Accounting Policies of Bannari Amman Spinning Mills Ltd. Company
Mar 31, 2018
1. Significant Accounting Policies
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1 Basis of accounting and preparation of financial statements
i) Compliance with Ind AS
The standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act. The financial statements up to year ended March 31 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act. These financial statements are the first financial statements of the company and its subsidiaires (the "group") under Ind AS. Refer note 34 for an explanation of how the transition from previous GAAP to Ind AS has affected the group''s financial position, financial performance and cash flows.
ii) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following :
a) Property plant and equipment, financial assets and liabilities that are measured at fair value
b) Defined benefit plans - plan assets measured at fair value
c) Assets held for sale - measured at fair value less cost to sell
2.2 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors of the Company assesses the financial performance and position of the Company, and makes strategic decisions. The board of directors, which has been identified as being the chief operating decision maker.
2.3 Use of estimates
In the application of the Company''s accounting policies, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a) Impairment of investments in subsidiaries
The Company reviews its carrying value of investments in subsidiaries at cost, annually, or more frequently when there is an indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
b) Useful lives of property, plant and equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This assessment may result in change in the depreciation expense in future periods.
c) Deferred tax assets
The carrying amount of deferred tax asset is reviewed at each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
d) Employee Benefits
The cost of defined benefit plans are determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.
2.4 Inventories
Inventories are valued at lower of cost and net realisable value. Cost of raw materials, Packing materials, Stores and Spares and consumables are valued at Cost on First-In-First-Out (FIFO) basis. Value of finished goods and work-in-progress are determined on First-In-First-Out (FIFO) basis and include appropriate share of overheads.
2.5 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits with banks other than deposits pledged with government authorities and margin money deposits.
Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value. Bank borrowings are generally considered to be financing activities. However, where bank overdrafts which are repayable on demand form an integral part of an entity''s cash management, bank overdrafts are included as a component of cash and cash equivalents. A characteristic of such banking arrangements is that the bank balance often fluctuates from being positive to overdrawn.
2.6 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information,
2.7 Taxes on income
a) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the standalone statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted and are applicable as at the end of the reporting period. In the absence of adequate taxable profits, the Company is required to pay Minimum Alternate Tax (MAT) on the book profits, as adjusted for certain provisions.
b) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
MAT paid in accordance with the tax laws, if any, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal tax. Accordingly, MAT is recognised as a deferred tax asset in the Balance sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
c) Current and deferred tax for the year
Current and deferred tax are recognised in the Statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
2.8 a) Property, plant and equipment
The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, including relevant borrowing costs for qualifying assets and any expected costs of decommissioning. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are charged to the Statement of Profit and Loss in the period in which the costs are incurred. Major shut-down and overhaul expenditure is capitalised as the activities undertaken improves the economic benefits expected to arise from the asset.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss.
Property, plant and equipment except freehold land held for use in the production, supply or administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses, if any.
Freehold land and leasehold land where the lease is convertible to freehold land under lease agreements at future dates at no additional cost, are not depreciated.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
b) Capital work-in-progress :
Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost , comprising direct cost and related incidental expenses.
Depreciation commences when the assets are ready for their intended use. Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013
The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis.
For the purpose of transition to Ind AS, the Company has elected to fair value all its property plant and equipment in accordance with Ind AS 101 as of April 01, 2016.
2.9 Leases
a) Where the company is Lessee :
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals for non-cancellable leases are recognised in the Statement of Profit and Loss on a straight-line basis over the period of lease where the lease payments are structured to increase in line with expected general inflation.
b) Where the company is Lessor :
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
2.10 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amount disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, value added taxes and amounts collected on behalf of third parties.
a) Sale of goods
Revenue from the sale of goods is recognised when the goods are dispatched/delivered and titles have passed, at which time all the following conditions are satisfied:
- The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
- The Company retains neither continuing managerial involvement to the degree associated with ownership nor effective control over goods sold;
- The amount of revenue can be measured reliably;
- It is probable that the economic benefits associated with the transaction will flow to the Company; and
- The costs incurred or to be incurred in respect of the transaction can be measured reliably
b) Sale of services
The Company recognises revenue when the significant terms of the arrangement are enforceable, services have been delivered and the collectability is reasonably assured.
c) Other operating revenue
Income incidental to exports such as income from import entitlement and premium on sale of such entitlement are recognised when there is a reasonability of collection
2.11 Other income
a) Interest
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
b) Dividend
Dividend Income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that economic benefits will flow to the Company and the amount of income can be measured reliably).
2.12 Employee benefits
Employee benefits include provident fund, employee state insurance, gratuity fund and compensated absences.
a. Retirement benefit costs and termination benefits
Payments to defined contribution Retirement Benefit Plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit Retirement Benefit Plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
b. Defined benefit costs are categorised as follows
- Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements) ;
- Net interest expense or income; and
- Remeasurement
For defined benefit plan, in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme. The gratuity fund is maintained with Life Insurance Corporation of India.
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expenses''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
c) Short-term and other long term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
2.13 Foreign currency transactions and translations
i) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is the Company''s functional and presentation currency.
ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other gains/(losses).
2.14 Borrowings and Borrowing cost
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
"Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred."
2.15 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
2.16 Provisions and contingencies
A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the 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. Contingent liabilities are disclosed in the Notes.
2.17 Financial Instruments
All financial instruments are recognised initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trade) are recognised on trade date. While, financial liabilities like loans and borrowings and payables are recognised net of directly attributable transaction costs.
For the purpose of subsequent measurement, financial instruments of the Company are classified in the following categories: non-derivative financial assets comprising amortised cost, equity instruments at FVTOCI or fair value through profit and loss account (FVTPL) and financial liabilities at amortised cost or FVTPL.
