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Accounting Policies of Loyal Textiles Mills Ltd. Company

Mar 31, 2015

A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The accounts have been prepared to comply with, in all material aspects, the generally accepted accounting principles, under the historical cost convention, on accrual basis and in line with accounting standards as prescribed under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts ) Rules, 2014, the provisions of Companies Act, 2013 to the extent notified and guidelines issued by Securities and Exchange Board of India ( SEBI). The disclosure and other requirements under the Micro, Small and Medium Enterprises Development Act, 2006 have been considered.

B) USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and the reported amount of income and expenses during the year.

C) REVENUE RECOGNITION

i) Sales are recognised when goods are despatched and are recorded excluding Sales Tax and recoveries. There is no Excise Duty collection on sales as the Company has opted out of the duty payment scheme.

ii) Rental Income / Interest income / Service / Process Charge is accounted on accrual basis.

iii) Dividend income on investments and claims are accounted for, when the right to receive the payment is established.

Dividends from foreign company is accounted on receipt.

D) DUTY DRAW BACK CLAIMS

i) Duty draw back claims and other export benefits are accounted on completion of exports, on complying with the rules of the scheme governing it. No obligation is attached to this assistance.

ii) Sale of import entitlements are accounted on completion of transfer.

iii) Duty portion of capital goods availed against Focus market / product licences for which no obligation is attached, is recognised under income approach method.

E) EXPENDITURE

Expenses are accounted for on accrual basis and provision is made for all losses and known liabilities. Cost of Inputs are accounted net of duty concessions availed.

F) FIXED ASSETS AND DEPRECIATION

i) Land including lease is stated at cost except for a portion revalued. Other Fixed Assets including leased out assets are stated at cost less depreciation. The cost includes borrowing cost and in respect of imported machinery the cost includes the value portion of customs duty credit availed as granted by the government under export incentive schemes. The Capital subsidy from government is accounted when the right to receive is established and is deducted from the gross value of the respective assets. Assets under erection / construction are stated at value incurred.

ii) Depreciation on Tangible Assets is provided over their useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013 on Straight Line method basis except the following which have been provided on written down value basis:- 1. All the assets in Garment Division

2. All the assets except Plant and Machinery in Loyal Division

3. Furniture and Fittings, Vehicles in Shri Vishala Textile Mills Division

4. Building in Wind Mill Division

iii) Depreciation in respect of additions / sales has been provided pro-rata from the date of commissioning or till the date of sale as rounded off to the nearest month.

iv) The increase / decrease in long term liability due to fluctuation in foreign currency in respect of imported Plant and Machinery beyond the date of commissioning is taken to Profit and Loss Statement. Depreciation has been provided from the date of commissioning. The assets identified as obsolete and held for disposal are stated at their estimated net realisable values.

G) FOREIGN CURRENCY TRANSACTIONS

i) Foreign Currency transactions are recorded at the negotiated rates prevailing on the dates of transactions. Exchange difference on Foreign Currency Transactions covered by specific forward contracts are recognised over the period of the contract.

ii) Foreign Exchange assets and liabilities are converted at the year end exchange rates. However non-monetary assets ie., investments are stated at the rate prevailing on the date of transaction.

iii) Exchange differences arising on foreign currency transactions are included in the Profit and Loss Statement.

H) EMPLOYEE BENEFITS

i) Short term benefits :

The gross amounts are recognized as expense and to the extent unpaid it is recognized as liability.

Short term compensated absences are provided for based on internal assessment.

Long term compensated absences are provided for based on actuarial valuation.

ii) Post employment benefits :

Provident fund and other funds, being defend contribution schemes, the contributions are charged to the Profit and Loss Statement of the year when the contributions, for the covered employees, to the respective government administered funds are due. Gratuity, being a defend benefit plan, the defend benefit obligations are provided for on the basis of an actuarial valuation made at the end of each financial year.

iii) Other long term benefits :

Deferred employee benefits / deferred compensation and termination benefits are recognized as an expense as and when incurred. Payments made under the Voluntary Retirement Scheme are charged to the Profit and Loss Statement in the year incurred. Actuarial gains / losses are immediately taken to the Profit and Loss Statement and are not deferred.

I) INVENTORIES

a) Inventories are valued at lower of cost or net realisable value, cost being ascertained on the following basis:

i) Stores and spares, raw-materials on weighted average basis.

ii) Stock-in-process, Finished goods - Cost includes applicable production overheads.

iii) Traded goods - at lower of Cost and Net Realisable Value.

b) Obsolete / non-moving Inventories are provided for to the extent of requirement and are stated at net realisable value.

J) INVESTMENTS

Investments being long term are valued at Cost. Provision for permanent diminution in value is made, when considered necessary.

K) TAXES ON INCOME

Current Tax is determined on the basis of taxable income for the year. Deferred tax is recognised for all timing differences, subject to the consideration of prudence.

L) CASH FLOW STATEMENT

Cash flow is reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future operating cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.

