Accounting Policies of Kallam Textiles Ltd. Company

Mar 31, 2018

I. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

i) Basis of preparation

a) Statement of compliance

In accordance with the notification issued by the Ministry of Corporate affairs, the company has adopted Indian Accounting Standards (referred to as “Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 w.e.f 1^st April, 2017. Previous periods financial statements have been restated to Ind AS. In accordance with Ind AS 101 “First time adoption of Indian Accounting Standards”, the company has presented a reconciliation from the presentation of financial statements under Accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (“Previous GAAP”) to Ind AS of Shareholders’ equity as at 1st April, 2016 and 31st March, 2017 and Statement of Profit and loss account for the year ended 31st March, 2017. These financial statements have been prepared in accordance with Ind AS as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

b) Basis of measurement

These financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) under historical cost convention on accrual basis of accounting except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (''the Act’) and guidelines issued by the Securities and Exchange Board of India (SEBI). Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Accounting policies have been consistently applied except a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

c) Use of estimates

The preparation of the financial statements in conformity with Ind AS requires management of the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The following are the critical judgements and estimates that have been made in the process of applying the company’s accounting policies that have the most significant effect on the amounts recognized in the financial statements.

i) Depreciation and useful lives of property, plant and equipment and intangible assets:

Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset. The Company also engages third party qualified valuers to ascertain the fair value of the Property, plant and equipment which requires estimation and judgment in determining the fair values which can be subject to change.

ii) Recoverability of trade receivable:

Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, past history of receivables, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.

iii) Fair value measurement of financial instruments:

Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent available. Where Level 1 inputs are not available, the fair value is measured using valuation techniques, including the discounted cash flow model, which involves various judgments and assumptions. The Company also engages third party qualified valuers to perform the valuation in certain cases. The appropriateness of valuation techniques and inputs to the valuation model are reviewed by the Management.

iv) Provisions:

Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.

v) Impairment of non-financial assets:

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or Cash Generating Units (CGU’s) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transaction are taken into account, if no such transactions can be identified, an appropriate valuation model is used.

vi) Impairment of financial assets:

The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

vii) Income Taxes:

The Company''s tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions.

viii) Defined benefit obligations:

The Company uses actuarial assumptions viz., discount rate, mortality rates, salary escalation rate etc., to determine such employee benefit obligations.

ix) Other estimates:

The preparation of financial statements involves estimates and assumptions that affect the reported amount of assets, liabilities, disclosure of contingent liabilities at the date of financial statements and the reported amount of revenues and expenses for the reporting period. Specifically, the Company estimates the probability of collection of accounts receivable by analysing historical payment patterns, customer concentrations, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required.

The judgments, estimates and underlying assumptions are made with the management''s best knowledge of the business environment and are reviewed on an on going basis. Accounting estimates could change from period to period. Actual results could differ from these estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

ii) Significant accounting policies

a) PROPERTY, PLANT AND EQUIPMENT

An item of Property, Plant and Equipment that qualified as an asset is measured at initial recognition at Cost. Property, plant and equipment are stated at cost/fair values less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by the management.

The company, as per the option given under Ind AS-101 “First time adoption of Indian Accounting Standards” elected to continue with the carrying value of all its fixed assets arrived under previous GAAP as on 1st April, 2016 as deemed cost at the date of transition for all the items of Property, plant and equipment except in case of land where the company opted for fair value measurement. The excess amount of fair value over its carrying value as per books of account amounting to Rs.60.82 crores is credited to revaluation surplus and shown under reserves and surplus.

The residual values of the assets as estimated by the management at the time of capitalization continues be the same as on 1st April, 2016.

Subsequent to the measurement of assets at deemed cost on date of transition, the company, based on Independent technical valuers report, revalued its assets of Land and buildings on 31.3.2018 and excess of carrying value of land Rs.28.45 crores and of buildings Rs.33.72 crores is recognized in Other comprehensive income and accumulated under equity under the head Revaluation surplus. The fair values of land has been arrived out by technical valuer based on prevailing market rates by considering the existing market conditions and in case of buildings under replacement model.

The company identifies and determines cost of each part of PPE separately, if the part has a cost which is significant to the total cost of that items of PPE and has useful life that is materially different from that of the remaining items.

