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Accounting Policies of Kewal Kiran Clothing Ltd. Company

Mar 31, 2016

1.1. Basis of Preparation of Financial Statements:

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory Accounting Standards as specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 as amended from time to time and the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India.

1.2. Presentation and Disclosure of Financial Statements:

All assets and liabilities have been classified as current & non-current as per company''s normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013.

Based on the nature of products / services and time between acquisition of assets for processing / rendering of services and their realization in cash and cash equivalents, operating cycle is less than 12 months. However for the purpose of current/non-current classification of assets & liabilities period of 12 months has been considered as normal operating cycle.

1.3. Use of Estimates:

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the application of accounting policies, reported balances of assets and liabilities, disclosure of contingent liabilities as on the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates and assumptions used in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any difference between the actual results and estimates are recognized in the period in which the results are known / materialize. Any revision to accounting estimates is recognized prospectively in the current and future periods.

1.4. Fixed Assets:

a) Tangible Assets

Tangible assets are stated at cost of acquisition / construction less accumulated depreciation, amortization and accumulated impairment losses, if any.

b) Intangible Assets

Intangible assets are recognized only if it is probable that the future economic benefits attributable to asset will flow to the Company and the cost of asset can be measured reliably. Intangible assets are stated at cost of acquisition/development less accumulated amortization and accumulated impairment loss if any.

c) Cost of fixed assets includes non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset and any directly attributable costs for bringing the asset to its working condition for its intended use.

d) Capital work-in-progress comprises of cost incurred on fixed assets under construction/ acquisition that are not yet ready for their intended use at the Balance Sheet Date.

1.5. Depreciation/Amortization:

a) Depreciation/Amortization on fixed assets (other than freehold land and capital work in progress) is provided on a straight-line method (SLM) over their useful lives which is in consonance of useful life mentioned in Schedule II to the Companies Act, 2013 except certain class of assets specified in (i) & (ii) below, based on internal assessment estimated by the management of the Company, where

b) Depreciation and amortization methods, useful lives and residual values are reviewed periodically including at the end of each financial year.

c) In case of assets purchased, sold or discarded during the year, depreciation / amortization on such assets is calculated on pro-rata basis from the date of such addition or as the case may be, upto the date on which such asset has been sold or discarded.

e) Leasehold lands are amortized over the period of lease or useful life whichever is lower. Buildings constructed on leasehold land are depreciated over its useful life which matches with the rates mentioned in Schedule II. In cases where building is having useful life greater than the period of lease (where the Company does not have right of renewal), the same is amortized over the lease period of land.

1.6. Impairment:

The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

Based on the assessment done at each balance sheet date, recognised impairment loss is further provided depending on changes in circumstances. After recognition of impairment loss, the depreciation charge for the fixed asset is adjusted in future periods to allocate the asset''s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. If the conditions leading to recognition of impairment losses no longer exist or have decreased, impairment losses recognised are reversed to the extent it does not exceed the carrying amount that would have been determined after considering depreciation/ amortization had no impairment loss been recognised in earlier years.

1.7. Investments:

a) Investments are classified into current and long-term investments.

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

c) Current investments are carried at lower of cost and fair value (net asset value in case of units of mutual fund) determined on category wise basis. Long term investments are carried at cost. However, provision for diminution in value of long term investments is made to recognize a decline, other than temporary, on an individual investment basis. Current investments in liquid mutual funds are classified as cash and cash equivalents.

d) Long term investments which are expected to be realized within twelve months from the balance sheet date are presented under ''current investments'' as ''current portion of long term investments'' in accordance with the current / noncurrent classification of investments as per Schedule III of the Companies Act, 2013

e) The cost of investments comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

f) Investment transactions are accounted for on a trade date basis. In determining the holding cost of investments and the gain or loss on sale of investments, the Weighted Average'' method is followed.

1.8. Accounting for Interest in Joint Ventures:

a) Incorporated Jointly Controlled Entities

i. Income on investments in incorporated jointly controlled entities is recognized when the right to receive the same is established.

ii. Investment in such joint ventures is carried at cost after providing for any diminution in value other than temporary in nature, if any.

1.9. Inventories:

a) The inventories (including traded goods) are valued at lower of cost and net realizable value after providing for cost of obsolescence wherever considered necessary. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

b) The cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable), conversion cost and other costs incurred in bringing the inventories to their present location and condition. Since the Company is in fashion industry with diverse designs / styles, the cost of inventory is determined on the basis of specific identification method (as the same is considered as more suitable).

c) In case of work in progress and finished goods, the costs of conversion include costs directly related to the units of production and systematic allocation of fixed and variable production overheads. The cost of finished goods also includes excise duty wherever applicable.

1.10. Revenue Recognition:

a) Sales of goods are recognized when significant risks and rewards of ownership of the goods have passed to the buyer that coincides with delivery and are recorded net of sales tax, rebates, trade discounts and sales returns.

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

c) Dividend income on investment is accounted for in the year in which the right to receive the payment is established.

d) Service income is recognized upon rendering of services. Service income is recorded net of service tax.

e) Licensing revenue is recognized on accrual basis in accordance with the terms of the relevant agreements. Licensing income is recorded net of sales tax and service tax.

f) Power generation income is recognized on the basis of electrical units generated and sold in excess of captive consumption and recognized at prescribed rate as per agreement of sale of electricity by the Company. Further, value of electricity generated and captively consumed is netted off from the electricity expenses.

g) Export incentives under the Duty Drawback Scheme are recognized on accrual basis in the year of export.

h) Rental income on assets given under operating lease arrangements is recognized on straight line basis over the lease term in accordance with terms of agreement. Rental income is recorded net of service tax.

1.11. Foreign Currency Transactions:

a) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) As at balance sheet date, foreign currency monetary items are translated at closing exchange rate. Foreign currency non-monetary items are carried at historical cost using exchange rate on the date of transaction.

c) Exchange difference arising on settlement or translation of foreign currency monetary items are recognized as income or expense in the year in which they arise except to the extent exchange differences are regarded as an adjustment to interest cost and treated in accordance with Accounting Standard 16- Borrowing Cost.

1.12. Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest, exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.

