Fortune Foods Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2012

1.1 Basis of preparation of fanatical statements

The statements are prepared and presented under the historical cost convention, with going; concern assumption, on the accrual basis of accounting and are in accordance with the accounting principles generally accepted in India, The financial Statements comply with the Accounting Standards issued by alien institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956, to the extent applicable-.

1.2 Use of estimates

The preparation of financial statements sn accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities. Actual results may differ from those estimates. Any revision to accounting estimates is recognized prospective in current and future periods

1.3 Fixed assets and depreciation

Fused assets are carried at cost of acquisition tens accumulated depredation and its written down value is stated. Cost includes inward freight, duties, laxest and Incidental expenses related to the acquisition, construction and Installation of the fixed assets, borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time or get ready for their intended use are capitalized

Depreciation on the fixed assets is provided under Straight line method Ht tiled rates specified in Schedule XIV of the Companies Act, 1956.

Further the management periodically review the status and useful life of the assets and provides for the additional deprecation of required

1.4 impairment

at Thu tarrying amounts of asserts arc reviewed at caddie balance softest date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds favorable government amount. The recoverable amount is the greater of the assets net selling price and value m use. in assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

b] After impairment, depredation is provided on the revised carrying amount of the asset over its remaining useful life.

C] A previously recognized impairment loss is increased or reversed depending on changes in circumstances, However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depredation if there was no impairment

1.5 Investments

Investments in bank fixed deposits ape made in relation to business of the mumping and are stated at cost

1.6 Inventories

Inventories are valued at the lower of cost and net realizable value after providing for cost of obsolescence. The method of determination of cost is as follows;

- Raw pettiness At First-in-First'' Out (''FIFO'') method which includes all costs of purchase and costs incurred in bringing inventories to their present location and condition

- Work in progress and finished goods - At cost, which includes direct material, labour cost anti appropriate portion of factory overheads based on normal operating Carew.

Net realizable value is determined in the following manner

- Raw materials - raw material inventory is written down below cost in cases where purchase prices have declined and it Es estimated that Librettos of finished products w0! exceed their net realizable value,

- Work m progress estimated selling price of finished goods in the ordinary course of business Jess selling expenses and estimated cost Of completion

- Finished goods - estimated selling price of finished goods in the ordinary course of business less selling expenses.

In case of Job work activity, ah inventory belong or the customer and does form part of the inventory of the Company.

1.7 Current assets, loans and advances

Current assets, loans am advances are of the value stated if realizable in the ordinary course of business,

1.8 Loans and borrowings

Secured as well as unsecured loans any stated at full value of [Liability payable on the date of balance sheet or future dale, except for liability for deferred sales tax loan, It is stated at discounted value as Net Present Value, Computation of Deferment of Sales Tax liability has been made In accordance vii NPV Method as provided by Department of Sales Tax, Maharashtra,

1.9 Revenue recognition

Revenue from of goods is recognized when goods are dispatched and the title passes to the cuss turners'' ales are stated net of sales tax and discounts.

1.10 Income tax

Current tax

Provision for income ray recognized under the taxes payable method fused on then estimated taps liability computed after taking credit for and exemptions in accordance with the Indian Income Tax Act, 1961

Since the company in having carried forward of Depredation losses, Provision for Income Tax payable is not media bocks Off accounts Deferred tax

Deferred tax expense or credit and the related liabilities or assets are not recognized as specified by CAl in AS 22 - Accounting for Taxes on Income,

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Mar 31, 2011

1 Background

Fortune Foods Limited ('the Company') was incorporated on 16th March 1989.

The Company is engaged in Manufacturing & Job Work activity related to Fruit Tomato Pulp Concentrate & Fruit Pulp Based Drinks.

The Company is having its Registered Office at 5, Gulshan Apartment, Tigrania Corner, Mumbai Agra Road. Nashik - 422011 and having its Manufacturing unit at Village Awankhed, Taluka Dindori, Dist. Nashik - 422202.

2 Summary of significant accounting policies

2.1 Basis of preparation of financial statements

The financial statements are prepared and presented under the historical cost convention, with going concern assumption, on the accrual basis of accounting and are in accordance with the accounting principles generally accepted in India. The financial statements comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956, to the extent applicable.

2.2 Use of estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities. Actual results may differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.3 Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulated depreciation and its written down value is stated. Cost includes inward freight, duties, taxes and incidental expenses related to the acquisition, construction and installation of the fixed assets. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised.

Depreciation on the fixed assets is provided under straight line method at the rates specified in Schedule XIV of the Companies Act, 1956.

Further, the management periodically review the status and useful life of the assets and provides for the additional deprecation, if required.

2.4 Impairment

a) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

b) After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

c) A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

2.5 Investments "

Investments in bank fixed deposits and shares of the bank are made in relation to business of the company and are stated at cost.

2.6 Inventories

Inventories are valued at the lower of cost and net realisable value after providing for cost of obsolescence. The method of determination of cost is as follows:

- Raw materials - At First-In-First-Out ('FIFO') method which includes all costs of purchase and costs incurred in bringing inventories to their present location and condition.

- Work in progress and finished goods - At cost, which includes direct material, labour cost and appropriate portion of factory overheads based on normal operating capacity.

Net realisable value is determined in the following manner:

- Raw materials - raw material inventory is written down below cost in cases where purchase prices have declined and it is estimated that the cost of finished products will exceed their net realisable value.

- Work in progress - estimated selling price of finished goods in the ordinary course of business less selling expenses and estimated cost of completion.

- Finished goods - estimated selling price of finished goods in the ordinary course of business less selling expenses.

In case of Job work activity, all inventory belong to the customer and does form part of the inventory of the Company.

2.7 Current assets, loans and advances

Current assets loans and advances are of the value stated if realisable in the ordinary course of business.

2.8 Loans and borrowings

Secured as well as unsecured loans are stated at full value of liability payable on the date of balance sheet or future date, except for liability for deferred 'sales tax loan. It is stated at discounted value as Net Present Value. Computation of Determent of Sales Tax liability has been made in accordance with NPV Method as provided by Department of Sales Tax, Maharashtra.

2.9 Revenue recognition

Revenue from sale of goods is recognised when goods are despatched and the title passes to the customers. Sales are stated net of sales tax and discounts.

2.10 Income tax

Current tax

Provision for income tax is recognised under the taxes payable method based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Indian Income Tax Act, 1961.

Since the company is having Carried forward of Depreciation losses, Provision for Income Tax payable is not made in books of accounts

Deferred tax

Deferred tax expense or credit and the related liabilities or assets are not recognised as specified by ICAI in AS 22 - Accounting for Taxes on Income.

2.11 Earnings per share

The basic and diluted earnings per share is computed by dividing the profit/loss after tax available for equity shareholders by the weighted average number of equity shares outstanding during the reporting period.

2.12 Provisions and contingencies

A provision is recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

When there is a possible obligation in respect of which the likelihood of out resources is remote, no provision or disclosure is made. 2"