The classification of financial instruments depends on the objective of the business model for which it is held. Management determines the classification of its financial instruments at initial recognition.
a) Non-derivative financial assets
1) Financial assets at amortised cost
A financial asset shall be measured at amortised cost if both of the following conditions are met:
a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest method, less any impairment loss.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or where appropriate, a shorter period, to the gross carrying amount on initial recognition.
Financial assets at amortised cost are represented by trade receivables, security deposits, cash and cash equivalents, employee and other advances and eligible current and non-current assets.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther Income" line item.
2) Equity instruments at FVTOCI
All equity instruments are measured at fair value. Equity instruments held for trading is classified as FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividend are recognised in OCI which is not subsequently recycled to statement of profit and loss.
3) Financial assets at FVTPL
FVTPL is a residual category for financial assets. Any financial asset which does not meet the criteria for categorization as at amortised cost or as FVTOCI, is classified as FVTPL
In addition the Company may elect to designate the financial asset, which otherwise meets amortised cost or FVOCI criteria, as FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
4) Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
b) Non-derivative financial liabilities
i) Financial liabilities at amortised cost
Financial liabilities at amortised cost represented by borrowings, trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest rate method.
ii) Financial liabilities at FVTPL
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ''Finance costs'' line item. The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in Statement of Profit and Loss.
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in the statement of profit and loss. The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
iii) Derecognition of non-derivative financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
2.18 Impairment
a) Financial Assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss. The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivable. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Lifetime ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12-months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive(i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider :
i) All contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.
ii) Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
As practical expedient, the Company uses a provision matrix to determine impairment loss on portfolio of its trade receivable. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward-looking estimates. At every reporting date, the historically observed default rates are updated and changes in forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognised during the year is recognised as income/expense in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below :
Financial assets measured at amortised cost, contractual revenue receivable: ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
b) Non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non financial asset or a group of non financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unit").
2.19 Government grants
Grants from the government are recognised when there is reasonable assurance that:
i) The Company will comply with the conditions attached to them; and
ii) The grant will be received.
Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. When the grant relates to an asset, it is recognized as income over the expected useful life of the asset.
Where the Company receives non-monetary grants, the asset is accounted for on the basis of its acquisition cost. In case a non-monetary asset is given free of cost it is recognised at a fair value. When loan or similar assistance are provided by government or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is recognized as government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received.
2.20 Operating cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2014
I. The accompanying Financial Statements have been prepared on a going
concern basis under the historical cost convention on accrual basis of
accounting in conformity with Generally Accepted Accounting Principles
in India ("Indian GAAP") to comply with Accounting Standards notified
under the Companies (Accounting Standards) Rules, 2006 (as amended) and
the relevant provisions of Companies Act, 1956.
ii. Investments: Investments are carried individually at cost and are
treated as long-term investments.
The diminution in the market value of investment is recognized when
diminution is considered permanent.
iii. Valuation of Inventory.
Raw materials and stores & spares: At cost determined on First in First
out basis or net realizable value, whichever is lower.
Finished goods and by products: At cost or net realizable value,
whichever is lower. The cost has been measured on the weighted average
cost basis and includes cost of purchase, cost of conversion and other
costs incurred in bringing the inventory to their present location and
condition.
Stock in Process : At estimated weighted average cost basis.
iv. Revenue is recognised only when risk and rewards incidental to
ownership are transferred to the customer, it can be reliably measured
and it is reasonable to expect ultimate collection. Revenue from
operations includes sale of goods, services, service tax, excise duty
and sales during trail run period, adjusted for discounts (net), and
gain/loss on corresponding hedge contracts. Dividend income is
recognised when the right to receive payment is established. Interest
income is recognised on a time proportion basis taking into account the
amount outstanding and the interest rate applicable.
v. The Fixed Assets are carried at historical cost less accumulated
depreciation. Cost includes related taxes, duties, freight, insurance
etc., attributable to acquisition and installation of assets and
borrowing cost incurred up to the date of commencing operations, but
excludes duties and taxes that are recoverable from taxing authorities.
The fixed assets shown in the books are not revalued.
vi. The Company has provided depreciation on straight-line basis in
respect of fixed assets other than Windmill Units at the rates
prescribed in Schedule XIV to the Companies Act, 1956. In respect of
Windmill assets, the depreciation has been provided on written down
value basis at the rates prescribed in Schedule XIV to the Companies
Act, 1956.
For assets costing Rs. 5000/- or less, 100% depreciation has been charged
in the year of purchase of such assets. For other assets acquired
during the year pro-rata charge has been made from the date of first
use. In the year of disposal of assets, depreciation is charged up to
the date of disposal.
vii. The Foreign Currency transactions are recorded at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary items as at the Balance Sheet date are reported at the closing
rate or at the rate at which it is likely to be realized from or
required to be disbursed. Exchange differences arising on settlement /
restatement of short-term foreign currency monetary assets and
liabilities of the Company are recognized as income or expense in the
Statement of Profit and Loss.
viii. The exchange differences on restatement / settlement of long term
foreign currency loans are accumulated in a "Foreign currency
translation reserve" until repayment of the loan. "Foreign Currency
Monetary item Translation difference Account" has been amortized as per
notification
G.S.R.225(E) of the Ministry of Corporate Affairs, Government Of India
dated 31.3.2009 as amended by notification G.S.R.913(E) dated
29.12.2011.
ix. The Company has opted for Life Insurance Corporation Employees
Group Gratuity Scheme to cover its gratuity liability. Contribution
paid/payable by the company to LIC of India is charged to revenue on
the basis of actuarial valuation towards demand worked out by LIC.