1.13. Employees'' Benefits:

a) Short term employee benefits

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined contribution plan

The defined contribution plan is post- employment benefit plan under which the Company contributes fixed contribution to a government administered fund and will have no obligation to pay further contribution. The Company''s defined contribution plan comprises of Provident Fund, Employee State Insurance Scheme, Employee Pension Scheme, National Pension Scheme and Labour Welfare Fund. The Company''s contribution to defined contribution plans are recognized in the Statement of Profit and Loss in the period in which employee renders the related service.

ii) Defined benefit plan

The Company''s obligation towards gratuity liability is funded to an approved gratuity fund, which fully covers the said liability under Cash Accumulation Policy of Life Insurance Corporation of India (LIC). The present value of the defined benefit obligations is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations. Actuarial gains or losses arising on account of experience adjustment and the effect of changes in actuarial assumptions are recognized immediately in the Statement of Profit and Loss as income or expense.

As per the Company''s policy, employees who have completed specified years of service are eligible for death benefit plan wherein defined amount would be paid to the survivors of the employee on the death of the employee while in service with the Company. To fulfill the Company''s obligation for the above mentioned plan, the Company has taken group term policy from an insurance Company. The annual premium for insurance cover is recognized in Statement of Profit and Loss.

1.14. Operating Lease:

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vests with the lessor are classified as operating lease.

Rental expenses on assets obtained under operating lease arrangements are recognized on a straight-line basis as an expense in the Statement of Profit and Loss over the lease term of respective lease arrangement.

1.15. Taxes on Income:

a) Tax expenses comprise of current tax, deferred tax charge or credit and adjustments of taxes for earlier years. In respect of amounts adjusted against securities premium/ retained earnings or other reserves, the corresponding tax effect is also adjusted against the securities premium/ retained earnings or other reserves as the case may be, as per the announcement of Institute of Chartered Accountant of India.

b) Provision for current tax is made as per the provisions of Income Tax Act, 1961.

c) Deferred tax charge or credit reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years and are measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each balance sheet date. 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/virtually certain as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.

1.16.Cash and Cash Equivalents:

Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien) and all short term highly liquid investments / mutual funds that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.

1.17.Cash Flow Statement:

Cash flows are reported using the indirect method, where by net profit before tax 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 item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.

1.18. Provisions and Contingent Liabilities:

A provision is recognized when the Company has a present obligation as a result of 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 not discounted to its present value (except retirement benefits) and are determined based on 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.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.

1.19. Earnings per Share:

Basic earnings per share are calculated by dividing the net profit or loss (after tax) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue and share split if any.

For the purpose of calculating diluted earnings per share, the net profit or loss (after tax) for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

1.20.Segment Reporting:

The segments have been identified taking into account the nature of the products / services, geographical locations, nature of risks and returns, internal organization structure and internal financial reporting system. The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.


Mar 31, 2015

1.1. Basis of Preparation of Financial Statements:

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory Accounting Standards as specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies Act, 2013 (to the extent notified) and guidelines issued by the Securities and Exchange Board of India.

1.2. Presentation and Disclosure of Financial Statements:

All assets and liabilities have been classified as current & non-current as per company's normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013.

Based on the nature of products / services and time between acquisition of assets for processing/ rendering of services and their realization in cash and cash equivalents, operating cycle is less than 12 months however for the purpose of current/non- current classification of assets & liabilities period of 12 months has been considered as its operating cycle.

1.3. Use of Estimates:

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the application of accounting policies, reported balances of assets and liabilities, disclosure of contingent liabilities as on the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates and assumptions used in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any difference between the actual results and estimates are recognized in the period in which the results are known / materialize. Any revision to accounting estimates is recognized prospectively in the current and future periods.

1.4. Fixed Assets:

a) Tangible Assets

Tangible assets are stated at cost of acquisition / construction less accumulated depreciation, amortization and accumulated impairment losses, if any.

b) Intangible Assets

Intangible assets are recognized only if it is probable that the future economic benefits attributable to asset will flow to the enterprise and the cost of asset can be measured reliably.Intangible assets are stated at consideration paid for acquisition less accumulated amortization and accumulated impairment loss if any.

c) Cost of fixed assets includes non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset and any directly attributable costs for bringing the asset to its working condition for its intended use.

d) Capital work-in-progress comprises of cost incurred on fixed assets under construction / acquisition that are not yet ready for their intended use at the Balance Sheet Date.

1.5. Depreciation/Amortization:

a) Depreciation on fixed assets (other than freehold land and capital work in progress) acquired / capitalized during the year is provided using straight line basis in accordance with Schedule II of the Companies Act, 2013 except:

i. the following assets where the useful lives based on internal assessment estimated by the management is lower than useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013. The management believes that the useful life as given below represent the period over which the management expects to use these assets;

Assets Useful life

Furniture & fittings at retail 5 years on straight line basis stores

Second hand factory / office Balance useful life (30 Years) building (RCC frame structure) on straight line basis

Second hand factory / office Balance useful life (5 Years) building (other than RCC frame on straight line basis structure)

ii. individual assets whose cost does not exceed five thousands rupees has been provided fully in the year of purchase considering management's estimate of useful life of such assets;

b) As per the transitional provision under Part C of Schedule II of the Companies Act, 2013, in respect of assets (other than those given above in para a) i and ii) acquired prior to 1st April 2014, the carrying amount as on 1st April 2014 is depreciated over the remaining useful life of the assets and in respect of assets whose remaining useful life of an asset is nil, the carrying value after retaining the residual value(if any) is recognized in the opening balance of retained earnings (net of taxes).

c) In case of assets purchased, sold or discarded during the year, depreciation on such assets is calculated on pro- rata basis from the date of such addition or as the case may be, upto the date on which such asset has been sold or discarded.

d) Amortization of intangible assets

Assets Amortization Period

Computer software 3 years on straight line basis or useful life, whichever is shorter

Membership Rights 5 years on straight line basis or useful life, whichever is shorter

e) Leasehold lands are amortized over the period of lease or useful life whichever is lower. Buildings constructed on leasehold land are depreciated at normal rate as prescribed in Schedule II of the Companies Act, 2013, in case the lease period of the land is beyond the useful life of the building. In other cases building constructed on leasehold land are amortized over the lease period of land.

1.6. Impairment:

The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

Based on the assessment done at each balance sheet date, recognised impairment loss is further provided depending on changes in circumstances. After recognition of impairment loss, the depreciation charge for the fixed asset is adjusted in future periods to allocate the asset's revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. If the conditions leading to recognition of impairment losses no longer exist or have decreased, impairment losses recognised are reversed to the extent it does not exceed the carrying amount that would have been determined after considering depreciation/ amortization had no impairment loss been recognised in earlier years.

1.7. Investments:

a) Investments are classified into current and long-term investments.

