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Accounting Policies of E-Land Apparel Ltd. Company

Mar 31, 2015

1. Corporate Information

The E-land Apparel Limited ("the Company") is a listed public limited company incorporated in 1997. Its shares are listed on two stock exchanges in India. The company caters to both domestic and international markets. The Company is primarily engaged in the business of manufacturing of garment.

2. Basis of preparation

The financial statements of the company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention, except for land and building acquired before April 1, 2010 which are carried at revalued amounts.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2.1 Summary of significant accounting policies

A) Use of Estimates:

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

B) Inventories:

Inventories are valued at lower of cost or Net Realizable Value. Cost is determined on weighted average basis. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

C) Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific criteria must also be met before revenue is recognised;

Sale of Goods

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods.

Export Sales are accounted for on the basis of dates of Bill of Lading.

Export Incentives

Export Incentives are accounted on accrual basis.

Dividend

Dividend is accounted on accrual basis when the right to receive the dividend is established.

Interest Income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

D) Fixed Assets:

Tangible Assets:

Fixed Assets are stated at cost of acquisition less accumulated depreciation. Cost comprises the purchase price, including duties and other non-refundable taxes or levies, any directly attributable cost of bringing the asset to its working condition and indirect costs specifically attributable to construction of a project or to the acquisition of a fixed asset.

Following initial recognition, tangible assets are carried at cost less accumulated depreciation and impairment losses, if any.

Gains or losses arising from derecognition of tangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

Intangible Assets:

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization / depletion.

E) Depreciation and Amortization:

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management. The company has used the following rates to provide depreciation on its fixed assets.

Leasehold land is amortized on a straight line basis over the period of lease, i.e., 99 years.

To comply with the requirement of Schedule II of the Companies Act, 2013, the Company has discontinued the practice of recouping the impact of additional depreciation from revaluation reserve.

The management has estimated, supported by independent assessment by technicians, the useful lives of plant and equipment is estimated as 20 years. These lives are higher than those indicated in schedule II.

Amortization of Intangible assets is provided on basis of management estimates. Goodwill is amortised over a period of 10 years on straight line method.

The amortization/depreciation period and the amortization/depreciation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization/ depreciation period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization/depreciation method is changed to reflect the changed pattern.

F) Impairment of Assets:

The carrying amounts of assets are reviewed at each Balance Sheet date. If there is any indication of impairment based on internal or external factors, i.e. when the carrying amount of the asset exceeds the recoverable amount, an impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed or reduced if there has been a favorable change in the estimate or the recoverable amount. Recoverable amount is the higher of an asset's net selling price and value in use.

G) Foreign Currency Transactions:

I. All transactions in foreign currency are recorded at the rates of exchange prevailing on the dates when the relevant transactions take place.

II. Monetary items in the form of Loans, Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date o f the Balance Sheet. Resultant gain or loss is accounted during the year.

III. Any income or expense on account of exchange difference either on settlement of monetary item or on translation is recognised in the Statement of Profit and Loss.

H) Retirement and other employee benefits:

i. Retirement benefit in the form of provident fund and super annuation fund is a defined contribution scheme. The company has no obligation, other than the contribution payable to the respective fund. The company recognizes contribution payable to the provident fund/ super annuation scheme as expenditure, when an employee renders the related service.

ii. Gratuity benefit is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

iii. Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

iv. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year end. The Company presents the leave as a current liability in the balance sheet to the extent it does not have an unconditional legal and contractual right to defer its settlement for 12 months after the reporting date.

v. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.

I) Investments:

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long- term investments.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

J) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of the qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to statement of profit and loss.

K) Lease:

Where the company is lessee:

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the period of the lease or other systematic basis more representative of the time pattern of the user's benefits.

Where the company is lessor:

Lease income on operating leases are recognised in the Statement of Profit and Loss on a straight line basis over the lease term which is representative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognised as an expense in the Statement of Profit and Loss in the period in which they are incurred.

L) Earnings Per Share:

The Company records basic and diluted Earnings Per Share (EPS) in accordance with Accounting Standard 20 "Earnings Per Share". Basic EPS is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, which have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted EPS, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.

M) Taxation:

I. Tax expense comprises both current and deferred tax. Current tax is the amount of tax payable on the assessable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.

