Accounting Policies of Katare Spinning Mills Ltd. Company

Mar 31, 2015

1) System of Accounting:

1) The Company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

ii) The financial statements have been prepared in all material respects with Accounting Standards as relevant and notified by the Central Government.

iii) The financial statements are prepared on historical cost basis and as a going concern.

2) Revenue recognition:

i) Sale of goods is recognized at the point of dispatch of goods to customers. Gross sale is inclusive of Excise Duty when applicable and is net of returns and Value Added Tax

ii) Income from guest accommodation in respect of hotel division is recognized on day to day basis after the guests checks in. Discounts, if any, in this regard are accounted upon final conclusion of the bill with the guests. Any advance received in respect of the same is treated as a liability pending finalization of bill/provision of services. Income from sale of Food & Beverages is recognized at the point of serving of these items to the guests. The income stated is inclusive of luxury tax, service charge and VAT but net of complimentary and discounts.

iii) Dividends from investment are recognized as income of the year in which the same are declared by the investee company

3) Tangible Fixed Assets and Depreciation:

Tangible Fixed Assets acquired by the company are reported at acquisition value with revaluated amount of Rs. 19,56,71,129 as approved by Valuer on 31/03/2002, with deductions for accumulated depreciation and impairment losses, if any.

The acquisition cost for this purpose includes the purchase price (net of duties and taxes which are recoverable in future) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use.

Where the construction or development of any such asset requiring time to set up for its intended use, is funded by borrowings, the corresponding borrowing costs are capitalized up to the date when the asset is ready for its intended use.

The interest during construction period, indirect project expenditure and trial run expenditure (net of trial run income) incurred in respect of projects under implementation are capitalized to the asset created.

Depreciation is provided in accordance with Schedule II of the Companies Act, 2013 in respect of the remaining useful life of the asset as far as the existing assets are concerned. In respect of additions, depreciation is provided on the basis of the useful life of the assets as prescribed by Schedule II of Companies Act, 2013.

During the year the company had carried out technical evaluation of the useful life of the existing assets and applied the method of depreciation as prescribed by Schedule II of the Companies Act, 2013. The adjustment as a result of the re- computation is made to the opening balance of profit and loss account.

4) Investments:

Investments are stated at cost.

5) Inventories:

a) Finished goods are valued at lower of cost or Net Realizable Value. Cost for this purpose is arrived at on Absorption costing basis. Excise duty is included in valuation of finished goods.

b) Stock in process/plant is valued at cost.

c) Stock of raw materials, Stores and Spares and packing materials are valued at cost. Cost for this purpose, does not include duties/taxes that are recoverable in future.

d) Food & Beverages:

1) Groceries: Groceries is valued at cost arrived at on weighted average basis.

2) Beverages: Valued at cost.

6) Staff Benefits:

a) The Company's contribution to Provident Fund and pension fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

b) Gratuity is accounted for on actual payment basis. No provision for gratuity on actuarial basis is made and hence it's effect on profit or loss can not be ascertained.

7) Research and Development:

Revenue expenditure on research and development is charged to Statement of profit and loss in the year in which is incurred. Capital expenditure on research and development is treated at par with fixed assets and depreciated as such.

8) Deferred Taxation:

Accounting treatment in respect of deferred taxation is in accordance with Accounting Standard 22 - "Accounting for Taxes on Income" issued by the Institute of Charted Accountants of India.

9) Minimum Alternate Tax:

Minimum Alternate Tax paid in accordance with tax laws, which give rise to the future economic benefits in the form of adjustment to future income tax liability, is considered as as asset in the balance sheet when it is probable that future economic benefit associated with it will flow to the company and the asset can be measured reliably.

10) Borrowing Costs:

Costs in respect of borrowings for the purpose of expansion/additional fixed investments including R & D project are capitalized to such investments.

Borrowing costs relating to period after the commencement of operations of the project are charged to revenue.

12) Foreign Currency Transactions:

Foreign Exchange Transactions are recorded at pre-determined standard exchange rates which are reviewed periodically. Gains or losses arising out of such standard rates and also on realization settlement are accounted for accordingly.

13) 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. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset's net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. In carrying out such exercise, due effect is given to the requirements of Schedule II to Companies Act, 2013.