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

c) Current investments are carried at lower of cost and fair value (net asset value in case of units of mutual fund) determined on category wise basis. Long term investments are carried at cost. However, provision for diminution in value of long term investments is made to recognize a decline, other than temporary, on an individual investment basis. Investments in liquid mutual funds are classified as cash and cash equivalents.

d) The cost of investments comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

e) Investment transactions are accounted for on a trade date basis. In determining the holding cost of investments and the gain or loss on sale of investments, the Weighted Average' method is followed.

1.8. Accounting for Interest in Joint Ventures:

a) Incorporated Jointly Controlled Entities

i. Income on investments in incorporated jointly controlled entities is recognized when the right to receive the same is established.

ii. Investment in such joint ventures is carried at cost after providing for any diminution in value other than temporary in nature, if any.

1.9. Inventories:

a) The inventories (including traded goods) are valued at lower of cost and net realizable value after providing for cost of obsolescence wherever considered necessary. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

b) The cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable), conversion cost and other costs incurred in bringing the inventories to their present location and condition.Since the Company is in fashion industry with diverse designs / styles, the cost of inventory is determined on the basis of specific identification method (as the same is considered as more suitable).

c) In case of work in progress and finished goods, the costs of conversion include costs directly related to the units of production and systematic allocation of fixed and variable production overheads. The cost of finished goods also includes excise duty wherever applicable.

1.10. Revenue Recognition:

a) Sales of goods are recognized when significant risks and rewards of ownership of the goods have passed to the buyer that coincides with delivery and are recorded net of sales tax, rebates,trade discounts and sales returns.

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

c) Dividend income on investment is accounted for in the year in which the right to receive the payment is established.

d) Service income is recognized upon rendering of services. Service income is recorded net of service tax.

e) Licensing revenue is recognized on accrual basis in accordance with the terms of the relevant agreements. Licensing income is recorded net of sales tax and service tax

f) Power generation income is recognized on the basis of electrical units generated and sold in excess of captive consumption and recognized at prescribed rate as per agreement of sale of electricity by the Company. Further, value of electricity generated and captively consumed is netted off from the electricity expenses.

g) Export incentives / benefits

i. Export incentives under the Duty Drawback Scheme/other benefits are recognized on accrual basis in the year of export.

ii. Export incentives / benefits in respect of duty free import of capital goods are recognized as income in Statement of Profit and Loss only on certainty of utilizing the benefit by import of capital goods.

h) Rental income on assets given under operating lease arrangements is recognized on straight line basis over the lease term in accordance with terms of agreement. Rental income is recorded net of service tax.

1.11. Foreign Currency Transactions:

a) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) As at balance sheet date, foreign currency monetary items are translated at closing exchange rate. Foreign currency non- monetary items are carried at historical cost using exchange rate on the date of transaction.

c) Exchange difference arising on settlement or translation of foreign currency monetary items are recognized as income or expense in the year in which they arise except to the extent exchange differences are regarded as an adjustment to interest cost and treated in accordance with Accounting Standard 16- Borrowing Cost.

1.12. Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest, exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.

1.13. Employees' Benefits:

a) Short term employee benefit

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined contribution plan

The defined contribution plan is post-employment benefit plan under which the Company contributes fixed contribution to a government administered fund and will have no obligation to pay further contribution. The Company's defined contribution plan comprises of Provident Fund, Employee State Insurance Scheme,Employee Pension Scheme and Labour Welfare Fund. The Company's contribution to defined contribution plans are recognized in the Statement of Profit and Loss in the period in which employee renders the related service.

ii) Defined benefit plan

The Company's obligation towards gratuity liability is funded to an approved gratuity fund, which fully covers the said liability under Cash Accumulation Policy of Life Insurance Corporation of India (LIC). The present value of the defined benefit obligations is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations. Actuarial gains or losses arising on account of experience adjustment and the effect of changes in actuarial assumptions are recognized immediately in the Statement of Profit and Loss as income or expense.

As per the Company's policy, employees who have completed specified years of service are eligible for death benefit plan wherein defined amount would be paid to the survivors of the employee on the death of the employee whilst in service with the Company. To fulfill the Company's obligation for the above mentioned plan, the Company has taken group term policy from an insurance Company. The annual premium for insurance cover is recognized in Statement of Profit and Loss.

1.14. Operating Lease:

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vests with the lessor are classified as operating lease.

Rental expenses on assets obtained under operating lease arrangements are recognized on a straight-line basis as an expense in the Statement of Profit and Loss over the lease term of respective lease arrangement.

1.15. Taxes on Income:

a) Tax expenses comprise of current tax, deferred tax charge or credit and adjustments of taxes for earlier years. In respect of amounts adjusted against securities premium or retained earnings, the corresponding tax effect is also adjusted against the securities premium or retained earnings as per the announcement of Institute of Chartered Accountant of India

b) Provision for current tax is made as per the provisions of Income Tax Act, 1961.

c) Deferred tax charge or credit reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years and are measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each balance sheet date. 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/virtually certain as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.

1.16. Cash and Cash Equivalents:

Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien) and all short term highly liquid investments / mutual funds that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.

1.17. Cash Flow Statement:

Cash flows are reported using the indirect method, where by net profit before tax 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 item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.

1.18. Provisions and Contingent Liabilities:

A provision is recognized when the Company has a present obligation as a result of 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 not discounted to its present value and are determined based on 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.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.

1.19. Earnings per Share:

Basic earnings per share are calculated by dividing the net profit or loss (after tax) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue and share split if any.

For the purpose of calculating diluted earnings per share, the net profit or loss (after tax) for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

1.20. Segment Reporting:

The segments have been identified taking into account the nature of the products / services, geographical locations, nature of risks and returns, internal organization structure and internal financial reporting system. The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

1.21. Derivative instrument:

Derivative instrument is accounted for based on the "Guidance note on accounting for Equity Index and Equity Stock Futures and Options". As per the Guidance Note, the profit or loss on settlement is recognized in statement of profit and loss. All open contracts / options at year end are stated at year end market rates.


Mar 31, 2014

1.1 Basis of Preparation of Financial Statements:

The fnancial statements are prepared in accordance with Indian Generally Accepted Accounting Principles ("GAAP") under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as specifed in the Companies (Accounting Standards) Rules, 2006 prescribed by the Central Government, relevant provisions of the Companies Act, 1956 (to the extent applicable), the Companies Act, 2013 (to the extent notifed) and guidelines issued by the Securities and Exchange Board of India. As clarifed by General Circular No. 08/2014 dated 4th April 2014 issued by the Ministry of Corporate Afairs, fnancial statements for the year ended 31st March 2014 have been prepared in accordance with the Companies Act, 1956. Accounting policies have been consistently applied except where 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.