II. Deferred tax is recognized on timing differences, being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognized only when there is virtual certainty of their realisation and on other items when there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year-end based on the tax rate and laws enacted or substantially enacted on the balance sheet date.

III. At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.

IV. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes- down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

N) Provisions

A provision is recognised when the company has a present obligation as a result of past event; 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 are not discounted to its present value and are determined based on best estimate required to settle the obligation at the reporting date. These are reviewed at each reporting date and adjusted to reflect the current best estimates.

O) Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

P) Cash and Cash equivalents

Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short- term investments with an original maturity of three months or less.

i Income Tax demand includes Demand Notice from Income Ta x Authorities under section 156 of Income Tax Act for the A.Y 2009-10 Rs. 69.47 Lacs and for A.Y. 2010-11 Rs. 70.89 Lacs.

ii The Master Restructuring Agreement (MRA) executed by the Company and the Corporate Debt Restructuring ('CDR') lenders as well as the provisions of the Master Circular on Corporate Debt Restructuring issued by the Reserve Bank of India, give a right to the CDR Lenders to get a recompense of their waivers and sacrifices made as part of the CDR Proposal. The recompense payable by the borrowers is contingent on various factors and conditions under the CDR Master Circular, the outcome of which currently, is materially uncertain and hence the proportionate amount payable as recompense has been treated as a contingent liability and not provided for.

iii The Company has given Guarantee to the Bankers for liabilities transferred to E-Land Fashion India Pvt. Ltd.(EFIPL) pursuant to the sale of D-1 unit to EFIPL in the previous year.

ii) Defined Benefit Plan

The Company has defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is unfunded.


Mar 31, 2014

A) Basis of preparation of financial statement:

The financial statements have been prepared under historical cost convention on accrual basis in accordance with generally accepted accounting principles and applicable accounting standards as notified under Companies (Accounting Standard) Rules, 2006 and the provisions of Companies Act, 1956.

All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current and non-current classification of assets and liabilities.

b) Use of Estimates:

The Preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods affected. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable.

c) Inventories:

Inventories are valued at lower of cost or Net Realisiable Value. Cost is determined on weighted average basis. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition.

d) Revenue Recognition:

I. Sale of Goods is recognized on transfer of significant risks and rewards of ownership which is generally on the dispatch of goods. Sales are accounted for net of sales return.

II. Export Sales are accounted for on the basis of dates of Bill of Lading.

III. Export Incentives viz duty drawback and focus marketing are accounted on accrual basis.

IV Dividend is accounted on accrual basis when the right to receive the dividend is established.

V Interest income is recognized on the time basis determined by the amount outstanding and the rate applicable and where no significant uncertainty as to measurability or collectability exists.

VI. Income on assets given on operating lease is recognized on a straight line basis over the lease term.

e) Fixed Assets:

Tangible Assets:

Fixed Assets are stated at cost of acquisition less accumulated depreciation. Cost comprises the purchase price, including duties and other non-refundable taxes or levies, any directly attributable cost of bringing the asset to its working condition and indirect costs specifically attributable to construction of a project or to the acquisition of a fixed asset.

Intangible Assets:

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation / depletion. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.

f) Depreciation and Amortisation:

Depreciation on fixed assets is provided to the extent of depreciable amount on Straight Line Method (SLM) at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 over their useful life.

Depreciation on the revalued component is provided on the straight line method. Such depreciation is withdrawn from Revaluation Reserve and credited to The Statement of Profit and Loss.

Amortisation of Intangible assets is provided on basis of management estimates. Goodwill is amortised over a period of 10 years on straight line method and Brand value is amortised over a period of 5 years on straight line method.

g) Impairment of Assets:

The carrying amounts of assets are reviewed at each Balance Sheet date. If there is any indication of impairment based on internal or external factors, i.e. when the carrying amount of the asset exceeds the recoverable amount, an impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed or reduced if there has been a favorable change in the estimate or the recoverable amount. Recoverable amount is the higher of an asset''s net selling price and value in use.

h) Foreign Currency Transactions:

I. All transactions in foreign currency are recorded at the rates of exchange prevailing on the dates when the relevant transactions take place.

II. Monetary items in the form of Loans, Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Resultant gain or loss is accounted during the year.

III. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

i) Employee Retirement and Other Benefits:

Defined Contribution Plans such as Provident Fund etc. are charged to the Statement of Profit and Loss as incurred.