Advances paid for acquisition of Property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets. Cost of the assets not put to use before such date are disclosed under ''Capital Work-in-progress’. Any subsequent expenditure relates to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in the statement of profit and loss when incurred. Items of spare parts are recognized as Property, plant and equipment when they meet the definition of Property, plant and equipment. The cost and related depreciation are eliminated from the property, plant and equipment upon sale or retirement of the asset and the resultant gain or losses are recognized in statement of profit and loss.

b) BORROWING COSTS

Borrowing Costs, that are directly attributable to the acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that they will result in future economic benefits and the cost can be measured reliably.

c) DEPRECIATION

The company has computed depreciation on fixed assets based on the useful lives as specified in Schedule II of Companies Act, 2013 under straight line method.

Depreciation methods, useful lives and residual values are reviewed periodically at the end of each financial year with the effect of any change in estimate accounted for on a prospective basis.

d) GOVERNMENT GRANTS

Government grants are not recognized until there is reasonable assurance that the company will comply with the conditions attaching to them and that the grants will be received.

Government grants related to revenue are recognized 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. When the grant relates to an asset, it is recognized as deferred revenue in the Balance sheet and transferred to the statement of Profit and Loss on a systematic and rational basis over the useful lives of the related assets.

e) IMPAIRMENT OF ASSETS

i) Financial assets (other than at fair value)

The company assesses at each balance sheet date whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The company recognizes lifetime expected losses for all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

ii) Non financial assets

Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amount may not be recoverable. If any such indication exists, the recoverable amount (i.e higher of the fair value less cost of sale and value in use) is determined on an individual asset basis unless the asset does not generates cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognized in the statement of profit and loss.

An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount and the carrying amount of the asset is increased to its revised recoverable amount subject to maximum of carrying amount.

f) INVENTORIES

i. Textile division :

Finished stocks are valued at cost or net realizable value which ever is lower.

Cotton Waste is valued at Net realizable Value.

Work-in-progress, Raw materials, stores and spares are valued at cost except where net realizable value of the finished goods they are used in is less than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.

ii. Power Division :

a) Stock of power (Banked with APTRANSCO) is valued at cost or net realizable value whichever is lower.

g) 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.

i)Revenue from sale of products is recognised when the goods are delivered and titles have passed i.e time when the risks and rewards of ownership are transferred to the buyer under the terms of the contract and the company retains no effective control over the goods sold. Revenue is measured at the fair value of the consideration taking into account contractually defined terms of payment. Revenue is reduced for discounts, rebates and other similar allowances.

When there is any uncertainty as to the measurement or collectability of consideration, revenue recognition to the extent of amount of uncertainty is postponed until such uncertainty is resolved.

ii) GST and other taxes is not received by the company on its own account as it is collected on behalf of government. Accordingly it is excluded from revenue.

iii) Inter unit transfer of goods is accounted at market price at which the similar goods are purchased from external party.

iv) Interest income is recognized using effective interest method.

h) TAXES ON INCOME

Income tax expense comprises the sum of tax currently payable and deferred tax. Income tax expense is recognized in net profit in the statement of profit and loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income.

Current tax is determined at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The carrying amount of deferred tax assets is reviewed at the end of each year 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 assets to be recovered.

Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or subsequently enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities are recognized as income or expense in the year of enactment. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as deferred tax asset if there is convincing evidence that the company will pay normal Income Tax. Accordingly, MAT is recognized as an asset in the balance sheet when it is probable that future economic benefits associated with it will flow to the Company.

i) SEGMENT REPORTING

The operating segments of the entity are identified based on the revenues earned and expenses incurred whose operating results are regularly reviewed by the entity’s decision maker to make decisions about resources to be allocated to the segment and assess its performance for which discrete financial information is available.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

Inter segment revenue has been accounted for based on the market related prices.

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis, have been included under “Unallocated expenses”.

j) RETIREMENT BENEFITS

The company provides retirement benefit in the form of provident fund and group gratuity. Contributions to the Provident Fund, a defined contribution scheme, is made at the prescribed rates to the provident fund commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable.

The Liability for group gratuity, which is unfunded, is provided based on actuarial valuation as per the Projected Unit Credit Method at the end of the each year.

