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Moneycontrol.com India | Accounting Policy > Steel - Sponge Iron > Accounting Policy followed by Bihar Sponge Iron - BSE: 500058, NSE: BIHARSPONG
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Bihar Sponge Iron

BSE: 500058|NSE: BIHARSPONG|ISIN: INE819C01011|SECTOR: Steel - Sponge Iron
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Dec 12, 16:00
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Bihar Sponge Iron is not traded in the last 30 days
Mar 14
Accounting Policy Year : Mar '15
1.  Basis of preparation of financial information
 
 The financial statements have been prepared in accordance with the
 Generally Accepted Accounting Principles in India (''Indian GAAP'') to
 company with the accounting standard specified under section 133 of the
 Companies Act, 2013 read with rule 7 of The Companies (Accounts) Rules
 2014 and the relevant provision of the Companies Act, 2013. The
 financial statements have been prepared under the historical cost
 convention on accrual basis (except for revaluation of certain fixed
 assets).
 
 2.  Use of Estimates
 
 The preparation of financial statements require the management to make
 some estimates and assumptions which affect the reported amount of
 assets and liabilities and the disclosures relating the contingent
 liabilities as at the date of the financial statements and the reported
 amount of income and expense during the year. Examples of such
 estimates include provisions for doubtful receivables, employee
 benefit, provision for tax & duties (including interest on arrear
 statutory dues/liabilities), the useful lives of depreciable fixed
 assets and provisions for impairment. Future results could differ due
 to change in these estimates and the difference between the actual
 result and the estimates are recognized in the period in which the
 results are known/materialised.
 
 3.  Inventories
 
 a) Stocks of raw materials and stores and spares and consumables are
 valued at lower of weighted average cost or net realisable value. The
 cost being exclusive of cenvatable excise duty and set offs of VAT, if
 any.
 
 b) The material in transit is valued at invoice cost.
 
 c) Closing stock of finished goods is valued at lower of cost or
 estimated net realisable value. For this purpose, cost includes
 depreciation and direct expenses to the point of stocking and excise
 duty but excludes interest, administrative and selling expenses.
 
 d) Work-in-progress is carried at the lower of cost or net realisable
 value; for this purpose cost does not include excise duty.
 
 4.  Fixed Assets:
 
 a) Fixed Assets are stated at cost or revalued cost, less accumulated
 depreciation/amortization. Costs include taxes duties (net of CENVAT
 and set off),cost of stores materials issued and expenditure incurred
 during construction and installation where applicable. Indirect
 expenses are not capitalised alongwith the fixed assets.
 
 b) An impairment loss is recognized based on the review conducted by
 the management at each balance date wherever the carrying value of
 existing assets exceed its net selling price or value in use, whichever
 is higher.
 
 5.  Expenditure during Construction:
 
 In respect of new projects, all expenses including interest incurred up
 to the date of commencement of commercial production are capitalized.
 
 In respect of substantial expansion of business, at existing locations,
 only direct costs are capitalized together with interest on the funds
 relatable to them up to the date of commercial production.
 
 6.  Depreciation / Amortization
 
 a) Depreciation on Tangible fixed assets other than land is charged on
 straight line method so as to write off the cost/carrying amount of
 assets (including revalued amount) as on 1-04-2014 over the useful life
 of assets as per Schedule II of the Companies Act, 2013. For assets
 acquired or sold during the year, the depreciation is calculated on
 pro-rata basis from the date of addition or upto the date of sale or
 discarded. Further where the remaining useful life of the asset is nil
 as on 1.4.2014, after retaining the residual value, depreciation has
 been recognized in the opening balance of retained earnings.
 
 b) Lease hold land is depreciated over the lease period.
 
 c) Intangible assets are being amortised over their useful life /
 licenses period.
 
 7.  Foreign Currency Translation:
 
 a) Transactions in Foreign Currencies are recorded at the exchange rate
 prevailing on the date of transactions.
 
 b) Foreign Currency Loans and other Liabilities are stated at the
 exchange rate prevailing as on the date of the balance sheet.
 
 c) Exchange variation arising as a result of the translation of foreign
 currency loans are Capitalized / de-capitalized to relating plant &
 machinery / assets.
 
 d) Exchange variations arising as a result of translation of interest
 on foreign currency loans accrued but not due are treated as income or
 expense.
 