Gratuity:

The present value of the obligation under such plan is determined based on an actuarial valuation using the Projected Unit Credit Method. Actuarial gains and losses arising on such valuation are recognised immediately in the Statement of Profit and Loss.

Compensated Absences:

The Company has scheme for compensated absences for employees, the liability for which is determined on the basis of actuarial valuation, carried out at Balance Sheet date.

Provident Fund & ESIC:

Contributions to defined contribution schemes i.e. Provident Fund & ESIC is made to the government owned funds and are charge to the Statement of Profit and Loss on accrual basis.

j) Investments:

Investments are classified into current and non-current investments. non-current investments are carried at cost. Provision for diminution, if any, in the value of each non-current investment is made to recognise a decline, other than of a temporary nature. Current investments are carried at lower of cost and quoted / fair value.

k) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of the qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue.

l) Lease:

As a lessee:

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the period of the lease or other systematic basis more representative of the time pattern of the user''s benefits.

As a lessor:

Lease income on operating leases are recognised in the Statement of Profit and Loss on a straight line basis over the lease term which is representative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognised as an expense in the Statement of Profit and Loss in the period in which they are incurred.

m) Earnings Per Share:

The Company records basic and diluted Earnings Per Share (EPS) in accordance with Accounting Standard 20 "Earnings Per Share". Basic EPS is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s EPS are the net profit for the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, which have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted EPS, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares; except where the results are anti-dilutive.

n) Taxation:

I. Tax expense comprises both current and deferred tax. Current tax is the amount of tax payable on the assessable income for the year determined in accordance with the provisions of the Income tax Act, 1961.

II. Deferred tax is recognized on timing differences; being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognized only when there is virtual certainty of their realisation and on other items when there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year-end based on the tax rate and laws enacted or substantially enacted on the balance sheet date.

o) Provisions , contingent liabilities and contingent assets:

Estimation of the probability of any loss that might be incurred on outcome of contingencies on basis of information available upto the date on which the financial statements are prepared. A provision is recognised when an enterprise has a present obligation as a result of a past event 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 are determined based on management estimates required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. In cases where the available information indicates that the loss on the contingency is reasonable possible but the amount of loss cannot be reasonably estimated, a disclosure to this effect is made in the financial statements. In case of remote possibility neither provision nor disclosure is made in the financial statements. The company does not account for or disclose contingent asset, if any.

(iii) Terms/ rights attached to Equity Shares :-

The company has only one class of share capital namely Equity Shares having par value of Rs.10 per share. Each holder of Equity Shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. In the event of liquidation of the company, the holders of Equity Shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the shareholders.

Mr. Murarilal Agarwal, Mr. Ravindra Agarwal, Mr. Vishwambharlal Bhoot (Old Promoters) and E-Land Asia Holdings Pte Ltd form the promoter group of Company. As per the provision of the Securities Contracts (Regulations) Rules, 1957 (as amended) (SCRR), the Company is required to maintain a public shareholding of 25% of the aggregate paid up share capital (Minimum Public Shareholding Threshold) (MPS). Accordingly, at present, the public shareholding of the Company falls short of the required Minimum Public Shareholding by 10.79%. In order to comply with MPS, the Company has identified among other options, sale of shares held by promoters through the secondary market (Offer for Sale) as the more feasible options to comply with requirement of MPS. However, in view of the extremely low volume of trading in the shares of the Company and also due to the shares being categorized for trading in the ''Periodic Call Auction" system, Company will seek more time to meet the MPS requirement. Till the time minimum public share holding is achieved by the Company, the rights attached to the shares of promoter/ promoter group stands modified as directed by SEBI vide its order dated 04th June, 2013.

Notes

(i) Restructuring :

During the earlier years, the Company had made a reference to the Corporate Debt Restructuring (CDR) cell for restructuring of the debts of the Company through CDR Mechanism. The final restructuring package was approved by CDR empowered group on June 01, 2012. The Master Restructuring Agreement ("MRA") has also been signed with the lenders participating in the CDR package (''CDR Lenders'') on September 24, 2012. Some of the salient features of the CDR package are as follows:

- Entire principal outstanding as on cut off date viz October 01, 2011 has been restructured

- Irregular portion of working capital loan has been converted into Working Capital Term Loan (WCTL)

- Interest on Term Loans, WCTL and Working Capital Facilities for first 12 months (i. e from the cut-off date) has been converted into Long term loan

- Repayment tenure of term loans, WCTL extended for a tenure of 10 years from COD -i.e. till 30th September, 2021.

