1 CORPORATE INFORMATION
Mohit Industries Limited ('the company) is a public limited company domiciled in India and incorporated under the provisions of the Company Law. Its shares are listed on BSE and NSE. The company is having its head quarters in Surat and plants at Kim. The company is primarily engaged in manufacture of Texturized Yarn from POY and weaving of the Yarn to Grey Cloth.
2 SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the Historical Cost Convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 2013.
B. USE OF ESTIMATES
The preparation of financial statements in confirmation with GAAP requires the management to make estimates and assumptions considered in reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The management believes that estimates used in preparation of financial statements are prudent and reasonable. Future results could differ due to these estimates and the difference between actual results and the estimates are recognized in the periods in which these gets materialized.
C. INVENTORIES
Closing stocks are valued at lower of cost or estimated realizable value. Cost of inventories comprise Cost of Purchase, Cost of Conversion and other costs incurred in bringing them to their respective present location and condition. The cost has been worked out on FIFO basis.
D. INVESTMENTS
Non-Current Investments are stated at cost less provision for diminution, other than temporary, in value of such investments. Current Investments are carried at lower of Cost or Net realizable Value. Provision for diminution in value of non-current investments, other than of temporary nature, is charged to Profit & Loss Account.
E. DEPRECIATION & AMORTIZATION
I) Depreciation on fixed assets has been charged on straight line method (SLM) on useful life of assets as prescribed in Schedule II of the Companies Act, 2013 except for intangible assets.
II) Depreciation on all assets are charged at rates of Single Shift except for Plant & Machinery in which depreciation is charged at rates of Triple Shift.
III) Depreciation on addition has been provided from the date of putting the assets into use.
IV) Cost of Software capitalized is amortized over period of five years.
F. EMPOLYEE BENEFITS
(a) All the Short Term Employee Benefits are accounted for on the basis of services rendered by the employees of the company.
(b) Company contributes towards Provident Fund which is Defined Contribution schemes. Liability in in respect thereof is determined on basis of contribution required to be made as per statutes/ rules.
(c) No provision has been made for Long Term Employee Benefits such as Gratuity and Leave Encashment as the same are recognized as and when they become due for payment.
G. FIXED ASSETS
Fixed Assets are stated at Cost, Less Accumulated Depreciation. All Costs, including Financing Cost are included in Total cost and accordingly capitalized in Fixed Assets. Capital Work In Progress includes Capital Items not installed or Building construction not completed.
H. REVENUE RECOGNITION
Sale of Goods
Sales of goods are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer which generally coincides with the delivery of goods.
Sales of Services (Job Charges)
Job Charges are recognized on delivery of the goods to the customers after completing the job work on the same.
Export Benefits
Export Benefits are recognized in the year of export
I. BORROWING COST
Borrowing Costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of Cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged the Statement of Profit & Loss.
J. CENVAT and VALUE ADDED TAX (VAT)
CENVAT and VAT credit received on purchases is reduced from respective item of purchases. Excise Duty & VAT on Sales is credited to Payable account and differential amount, if any, is paid. Thus, the company has followed exclusive method of accounting whereby purchases, sales and stock is shown exclusive of Cenvat & VAT and accounted for in separate Account.
K. FOREIGN CURRENCY TRANSACTION
The Foreign Currency Transaction of the company includes Purchases of Fixed Assets and Sales of Texturized Yarn which are valued at the Rate prevailing at the time of the transaction.
Monetary assets & liabilities in foreign currency, outstanding at the close of year, are converted into Indian currency at appropriate exchange rate prevailing on date of Balance Sheet. The resultant gain or loss, except to the extent of long term monetary items for acquisition of capital assets, is charged to Statement of Profit & Loss.
Gain or Loss relating to Long Term Monetary items for financing acquisition of depreciable capital assets, is adjusted to the acquisition cost of such asset and depreciated over its remaining useful life.
L. TAXES ON INCOME
Tax Expenses comprises of both current and deferred tax at the applicable enacted rates. Current tax represents the amount of income tax payable in respect of taxable income for the reporting period.
Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. MAT credit available on current tax is recognized as asset. MAT credit is recognized if there is convincing evidence of realization of the same. MAT Credit utilized is recognized as Tax Expense.
M. FINANCIAL DERIVATIVES
In respect of derivative contracts, premiums paid, gains & losses on settlement and losses on restatement are recognized in Profit & Loss Statement.
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