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SENSEX NIFTY India | Accounting Policy > Trading > Accounting Policy followed by Singer India - BSE: 505729, NSE: SINGER

Singer India

BSE: 505729|NSE: SINGER|ISIN: INE638A01035|SECTOR: Trading
Jun 22, 16:00
0.6 (1.2%)
VOLUME 67,763
Singer India is not traded in the last 30 days
Mar 16
Accounting Policy Year : Mar '17

1. Corporate Information

Singer India Limited (''the Company’) is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of trading / manufacturing of sewing products and also conducts trading in domestic appliances.

2. Significant Accounting Policies

(a) Basis of Preparation

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all respects with the accounting standards {Companies (Accounting Standard) Rules 2006, as amended by Ministry of Corporate Affairs vide notification no. G.S.R 364 (E) dated 30.03.2016 made applicable to accounting periods commencing on or after the date of publication of the notification} notified under section 133 of the Companies Act 2013 (''the Act’), read together with paragraph 7 of the Companies (Accounts) Rules 2014 and provisions of the Act. The financial statements have been prepared on an accrual basis and under the historical cost convention except for certain block of Fixed Assets which are carried at revalued amounts and ongoing concern basis.

(b) Use of Estimates

The preparation of the Financial Statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reporting balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reporting amounts of income and expenditure during the year. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Actual results could differ from such estimates. Any revision to accounting estimates is recognized in the period the same is determined.

(c) Fixed Assets (Tangible & Intangible - Property, Plant & Equipment)

Tangible Fixed Assets are stated at cost (or revalued amount of certain block of assets as the case may be), less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price / cost of acquisition including taxes, duties, freight and other incidental expenses related to acquisition, construction and installation to bring the asset to its working condition for its intended use. In case of revaluation of fixed assets, the original cost as written up by the valuer, is considered in the accounts and the differential amount is transferred to revaluation reserve. Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalized. Intangible fixed assets are stated at cost less accumulated amortization and net of impairments, if any. An intangible asset is recognized if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Company and its cost can be measured reliably. Intangible assets having finite useful lives are amortized on straight line basis over their estimated useful lives.

(d) Impairment of Assets

Regular review is done to determine whether there is any indication for impairment in carrying amount of the Company''s fixed assets. If any indication exists, an assets recoverable amount is estimated based on internal / external factors. An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

(e) Investments

Long term investments are stated at cost. Provision for diminution in value, other than temporary, is made in the accounts. Earnings on investments are accounted for when the right to receive payment is established.

(f) Inventories

Raw materials are valued at Lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a First in First out basis.

Work-in-progress and finished goods are valued at Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a First in First Out basis.

Traded goods are valued at Lower of cost and net realizable value. Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on a First in First out basis.

Goods in transit are valued at cost Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion to make the sale.

(g) Warranties & Returns

Product warranty and return costs are determined using reasonable estimates based on costs incurred in the past and are provided for in the year sale is made. These includes free replacements, breakages, returns etc. in respect of sewing machines and domestic appliances.

(h) Excise Duty

Excise duty is accounted for at the point of manufacture of goods and accordingly, is considered for valuation of finished goods stock lying in the factory and branches and as on the Balance Sheet date.

(i) Revenue recognition

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. Revenue from sale of goods including traded and manufactured products is recognized upon passage of title to the customers, in accordance with the Sale of Goods Act, 1930. The Company collects Sales taxes / Value added Taxes (VAT) on behalf of the Government and, therefore, these are not economic benefits flowing to the Company. Hence they are excluded from Revenue. Interest income is recognized on time proportionate basis taking into account the amount outstanding and the rate applicable and is stated at gross. Export incentives are accounted on accrual basis.