M) IMPAIRMENT OF FIXED ASSETS

Consideration is given at each Balance Sheet date to determine whether there is any impairment of the carrying amount of the company's fixed assets including leased out assets. Impairment loss is recognised as and when required.

N) EARNINGS PER SHARE:

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect on any extra ordinary items. The number of shares used in computing basic and diluted equity shares is the weighted average number of shares outstanding during the year.

O) PROVISIONS AND CONTINGENT LIABILITIES

The company creates a provision when there is a present obligation as a result of an event that requires an outflow of resources and a reliable estimate can be made of the amount. 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.

P) SEGMENT REPORTING SEGMENT INFORMATION

a) The company has identified five reportable business segments as primary segments viz : yarn, yarn for trading, cloth, cloth trading and garments.

b) The secondary segment information is identified on the basis of geographical segments viz. Europe, Asia, U.S.A. and Others.

c) The Accounting policies adopted for segment reporting are in line with the accounting policy of the company with the following additional policies for segment reporting .

i) Revenue and Expenses have been identified to a segment on the actual basis / on turnover basis of the segment.

ii) Pricing for Inter Segment transfers has been made, considering the normal internal business reporting system of the company at estimated realisable value.

iii) Operating assets and liabilities represent assets / liabilities in respective segments.

Q) LEASES

i) The determination of whether an agreement is, or contains, a lease is based on the substance of agreement at the date of inception.

ii) Operating leases - assets leased out under operating leases are capitalised. Lease rental income is recognised on an accrual basis.

iii) In respect of operating lease, the depreciation is recognised in the Profit and Loss Statement.

iv) Initial direct costs, if any, incurred specifically to earn revenue from operating lease, is recognised as expense in the Profit and Loss Statement.

R) RESEARCH AND DEVELOPMENT COSTS

Revenue expenditure pertaining to research is charged to the Profit and Loss Statement. Development costs of products are charged to the Profit and Loss Statement unless a product's technological feasibility has been established, in which case such expenditure is capitalised.

S) BORROWING COSTS

Borrowing costs attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, up the date when the assets are ready for their intended use. All other borrowing costs are recognised in the Profit and Loss Statement in the period in which they are incurred.


Mar 31, 2014

A) The accounts have been prepared to comply with, in all material aspects, the generally accepted accounting principles, under the historical cost convention, on accrual basis and in line with the applicable accounting standards specified in Companies (Accounting Standard) Rule 2006, the provisions of Companies Act 1956. The disclosure and other requirements under the Micro, Small and Medium Enterprises Development Act, 2006 have been considered.

B) Revenue recognition:

(i) Sales are recognised when goods are despatched and are recorded excluding Sales Tax and recoveries. There is no Excise Duty collection on sales as the Company has opted out of the duty payment scheme.

(ii) Rental Income / Interest income / Service / Process Charge is accounted on accrual basis.

(iii) Dividend income on investments/claims are accounted for, when the right to receive the payment is established. Dividends from foreign company is accounted on receipt.

C) Duty Draw Back claims:

i) Duty draw back claims, other Export benefits are accounted on completion of exports, on complying with the rules of the scheme governing it. No obligation is attached to this assistance.

ii) Sale of import entitlements are accounted on completion of transfer.

iii) Duty portion of capital goods availed against Focus market / product licences for which no obligation is attached, is recognised under income approach method.

D) Expenditure:

Expenses are accounted for on accrual basis and provision is made for all losses and known liabilities. Cost of inputs are accounted net of duty concessions availed.

E) Use of estimates:

The preparation of financial statement requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statement and the reported amount of income and expenses during the year.

F) Fixed Assets and Depreciation:

i) Land including lease is stated at cost except for a portion revalued. Other Fixed Assets are stated at cost less depreciation. The cost include borrowing cost and in respect of imported machinery the cost include the value portion of customs duty credit availed as granted by the government under export incentive schemes. The Capital subsidy from government is accounted when the right to receive is established and is deducted from the gross value of the respective assets. Assets under erection/construction are stated at value incurred.

ii) Depreciation in respect of all assets at Loyal division excepting Plant and Machinery (On SLM basis) has been provided on written down value basis at the rates specified in Schedule XIV to the Companis Act 1956.

iii) Depreciation in respect of all assets at Valli Division, Processing Division and Plant and Machinery of Loyal division (except as stated specifically elsewhere), SCTM division has been provided at the rates specified in Schedule XIV to the Companies Act, 1956 on straight line basis. Depreciation in respect of all assets at Garment division has been provided on written down value basis at the rates specified in Schedule XIV. Rate of depreciation is determined on certain assets as per the internal assessment on the useful life of such assets.

iv) Depreciation in respect of all assets (except Furniture & Vehicles, which has been provided on WDV basis) at Shri Vishala Textile Mills division has been provided on SLM basis at the rates specified in Schedule XIV of the Companies Act, 1956.

v Depreciation in respect of additions/sales has been provided pro-rata from the date of commissioning or till the date of sale as rounded off to the nearest month.

vi) The increase / decrease in long term liability due to fluctuation in foreign currency in respect of imported Plant and Machinery beyond the date of commissioning is taken to Profit and Loss account. Depreciation has been provided from the date of commissioning. The assets identified as obsolete and held for disposal are stated at their estimated net realisable values.

