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Moneycontrol.com India | Accounting Policy > Textiles - Weaving > Accounting Policy followed by Kamadgiri Fashion - BSE: 514322, NSE: N.A
Kamadgiri Fashion
BSE: 514322|ISIN: INE535C01013|SECTOR: Textiles - Weaving
, 16:01
VOLUME 1,421
Kamadgiri Fashion is not listed on NSE
Mar 12
Accounting Policy Year : Mar '13
1.  Basis of Accounting
 The financial statements are prepared in accordance with generally
 accepted accounting principles (GAAP) in India under the historical
 cost convention on accrual basis. GAAP comprise mandatory accounting
 standards as prescribed by the Companies (Accounting Standards) Rules,
 2006 (as amended) as per section 211(3C) of the Companies Act, 1956 and
 Guidelines issued by the Securities and Exchange Board of India.
 All the 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 products and the time between the acquisition of assets for
 processing and their realization in cash and cash equivalent, the
 Company has ascertained its operating cycle to be 12 months for the
 purpose of current-noncurrent classification of assets and
 2.  Use of Estimates
 The preparation of financial statements is in conformity with the
 generally accepted accounting principles requires management to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities and the disclosure of contingent liabilities at the
 date of the financial statements and the reported amounts of revenues
 and expenses during the reporting period.
 Although these estimates are based on the management''s best knowledge
 of the current events and actions, actual results could differ from the
 3.  Fixed Assets, Intangible Assets and Capital Work in Progress
 Fixed assets are stated at cost less accumulated depreciation. Cost
 comprises of purchase price and any attributable cost required for
 bringing the assets to its working conditions for its intended use.
 Capital Work-in-Progress includes advances paid to acquire fixed
 assets, and the costs of fixed assets that are not ready for their
 intended use at the balance sheet date. Intangible assets are stated at
 cost less accumulated amortization. The cost of an intangible asset
 comprises the consideration paid for acquisition, including any duties
 and taxes and any directly attributable expenditure on making the asset
 ready for its intended use.
 4.  Depreciation
 Depreciation on fixed assets is provided on Straight line method at
 the rates specified in schedule XIV to the Companies Act, 1956.
 Computer software is grouped under Intangible Assets and is
 amortized over its useful life using straight line method in accordance
 with the rates prescribed against computers in schedule XIV of the
 Companies Act, 1956. Further,
 - Cost of leasehold land is amortized over the period of lease.
 - Assets each costing Rs. 5,000 or less are depreciated fully in the
 year of purchase.
 - Depreciation in respect of addition to fixed assets is provided on
 pro-rata basis from the date on which such assets are capitalized.
 - Depreciation on fixed assets sold, discarded or demolished during
 the year is being provided at their respective rates up to the date on
 which such assets are disposed off.
 5.  Investments
 Investments that are readily realizable and intended to be held
 generally 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
 investment are carried at cost less provision recorded to recognize any
 decline, other than temporary, in the carrying value of each
 6.  Valuation of Inventories
 - Raw Materials (Including goods in transit) are valued at lower of
 cost and Net Realizable Value. However, materials and other items held
 for use in production of inventories are not written down below cost if
 the finished products in which they will be incorporated are expected
 to be sold at or above cost.
 - Stores and Spares are valued at cost.
 - Work in process is valued at cost which includes direct materials
 and labour and a proportion of manufacturing overheads based on normal
 operating capacity.
 - Finished Stocks are valued at lower of cost or net realizable
 value. Cost for this purpose includes direct cost and attributable
 - Cost is ascertained on the FIFO/Specific Identification basis, as
 7.  Revenue Recognition
 Revenue is recognized to the extent that it is probable that the
 economic benefits will flow to the company and the revenue shall be
 reliably measured.
 Sale of goods
 Revenue is recognized on transfer of significant risks and rewards of
 ownership of the goods (which is generally on the dispatch of goods) to
 the buyer.
 Job Work Charges
 Incomes from job charges are recognized as and when the services are
 Interest Income
 Interest income is recognized on the time proportion basis taking into
 account the amount outstanding and the rate applicable.
 8.  Impairment of Assets
 The carrying amounts of assets are reviewed at each balance sheet date
 if there is an 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.  Net
 selling price is the amount obtainable from sale of the asset in an arm
 length transaction between knowledgeable, willing parties, less the
 cost of disposal. After impairment the depreciation is provided on the
 revised carrying amount of the asset over its remaining useful life.
 9.  Employee Benefits
 a) Employee benefits comprise both defined contribution and defined
 benefit plans.
 b) Provident fund is a defined contribution plan
 Each eligible employee and the Company make an equal contribution at a
 percentage of the basic salary specified under the Employees Provident
 Funds and Miscellaneous Provisions Act, 1952. The Company has no
 further obligations under the plan beyond its periodic contributions.
 c) Gratuity and Leave Encashment are defined benefit plans:-
 The company''s liability towards gratuity and leave encashment are
 charged off to the Statement of Profit & Loss in the period in which
 the employee has rendered services at the present value of the amounts
 payable determined using actuarial valuation techniques. The actuarial
 method used for measuring the liability is the Projected Unit Credit
 10.  Provisions, Contingent Liabilities and Contingent Assets
 Provisions are recognized when there is a present obligation as a
 result of past events and it is probable that there will be an outflow
 of resources to settle the obligation, in respect of which a reliable
 estimate is possible. Provisions are not discounted to its present
 value and are determined on the basis of the best estimate required to
 settle the obligation as on the balance sheet date. These are reviewed
 at each balance sheet date and adjusted to reflect the current best
 Contingent Liabilities are not recognized in the financial statements
 but are disclosed in the notes. Contingent Assets are neither
 recognized nor disclosed in the financial statements.
