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Accounting Policies of Lux Industries Ltd. Company

Mar 31, 2015

A) Nature of Operation

Lux Industries Limited (the "Company") is engaged in the business of manufacturing & sale of knitwear's. The Manufacturing units of the company are located in Kolkata (West Bengal) and Tirupur, in the state of Tamilnadu.The Company is a public Limited company and its share is listed on the Kolkata and Ahmedabad stock Exchanges in India.

b) Basis of Preparation of Accounts

The financial statements have been prepared to comply with the generally accepted Accounting Principles in India (Indian GAPP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on an accrual basis. The accountings policies have been consistently applied by the company with those used in the previous year except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard/ Law requires a change in the accounting policy hitherto in use. The financial statements are presented in Indian rupees rounded off to the nearest rupees in lakhs.

Change in accounting Policy

Up to the year ended March, 2014, the company had been accounting for depreciation on tangible fixed assets based on the written down value method. During the current year, the company has revised its accounting policy of providing for depreciation from written down value method to straight line method. The change in the accounting policy has resulted in a surplus of Rs.1.62 lakhs. Consequently, the net profit for the current year is higher by Rs.1.62 lakhs .Had the company followed the written down value basis of depreciation accounting, the charge for the year end would have been higher by the same amount. .

c) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make judgments, estimates and assumptions that affect the reported amounts of Assets and Liabilities and disclosure of Contingent Liabilities on the date of the Financial Statements and the reported amounts of revenue and expenses during the reporting period. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes and useful life of intangible assets. Although these estimates are based on the management's best knowledge, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

d) Revenue Recognition

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

a) Sale of Goods : Sales are recognized when goods are supplied and are net of Sales Return.

b) Revenue from Services : Revenue from services is recognized as the service is performed based on agreements/arrangements with the concerned parties.

c) Interest : Interests on Investments are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

d) Dividends : Revenue is recognized when the Company's right to receive payment is established by the balance sheet date.

e) Export Benefits : Export Entitlements in the form of Duty Drawback are recognized in the Profit and Loss account when the right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

Exports benefits under DEPB/Focus Licence Scheme are recognized in the year of export itself provided there are no un certainity as to the amount of duty entitlement. Such export benefits are booked separately as revenue by creating a claim against it on the assets side.

e) Accounting of Claims

(a) Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claims payable are accounted for at the time of acceptance.

(b) Claim raised by Government Authorities regarding taxes and duties, which are disputed by the Company, are accounted based on merits of each claim.

f) Expenditure

Expenses are accounted for on accrual basis and provision is made for all known losses and liabilities.

g) Government Grant:

The company receives sales tax incentive under the WBIP (A.I. Units) Scheme'1994 and the same is recognized as revenue in the period in which these are accrued and shown as income under the head "Other Operating revenue". The Company has not received any non-monetary assets at concessional rate or free of cost as Government Grant.

In respect of capital subsidy on special machinery from government (under TUF-Scheme), The grant is shown as deduction from the value of assets, when subsidy is received from the government.

h) Fixed Assets

(a) Tangible Assets : Tangible Assets are stated at their original cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price(net of modvat) and any attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to the acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.

Subsequent expenditure related to an item of Tangible Asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

(b) Intangible Assets & amortization : Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated useful lives. The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the assets is significantly different from previous estimates, the amortization period is changed accordingly. The Intangible assets include Computer Software and Web Site Development cost. Amortization of Intangible Assets is made based on management's evaluation of duration of life cycle of intangible assets. The amortization rate used are :

Asset %

Computer Software: 40.00

Website Development cost: 33.33

(c) Capital Work-in-progress : Capital work-in-progress comprises the cost of fixed assets that are not yet ready for their intended use at the reporting date.