The Liability for Leave encashment being short term benefits, is accounted on accrual of said liability.

k) FOREIGN EXCHANGE TRANSACTIONS

The functional currency of the company is the Indian rupee and the financial statements are presented in Indian rupee.

Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of the transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

At each Balance Sheet date

i) Foreign currency denominated monetary items are translated into the relevant functional currency at exchange rate at the balance sheet date. The gains and losses resulting from such translations are included in net profit in the statement of profit and loss.

ii) Foreign currency denominated non-monetary items are reported using the exchange rate at which they were initially recognized.

Transaction gains or losses realized upon settlement of foreign currency transactions are included in statement of profit and loss.

l) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognised when there is a present obligation as a result of past event, it is probable that the company will be required to settle the obligation and a reliable estimate of the amount of obligation can be made. Where the effect of time value of money is material, the amount of provision is the present value of the expenditure to be required to settle the obligation. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The company does not recognise contingent liabilities but the same are disclosed in the notes.

Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

m) FINANCIAL INSTRUMENTS

Initial recognition:

The company recognizes financial assets and liabilities when it becomes a party to the contractual provisions of the instruments. All financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and liabilities (other than the financial assets and liabilities at fair value through profit and loss) are added to or deducted from the fair value of financial assets and liabilities, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Subsequent measurement:

i) Financial assets carried at amortized cost:

A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(ii) Financial assets at fair value through other comprehensive income.

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.

(iii) Financial assets at fair value through profit or loss

A financial asset which is not classified in any of the above categories is subsequently fair valued through profit or loss.

De-recognition of financial asset

The company de-recognises financial assets when the contractual right to the cash flows from the asset expires or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

(iv) Financial liabilities

Financial liabilities are subsequently carried at amortized cost using the effective interest method. The effective interest method is a method of calculating the amortization cost of a financial liability and of allocating interest expense over the relevant period. The effective interest is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability to the net carrying amount on initial recognition.

De-recognition of financial liability

The company de-recognises financial liabilities when the company’s obligations are discharged, cancelled or expired. The difference between the initial carrying amount of the financial liabilities and their redemption value is recognized in the statement of profit and loss over the contractual terms using the effective interest method.

n) EARNING PER EQUITY SHARE

Basic earning per equity share is computed by dividing the net profit attributable to the equity shareholders of the company by the weighted average number of equity shares during the period. The company did not have any potentially dilutive securities in any of the years presented.

The number of equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of financial statements by the board of directors.

o) CASH FLOW STATEMENT

Cash flows are reported using indirect method whereby the profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financial activities of the company are segregated.

p) DIVIDENDS

Final dividends on shares are recorded as a liability on the date of approval by the shareholders i.e the year in which the dividends are approved and interim dividends are recorded as a liability on the date of declaration by the company’s board of directors.

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Mar 31, 2016

1. General

The financial statements are prepared under historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles in India. The financial statements are prepared to comply in all material respects with the Accounting Standards as prescribed under Section 133 of the Companies Act, 2013 (‘Act’) read with Rule 7 of Companies (Accounts) Rules, 2014, the pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 2013 and Companies Act, 1956 to the extent applicable and guidelines issued by the Securities and Exchange Board of India. The Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard or amendments to the provisions of any statue which requires a change in the accounting policy hitherto in use.

2. Use of Estimates

The preparation of the financial statements requires management of the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities and commitments. Examples of such estimates include provisions for provisions for doubtful debts and advances, employee benefit plans, useful lives of fixed assets and provisions for impairment. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

The judgments, estimates and underlying assumptions are made with the management''s best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

3. FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of directly attributable cost of bringing the assets to their working condition for the intended use. CENVAT/VAT/ Terminal Excise duty availed, if any, on fixed assets is not included in the cost of such fixed assets capitalized. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular, such machinery spares are capitalized to fixed assets and depreciated over the useful life of parent asset or estimated life of spare part whichever is shorter.

4. BORROWING COSTS

Borrowing costs incurred in connection with the funds borrowed for acquisition of assets that takes necessarily substantial period of time to get ready for intended use are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

5. DEPRECIATION

The company has computed depreciation on fixed assets based on the useful lives as specified in Schedule II of Companies Act, 2013 under straight line method.

