Spice Mobility - Spice Global

Spice Mobility Limited (formerly Spice Mobiles Limited)
Schedule 24
Notes to Accounts
1. Nature of Operations
The Company is primarily engaged in the trading and manufacturing of Mobile handset and accessories. During the year, the
Company has set up a plant at its facility in Baddi, in the state of Himachal Pradesh, for manufacturing of mobile handsets.
2. Statement of Signifi cant Accounting Policies
a) Basis of Preparation
The fi nancial statements have been prepared to comply in all material respects with the Accounting Standards notifi ed by
Companies Accounting Standard Rules, 2006 (as amended), and the relevant provisions of the Companies Act, 1956. The
fi nancial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies
have been consistently applied by the Company, and except for the change in accounting policy discussed more fully below,
are consistent with those used in the previous year.
b) Change in Accounting Policy
During the year with effect from January 8, 2010, the Company has implemented SAP system under ERP Platform. Accordingly,
the Company has changed its method of valuation of inventory of traded goods, raw materials, service components and spares
from monthly weighted average method to transaction moving weighted average method. The impact of change has not been
ascertained. However the same is not likely to have a material impact on the profi t of the Company for the current year.
c) Use of estimates
The preparation of fi nancial statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the fi nancial statements and the results of operations during the reporting period end. Although these
estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these
estimates.
d) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation/amortisation and impairment losses, if any. Cost comprises
the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs
relating to acquisition of fi xed assets which takes substantial period of time to get ready for its intended use are also included
to the extent they relate to the period till such assets are ready to be put to use.
e) Depreciation / Amortisation
i) Depreciation is provided using the straight line method as per the useful lives of the assets estimated by the management,
or at the rates prescribed under Schedule XIV of the Companies Act, 1956, whichever is higher. In the following cases,
the depreciation rates are higher than the corresponding rates prescribed in Schedule XIV of the Companies Act, 1956 :
Rates (SLM) Sch XIV Rates (SLM)
Technical equipments (included in Plant and Machinery) 10.00% 4.75%
Building at Baddi in the State of Himachal Pradesh 7.27% 3.34%
f)
ii) Leasehold improvements are depreciated over the primary lease period or its useful life whichever is lower.
iii) All individual assets costing Rs. 5,000 or less are depreciated in full in the year of addition.
iv) Intangible Assets (Software’s) are amortised over their useful lives not exceeding six years.
Impairment
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the
estimated future cash fl ows are discounted to their present value at the weighted average cost of capital.
g) Leases
Where the Company is the lessee
Leases, where the lessor effectively retains substantially all risks and benefi ts of ownership of the leased item, are classifi ed
as operating leases. Operating lease payments are recognized as an expense in the Profi t and Loss Account on a straight–
line basis over the lease term.
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