 8.  Revenue Recognition:
 
 a) Sales are accounted for based on despatch of finished goods to the
 customers from various stocking points, and includes excise duty but
 exclusive of VAT / CST and is net of trade discounts.
 
 b) Interest income is recognized on a time proportion basis taking into
 account the amount outstanding and the applicable interest rate.
 Interest on tax refund is accounted for on receipt basis.
 
 c) Other miscellaneous revenues are recognized when the amount and the
 collectability are certain. Accordingly insurance claims are accounted
 for on settlement.
 
 9.  Raw Material consumption is accounted for after ascertaining the
 year end closing stock of the raw materials by an independent Surveyor
 from the total of the opening stocks and purchases.
 
 10.  Salaries and wages on repairs and maintenance of plant &
 machinery, where carried out internally, are charged to salaries and
 wages account.
 
 11.  Extraordinary Items:
 
 Extraordinary items of income & expenditure as covered by AS-5, are
 disclosed separately.
 
 12.  Borrowing cost
 
 Borrowing cost attributable to the acquisition or construction of a
 qualifying assets are capitalized as part of cost of that asset. Other
 borrowing costs are recognized as expense in the period to which they
 relate.
 
 13.  Employee Benefits
 
 Employee benefits have been recognized in accordance with Accounting
 Standard 15 (Revised)issued by the ICAI accordingly:-
 
 (a) Short Term Employee Benefits
 
 Short Term employee benefits are recognized in the period during which
 the services have been rendered.
 
 (b) Long Term Employee Benefits
 
 (i) Defined Contribution Plan Provident Fund
 
 All employees of the Company are entitled to receive benefits under the
 Provident Fund, which is a defined contribution plan. Both Employee and
 employer make monthly contribution to the plan at a predetermined rate
 of employee''s basic salary. Contribution to Provident Fund are
 administered and managed by a separate fund. Contributions to Provident
 Fund are expensed in the Profit and Loss account.
 
 (ii) Defined Benefits plan
 
 (a) Leave encashment
 
 The liability on account of un-availed earned leave at the year end is
 fully provided for on actuarial valuation basis.
 
 (b) Gratuity
 
 The Company provides for gratuity, a defined benefit plan (the
 ''Gratuity Plan'') covering all eligible employees. In accordance with
 the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump
 sum payment to vested employees at retirement, deaths incapacitation or
 termination of employment. Liabilities with regards to the Gratuity
 Plan are determined by actuarial valuation as of balance sheet date and
 are expensed in the Profit and Loss account.
 
 (iii) The actuarial valuation takes note of actuarial gains and losses.
 
 14.  Provisions Contingent Liabilities
 
 Liabilities, though contingent, are provided for if there are
 reasonable prospects of such liabilities maturing. Other contingent
 liabilities, barring frivolous claims, not acknowledged as debt, are
 disclosed by way of a note. These are reviewed at each balance sheet
 date and adjusted to reflect the current best estimates.
 
 15.  Earning Per Share
 
 The earnings considered in accounting the Company''s Earning Per Share
 (EPS) comprise the net profit after tax and includes the post tax
 effect of any extraordinary items. The number of shares used in
 computing basic & diluted EPS is the weighted average number of shares
 outstanding during the periods and adjusted for all events.
 
 The diluted EPS is calculated on the same basis as basic EPS, after
 adjusting for the effects of potential dilutive shares.
 
 16.  Taxation
 
 a) Provision for current tax is made on the basis of applicable Income
 Tax Act, 1961.
 
 b) Deferred tax assets and liabilities are accounted for in accordance
 with AS-22 issued by the Institute of Chartered Accountants of India.
 
 17.  Leases
 
 Leases in which the Company does not transfer substantially all the
 risks and benefits of ownership of the asset are classified as
 Operating Leases. Assets subject to operating leases are included in
 fixed assets. Lease income on an operating lease is recognized in the
 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.
 
 18.  Cash Flow Statement
 
 Cash flow are reported using the indirect method, whereby profit before
 extraordinary items and tax is adjusted for the effects of transactions
 of non-cash nature and any deferrals or accruals of past or future cash
 receipts or payments and item of income or expenses associated with
 investing or financing cash flows.
 
 The cash flows from operating, investing and financing activities of
 the company are segregated based on the available information.
Source : Dion Global Solutions Limited
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