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Mar 31, 2014

2.1 Basis of acoounting and preperation of financiai statem ents

The company maintains Hs accounts on accrue I basis :Ql losing his;orical cost c6hventicn, in accordance with the Indian Generally Accepted Accounting Principles. Management makes estimates and technical aid ocherassumptions regarding tie amounts of incomes and axpenses, assets and liabilities and disclosure ot contingencies, in accordance with Generally Accepted Accoutring Principles in India in the preparation df the financial statements. Difference between the actual results and estimates are retogn-zed in toe per :uU in wl nvi 111 icydredtiLu mined.

2.2 Fixed Assets

E and and i pasphnld t and, Fartnry F.l Hiring, Hntel Building and Plant A Marhnpry havp been shown as revalued by the approved Valuer on 3iy03/20'}2 thereby increase in such assets In Gross Block bv Rs, 19,56,71,12& Other fixed assets are recorded at cost of dLLiursitiun, ntrL uf nuevat. and VAT crtdiL or vusL uf LuristrucLivri urdudiiig urec.ly attributable costs reduced by accumulated deprecation. Land on leasehod basis is included in the schedule of fixed assets.

2.3 Depredation

r. Depreciation nas been changed on the Sbarght Line Method in accordance with tie rates s pec if I sd un de r 5c hedul e XIV tc the Core pa n i e 5 Act, 19 5G, fi. Depreciation on assets added during the year has been provided on pry-rata basis, iii Depreciation on revaluation amount of fired assets is adjusted hy transferring me eq ui va I e n t amou nt Fro m Reva I uat ion Re serve Accou n t.

2.4 Inventories

Raw Material, Work in Process, stores and spares, food and beverages are valued at cost u n FI FO me thud Fi nished Goods an d Goods or i Con sig n merit a re va iu tad at oust u r rel i a til e value wiirheveris lower Wastage and scrap are valued at Reaii7ahlp Market Valine

2.5 Rcvenua recognition Sale of goods

Sales are accounted net ot returns and discounts and is accounted at the point of despatch of materia, to I he customers. In the Ho;el Division receipts from mom rent are net of discount but inclusive o" luxury tax ant service charge. In case of food and beverac e sal es a re acco un ted net of comp I i nrenta ry a nd d i sco u nt but i nc I usi ve of serv ice charge and vat.

2.6 Other ircome

Interest income is accounted oil actmed basis. Dividend income is accounted for when through to receive estabilshment.

2.7 Cash and cash equivalents (for purposes of Cash flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition) liiylily I qurd inveatiTltifits hint are readily cgiivertfbie iiituknoWn amounts of cash and which a re subject to insignificant risk of changes in value.

2.8 Cash flow statement

Cash flows are reported using the iincirect method, whereby prefit j (loss) before extraordinary item sand tax is adjusted for the effects of transactions of non-cash nature cm uJ tii iy defend s ur dcuudlij of j/astui fuLun: cdth iooui|Xs ui payments. The cash huwb from operating, investing and financing activities of the Company are segregated based a n the avai la b le i nform ati o n.

2.9 Forei gn cu rren cy t ransa ttio ns and Iran static rs There were no foreign, currency transactions,

2.10 Investments InvesLruenLs are sLa.ed at cost.

2.11 Empoloyee Reterirment benefits

The Company's contribution to provident fund and pension fund are considemd as defined contribution plans and are charged as an expense as they fall due based on tie amount of contribution required :o be made.

Defined benefit plans

Gratu i ty i s eecou nted Fo r o n net ua I pe ym ;n c b»si s. No pr)v I sio n for gr-etu ty on act ua ri al basis is made and hence its effect on profit or oss cannot be ascertained.

2.12 Borrowing costs

Borrowing costs include interest, amortization of ancillary costs ncurred. Costs in connecti on wlth the sorrow] ng of fy nd s to rh e ex te nt not di redly re la ted to the acqu i sitio n of qualifying asictssre changed tothS Statementof Profit and Loss over the tenure oftTie loan. Borrowing costs, ailocatec to and utilized for qualifying assets, pertaining to tie penod from commencement of activities relating to construction / devebpment of tie qualifying asset upto the date cr capitalization of such asset is added to the cost of tie assets.

2.13 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organzation end management structure. The operating segments 9re the segment for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly oy the executive Management in deed mg how to allocate resources and in assessing pc-form a nee.