G. Foreign Currency Transactions:

i) Foreign Currency transactions are recorded at the negotiated rates prevailing on the dates of transactions. Exchange difference on Foreign Currency Transactions covered by specific forward contracts are recognised over the period of the contract.

ii) Foreign Exchange assets and liabilities are converted at the year end exchange rates. However non monetary assets ie., investments are stated at the rate prevailing on the date of transaction.

iii) Exchange differences arising on foreign currency transactions are included in the profit and loss statement.

H. Retirement benefits:

a) Short term benefits:

The gross amounts are recognized as expense and to the extent unpaid it is recognized as liability.

Short term compensated absences are provided for based on internal assessment.

Long term compensated absences are provided for based on actuarial valuation.

b) Post employment benefits:

Provident fund and other funds, being defined contribution schemes, the contributions are charged to the Profit and Loss Account of the year when the contributions, for the covered employees, to the respective government administered funds are due. Gratuity, being a defined benefit plan, the defined benefit obligations are provided for on the basis of an actuarial valuation made at the end of each financial year.

c) Other long term benefits:

Deferred employee benefits/deferred compensation and Termination benefits are recognized as an expense as and when incurred. Payments made under the Voluntary Retirement scheme are charged to the Profit and Loss Account in the year incurred. Actuarial gains/losses are immediately taken to the Profit and Loss account and are not deferred.

I) Valuation of Inventories:

a) Inventories are valued at lower of cost or net realisable value, cost being ascertained on the following basis:

i) Stores and spares, raw-materials on weighted average basis.

ii) Stock-in-process, Finished goods - cost includes applicable production overheads.

iii) Traded goods - at lower of Cost or net realisable value.

b) Obsolete/non-moving Inventories are provided for to the extent of requirement and are stated at net realisable value.

J. Investments:

Investments being long term are valued at Cost. Provision for permanent diminution in value is made, when considered necessary.

K. Taxes on Income :

Current Tax is determined on the basis of taxable income for the year. Deferred tax is recognised for all timing differences, subject to the consideration of prudence.

L. Cash Flow Statement:

Cashflow is reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future operating cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.

M. Impairment of Fixed Assets:

Consideration is given at each Balance Sheet date to determine whether there is any impairment of the carrying amount of the Company''s fixed assets. Impairment loss is recognised as and when required.

N. Earnings per share:

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect on any extra ordinary items. The number of shares used in computing basic and diluted equity shares is the weighted average number of shares outstanding during the year.

O. Provisions and contingent liabilities:

The company creates a provision when there is a present obligation as a result of an event that requires an outflow of resources and a reliable estimate can be made of the amount. 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.

P. SEGMENT REPORTING:

SEGMENT INFORMATION:

a) The company has identified four reportable business segments as primary segments viz : yarn, yarn for trading, cloth and garments.

b) The secondary segment information are identified on the basis of geographical segments viz. Europe, Asia, U.S.A and Others.

c) The Accounting policies adopted for segment reporting are in line with the accounting policy of the company with the following additional policies for segment reporting.

i) Revenue and Expenses have been identified to a segment on the actual basis / on turnover basis of the segment.

ii) Pricing for Inter segment transfers has been made, considering the normal internal business reporting system of the company at estimated realisable value.

iii) Operating assets and liabilities represent assets / liabilities in respective segments.

Q. Accounting for Leases :

a) The determination of whether an agreement is , or contains , a lease is based on the substance of agreement at the date of inception.

b) Operating leases - assets leased out under operating leases are capitalised, Lease rental income is recognised on an accrual basis.

c) In respect of operating lease, the depreciation is recognised in the Profit and Loss Statement.

d) Initial direct costs, if any, incurred specifically to earn revenue from operating lease, is recognised as expenses in the Profit and Loss Statement.


Mar 31, 2013

A) The accounts have been prepared to comply with, in all material aspects, the generally accepted accounting principles, under the historical cost convention, on accrual basis and in line with the applicable accounting standards specified in Companies (Accounting Standard) Rule 2006, the provisions of Companies Act 1956. The disclosure and other requirements under the Micro, Small and Medium Enterprises Development Act, 2006 have been considered.

B) Revenue recognition:

ii) Sales are recognised when goods are despatched and are recorded excluding Sales Tax and recoveries. There i s no Excise Duty collection on sales as the Company has opted out of the duty payment scheme.

(ii) Rental Income / Interest income / Service / Process Charge is accounted on accrual basis.

(iii) Dividend income on investments/claims are accounted for, when the right to receive the payment is established. Dividends from foreign company is accounted on receipt.

