Accounting Policies of MP Telelinks Ltd. Company

Mar 31, 2009

1. Accounting Convention

The financial statements are prepared under the historical cost convention on an accrual basis and on going concern basis in accordance with the mandatory Accounting Standards and the relevant provisions of the Indian Companies Act, 1956. Accounting policies not specifically referred to are consistent with generally accepted accounting practice.

2. Revenue Recognition

Gross Sales represent Invoice value of Sales net of trade Discount, if any, but includes Excise Duty and Sales Tax.

3. Fixed Assets

Fixed Assets are stated at cost (net of modvat) less accumulated depreciation.

4. Depreciation

Depreciation has been provided on fixed assets on Straight line Method at the rates specified in Schedule XIV of the Companies Act, 1956 excluding that on Leasehold Land.

5. Inventories

Raw Materials and Stock in Process are valued at Cost. Finished Goods are valued at lower of cost or net realisable value. Provision for obsolescence in inventories is made wherever required. Scrap materials are valued at net realisable value.

6. Deferred Commercial Tax Liability

The Company have not paid the Deferred Commercial Tax that had fallen due on time due to continuous losses. The Company in respect of this, propose to approach the State Govt for an arrangement of revival package in terms of extension of time to meet out the deferred commercial tax dues as well as to seek exemption from payment of commercial tax in the best possible way, so as to revive the Companys business activities and emerge from the deep rooted financial difficulties/accumulated losses.

7. The Accounting Standard on Accounting for Retirement benefits in the financial statement of Employees" (AS- 15) issued by the Institute of Chartered Accountants of India, although mandatory, the Company has not made provision for leave encashment/retirement benefits. However, the liability accrued on this behalf is insignificant. Contributions to Provident Fund are made to the appropriate authorities. The Company has created an Employees Group Gratuity Fund, which has taken a Group Gratuity Cum Life Insurance Policy from Life Insurance Corporation of India. Gratuity is provided on the basis of the above policy.

8. Foreign Currency Transactions

Transactions denominated in foreign currency are converted into Indian Rupees, wherever applicable, at the exchange rate prevailing on the date of payment.

9. Investments

Investments are classified as long term.as per the AS-13 on Accounting for Investments issued by the Institute of Chartered Accountants of India, New Delhi and hence, valued at" cost. The diminution in the value of investments, if any, and of temporary in nature does not call for provision there against.

10. Interest on Borrowings

Borrowing cost is charged to Profit & Loss Account for the year in which it is incurred except for Capital Assets which is capitalized till the date of commercial use of Asset.

11. Interest on Deferred Commercial Tax Dues :

With the background of default in regular repayments against deferred commercial tax dues, the Company had approached the Commercial Tax Department for waiver of interest on overdues, however, the said request of the Company has not been accepted by the Department. The Company has therefore provided Rs. 174.07 lac towards interest payable on outstanding deferred commercial tax, which includes interest of prior years.

B. CONTINGENT LIABILITIES (not provided for)

12. Bank Guarantee issued by the Bank on behalf of the Company outstanding Rs.296.11 lac (Previous year Rs.377 lac); Letters of Credit issued by the Bank on behalf of the Company Rs. Nil (Previous year Rs. 469.59 lac).