The accounting polities adopted for segment reporting are in line with the accounting policies or the company, segment revenue, segment expenses, segment assets ano segment liabilities have been identified to segments on me basis of their relationship to the operaticg activities of the segment. Revenue, expenses, assets and liabiltles which relate to the Company as a whole and are not allocable tc segments on reasonable basis have been included under "unallocated revenue/ expenses / assets / iiabilrJes,1'

2-1A Taxes on Income Current Tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax

Deferred tax is calculated at the rates and laws that have been enacted or substantially enacted as of the balance sheet date and is recognized on tming differences that originate in one period and are capable of reversal in one or more subsequent period, Deferred tax assets, subject to cons ideation ot prudence are recognized and carried forward only to the extent that they can be realized.

Minimum Alternate Tax (MAT)

Minimum alternate "ax paid in accordance with the tax laws, whicn give rise to the future economic benef ts in theform of ad justment to future income tax IiabiHty, is considered as an asset in the balance sheet when it is probable that future economic benefit associated with it will howto the company and the asset can be measured reliably.

2.15 Etii'niiigsper shafts

Bade earning per share is computer by dividing the profi: / (loss) after tax (including tie post tax effect of extraordinary hems, if any) by the weighted average number of equ ty shares outstanding during the year. Diluted earnings per she re is computed by dviding the profit i (loss) aftertax (including the post tax effect of extraordinary items, if any) as adjusted For dividend, interest znd othe' charges to expense or income rela:mg to tie delusive potential equity shares, by the weighted average numbe- of equity shares considered or deriving basic earnings [ier share and the weighted average number of equity shares which could have been Issued on the conversion of alt delusive potential equity shares.

2.16 Research ard development expenses

Revenue expenditure pertaining to jesearct is charged to the Statement of Pm'it and Loss, Development costs of products are also cha-ged to the Statement of Profit and Loss unless a product's technological feasibility has been established, in which case such expenditure is capita Sized. The amount capitalized comprises expenditure that can oe directly attributed or etlocated on a reesanpbte and consistent bosis- to creating, producing end 'rakinq the asset ready for its intended use. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Tangible Fixed Assets a ad Intangible Assets.

2.17 Provisions and con ting encies

A p-oviiion is recognised when the Company he; e present obligation e; a result of pest events and it is probable that an outflow of resources will be required to settle tie obligation in respect of which a reliable estimate can be made. Provisions (excluding reti'ement benefits) are not discounted to their present value anc are determined based on the bes: estimate required to sette the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted bo reflect the current best estimates. Contingent I i abilities a re disci csed in the Notes.

2.18 In sura nee claims

Insurance claims are accounted for on the basis of claims admitted / expected to oe admitted and to the extent that there is no uncertainty in receiving the claims.

2.19 Finrvicetax tnpuh rmdit

5erv ice ta x in put cred ibis a ccou nted 'or in the books fri the period in wh ich the unde rlyi n g service received is accounted and when there is no cncertairty in availing / utilizing tie credits.

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Mar 31, 2012

1.1 Basis of accounting and preparation of financial statements

The company maintains its accounts on accrual basis following historical cost convention, in accordance with the Indian Generally Accepted Accounting Principles. Management makes estimates and technical and other assumptions regarding the amounts of incomes and expenses, assets and liabilities and disclosure of contingencies, in accordance with Generally Accepted Accounting Principles in India in the preparation of the financial statements. Difference between the actual results and estimates are recognized in the period in which they are determined.

1.2 During the year ended 31st March, 2012 the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised schedule does not impact recognition and measurement principles followed for the preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figu es in accordance with the requirements applicable in the current year.

1.3 Fixed Assets

Land and Leasehold Land, Factory Building, Hotel Building and Plant & Machinery have been shown as revalued by the approved Value on 31/03/2002 thereby increase in such assets in Gross Block by Rs. 19,56,71,129. Other fixed assets are recorded at cost of acquisition, net of modal and VAT credit or cost of construction including directly attributable costs reduced by accumulated depreciation Land on leasehold basis is included in the schedule of fixed assets.

1.4 Depreciation

i Depreciation has been charged on the Straight Line Method in accordance with the rates specified under Schedule XTV to the Companies Act, 1956.

ii Depreciation on assets added during the year has been provided on pro-rata basis.

iii Depreciation on revaluation amount of fixed assets is adjusted by transferring the equivalent amount from Revaluation Reserve Account.

1.5 Inventories

Raw Material, Work in Process, stores and spares, food and beverages are valaed at cost on FIFO method. Finished Goous and Goods on Consignment are valued at cost or reusable value whichever is lower. Wastage and scrap are valued at Realisable Market Value.

