1. SIGNIFICANT ACCOUNTING POLICIES a) General The accompanying financial statements have been brpared on historical cost basis except or otherwise stated and in accordance with the generally accepted accounting principles and complying with the applicable Accounting Standards. b) Inventories Inventories are valued in line with the mandatory Accounting Standards - 2 (Revised) issued by the Institute of Chartered Accountants of India by adopting cost or net realisable value whichever is lower and the formula used for arriving at the cost are as follows: c) Revenue Recognition Revenue is recognized and expenditure is accounted for on their accrual. Egg Powder Division Sales are recognized on accrual basis and are accounted for in the books of accounts on the dates on which the goods are actually dispatched from the factor." Poultry Farm Division Sales of Eggs and Birds are recognized on accrual basis and are accounted for in the books of accounts on the dates on which the goods/Birds are actually dispatched from the farms or sold respectively. d) Debrciation Debrciation is provided on straight line method as per the rates provided in schedule XIV of the Companies Act 1956, except for imported plant & machinery for which the rate has been taken as 3.80%, based upon the technical evaluation by the expert committee on the useful life of the assets. In respect of assets added/adjusted during the year, debrciation is provided on pro-rata basis. e) Provisions Provision is recognised in respect of brsent obligation requiring settlement by outflow of resources and of which a reliable estimate on the account of obligation could be made. f) Taxes on Income Current Income tax expenses comprises taxes on income from operations in India and in foreign jurisdictions. Income tax payable in India is determined in accordance with the provisions of the income tax act.1961. Tax expense relating to foreign operations is determined in accordance with tax laws applicable in countries where such operations are domiciled. Minimum Alternative Tax (MAT) paid in accordance with the tax laws in india, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the company will pay normal income tax after the tax holiday period. Accordingly, MAT is recognised as an asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will fructify. Deferred tax expense or benefit is recognized on timing differences being the difference between the taxable income and accounting income that originate in one period and is likely to reverse in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. In the event of unabsorbed debrciation and carry forward losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets. Advance taxes and provisions for current income taxes are brsented in the balance sheet after off setting advance taxes paid and income tax provisions arising in the same tax jurisdiction for relevant tax paying units and where the company is able to and intends to settle the asset and liability on a net basis. The company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws. g) Accounting Convention The Financial statements have been brpared under historical cost convention. The Financial Statements materially comply with the Accounting Standards issued by the Institute of Chartered Accountants of India. h) Estimates and Assumptions Preparation of financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the Balance sheet and the reported amounts of income and expenses during the reporting period. Examples include bad debts written off, useful life of the assets, etc. Actual results may differ from these estimates. i) Cash Flow Statements Cash Flow Statement has been brpared under "Indirect Method", Cash and Cash Equivalents Comprise Cash in Hand, Current and Other accounts (Including Fixed Deposit) held with bank. j) Events Occurring after the Balance Sheet Date i. Assets and Liabilities are adjusted for events occurring after the balance sheet date that provide additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date. ii. Dividends, Which are proposed / declared by the company after the balance sheet date but before the approval of the financial statements are adjusted. k) Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Polices i. Net Profit for the Period All the items of income and expenses in the period are included in the determination of net profit for the period, unless specifically mentioned elsewhere in the financial statements or is required by the Accounting Standard. ii. Prior Period Items Income / Expenditure are disclosed in Prior period adjustments, only when considered by the management to be material to impact the financial statement significantly. iii. Extra-ordinary items Extra - ordinary items are accounted in accordance with the Accounting Standard - 5. iv. Wherever there is a change in the method of accounting followed by the company, the same is dealt with and disclosed in accordance with the accounting standard - 5. I) Accounting for Fixed Assets Fixed Assets Fixed Assets are stated at cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition. In respect of major projects involving construction, related broperational expenses form part of the value of assets capitalised. Expenses capitalised also include applicable borrowing costs. Capital Work-in-progress Advances paid towards the acquisition of fixed assets and the cost of assets under installation / construction / not put to use before the year end are disclosed under capital Work-in-Progress. m) Foreign Currency Transactions and Forward Contracts in Foreign Currencies Foreign Currency Transactions Transaction in Foreign Exchange are accounted atthe rates brvailing on the dates of transactions. Foreign currency Liabilities / Assets at the close of the year are restated, adopting the contracted/ year and rates, as applicable. The resultant difference, if any, is suitably dealt with in the accounts. Exchange Difference arising on forward Contracts is recognised in the statement of Profit and Loss in the reporting period in which the exchange rates change. Premium / Discounts arising on forward contracts are amortised as expense or income over the life of the Contract. Any Profit or Loss arising on cancellation or renewal of the forward exchange contract is recognized as income or as expense for the period. n) Forward