Hitkari Industries Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2010

1) Basis of Preparation

The financial statements have been prepared to comply in all material respects with the Notified Accounting Standards pursuant to Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

2) Use of Estimates

The presentation of financial statements in conformity with the Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the results of operations during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

3) Revenue Recognition

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

Sale of Goods - Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer and is stated net of trade discounts, returns and Sales Tax /VAT and Excise Duty.

Contract Manufacturing- Revenue is recognized on an accrual basis in accordance with the terms of the relevant agreement.

4) Fixed Assets

i) Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any acountable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

ii) The purchase cost of Fixed Assets is considered net of Cenvat, Excise & Incentives as applicable.

iii) Subsidy is adjusted against the cost of respective asset.

iv) Depreciation is provided on straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

v) No write off is made in respect of rights in leasehold land.

5) Impairment of Fixed Assets

The carrying amounts of assets are reviewed at each Balance Sheet date as to whether 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. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

6) 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, if any, in value is made to recognize a decline other than temporary in the value of the investments.

7) Inventories

Finished Goods, Work in Progress, Raw Materials, Packing Materials, Stores & Spare parts are stated at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost.

Cost of Work in Progress and Finished Goods is determined by considering direct material cost and appropriate portion of manufacturing overheads based on normal operating capacity. Cost of Finished Goods includes Excise Duty. Goods-in-transit are valued at cost. Stores and Packing materials are valued at cost.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale.

The purchase cost of Raw Materials is inclusive of direct expenses and is net of Cenvat Credit available on input.

8) Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and shortterm investments with an original maturity of three months or less.

9) Excise Duty

Excise duty is accounted on the basis of both payments made in respect of goods cleared as also provision made for goods lying in bonded warehouse.

10) Employees Benefits

i. Retirement benefits in the form of Provident Fund are defined contribution schemes and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

ii. The Companys Provident Fund Scheme and ESI Plans are defined Contribution Plans and the Companys Contribution paid / payable is recognized as expense in the Profit and Loss Account during the year in which the employees render the related service.

iii. Un-availed leave is encashed at the end of the year.

11) Foreign Currency Transactions

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 the transaction.

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 and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting such 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 as expenses in the year in which they arise.

12) Income Taxes

Tax expense comprises of Current, Deferred and Fringe Benefit Tax. Current Income Tax and Fringe Benefit Tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred Income taxes reflect the impact of current year timing difference between taxable income and accounting income for the year and reversal of timing difference of earlier years.

Deferred Income Tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. If the Company unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realized against future taxable profits.

At each Balance Sheet date the Company re-assesses unrecognized deferred tax assets, if any. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

13) Earnings per Share

Basic Earnings per Share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split, and reverse share split (consolidation of shares), if any.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of Shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

14) Provisions

A provision is recognized when the Company has a present obligation as a result of 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. Provisions are not discounted to its present value and are determined based on managements best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

15) Contingencies

Contingent losses arising from claims, litigation, assessments, fines, penalties, etc. is provided for when it is probable that a liabilities may be incurred and the amount can be reasonable estimated.

---

Mar 31, 2009

General

The accounts are prepared under the historical cost convention using accrual method of accounting and in compliance with applicable Accounting standards referred to in section 211 (3C) & with other requirements of the Companies Act, 1956.

Fixed Assets

i) Fixed assets are stated at cost inclusive of expenditure

related to the acquisition and installation less accumulated depreciation.

ii) The purchase cost of Fixed Assets is considered net of Cenvat Excise & Incentives as applicable.

iii) Subsidy is adjusted against the cost of respective asset.

iv) Depreciation is provided on straight lime method at the rales and in the manner specified in Schedule XIV of the Companies Act, 1956.

v) No write off is made in respect of rights in leasehold land.

Investments

Long term investments are shown at cost plus expenses less provision for permanent diminution in value or such investments.

Inventories

i) Stocks are valued at or below cost.

ii) Stores and Packing materials are valued at cost.

iii) Goods-in-transit are valued at cost.

Excise Duty

Excise duty is accounted on the basis of both payments made in respect of goods cleared as also provision made for goods lying in bonded warehouse.

Sales & Purchases

i) Sales are accounted for on accrual basis and are exclusive

of excise duly & sales-tax and are net of sales returns and discounts.

ii) Sales are recognized at the lime of dispatch of goods.

iii) The purchase cost of Raw Materials is inclusive of direct expenses and are net of Cenvat credit available on input.

Employees Benefits -

i) The Companys Gratuity is Defined Benefit Plan. The

Companys Liability towards Gratuity is determined using the Projected Unit Credit Method "which recognizes each period of service as giving rise to additional unit of Employee Benefit Entitlement. The Gratuity scheme is operated through Group Gratuity Scheme of Life Insurance Corporation of India.

ii) The liabilities are provided based on Actuarial Valuation certified by Life Insurance Corporation of India. Actuarial gain and losses are charged to Profit & Loss Account. .

iii) The Companys Provident Fund Scheme and ESI Plans are defined Contribution Plans and the Companys Contribution paid / payable is recognized as expense in the Profit and Loss Account, during-the year in which the employees render the related service.

iv) Un-availed leave is encashed at the end of the, year.

Foreign Currency Transactions

The foreign currency transactions are recorded at the exchange rate prevailing at the time of transactions.

Deferred Tax

i) Current tax is determined as the amount of tax payable in

respect of taxable income for the year.

ii) Deferred tax is recognized on timing difference, being the difference between taxable income and accounting income that originate in one year and is reversible in one or more subsequent years.

iii) Deferred tax assets are recognized to the extent there is certainty of future taxable income will be available for its realization.

Impairment of Assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss, if material, i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided for in the books of account.

Contingent Liabilities

Contingent liabilities are disclosed in the accounts by way of notes giving nature and quantum of such liabilities.