1.2 Presentation and Disclosure of Financial Statements:

All assets and liabilities have been classifed as current & non-current as per Company''s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956.

Based on the nature of products / services and time between acquisition of assets for processing / rendering of services and their realization in cash and cash equivalents, operating cycle is less than 12 months however for the purpose of current/non-current classifcation of assets & liabilities period of 12 months has been considered as its operating cycle.

1.3 Use of Estimates:

The preparation of the fnancial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that afect the application of accounting policies, reported balances of assets and liabilities, disclosure of contingent liabilities as on the date of the fnancial statements and reported amounts of income and expenses during the period. Management believes that the estimates and assumptions used in the preparation of fnancial statements are prudent and reasonable. Actual results could difer from those estimates. Any diference between the actual results and estimates are recognized in the period in which the results are known / materialize. Any revision to accounting estimates is recognized prospectively in the current and future periods.

1.4 Fixed Assets:

a) Tangible Assets

Tangible assets are stated at cost of acquisition / construction less accumulated depreciation, amortization and accumulated impairment losses, if any.

b) Intangible Assets

Intangible assets are recognized only if it is probable that the future economic benefts attributable to asset will fow to the enterprise and the cost of asset can be measured reliably. Intangible assets are stated at consideration paid for acquisition less accumulated amortization and accumulated impairment loss if any.

c) Cost of fxed assets includes non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset and any directly attributable costs for bringing the asset to its working condition for its intended use.

d) Capital work-in-progress comprises of cost incurred on fxed assets under construction/ acquisition that are not yet ready for their intended use at the Balance Sheet Date.

1.5 Depreciation/Amortization:

a) Depreciation is provided using written down value method on pro-rata basis at the rates prescribed under Schedule XIV of the Companies Act, 1956 except in respect of the following assets, which are depreciated at higher rates than the rates specifed in the schedule XIV consequent to management''s estimate of useful life of the asset.

1.6 Impairment:

The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. Value in use is the present value of estimated future cash fows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

Based on the assessment done at each balance sheet date, recognised impairment loss is further provided depending on changes in circumstances. After recognition of impairment loss, the depreciation charge for the fxed asset is adjusted in future periods to allocate the asset''s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. If the conditions leading to recognition of impairment losses no longer exist or have decreased, impairment losses recognised are reversed to the extent it does not exceed the carrying amount that would have been determined after considering depreciation/ amortization had no impairment loss been recognised in earlier years.

1.7 Investments:

a) Investments are classifed into current and long-term investments.

b) Investments that are readily realizable and intended to be held for not more than a year from the date on which such investments are made are classifed as current investments. All other investments are classifed as long-term investments.

c) Current investments are carried at lower of cost and fair value (net asset value in case of units of mutual fund) determined on category wise basis. Long term investments are carried at cost. However, provision for diminution in value of long term investments is made to recognize a decline, other than temporary, on an individual investment basis. Investments in liquid mutual funds are classifed as cash and cash equivalents.

d) The cost of investments comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

e) Investment transactions are accounted for on a trade date basis. In determining the holding cost of investments and the gain or loss on sale of investments, the Weighted Average method is followed.

1.8 Accounting for Interest in Joint Ventures:

a) Incorporated Jointly Controlled Entities

i. Income on investments in incorporated jointly controlled entities is recognized when the right to receive the same is established.

ii. Investment in such joint ventures is carried at cost after providing for any diminution in value other than temporary in nature, if any.

1.9 Inventories:

a) The inventories (including traded goods) are valued at lower of cost and net realizable value after providing for cost of obsolescence wherever considered necessary. However, materials and other items held for use in the production of inventories are not written down below cost if the fnished products in which they will be incorporated are expected to be sold at or above cost.

b) The cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable), conversion cost and other costs incurred in bringing the inventories to their present location and condition.

Since the Company is in fashion industry with diverse designs/styles, the cost of inventory is determined on the basis of specifc identifcation method (as the same is considered as more suitable).

c) In case of work in progress and fnished goods, the costs of conversion include costs directly related to the units of production and systematic allocation of fxed and variable production overheads. The cost of fnished goods also includes excise duty wherever applicable.

1.10. Revenue Recognition:

a) Sales of goods are recognized when signifcant risks and rewards of ownership of the goods have passed to the buyer that coincides with delivery and are recorded net of sales tax, rebates, trade discounts and sales returns.

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

c) Dividend income on investment is accounted for in the year in which the right to receive the payment is established.

d) Service income is recognized upon rendering of services. Service income is recorded net of service tax.

e) Licensing revenue is recognized on accrual basis in accordance with the terms of the relevant agreements. Licensing income is recorded net of sales tax and service tax

f) Power generation income is recognized on the basis of electrical units generated and sold in excess of captive consumption and recognized at prescribed rate as per agreement of sale of electricity by the Company. Further, value of electricity generated and captively consumed is netted of from the electricity expenses.

g) Export incentives / benefts

i. Export incentives under the Duty Drawback Scheme/other benefts are recognized on accrual basis in the year of export.

ii. Export incentives / benefts in respect of duty free import of capital goods are recognized as income in Statement of Proft and Loss only on certainty of utilizing the beneft by import of capital goods.

h) Rental income on assets given under operating lease arrangements is recognized on straight line basis over the lease term in accordance with terms of agreement. Rental income is recorded net of service tax.

1.11. Foreign Currency Transactions:

a) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) As at balance sheet date, foreign currency monetary items are translated at closing exchange rate. Foreign currency non-monetary items are carried at historical cost using exchange rate on the date of transaction.

c) Exchange diference arising on settlement or translation of foreign currency monetary items are recognized as income or expense in the year in which they arise except to the extent exchange diferences are regarded as an adjustment to interest cost and treated in accordance with Accounting Standard 16- Borrowing Cost.

1.12. Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest, exchange diference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.