- Overall reduction in interest rates on term loans, WCTL and working capital.

- Promoters contribution to support restructuring package amounting Rs.171.00 Crores.

- Creation of security in favor of CDR lenders in order to secure the debt obligations of the Company under the CDR Package which is under creation.

(ii) Nature of Security of Secured Loans:

(a) All existing term loans, SBI corporate loan, Working Capital Term Loan, FITL, and Working Capital facilities to be secured by first charge on pari passu basis on Fixes Assets and Current Assets. Creation of security in favor of CDR lenders as per Corporate Debt Restructuring (CDR) package is under process.

(b) Vehicle Loans are Secured by hypothecation of specified vehicles against which the finance is obtained.

(iii) Terms of repayment of term loan and other loans are as below:

a) Term Loan under TUFF Scheme - Repayment of these loans has commenced from 31st December,2011 in Quarterly Installment as Follows:- FY12H1-0.1%, FY12 (H2)-0.2%, FY13-0.2%, FY14-1.75%, FY15-3%, FY16-9%, FY17-10%, FY18-16%, FY19-17%, FY20-18%, FY21-18% & FY22 (H1)-6.75%

b) Other Term Loan & WCTL - Repayment of these loans has commenced from June,2013 in Quarterly Installment as Follows:- FY14-1.75%, FY15-3%, FY16-9%, FY17-10%, FY18-16%, FY19-17%, FY20-18%, FY21-18% & FY22 (H1)-7.25%

c) FITL on TUFS Loans to be paid with in 6 quarters from COD i.e. till 31.03.2013, FITL on SBI corporate loan, IDBI & SIDBI TL facilities, Axis MTM Forex, WCTL & on WC facility to be repaid in 8 equal quarterly installments beginning 30th Septemeber,2014

d) Details of terms and repayment of Vehicle loan is as under:

Name of Bank Rate of Interest Repayment terms

HDFC Bank Ltd 9.37% 59 Months

HDFC Bank Ltd 9.92% 60 Months

HDFC Bank Ltd 9.92% 60 Months

HDFC Bank Ltd 9.92% 60 Months

Oriental Bank of Commerce 10.51% 38 Months

iv) Interest Recompense

Under the CDR package, the lenders have reserved their right of recompense for the reliefs, waivers and sacrifices extended by them to the Company. As per MRA, as on date of MRA, the total amount of sacrifice extended by the lenders to the Company is Rs. 4,544 Lacs.

v) The entire outstanding term loan and working capital loan related to D1 unit alongwith security provided thereof has been transferred to E-Land Fashion India Pvt. Ltd. as on 29th March 2014 as loan liability of Company''s unit at D-1, Tarapur under the Business Transfer Agreement.

vi) Loans and Advances from related parties - Repayment of these loans are as follows :- - 10% of the loan amount on or prior to December 31, 2022

- 20% of the loan amount on or prior to December 31, 2023

- Balance 70% of the loan amount on or prior to December 31, 2024

i) In terms of Tripatriate Settlement Agreement (TSA) entered into between the Company, Ex-Promoters, and E-Land Asia Holdings Pte. Ltd. (''E-Land Asia'') (Company''s Foreign Holding Company), E-Land Asia has repaid the loan amounting to Rs. 1,150.63 lacs to the Ex-Promoters on behalf of the Company. Accordingly, the Company has recorded in its books of accounts, Rs. 1,150.63 lacs as unsecured loans payable to E-Land Asia. The balance amount Rs. 551.76 lacs is written back by the Company in their books as no more payable to Ex-Promoters in terms of TSA.

ii) The Company is in the process of evaluating the applicability of the various provisions of the Foreign Exchange Management Act and rules and regulations there under to the said transaction. If required, the Company would apply to the regulatory authorities for regularizing the transaction.