C) Duty Draw Back claims:

ii) Duty draw back claims, other Export benefits are accounted on completion of exports, on complying with the rules of the scheme governing it. No obligation is attached to this assistance.

ii) Sale of import entitlements are accounted on completion of transfer.

iii) Duty portion of capital goods availed against Target plus licences for which no obligation is attached, is recognised under income approach method.

D) Expenditure:

Expenses are accounted for on accrual basis and provision is made for all losses and known liabilities. Cost of inputs are accounted net of duty concessions availed.

E) Use of estimates:

The preparation of financial statement requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statement and the reported amount of income and expenses during the year.

F) Fixed Assets and Depreciation:

i)Land including lease is stated at cost except for a portion revalued. Other Fixed Assets are stated at cost less depreciation. The cost include borrowing cost and in respect of imported machinery the cost include the value portion of customs duty credit availed as granted by the government under export incentive schemes. The Capital subsidy from government is accounted when the right to receive is established and is deducted from the gross value of the respective assets. Assets under erection/construction are stated at value incurred.

ii) Depreciation in respect of all assets at Loyal division excepting Plant and Machinery (On SLM basis) has been provided on written down value basis at the rates specified in Schedule XIV to the Companis Act 1956.

iii) Depreciation in respect of all assets at Valli Division, Processing Division and Plant and Machinery of Loyal division (except as stated specifically elsewhere), SCTM division has been provided at the rates specified in Schedule XIV to the Companies Act, 1956 on straight line basis. Depreciation in respect of all assets at Garment division has been provided on written down value basis at the rates specified in Schedule XIV. Rate of depreciation is determind on certain assets as per the internal assessment on the useful life of such assets.

iiv) Depreciation in respect of all assets (except Furniture & Vehicles, which has been provided on WDV basis) at Shri Vishala Textile Mills division has been provided on SLM basis at the rates specified in Schedule XIV of the Companies Act, 1956.

v) Depreciation in respect of additions/sales has been provided pro-rata from the date of commissioning or till the date of sale as rounded off to the nearest month.

vi) The increase / decrease in long term liability due to fluctuation in foreign currency in respect of imported Plant and Machinery beyond the date of commissioning is taken to Profit and Loss account. Depreciation has been provided from the date of commissioning. The assets identified as obsolete and held for disposal are stated at their estimated net realisable values.

G. Foreign Currency Transactions:

ii) Foreign Currency transactions are recorded at the negotiated rates prevailing on the dates of transactions. Exchange difference on Foreign Currency Transactions covered by specific forward contracts are recognised over the period of the contract.

ii) Foreign Exchange assets and liabilities are converted at the year end exchange rates. However non-monetary assets ie., investments are stated at the rate prevailing on the date of transaction.

iii) Exchange differences arising on foreign currency transactions are included in the profit and loss account.

H. Retirement benefits:

a) Short term benefits:

The gross amounts are recognized as expense and to the extent unpaid it is recognized as liability. Short term compensated absences are provided for based on internal assessment. Long term compensated absences are provided for based on actuarial valuation.

b) Post employment benefits:

Provident fund and other funds, being defined contribution schemes, the contributions are charged to the Profit and Loss Account of the year when the contributions, for the covered employees, to the respective government administered funds are due. Gratuity, being a defined benefit plan, the defined benefit obligations are provided for on the basis of an actuarial valuation made at the end of each financial year.

c) Other long term benefits:

Deferred employee benefits/deferred compensation and Termination benefits are recognized as an expense as and when incurred. Payments made under the Voluntary Retirement scheme are charged to the Profit and Loss Account in the year incurred. Actuarial gains/lossess are immediately taken to the Profit and Loss account and are not deferred.

I) Valuation of Inventories:

a) Inventories are valued at lower of cost or net realisable value, cost being ascertained on the following basis: I i) Stores and spares, raw-materials on weighted average basis.

ii) Stock-in-process, Finished goods - cost includes applicable production overheads. iii) Traded goods - at lower of Cost or net realisable value.

b) Obsolete/non-moving Inventories are provided for to the extent of requirement and are stated at net realisable value.

J. Investments being long term are valued at Cost. Provision for permanent dimunition in value is made, when considered necessary.

K. Taxes on Income - Current Tax is determined on the basis of taxable income for the year. Deferred tax is recognised for all timing differences, subject to the consideration of prudence.

L. Cash Flow Statement:

Cashflow is reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future operating cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.

M. Impairment of Fixed Assets:

Consideration is given at each Balance Sheet date to determine whether there is any impairment of the carrying amount of the company''s fixed assets. Impairment loss is recognised as and when required.

N. Earnings per share:

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect on any extra ordinary items. The number of shares used in computing basic and diluted equity shares is the weighted average number of shares outstanding during the year.

O. Provisions and contingent liabilities:

The company creates a provision when there is a present obligation as a result of an event that requires an outflow of resources and a reliable estimate can be made of the amount. 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.

