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Accounting Policies of Cravatex Ltd. Company

Mar 31, 2016

(a) Basis of accounting

The financial statements have been prepared in accordance with the generally accepted accounting principles in India “Indian GAAP” to comply in all material aspects with the Accounting Standards specified under section 133 of the Companies Act

2013 read together with paragraph 7 of the Companies (Accounting Standards) Rules,2014. The financial statements have been prepared under the historical cost convention on accrual basis of accounting.

(b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual result could differ from these estimates.

(c) Fixed Assets and depreciation:

(i) Depreciation is provided on fixed assets, other than Spa/Fitness Equipment and Leasehold Improvement under the straight-line method in the manner prescribed under schedule II of the Companies Act, 2013, which also represents the useful life of fixed assets.

(ii) Spa/Equipment and Leasehold Improvement are depreciated on a straight-line basis over a period of 5 years which is managements estimate of the useful life of these assets.

(d) Intangible assets

Costs relating to the following assets are capitalized as ‘Intangible asset'' and amortized on a straight-line basis over a period which is the management''s estimate of the useful life of such assets:

Sublicense - over a period of 10 years

Software - over a period of 10 years

(e) Investments

Investments are classified into “Non-current Investments” and are valued at cost

(f) Inventories

Stock-in-trade and spares are valued at lower of cost and net realizable value, cost being the actual purchase price and other costs that are necessary to bring the inventories to the present location and condition.

(g) Foreign currency transactions

(i) Initial Recognition - Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the date of transaction.

(ii) Conversion - Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange prevailing on the date of the Balance Sheet.

(iii) Exchange differences - All exchange differences arising on settlement/conversion of foreign currency transactions are included in the Statement of Profit and Loss in the year in which they arise.

(iv) Forward Contract - The Company uses foreign exchange forward contracts to hedge its exposure of foreign currency fluctuations. Any profit or loss arising on cancellation or renewal of foreign exchange forward contracts is recognition as income or expenses for the year.

(h) Employee Benefits:

(i) The Company''s contribution to Provident Fund is remitted to Employs’ Provident Fund Organization based on a fixed percentage of the eligible employee''s salary and charged to Statement of Profit and Loss . (The Company has categorized its Provident Fund as a defined contribution plan since it has no further obligations beyond these contributions).

(ii) The Company''s contribution under a defined Superannuation Plan to the trust established for this purpose bases on a specific percentage of salary of eligible employees is charged to Statement of Profit and Loss. (The Company has categorized superannuation plan as a defined contribution plan since it has no further obligations beyond these contributions).

(iii) The Company''s liability towards gratuity is accounted for on the basis of an actuarial valuation done by Life Insurance Corporation of India (LIC) at the year end and actuarial gains/losses are charged to the Statement of Profit and Loss. Gratuity liability is funded by payments to LIC under the Group Gratuity Scheme of the Company''s employees.

(iv) Leave encashment which is expected to be utilized within a year, is treated as short-term employment benefit.

(i) Taxes on Income

Deferred tax is recognized on timing differences between the accounting and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted at the Balance Sheet date and is capable of reversal in one or more subsequent periods.

Tax credit is recognized in respect of Minimum Alternative Tax (“MAT”) as per the provisions of section 115 JAA of the Income Tax Act,1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and is reviewed at each Balance Sheet date.

(j) Leases:

(i) Assets acquired under finance leases are capitalized at the lower of the fair value of the leased assets at the inception of the lease term and the present value of minimum lease payments.

(ii) Lease payments under operating lease are recognized as an expense in the Statement of Profit and Loss on straight line basis over the lease term.


Mar 31, 2015

(a) Basis of accounting and preparation of financial statements

The financial statements which have been prepared under the historical cost convention on the accrual basis of accounting, are in accordance with the applicable requirements of the Companies Act, 1956 (the 'Act') and comply in all material aspects with the Accounting Standards prescribed by the Central Government, in accordance with the Companies (Accounting Standards) rules, 2006, to the extent applicable.

(b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

(c) Fixed Assets and depreciation:

(i) Fixed Assets are stated at cost less accumulated depreciation.

(ii) Depreciation is provided in the manner as specified in Schedule II of the Companies Act, 2013, except in respect of the following assets which are amortised on a straight line basis over a period which is management's estimate of the useful life of such assets:

Tangible Asset:

(a) In the case of Spa / Fitness Equipment and Leasehold Improvement, which are depreciated over a period of 5 years Intangible Asset:

(a) In the case of Sublicense, amortized over this period of 15 years.

