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Moneycontrol.com India | Accounting Policy > Chemicals > Accounting Policy followed by Omkar Speciality Chemicals - BSE: 533317, NSE: OMKARCHEM
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Omkar Speciality Chemicals

BSE: 533317|NSE: OMKARCHEM|ISIN: INE474L01016|SECTOR: Chemicals
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Accounting Policy Year : Mar '16

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements are prepared under the historical cost convention in accordance with the Generally Accepted Accounting Principles in India, the provisions of the Companies Act, 2013 and the applicable Accounting Standards. The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

2. USE OF ESTIMATES:

The preparation of financial statements requires estimates and assumptions that affect the reported amount of Assets and Liabilities on the date of the financial statements and the reported amount of Revenues and Expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the same are known/ materialized.

3. FIXED ASSETS:

1. Fixed Assets are stated at cost of acquisition or construction ( net of CENVAT/VAT credit availed) less accumulated depreciation/amortization and impairment loss, if any.

2. Cost comprises of purchase price and any attribute able cost of bringing the asset to its working condition for its intended use.

3. Exchanges differences arising on liabilities relating to acquisition of depreciable fixed assets are adjusted to the cost of respective assets and depreciated over the remaining useful life of such assets

4. FOREIGN CURRENCY TRANSACTIONS/TRANSLATION:

Foreign currency transactions denominated in foreign currencies are recorded at the rate of exchange prevailing on the date of transaction. Exchange differences, if any, arising out of transactions settled during the Year are recognized in the profit & loss account.

Monetary items denominated in foreign currency as at the balance sheet date are translated at the closing exchange rate on that date. The Exchange differences, if any, are recognized in the profit & loss account. Non monetary foreign currency items are carried at cost.

The premium in respect of forward exchange contract is amortized over the life of the contract. The net gain or loss on account of any exchange difference, cancellation or renewal of such forward exchange contracts is recognized in the Profit & Loss Account in the reporting period.

5. CASH FLOW STATEMENTS

Cash flows are reported using indirect method, whereby profit/(loss) is adjusted for the effects of the transaction are adjusted with non cash transaction and any difference or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the company are segregated based on available information.

6. INVENTORIES:

1. Raw Material

The company is valuing Raw material, packing material and stores stock by taking costs of purchase consist of the purchase price including duties and taxes (other than those subsequently recoverable by the enterprise from the taxing authorities), freight inwards and other expenditure directly attributable to the acquisition. Trade discounts, rebates, duty drawbacks, finance cost and other similar items are deducted in determining value of the stock of Raw materials. In determining the cost, the First In First Out (FIFO) method is used.

2. Finished Goods and Work in process

Finished Goods and Work in process are valued at cost or net realizable value, whichever is lower. The cost is determined by reducing from the sales value of inventory, the appropriate percentage of gross margin depending on the stage of completion.

7. REVENUE RECOGNITION:

1. Revenue from sale of goods is recognized when the significant risks and rewards in respect of ownership of products are transferred by the company.

2. Revenue from product sale is stated net of returns, sales tax/VAT and applicable trade discounts and allowances.

3. Interest income is recognized on time accrual basis.

8. INVESTMENTS:

1. Investments that are readily realizable and intended to be held for not more than one year from the date of investment are classified as current investments. All other investments are classified as long-term investments.

2. Current investments are carried at the lower of cost and realizable value, determined on an individual investment basis.

3. Long-term investments are carried at cost less any other-than-temporary diminution in value, determined separately in respect of each category of investment.

9. EXPORT BENEFITS:

Export benefits available under prevalent schemes are accrued in the year in which the goods are exported and are accounted to the extent considered receivable.

10. EXCISE DUTY/CUSTOMS DUTY:

Excise duty / Customs duty has been accounted on the basis of payments made in respect of goods cleared. Modal credit on raw materials and capital goods has been accounted for, by reducing the purchase cost of raw materials and capital goods respectively.

11. DEPRECIATION/AMORTIZATION:

1. Intangible Assets:

The intangible assets (Other than computer software) are amortized over a period of 10 years.

2. Tangible Assets:

Depreciation on all fixed assets is provided as per the provisions of Companies Act, 2013 on Written Down Value Method. Depreciation is calculated on pro-rata basis from month of installation till the month of the assets are sold/ disposed off.

Cost of leasehold land is amortized over the period of lease.

12. EMPLOYEE BENEFITS:

1. Short Term Employee Benefits:

All short- term employee benefits such as salaries, wages, bonus, special awards, medical benefits which fall due within twelve months of the period in which the employee renders the related services which entitles him to avail such benefits and non-accumulating compensated absences are recognized on an undiscounted basis charged to the profit and loss account.