P. SEGMENT REPORTING:

SEGMENT INFORMATION:

a) The company has identified four reportable business segments as primary segments viz : yarn, yarn for trading, cloth and garments.

b) The secondary segment information are identified on the basis of geographical segments viz. Europe, Asia, U.S.A and Others.

c) The Accounting policies adopted for segment reporting are in line with the accounting policy of the company with the following additional policies for segment reporting.

I i) Revenue and Expenses have been identified to a segment on the basis actual / on turnover basis of the segment. ii) Pricing for Inter segment transfers has been made, considering the normal internal business reporting system of the company at estimated realisable value. iii) Operating assets and liabilities represent assets / liabilities in respective segments.


Mar 31, 2012

A) The accounts have been prepared to comply with, in all material aspects, the generally accepted accounting principles, under the historical cost convention, on accrual basis and in line with the applicable accounting standards specified in Companies (Accounting Standard) Rule 2006, the provisions of Companies Act 1956. The disclosure and other requirements under the Micro, Small and Medium Enterprises Development Act, 2006 have been considered.

B) Revenue recognition:

i) Sales are recognized when goods are dispatched and are recorded excluding Sales Tax and recoveries. There is no Excise Duty collection on sales as the Company has opted out of the duty payment scheme.

ii) Rental Income / Interest income / Service / Process Charge is accounted on accrual basis.

iii) Dividend income on investments / claims are accounted for, when the right to receive the payment is established.

C) Duty Draw Back claims:

i) Duty draw back claims are accounted on completion of exports, on complying with the rules of the scheme governing it. No obligation is attached to this assistance.

ii) Sale of import entitlements are accounted on completion of transfer.

iii) Duty portion of capital goods availed against Target plus licences for which no obligation is attached, is recognised under income approach method.

D) Expenditure:

Expenses are accounted for on accrual basis and provision is made for all losses and known liabilities. Cost of Inputs are accounted net of duty concessions availed.

E) Use of estimates:

The preparation of financial statement requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statement and the reported amount of income and expenses during the year.

F) Fixed Assets and Depreciation :

i) Land including lease is stated at cost except for a portion revalued. Other Fixed Assets are stated at cost less depreciation. The cost include borrowing cost and in respect of imported machinery the cost include the value portion of customs duty credit availed as granted by the government under export incentive schemes. The Capital subsidy from government is accounted when the right to receive is established and is deducted from the gross value of the respective assets .Assets under erection / construction are stated at value incurred.

ii) Depreciation in respect of all assets at Loyal division excepting Plant and Machinery(On SLM basis) has been provided on written Down value basis at the rates specified in Schedule XIV to the Companies Act 1956.

iii) Depreciation in respect of all assets at Valli Division, Processing Division and Plant and Machinery of Loyal division (except as stated specifically elsewhere), SCTM division has been provided at the rates specified in schedule XIV to the Companies Act, 1956 on Straight line basis. Depreciation in respect of all assets at Garment division has been provided on written down value basis at the rates specified in schedule XIV. Rate of depreciation is determined on certain assets as per the internal assessment on the useful life of such assets.

iv) Depreciation in respect of all assets (except Furniture & Vehicles, which has been provided on WDV basis) at Shri Vishala Textile Mills division has been provided on SLM basis at the rates specified in Schedule XIV of the Companies Act, 1956.

v) Depreciation in respect of additions / sales has been provided pro-rata from the date of commissioning or till the date of sale as rounded off to the nearest month.

vi) Consequent to the amendment to schedule VI as per notification No. G.S.R. 226(E) Dated 31.03.2009 the increase / decrease in long term liability due to fluctuation in foreign currency in respect of imported Plant and Machinery beyond the date of commissioning is taken to Profit and Loss account. Depreciation has been provided from the date of commissioning. The assets identified as obsolete and held for disposal are stated at their estimated net realizable values.

G. Foreign Currency Transactions :

i) Foreign currency transactions are recorded at the negotiated rates prevailing on the dates of transactions. Exchange difference on Foreign Currency Transactions covered by specific forward contracts are recognized over the period of the contract.

ii) Foreign Exchange assets and liabilities are converted at the year end exchange rates. However non-monitory assets ie., investments are stated at the rate prevailing on the date of transaction.

iii) Exchange differences arising on foreign currency transactions are included in the profit and loss account.

H. Retirement benefits:

a) Short term benefits :

The gross amounts are recognized as expense and to the extent unpaid it is recognized as liability. Short term compensated absences are provided for based on internal assessment.

Long term compensated absences are provided for based on actuarial valuation.

b) Post employment benefits :

Provident fund and other funds, being defined contribution schemes, the contributions are charged to the Profit and Loss Account of the year when the contributions, for the covered employees, to the respective government administered funds are due. Gratuity, being a defined benefit plan, the defined benefit obligations are provided for on the basis of an actuarial valuation made at the end of each financial year.

c) Other long term benefits :

Deferred employee benefits/deferred compensation and Termination benefits are recognized as an expense as and when incurred. Payments made under the Voluntary Retirement scheme are charged to the Profit and Loss Account in the year incurred. Actuarial gains/losses are immediately taken to the Profit and Loss account and are not deferred.

