accounting for post employment benefit is covered under Defined Contribution plans. The Company''s contribution towards retirement benefit scheme, viz. Provident fund and Gratuity Fund is charged against revenue each year.

The gratuity fund is administered by a trust formed for this purpose through the group gratuity scheme of Life Insurance Corporation of India and Provident fund is administered by Government.

1.4 Investment:

Investments are stated at cost.

1.5 Fixed Assets and Depreciation:

(a) Fixed Assets are stated at their original cost including incidental expenditure related to acquisition and installation less accumulated depreciation up to 31.03.2013, and exclusive of Cenvat benefit and VAT credit thereafter.

(b) Company had been providing Depreciation at the rates prescribed under schedule XIV of the Companies Act, 1956 on WDV method for the fixed assets.

(c) Depreciation on additions to assets has been provided with reference to the month of addition / installation and in case of sale of assets up to the previous month of sale.

(d) No write off has been made in respect of leasehold land.

1.6 Sales:

(a) Sale of goods is recognized on dispatch of goods to customers. Sales include excise duty.

(b) The Income or expenses in foreign currency during the year are recorded at the rate of exchange prevailing on the dates when the relevant transaction took place. The assets and the liabilities in the foreign currencies are converted at year end exchange rates and the overall resultant Gain or Loss, if any, is charged to the Profit and Loss Account.

1.7 Taxes on Income

(a) Provision for current income tax is made on the basis of assessable income under the Income Tax Act, 1961 less advance Income tax paid and TDS Credit.

(b) Deferred income tax is recognized on timing difference, between taxable income and accounting income, which originate in one period and are capable of reversal in one or more subsequent period. The tax effect is calculated on the accumulated timing differences at the year-end based on tax rates and laws enacted or substantially enacted as of the Balance Sheet date.

1.8 Foreign Exchange Rate Fluctuations:

The Income or expenses in foreign currency during the year are recorded at the rate of exchange prevailing on the dates when the relevant transaction took place. The assets and the liabilities in the foreign currencies are converted at 31st March exchange rates and the overall resultant Profit & Loss, if any, is charged to the Profit and Loss Account.

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Mar 31, 2012

1.1 Method of Accounting:

Generally Mercantile System of Accounting is followed except payment of Bonus, interest on National Saving Certificate, Subsidy and incentives which, are accounted on Cash basis.

1.2 Inventories:

Raw material is valued at cost.

Work in progress is valued at cost.

Finished goods produced and purchased by the company are valued at lower of cost or estimated realisable value.

Wastage is valued at estimated realisable value.

Stores, Spares, Consumables are valued at cost.

Cost of Inventories is generally ascertained on FIFO basis.

Cost of finished goods is determined considering predetermined cost based on consumption of material, labour and appropriate proportion of factory overheads including depreciation and excise duty paid / payable on such goods.

1.3 Retirement Benefits:

As per Accounting Standard (AS-15) accounting for post employment benefit is covered under Defined Contribution plans. The Company's contribution towards retirement benefit scheme, viz. Provident fund and Gratuity Fund is charged against revenue each year.

The gratuity fund is administered by a trust formed for this purpose through the group gratuity scheme of Life Insurance Corporation of India and Provident fund is administered by Government.

1.4 Investment:

Investments are stated at cost.

1.5 Fixed Assets and Depreciation:

(a) Fixed Assets are stated at their original cost including incidental expenditure related to acquisition and installation less accumulated depreciation up to 31.03.2012, and exclusive of Cenvat benefit and VAT credit thereafter.

(b) Company had been providing Depreciation at the rates prescribed under schedule XIV of the company's act, 1956 on WDV method for the fixed assets.

(c) Depreciation on additions to assets has been provided with reference to the month of addition / installation and in case of sale of assets up to the previous month of sale.

(d) No write off has been made in respect of leasehold land.

1.6 Sales:

(a) Sale of goods is recognized on dispatch to customers. Sales include excise duty.