6. INVENTORIES

Inventories are valued as follows :

I. Spinning and Weaving Division :

a) Finished stocks are valued at cost or net realizable value whichever is lower.

b) Cotton Waste is valued at Net realizable Value.

c) Work-in-progress, Raw materials, stores and spares are valued at cost except where net realizable value of the finished goods they are used in is less than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.

II. Power Division :

a) Stock of power (Banked with APTRANSCO) is valued at cost or net realizable value whichever is lower.

c) Tools & Implements are being valued at cost.

7. 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.

i) Revenue from sale of products is recognized when the risks and rewards of ownership are transferred to the buyer under the terms of the contract which usually coincide on the dispatch of goods to the customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales are stated net of trade discounts and sales tax.

iii) Incentives such as DEPB benefits are recognized as Income only on actual realization/on sale/ utilization of said licenses.

iv) Interest on investments and deposits is booked on a time proportion basis taking into account the amounts invested and the rate of interest.

8. INTER-DIVISIONAL TRANSFERS:

Inter-divisional transfer of goods as independent marketable products of separate divisions used for captive consumption are transferred at prevailing market prices. This accounting treatment has no impact on the profit of the company. Such transactions are neither included in turnover nor in consumption of materials, except for valuation purposes.

9. DEFERRED GOVT. GRANTS

Grants related to specific depreciable assets are treated as deferred income and recognized in profit and loss account over the useful life of the said asset on which subsidy was received. Such allocation to income is made over the period and in proportion in which depreciation on such related asset is charged.

Grants which are given with reference to the total investment in an undertaking are treated as part of shareholders’ funds and grouped under capital reserves.

10. RETIREMENT BENEFITS

The company provides retirement benefit in the form of provident fund and group gratuity. Contributions to the Provident Fund, a defined contribution scheme, is made at the prescribed rates to the provident fund commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable.

The Liability for group gratuity, which is unfunded, is provided based on actuarial valuation as per the Projected Unit Credit Method at the end of the each year.

The Liability for Leave encashment being short term benefits, is accounted on accrual of said liability.

11. FOREIGN CURRENCY TRANSACTIONS

i) Foreign Currency Liability contracted for acquiring Fixed Assets are restated at the Foreign Exchange rates prevailing at the year end and all exchange differences arising as a result of such restatement are charged to the Profit and loss account.

ii) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/ payment during the year.

iii) At each balance sheet date

- Foreign Currency monetary items are reported using the rate of exchange on that date

- Foreign Currency non-monetary items are reported using the exchange rate at which they were initially recognized.

In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortized over the term of the contract

- Exchange differences on the contract are recognized as profit or loss in the period in which they arise.

12. TAXES ON INCOME

Current tax is determined as per provisions of Income Tax Act, 1961 in respect of Taxable Income for the year. Deferred tax liability 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.

Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation as per Income-tax laws are recognized only when there is virtual certainty supported by convincing evidence that such assets will be realized. Deferred tax assets arising on other temporary differences are recognized only if there is a reasonable certainty of realization.

13. SEGMENT REPORTING

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company with the following additional policies for segment reporting.

Inter Segmental revenue have been accounted for based on the market related price.

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The company does not recognize contingent liabilities but the same are disclosed in the Notes.

Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

15. DIVIDENDS

Provision is made in accounts for the dividends payable by the company as recommended by the board of directors pending approval of the shareholders at the Annual General Meeting. Tax on Distributable profit is provided for in the year to which such distributable profits relate.

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Mar 31, 2014

1. General

The Accounts are prepared under the historical cost convention and in accordance with generally accepted accounting practices. The financial statements are prepared to comply in all respects with the Accounting Standards notified under section 211(3C) of the Companies Act, 1956 read with the General Circular 15/2013 dated 13.9.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and all the relevant provisions thereof.

2. Use of Estimates

The preparation of financial statements requires the management of the Company to make judgments, estimates and assumptions that affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. The judgments, estimates and underlying assumptions are made with the management''s best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to these accounting estimates is recognized prospectively in the current and future periods.

3. FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of directly attributable cost of bringing the assets to their working condition for the intended use. CENVAT/VAT/Terminal Excise duty availed, if any, on fixed assets is not included in the cost of such fixed assets capitalized. Interest on borrowings incurred upto the date of commissioning of assets are capitalized

4. BORROWING COSTS

Borrowing costs incurred in connection with the funds borrowed for acquisition of assets that takes necessarily substantial period of time to get ready for intended use are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

5. DEPRECIATION

Depreciation on Tangible fixed Assets has been provided on Straight Line Method at applicable rates prescribed in Scheduled XIV of the Companies Act, 1956.