I. Valuation of inventories :

a) Inventories are valued at lower of cost or net realizable value, cost being ascertained on the following basis:

i) Stores and spares, raw-materials on weighted average basis.

ii) Stock-in-process, Finished goods-Cost includes applicable production overheads.

iii) Traded goods - Cost at present location and condition.

b) Obsolete / non-moving Inventories are provided for to the extent of requirement and are stated at net realizable value.

J. Investments being long term are valued at Cost. Provision for permanent diminution in value is made, when considered necessary.

K. Taxes on Income - Current Tax is determined on the basis of taxable income for the year. Deferred tax is recognized for all timing differences, subject to the consideration of prudence.

L. Cash Flow Statement :

Cash flow is reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future operating cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.

M. Impairment of Fixed Assets :

Consideration is given at each Balance Sheet date to determine whether there is any impairment of the carrying amount of the company's fixed assets. Impairment loss is recognized as and when required.

N. Earnings per share :

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect on any extra ordinary items. The number of shares used in computing basic and diluted equity shares is the weighted average number of shares outstanding during the year.

O. Provisions and contingent liabilities :

The Company creates a provision when there is a present obligation as a result of an event that requires an outflow of resources and a reliable estimate can be made of the amount. 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.

P. SEGMENT REPORTING :

SEGMENT INFORMATION :

a) The company has identified three reportable business segments as primary segments viz: yarn, cloth and garments.

b) The secondary segment information are identified on the basis of geographical segments viz. Europe, Asia,U.S.A and Others.

c) The Accounting policies adopted for segment reporting are in line with the accounting policy of the company with the following additional policies for segment reporting.

i) Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Expenses incurred on behalf of other segments are not directly identifiable to each reportable segment have been allocated to each segment on the basis of associated revenues of each segment.

ii) Pricing for Inter segment transfers has been made, considering the normal internal business reporting system of the company at estimated realizable value.

iii) Operating assets and liabilities represent assets / liabilities in respective segments.


Mar 31, 2011

A) The accounts have been prepared to comply with, in all material aspects, the generally accepted accounting principles, under the historical cost convention, on accrual basis and in line with the applicable accounting standard specified in Companies (Accounting Standard) Rule 2006, the provisions of Companies Act 1956. The disclosure and other requirements under the Micro, Small and Medium Enterprises Development Act, 2006 have been considered.

B) Revenue recognition:

i) Sales are recognised when goods are despatched and are recorded excluding Sales Tax and recoveries. There is no Excise Duty collection on sales as the Company has opted out of the duty payment scheme.

ii) Rental Income / Interest income is accounted on accrual basis.

iii) Dividend income on investments / claims are accounted for, when the right to receive the payment is established.

C) Expenditure:

Expenses are accounted for on accrual basis and provision is made for all losses and known liabilities. Cost of Inputs are accounted net of duty concessions availed.

D) Duty Draw Back claims:

i) Duty draw back claims are accounted on completion of exports, on complying with the rules of the scheme governing it. No obligation is attached to this assistance

ii) Sale of import entitlements are accounted on completion of transfer.

iii) Duty portion of capital goods availed against Target plus licences for which no obligation is attached, is recognised under income approach method.

E) Use of estimates:

The preparation of financial statement requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statement and the reported amount of income and expenses during the year.

F) Fixed Assets and Depreciation :

i) Land including lease is stated at cost except for a portion revalued. Other Fixed Assets are stated at cost less depreciation.The cost include borrowing cost and in respect of imported machinery, the cost include the value portion of customs duty credit availed as granted by the government under export incentive schemes. The Capital subsidy from government is accounted when the right to receive is established and is deducted from the gross value of the respective assets .Assets under erection / construction are stated at value incurred.

ii) Depreciation in respect of all assets at Loyal division excepting Plant and Machinery has been provided on Written Down value basis at the rates specified in schedule XIV to the Companies Act 1956.

iii) Depreciation in respect of all assets at Valli Division, Processing Division and Plant and Machinery of Loyal division (except as stated specifically elsewhere) SCTM division has been provided at the rates specified in schedule XIV to the Companies Act, 1956 on straight line basis. Depreciation in respect of all assets at Garment division has been provided on written down value basis at the rates specified in schedule XIV. Rate of depreciation is determined on certain assets as per the internal assessment on the useful life of such assets.

iv) Depreciation in respect of additions / sales has been provided pro-rata from the date of commissioning or till the date of sale as rounded off to the nearest month.

v) Consequent to the amendment to schedule VI as per notification No. G.S.R. 226(E) Dated 31.03.2009 the increase / decrease in long term liability due to fluctuation in foreign currency in respect of imported Plant and Machinery beyond the date of commissioning is taken to Profit and Loss account. Depreciation has been provided from the date of commissioning. The assets identified as obsolete and held for disposal are stated at their estimated net realisable values.

