Accounting Policies of KMF Ltd. Company

Mar 31, 2011

1 ACCOUNTING CONVENTION

The Financial statements have been prepared under the historical cost convention & on the principles of going concern and the system of accounting followed is mercantile system in accordance with the generally acceptance accounting principles and provisions of the Companies Act 1956, and the accounting standards issued by the Institute of Chartered Accountants of India, as adopted consistently Dy the company. The accounting Policies not specifically referred are consistent with generally accepted accounting principles followed by the company.

2 FIXED ASSETS

Fixed assets are stated at cost of acquisition or construction inclusive of freight, duties, taxes, other incidental expenses and net of MODVAT. Assets acquired on lease are not reflected in the accounts and the lease rent is charged to Profit & Loss ale, as accrued.

3 DEPRECIATION

The Depreciation on the Fixed Assets Other than Land have been provided on pro-rata basis using Written Down Value method at the rates specified in schedule XIV of the Companies Act 1956

4 VALATION OF STOCK

i. Inventories are valued on first -in-first out basis as under

a. Raw Material At cost or net realizable value, whichever is less

b. Work in progress At cost

c. Stores & Spares At cost

d. Finished Goods At cost or net realizable value whichever is lower

ii. Appropriate share of overheads is absorbed over the work in progress, manufactured/ Processed finished goods.

iii. the cost is computed on "FIFO" basis.

iv. Appropriate provisions are made for slow and non moving inventories to write down the carrying value.

5 FOREIGN CURRENCY TRANSACTION

Transaction in Foreign exchange are accounted for, at the rates prevailing on the date of transaction. The exchange differences arising out of their settlements are dealt with in Profit & loss account. All monetary items denominated in foreign currency, other than liabilities relating to fixed assets are translated at the year end rates & exchange differences arising on such transactions are also adjusted in the Profit & loss Account. Exchange differences arising arising on payment of liabilities for purchase of Fixed Assets from outside India and year end conversion of such which were until the previous year adjusted to the carrying cost of the respective fixed assets, are charged/ credited to the Profit & loss Account, consequent to the applicability of Companies (Accounting Standards) rules 2006.

6 CUSTOM, EXICSE DUTY & VALUE ADDED TAX

The custom duty payable on imported material lying at the end of the year in custom bonded warehouses and excise duty in respect of goods manufactured but not cleared for the factory premises at the end of the year are neither included in expenses nor considered in valuation of such material/ goods. Such duties are accounted for on actual payment on clearance of such material/goods.

7 RETIREMENT & OTHER BENIFITS

a. Defined Contribution Plans

Company 's contribution paid/payable during the year to Provident Fund and Labor welfare fund are recognized in the Profit & Loss Account.

b. Defined Benefit Plan

Company's liabilities towards gratuity, leave encashment are determined using the projected unit credit method which consider each period of service as giving rise to an additional unit of benefit entitlement and measure each unit separately to build up the final obligation. Past services are recognized on straight line basis over the average period until the amended benefit become bested. Actuarial gain and losses are recognized immediately in Profit & loss Account as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by reference to market yields at Balance sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

8 MISCELLANEOUS EXPANDITURE

Share Issue expenses and preliminary expenses included under the above heads is being amortized over the period of 5 years i.e. 1/5th expenses is charged every year to the Profit & Loss A/c.

9 Revenue Recognition

a. Revenue in respect of Sale of Products is recognized on dispatch of goods to the customers, which coincides with the transfer of Property to the buyer.

b. Service Income is recognized as and when the services are performed in accordance with the terms of the Contract.

c. Insurance claims are recognized for on their acceptance & receipts.

d. Purchase are recognized on the date of their dispatch by supplier at the price inclusive of demurrage, wharf age and are shown at their gross value net of returns.

10 Leases

Finance Leases

Lease of Fixed Assets where the Company assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance Leases are capitalized at the estimated present Value of the underlying lease payments. Each lease payment is allocated between liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long term payables. The interest element of the finance charge is charged to the Income statement over the lease period. The Fixed assets under the finance leasing contracts are depreciated as per the Company's depreciation policy over the useful life of the asset.

Operating lease

Leases of assets under which all the risk and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight- line basis over the period of the lease.