(j) Depreciation / Amortization

i) Tangible Assets

a) Depreciation on the tangible fixed assets is provided on straight line method based on the useful life of the assets as estimated by the management. The estimate of the useful life of the assets has been assessed based on internal evaluation/ technical advice which considered the nature of the asset, expected physical wear and tear, the operating conditions of the asset etc., The useful lives of following assets; furniture & fittings, plant and machinery and office equipment, are depreciated over estimated useful lives of 5 years, 4 - 15 years & 2-5 years respectively which are lower than those indicated in Schedule II. The Company has used the following lives to provide depreciation on its fixed assets (except building as mentioned in para (b) below):

b) The buildings are depreciated equally over the balance useful life ascertained by independent technical expert, which ranges between 41 years and 52 years as on 1st July, 2014 after considering the structural condition etc. The management believes that the balance useful lives so assessed best represent the periods over which the buildings are expected to be in use.

c) Leasehold land is amortized over the lease period.

d) In case of leasehold land and building which are revalued, the additional depreciation on the increased value of the assets due to revaluation is debited to Statement of Profit & Loss and equivalent amount is transferred from Revaluation Reserve to General Reserve.

e) Depreciation on fixed assets added/disposed off during the year is provided on pro-rata basis with reference to the month of addition/ disposal.

f) In case of impairment, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

ii) Intangible Assets

Computer software is amortized over a period of 3-5 years on the straight line method.

(k) Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit & Loss on a straight-line basis over the lease term.

(l) Foreign currency transactions

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Foreign currency monetary items are reported using the closing rate. Non-monetary items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

Exchange differences arising on the settlement of monetary items or on reporting company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

(m) Employees Benefits

Short Term Employee Benefit is recognized as an expense in the Statement of Profit and Loss of the year in which related service is rendered. Post employment and other Long Term Employee Benefits are provided in the Accounts in the following manner:

i) Gratuity: Maintained as a defined benefit retirement plan and contribution is made to the Life Insurance Corporation of India, as per the Company''s Scheme. Provision / write back, if any is made on the basis of the present value of the liability as at the Balance Sheet date determined by actuarial valuation following projected Unit Credit Method and is treated as liability.

ii) Leave Encashment: As per independent actuarial valuation as at the Balance Sheet date following projected Unit Credit Method in accordance with the requirements of Accounting Standard AS-15 on ''Employee Benefit'' is included in provisions.

iii) Provident Fund: Liability on account of Provident Fund (Pension) for employees is a defined contribution wherever contributions are made to a fund administered by Government Provident Fund Authority.

For employees, Provident Fund administered by a Recognized Trust, is a Defined Benefit Plan (DBP) wherein the employee and the Company make monthly contributions. Pending the issuance of Guidance Note from the Actuarial Society of India, actuarial valuation is not carried out and the Company provides for required liability at year end, in respect of the shortfall, if any, upon confirmation from the Trustees of such fund.

(n) Research and development

Research and development expenses of revenue nature are charged to the Statement of Profit & Loss in the year in which they are incurred.

(o) Government grants / Incentives

Grants that the Company is entitled to unconditionally on fulfillment of certain conditions, such grants are recognized as Income when there is reasonable assurance that the grant will be received.

(p) Taxes on Income

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act,1961. Deferred income taxes reflects 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 is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized 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. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes down the carrying amount of the deferred tax assets to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonable certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Minimum Alternate Tax (MAT) is accounted for in accordance with tax laws which give rise to future economic benefits in the form of tax credits against which future income tax liability is adjusted and is recognized as an asset in the Balance Sheet.

(q) Provisions, Contingent Liabilities & Contingent Assets

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of Accounting Standard-29, are not discounted to its present value and are determined based on the management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. The company does not recognize a contingent liability but discloses its existence in the financial statements.

Contingent assets are not recognized in the financial statements.

(r) Dividend

Dividend to holders of equity instruments is recognized as liability in the period on which obligation to pay is established. Under the previous GAAP, dividend payable was recognized as a liability in the period to which it relates. Interim dividend is recognized as a liability on the date of declaration by the Company''s Board of Directors.

(s) Earnings per share

Earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

(t) Events after the Balance Sheet date

Events occurring after the date of the Balance Sheet which affect the financial position to a material extent are taken into cognizance.

(u) Cash and cash equivalents

Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and fixed deposits with maturity of three months or less.

Source : Dion Global Solutions Limited
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