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Moneycontrol.com India | Accounting Policy > Textiles - Spinning - Cotton Blended > Accounting Policy followed by Shiva Texyarn - BSE: 511108, NSE: SHIVTEX
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Shiva Texyarn
BSE: 511108|NSE: SHIVTEX|ISIN: INE705C01012|SECTOR: Textiles - Spinning - Cotton Blended
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Accounting Policy Year : Mar '13
A.  BASIS OF ACCOUNTING
 
 The accounts are prepared under the historical cost convention applying
 accrual method of accounting and as a going concern, complying with the
 applicable Accounting Standards and the generally accepted accounting
 principles prevailing in the country.
 
 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 revenues and expenses during
 the reporting period. Differences between actual results and estimates
 are recognized in the period in which the results are known /
 materialized.
 
 C.  FIXED ASSETS
 
 i) Fixed assets have been maintained in the books at historical cost.
 Fixed assets acquired on amalgamation of Shiva Texyarn Limited have
 been accounted for based on the gross purchase consideration adopted
 for acquisition as per the Scheme of Amalgamation which was effective
 from 1.1.2001.
 
 ii) Cenvat credit eligible against capital equipments purchased during
 the year for central excise duty paid, service tax paid and for State
 Value Added Tax paid have been adjusted and reduced from the cost of
 the relevant asset.
 
 D.  DEPRECIATION AND AMORTISATION
 
 Provision for depreciation has been made on cost of fixed assets, as
 reduced by the cenvat credit, adopting the following methods/rates:
 
 i) On straight line method and at the rates prescribed in schedule XIV
 to the Companies Act 1956; for plant and machinery in the spinning
 units of textile division, the rates applicable to continuous process
 plant have been applied.
 
 ii) For assets costing Rs 5000/- or less, full depreciation has been
 charged in the year of purchase of such assets; for other assets
 acquired during the year pro-rata charge has been made from the date of
 first use; no depreciation is charged in the year of disposal of
 assets, as per consistent practice followed by the company, which has
 no revenue impact.
 
 iii) Amount paid towards advance rental for leasehold land is amortised
 over the period of lease.
 
 E.  FOREIGN CURRENCY TRANSACTIONS
 
 i) Receivables on account of exports, backed by irrevocable letter of
 credit of customer''s bankers are accounted for at the exchange rate as
 negotiated by the bankers at the time of discounting of export bills.
 
 ii) All other foreign currency transactions have been accounted for at
 the rates negotiated by the bankers or at the forward contract rates
 wherever applicable; exchange fluctuation gain or loss has been charged
 to revenue.
 
 F.  INVESTMENTS
 
 Investments are treated as non-current investments and are maintained
 at cost; provision for diminution in value, other than temporary, has
 been made wherever required.
 
 Investments in lands and buildings that are not intended to be occupied
 substantially for use by, or in the operations of the Company, have
 been classified as investment property. Investment properties are
 carried at cost less accumulated depreciation.
 
 G.  INVENTORIES
 
 Inventories are valued at the lower of cost and net realizable value.
 Cost of inventories comprises all cost of purchase, cost of conversion
 and other costs incurred in bringing the inventories to their present
 location and condition. The methods of determining cost of various
 categories of inventories are as follows:
 
 i) Raw materials - cotton - at weighted average method
 
 ii) Packing materials, stores and spares - at weighted average method
 
 iii) Process - at weighted average method including appropriate
 production overhead
 
 iv) Finished goods - at weighted average method including appropriate
 production overhead
 
 v) Waste - at since realised/realisable value
 
 vi) Scrapped machines - at depreciated value or net realisable value,
 whichever is lower
 
 vii) Stationery, stamps etc., - at actual item wise cost
 
 H.  RESEARCH AND DEVELOPMENT
 
 Revenue expenditure incurred on research and development is expensed as
 incurred. Capital expenditure incurred on research and development is
 depreciated over the estimated useful lives of the related assets.
 
 I.  CASH FLOW STATEMENTS
 
 Cash flows are reported using the indirect method, whereby profit
 before tax is adjusted for the effects of transactions of a non-cash
 nature, any deferrals or accruals of past or future operating cash
 receipts or payments and items of income or expense associated with
 investing or financing cash flows. Cash and cash equivalents include
 cash on hand and balance with banks in current and deposit accounts
 with necessary disclosure of cash and cash equivalent balances that are
 not available for use by the company.
 