Provident fund/pension fund and gratuity liability are Defined
Contribution Schemes and contributions are charged to Profit and Loss
Account of the year in which the contribution to the respective funds
are due.
Short term employee benefits including compensated absences are
provided for based on the expected obligation on an undiscounted basis
as per Accounting Standard 15 (Revised).
x. Borrowing costs attributable to the acquisition, construction and
installation of qualifying capital
assets are capitalized till the period before they are put into use.
xi. The carrying value of assets at each balance sheet date is reviewed
for impairment. If any indication of impairment exists the recoverable
amount of such assets is estimated and appropriate provision is
recognized in the accounts.
xii. Current tax is determined at the current rates of income tax on
taxable income and tax credits are computed in accordance with the
provisions of the Income Tax Act, 1961.
xiii. Deferred tax is recognized on timing difference between the
accounting income and the taxable income for the year and quantified
using the rates and tax laws that prevail as at the balance sheet date.
The deferred tax assets are recognized and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax asset
can be realized.
xiv. Government grants have been recognized based on the reasonable
assurance that the Company will comply with the conditions attached to
the grants and the grants will be received. Government grants
relatable to borrowing cost have been reduced from the borrowing cost
thereby reducing the cost of the asset. Government grants relatable to
periods after the acquisition, construction and installation of
qualifying assets are in the nature of revenue grants and have been
recognized on a systematic basis in the profit and loss account.
Export benefits are accounted for in the year of exports based on the
eligibility and there is no uncertainty in receiving the same.
xv. The Company has operated only one business segment which is textile
segment and hence segment report is not furnished.
xvi. Provisions, Contingent liabilities and Contingent Assets:
Provision is recognized only when there is a present obligation as a
result of past event and it is probable that there will be an outflow
of resources. Contingent liabilities are not recognized but are shown
by way of notes attached to and forming part of the Balance Sheet.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
xvii. Assets taken on lease by the Company in its capacity as lessee
where substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalized
at the inception of the lease at the lower of the fair value and the
present value of the minimum lease payments and a liability is created
for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
xviii.Lease arrangements where the risks and rewards incidental to
ownership of an asset substantially vest with the lessor are recognised
as operating leases. The lease rentals paid under such agreements are
accounted in the profit and loss account.
Terms/rights attached to the equity shares
The company has issued only one class of equity shares having a par
value of Rs. 10 per equity share. Each holder of equity share is entitled
to one vote per share. The company declares and pays dividend in Indian
Rupees. The dividend proposed by Board of Directors is subject to the
approval of Shareholders in the ensuing Annual General Meeting.
Name of the Bank and Details of the loan ICICI Bank Limited
"ICICI Bank Ltd - Rupee Term Loan under Technology Upgradation Fund
Scheme - Outstanding as at 31.03.2014 Rs. 112.50 Lakhs (31.03.2013 - Rs.
337.50 Lakhs) - Current maturity for 31.03.2014 - Rs. 112.50 Lakhs
(31.03.2013 - Rs. 225.00 Lakhs)"
Securities and other Terms & Conditions
Security : Hypothecation of specified movable properties including the
machinery spares, tools and accessories of the spinning unit situated
at Vadamadurai Village, Vedasandhur Taluk, Dindigul District.
Repayment : 32 quarterly instalments starting from December 2006. Loan
has been further secured by the personal guarantee of Managing Director
of the Company.
Rate of Interest : 8.55 %, 8.90% & 9.10% (Fixed)"
ICICI Bank Limited
"ICICI Bank Ltd - Rupee Term Loan Outstanding as at 31.03.2014 Rs.
3200.00 Lakhs (31.03.2013 - Rs. 4000 Lakhs ) - Current maturity for
31.03.2014 - Rs. 800 Lakhs (31.03.2013 - Rs. 800 Lakhs )"
"Security: First charge on entire movable and immovable fixed assets of
spinning unit I situated at Vadamadurai Village, Vedasandhur Taluk,
Dindigul District and entire movable fixed assets of weaving division
situated at Karanampettai, Paruvai Road, Coimbatore 641658.Second
charge on the current assets of Spinning Unit I situated at Vadamadurai
Village, Vedasandhur Taluk, Dindigul.
Repayment: 20 quarterly instalments starting from April 2013.
Rate of Interest : 13.00% (Fixed)"
Corporation Bank
"Corporation Bank - Rupee Term Loan under Technology Upgradation Fund
Scheme - Outstanding as at 31.03.2014 Rs. 1161.28 Lakhs (31.03.2013 - Rs.
1561.28 Lakhs) - Current maturity for 31.03.2014 - Rs. 400 Lakhs
(31.03.2013 - Rs. 400 Lakhs)"
"First charge by way of Equitable Mortgage over factory land and
building and hypothecation of other movable assets financed by the bank
for the expansion project ranking pari-passu with other banks. Second
charge on the above fixed assets to be extended to the bankers who are
extending working capital facilities to the company.
Repayment : 32 quaterly instalments starting from Dec 2009.
Rate of Interest : 12.75%"
"Corporation Bank - Rupee Term Loan under Technology Upgradation Fund
Scheme - Outstanding as at 31.03.2014 Rs. 56 Lakhs (31.03.2013 - Rs. 280
Lakhs) - Current maturity
"Exclusive First charge on the Windmill- Unit I and all related
equipments, systems and accessories. Loan has been further secured by
the personal guarantee of Managing for 31.03.2014 - Rs. 56 Lakhs
(31.03.2013 - Rs. 224 Lakhs)"
Director of the Company.
Repayment : 32 quarterly instalments starting from August 2006.