(b) In the case of Software, which are depreciated over a period of 10 years

(d) Investments are stated at the cost of acquisition.

(e) Inventories

Stock-in-trade and spares - At cost or net realisable value whichever is lower, cost being the actual purchase price and other costs that are necessary to bring the inventories to the present location and condition.

(f) Foreign Exchange Transactions

Transactions in foreign currency are recorded at the prevailing exchange rate on the date of negotiation of bills. Current assets and current liabilities in foreign currency are stated at the exchange rate prevailing as on 31 March, 2015 and the difference is recognised in the Statement of Profit and Loss . Where the Company has entered into forward exchange contract the liability is recorded at the contract rate. The difference between the contracted rate and the rate at the date of transaction, except for the fixed assets, is recognised in the Statement of Profit and Loss over the period of the contract.

(g) Employee Benefits:

(i) Provision for Gratuity has been accounted as per the actuarial valuation done by Life Insurance Corporation of India (LIC) in accordance with Accounting Standard on Employee Benefits.(AS-15 revised) and with corresponding payment to LIC.

(ii) Amount payable on account of leave encashment is on actual basis.

(h) Leases:

(i) Assets acquired under finance leases are capitalised at the lower of the fair value of the leased assets at the inception of the lease term and the present value of minimum lease payments.

(ii) Lease payments under operating lease are recognised as an expense in the Statement of Profit and Loss on straight line basis over the lease term.

(i) Taxation

Provision for Income-tax comprises current tax based on the liability computed after considering tax allowances and exemptions.Deferred tax recognised, subject to consideration of prudence in respect of deferred tax assets, at the rate of income tax prevailing on the balance sheet date on timing difference, being the difference between the taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.


Mar 31, 2014

(a) Basis of accounting and preparation of financial statements

The Financial statements which have been prepared under the historical cost convention on the accrual basis of accounting, are in acordance with the applicable requirements of the Companies Act, 1956 (the ''Act'') and comply in all material aspects with the Accounting Standards prescribed by the Central Government, in accordance with the Companies (Accounting Standards) rules, 2006, to the extent applicable.

(b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

(c) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation.

(d) Intangible Assets

(a) Licenses and Franchise are amortised on written down value basis over a period which is the management estimate of the useful life of such intangible assets.

(b) Sublicense - is amortised over the period of the license in equal annual installments.

(e) Depreciation

Depreciation is provided on straightline method at the rates and in the manner as specified in Schedule XIV of the Companies Act, 1956 except:

In the case of Licenses and Franchise, depreciation has been charged on written down value method at the rate of 25% as specified for Intangible Assets under the Income-tax Rules.

In the case of Sublicense, amortized over this period of 10 years.

In the case of Spa Equipment, which are depreciated over a period of 7 years on straight line method.

(f) Investments are stated at the cost of acquisition.

(g) Inventories Stock-in-trade and spares - At cost or net realisable value whichever is lower, cost being the actual purchase price and other costs that are necessary to bring the inventories to the present location and condition.

(h) Foreign Exchange Transactions:

Transactions in foreign currency are recorded at the prevailing exchange rate on the date of negotiation of bills. Current assets and current liabilites in foreign currency are stated at the exchange rate prevailing as on 31 March, 2014 and the difference is recognised in the Statement of Profit and Loss. Where the Company has entered into forward exchange contract the liability is recorded at the contract rate. The difference between the contracted rate and the rate at the date of transaction, except for the fixed assets, is recognised in the Statement of Profit and Loss over the period of the contract.

(i) Employee Benefits

(i) Provision for Gratuity has been accounted as per the acturial valuation done by Life Insurance Corporation of India (LIC) in accordance with Accounting Standard on Employee Benefits (AS-15 revised) and with corresponding payment to LIC.

(ii) Amount payable on account of leave encashment is on actual basis.

(j) Leases:

(i) Assets acquired under finance leases are capitalised at the lower of the fair value of the leased assets at the inception of the lease term and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term at constant periodic rate of interest on the remaining balance of liability.

(ii) Lease payments under operating leases are recognised as an expense in the Statement of Profit and Loss on straight line basis over the lease term.

(k) Taxation:

Provision for Income-tax comprises current tax based on the liability computed after considering tax allowances and exemptions. Deferred tax recognised, subject to consideration of prudence in respect of deferred tax assets, at the rate of income tax prevailing on the balance sheet date on timing difference, being the difference between the taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.


