Applicability of cost audit

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

18 April 2013 Hi,

An unlisted public Company is mainly engaged in seed, agriculture and nursery business. It also produces fertilizers which contributes to the total turnover of the Company to the extent of 22 lac only. But the aggregate value of the net worth of the Company exceeds 5 Crores and total turnover of the Company including other SEGMENTS (agriculture, seed and nursery business) exceeds 20 Crores.

As per my understanding of Rule 3 of the Cost Accounting Records (Fertilizer Industry) Rules, 2011; the said rule is applicable to Company. Am I right?

If yes, then whether the company should maintain cost records for other segments also apart from fertilizers? Is there any provision under which the Company can get an exemption from cost compliance? Please help before it becomes urgent from important.

Thanks.

Rahul Jain

Rahul Jain (Expert)
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19 April 2013 Actually you need to maintain the Cost Records from the financial year 2011-12 as per the notification dated 3rd June 2011.

And you also fall in the notification dated 7th Dec 2011 for Fertilizers,So for the fertilizer segment you need to prepare records as per this notification and for other segments the any set of cost records that enables for calculating true cost of production.

And it the the total turnover which we count not the turnover of a specific product.

So for the f/y 2011-12 and 2012-13 you need to maintain the Cost Records and file a Compliance Report duly authorized by a practicing Cost Accountant

If any f/y your turnover will exceed 100cr then from the next f/y you will have to get the Cost Audit done (as per notification dated 6th Nov 2012)

Please revert in case of any clarifications.

CMA Rahul Jain
rahuljain@jmsandco.in

Querist : Anonymous

Querist : Anonymous (Querist)

19 April 2013 Dear Mr. Jain,

Thanks a lot for clarifying my doubts.

Further, please clarify another thing in regard to Notification dated 6th Nov. 2012.
As per Clause 2 of the said notification, even if the company's turnover doesn't exceed 100 Crore, if Fertilizer Rule is applicable and i) Company is also producing any fertilizer under Table-I, and ii) the turnover is 75 Crore, then also from F/Y commencing on or after 1st Jan, 2013, Cost Audit shall be conducted.

Have I understood correctly?

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