Jeypore Sugar Company Ltd has informed that in the limited review report of the Company for the quarter ended December 31, 2007, the Auditors of the Company have made the following observations:
1.It has been explained to the Auditors by the Company Management that, the Sugar Industry being a seasonal industry and since the sugar season does not match with the Companys financial year, recognition of expenses strictly in the period in which they have been incurred, would result in substantial distortion of the financial result in different quarters of the financial year. It is therefore, the consistent practice followed by the Company, to identify such expenses incurred during the off-season that are relatable to the coming season, and to defer them and recognise them only in the season period.
2. In respect of the Companys Sugar unit at Chagallu, part of the expenses incurred towards staff costs, manufacturing expenses, other expenses and depreciation have been recognised as such during the Quarter ending December 31, 2007 only to the extent they are relatable to the production of sugar manufactured, if any, during the said Quarter. In the opinion of the Companys Management, the remaining expenses are relatable to the sugar to be produced in the rest of the season, which commenced during this quarter. The expenses so deferred based on the management perception and technical evaluation are as follows:
Particulars of ExpenditureAmount deferred (Rs in Lakhs)
Staff cost 416
Manufacturing expenses 468
Other expenses 56
Depreciation 280
3. The Auditors have been informed that interest expense incurred on the general borrowings, to be capitalized if any to project costs, will be determined at the year end.
1.It has been explained to the Auditors by the Company Management that, the Sugar Industry being a seasonal industry and since the sugar season does not match with the Companys financial year, recognition of expenses strictly in the period in which they have been incurred, would result in substantial distortion of the financial result in different quarters of the financial year. It is therefore, the consistent practice followed by the Company, to identify such expenses incurred during the off-season that are relatable to the coming season, and to defer them and recognise them only in the season period.
2. In respect of the Companys Sugar unit at Chagallu, part of the expenses incurred towards staff costs, manufacturing expenses, other expenses and depreciation have been recognised as such during the Quarter ending December 31, 2007 only to the extent they are relatable to the production of sugar manufactured, if any, during the said Quarter. In the opinion of the Companys Management, the remaining expenses are relatable to the sugar to be produced in the rest of the season, which commenced during this quarter. The expenses so deferred based on the management perception and technical evaluation are as follows:
Particulars of ExpenditureAmount deferred (Rs in Lakhs)
Staff cost 416
Manufacturing expenses 468
Other expenses 56
Depreciation 280
3. The Auditors have been informed that interest expense incurred on the general borrowings, to be capitalized if any to project costs, will be determined at the year end.
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