Accounting Policies of Tirupati Fibres & Industries Ltd. Company

Mar 31, 2013

A. Change in accounting policy

Presentation and disclosure of financial statements

During the year ended 31 March 2013, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. However it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

b. Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments estimates and assumptions that affect , the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods

c. Borrowing Cost

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowing and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a Substantial period of time to get ready for its Intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

d. 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 - Non Current Investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments

e. Revenue Recognition

(a) Revenue is being recognised as and when there is reasonable certainty of ultimate Realization.

(b) Dividend income is accounted on cash basis.

(c) Interest income is recognised on a time proportionate basis.

f. Taxes on Income

Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

g. Earnings per share

Basic earnings per share are 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.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

h. Provisions

a) No provisions of Income Tax has been made in accounts in view of various statutory reliefs, deductions and carried forward losses available under the Income Tax Act, 1961.

b) In view of heavy carry forward losses, there is no reasonable certainty that there will be sufficient future taxable income against which deferred tax assets can be realized and accordingly deferred tax assets are not recognized and carried forward, and no deferred tax is recognized on the same.

i. Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence/ 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. A contingent liability also arises in extremely rare cases where there is a liability recognized because it measured reliably. The Company recognise contingent liability and discloses its existence in the Notes on account.

j. Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and fixed deposits with an original maturity of three months or less with banks.

k. Segment reporting policies

The company is engaged in only one segment namely "TEXTILE & MORE SPECIFICALY SYNTHETIC YARN". Thus the segment revenue, segment result, total carrying amount of segment assets, total amount of segment liabilities, total cost incurred to acquire segment assets, the total amount of expense incurred for depreciation and amortization during the year are all as reflected in the financial statement for the year ended 31st March, 2013, and as on that date. As there is no Export turnover, there is no reportable geographical Segment

I. Method of Accounting

The books of accounts are maintained on accrual basis except gratuity, Leave encashment benefits on retirement and petty amounts of interest receivable on Arrears of Allotment & call money, which are accounted for on cash basis.

m. Depreciation:

Depreciation on assets acquired up to 30.6.87 is provided on straight line method, on the basis of rates applicable as per Income Tax Rules as in force at the time of acquisition of assets, and on assets acquired since 01.07.87 is provided on straight line method by applying the rates specified in Schedule XIV of the companies Act, 1956. The depreciation is calculated on the basis of revalued amount of assets acquired up to 31.03.92 and on the cost of assets acquired there after. The additional depreciation on increased amount of assets due to revaluation is duly transferred from revaluation reserve to profit & loss account, 100% depreciation on assets whose cost does not exceeds Rs. 5,000/- is charged fully in the year of put to use.

n. Excise Duty:

Excise duty is accounted for on clearance of goods from the factory and the liability is provided at the end of the year on the finished goods stock lying in the factory.

o. Claims

Insurance claims are accounted for as and when claim is lodged/ assessed.

Since it is not possible to ascertain with reasonable certainty the quantum of quality claims payable to customers, same are accounted for on settlement basis.

p. Transaction in Foreign Currency:

Transactions in Foreign Currencies are recorded, on initial recognition 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.

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Mar 31, 2011

(i) Method of Accounting

The books of accounts are maintained on accrual basis except gratuity, Leave encashment benefits on retirement and petty amounts of interest receivable on Arrears of Allotment & call money, which are accounted for on cash basis.

(ii) Depreciation :

Depreciation on assets acquired up to 30.6.87 is provided on straight line method, on the basis of rates applicable as per Income Tax Rules as in force at the time of acquisition of assets, and on assets acquired since 01.07.87 is provided on straight line method by applying the rates specified in Schedule XIV of the companies Act, 1956. The depreciation is calculated on the basis of revalued amount of assets acquired up to 31.03.92 and on the cost of assets acquired there after. The additional depreciation on increased amount of assets due to revaluation is duly transferred from revaluation reserve to profit & loss account, 100 % depreciation on assets whose cost does not exceeds Rs.5,000/- is charged fully in the year of put to use.

(iii)Excise Duty:

Excise duty is accounted for on clearance of goods from the factory and the liability is provided at the end of the year on the finished goods stock lying in the factory.

(iv) Insurance claims are accounted for as and when lodged/assessed.

(v) Since it is not possible to ascertain with reasonable certainty the quantum of quality claims payable to customers, same are accounted for on settlement basis.

(vi) Transaction in Foreign Currency :

Transactions in Foreign Currencies are recorded, on initial recognition 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.

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Mar 31, 2009

(i) Method of Accounting

The books of accounts are maintained on accrual basis except gratuity, Leave encashment benefits on retirement and petty amounts of interest receivable on Arrears of Allotment & call money, which are accounted for on cash basis.

(ii) Depreciation :

Depreciation on assets acquired up to 30.6.87 is provided on straight line method, on the basis of rates applicable as per Income Tax Rules as in force at the time of acquisition of assets, and on assets acquired since 01.07.87 is provided on straight line method by applying the rates specified in Schedule XIV of the companies Act, 1956. The depreciation is calculated on the basis of revalued amount of assets acquired up to 31.03.92 and on the cost of assets acquired there after. The additional deprecia- tion on increased amount of assets due to revaluation is duly transferred from revaluation reserve to profit & loss account, 100% depreciation on assets whose cost does not exceeds Rs. 5,000/- is charged fully in the year of put to use.

(iii) Excise Duty:

Excise duty is accounted for on clearance of goods from the factory and the liability is provided at the end of the year on the finished goods stock lying in the factory.

(v) Insurance claims are accounted for as and when lodged/assessed.

(vi) Since it is not possible to ascertain with reasonable certainty the quantum of quality claims payable to customers, same are accounted for on settlement basis.