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SUJANA METAL PRODUCTS LIMITED
SCHEDULE 22: SIGNIFICANT ACCOUNTING POLICIES
1 Basis of Preparation of Financial Statements
The financial statements have been prepared on accrual basis under the historical cost convention
in accordance with the Accounting Standards as notified by the Companies (Accounting Standards)
Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements are
presented in Indian rupees.
2. Use of Estimates
The preparation of financial statements are in conformity with Indian GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.Actual results could differ from those estimates.
Any revision to accounting estimates is recognised prospectively in current and future periods.
Examples of such estimates include provisions for doubtful debts, employee retirement benefit plans,
provision for income taxes and the useful lives of fixed assets.
3. Fixed Assets and Deprecation
Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. The
cost of fixed assets comprises the purchase price (net of rebates and discounts) and any other
directly attributable costs of bringing the assets to working condition for their intended use. Costs
of construction are consists of those costs that relate directly to specific assets and those that are
attributable to the construction activity in general and can be allocated to the specific assets up to the
date when the asset is ready to use.
Depreciation on fixed assets is provided using the straight-line method as per the rates prescribed
in Schedule XIV to the Companies Act, 1956.The rates of depreciation prescribed in Schedule XIV
to the Companies Act, 1956 are considered as minimum rates. If the management’s estimate of the
useful life of a Fixed Asset at the time of acquisition of the Asset or of the remaining useful life on a
subsequent review is shorter than envisaged in the aforesaid schedule, depreciation is provided at a
higher rate based on the management’s estimate of the useful life / remaining useful life.
Depreciation is calculated on a pro-rata basis from/upto the date the assets are purchased /sold.
Individual assets costing less than Rs. 5,000 are depreciated in full in the year of purchase.
4. Investments
Investments are classified as current or long-term in accordance with Accounting Standard 13 on
“Accounting for Investments”.
Current Investments are stated at lower of cost or market value.Any reduction in the carrying amount
and any reversals of such reductions are charged or credited to the Profit and Loss Account.
Long term Investments are stated at cost comprising of acquisition and incidental expenses. Provision
is made to recognize a diminution, other than temporary, in the value of such investments.
5. Revenue Recognition
Revenue is recognized when it is earned and to the extent that it is probable that the economic benefits
will flow to the company and the revenue can be reliably measured.
Revenue from sale of manufactured goods is recognized on physical delivery of the products, when
all significant contractual obligations have been satisfied, the property in the goods is transferred for
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