G. Foreign Currency Transactions :

i) Foreign currency transactions are recorded at the negotiated rates prevailing on the dates of transactions. Exchange difference on Foreign Currency Transactions covered by specific forward contracts are recognised over the period of the contract.

ii) Foreign exchange assets and liabilities are converted at the year end exchange rates. However non-monetory assets ie., investments are stated at the rate prevailing on the date of transaction.

iii) Exchange differences arising on foreign currency transactions are included in the profit and loss account.

H. Retirement benefits:

a) Short term benefits

The gross amounts are recognized as expense and to the extent unpaid it is recognized as liability. Short term compensated absences are provided for based on internal assessment. Long term compensated absences are provided for based on actuarial valuation.

b) Post employment benefits

Provident fund and other funds, being defined contribution schemes, the contributions are charged to the Profit and Loss Account of the year when the contributions, for the covered employees, to the respective government administered funds are due.

Gratuity, being a defined benefit plan, the defined benefit obligations are provided for on the basis of an actuarial valuation made at the end of each financial year.

c) Other long term benefits

Deferred employee benefits/deferred compensation and termination benefits are recognized as an expense as and when incurred. Payments made under the Voluntary Retirement scheme are charged to the Profit and Loss account in the year incurred. Actuarial gains/losses are immediately taken to the Profit and Loss account and are not deferred.

I. Valuation of inventories

a) Inventories are valued at lower of cost or net realisable value, cost being ascertained on the following basis.

i) Stores and spares, raw-materials on weighted average basis.

ii) Stock-in-process, Finished goods cost includes applicable production overheads.

iii) Traded goods - Cost at present location and condition.

b) Obsolete / non-moving Inventories are provided for to the extent of requirement and are stated at net realisable value.

J. Investment being long term are valued at Cost. Provision for permanent dimunition in value is made, when considered necessary.

K. Taxes on Income - Current Tax is determined on the basis of taxable income for the year. Deferred tax is recognised for all timing differences, subject to the consideration of prudence.

L. Cash Flow Statement

i) Cashflow are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accurals of past or future operating cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.

M. Impairment of Fixed Assets :

Consideration is given at each Balance Sheet date to determine whether there is any impairment of the carrying amount of the company's fixed assets. Impairment loss is recognised as and when required.

N. Earnings per share :

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect on any extra ordinary items. The number of shares used in computing basic and diluted equity shares is the weighted average number of shares outstanding during the year.

O. Provisions and contingent liabilities :

The Company creates a provision when there is a present obligation as a result of an event that requires an outflow of resources and a reliable estimate can be made of the amount. 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.

P. SEGMENT REPORTING:

SEGMENT INFORMATION :

a) The company has identified three reportable business segments as primary segments viz:yarn, cloth and garments.

b) The secondary segment information are identified on the basis of geographical segments viz. Europe, Asia and Others.

c) The Accounting policies adopted for segment reporting are in line with the accounting policy of the company with the following additional policies for segment reporting.

i) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Expenses incurred on behalf of other segments and not directly identifiable to each reportable segment have been allocated to each segment on the basis of associated revenues of each segment.

ii) Pricing for Inter segment transfers has been made, considering the normal internal business reporting system of the company at estimated realisable value.

iii) Operating assets and liabilities represent assets / liabilities in respective segments.

Q. ACCOUNTING FOR AMALGAMATION :

The company has, in the matter of accounting for amalgamation, adopted pooling of interest method for recording assets, liabilities and reserves of the transfer or company at their exisiting carrying value as recommended by the companies Accounting Standard Rules, 2006 (AS 14)


Mar 31, 2010

A) The accounts have been prepared to comply with, in all material aspects, the generally accepted accounting principles, under the historical cost convention, on accrual basis and in line with the applicable accounting standard specified in Companies (Accounting Standard) Rule 2006, the provisions of Companies Act 1956. The disclosure and other requirements under the Micro Small and Medium Enterprises Development Act, 2006 have been considered.

B) Revenue recognition:

i) Sales are recognised when goods are despatched and are recorded excluding Sales Tax and recoveries. There is no Excise Duty collection on sales as the Company has opted out of the duty payment scheme.

ii) Rental Income / Interest income is accounted on accrual basis.

iii) Dividend income on investments / claims are accounted for, when the right to receive the payment is established.

C) Expenditure:

Expenses are accounted for on accrual basis and provision is made for all losses and known liabilities. Cost of Inputs are accounted net of duty concessions availed.

D) Duty Draw Back claims:

i) Duty draw back claims are accounted on completion of exports, on complying with the rules of the scheme governing it. No obligation is attached to this assistance

ii) Sale of import entitlements are accounted on completion of transfer.

iii) Duty portion of capital goods availed against Target plus licences for which no obligation is attached, is recognised under income approach method.