Rate of Interest : 9.00% (Fixed)"
Bank of Maharashtra
"Bank of Maharastra - Rupee Term Loan under Technology Upgradation Fund
Scheme - Outstanding as at 31.03.2014 Rs. 2343.75 Lakhs (31.03.2013 - Rs.
2968.75 Lakhs) - Current maturity for 31.03.2014 - Rs. 625 Lakhs
(31.03.2013 - Rs. 625 Lakhs)"
"First charge by way of Equitable Mortgage over factory land and
building and hypothecation of other movable assets financed by the bank
for the expansion project ranking pari-passu with other banks. Second
charge on the above fixed assets to be extended to the bankers who are
extending working capital facilities to the company.
Repayment :32 quarterly instalments starting from March 2010.
Rate of Interest : 12.75%"
Oriental Bank of Commerce
"Oriental Bank of Commerce - Rupee Term Loan under Technology
Upgradation Fund Scheme - Outstanding as at 31.03.2014 Rs. 6558.86 Lakhs
(31.03.2013 - Rs. 8433.86 Lakhs) - Current maturity for 31.03.2014 - Rs.
1875 Lakhs (31.03.2013 - Rs. 1875 Lakhs)"
"First charge by way of Equitable Mortgage over factory land and
building and hypothecation of other movable assets financed by the bank
for the expansion project ranking pari-passu with other banks. Second
charge on the above fixed assets to be extended to the bankers who are
extending working capital facilities to the company.
Repayment :32 quarterly instalments starting from October 2009
Rate of Interest : 12.75%"
Indian Bank
"Indian Bank - Rupee Term Loan Outstanding as at 31.03.2014 Rs. 1490.00
Lakhs (31.03.2013 - Rs. 1862.50 Lakhs) - Current maturity for 31.03.2014
- Rs. 372.50 Lakhs (31.03.2013 - Rs. 372.50 Lakhs)"
"Indian Bank - Rupee Term Loan
Outstanding as at 31.03.2014 Rs. 2468.93 Lakhs (31.03.2013 - Rs. 1824.92
Lakhs) - Current maturity for 31.03.2014 - Rs. 124 Lakhs
(31.03.2013 - Rs. 31.00 Lakhs)"
"Exclusive First charge by way of Mortgage and hypothecation on windmil
unit III assets being financed by the Bank.
Repayment :32 quarterly instalments starting from June 2011.
Rate of Interest : 12.70%"
"Pari-pasu First charge by way of equitable mortgage over factory land
and building where construction is proposed at SIPCOT Perundurai and
exclusive charge on fixed assets to be purchased out of the loan.
Repayment :32 quarterly instalments starting from Feb'' 2014.
Rate of Interest : 12.20%"
"Indian Bank - Rupee Term Loan
Outstanding as at 31.03.2014 Rs. 1323.98 Lakhs (31.03.2013 - NIL) -
Current maturity for 31.03.2014 - NIL (31.03.2013 - Nil)"
"Pari-passu First Charge by way of Equitable Mortgage over factory land
and building where land and building where construction is proposed at
SIPCOT, Perundurai and exclusive charge on fixed assets to be purchased
out of this project (Mortgage and Hypothecation)
Repayment :32 quarterly instalments starting from April''2016.
Rate of Interest : 12.20%"
Indian Overseas Bank
"Indian Overseas Bank - Rupee Term Loan under Technology Upgradation
Fund SchemeOutstanding as at 31.03.2014 Rs. 4337.20 Lakhs (31.03.2013 - Rs.
5587.20 Lakhs) - Current maturity for 31.03.2014 - Rs. 1250 Lakhs
(31.03.2013 - Rs. 1250 Lakhs)"
"First charge by way of Equitable Mortgage over factory land and
building and hypothecation of other movable assets financed by the bank
for the expansion project ranking pari-passu with other banks. Second
charge on the above fixed assets to be extended to the bankers who are
extending working capital facilities to the company.
Repayment :32 quarterly instalments starting from October 2009.
Rate of Interest : 13.00%"
"Indian Overseas Bank - Rupee Term Loan Outstanding as at 31.03.2014 Rs.
2531 Lakhs (31.03.2013 - Rs. 2951 Lakhs) - Current maturity for
31.03.2014 - Rs. 420 Lakhs (31.03.2014 - Rs. 420 Lakhs)"
"Exclusive First charge on windmil unit IV & V assets situated at
Chinnapudur village, Dharapuram Taluk, Tamilnadu and Kongalnagaram,
Udumalpet Taluk, Tirupur district, Tamilnadu.
Repayment :32 quarterly instalments starting from June 2012.
Rate of Interest : 13.00%"
"Indian Overseas Bank - Foreign Currency Term Loan Outstanding as at
31.03.2014 Rs. 1277.26 Lakhs (31.03.2013 - Rs. 1671.48 Lakhs) - Current
maturity for 31.03.2014 - Rs. 570 Lakhs (31.03.2013 - Rs. 570 Lakhs)"
"Exclusive First charge on windmil unit II assets situated at
Chinnapudur village, Dharapuram Taluk, Tamilnadu
Repayment :14 Half-yearly instalments starting from June 2009.
Rate of Interest : 6.3452%".
The Karur Vysya Bank Limited
"Karur Vysya Bank Ltd - Working Capital Limit Rs.950 Lakhs Outstanding
as at 31.03.2014 Rs. 1034.58 Lakhs (31.03.2013 - Rs. 131.66 Lakhs)"
Securities and other Terms & Conditions :
"Security : First Charge by way of Hypothecation of Raw materials,
Stock in-process, Finished goods of the Spinning Unit - I. Second
charge on the Fixed Assets of the Spinning Unit - I.