 11.  Taxes on Income
 Provision for current tax is made in accordance with and at the rates
 and in the manner specified under the Income Tax Act, 1961 as amended
 from time to time. Income taxes are accrued at the same period in which
 the related revenue and expense arise. A provision is made for income
 tax based on the tax liability computed after considering tax
 allowances and exemptions.
 Deferred Tax is measured based on the tax rates and the tax laws
 enacted or substantively enacted at the balance sheet date. Deferred
 tax assets and deferred tax liabilities are offset, if a legally
 enforceable right exists to set off current tax assets against current
 tax liabilities and the deferred tax assets and deferred tax
 liabilities relate to the taxes on income levied by same governing
 taxation laws. Deferred tax assets are recognized only to the extent
 that there is reasonable certainty that sufficient future taxable
 income will be available against which such deferred tax assets can be
 realized. In situations where the company has unabsorbed depreciation
 or carry forward tax losses, all deferred tax assets are recognized
 only if there is virtual certainty supported by convincing evidence
 that they can be realized against future taxable profits.
 The carrying amount of deferred tax assets are reviewed at each balance
 sheet date. The company writes-down the carrying amount of a deferred
 tax asset to the extent that it is no longer reasonably certain or
 virtually certain, as the case may be, that sufficient future taxable
 income will be available against which deferred tax asset can be
 realized. Any such write-down is reversed to the extent that it becomes
 reasonably certain or virtually certain, as the case may be, that
 sufficient future taxable income will be available.
 12.  Leases
 Where the company is lessee:
 Leases where the lessor effectively retains substantially all the risk
 and benefits of ownership of the leased term, are classified as
 operating leases. Operating lease payments are recognized as expenses
 in the Statement of Profit and Loss on a straight line basis over the
 lease term.
 Where the company is lessor:
 Assets subject to operating leases are included in fixed assets; lease
 income is recognized in Statement of Profit and Loss on a straight line
 basis over the lease term. Costs including depreciation are recognized
 as an expense in the Statement of Profit and Loss. Initial direct costs
 such as legal cost, brokerage, etc. are recognized immediately in the
 Statement of Profit and Loss.
 13.  Transaction in Foreign Currencies
 a) 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
 b) Conversion:
 Foreign Currency monetary items are reported using the closing rate.
 Non-monetary items which are carried in terms of the historical cost
 denominated in the foreign currency are reported using the exchange
 rate at the date of the transaction; non-monetary items which are
 carried at a fair value or other similar valuation denominated in a
 foreign currency are reported using the exchange rate that existed on
 the date the values were determined.
 c) Exchange Difference:
 The exchange difference arising on the settlement of monetary items or
 on reporting unsettled monetary items at the rates different from those
 at which they were initially recorded during the year, or reported in
 the previous financial statements, are recognized as income or as
 expenses in the period in which they arise.
 d) Forward Exchange Contracts:
 In case of transactions covered by forward exchange contracts, which
 are not intended for trading or speculation purposes, the
 premium/discount represented by difference between the exchange rate at
 the date of the inception of the forward exchange contract and forward
 rate specified in the contract is amortized as expense or income over
 the life of the contract.
 Exchange differences on such contracts are recognized in the statement
 of Profit and Loss in the period in which they occur.
 Any profit or loss arising on cancellation or renewal of forward
 exchange contract is recognized as income or as expense for that
 e) Non-monetary foreign currency items such as investments are carried
 at cost.
 14.  Cash and Cash Equivalents
 Cash and Cash Equivalents for the purposes of cash flow statement
 comprise cash at bank and in hand and short term investment with an
 original maturity of three month or less.
 15.  Earnings per Share (EPS)
 Basic earnings per share are calculated by dividing the net profit or
 loss after tax for the period attributable to the equity shareholders
 by the weighted average number of equity shares outstanding during the
 period. Partly paid equity shares are treated as a fraction of an
 equity share to the extent they that they were entitled to participate
 in the dividends relative to a fully paid equity share during the
 reporting period. The weighted average numbers of equity shares
 outstanding during the period are adjusted for events like bonus issue,
 bonus element in a rights issue to the existing shareholders, share
 split and reverse share split (consolidation of shares).
 For the purpose of calculating diluted earnings per share, net profit
 or loss for the period attributable to equity share holders and the
 weighted average no. of shares outstanding during the period are
 adjusted for the effects of all dilutive potential equity shares.
 16.  Government Grants
 Government grants in the nature of the promoters'' contribution are
 credited to the capital reserve and treated as a part of the share
 holders'' funds.
 17.  Borrowing Costs
 Interest and other borrowing costs attributable to qualifying assets
 are capitalized. Other interest & borrowing costs are charged to
 18.  Application of Securities Premium Account
 Share and debenture Issue expenses and Premium payable on Redemption of
 Debentures, are charged first against available balance in Securities
 Premium Account.
Source : Dion Global Solutions Limited
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