Mar 31, 2013

(a) General

(i) These accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

(ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

(b) Revenue Recognition

Expenses and income considered payable and receivable have been accounted for on accrual basis.

(c) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation

(d) Investments are stated at the cost of acquisition.

(e) Inventories

Stock-in-trade and spares - At cost or net realisable value whichever is lower, cost being the actual purchase price and other costs that are necessary to bring the inventories to the present location and condition.

(f) Depreciation

Depreciation is provided on straightline method at the rates and in the manner as specified in Schedule XIV of the Companies Act, 1956 except:

— in the case of Licenses and Franchise, depreciation has been charged on written down value method at the rate of 25% as specified for Intangible Assets under the Income-tax Rules.

— In the case of sublicense, amortized over this period of license in equal annual instalments.

— In the case of Spa Equipment, which are depreciated over a period of 7 years on straight line method.

(g) Foreign Exchange Transactions:

Transactions in foreign currency are recorded at the prevailing exchange rate on the date of negotiation of bills. Current assets and current liabilites in foreign currency are stated at the exchange rate prevailing as on 31 March, 2013 and the difference is recognised in the Statement of Profit and Loss. Where the Company has entered into forward exchange contract the liability is recorded at the contract rate. The difference between the contracted rate and the rate at the date of transaction, except for the fixed assets, is recognised in the Statement of Profit and Loss over the period of the contract.

(h) Employee Benefits

(i) Provision for Gratuity has been accounted as per the acturial valuation done by Life Insurance Corporation of India (LIC) in accordance with Accounting Standard on Employee Benefits (AS-15 revised) and with corresponding payment to LIC. (ii) Amount payable on account of leave encashment is on actual basis.

(i) Leases:

(i) Assets acquired under finance leases are capitalised at the lower of the fair value of the leased assets at the inception of the lease term and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term at constant periodic rate of interest on the remaining balance of liability. (ii) Lease payments under operating lease are recognised as an expense in the Statement of Profit and Loss on straight line basis over the lease term.

(j) Taxation:

Provision for Income-tax comprises current tax based on the liability computed after considering tax allowances and exemptions.Deferred tax recognised, subject to consideration of prudence in respect of deferred tax assets, at the rate of income tax prevailing on the balance sheet date on timing difference, being the difference between the taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.


Mar 31, 2012

(a) General

(i) These accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

(ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

(b) Revenue Recognition

Expenses and income considered payable and receivable have been accounted for on accrual basis.

(c) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation

(d) Investments are stated at the cost of acquisition.

(e) Inventories

Stock-in-trade and spares - At cost or net realizable value whichever is lower, cost being the actual purchase price and other costs that are necessary to bring the inventories to the present location and condition.

(f) Depreciation

Depreciation is provided on straight-line method at the rates and in the manner as specified in Schedule XIV of the Companies Act, 1956 except:

- in the case of Licenses and Franchise, depreciation has been charged on written down value method at the rate of 25% as specified for Intangible Assets under the Income-tax Rules.

- In the case of Spa Equipment, which are depreciated over a period of 7 years on straight line method.

(g) Foreign Exchange Transactions:

Transactions in foreign currency are recorded at the prevailing exchange rate on the date of negotiation of bills. Current assets and current liabilities in foreign currency are stated at the exchange rate prevailing as on 31 March, 2012 and the difference is recognized in the Statement of Profit and Loss. Where the Company has entered into forward exchange contract the liability is recorded at the contract rate. The difference between the contracted rate and the rate at the date of transaction, except for the fixed assets, is recognized in the Statement of Profit and Loss over the period of the contract.

(h) Employee Benefits

(i) Provision for Gratuity has been accounted as per the actuarial valuation done by Life Insurance Corporation of India (LIC) in accordance with Accounting Standard on Employee Benefits (AS-15 revised) and with corresponding payment to LIC.

(ii) Amount payable on account of leave encashment is on actual basis.

(i) Leases:

(i) Assets acquired under finance leases are capitalized at the lower of the fair value of the leased assets at the inception of the lease term and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term at constant periodic rate of interest on the remaining balance of liability.

(ii) Lease payments under operating lease are recognized as an expense in the Statement of Profit and Loss on straight line basis over the lease term.

(j) Taxation:

Provision for Income-tax comprises current tax based on the liability computed after considering tax allowances and exemptions. Deferred tax recognized, subject to consideration of prudence in respect of deferred tax assets, at the rate of income tax prevailing on the balance sheet date on timing difference, being the difference between the taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.