Rate of Interest : 12.50%"
Corporation Bank
"Corporation Bank - Working Capital Limit Rs. 5250 Lakhs Outstanding as
at 31.03.2014 Rs. 2423.11 Lakhs (31.03.2013 - Rs. 1389.44 Lakhs)"
"Security : First Charge by way of
Hypothecation of Raw materials, Stock in- process, Finished goods of
the Spinning Unit - I and II. Second charge on the Fixed Assets of the
Spinning Unit - I and II.
Rate of Interest : 13.85% Short Term Loan : 11.25% (Fixed)"
ICICI Bank Limited
"ICICI Bank Limited - Foreign Currency - Working Capital Limit Rs. 1500
Lakhs Out standing as at 31.03.2014 Rs. 821.38 Lakhs (31.03.2013 - Rs.
851.41 Lakhs)"
"Security: First Charge by way of
Hypothecation of Raw materials,Semi- finished and Finished goods,
Consumable stores and Spares and other movable properties both present
and future for Limit upto Rs.1500 Lakhs.PCFC
Rate of Interest : 3.60%"
Oriental Bank of Commerce
Oriental Bank of Commerce - Working
Capital Limit Rs. 6000 Lakhs ( Interchangable of Cash credit/Rupee
Packing Credit/Packing Credit in Foreign Currency Loan) Outstanding as
at 31.03.2014 Rs. 3628.39 Lakhs (31.03.2013 - Rs. 1659.64 Lakhs)
"Security: Pari-pasu first charge on current assets of the company
belonging to expansion project along with other banks who have extended
Working Capital Finance for expansion project under multiple banking
arrangements. Pari-pasu second charge on Fixed Assets of the company
belonging to expansion project along with other banks who have extended
Working Capital Finance for expansion project under multiple banking
arrangements.First Pari- passu Charge on Current Assets of Garment and
Processing Division Foreign
Documentary Demand / Usance Bill having maximum usanc e of 180 days
accompanied by Airway Bill / Bill of Lading evidencing shipment of
Goods dealt in by the borrower and drawn under irrevocable letter of
credit / Confirmed orders.
Rate of Interest : 12.75%PCFC A/c Rate of Interest : 3.85%"
Indian Overseas Bank
Indian Overseas Bank - Working Capital
Limit Rs.5000 Lakhs ( Interchangable of Cash credit / WCFC / Rupee
Packing Credit / Packing Credit in Foreign Currency Loan) Outstanding
as at 31.03.2014 Rs. 5845.33 Lakhs (31.03.2013 - Rs. 1060.92 Lakhs)
"Security: Pari-pasu first charge on current assets of the company
belonging to expansion project along with other banks who have extended
Working Capital Finance for expansion project under multiple banking
arrangements. Pari-pasu second charge on Fixed Assets of the company
belonging to expansion project along with other banks who have extended
Working Capital Finance for expansion project under multiple banking
arrangements.CC A/c Rate of Interest :
13.00%PCFC A/c
Rate of Interest : 3.85%"
Bank of Maharashtra
Bank of Maharashtra - Working Capital Limit Rs.500Lakhs Outstanding as
at 31.03.2014 Rs. 145.28 Lakhs (31.03.2013 - Rs. Nil )
Security: Pari-pasu first charge on current assets of the company
belonging to expansion project along with other banks who have extended
Working Capital Finance for expansion project under multiple banking
arrangements.
Rate of Interest : 12.75%
Allahabad Bank
Allahabad Bank - Working Capital Limit (Interchangeable of Cash
credit/Packing Credit/Packing Credit in Foreign Currency Loan ) Rs. 4500
Lakhs.
Outstanding as at 31.03.2014 Rs. 3093.04 Lakhs (31.03.2013 - Rs. 1423.26
Lakhs)
"Security: Pari-pasu first charge on current assets of the Company''s
Spinning Unit- II along with other banks who have extended Working
Capital Finance under multiple banking arrangements.
Exclusive first charge on the Current Assets of the Company''s Garment
Division Pari- Passu second charge on Fixed Assets of the Company''s
Spinning Unit -II along with other Working Capital lenders of Spinning
Unit - II. Pari-passu second charge on Fixed Assets of the Company''s
Garment Division
Rate of Interest : CC A/c . 12.70%PCFC A/c
Rate of Interest : 3.86%."
Mar 31, 2013
I. The accompanying Financial Statements have been prepared on a going
concern basis under the historical cost convention on accrual basis of
accounting in conformity with Generally Accepted Accounting Principles
in India ("Indian GAAP") to comply with Accounting Standards notified
under the Companies (Accounting Standards) Rules, 2006 (as amended) and
the relevant provisions of Companies Act, 1956.
ii. Investments: Investments are carried individually at cost and are
treated as long-term investments. The diminution in the market value of
investment is recognized when diminution is considered permanent.
iii. Valuation of Inventory.
Raw materials and stores & spares: At cost determined on First in First
out basis or net realizable value, whichever is lower.
Finished goods and by products: At cost or net realizable value,
whichever is lower. The cost has been measured on the weighted average
cost basis and includes cost of purchase, cost of conversion and other
costs incurred in bringing the inventory to their present location and
condition.
Stock in Process : At estimated weighted average cost basis.
iv. The Fixed Assets are carried at historical cost less accumulated
depreciation. Cost includes related taxes, duties, freight, insurance
etc., attributable to acquisition and installation of assets and
borrowing cost incurred up to the date of commencing operations, but
excludes duties and taxes that are recoverable from taxing authorities.
The fixed assets shown in the books are not revalued.
v. The Company has provided depreciation on straight-line basis in
respect of fixed assets other than Windmill Units at the rates
prescribed in Schedule XIV to the Companies Act, 1956. In respect of
Windmill assets, the depreciation has been provided on written down
value basis at the rates prescribed in Schedule XIV to the Companies
Act, 1956.
