Accounting Policies of Texplast Industries Ltd. Company

Mar 31, 2013

1.Accounting Convention

1.1 The financial statements are prepared in accordance with Indian Generally Accepted Principles under the historical cost convention on art accrual basis and are in conformity with mandatory accounting standards, as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956.

1.2 All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule VI to the Companies Act, 1956. Based on the nature of the products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the company has determined its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.

1.3 The preparation of the financial statements in conformity-with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure relating to contingent liabilities as at the date of financial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Future results could differ from these estimates.

2. Fixed Assets

Fixed Assets have been stated at cost of acquisition inclusive of expenses directly attributable to the acquisition of such assets. Elements of refundable duties and taxes on capital goods purchased have been reduced from the total cost of such assets.

3. Depreciation

Depreciation is provided on fixed assets on Written Down Method (WDV) at the rates and in the manner specified in Income Tax Act, 1961.

4. Pre-operative Expenses and Allocation thereon

All pre-operative expenditure & trial run expenditure are accumulated as Capital Work-in-Progress and is allocated to the relevant fixed assets on a pro-rata / reasonable basis depending on the prime cost of assets.

5. Investments

Investments classified as long term investments are stated at cost. Provision for diminution in value of long term investment is made only if such a decline is other than temporary.

6. Valuation of Inventories

I. Raw Materials have been valued at lower of cost or net realizable value based upon FIFO method. ii. Work-in-progress has been valued on cost of raw-material and other direct cost depending upon the stage of completion of production in general. iii. Finished goods and trading stocks have been valued at lower of cost or net realizable value based upon FIFO method except where the finished goods are specifically identifiable. iv. Scraps have been valued at net realizable value.

v. Stores, spares and consumables have been valued at lower of cost or net realizable value. Inventories of finished goods and scrap include excise duty wherever applicable.

7. Material Event Occurring after the Balance Sheet Date

Material events occurring after the date of Balance Sheet have been taken cognizance of liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty have been treated as contingent liability and are disclosed by way of notes to accounts.

8. Prior Period Adjustment

Expenses and income pertaining to earlier/ previous years are accounted as Prior Period Items.

9. Revenue Recognition

I. A sale is recognized at the time of dispatching the goods to the customer excluding Value Added Tax & Excise Duty collection. Purchases include import purchases are recognized net of refundable Value Added Tax and Duty component at the time of receipt of goods. ii. Export Benefits have been recognized at the time of making the export sales and valued on estimated monetary benefit receivable there from. iii. Job/process income is recognized on an accrual basis in accordance with the terms mutually agreed. iv. Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

v. Commission income is recognized on an accrual basis in accordance with the terms mutually agreed.

vi. Income from jobbing operation / trading in F&O activities in shares is recognized as per terms with investor.

vii. Overseas Support Charges recognized on an accrual basis in accordance with the terms mutually agreed.

10. Export Benefits

The. Company accounts for Export Benefits under duty exemption Advance License Scheme of the Government of India, in the year of export of goods.

11. Duties and Taxes on Purchases

Refundable duties and taxes on purchase of Raw Materials, other eligible inputs and capital goods are adjusted against duties and taxes payable. The unadjusted credits of such duties and taxes are shown underthe head "Loans and Advances".

12. Employee Benefits

I. Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

ii. Post employment and other long term employee benefits are recognized as an expense in the profit and loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Prof it and Loss Account.

13. Foreign Currency Transactions

I. Transactions denominated in foreign currencies are initially recorded at the exchange rate prevailing on the date of the transaction. ii. Monetary items denominated in foreign currencies at the year-end are restated at the closing rates. In case of items which are covered by forward exchange contracts, the difference between the closing rate and rate on the date of the contract is recognized as exchange difference. iii. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of transaction.

iv. Exchange differences arising on repayment of liabilities and conversion of year-end foreign currency balances pertaining to long term loans for acquiring depreciable assets including capital work in progress are adjusted in the carrying cost of these assets.

v. The premium or discount arising at the inception of a forward exchange contract not intended for trading or speculation purpose is amortized as expense or income over the life of the contract. Exchange difference on account of change in rates of underlying currency at the year end is recognized in the Statement of Profit and Loss. Any profit or loss arising on cancellation or renewal of such forward contract is recognized as an expense or an income for the year.

vi. The exchange difference arising on revenue and other account except as stated in (iv) above and

(11) below is adjusted in the Statement of Profit and Loss.

