Accounting Policies of Surya Funcity Ltd. Company

Mar 31, 2010

1. Accounting Concepts

-The financial statements are prepared under historical cost convention on accrual basis of accounting in accordance with generally accepted accounting principles, applicable Accounting Standards and the relevant provisions of the Companies Act, 1956.

2 Fixed Assets

Tangible Assets -Fixed Assets are stated at their cost of acquisition or construction less accumulated depreciation and impairment of assets, if any.

-Cost comprises of purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Intangible Assets

-Intangible Assets are shown at acquisition cost less accumulated amortisation.

Capital Work-in-Progress

Expenses incurred during construction/installation period are included under capital work-in-progress and allocated to relevant fixed assets in the ratio of cost of the respective assets on completion of construction/installation.

3. Depreciation

-Depreciation on fixed assets is provided, on straight line method method, as per the rates prescribed in Schedule XIV of the Companies Act, 1956.

-Depreciation on additions to fixed assets is calculated on month-end balances.

-Depreciation on assets sold & scrapped, during the year, is provided upto the month in which such fixed assets are sold or scrapped.

4. Revenue Recognition

-Revenue from sales of goods is recognised when risk and rewards of ownership are transferred to the customers.

-Revenue from services is recognised as and when services are rendered and related costs incurred.

-Other income is recognised on accrual basis unless otherwise stated.

-Sales are shown net of taxes, as applicable.

5. Earning per Share (EPS)

Annualised basic earning per equity share is arrived at based on net profit/(loss) after taxation to the basic weighted average number of equity shares.

6. Employee Benefits

-Contribution as required under the Statute/Rule is made to Employees State Insurance & Provident Fund and charged to the Profit & Loss Account of the year when the contribution to the respective funds are due.

-Gratuity is accounted for at the time of actual payment - the Company has not taken any Group Gratuity Policy with L.I.C.

-Leave Encashment is accounted for on accrual basis.

-Termination benefits are recognised as an expense as and when incurred.

7. Foreign Currency Transactions

-Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction.

-All gains or losses arising due to exchange differences at the time of transaction or settlement are accounted for in the Profit & Loss Account (except those relating to acquisition of fixed assets, which are adjusted in the cost of assets).

8. Borrowing Costs

Borrowing costs which are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of such assets. Other borrowing costs are recognised as an expense in the period in which they are incurred.

9. Investments

Current Investments are carried at lower of cost & fair value. Long-term investments are carried at cost. Provision for diminution in value of long term investments is made only, if a decline is other than temporary.

10. Impairment of Assets

The cash generating units are evaluated at the Balance Sheet date to ascertain the estimated recoverable amount/value in use as against the written down value. Impairment loss, if any, is recognized whenever the written down value exceeds estimated recoverable amount/value in use.

11. Taxes on Income

-Current Tax is determined on the basis of harmonious contextual interpretation of the Income Tax Act, 1961.

-Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

12. Insurance and other claims

Insurance claims are accounted for on settlement of claims/on receipt.

13. Prior Period Items/Extra-ordinary Items

Prior period items/Extra-ordinary items, having material impact on the financial affairs of the Company, are disclosed separately.

14. Miscellaneous Expenditure

The Company follows the policy of treating some expenditure, the benefits of which accrue to the Company over an extended period as miscellaneous or deferred revenue expenditure and amortises such expenditure over a period of upto five years depending on the nature & expected future benefits of such expenditure.

15. 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 recognised but are disclosed in the Notes to Accounts. Contingent assets are neither recognised nor disclosed in the financial statements.