For assets costing Rs.5000/- or less, 100% depreciation has been
charged in the year of purchase of such assets. For other assets
acquired during the year pro-rata charge has been made from the date of
first use. In the year of disposal of assets, depreciation is charged
up to the date of disposal.
vi. The Foreign Currency transactions are recorded at the exchange rate
prevailing on the date of the transaction. Foreign currency monetary
items as at the Balance Sheet date are reported at the closing rate or
at the rate at which it is likely to be realized from or required to be
disbursed. Exchange differences arising on settlement / restatement of
short-term foreign currency monetary assets and liabilities of the
Company are recognized as income or expense in the Statement of Profit
and Loss.
vii. The exchange differences on restatement / settlement of long term
foreign currency loans are accumulated in a "Foreign currency
translation reserve" until repayment of the loan. "Foreign Currency
Monetary item Translation difference Account" has been amortized as per
notification G.S.R.225(E) of the Ministry of Corporate Affairs,
Government Of India dated 31.3.2009 as amended by notification
G.S.R.913(E) dated 29.12.2011.
viii. The Company has opted for Life Insurance Corporation Employees
Group Gratuity Scheme to cover its gratuity liability. Contribution
paid/payable by the company to LIC of India is charged to revenue on
the basis of actuarial valuation towards demand worked out by LIC.
Provident fund/pension fund and gratuity liability are Defined
Contribution Schemes and contributions are charged to Profit and Loss
Account of the year in which the contribution to the respective funds
are due.
Short term employee benefits including compensated absences are
provided for based on the expected obligation on an undiscounted basis
as per Accounting Standard 15 (Revised).
ix. Borrowing costs attributable to the acquisition, construction and
installation of qualifying capital assets are capitalized till the
period before they are put into use.
x. The carrying value of assets at each balance sheet date is reviewed
for impairment. If any indication of impairment exists the recoverable
amount of such assets is estimated and appropriate provision is
recognized in the accounts.
xi. Current tax is determined at the current rates of income tax on
taxable income and tax credits are computed in accordance with the
provisions of the Income Tax Act, 1961.
xii. Deferred tax is recognized on timing difference between the
accounting income and the taxable income for the year and quantified
using the rates and tax laws that prevail as at the balance sheet date.
The deferred tax assets are recognized and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax asset
can be realized.
xiii. Government grants have been recognized based on the reasonable
assurance that the Company will comply with the conditions attached to
the grants and the grants will be received. Government grants relatable
to borrowing cost have been reduced from the borrowing cost thereby
reducing the cost of the asset. Government grants relatable to periods
after the acquisition, construction and installation of qualifying
assets are in the nature of revenue grants and have been recognized on
a systematic basis in the profit and loss account. Export benefits are
accounted for in the year of exports based on the eligibility and there
is no uncertainty in receiving the same.
xiv. The Company has operated only one business segment which is
textile segment and hence segment report is not furnished.
xv. Provisions, Contingent liabilities and Contingent Assets: Provision
is recognized only when there is a present obligation as a result of
past event and it is probable that there will be an outflow of
resources. Contingent liabilities are not recognized but are shown by
way of notes attached to and forming part of the Balance Sheet.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
xvi. Assets taken on lease by the Company in its capacity as lessee
where substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalized
at the inception of the lease at the lower of the fair value and the
present value of the minimum lease payments and a liability is created
for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
xvii. Lease arrangements where the risks and rewards incidental to
ownership of an asset substantially vest with the lessor are recognised
as operating leases. The lease rentals paid under such agreements are
accounted in the profit and loss account.
Mar 31, 2012
I. The accompanying Financial Statements have been prepared on a going
concern basis under the historical cost convention on accrual basis of
accounting in conformity with Generally Accepted Accounting Principles
in India ("Indian GAAP") to comply with Accounting Standards notified
under the Companies (Accounting Standards) Rules, 2006 (as amended) and
the relevant provisions of Companies Act, 1956.
ii. Investments: Investments are carried individually at cost and are
treated as long-term investments. The diminution in the market value of
investment is recognized when diminution is considered permanent.
iii. Valuation of Inventory.
Raw materials and stores & spares: At cost determined on First in First
out basis or net realizable value, whichever is lower.
Finished goods and waste cotton: At cost or net realizable value,
whichever is lower. The cost has been measured on the weighted average
cost basis and includes cost of purchase, cost of conversion and other
costs incurred in bringing the inventory to their present location and
condition.
Stock in Process: At estimated weighted average cost basis
iv. The Fixed Assets are carried at historical cost less accumulated
depreciation. Cost includes related taxes, duties, freight, insurance
etc., attributable to acquisition and installation of assets and
borrowing cost incurred up to the date of commencing operations, but
excludes duties and taxes that are recoverable from taxing authorities.
The Fixed assets shown in the books are not revalued.
v. The Company has provided depreciation on straight-line basis in
respect of fixed assets other than Windmill Units at the rates
prescribed in Schedule XIV to the Companies Act, 1956. In respect of
Windmill assets, the depreciation has been provided on written down
value basis at the rates prescribed in Schedule XIV to the Companies
Act, 1956.