(b) The Income or expenses in foreign currency during the year are recorded at the rate of exchange prevailing on the dates when the relevant transaction took place. The assets and the liabilities in the foreign currencies are converted at year end exchange rates and the overall resultant Gain or Loss if any charged to the Profit and Loss Account.

1.7 Taxes on Income

(a) Provision for current income tax is made on the basis of assessable income under the Income Tax Act, 1961 less advance income tax paid and TDS Credit.

(b) Deferred income tax is recognized on timing difference, between taxable income and accounting income, which originate in one period and are capable of reversal in one or more subsequent period. The tax effect is calculated on the accumulated timing differences at the year-end based on tax rates and laws enacted or substantially enacted as of the Balance Sheet date.

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Mar 31, 2010

1.1 Method of Accounting:

Generally Mercantile System of Accounting is followed except payment of Bonus and interest on National Saving Certificate, which, is accounted on Cash basis.

1.2 Inventories:

Raw material is valued at cost.

Work in progress is valued at cost.

Finished goods produced and purchased by the company are valued at lower of cost or estimated realisable value.

Wastage is valued at estimated realisable value.

Stores, Spares, Consumables are valued at cost.

Cost of Inventories is generally ascertained on FIFO basis.

Cost of finished goods is determined considering predetermined cost based on consumption of material, labour and appropriate proportion of factory overheads including depreciation and excise duty paid / payable on such goods.

1.3 Retirement Benefits:

As per Accounting Standard (AS-15) accounting for post employment benefit is covered under Defined Contribution plans. The Companys contribution towards retirement benefit scheme, viz. Provident fund and Gratuity Fund is charged against revenue each year.

Company encash every year unused leaves to its employees and do not carry forward the same to future years.

The gratuity fund is administered by a trust formed for this purpose through the group gratuity scheme of Life Insurance Corporation of India and Provident fund is administered by Government.

1.4 Investment:

Investments are stated at cost.

1.5 Fixed Assets and Depreciation:

(a) Fixed Assets are stated at their original cost including incidental expenditure related to acquisition and installation less accumulated depreciation up to 31.03.2010, and exclusive of Cenvat benefit and VAT credit thereon.

(b) Company had been providing Depreciation at the rates prescribed under schedule XIV of the companys act, 1956 on WDV method for the fixed assets acquired up to 31.03.1994 and on the Straight Line method for the assets acquired thereafter. This year company has changed the depreciation policy from Straight Line Method to Written down Value method. This has resulted into charging of additional depreciation during the year to the extent of Rs. 125.97 Lacs and profit has been reduced to that extent.

(c) Depreciation on additions to assets has been provided with reference to the month of addition / installation and in case of sale of assets up to the previous month of sale.

(d) No write off has been made in respect of leasehold land.

1.6 Sales:

(a) Sale of goods is recognized on dispatch to customers. Sales include excise duty.

(b) The Income or expenses in foreign currency during the year are recorded at the rate of exchange prevailing on the dates when the relevant transaction took place. The assets and the liabilities in the foreign currencies are converted at year end exchange rates and the overall resultant Profit & Loss if any, charged to the Profit and Loss Account.

1.7 Taxes on Income

(a) Provision for current income tax is made on the basis of assessable income under the Income Tax Act, 1961.

(b) Deferred income tax is recognized on timing difference, between taxable income and accounting income, which originate in one period and are capable of reversal in one or more subsequent period. The tax effect is calculated on the accumulated timing differences at the year-end based on tax rates and laws enacted or substantially enacted as of the Balance Sheet date.

Particulars of securities-Term Loans and Other Loans

2.1 Term Loan and Working Capital facilities :

(a) Working capital facilities are secured by way of hypothecation of stocks of raw material, work in progress, finished goods and other current assets of the Company.

(b) Further, the Company has created security in favor of Punjab National Bank against Term Loan and working capital facilities of ail the block of assets present and future of the existing units of the Company situated at 207(A) MIA, Udaipur and Village Nai.

(c) All the aforesaid loans are further secured by way of personal guarantee of Mr. B.H.Bapna, Mr. Vinod Bapna and Mr. Sandeep Bapna Directors of the Company.