6. INVENTORIES

Inventories are valued as follows :

I. Spinning and Weaving Division :

a) Finished stocks are valued at cost or net realizable value which ever is lower.

b) Cotton Waste is valued at Net realizable Value.

c) Work-in-progress, Raw materials, stores and spares are valued at cost except where net realizable value of the finished goods they are used in is less than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.

II. Power Division :

a) Stock of power (Banked with APTRANSCO) is valued at cost or net realizable value which ever is lower.

c) Tools & Implements are being valued at cost.

7. 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.

i) Revenue from sale of products is recognised when the risks and rewards of ownership are transferred to the buyer under the terms of the contract which usually coincide on the dispatch of goods to the customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales are stated net of trade discounts and sales tax.

iii) Incentives such as DEPB benefits are recognized as Income only on actual realization/on sale/ utilization of said licences.

iv) Power generated and supplied to spinning division is accounted for at the rate at which company purchases from the APTRANSCO.

v) Interest on investments and deposits is booked on a time proportion basis taking into account the amounts invested and the rate of interest.

8. INTER-DIVISIONAL TRANSFERS:

Inter-divisional transfer of goods as independent marketable products of separate divisions used for captive consumption are transferred at prevailing market prices. This accounting treatment has no impact on the profit of the company. Such transactions are neither included in turnover nor in consumption of materials, except for valuation purposes.

9. DEFERRED GOVT. GRANTS

Grants related to specific fixed assets are treated as deferred income and recognized to profit and loss account over the expected life of the said asset on which subsidy received.

Grants which are given with reference to the total investment in an undertaking are treated as part of shareholders'' funds and grouped under capital reserves.

10. RETIREMENT BENEFITS

The company provides retirement benefit in the form of provident fund and group gratuity. Contributions to the Provident Fund, a defined contribution scheme, is made at the prescribed rates to the provident fund commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable.

The Liability for group gratuity, which is unfunded, is provided based on actuarial valuation as per the Projected Unit Credit Method at the end of the each year.

The Liability for Leave encashment being short term benefits, is accounted on accrual of said liability.

11. FOREIGN CURRENCY TRANSACTIONS

i) Foreign Currency Liability contracted for acquiring Fixed Assets are restated at the Foreign Exchange rates prevailing at the year end and all exchange differences arising as a result of such restatement are charged to the Profit and loss account.

ii) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

iii) At each balance sheet date

- Foreign Currency monetary items are reported using the rate of exchange on that date

- Foreign Currency non-monetary items are reported using the exchange rate at which they were initially recognized.

- In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortized over the term of the contract

- Exchange differences on the contract are recognized as profit or loss in the period in which they arise.

12. TAXES ON INCOME

Current tax is determined as per provisions of Income Tax Act, 1961 in respect of Taxable Income for the year.

Deferred tax liability 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.

Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation as per Income-tax laws are recognized only when there is virtual certainty supported by convincing evidence that such assets will be realized. Deferred tax assets arising on other temporary differences are recognized only if there is a reasonable certainty of realization.

13. SEGMENT REPORTING

The accounting polices adopted for segment reporting are in line with the accounting policies of the Company with the following additional policies for segment reporting.

Inter Segmental revenue have been accounted for based on the market related price.

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The company does not recognise contingent liabilities but the same are disclosed in the Notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

15. DIVIDENDS

Provision is made in accounts for the dividends payable by the company as recommended by the board of directors pending approval of the shareholders at the Annual General Meeting. Tax on Distributable profit is provided for in the year to which such distributable profits relate.

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Mar 31, 2012

1. GENERAL

The Accounts are prepared under the historical cost convention and in accordance with generally accepted accounting practices. The financial statements are prepared to comply in all respects with the Accounting Standards notified under section 211 (3C) of the Companies Act, 1956 and all the relevant provisions thereof.