For assets costing Rs 5000/- or less, 100% depreciation has been
charged in the year of purchase of such assets. For other assets
acquired during the year pro-rata charge has been made from the date of
first use. In the year of disposal of assets, depreciation is charged
up to the date of disposal.
vi. The Foreign Currency transactions are recorded at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary items as at the Balance Sheet date are reported at the closing
rate or at the rate at which it is likely to be realized from or
required to be disbursed. Exchange differences arising on settlement /
restatement of short-term foreign currency monetary assets and
liabilities of the Company are recognized as income or expense in the
Statement of Profit and Loss.
vii. The exchange differences on restatement / settlement of long term
foreign currency loans are accumulated in a "Foreign currency
translation reserve" until repayment of the loan. "Foreign Currency
Monetary item Translation difference Account" has been amortized as per
notification G.S.R.225(E) of the Ministry of Corporate Affairs,
Government of India dated 31.3.2009 as amended by notification
G.S.R.913(E) dated 29.12.2011.
viii. The Company has opted for Life Insurance Corporation Employees
Group Gratuity Scheme to cover its gratuity liability. Contribution
paid/payable by the company to LIC of India is charged to revenue on
the basis of actuarial valuation towards demand worked out by LIC.
Provident fund/pension fund and gratuity liability are Defined
Contribution Schemes and contributions are charged to Profit and Loss
Account of the year in which the contribution to the respective funds
are due.
Short term employee benefits including compensated absences are
provided for based on the expected obligation on an undiscounted basis
as per Accounting Standard 15 (Revised).
ix. Borrowing costs attributable to the acquisition, construction and
installation of qualifying capital assets are capitalized till the
period before they are put into use.
x. The carrying value of assets at each balance sheet date is reviewed
for impairment. If any indication of impairment exists the recoverable
amount of such assets is estimated and appropriate provision is
recognized in the accounts.
xi. Current tax is determined at the current rates of income tax on
taxable income and tax credits are computed in accordance with the
provisions of the Income Tax Act, 1961.
xii. Deferred tax is recognized on timing difference between the
accounting income and the taxable income for the year and quantified
using the rates and tax laws that prevail as at the balance sheet date.
The deferred tax assets are recognized and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax asset
can be realized.
xiii. Government grants have been recognized based on the reasonable
assurance that the Company will comply with the conditions attached to
the grants and the grants will be received. Government grants relatable
to borrowing cost have been reduced from the borrowing cost thereby
reducing the cost of the asset. Government grants relatable to periods
after the acquisition, construction and installation of qualifying
assets are in the nature of revenue grants and have been recognized on
a systematic basis in the profit and loss account.
Export benefits are accounted for in the year of exports based on the
eligibility and there is no uncertainty in receiving the same.
xiv. The Company has operated only one business segment which is
textile segment and hence segment report is not furnished.
xv. Provisions, Contingent liabilities and Contingent Assets:
Provision is recognized only when there is a present obligation as a
result of past event and it is probable that there will be an outflow
of resources. Contingent liabilities are not recognized but are shown
by way of notes attached to and forming part of the Balance Sheet.
Contingent Assets are neither recognized nor disclosed in the financial
statements
xvi. Assets leased by the Company in its capacity as lessee where
substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalized
at the inception of the lease at the lower of the fair value and the
present value of the minimum lease payments and a liability is created
for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
xvii. Lease arrangements where the risks and rewards incidental to
ownership of an asset substantially vest with the lessor are recognised
as operating leases. The lease rentals paid under such agreements are
accounted in the profit and loss account.
Mar 31, 2011
I. The accompanying Financial Statements have been prepared on a going
concern basis under the historical cost convention on accrual basis of
accounting in conformity with Generally Accepted Accounting Principles
in India ("Indian GAAP").
ii. Investments: Investments are accounted at cost and are treated as
long-term investments. The diminution in the market value of investment
is recognized when diminution is considered permanent.
iii. Valuation of Inventory.
Raw materials and stores & spares: At cost determined on First in First
out basis or net realizable value, whichever is lower.
Finished goods and waste cotton: At cost or net realizable value,
whichever is lower. The cost has been measured on the weighted average
cost basis and includes cost of purchase, cost of conversion and other
costs incurred in bringing the inventory to their present location and
condition.
Stock in Process: At estimated weighted average cost basis.
iv. The Fixed Assets are valued at historical cost. Cost includes
related taxes, duties, freight, insurance etc.,
attributable to acquisition and installation of assets and borrowing
cost incurred up to the date of commencing operations, but excludes
duties and taxes that are recoverable from taxing authorities. The
Fixed assets shown in the books are not revalued.
v. The Company has provided depreciation on straight-line basis in
respect of fixed assets other than Windmill Units at the rates
prescribed in Schedule XIV to the Companies Act, 1956. In respect of
Windmill assets, the method of providing for depreciation has been
changed to written down value basis from straight line method basis as
adopted in the previous year.
For assets costing Rs.5000/- or less, 100% depreciation has been
charged in the year of purchase of such assets. For other assets
acquired during the year pro-rata charge has been made from the date of
first use. In the year of disposal of assets, depreciation is charged
up to the date of disposal.
vi. The Foreign Currency transactions are recorded at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary items as at the Balance Sheet date are reported at the closing
rate or at the rate at which it is likely to be realized from or
required to be disbursed.
vii. "Foreign Currency Monetary item Translation difference Account"
has been amortized as per notification G.S.R.225(E) of the Ministry of
Corporate Affairs, Government of India dated 31.3.2009.
viii. The Company has opted for Life Insurance Corporation Employees
Group Gratuity Scheme to cover its gratuity liability. Contribution
paid/payable by the Company to LIC of India is charged to revenue on
the basis of actuarial valuation towards demand worked out by LIC.
Provident fund/pension fund and gratuity liability are Defined
Contribution Schemes and contributions are charged to Profit and Loss
Account of the year in which the contribution to the respective funds
are due.