Sep 30, 2012

A) Basis of preparation of financial statement:

The financial statements have been prepared under historical cost convention on accrual basis in accordance with generally accepted accounting principles and applicable accounting standards as notified under Companies (Accounting Standard) Rules, 2006 and the provisions of Companies Act, 1956.

b) Use of Estimates:

The Preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known or materialized.

c) Revenue Recognition:

Domestic sales and Processing Charges are accounted for on dispatch of goods to customers and Export Sales are accounted for on the basis of dates of Bill of Lading. Sales are accounted for net of sales return. Export Incentives viz duty drawback, duty entitlement passbook scheme and focus marketing are accounted on accrual basis. Dividend is accounted on accrual basis when the right to receive the dividend is established. Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

d) Employee Retirement and Other Benefits:- Defined benefit Obligation:

Gratuity:

Gratuity provision is made for qualifying employees. Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit cost method. Actuarial gains / losses are recognised immediately taken to the profit and loss account and are not deferred.

Provident Funds & ESIC:

Contributions to defined contributions schemes i.e. Provident Fund & ESIC is made to the government owned funds and are charged to the Profit & Loss Account on accrual basis.

Compensated Absences:

The Company has a scheme for compensated absences for employees, the liability for which is determined on the basis of an actuarial valuation, carried out at the Balance Sheet date.

e) Fixed Assets:

Fixed Assets are stated at cost of acquisition less accumulated depreciation. The cost includes taxes, duties, freight, installation, startup and commissioning expenses and other preoperative expenses and other direct and allocated expenses up to the date of commercial production.

f) Tangible Assets:

Depreciation on Fixed Assets is provided on "Straight Line Method" in the manner prescribed in Schedule-XIV to the Companies Act, 1956 on pro rata basis.

g) Intangible Assets & Amortisation:

Intangible assets are stated at cost less accumulated amortisation. Amortisation of Intangible assets is provided on basis of management estimates. Goodwill is amortised over a period of 10 years on straight line method and Brand value is amortised over a period of 5 years on straight line method.

h) Impairment of Assets:

The carrying amounts of assets are reviewed at each Balance Sheet date. If there is any indication of impairment based on internal or external factors, i.e. when the carrying amount of the asset exceeds the recoverable amount, an impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed or reduced if there has been a favorable change in the estimate or the recoverable amount. Recoverable amount is the higher of an asset''s net selling price and value in use.

i) Investments:

Long term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investment.

j) Inventories:

Inventories are valued at lower of cost or Net Realisiable Value. Cost is determined on moving weighted average basis. Cost of Work in Progress and manufactured goods includes material, labour and other appropriate conversion cost and overheads wherever applicable.

k) Foreign Currency Transactions:

All transactions in foreign currency are recorded at the rates of exchange prevailing on the dates when the relevant transactions take place .Monetary assets and liabilities in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Resultant gain or loss, except the extent it relates to long term monetary items, is charged to the Profit and Loss Account for the year. Such gain or loss relating to long term monetary items for financing acquisition of depreciable capital assets, is adjusted to the acquisition cost of such asset and depreciated over its remaining useful life;

l) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of the qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue.

m) Taxation:

(i) Provision for current Tax is made with reference to taxable income computed for the accounting period, for which the financial statements are prepared by the tax rates as applicable.

(ii) Deferred tax is recognized subject to the consideration of prudence, on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Such deferred tax is quantified using the tax rates and laws enacted/substantively enacted as on the Balance Sheet date. Deferred tax Assets are recognized and carried forward to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

n) Lease:

Leases where significant portion of risk and rewards of ownership are retained by lessor are classified as operating lease and lease rental thereon are charged to Profit & Loss Account.

o) Provisions , contingent liabilities and contingent assets

Estimation of the probability of any loss that might be incurred on outcome of contingencies on basis of information available upto the date on which the financial statements are prepared. A provision is recognised when an enterprise has a present obligation as a result of a past event 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 are determined based on management estimates required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. In cases where the available information indicates that the loss on the contingency is reasonable possible but the amount of loss cannot be reasonably estimated, a disclosure to this effect is made in the financial statements. In case of remote possibility neither provision nor disclosure is made in the financial statement. The company does not account for or disclose contingent asset, if any.

p) Share Issue expenses

Expenses pertaining and related to issue of shares are adjusted against balance lying in Securities Premium Account.

q) Earnings Per Share

The company records basic and diluted Earnings Per Share (EPS) in accordance with Accounting Standard 20 Earnings per share. Basic EPS is computed by dividing the net profit or loss for the year available for the year for equity share holders by the weighted average no of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effect of all dilutive potential equity shares, except where the results are anti-dilutive.