2. USE OF ESTIMATES

The preparation of financial statements requires the management of the Company to make judgements, estimates and assumptions that affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. The judgements, estimates and underlying assumptions are made with the management's best knowledge of the business environment and are reviewed on an on going basis. However, future results could differ from these estimates. Any revision to these accounting estimates is recognised prospectively in the current and future periods.

3. FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of directly attributable cost of bringing the assets to their working condition for the intended use. CENVAT/VAT/Terminal Excise duty availed, if any, on fixed assets is not included in the cost of such fixed assets capitalised. Interest on borrowings incurred up to the date of commissioning of assets are capitalised.

4. BORROWING COSTS

Borrowing costs incurred in connection with the funds borrowed for acquisition of assets that takes necessarily substantial period of time to get ready for intended use are capitalised as part of cost of such assets. All other borrowing costs are charged to revenue.

5. DEPRECIATION

Depreciation on Tangible fixed Assets has been provided on Straight Line Method at applicable Rates prescribed in Scheduled XIV of the Companies Act, 1956.

6. INVENTORIES

Inventories are valued as follows

I. Spinning Division:

a) Finished stocks are valued at cost or net realisable value which ever is lower.

b) Cotton Waste is valued at Net realisable Value.

c) Work-in-progress, Raw materials, stores and spares are valued at cost except where net realisable value of the finished goods they are used in is less than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.

II. Power Division:

a) Stock of power (Banked with APTRANSCO) is valued at cost or net realisable value which ever is lower.

b) Tools & Implements are being valued at cost.

7. REVENUE RECOGNITION

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

i) Revenue from sale of products is recognised when the risks and rewards of ownership are transferred to the buyer under the terms of the contract which usually coincide on the dispatch of goods to the customer orwhen they are unconditionally appropriated underthe terms of sale.

ii) Sales are stated net of trade discount and sales tax.

iii) Incentives such as DEPB benefits are recognised as Income only on actual realisation / on sale / utilisation of said licenses.

iv) Power generated and supplied to spinning division is accounted for at the rate at which company purchases from the APTRANSCO

v) Interest on investments and deposits is booked on a time proportion basis taking into account the amounts invested and the rate of interest.

8. INTER-DIVISIONAL TRANSFERS

Inter-divisional transfer of goods as independent marketable products of separate divisions used for captive consumption are transferred at prevailing market prices. This accounting treatment has no impact on the profit of the company. Such transactions are neither included in turnover nor in consumption of materials, except for valuation purposes.

9. DEFERRED GOVT. GRANTS

State subsidy received towards installation of Generator is being recognised to profit and loss account over the expected life ofthe said asset on which subsidy received.

10. RETIREMENT BENEFITS

The company provides retirement benefit in the form of provident fund and group gratuity. Contributions to the Provident Fund, a defined contribution scheme, is made at the prescribed rates to the provident fund commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable.

The Liability for group gratuity is provided based on actuarial valuation as per the Projected Unit Credit Method at the end ofthe each year.

The Liability for Leave encashment being shortterm benefits, is accounted on accrual of said liability.

11. FOREIGN CURRENCY TRANSACTIONS

i) Foreign Currency Liability contracted for acquiring Fixed Assets are restated at the Foreign Exchange rates prevailing at the year end and all exchange differences arising as a result of such restatement are charged to the Profit and Loss Account.

ii) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

iii) At each balance sheet date

- Foreign Currency monetary items are reported using the rate of exchange on the date

- Foreign Currency non-monetary items are reported using the exchange rate at which they were initially recognised.

In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term ofthe contract

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise. "

12. TAXES ON INCOME

Currenttax is determined as per provisions of Income Tax Act, 1961 in respect of Taxable Income for the year.

Deferred tax liability is recognised, subject to the consideration of prudence on timing differences, being the difference between taxable inome and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation as per Income-tax laws are recognised only when there is virtual certainity supported by convincing evidence that such assts will be realised. Deferred tax assets arising on other temporary differences are recognised only if there is a reasonable certainty of realisation.

13. SEGMENT REPORTING

The accounting polices adopted for segment reporting are in line with the accounting policies of the Company with the following additional policies for segment reporting.

Inter Segmental revenue have been accounted for based on the market related price.

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The company does not recognise contingent liabilities but the same are disclosed in the Notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

15. DIVIDENDS

Provision is made in accounts for the dividends payable by the company as recommended by the board of directors pending approval of the shareholders at the Annual General Meeting. Tax on Distributable profit is provided for in the year to which such distributable profits relate.