Exchange Contracts covered under AS 11, "The Effects of Changes in Foreign Exchange Rates" The Company uses foreign exchange contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange contracts reduces the risk or cost to the company. Wherever the company uses the forwards to mitigate the business loss on account of foreign currency fluctuations, the company records the gain or loss on effective hedges in foreign currency fluctuation reserve until the transactions are complete. On Completion, the gain or loss is transferred to the profit and loss account of that period. To designate a forward contract as an effective hedge the management objectively evaluate and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk. In the absence of a designation as effective hedge, the gain or loss is recognized in the profit and loss account. o) Accounting for Government Grants: Grants and Subsidies in the nature of revenue are treated as revenue income and credited to the respective expenses accounts and subsidies in the nature of capital are adjusted to the value of assets. p) Accounting for Investments: i. Long Term investments are valued at cost. Provisions, if any, is made to recognize a decline other than a temporary decline, in the value of long-term investments. ii. Current Investments are stated at lower of cost and fair market value, q) Accounting for Retirement Benefits i. Defined Contribution Plans The company makes Provident Fund to defined contribution retirement benefit plans for qualifying employees. Under the Schemes, the company is required to contribute a specific percentage of the of the payroll costs to fund the benefits. The company recognized Rs.53.02 Lacs (Previous Year Rs. 44.41 lacs) for provident fund Contribution in the Profit and Loss Account. The Contributions payable to these plans by the company are at rates specified in the rules of the Schemes. ii. Defined benefit plans The brsent value of the obligation is determined based on actuarial valuation using the Projected Unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. iii. Accounting for Employment Benefits Short term employee benefit are charged off at the undiscounted amount in the year in which the related service is rendered. Post employment and other long term employee benefits are charges off in the year in which the employee has rendered services. The amount charges off is recognized at the brsent value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and losses in respect of post employment and other long term benefits are charged to Profit and Loss Account. r) Borrowing Cost Borrowing costs attributable to acquisition and construction of assets are capitalised as part of the cost of such asset up to the date when such asset is ready for its intended use. Other Borrowing Costs are treated as revenue expenditure. s) Provisions, Contingent Liabilities and Contingent Assets i A brsent obligation, which could be reliably estimated, is provided for in the accounts, if it is probable that an outflow of resources embodying economic benefits will be required for its settlement. ii All the liabilities have been provided for in the accounts except liabilities of a contingent nature, which have been disclosed at their estimated value by way of notes in the Balance Sheet. iii. Contingent Assets are neither recognized nor disclosed, t) Sundry Debtors / Loans and Advances Sundry Debtors and Loans and Advances are stated after making adequate provisions for doubtful balances, u) Expenditure Expenses are accounted on accrual basis and provision is made for all known losses and liabilities, v) Segment Reporting The Egg Powder Manufacturing activity is the only Reportable segment of Operation of the Company. w) Impairment of Assets Impairment Loss, if any, is generally provided to the extent the carrying amount of the assets exceeds their recoverable amount. x) Lease Lease Income/Payments of the Assets Given/Taken under the Operating Lease is recognised in the year in which it accrues. 2. Provision for Income Tax Provision had been made in respect of Income Tax liablility arising under the provisions of MAT under section 115 JB of the Income Tax Act 1961 and there is no tax liability when computed in accordance with the Normal Provisions of the Income Tax Act 1961 because of the availability of benefit of set off of brought forward losses of the earlier years. MAT thus paid/payable is recognised as an asset in the balance sheet since the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will fructify. 3. No provision has been made in respect of demand of excise duties Rs.27.17 lacs and Service Tax of Rs.39.62 Lacs, for which the company has filed appeals with various Higher Appellate Forums, against the orders of the Lower Authorities and the company is confident of coming out successful in the Appeals. Similarly there are Income Tax Demands totalling to the tune of of Rs.552.81 lacs i.e for the Assessment year 2008-2009 (Rs.270.07 Lacs - Net of Recovery) and 2009-2010 (Rs.282.74 Lacs Net of Part Payment). Based on the decisions of Appellate Authorities and the interbrtations of other relevant provisions, the company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision has been made. 4. There are no impairment of assets in terms of Accounting Standard No.28 issued by The Institute of Chartered Accountants of India. The Company had disposed some of the assets during the current financial year which has been suitably recognised / Deal with in the financial statements in accordance with the Accounting Standard No.10 issued by the Institute of Chartered Accountants of India." 5. Poultry Division All the consumption of Feeds, Drugs, Vaccines and Medicines upto the grower stage are being added on the value of b i rd s and shown as "Value of Livestock" underthe fixed assets in the Balance Sheet. The Cost of Birds thus arrived at is being amortized over remaining life time of the Birds and is recognized in the Profit and loss account. The remaining unamortized value of the Birds is shown as "Unamortised Value of Live Stock" underthe head Other Current Assets in the Balance Sheet. For N.C. Rajagopal & Co., Chartered Accountants FRN:003398S N.C. Vijay Kumar Partner Membership No.208276 SKM Maeilanandhan Executive Chairman SKM Shree Shivkumar Managing Director Place: Erode Date : 30.05.2014 |