Mar 31, 2011

A) Basis of preparation of financial statement:

The financial statements have been prepared under historical cost convention on accrual basis in accordance with generally accepted accounting principles and applicable accounting standards as notified under Companies (Accounting Standard) Rules, 2006 and the provisions of Companies Act, 1956.

b) Use of Estimates:

The Preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known or materialized.

c) Fixed Assets:

Fixed Assets are stated at cost of acquisition less accumulated depreciation. The cost includes taxes, duties, freight, installation, startup and commissioning expenses and other preoperative expenses and other direct and allocated expenses up to the date of commercial production.

d) Depreciation:

Depreciation on Fixed Assets is provided on "Straight Line Method" in the manner prescribed in Schedule-XIV to the Companies Act, 1956 on pro rata basis.

e) Intangible Assets & Amortisation:

Intangible assets are stated at cost less accumulated amortisation. Amortisation of Intangible assets is provided on basis of management estimates. Goodwill is amortised over a period of 10 years on straight line method and Brand value is amortised over a period of 5 years on straight line method.

f) Investments:

Long term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investment.

g) Revenue Recognition:

Domestic sales and Processing Charges are accounted for on dispatch of goods to customers and Export Sales are accounted for on the basis of dates of Bill of Lading. Sales are accounted for net of sales return. Export Incentives viz duty drawback, duty entitlement passbook scheme and focus marketing are accounted on accrual basis. Dividend is accounted on accrual basis when the right to receive the dividend is established. Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

h) Inventories:

Inventories are valued at lower of cost or Net Realisiable Value. Cost is determined on moving weighted average basis. Cost of Work in Progress and manufactured goods includes material, labour and other appropriate conversion cost and overheads wherever applicable.

i) Foreign Currency Transactions:

All transactions in foreign currency are recorded at the rates of exchange prevailing on the dates when the relevant transactions take place. Monetary assets and liabilities in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Resultant gain or loss, except the extent it relates to long term monetary items, is charged to the Profit and Loss Account for the year. Such gain or loss relating to long term monetary items for financing acquisition of depreciable capital assets, is adjusted to the acquisition cost of such asset and depreciated over its remaining useful life;

j) Employee Retirement and Other Benefits:- Defined benefit Obligation: Gratuity:

Gratuity provision is made for qualifying employees. Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit cost method. Actuarial gains / losses are recognised immediately taken to the profit and loss account and are not deferred.

Provident Funds & ESIC:

Contributions to defined contributions schemes i.e. Provident Fund & ESIC is made to the government owned funds and are charged to the Profit & Loss Account on accrual basis.

Leave Encashment:

As per the policy of the Company leave encasement is not entitled to be carry forward to any subsequent year, thereby no actuarial valuation of the same is required. Leave encashment paid during the year is charged to Profit & Loss Account on accrual basis.

k) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of the qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue.

I) Taxation:

(i) Provision for current Tax is made with reference to taxable income computed for the accounting period, for which the financial statements are prepared by the tax rates as applicable.

(ii) Deferred tax is recognized subject to the consideration of prudence, on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Such deferred tax is quantified using the tax rates and laws enacted/substantively enacted as on the Balance Sheet date. Deferred tax Assets are recognized and carried forward to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

m) Lease:

Leases where significant portion of risk and rewards of ownership are retained by lessor are classified as operating lease and lease rental thereon are charged to Profit & Loss Account.

n) Impairment of Assets:

The carrying amounts of assets are reviewed at each Balance Sheet date. If there is any indication of impairment based on internal or external factors, i.e. when the carrying amount of the asset exceeds the recoverable amount, an impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed or reduced if there has been a favorable change in the estimate or the recoverable amount. Recoverable amount is the higher of an asset's net selling price and value in use.

o) Provisions, contingent liabilities and contingent assets

Estimation of the probability of any loss that might be incurred on outcome of contingencies on basis of information available upto the date on which the financial statements are prepared. A provision is recognised when an enterprise has a present obligation as a result of a past event 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 are determined based on management estimates required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. In cases where the available information indicates that the loss on the contingency is reasonable possible but the amount of loss cannot be reasonably estimated, a disclosure to this effect is made in the financial statements. In case of remote possibility neither provision nor disclosure is made in the financial statement. The company does not account for or disclose contingent asset, if any.

p) Share Issue expenses

Expenses pertaining and related to issue of shares are adjusted against balance lying in Securities Premium Account.

q) Earnings Per Share

The company records basic and diluted Earnings Per Share (EPS) in accordance with Accounting Standard 20 Earnings per share. Basic EPS is computed by dividing the net profit or loss for the year available for the year for equity share holders by the weighted average no of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effect of all dilutive potential equity shares, except where the results are anti-dilutive.




