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Moneycontrol.com India | Accounting Policy > Breweries & Distilleries > Accounting Policy followed by Ravi Kumar Distilleries - BSE: 533294, NSE: RKDL
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Ravi Kumar Distilleries

BSE: 533294|NSE: RKDL|ISIN: INE722J01012|SECTOR: Breweries & Distilleries
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Accounting Policy Year : Mar '15
1.  General Information:
 
 The Company was incorporated during the year 1993 and is engaged in the
 business of manufacture and sale of Indian Made Foreign Liquor (IMFL).
 The Company has its manufacturing unit at Pondicherry.
 
 2.1 Basis of preparation of Financial Statements:
 
 The Financial Statements have been prepared in accordance with the
 generally accepted accounting principles (''GAAP'') applicable in India
 under the historical cost convention on accrual basis These financial
 statements have been prepared to comply in all material aspects with
 the accounting standards notified under Section 133 read with Rule 7 of
 the Companies (Accounts)Rules,2014, as amended from time to time and
 the other relevant provisions of the Companies Act,2013.
 
 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 Schedule III of the Companies Act,2013.
 
 2.2 Use of Estimates:
 
 The preparation of Financial Statements in conformity with GAAP
 requires that the management of the Company makes estimates and
 assumptions that affect the reported amounts of income and expenses of
 the period, the reported balances of assets and liabilities and the
 disclosures relating to contingent liabilities as of the date of the
 financial statements. Actual results could differ from these estimates.
 Difference between the actual results and estimates are recognized in
 the period in which the results are known / materialized. Management
 believes that the estimates used in preparation of financial statements
 are prudent and reasonable.
 
 2.3 Tangible Assets:
 
 Tangible Assets are stated at cost (or revalued amount as the case may
 be) less accumulated depreciation and accumulated impairment losses if
 any. Cost Comprises purchase price and any other attributable cost of
 bringing the asset to its working condition for its intended use.
 Subsequent expenditure related to an item of fixed asset are added to
 its book value only if they increase the future benefits from the
 existing asset beyond its previously assessed standard of performance.
 
 Gain or loss arising from de-recognition of assets are measured as the
 difference between the net disposal proceeds and the Carrying amount of
 the assets and are recognized in the statement of profit and loss when
 the asset is derecognized.
 
 Consequent to the enactment of the Companies Act, 2013 (the Act) and
 its applicability for accounting periods commencing after April 1,
 2014, the company has reworked depreciation with reference to the
 estimated economic lives of fixed assets prescribed by Schedule II to
 the Act or actual useful life of assets, whichever is lower. In case of
 assets whose life has completed as above, the carrying value, net of
 residual value as at April 1, 2014 has been adjusted to the reserves
 and in other cases the carrying value has been depreciated over the
 remaining of the revised life of the asset and recognized in the
 statement of Profit and Loss.
 
 2.4 Borrowing Costs:
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized as part of the cost
 of such assets. A qualifying asset is one that takes necessarily
 substantial period of time to get ready for its intended use. All other
 borrowing costs are charged tor revenue.
 
 2.5 Impairment of assets:
 
 As on Balance Sheet date, the Company reviews the carrying amount of
 Fixed Assets to determine whether there are any indications that those
 assets have suffered Impairment Loss Impairment loss, if any, is
 provided to the extent, the carrying amount of assets exceeds their
 recoverable amount. Recoverable amount is higher of an asset''s net
 selling price and its value in use.Value inuse is the present value of
 estimated future cash flows
 expectedtoarisefromcontinuinguseofanassetandfromits disposal at the end
 of its use full life.
 
 2.6 Investments:
 
 Investments that are readily realizable and intended to be held 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 or Market/Fair Value
 determined on a individual investment basis.
 
 Long Term investments are valued at cost. Provision for diminution in
 the value of long term investment is made only if such deckles other
 than temporary in nature.
 
 2.7 Grants and Subsidies:
 
 Grants and Subsidies are recognized when there is reasonable assurance
 that the Grant / Subsidy will be received and all attaching conditions
 will be complied with. When the grant or subsidy relates to a revenue
 item it is recognized as income over the period necessary to match them
 on a systematic basl to the costs, which it is intended to compensate.
 
 Where the Grant on subsidy relates to an asset its value is deducted in
 arriving at the carrying amount of the related asset.
 
 2.8 Revenue Recognition:
 
 The company is in the business of manufacture and sale of IMFL
 products. Sale of goods are recognized when the goods are dispatched
 /on passing title of the Goods to the customers. The sales are
 accounted by including the scheme / discounts / Excise Duty and Sales
 Tax. The Scheme discounts / Sales Tax are charged off separately to the
 Profit and Loss Account. Profit on sale of investments is recorded on
 transfer of title from the company and is determined as the difference
 between the sale price and the carrying value of the investment.
 Interest is recognized based on time-proportion method based on rates
 implicit in the transaction.
 
 2.9 Inventories:
 
 Inventories are valued at lower of cost and estimated net realizable
 value after providing for cost of obsolescence and other anticipated
 losses, wherever considered necessary. Cost includes taxes, duties and
 all incidental expenses directly attributable to the purchases.
 