E) Use of estimates:

The preparation of financial statement requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statement and the reported amount of income and expenses during the year.

F) Fixed Assets and Depreciation :

i) Land including lease is stated at cost except for a portion revalued. Other Fixed Assets are stated at cost less depreciation.The cost include borrowing cost and in respect of imported machinery, the cost include the value portion of customs duty credit availed as granted by the government under export incentive schemes. The Capital subsidy from government is accounted when the right to receive is established and is deducted from the gross value of the respective assets and shown in the fixed assets schedule. Assets under erection are stated at value incurred.

ii) Depreciation in respect of all assets at Loyal division excepting Plant and Machinery has been provided on Written Down value basis at the rates specified in schedule XIV to the Companies Act 1956.

iii) Depreciation in respect of all assets at Valli Division, Processing Division and Plant and Machinery of Loyal division (except as stated specifically elsewhere) has been provided at the rates specified in schedule XIV to the Companies Act, 1956 on straight line basis. Depreciation in respect of all assets at Garment division has been provided on written down value basis at the rates specified in schedule XIV. Rate of depreciation is determined on

iv) Depreciation in respect of additions / sales has been provided pro-rata from the date of commissioning or till the date of sale as rounded off to the nearest month.

v) Consequent to the amendment to schedule VI as per notification No. G.S.R. 226(E) Dated 31.03.2009 the increase / decrease in long term liability due to fluctuation in foreign currency in respect of imported Plant and Machinery beyond the date of commissioning is taken to Profit and Loss account. Depreciation has been provided from the date of commissioning. The assets identified as obsolete and held for disposal are stated at their estimated net realisable values.

G. Foreign Currency Transactions :

i) Foreign currency transactions are recorded at the negotiated rates prevailing on the dates of transactions. Exchange difference on Foreign Currency Transactions covered by specific forward contracts are recognised over the period of the contract.

ii) Foreign exchange assets and liabilities are converted at the year end exchange rates. However non-monetory assets ie., investments are stated at the rate prevailing on the date of transaction.

iii) Exchange differences arising on foreign currency transactions are included in the profit and loss account.

H. Retirement benefits:

a) Short term benefits The gross amounts are recognized as expense and to the extent unpaid it is recognized as liability. Short term compensated absences are provided for based on internal assessment. Long term compensated absences are provided for based on actuarial valuation

b) Post employment benefits

Provident fund and other funds, being defined contribution schemes, the contributions are charged to the Profit and Loss Account of the year when the contributions, for the covered employees, to the respective government administered funds are due.

Gratuity, being a defined benefit plan, the defined benefit obligations are provided for on the basis of an actuarial valuation made at the end of each financial year.

c) Other long term benefits

Deferred employee benefits/deferred compensation and termination benefits are recognized as an expense as and when incurred. Payments made under the Voluntary Retirement scheme are charged to the Profit and Loss account in the year incurred. Actuarial gains/losses are immediately taken to the Profit and Loss account and are not deferred.

I. Valuation of inventories

a) Inventories are valued at lower of cost or net realisable value, cost being ascertained on the following basis.

i) Stores and spares, raw-materials on weighted average basis.

ii) Stock-in-process, Finished goods cost includes applicable production overheads.

iii) Traded goods - Cost at present location and condition.

b) Obsolete / non-moving Inventories are provided for to the extent of requirement and are stated at net realisable value.

J. Investment being long term are valued at Cost. Provision for permanent dimunition in value is made, when considered necessary.

K. Taxes on Income - Current Tax is determined on the basis of taxable income for the year. Deferred tax is recognised for all timing differences, subject to the consideration of prudence.

L. Cash Flow Statement

i) Cashflow are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accurals of past or future operating cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.

M. Impairment of Fixed Assets :

Consideration is given at each Balance Sheet date to determine whether there is any impairment of the carrying amount of the companys fixed assets. Impairment loss is recognised as and when required.

N. Earnings per share :

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect on any extra ordinary items. The number of shares used in computing basic and diluted equity shares is the weighted average number of shares outstanding during the year.

O. Provisions and contingent liabilities :

The Company creates a provision when there is a present obligation as a result of an event that requires an outflow of resources and a reliable estimate can be made of the amount. 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.

P. SEGMENT REPORTING:

SEGMENT INFORMATION :

a) The company has identified three reportable business segments as primary segments viz:yarn, cloth and garments.

b) The secondary segment information are identified on the basis of geographical segments viz. Europe, Asia and Others.

c) The Accounting policies adopted for segment reporting are in line with the accounting policy of the company with the following additional policies for segment reporting.

i) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Expenses incurred on behalf of other segments and not directly identifiable to each reportable segment have been allocated to each segment on the basis of associated revenues of each segment.

ii) Pricing for Inter segment transfers has been made, considering the normal internal business reporting system of the company at estimated realisable value.

iii) Operating assets and liabilities represent assets / liabilities in respective segments.