Hanil Era Textiles Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2010

1. Basis of Accounting:

The financial statements are prepared under historical cost convention, using the accrual system of accounting in accordance with the accounting principles generally accepted in India (Indian GAAP) and the requirements of the Companies Act, 1956, including the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India, as referred to in Section 211 (3C) of the Companies Act, 1956

2. Use of Estimates :

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the year. Example of such estimates include provisions for doubtful debts, employee retirement benefits plans, provision for income tax, accounting for contract costs expected to be incurred to complete software development and the useful lives of fixed assets.

3. Fixed Assets:

a) Fixed assets are stated at cost less accumulated depreciation. Cost is inclusive of freight, insurance, installation charges, duties & taxes, financial cost & other incidental expenditure but net of Modvat / Cenvat. Exchange difference, if any, in respect of liabilities incurred to acquire fixed assets is charged to Profit & Loss Account

b) Expenditure relating to existing fixed assets is added to the cost of the assets where it increases the capacity/performance of the asset as assessed earlier.

c) Capital Work in Progress is carried at cost, comprising of direct cost attributable, interest & incidental expenditure. The advances given for acquiring / erecting fixed assets are shown under capital work in progress.

4. Depreciation:

The Company provides depreciation on Fixed Assets on Straight-Line Method (SLM) at the rates and in the manner prescribed in the Schedule XIV to the Companies Act, 1956. No Depreciation has been provided on machineries not put to use during the year.

5. Inventories:

Inventories are valued at cost or net realizable value whichever is lower. Cost is determined using First-In-First-Out (FIFO) method.

6. Foreign Currency Transactions:

Transactions of foreign currency are recorded at the exchange rates prevailing on the date of transaction. Current assets & current liabilities in foreign currency outstanding as at the year-end are translated at the year-end rate. The difference between the rate prevailing on the date of transaction and on the date of settlement as above on transaction of current assets & current liabilities at the end of the year is recognized as the case may be as income or expense for the year.

7. Sales:

a) Sales made in the Domestic Tariff Area (DTA) include Excise duty and Sales tax, wherever applicable.

b) Export Sales include insurance and freight, wherever applicable.

8. Investments:

Investments are classified into Current Investment and Long Term Investments.

Current Investments are carried at lower of the cost or fair / quoted value. Long Term Investments are carried at cost. Provision for diminution in the value is made only if, in the opinion of the management, such a decline is other than temporary

9. Excise Duty:

Liability towards excise duty on finished goods is accounted for as and when the goods are cleared from the factory premises for DTA sales. No provision is made in the accounts for goods manufactured and lying in Bonded warehouse in the factory premises.

10. Employee Retirement Benefits:

a) Contribution to Provident Fund is accounted on accrual basis with corresponding contribution charged to the Profit & Loss Account.

b) Liability for gratuity is provided on the assumption that such benefits are payable to all employees at the end of the accounting year

11. Borrowing Cost:

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred

12 Prior period items etc.:

Material items of income and expenditure related to earlier year(s) are accounted through prior period adjustment account and are disclosed separately in the Profit & Loss Account.

13 Derivative Instruments:

The Company uses derivative financial instruments, such as forward exchange contracts, currency swaps and interest rate swaps, to hedge its risks associated with foreign currency fluctuations and interest rate. Currency and interest rate swaps are accounted in accordance with their contract.

14. Accounting for Leases

Rentals in respect of all operating leases are charged to Profit & Loss Account.

15. Earnings per Share

In accordance with the Accounting Standard 20 ( AS – 20) "Earnings Per Share" issued by the Institute of Chartered Accountants of India, basic / diluted earnings per share is computed using the weighted average number of shares outstanding during the period.

16. Provisions & Contingent Liabilities:

The company creates a provision when there is a present obligation as a result of an obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

17. Other Accounting Policies:

These are consistent with generally accepted accounting policies.