 Method of assignment of cost is as under:
 
 Raw Material, Stores & Spares: Weighted average cost basis
 
 Work-in-progress : Direct expenses plus appropriate Factory overheads
 on the basis of completed production
 
 Finished Goods : Cost of goods, direct expenses plus appropriate
 Factory overheads and Excise Duty
 
 Traded Goods : Actual cost Basis
 
 2.10 Employee Benefits:
 
 The Provident fund scheme and Employee State Insurance Scheme are
 defined contribution plans. The company contributes a fixed sum to the
 Provident Fund / Employees State Insurance Scheme maintained by the
 Central Government The contribution paid/ payable under the schemes is
 recognized during the period in which the employee renders the related
 service.
 
 The liability for Gratuity to employees as at the Balance Sheet date is
 as per the obligation to gratuity fund administered by the trustees and
 managed by Life Insurance Corporation of India. The contribution
 thereof paid/payable for the relevant period is charged off to Profit
 and Loss Account.
 
 2.11 Foreign Exchange Transactions:
 
 Foreign currency transactions are recorded at the rate of exchange
 prevailing on the date of the respective transactions.
 
 Foreign Exchange monetary items in the Balance Sheet are translated at
 the year-end rates. Exchange differences on settlement / conversion are
 adjusted to Profit and Loss Account.
 
 2.12 Tax Expenses:
 
 Tax expenses for the year comprise of current tax and deferred tax.
 Current tax is measured after taking into consideration the deductions
 and exemptions admissible under the provision of Income Tax Act, 1961
 and in accordance with Accounting Standard 22on Accounting for Taxes
 on Income.
 
 Deferred Tax represents the tax effect of timing differences between
 taxable income and accounting income for the reporting period and is
 capable of reversal in one or more subsequent periods. Deferred tax are
 quantified using the tax rates and laws enacted or substantively
 enacted as on the Balance Sheet Date
 
 Deferred Tax Assets are recognized and carried forward 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. Deferred tax asset on unabsorbed depreciation and
 carry forward of losses are not recognized unless there is virtual
 certainty that sufficient future taxable income will be available
 against which such deferred tax assets can be realized.
 
 2.13 Contingent Liabilities and Provisions:
 
 Provisions are recognized only when there is a present obligation as a
 result of past events and when a reliable estimate of the Amount of
 obligation can be made.
 
 Contingent Liability is disclosed for
 
 a.  Possible obligation which will be confirmed only by future events
 not wholly within the control of the company or
 
 b.  Present obligations arising from the past events where it is not
 probable that an outflow of resources will be required to settle the
 oblations or are liable estimate of the amount of the obligation cannot
 be made.
 
 c.  Contingent Assets are not recognized in the financial statements
 since this may result in the recognition of income that may never be
 realized.
 
 2.14 Earnings Per Share:
 
 In determining the Earnings Per share, the company considers the net
 profit after tax including any post tax effect of any extraordinary /
 exceptional item. The number of shares used in computing basic earnings
 per share is the Weighted average number of shares outstanding during
 the period. The number of shares used in computing Diluted earnings per
 share comprises the Weighted average number of shares considered for
 computing Basic Earnings per share and also the weighted number of
 equities rest hat have been issued on conversion of all potentially
 dilutive shares.
 
 In the event of issue of bonus shares, or share split the number of
 equity shares outstanding is increased without an increase in the
 resources. The number of Equity shares outstanding before the event is
 adjusted for the proportionate change in the number of equity shares
 outstanding as if thee venthadocmrre the beginning of the earliest
 period reported.
 
 2.15 Leases:
 
 Finance Lease
 
 Leases which effectively transfer to the company all the risks and
 benefits incidental to ownership of the leased item, are classified as
 Finance Lease. Lease rentals are capitalized at the lower of the fair
 value and present value of the minimum lease payments at the inception
 of the lease term and disclosed as leased assets. Lease payments are
 apportioned between the finance charges and reduction of the lease
 liability based on the implicit rate of return.
 
 Operating Lease
 
 Lease where the less or effectively retains substantially all risks and
 benefits of the asset are classified as Operating lease.  Operating
 lease payments are recognized as an expense in the Profit & Loss
 account on a Straight Line Basis over the Lease term.
 
 2.16 Segment Reporting:
 
 The generally accepted accounting principles used in the preparation of
 the financial statements are applied to record revenue And expenditure
 in individual segments.
 
 Segment revenue and segment results include transfers between business
 segments. Such transfers are accounted for at the agreed transaction
 value and such transfers are eliminated in the consolidation of the
 segments.
 
 Expenses that are directly identifiable to segments are considered for
 determining the segment result. Expenses, which relate to the company
 as a whole and are not allocable to segments are included under
 unallocated corporate expenses.
 
 Segment assets and liabilities include those directly identifiable with
 the respective segments. Unallocated corporate assets and Liabilities
 represent the assets and liabilities that relate to the company as a
 whole and not allocable to any segment.
Source : Dion Global Solutions Limited
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