1.13. Employees'' Benefts:

a) Short term employee beneft

All employee benefts falling due wholly within twelve months of rendering the service are classifed as short term employee benefts and they are recognized as an expense at the undiscounted amount in the Statement of Proft and Loss in the period in which the employee renders the related service.

b) Post-employment benefts

i) Defned contribution plan

The defned contribution plan is post-employment beneft plan under which the Company contributes fxed contribution to a government administered fund and will have no obligation to pay further contribution. The Company''s defned contribution plan comprises of Provident Fund, Employee State Insurance Scheme, Employee Pension Scheme and Labour Welfare Fund. The Company''s contribution to defned contribution plans are recognized in the Statement of Proft and Loss in the period in which employee renders the related service.

ii) Defned beneft plan

The Company''s obligation towards gratuity liability is funded to an approved gratuity fund, which fully covers the said liability under Cash Accumulation Policy of Life Insurance Corporation of India (LIC). The present value of the defned beneft obligations is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defned beneft obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations. Actuarial gains or losses arising on account of experience adjustment and the efect of changes in actuarial assumptions are recognized immediately in the Statement of Proft and Loss as income or expense.

As per the Company''s policy, employees who have completed specifed years of service are eligible for death beneft plan wherein defned amount would be paid to the survivors of the employee on the death of the employee whilst in service with the Company. To fulfll the Company''s obligation for the abovementioned plan, the Company has taken group term policy from an Insurance Company. The annual premium for insurance cover is recognized in Statement of Proft and Loss.

1.14. Operating Lease:

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vests with the lessor are classifed as operating lease.

Rental expenses on assets obtained under operating lease arrangements are recognized on a straight-line basis as an expense in the Statement of Proft and Loss over the lease term of respective lease arrangement.

1.15. Taxes on Income:

a) Tax expenses comprise of current tax, deferred tax charge or credit and adjustments of taxes for earlier years.

b) Provision for current tax is made as per the provisions of Income Tax Act, 1961.

c) Deferred tax charge or credit refects the impact of current year timing diferences between taxable income and accounting income for the year and reversal of timing diferences of earlier years and are measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that sufcient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profts. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each balance sheet date. 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/ virtually certain as the case may be that sufcient future taxable income will be available against which such deferred tax assets can be realized.

1.16. Cash and Cash Equivalents:

Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien) and all short term highly liquid investments / mutual funds that are readily convertible into known amounts of cash and are subject to an insignifcant risk of changes in value.

1.17. Cash Flow Statement:

Cash fows are reported using the indirect method, where by net proft before tax is adjusted for the efects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or fnancing cash fows. The cash fows from operating, investing and fnancing activities are segregated.

1.18. Provisions and Contingent Liabilities:

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outfow 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 balance sheet date. These are reviewed at each balance sheet date and adjusted to refect the current best estimates.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outfow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outfow of resources is remote, no provision or disclosure is made.

1.19. Earnings per Share:

Basic earnings per share are calculated by dividing the net proft or loss (after tax) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue and share split if any.

For the purpose of calculating diluted earnings per share, the net proft or loss (after tax) for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the efects of all dilutive potential equity shares.

1.20. Segment Reporting:

The segments have been identifed taking into account the nature of the products / services, geographical locations, nature of risks and returns, internal organization structure and internal fnancial reporting system. The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the fnancial statements of the Company as a whole.


Mar 31, 2013

1.1. Basis of Preparation of Financial Statements:

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles ("GAAP") under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as specified in the Companies (Accounting Standards) Rules, 2006 prescribed by the Central Government, relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. Accounting policies have been consistently applied except 1.3 below and where 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.

1.2. Presentation and Disclosure of Financial Statements:

All assets and liabilities have been classified as current & non-current as per Company''s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956.

Based on the nature of products / services and time between acquisition of assets for processing / rendering of services and their realisation in cash and cash equivalents, 12 months has been considered by the Company for the purpose of current & non-current classification of assets and liabilities.

1.3. Change in Accounting Policy:

During the year, the Company has changed the following accounting policies;

a) Computers purchased after 31st March 2012 are depreciated equally over the period of three years. Computers purchased prior to 1st April 2012 will continue to be depreciated on written down value method at the rates prescribed under Schedule XIV to the Companies Act, 1956.

b) Deposits with banks under lien are not considered as Cash and Cash Equivalents.

1.4. Use of Estimates:

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the application of accounting policies, reported balances of assets and liabilities, disclosure of contingent liabilities as on the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates and assumptions used in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any difference between the actual results and estimates are recognised in the period in which the results are known / materialise. Any revision to accounting estimates is recognised prospectively in the current and future periods.

1.5. Fixed Assets:

a) Tangible Assets

Tangible assets are stated at cost of acquisition / construction less accumulated depreciation, amortisation and accumulated impairment losses, if any.

b) Intangible Assets

Intangible assets are recognised only if it is probable that the future economic benefits attributable to asset will flow to the enterprise and the cost of asset can be measured reliably. Intangible assets are stated at consideration paid for acquisition less accumulated amortisation and accumulated impairment loss if any.

c) Cost of fixed assets includes non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset and any directly attributable costs for bringing the asset to its working condition for its intended use.

d) Capital work-in-progress comprises of cost incurred on fixed assets under construction/ acquisition that are not yet ready for their intended use at the Balance Sheet Date.

1.6. Depreciation/Amortisation:

a) Depreciation is provided using written down value method on pro-rata basis at the rates prescribed under Schedule XIV of the Companies Act, 1956 except in respect of the following assets, which are depreciated at higher rates than the rates specified in the schedule XIV consequent of management estimate of useful life of the asset.

b) Computer softwares are amortised over a period of three years on straight line basis or useful life, whichever is shorter.

c) Depreciation on individual assets whose cost does not exceed five thousand rupees has been provided at the rate of hundred per cent in the year of capitalisation.

d) Leasehold lands are amortised over the period of lease or useful life whichever is lower. Buildings constructed on leasehold land are depreciated at normal rate as prescribed in schedule XIV, In case the lease period of the land is beyond the useful life of the building. In other cases building constructed on leasehold land are amortised over the lease period of land.

1.7. Impairment:

The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal / external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

Based on the assessment done at each balance sheet date, recognised impairment loss is further provided or reversed depending on changes in circumstances. After recognition of impairment loss or reversal of impairment loss as applicable, the depreciation charge for the fixed asset is adjusted in future periods to allocate the asset''s revised carrying amount, less its residual value (if any), on a systematic basis over its useful life

1.8. Investments:

a) Investments are classified into current and long-term investments.

b) Investments that are readily realisable and intended to be held for not more than a year from the date on which such investments are made are classified as current investments. All other investments are classified as long- term investments.

c) Current investments are carried at lower of cost and fair value (net asset value in case of units of mutual fund) determined on category wise basis. Long term investments are carried at cost. However, provision for diminution in value of long term investments is made to recognise a decline, other than temporary, on an individual investment basis. Investments in liquid mutual funds are classified as cash and cash equivalents.

d) The cost of investments comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

e) Investment transactions are accounted for on a trade date basis. In determining the holding cost of investments and the gain or loss on sale of investments, the Weighted Average'' method is followed.