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Mar 31, 2010

1 ACCOUNTING CONVENTION

The Financial statements have been prepared under the historical cost convention & on the principles of going concern and the system of accounting followed is mercantile system in accordance with the generally acceptance accounting principles and provisions of the Companies Act 1956, and the accounting standards issued by the Institute of Chartered Accountants of India, as adopted consistently by the company. The accounting Policy bus not specifically referred are consistent with generally accepted accounting principles followed by the company.

2 FIXED ASSETS

Fixed assets are stated at cost of acquisition or construction inclusive of freight, duties, taxes, other incidental expenses and net of MODVAT. Assets acquired on lease are not reflected in the accounts and the lease rent is charged to Profit & Loss a/c, as accrued.

3 DEPRECIATION

The Depreciation on the Fixed Assets Other than Laid have been provided on pro-rata basis using Written Down Value method at the rates specified in schedule XIV of the Companies Act 1956

4 VALATION OF STOCK ,

i. Inventories are valued on first -in-first out basis, as under

a. Raw Material At cost or net realizable value, whichever is less

b. Work in progress At cost

c. Stores & Spares At cost

d. Finished Goods At cost or net realizable value whichever is lower

ii. Appropriate share of overheads is absorbed over the work in progress, manufactured/ Processed finished goods,

iii. the cost is computed on "FIFO" basis.

iii. Appropriate provisions are made for slow and nc n moving inventories to write down the carrying value.

5 FOREIGN CURRENCY TRANSACTION

Transaction in Foreign exchange are accounted for, at the rates prevailing on the date of transaction.

The exchange differences arising out of their settlements are dealt with in Profit & loss account. All monetary items denominated in foreign currency, other than liabilities relating to fixed assets are translated at the year end rates & exchange differences arising on such transactions are also adjusted in the Profit & loss Account. Exchange differences arising arising on payment of liabilities for purchase of Fixed Assets from outside India and year end conversion of such which were until the previous year adjusted to the carrying cost of the respective fixed assets, are charged/ credited to the Profit & loss Account, consequent to the applicability of Companies (Accounting Standards) rules 2006.

6 CUSTOM, EXICSE DUTY & VALUE ADDED TAX

The custom duty payable on imported material lying at the end of the year in custom bonded warehouses and excise duty in respect of goods manufactured but not cleared for the factory premises at the end of the year are neither included in expenses nor considered in valuation of such material/ goods. Such duties are accounted for on actual payment on clearance of such material/goods.

7 RETIREMENT & OTHER BENIFITS

a. Defined Contribution Plans

Company's contribution paid/payable during the year to Provident Fund and Labor welfare fund are recognized in the Profit & Loss Account.

b. Defined Benefit Plan

Company's liabilities towards gratuity , leave encashment are determined using the projected unit credit method which consider each period of service as giving rise to an additional unit of benefit entitlement and measure each unit separately to build up the final obligation. Past service are recognized on straight line basis over the average period until the amended benefit became invested. Actuarial gain and losses are recognized immediately in Profit & Loss Account as income or expense obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by reference to market yields at Balance sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

8 MISCELLANEOUS EXPANDITURE

Share issue expenses and preliminary expenses included under the above heads is being amortized over the period of 5 years i.e. 1/5th expenses is changed every year to the profit & Loss A/c.

9 Revenue Recognition

a. Revenue in respect of Sale of Products is recognized on dispatch of goods to the customers. which coincides with the transfer of Property of the buyer,

b. Service income is recognized as and when the services are performed in accordance with the terms of the Contract.

c. Insurance claims are recognized for on their acceptance & receipts.

d. Purchase are recognized on the date of their dispatch by supplier at the price inclusive of ,demurrage wharf and are shown at their gross value net of returns.

10 Leases

Finance Leases

Lease of Fixed Assets where the Company assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance Leases are capitalized at the estimated present value of the underlying lease payments. Each lease payment is allocated between liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges. are included in other long term payables. The interest element under the finance leasing contracts are depreciated as per the company's depreciation policy over the useful life of the asset. Operating lease Leases of assets under which all the risk and benefits of ownership are effectively retained by the lesser are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.