14. Borrowing Cost

Borrowing costs directly attributable to the acquisition or construction of qualifying fixed assets are capitalized as part of cost of assets, up to the date, the asset is put to use. Borrowing costs also include exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to interest costs. Other borrowing costs are charged to the Statement of Profit and Loss in the year in which they are incurred.

15. Segmental Reporting

The Company is operating in one significant business segment i.e. Textile and Allied Product; hence disclosure of segment-wise information is not required under Accounting Standard 17 - ''Segmental Information'' notified pursuant to the Companies (Accounting Standards) Rules, 2006 (as amended).

16. Impairment of Assets

An assets is treated as impaired when the carrying cost of an assets exceeds its recoverable value. The impairment loss is charge to Profit and Loss Account in the year which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been change in the estimate of recoverable amount.

17. Provision for Current and Deferred Tax

i. Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. ii. Deferred tax resulting from "timing differences" 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. The deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

iii. Minimum Alternative Tax (MAT) is recognized as an asset only when, and to the extent there is convincing evidence that the company will pay normal income tax during the specified period.

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Mar 31, 2011

A The financial statements are prepared under the historical cost convention following accrual basis of accounting and in accordance with the mandatory accounting standards notified under the Companies Accounting Standards Rules, 2006.

Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

B USE OF ESTIMATES:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the period which the results are known / materialized.

C FIXED ASSETS:

Fixed Assets have been stated at cost of acquisition inclusive of expenses directly attributable to the acquisition of such assets. Elements of refundable duties and taxes on capital goods purchased have been reduced from the total cost of such assets.

D DEIJRECIATION:

The Company has applied Depreciation rates as per Income Tax Act.

E PRE-OPERATIVE EXPENSES AND ALLOCATION THEREON:

All pre-operative expenditure & trial run expenditure are accumulated as Capital Work-in- Progress and is allocated to the relevant fixed assets on a pro-rata / reasonable basis depending on the prime cost of assets.

F INVESTMENTS:

Investments classified as long term Investments are stated at cost. Provision for diminution in value of long term investment is made only if such a decline is other than temporary.

G INVENTORIES:

- Raw Materials have been valued at lower of cost or net realisable value based upon FIFO method.

- Work-in-progress has been valued on cost of raw-material and other direct cost depending upon the stage of completion of production in general.

- Finished goods have been valued at lower of cost or net realisable value based upon FIFO method except where the finished goods are specifically identifiable.

- Scraps are value at net realized value.

- Stores, spares and consumables have been valued at lower of cost or net realisable value.

H EMPLOYEE BENEFITS:

- Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

- Post employment and other long term employee benefits are recognized as an expense in the profit and loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Profit and Loss Account.

I FOREIGN EXCHANGE TRANSACTION:

- Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

- Monetary items denominated in foreign currencies at the yearend are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the yearend rate and rate on the date of the contract is recognized as exchange difference.

- Non monetary foreign currency items are carried at cost

- Exchange differences arising on repayment of liabilities and conversion of year-end foreign currency balances pertaining to long term loans for acquiring depreciable assets including capital work in progress are charged or credit to profit & loss account.

- The exchange difference arising on revenue and other account is adjusted in the Profit and Loss Account

J IMPAIRMENT OF ASSETS:

An assets is treated as impaired when the carrying cost of an assets exceeds its recoverable value. The impairment loss is charge to Profit and Loss Account in the year which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been change in the estimate of recoverable amount.

K MATERIAL EVENT OCCURRING AFTER THE BALANCE SHEET DATE

Material events occurring after the date of Balance Sheet have been taken cognizance of liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty have been treated as contingent liability and are disclosed by way of notes to accounts.

L BORROWING COST:

Borrowing costs directly attributable to the acquisition or construction of qualifying fixed assets are capitalized as part of cost of assets, up to the date, the asset is put to use. Other borrowing costs are charged to the Profit & Loss Account ir the year in which they are incurred.

M EXCISE DUTY ON FINISHED GOODS:

Excise duty is accounted on the basis of both, payments made in respect of goods cleared and also provision made for goods lying in the stock as at the year end.