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Mar 31, 2010

1. GENERAL

The accounts are prepared under the historical cost convention and in accordance with generally accepted accounting practices.

2. FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of directly attnoutable cost of bringing the assets to their working condition for the intended use. CENVATA/AT/Terminal Excise duty availed, if any, on fixed assets is not included in the cost of such fixed assets capitalized. Interest on borrowings incurred upto the date of commission- ing of assets are capitalized.

3. BORROWING COSTS

Borrowing costs incurred in connection with the funds borrowed for acquisition of assets that takes necessarily substantial period of time to get ready for intended use are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

4. DEPRECIATION

Depreciation on Fixed Assets has been provided on Straight Line Method at applicable Rates prescribed in Scheduled XIV of the Companies Act, 1956.

5. INVESTMENTS

Long Term Investments are stated at cost and Income thereon is accounted for on accrual. Provi- sion towards decline in the value of long term Investments is made only when such decline is other than temporary.

6. INVENTORIES

Inventories are valued as follows :

I. Spinning Division:

a) Finished stock of Yarn is valued at cost or net realizable value which ever is lower.

b) Cotton Waste is valued at Net realizable Value.

c) Work-in-progress, Raw materials, stores and spares are valued at cost except where net realizable value of the finished goods they are used in is less than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.

II. Power Division:

a) Stock of power (Banked with APTRANSCO) is valued at cost or net realizable value

which ever is lower. c) Tools & Implements are being valued at cost.

7. SALES :

a) Sales are inclusive of Excise Duty, Packing charges and Sale Tax.

b) Export incentives such as DEPB benefits are recognized on export of the goods.

q) Power generated and supplied to spinning division is accounted for at the rate at which company purchases from the APTRANSCO.

8. DEFERRED GOVT. GRANTS

State subsidy received towards installation of Generator is being recognized to profit and loss account over the expected life of the said asset on which subsidy received.

9. RETIREMENT BENEFITS

The company provides retirement benefit in the form of provident fund and group gratuity. Contribu- tions to the Provident Fund, a defined contribution scheme, is made at the prescribed rates to the provident fund commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable.

The Liability for group gratuity is provided based on actuarial valuation as per the Projected Unit credit method at the end of each year.

10. FOREIGN CURRENCY TRANSACTIONS

i) Foreign Currency Liability contracted for acquiring Fixed Assets are restated at the Foreign Ex- change rates prevailing at the year end and all exchange differences arising as a result of such restatement are charged to the Profit and loss account. ii) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

iii) At each balance sheet date.

-Foreign Currency monetary items are reported using the rate of exchange on that date.

-Foreign Currency non-monetary items are reported using the exchange rate at which they were initially recognized. a. In respect of forward exchange contracts in the nature of hedges.

-Premium or discount on the contract is amortized over the term of the contract.

-Exchange differences on the contract are recognized as profit or loss in the period in which they arise.

11. PLANTATION DIVISION

(i) Expenditure on maintenance of teak plants is accumulated to Teak Plants Work in Progress account till the plants are sold.

(ii) Purchase of teak plants from its unit- holders: To the extent of original deposit, it is charged to deposit account and balance to plantations account.

12. TAXES ON INCOME

Current tax is determined as per provisions of Income Tax Act, 1961 in respect of Taxable Income for the year. Deferred tax liability 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.

Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation as per Income-tax laws are recognized only when there is virtual certainty supported by convincing evi- dence that such assets will be realized. Deferred tax assets arising on other temporary differences are recognized only if there is a reasonable certainty of realization.

13. SEGMENT REPORTING

The accounting polices adopted for segment reporting are in line with the accounting policies of the Company with the following additional policies for segment reporting. a) Inter Segmental revenue have been accounted for based on the market related price. (Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.)

14. CONTINGENT LIABILITIES

Contingent liabilities are not recognized in the accounts, but are disclosed after a careful evaluation of the concerned facts and legal issues involved.

15. DIVIDENDS

Provision is made in the accounts for the dividends payable by the company as recommended by the board of directors pending approval of the shareholders at the Annual general meeting. Tax on distributable profits is provided for in the year to which such distributable profits relate.