2. Provision for Gratuity is made and provided on actuarial valuation basis.

Other retirement benefits are accounted as per company’s policy.

13. TAXES ON INCOME

Income Taxes are accounted for in accordance with Accounting Standard 22 (AS 22) “Accounting for Taxes on Income”. Tax expense comprises of Current Tax and Deferred Tax:

1. Current Tax is determined as the amount of tax payable in respect of taxable income for the year.

2. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to Timing Differences, between the taxable income and accounting income, that originate in one period and are capable of reversal in one or more periods. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future, however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realized.

14. 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 events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Notes to Accounts. Contingent Assets are neither recognized nor disclosed in the financial statements.

15. BORROWING COST:

Borrowing cost attributable to acquisitions and construction of capital goods are capitalized as a part of cost of such assets up to the date when such assets are ready for its intended use and all other borrowing costs are charged to profit & loss Account.

16. IMPAIRMENT OF ASSETS:

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

17. RESEARCH AND DEVELOPMENT COSTS:

Revenue expenditure on research and development is expensed out under the respective heads of account in the year in which it is incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalized, if the cost can be reliably measured, the product or process is technically and commercially feasible and the Company has sufficient resources to complete the development and to use and sell the asset. The expenditure capitalized includes the cost of materials, direct labor and an appropriate proportion of overheads that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognized in the Profit and Loss account as an expense as incurred. Capitalized development expenditure is stated at cost less accumulated amortization and impairment losses. Fixed assets used for research and development are depreciated in accordance with the Company’s policy.

18. LOANS AND ADVANCES:

Loans and advances are stated net of provision for bad and doubtful items if any and recoveries are written back to the profit and loss account when received.

19. SECURITY PREMIUM ACCOUNT:

Any expenses incurred for rising of funds from securities are adjusted against security premium account.

20. CHANGES IN ACCOUNTING POLICIES:

There are no changes in the accounting policies during the reported period.

1) During FY 2009-10, 1,126,600 Equity Shares of Rs 100/- each have been allotted as Bonus Shares by capitalization of Profits & Security Premium A/c.

2) Nominal value of Rs 100/- per Equity Share was sub divided into Rs, 10/- per Equity Share, during the FY 2010-11.

3) Further, during the FY 2010-11, 8,100,004 Equity Shares of Rs, 10/-each were issued at premium of Rs, 88/- each by Public Offer.

*4) Mr. Pravin S. Herlekar holds 10,548,874 Equity Shares as on March 31, 2016, out of which 290,000 shares are encumbered. (As on March 31, 2015, 110,603 shares are not reflected in his name & 722,300 shares are encumbered.)

5) The Company has issued one class of equity shares having a par value of Rs,10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the Equity Shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

1) Term loans: a) From Banks were secured by way of hypothecation of stock, spare parts and book debts and first charge on land, building and plant and machinery present and future situated at plot No. F-24,W -92A, W-94, W-95, F-9, F -10/1, B-34, M.I.D.C, Badlapur, Dist : Thane and plot No. D 27/5, Lote Parshuram Industrial Area, Taluka - Khed, Ratnagiri in Maharashtra. b)Personal guarantee of the Promoter Directors of the company.

2) Working Capital Loans: a) From Banks were secured by way of hypothecation of stock, spare parts and book debts and first charge on land building and plant and machinery present and future situated at plot No. F-24, W -92A,W-94,W-95, B-34, F-9, F -10/1, M.I.D.C, Badlapur, Dist : Thane & plot No. D 27/5, Lote Parshuram Industrial Area, Taluka - Khed , Ratnagiri in Maharashtra. b) Personal guarantee of the Promoter Directors of the company.

3) Secured Borrowings from banks, repayable on demand.

4) Other Loans are repayable on demand.

5) *Current maturities of long term borrowings are considered in Note No. 7 - Other Current Liabilities

1) The Company has not received the required information from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures as required under Schedule VI of the Companies Act, 2013 relating to amounts unpaid as at the yearend together with interest paid/ payable, etc., have not been made.

2) The Company has not received the required information from suppliers regarding their status under the Small Scale Industries Act and hence disclosures as required under Schedule VI of the Companies Act, 2013 relating to amounts unpaid as at the yearend together with interest paid/ payable, etc., have not been made.

During the financial year 2015, the Company has issued & allotted 950,000 Equity Shares of the Company pursuant to conversion of warrants issued on preferential basis, @ Rs, 150/- per warrant,

Source : Dion Global Solutions Limited
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