N REVENUE RECOGNITION:

A sale is recognized at the time of dispatching the goods to the customer excluding Value Added Tax & Excise Duty collection. Purchases including import purchases are recognized net of refundable Value Added Tax and Duty component at the time of receipt of goods.

Export benefits have been recognized at, the time of making the export sales & valued on estimated monetary benefit receivable there from.

O EXPORT BENIFIT:

The Company accounts for Export Benefits under duty exemption Advance License Scheme of the Government of India, in the year of exports of goods.

P DUTIES & TAXES ON PURCHASE:

Refundable duties and taxes on purchase of Raw Materials, other eligible inputs and capital goods are adjusted against duties and taxes payable. The unadjusted credits of such duties and taxes are shown under the head "Loans and Advances".

Q PRIOR PERIOD ADJUSTMENT

Expenses and income pertaining to earlier / previous years are accounted as Prior Period Items.

R PROVISION FOR CURRENT & DEFERRED TAXATION:

Provision for current tax and fringe benefit tax is made based on the liability computed in accordance with the relevant tax rates and tax laws. Provision for deferred tax is made for all timing difference arising between the taxable incomes and accounting income at the tax rates enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only if there is virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

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Mar 31, 2010

A BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognises Income and Expenditure on accrual basis. Accounting policies not referred to otherwise are consistent with the generally accepted accounting principles.

b FIXED ASSETS

Fixed Assets are recorded at cost of acquisition or construction, net of cenvat and include amounts added /reduced on sale / discard, less accumulated depreciation and impairment loss, if any. All costs including financial costs till commencement of commercial production attributable to fixed assets have been capitalized.

c USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

d INVESTMENTS

Investments classified as long term investments are stated at cost. Provision for diminution in value of long term investment is made only if such a decline is other than temporary.

e INVENTORIES

Stores & Spares are valued at cost.

Raw Materials are valued at cost.

Work - in - Process are valued at Raw Material cost plus appropriate share of manufacturing expenses/ relevant overheads i-e. absorption costing.

Finished goods are valued at lower of cost or net realizable value.

Scraps are valued at net realized value.

f RETIREMENT BENEFITS

Gratuity: Gratuity is a defined benefit scheme and is accrued based on Actuarial Valuations at the balance sheet date, carried out by an independent actuary.

Leave Encashment:

As determined on the basis of accumulated leave to the credit of the employee.

g FOREIGN CURRENCY TRANSACTION

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.

All monetary items denominated in foreign currency are converted at the rates prevailing on the date of the financial statement.

h IMPAIRMENT OF ASSETS

An assets is treated as impaired when the carrying cost of an assets exceeds its recoverable value. The impairment loss is charge to Profit and Loss Account in the year which an asset is identified as impaired.

i BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss Account.

J DEPRECIATION

The Company has applied Depreciation rates as per Income Tax Act.

k REVENUE RECOGNITION

evenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sale of goods is recognised at the point of dispatch of finished goods to the customers.Sales of goods is net of sales tax / value added tax .Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

I EXPORT INCENTIVE

The benefits in respect of Advance Licence received by the Company against the Exprt made by ft are recognised as and when goods imported against them.

m EXPENSES

All material known liabilities are provided for on the basis of available information / estimates.

n CENVAT

i) The Purchase cost of raw materials and other expenses has been considered net of cenvat available on inputs.

ii) The cenvat benefits attributable to acquisition / construction of fixed assets is netted off against the cost of fixed assets in accordance with the guidance note issued by The Institute of Chartered Accountants of India.

o SCRAP

Scrap (i.e. Wastages) is accounted for at net realizable value.

p EXCISE DUTY

Excise Duty has been accounted on the basis of both payments made in respect of goods cleared as also provision made for uncleared goods and the same has been treated as part of the cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty issued by The Institute of Chartered Accountants of India.

q RESEARCH AND DEVELOPMENT

AH revenue expenditure on research and development are charged to Profit & Loss Account for the year in which they are incurred.

r TAXATION

Provision for current tax and fringe benefit tax is made based on the liability computed in accordance with the relevant tax rates and tax laws. Provision for deferred tax is made for all timing differences arising between the taxable income and accounting income at the tax rates enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only if there is virtual certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.