1. Background of the Company
KGS Sugar & Infra Corporation Ltd. is a company incorporated and domiciled in India under the Companies Act, 1956 having its registered office in Mumbai. The Company is proposing to engage in manufacturing and sale of Sugar & generation of Power and allied activities.
2. Basis of preparation of Financial Statements
The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting in conformity with the generally accepted accounting principles (GAAP) in India and comply with the all material aspects notified in Accounting Standards (AS) prescribed in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956 (‘the Act’) to the extent applicable.
The accounting policies are consistently applied by the Company and are consistent with those used in the previous year.
3. Presentation and Disclosure of Financial Statements
From the year ended March 31, 2014 the Revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Company, for preparation and presentation of its Financial Statements. The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of Financial Statements. However, it has significant impact on presentation and disclosures made Financial Statements. The Company has also classified previous years figures in accordance with the requirements applicable in the current year.
4. Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that, affect the reported amount of assets and liabilities the disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year-end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results may differ from those estimates. Any revisions to accounting estimates are recognized prospectively in current and future periods.
5. Tangible Assets and Depreciation
Fixed assets are stated at cost of acquisition. The cost comprises of the purchase price and the attributable cost of bringing the asset to its working condition for intended use. Expenses include inward freight, duties, taxes and other directly attributable expenses.
Depreciation on fixed assets is provided on the Written Down Method pro-rata to the period of use. The rates of depreciation prescribed in Schedule XIV to the Act have been adopted by the Company, which in the view of the management reflects the useful life of the related fixed asset.
Depreciation on assets sold during the year is recognised on a pro-rata basis to the profit and loss account till the date of sale.
Depreciation reserve has been created and proportional values of respective fixed assets are increased.
6. Investments
Long-term investments are carried at cost less any other than temporary diminution in value, determined separately for each individual investment.
Profit or loss on sale of investments is determined on the basis of weighted average carrying amount of investments disposed off.
7. Revenue Recognition
Product Sales & Services
Revenue is recognized for products sales and services rendered on accrual basis. There is no revenue to be recognized in the financial statement of the company.
8. Provisions and Contingencies
Provision is recognized in the Balance Sheet when, the Company has a present obligation as a result of a past event; it is probable that an outflow of economic benefits will be required to settle the present obligation and a reliable estimate of the amount of the obligation can be made.
Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
A disclosure by way of a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. There is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
9. Retirement Benefits
No provision has been made in the account for the future payment of gratuity, leave encashment, etc. The same is being accounted on cash basis.
10. Income Taxes
Income-tax comprises of current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax (reflecting the tax effects of timing differences between accounting income and taxable income for the year).The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the Balance Sheet date.
Deferred tax assets are recognized only to the extent there is reasonable certainty that they will be realised in future; however, where there is unabsorbed depreciation and carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each Balance Sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.
11. Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the number of equity shares outstanding during the year.
12. Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand, cheques on hand and remittances in transit.