Short term employee benefits including compensated absences are
provided for based on the expected obligation on an undiscounted basis
as per Accounting Standard 15 (Revised).
ix. Borrowing costs attributable to the acquisition, construction and
installation of qualifying capital assets are capitalized till the
period before they are put into use.
x. Provisions, Contingent liabilities and Contingent Assets: Provision
is recognized only when there is a present obligation as a result of
past event and it is probable that there will be an outflow of
resources. Contingent liabilities are not recognized but are shown by
way of notes attached to and forming part of the Balance Sheet.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
xi. Impairment loss of fixed assets is assessed as at the close of
each financial year and appropriate provision, if required, is
recognized in the accounts.
xii. Current tax is determined at the current rates of income tax on
taxable income and tax credits are computed in accordance with the
provisions of the Income Tax Act,1961.
xiii. Deferred tax is recognized on timing difference between the
accounting income and the taxable income for the year and quantified
using the rates and tax laws that prevail as at the balance sheet date.
The deferred tax assets are recognized and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax asset
can be realized.
xiv. Government grants have been recognized based on the reasonable
assurance that the Company will comply with the conditions attached to
the grants and the grants will be received. Government grants relatable
to borrowing cost have been reduced from the borrowing cost thereby
reducing the cost of the asset. Government grants relatable to periods
after the acquisition, construction and installation of qualifying
assets are in the nature of revenue grants and have been recognized on
a systematic basis in the profit and loss account.
xv. The Company has operated only one business segment which is textile
segment and hence segment report is not furnished.
xvi. The Company's significant leasing arrangements are operating
leases and cancelable in nature. The lease rentals paid/received under
such agreements are accounted in the profit and loss account.
Mar 31, 2010
I. The accompanying Financial Statements have been prepared on a going
concern basis under the historical cost convention on accrual basis of
accounting in conformity with Generally Accepted Accounting Principles
in India ("Indian GAAP").
ii. Investments: Investments are accounted at cost and are treated as
long-term investments. The diminution in the market value of investment
is recognized when diminution is considered permanent.
iii. Valuation of Inventory.
Raw materials and stores & spares: At cost determined on First in First
out basis or net realizable value, whichever is lower.
Finished goods and waste cotton: At cost or net realizable value,
whichever is lower. The cost has been measured on the weighted average
cost basis and includes cost of purchase, cost of conversion and other
costs incurred in bringing the inventory to their present location and
condition.
Stock in Process: At estimated weighted average cost basis.
iv. The Fixed Assets are valued at historical cost. Cost includes
related taxes, duties, freight, insurance etc., attributable to
acquisition and installation of assets and borrowing cost incurred up
to the date of commencing operations, but excludes duties and taxes
that are recoverable from taxing authorities. The Fixed assets shown in
the books are not revalued.
v. The Company has provided depreciation on straight-line basis in
respect of fixed assets at the rates prescribed in Schedule XIV to the
Companies Act, 1956. For assets costing Rs.5000/- or less, 100%
depreciation has been charged in the year of purchase of such assets;
For other assets acquired during the year pro-rata charge has been made
from the date of first use; In the year of disposal of assets,
depreciation is charged up to the date of disposal.
vi. The Foreign Currency transactions are recorded at the exchange rate
prevailing on the date of the transaction. Foreign currency monetary
items as at the Balance Sheet date are reported at the closing rate or
at the rate at which it is likely to be realized from or required to be
disbursed.
vii. "Foreign Currency Monetary item Translation difference Account"
has been amortised as per notification G.S.R.225CE) of the Ministry of
Corporate Affairs, Government of India dated 31.3.2009.
viii. The Company has opted for Life Insurance Corporation Employees
Group Gratuity Scheme to cover its gratuity liability. Contribution
paid/payable by the company to LIC of India is charged to revenue on
the basis of actuarial valuation towards demand worked out by LIC.
Provident fund/pension fund and gratuity liability are Defined
Contribution Schemes and contributions are charged to Profit and Loss
Account of the year in which the contribution to the respective funds
are due.
Short term employee benefits including compensated absences are
provided for based on the expected obligation on an undiscounted basis
as per Accounting Standard 15 (Revised).
ix. Borrowing costs attributable to the acquisition, construction and
installation of qualifying capital assets are capitalized till the
period before they are put into use.
x. Provisions, Contingent liabilities and- Contingent Assets: Provision
is recognized only when there is a present obligation as a result of
past event and it is probable that there will be an outflow of
resources. Contingent liabilities are not recognized but are shown by
way of notes attached to and forming part of the Balance Sheet.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
xi. Impairment loss of fixed assets is assessed as at the close of each
financial year and appropriate provision, if required, is recognized in
the accounts.
xii. Current tax is determined at the current rates of income tax on
taxable income and tax credits are computed in accordance with the
provisions of the Income Tax Act, 1961. Fringe benefit tax provision is
made in accordance with the provisions of the Income Tax Act, 1961.
xiii, Deferred tax is recognized on timing difference between the
accounting income and the taxable income for the year and quantified
using the rates and tax laws that prevail as at the balance sheet date.
The deferred tax assets are recognized and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax asset
can be realized.
xiv. Government grants have been recognized based on the reasonable
assurance that the Company will comply with the conditions attached to
the grants and the grants will be received. Government grants relatable
to borrowing cost have been reduced from the borrowing cost thereby
reducing the cost of the asset. Government grants relatable to periods
after the acquisition, construction and installation of qualifying
assets are in the nature of revenue grants and have been recognized on
a systematic basis in the profit and loss account.
xv. The Company has operated only one business segment which is textile
segment and hence segment report is not furnished.
xvi. The Companys significant leasing arrangements are operating
leases and cancelable in nature. The lease rentals paid/received under
such agreements are accounted in the profit and loss account.
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