1.9. Accounting for Interest in Joint Ventures :

a) Incorporated Jointly Controlled Entities

i. Income on investments in incorporated jointly controlled entities is recognised when the right to receive the same is established.

ii. Investment in such joint ventures is carried at cost after providing for any diminution in value other than temporary in nature, if any.

1.10. Inventories:

a) The inventories (including traded goods) are valued at lower of cost and net realisable value after providing for cost of obsolescence wherever considered necessary. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

b) The cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable), conversion cost and other costs incurred in bringing the inventories to their present location and condition. Since the Company is in fashion industry with diverse designs/styles, the cost of inventory is determined on the basis of specific identification method (as the same is considered as more suitable).

c) In case of work in progress and finished goods, the costs of conversion include costs directly related to the units of production and systematic allocation of fixed and variable production overheads. The cost of finished goods also includes excise duty wherever applicable.

1.11. Revenue Recognition:

a) Sales of goods are recognised when significant risks and rewards of ownership of the goods have passed to the buyer that coincides with delivery and are recorded net of sales tax, rebates, trade discounts and sales returns .

b) Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable.

c) Dividend income on investment is accounted for in the year in which the right to receive the payment is established.

d) Service income is recognised upon rendering of services. Service income is recorded net of service tax.

e) Licensing revenue is recognised on accrual basis in accordance with the terms of the relevant agreements. Licensing income is recorded net of sales tax and service tax

f) Power generation income is recognised on the basis of electrical units generated in excess of captive consumption and recognised at prescribed rate as per agreement of sale of electricity by the Company.

g) Export incentives / benefits

i. Export incentives under the Duty Drawback Scheme are recognised on accrual basis in the year of export.

ii. Export incentives / benefits in respect of duty free import of capital goods are recognised as income in Statement of Profit and Loss only on certainty of utilising the benefit by import of capital goods.

h) Rental income on assets given under operating lease arrangements is recognised on straight line basis over the lease term in accordance with terms of agreement. Rental income is recorded net of service tax.

1.12. Foreign Currency Transactions:

a) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) As at balance sheet date, foreign currency monetary items are translated at closing exchange rate. Foreign currency non-monetary items are carried at historical cost using exchange rate on the date of transaction.

c) Exchange difference arising on settlement or translation of foreign currency monetary items are recognised as income or expense in the year in which they arise except to the extent exchange differences are regarded as an adjustment to interest cost and treated in accordance with Accounting Standard 16- Borrowing Cost.

1.13. Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset are capitalised as part of the cost of the respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest, exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.

1.14. Employees'' Benefits:

a) Short term employee benefit

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined contribution plan

The defined contribution plan is post-employment benefit plan under which the Company contributes fixed contribution to a government administered fund and will have no obligation to pay further contribution. The Company''s defined contribution plan comprises of Provident Fund, Employee State Insurance Scheme, Employee Pension Scheme and Labour Welfare Fund. The Company''s contribution to defined contribution plans are recognised in the Statement of Profit and Loss in the period in which employee renders the related service.

ii) Defined benefit plan

The Company''s obligation towards gratuity liability is funded to an approved gratuity fund, which fully covers the said liability under Cash Accumulation Policy of Life Insurance Corporation of India (LIC). The present value of the defined benefit obligations is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations. Actuarial gains or losses arising on account of experience adjustment and the effect of changes in actuarial assumptions are recognised immediately in the Statement of Profit and Loss as income or expense.

As per the Company''s policy, employees who have completed specified years of service are eligible for death benefit plan wherein defined amount would be paid to the survivors of the employee on the death of the employee whilst in service with the Company. To fulfill the Company''s obligation for the abovementioned plan, the Company has taken group term policy from an insurance company. The annual premium for insurance cover is recognised in Statement of Profit and Loss.

1.15. Operating Lease:

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vests with the lessor are classified as operating lease.

Rental expenses on assets obtained under operating lease arrangements are recognised on a straight-line basis as an expense in the Statement of Profit and Loss over the lease term of respective lease arrangement.

1.16. Taxes on Income:

a) Tax expenses for the year comprise of current tax, deferred tax charge or credit and adjustments of taxes for earlier years.

b) Provision for current tax is made as per the provisions of Income Tax Act, 1961.

c) Deferred tax charge or credit reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years and are measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each balance sheet date. At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably/virtually certain as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

1.17 Cash and Cash Equivalents:

Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien) and all short term highly liquid investments / mutual funds that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.

1.18. Cash Flow Statement:

Cash flows are reported using the indirect method, where by net profit before tax 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 item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.

1.19. Provisions and Contingent Liabilities:

A provision is recognised when the Company has a present obligation as a result of 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 not discounted to its present value and are determined based on 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.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.

1.20. Earnings per Share:

Basic earnings per share are calculated by dividing the net profit or loss (after tax) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue and share split if any.

Diluted earnings per share is calculated by dividing the net profit or loss (after tax) for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

1.21. Segment Reporting

The segments have been identified taking into account the nature of the products / services, geographical locations, nature of risks and returns, internal organisation structure and internal financial reporting system. The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.


Mar 31, 2012

1.1. Basis of Preparation of Financial Statements:

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles ("GAAP") under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as specified in the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. Accounting policies have been consistently applied except where 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.

1.2. Use of estimates:

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that may affect the reported amount of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any difference between the actual results and estimates are recognised in the period in which the results are known / materialize. Any revision to accounting estimates is recognised prospectively in the current and the future periods.

1.3. Fixed Assets:

Fixed assets are stated at cost less depreciation or amortisation and impairment, if any. The cost of fixed assets includes borrowing cost attributable to acquisition of fixed assets, if any, up to the date when the asset is ready for its intended use and other incidental expenses incurred up to that date. Capital work-in-progress is carried at cost comprising direct cost, borrowing cost (if applicable) and related incidental expenses.

