A) Basis of Preparation
The financial statements of Suraj Limited (the Company) have been
prepared under the historical cost convention on accrual basis of
accounting in accordance with the Indian Generally Accepted Accounting
Principles (GAAP) and mandatory accounting standards as specified in
the Companies (Accounting Standards) Rules, 2006, to the extent
applicable and relevant provisions of the Companies Act, 1956.
All 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 the Revised Schedule VI to the Companies Act, 1956.
Based on the nature of product and the time between the acquisition of
assets for processing and their realization in cash and cash
equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current -non current classification of assets
B) Fixed Assets and Depreciation
(i) Fixed Assets
Fixed assets are stated at cost of acquisition (net of CENVAT, wherever
applicable), less accumulated depreciation. Cost is inclusive of
freight, duties, levies and any directly attributable cost of bringing
the assets to their working condition for intended use. Direct costs
are capitalized till the assets are ready to be put to use. Interest on
borrowings, wherever applicable, attributable to new projects is
capitalized and included in the cost of fixed assets as appropriate.
Depreciation on fixed assets is charged on the Straight Line Method at
the rates prescribed in Schedule
XIV to the Companies Act, 1956. Depreciation on Plant & Machinery of
the Company is charged for Triple Shift.
Depreciation on sale /deduction from Fixed Assets is provided for up to
the month of sale, deduction, discarded as the case may be.
C) Borrowing costs
Borrowing cost attributable to acquisition, construction or production
of qualifying assets are capitalised as part of the cost of that asset,
till the asset is ready for use. Other borrowing costs are recognized
as an expense in the period in which these are incurred.
a) Raw Materials: Valued at cost or Market Value which ever is Lower.
b) Work-in-Progress is valued at cost plus direct cost, manufacturing
overheads and other related cost or market value whichever is lower.
c) Finished goods are valued at cost or net realizable value whichever
is lower. The cost includes cost of production and other appropriate
d) Goods in Transits: At Cost.
e) Stores and Spares are valued at cost or market value whichever is
f) Scrap is valued at estimated realisable value.
E) Revenue Recognition
(a) 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. The company collects sales tax and value added tax
(VAT) on behalf of Government and therefore these are not economic
benefit flowing to the company. Hence they are excluded from revenue.
Sales of goods is recognized when the significant risks and rewards of
ownership of goods have passed to buyer.
(c) Export Benefits :
Incomes in respect of Duty Drawback and Duty Entitlement Pass Book
Scheme (DEPB) in respect of exports made during the year are accounted
on accrual basis. Profit or losses on transfer of DEPB licenses are
accounted in year of the sales. Duty free imports of material under
Advance License matched with the export made against the said licenses.
F) CENVAT Credit
The CENVAT credit available on purchase of raw materials, other
eligible inputs and capital goods is adjusted against excise duty
payable on clearance of goods produced. The unadjusted CENVAT credit is
shown under the head Loans and Advances
G) Employee Benefits
(a) Provision for gratuity and leave encashment is made on the basis of
actuarial valuation at the end of the year in conformity with the
Accounting Standard - 15. Actuarial gains or losses are recognized in
the profit and loss account.
(b) Contribution to Provident Fund and Superannuation is accounted for
on accrual basis.
H) Foreign Exchange Transactions
(a) Foreign currency transactions are recorded at the exchange rates
prevailing on the date of the respective transactions. Monetary items
denominated in foreign currencies at the year-end and not covered under
forward exchange contracts are translated at year-end rate.
(b) Exchange differences arising on foreign currency transactions
settled during the year are recognized in the profit and loss A/c
except in respect of fixed assets where exchange variance is adjusted
to the cost of the respective fixed assets.
I) Amortization of Miscellaneous Expenditure
Preliminary expenses & Amalgamation expenses have been amortized over a
period of five years in equal installments.
J) Income Tax Expenses
- Income tax expenses comprise current tax and deferred tax charge or
- Current Tax
The current charge for income tax is calculated in accordance with the
relevant tax regulations applicable to the company.
- Deferred tax
Deferred Tax charge or credit reflects the tax effects of timing
differences between accounting Income and taxable income for the
period. The deferred tax charge or credit and the corresponding
deferred tax liabilities or assets are recognized using the tax rates
that have been enacted or substantially enacted by the Balance Sheet
date as per the Accounting Standard - 22.
K) Impairment of assets
An assets is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which assets is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been change in the estimate of recoverable
L) Prior Period Adjustment
Expenses and income pertaining to earlier/previous years are accounted
as prior period items.
M) Earning Per Share
In determining earning per share, the company considers the net profit
after tax and includes the post- tax effect of any extra ordinary
items. The number of shares used in computing basic earning per shares
is the weighted average number of shares outstanding during the period.
N) Provisions, Contingent Liabilities and Contingent Assts
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of that obligation.
Contingent Liabilities which are considered significant and material by
the company are disclosed in the Notes to Accounts. Contingent Assets
are neither recognized nor disclosed.