 J.  REVENUE RECOGNITION
 
 i) Sales are accounted on transfer of property in goods to the buyers
 for a definite consideration; Sales exclude exchange fluctuation
 gain/loss realized or incurred during the year in respect of export
 sales, for subsequent change in exchange rates after negotiation of
 documents.
 
 ii) Sales include receipts incidental to export such as income from
 import entitlement and premium on sale of such entitlement etc.
 
 iii) Income from windmills denotes income earned by sale of electricity
 to Tamilnadu Electricity Board and the income accrued for which billing
 is pending.
 
 iv) Revenue from others:
 
 a) Income from investments in shares is accounted for in the year in
 which the right to receive the yield are definite.
 
 b) Income from erstwhile financing business against overdue hire
 purchase instalments, lease rentals, bills discounted and loans written
 off are accounted for to the extent collected upon final settlement of
 account with the parties.
 
 K.  EXCISE DUTY
 
 Excise duty if any is consistently accounted on clearance basis.
 
 L.  DEFINED RETIREMENT BENEFITS
 
 Gratuity, which is a defined benefit, has been accounted for an
 actuarial valuation by contribution to an approved gratuity fund
 established under Life Insurance Corporation of India (LIC) group
 gratuity scheme; difference in payment of gratuity to employees is
 being accounted for in the year of settlement of such liability.
 
 Contributions payable to Recognized Provident Funds, which is a defined
 contribution, are determined based on the statutory rates in force and
 remitted to the competent authority, and is charged to the profit and
 loss account.
 
 Contributions payable to Employees State Insurance Scheme, which is a
 defined contribution, are determined based on the statutory rates in
 force and remitted to the competent authority, and is charged to the
 profit and loss account.
 
 M.  BORROWING COSTS
 
 Interest on borrowings, if any attributed to acquisition of qualifying
 assets are capitalized and included in the cost of the assets, as
 appropriate.
 
 N.  RELATED PARTY TRANSACTIONS
 
 Irrespective of the materiality, all the transactions between related
 parties during the existence of related party relationship has been
 disclosed as required by the Accounting Standard 18 prescribed under
 the Companies (Accounting Standards) Rules, 2006. Items of the similar
 nature has been disclosed in aggregate by type of related party except
 when separate disclosure is necessary for an understanding of the
 effects of related party transactions on the financial statements of
 the reporting enterprise.
 
 O.  OPERATING LEASES
 
 Leases, where significant portion of risk and reward of ownership are
 retained by the Lessor, are classified as Operating Leases and lease
 rentals thereon charged to the Profit and Loss Account.
 
 P.  EARNINGS PER SHARE
 
 Basic Earnings per share is calculated by dividing the Net Profit after
 tax attributable to the shareholders by the weighted average number of
 Equity Shares outstanding during the year.
 
 Q.  ACCOUNTING FOR TAXES ON INCOME
 
 Income tax expense is accounted for in accordance with AS 22 -
 Accounting for taxes on income prescribed under the Companies
 (Accounting Standards) Rules, 2006 which includes current taxes and
 deferred taxes
 
 Current taxes reflect the impact of tax on income of the previous year
 as defined under the Income Tax Act, 1961 as per applicable rates.
 
 Deferred taxes reflect the impact of Current Year timing differences
 between taxable income and accounting income for the year and reversal
 of timing differences of earlier years. Deferred tax assets are
 recognized only to the extent that there is reasonable certainty that
 sufficient future taxable income will be available.
 
 R.  IMPAIRMENT OF ASSETS
 
 Impairment loss from fixed assets is assessed as at the close of each
 financial year and appropriate provision, if required, is considered in
 the accounts.
 
 S.  PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 
 Provisions involving substantial degree of estimation in measurement
 are recognized when there is a present obligation as a result of past
 event and it is probable that there will be an outflow of resources.
 Contingent Liabilities are not recognized but are disclosed in the
 notes. Contingent Assets are neither recognized nor disclosed in the
 financial statements.
 
 T.  CENVAT AND STATE VAT FOR INPUTS
 
 i) The value of eligible CENVAT Credit against Central Excise duty paid
 on purchase of capital goods and service tax on capital expenditure
 have been deducted from the cost of relevant plant and machinery
 capitalized.
 
 ii) The value of eligible CENVAT Credit against Central Excise duty
 paid has been adjusted against the relevant materials purchased and
 inventory of materials has been valued at rates net of CENVAT Credit;
 Service Tax paid against input services has been reduced from the
 relevant expenses for input credit taken.
 
 iii) CENVAT Credit availed has been adjusted against Central Excise
 duty incurred on finished goods dispatched and unutilised deferred
 CENVAT Credit are carried over as advance.
 
 iv) STATE VAT - Input Credit against Capital goods are adjusted against
 relevant asset and net amount capitalized; Input credit against
 remaining goods are accounted for by adjustments against cost of
 relevant goods; Unadjusted State VAT is carried over as advance.
Source : Dion Global Solutions Limited
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