1.4. Depreciation/Amortisation:

a) Depreciation is provided on written down value method at the rates prescribed under Schedule XIV of the Companies Act, 1956 for all assets except those given below and such rates not being lower than the rates prescribed by the said Schedule XIV Assets costing Rs 5,000 or less are fully depreciated in the year of purchase.

b) Assets lying at retail stores are depreciated over a period of five years on straight-line basis.

c) Software is amortised over a period of three years on straight-line basis.

d) Mobile handsets (acquired on or after April 1, 2010) are amortised over a period of three years on straight-line basis.

e) Leasehold Lands are amortised over the period of lease or useful life whichever is lower

1.5. Impairment:

Impairment loss is recognised whenever the carrying amount of the asset is in excess of its recoverable amount and the same is recognised as an expense in the Statement of Profit and Loss and the carrying amount of the asset is reduced to its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

1.6. Investments:

Long-term investments are stated at cost less diminution (other than temporary) in value. Current investments are stated at cost or fair value (net asset value in case of units of mutual fund); whichever is lower, computed category wise for related investments. Investments in liquid mutual funds are classified as cash and cash equivalents.

Investment transactions are accounted for on a trade date basis. In determining the holding cost of investments and the gain or loss on sale of investments, the 'Weighted Average' method is followed.

1.7. Inventories:

a) Raw material, packing material and accessories, stores, chemicals and consumables are valued at lower of cost or net realisable value.

b) Work-in-progress, finished goods and traded goods are valued at lower of cost or estimated net realisable value. The excise duty in respect of inventory of finished goods is included in the cost of the finished goods.

c) Cost is ascertained on specific identification method and includes appropriate production overheads in case of work-in-progress and finished goods.

1.8. Revenue Recognition:

a) Sales are recognised when significant risks and rewards of ownership of the goods have passed to the buyer that coincides with delivery and are recorded net of trade discount, rebates and sales tax. Sales do not include inter-divisional transfers.

b) Service Income is recognised upon rendering of services.

c) Licensing revenue is recognised in accordance with the terms of the relevant agreements.

d) Power generation income is recognised on the basis of electrical units generated in excess of captive consumption and recognised at prescribed rate as per agreement of sale of electricity by the Company.

e) Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable.

f) Export Incentive/benefits

i. Export incentives under the Duty Drawback Scheme are recognised on accrual basis in the year of export.

ii. Export incentives benefit in respect of duty free import of capital goods is recognised as income only on certainty of utilising the benefits by import of capital goods.

1.9. Foreign Currency Transactions:

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit and loss of the year. Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing as on the balance sheet date and the resulting exchange differences are recognised in the Statement of Profit and Loss. Non Monetary items are carried at historical cost using exchange rate on the date of transactions.

1.10. Employees' Benefits:

Employees' benefits are dealt with in the following manner:

a) Provident Fund is defined contribution plan and charged to Statement of Profit and Loss on accrual basis with corresponding contribution to recognised funds.

b) Gratuity is defined benefit plan and payment for present liability of future payment of gratuity is made to an approved gratuity fund, which fully covers the said liability under Cash Accumulation Policy of Life Insurance Corporation of India (LIC). The additional liability arising out of the difference between the actuarial valuation and the fund balance with the LIC, if any, is accrued at the year-end. The gratuity liability is determined on basis of actuarial valuation as at year end. The actuarial valuation method used for measuring the liability is the projected unit credit method.

c) The leave entitlements defined benefits are short term benefits and leave liability towards such short term benefits are recognised/ measured on un-discounted basis.

d) As per the Company's policy, employees who have completed specified years of service are eligible for death benefit plan wherein defined amount would be paid to the survivors of the employee on the death of the employee whilst in service with the Company. To fulfill the Company's obligation for the abovementioned plan, the Company has taken group term policy from an insurance company. The annual premium for insurance cover is recognised in Statement of Profit and Loss.

1.11. Operating Lease:

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vests with the lessor are classified as operating lease.

Rental income and expense on assets given or obtained under operating lease arrangements are recognised on a straight-line basis / as per lease arrangement over the term of relevant lease.

1.12. Taxes on Income:

Tax expenses for the year comprises of current tax, deferred tax and adjustments of taxes for previous years. Current tax provision has been determined based on reliefs and deductions available under the Income Tax Act, 1961. Deferred tax resulting from timing differences between taxable and accounting income is accounted for using the tax rate and laws enacted or substantively enacted as on the balance sheet date. The Deferred tax asset is recognised and carried forward only to the extent that there is reasonable certainty that the asset will be realised in future.

1.13. Cash and Cash Equivalents:

Cash and cash equivalents comprise cash and deposits with banks. The Company considers all highly liquid investments/mutual funds that are readily convertible to known amounts of cash to be cash equivalents.

1.14. Cash Flow Statement:

Cash flows are reported using the indirect method, where by net profit before tax 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 item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.

1.15. Provisions and Contingent Liabilities:

Provisions are recognised when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of the obligation. The provisions are reviewed and adjusted to reflect the current best estimate.

Contingent liability is disclosed when there is (a) possible obligation or (b) a present obligation, which is not recognised since it is not probable that outflow of resources, would be required to settle the obligation. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made

1.16. Earnings per Share:

Basic earnings per share are calculated by dividing the net profit (after tax) for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profits (after tax) for the year attributable to the equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.

1.17. Borrowing costs

Borrowing costs attributable to qualifying assets are capitalised upto the date when such assets are ready for their intended use. Other borrowing costs are recognised as expense in the period in which they are incurred.


Mar 31, 2011

1. REVENUE RECOGNITION:

a) Sales are recognised when significant risks and rewards of ownership of the goods have passed to the buyer that coincides with delivery and are recorded net of trade discount, rebates and sales tax. Sales do not include inter-divisional transfers.

b) Service Income are recognised after rendering of services.

c) Export incentives under the Duty Drawback Scheme are recognised on accrual basis in the year of export.

d) Licensing revenue is recognised in accordance with the terms of the relevant agreements.

e) Power generation income is recognised on the basis of electrical units generated in excess of captive consumption and recognised at prescribed rate as per agreement of sale of electricity by the Company.

f) Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable.

2.EMPLOYEES' BENEFITS:

Employees' benefits are dealt with in the following manner:

a) Provident Fund is defined contribution plan and charged to Profit and Loss Account on accrual basis with corresponding contribution to recognised funds.

b) Gratuity is defined benefit plan and payment for present liability of future payment of gratuity is made to an approved gratuity fund, which fully covers the said liability under Cash Accumulation Policy of Life Insurance Corporation of India (LIC). The additional liability arising out of the difference between the actuarial valuation and the fund balance with the LIC, if any, is accrued at the year-end.

c) The leave entitlements defined benefits are either short term or long term benefit depending on the eligibility of the employees. Long term leave liabilities was funded with LIC and accounted as per actuarial valuation determined at the year end and short term leave liability are recognised/ measured on un-discounted basis.