1.6 Revenue recognition Sale of goods

Sales are accounted net of returns and discounts and is accounted at the point of despatch of material to the customers. In the Hotel Division receipts from room rent are net of disocunt but inclusive of luxury tax and service charge. In case of food and beverage sales are accounted net of complimetary and discount but inclusive of service charge and vat.

1.7 Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

1.8 Cash and cash equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.9 Cash flow statement Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.10 Foreign currency transactions and translations

There were no foreign currency transactions.

1.11 Investments Investments are stated at cost.

1.12 Employee/Retirement benefits Defined contribution plans The Company's contribution to provident fund and pension fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defined benefit plans

Gratuity is accounted for on actual payment basis. No provision for gratuity on acturial basis is made and hence its effect on profit or loss cannot be ascertianed.

1.13 Borrowing costs

Borrowing costs include interest, amortization of ancillary costs incurred. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalization of such asset is added to the cost of the assets.

1.14 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

1.15 Taxes on Income Current Tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax

Deferred tax is calculated at the rates and laws that have been enacted or substantially enacted as of the balance sheet date and is recognized on timing differences that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax assets, subject to consideration of prudence are recognised and carried forward only to the extent that they can be realised.

Minimum Alternate Tax (MAT) Minimum alternate Tax paid in accordance with the tax laws, which give rise to the future economic benefits in the form of adjustment to future incoem tax liability, is considered as an asset in the balance sheet when it is probable that future economic benefit associated with it will flow to the company and the asset can be measured reliably.

1.16 Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post fax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

1.17 Research and development expenses

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product's technological feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets.

1.18 Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.

1.19 Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

1.20 Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

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Mar 31, 2010

A) The accounts are prepared, based on historical cost and on the asis of a going concern with revenues considered and. expenses accounted wherever possible on their accrual, as modified by revaluation of certain assets, viz Land and Leasehold land, Factory Building," Hotel Building and Plant & Machinery.

b) Fixed Assets:

Land & Leasehold Land, Factory Building, Hotel Building and Plant and Machinery have been shown as revalued by the approved valuer on 31.03.2002 thereby increase in such assets in gross block Is by Rs. 19,56,71,129. Other Fixed Assets are recorded at post of acquisition, net of modvat credit or cost of construction including directly attributable cost as reduced by accumulated depreciation. Land on Lease basis is included in the schedule of Fixed Assets.

c) Depreciation:

i) Depreciation has been charged on the Straight Line Method in accordance with the rates

specified under Schedule XIV to the Companies Act, 1956. i i) Depreciation on assets added during the year has been provided on pro-rata basis. iii) Depreciation on revaluation amount of fixed assets is adjusted by transferring the

equivalent amount from Revaluation Reserve Account.

d) Inventory Valuation:

i) Raw Material, Work in Process

Stores & Spares : At Cost

ii) Food & Beverages : At Cost

iii) Finished Goods & : At Cost or Realisable Consignment Goods Value whichever is Lower

iv) Wastage & Scrap : At Market Realisable Value

e) Sales:

Sales are accounted net of returns and discounts and is accounted at the point of despatch of material to customers. In the Hotel Division Receipts from Room Rent are net of discount but inclusive of luxury tax and service charge. In case of Food and Beverage sales are accounted net of complimentary and discount but inclusive of service charge and VAT.

f) Retirement Benefits:

Gratuity is accounted for on actual payment basis. No provision for gratuity on actuarial basis is made and hence its effect on profit or loss cannot be ascertained. Retirement Benefit in the form of Provident Fund and Pension Schemes are accounted for on accrual basis and charged to Profit & Loss Account of the year. Leave Encashable on retirement is being accounted for as and when it is due for payment.

g) Investment: Investments are stated at cost

h) Taxes On Income

Deferred Tax:

Deferred tax calculated at the rates and laws that have been enacted or substantially enacted as of the balance sheet date is recognized on timing differences that originate in one period and are capable of reversal in one or more subsequent period. Deferred Tax assets, subject to consideration of prudence are recognized and carried forward only to the extent that they can be realized.

Minimum Alternate Tax (MAT)

Minimum Alternate Tax (MAT) paid in accordance to the tax laws, which give rise to the future economic benefits in the form of adjustment of future income tax liability, is considered as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the Company and the asset can be measured reliably.