Mar 31, 2011

(a) General

(i) These accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

(ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

(b) Revenue Recognition

Expenses and income considered payable and receivable have been accounted for on accrual basis.

(c) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation

(d) Investments are stated at the cost of acquisition.

(e) Inventories

Finished Goods (including spares) - At cost or net realisable value whichever is lower, cost being the actual purchase price and other costs that are necessary to bring the inventories to the present location and condition.

(f) Depreciation

Depreciation is provided on straightline method at the rates and in the manner as specified in Schedule XIV of the Companies Act, 1956 except:

– in the case of Licenses and Franchise, depreciation has been charged on written down value method at the rate of 25% as specified for Intangible Assets under the Income-tax Rules.

– In the case of Spa Equipment, which are depreciated over a period of 7 years on straight line method.

(g) Foreign Exchange Transactions:

Transactions in foreign currency are recorded at the prevailing exchange rate on the date of negotiation of bills. Current assets and current liabilites in foreign currency are stated at the exchange rate prevailing as on 31 March, 2011 and the difference is recognised in the Profit and Loss Account. Where the Company has entered into forward exchange contract the liability is recorded at the contract rate. The difference between the contracted rate and the rate at the date of transaction, except for the fixed assets, is recognised in the profit and Loss Account over the period of the contract.

(h) Employee Benefits:

(i) Provision for Gratuity has been accounted as per the actuarial valuation done by Life Insurance Corporation of India (LIC) in accordance with Accounting Standard on Employee Benefits. (AS-15 revised) and with corresponding payment to LIC.

(ii) Amount payable on account of leave encashment is on actual basis.

(i) Leases:

(i) Assets acquired under finance leases are capitalised at the lower of the fair value of the leased assets at the inception of the lease term and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term at constant periodic rate of interest on the remaining balance of liability.

(ii) Lease payments under operating lease are recognised as an expense in the Profit and Loss Account on straight line basis over the lease term.

(j) Taxation:

Provision for Income-tax comprises current tax based on the liability computed after considering tax allowances and exemptions. Deferred tax recognised, subject to consideration of prudence in respect of deferred tax assets, at the rate of income tax prevailing on the balance sheet date on timing differnce, being the difference between the taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.


Mar 31, 2010

(a) General

(i) These accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

(ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

(b) Revenue Recognition

Expenses and income considered payable and receivable have been accounted for on accrual basis.

(c) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation

(d) Investments are stated at the cost of acquisition.

(e) Inventories

Finished Goods (including spares) - At cost or net realisable value whichever is lower, cost being the actual purchase price and other costs that are necessary to bring the inventories to the present location and condition.

Fabrics - At cost

(f) Depreciation

Depreciation is provided on straightline method at the rates and in the manner as specified in Schedule XIV of the Companies Act, 1956 except:

- in the case of Licenses and Franchise, depreciation has been charged on written down value method at the rate of 25% as specified for Intangible Assets under the Income-tax Rules.

- In the case of Spa Equipment, which are depreciated over a period of 7 years on straight line method.

(g) Foreign Exchange Transactions:

Transactions in foreign currency are recorded at the prevailing exchange rate on the date of negotiation of bills. Current assets and current liabilites in foreign currency are stated at the exchange rate prevailing as on 31 March, 2010 and the difference is recognised in the Profit and Loss Account. Where the Company has entered into forward exchange contract the liability is recorded at the contract rate. The difference between the contracted rate and the rate at the date of transaction, except for the fixed assets, is recognised in the Profit and Loss Account over the period of the contract.

(h) Retirement Benefits

(i) Provision for Gratuity has been accounted as per the actuarial valuation done by Life Insurance Corporation of India (LIC) in accordance with Accounting Standard on Employee Benefits. (AS-15 revised) and with corresponding payment to LIC.

(ii) Amount payable on account of leave encashment is on actual basis.

(i) Leases:

(i) Assets acquired under finance leases are capitalised at the lower of the fair value of the leased assets at the inception of the lease term and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term at constant periodic rate of interest on the remaining balance of liability.

(ii) Lease payments under operating lease are recognised as an expense in the Profit and Loss Account on straight line basis over the lease term.

(j) Taxation:

Provision for Income-tax comprises current tax based on the liability computed after considering tax allowances and exemptions. Deferred tax recognised, subject to consideration of prudence in respect of deferred tax assets, at the rate of income tax prevailing on the balance sheet date on timing difference, being the difference between the taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

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