3.TAXES ON INCOME:

Tax expenses for the year comprises of current tax, deferred tax and adjustments of taxes for previous years. Current tax provision has been determined based on reliefs and deductions available under the Income Tax Act, 1961. Deferred tax resulting from timing differences between taxable and accounting income is accounted for using the tax rate and laws enacted or substantively enacted as on the balance sheet date. The Deferred tax asset is recognised and carried forward only to the extent that there is reasonable certainty that the asset will be realised in future.

4.PROVISIONS AND CONTINGENT LIABILITIES:

Provisions are recognised when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of the obligation. The provisions are reviewed and adjusted to reflect the current best estimate.

Contingent liability is disclosed when there is (a) possible obligation or (b) a present obligation, which is not recognised since it is not probable that outflow of resources, would be required to settle the obligation.

5.0PERATING LEASE:

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vests with the lessor are classified as operating lease.

Rental income and expense on assets given or obtained under operating lease arrangements are recognised on a straight-line basis / as per lease arrangement over the term of relevant lease.

6.EARNINGS PER SHARE:

Basic earnings per share are calculated by dividing the net profit (after tax) for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profits (after tax) for the year attributable to the equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.

7.CASH FLOW STATEMENT:

Cash flows are reported using the indirect method, whereby net profit before tax 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 item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.


Mar 31, 2010

1. Basis of Accounting:

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles ("GAAP") under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as specified in the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. Accounting policies have been consistently applied except where 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.

2. Use of estimates:

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that may affect the reported amount of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3. Fixed Assets & Capital Work-in-Progress:

Fixed assets are stated at cost less depreciation or amortization and impairment, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of fixed assets, if any, up to the date of commissioning of the assets and other incidental expenses incurred up to that date.

Capital work-in-progress is carried at cost comprising direct cost, borrowing cost (if applicable) and related incidental expenses.

4. Depreciation/Amortization:

a) Depreciation is provided on written down value method at the rates prescribed under Schedule XIV of the Companies Act, 1956 tor all assets except those given below and such rates not being lower than the rates prescribed by the said Schedule XIV. Assets costing Rs. 5,000 or less are fully depreciated in the year of purchase.

b) Assets lying at retail stores are depreciated over a period of five years on straight-line basis.

c) Software is amortized over a period of three years on straight-line basis.

d) Leasehold Lands are amortized over the period of lease.

5. Impairment:

Impairment loss is recognized whenever the carrying amount of the asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and the carrying amount of the asset is reduced to its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

6. Investments:

Long-term investments are stated at cost less diminution (other than temporary) in value. Current investments are stated at cost or fair value (net asset value in case of units of mutual fund); whichever is lower, computed category wise for related investments.

Investment transactions are accounted for on a trade date basis. In determining the holding cost of investments and the gain or loss on sale of investments, the Weighted Average method is followed.

7. Inventories:

a) Raw material, packing material, accessories, stores and consumables are valued at lower of cost or net realizable value.

b) Work-in-process, finished goods and traded goods are valued at lower of cost or estimated net realizable value.

c) Cost is ascertained on specific identification method and includes appropriate production overheads in case of work-in-process and finished goods.

8. Foreign Currency Transactions:

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing as on the balance sheet date and the resulting exchange differences are recognized in the profit and loss account. Non Monetary items are carried at historical cost using exchange rate on the date of transactions

The Central Government, vide notification dated 31st March 2009 has amended Accounting Standard (AS) - 11 The Effects of changes in Foreign Exchange Rates notified under the Companies (Accounting Standard) Rules, 2006. The company has decided to continue the existing accounting policy to charge off all exchange difference to the profit and loss account. Accordingly, the company has not amended its accounting policy to adopt the alternate treatment / option as per the above notification.

9. Revenue Recognition:

a) Sales are recognized when significant risks and rewards of ownership of the goods have passed to the buyer that coincides with delivery and are recorded net of trade discount, rebates and taxes. Sales do not include inter-divisional transfers.

b) Service charges are recognized after rendering of services.

c) Export incentives under the Duty Drawback Scheme are recognized on accrual basis in the year of export.

d) Power generation income is recognized on the basis of electrical units generated in excess of captive consumption and recognized at prescribed rate as per agreement of sale of electricity by the company.

e) Interest income is recognized on accrual basis and Dividend income is accounted for when the right to receive payment is established.

10. Employees Benefits:

Employees benefits are dealt with in the following manner:

a) Provident Fund is defined contribution plan and charged to Profit and Loss Account on accrual basis with corresponding contribution to recognized funds.

b) Gratuity is defined benefit plan and payment for present liability of future payment of gratuity is made to an approved gratuity fund, which fully covers the said liability under Cash Accumulation Policy of Life Insurance Corporation of India (LIC). The additional liability arising out of the difference between the actuarial valuation and the fund balance with the LIC, if any, is accrued at the year-end.

c) The leave entitlements defined benefits to employees are either short term or long term benefit depending on the eligibility of the employees. Long term leave liabilities are funded with LIC and accounted as per actuarial valuation determined at the year end and short term leave liability is determined arithmetically and charged to Profit & Loss Account on accrual basis.

11. Taxes on Income:

Tax expenses for the year comprises of current tax, deferred tax, wealth tax and adjustments of taxes for previous years. Current tax provision has been determined based on reliefs and deductions available under the Income Tax Act, 1961. Deferred tax resulting from timing differences between taxable and accounting income is accounted for using the tax rate and laws enacted or substantively enacted as on the balance sheet date. The Deferred tax asset is recognized and carried forward only to the extent that there is reasonable certainty that the asset will be realized in future. Provision for Fringe benefit tax if applicable is made in accordance with Chapter XII- H of the Income Tax Act, 1961.

12. Provisions and Contingent Liabilities:

Provisions are recognized when the company has a legal and constructive obligation as a result of a past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of the obligation. The provisions are reviewed and adjusted to reflect the current best estimate.

Contingent liability is disclosed when there is (a) possible obligation or (b) a present obligation, which is not recognised since it is not probable to that outflow of resources, would be required to settle the obligation.

13. Operating Lease:

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vests with the lessor are classified as operating lease.

Rental income and expense on assets given or obtained under operating lease arrangements are recognized on a straight-line basis over the term of relevant lease.

14. Earnings Per Share (EPS):

Basic earnings per share are calculated by dividing the net profit (after tax) for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profits (after tax) for the year attributable to the equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.



 
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