Mar 31, 2010

A) Basis of Preparation of Financial Statement

The company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis. The accounts are prepared on historical cost basis as a going concern and are consistent with generally accepted accounting principles.

b) Inventories:

Inventories are valued at lower of cost or Net Realisiable Value. Cost is determined on moving weighted average basis. Cost of Work in Progress and manufactured goods includes material, labour and other appropriate overheads wherever applicable.

c) Depreciation:

Depreciation on Fixed Assets is provided on "Straight Line Method" in the manner prescribed in Schedule-XIV to the Companies Act, 1956 on pro rata basis.

d) Revenue Recognition:

Domestic sales and Processing Charges are accounted for on dispatch of goods to customers and Export Sales are accounted for on the basis of dates of Bill of Lading. Sales are accounted for net of sales return. Dividend is accounted on accrual basis when the right to receive the dividend is established.

e) Fixed Assets:

Fixed Assets are slated at cost of acquisition less accumulated depreciation. The Cost includes taxes, duties, freight, installation, trial run and other preoperative expenses and other direct and allocated expenses up to the date of commercial production.

f) Foreign Currency Transactions:

All transactions in foreign currency are recorded at the rates of exchange prevailing on the dates when the relevant transactions take place. Monetary assets and liabilities in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Resultant gain or loss, except the extent it relates to long term monetary items, is charged to the Profit and Loss Account for the year. Such gain or loss relating to long term monetary items for financing acquisition of depreciable capital assets. is adjusted to the acquisition cost of such asset and depreciated over its remaining useful life. In respect of forward exchange contract entered into to hedge foreign currency risks, the difference between the forward rate and exchange rate at the inception of the contract is recognized as income or expense over the life of the contract. Further, the exchange difference arising on such contracts are recognised as income or expense along with the exchange differences on the underlying assets / liabilities. Profit or loss on cancellations / renewals or forward contracts is recognised during the year

g) Investments:

Long term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investment.

h) Employee Retirement and Other Benefits:-

Defined benefit Obligation: -

Gratuity:

Gratuity provision is made for qualifying employees. Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit cost method.

Provident Funds & ESIC:

Contributions to defined contributions schemes i.e. Provident Fund & ESIC is made to the government owned funds and are charged to the Profit & Loss Account on accrual basis.

Leave Encashment:

Employee benefit in form of leave encashment is provided but as per the policy of the company the employee is not entitled to carry forward the leave and thereby requiring no provisions or actuarial valuations to be done.

I) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of the qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue.

j) Taxation:

(i) Provision for current Tax is made with reference to taxable income computed for the accounting period, for which the financial statements are prepared by the tax rates as applicable.

(ii> Deferred tax is recognized subject to the consideration of prudence, on timing differences being the difference between taxable income and Accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Such deferred tax is quantified using the tax rates and laws enacted / substantively enacted as on the Balance Sheet date. Deferred lax Assets are recognized and carried forward to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

k) Impairment of Assets:

The carrying amounts of assets are reviewed at each Balance Sheet date. if there is any indication of impairment based on internal / external factors, i.e. when the carrying amount of the asset exceeds the recoverable amount, an impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounling periods is reversed or reduced if there has been a favorable change in the estimate or the recoverable amount. Recoverable amount is the higher of an assets net selling price and value in use.

l) Provisions. contingent liabilities and contingent assets

Estimation of the probability of any loss that might be incurred on outcome of contingencies on basis of information available upto the date on which the financial statements are prepared. A provision is recognised when an enterprise has a present obligation as a result of a past event 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 are determined based on management estimates required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. In cases where the available information indicates that the loss on the contingency is reasonable possible but the amount of loss cannot be reasonably estimated, a disclosure to this effect is made in the financial statements. In case of remote possibility neither provision nor disclosure is made in the financial statement. The company does not account for or disclose contingent asset, if any.



 
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