(d) Depreciation : Depreciation on fixed assets is provided on Straight Line method (SLM). Depreciation is provided based on useful life of the assets as prescribed in schedule II to the Companies Act, 2013. Individual Assets costing below Rs. 5,000 are fully depreciated in the year of acquisition.

i) Investments

Investments are classified as Current and Non current. Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long- term investments are carried at cost. Provision is made for any diminution in the market value of long term investment where such diminution is considered permanent in nature.

j) Valuation of Inventories

Raw materials including packing materials are carried at the lower of cost and net realizable value. Cost is determined on FIFO Basis. Work in progress is carried at the lower of cost and net realizable value. Finished goods produced or purchased by the company are carried at lower of cost and net realizable value. Cost of finished goods and process stock includes cost of conversion and other cost incurred in bringing the inventories to their present locations and conditions. The company has valued inventory net of modvat benefits. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

k) Employee Benefits

(a) Defined Contribution Schemes such as provident fund, pension and employee's state insurance is charged to the Profit & Loss Accounts of the year when the contribution to the respective funds are due.

(b) Defined Benefit Plan - the cost of providing benefits is determined using the projected unit credit method with actuarial valuations being carried out at each Balance sheet date. Actuarial gain or losses are recognized in full in the statement of profit and loss for the period in which they occur.

(c) Short Term benefit are recognized in the Profit & Loss A/c relating to the year in which the employee has rendered services.

(d) Liability on account of other long term employees benefit are accounted for as and when such Liability arises as per the relevant legislation in force in India.

l) Taxes on Income

Tax expense comprises current and deferred Tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred taxes is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originates in one period and are capable of reversal in one or more subsequent periods.

Deferred tax Assets & Liabilities are measured using the Tax Rates & Tax Laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available.

Advance Taxes and Provisions for current taxes are presented in the Balance sheet after offsetting advance taxes paid and income tax provisions arising in the same tax jurisdiction and where the company is able to and intends to settle the assets and liability on a net basis.

m) Provision, Contingent Liabilities And Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed by way of notes on accounts. Contingent Assets are neither recognized nor disclosed in the financial statements. During the financial year the company has made provision for doubtful debts and doubtful advances to the extent of 100% of the total amount identified as doubtful debts and advances.

n) Borrowing Cost

Borrowing Cost relating to acquisition or construction of fixed assets which take substantial period of time to get ready for its intended use are capitalized as part of the cost of a qualifying asset to the extent they relate to the period till such assets are ready to be put to use. Other Borrowing Costs are recognized as an expense in the year in which they are incurred.

o) Foreign Currency Transaction

(a) Initial Recognition : Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion : Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(c) Exchange Differences : Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized a income or as expenses in the year in which they arise.

(d) Forward Exchange : Contracts (Derivative Instruments) not intended for trading or speculation purpose: The Company uses forward exchange forward contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount on the forward exchange contract is not recognized separately. Exchange difference on such contracts is recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expenses for the year.

p) Segment Reporting Policies:

Identification of Segments:

Primary Segment

Business Segment : The Company's operating operation comprises of only one primary segment viz. manufacturing and sale of knitwear's.

Secondary Segment

Geographical Segment : The analysis of geographical segment is based on the geographical location of the customers.

* Sales within India include sales to customers located within India.

* Sales outside India include sales to customers located outside India.

q) Earnings per Share (Basic & Diluted)

Basic earnings (loss) per share are calculated by dividing the net profit or loss 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; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).

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

r) Impairment of assets:

Impairment loss is recognized wherever the carrying amount of an assets is in excess of its recoverable amount and the same is recognized as an expenses in the statement of Profit & Loss and carrying amount of the assets is reduced to its recoverable amount.

Reversal of impairment losses recognized in prior year is recovered when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

s) Cash Flow Statement

Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating. Financing and investing activities of the Company are segregated. Cash and cash equivalents in the balance sheet comprise cash at bank, cash/cheques in hand and unpaid deposit account.


Mar 31, 2014

A) Nature of Operation

Lux Industries Limited (the "Company") is engaged in the business of manufacturing & sale of knitwear's. The Manufacturing units of the company are located in Kolkata (West Bengal) and Tirupur, in the state of Tamilnadu.The Company is a public Limited company and its share is listed on the Kolkata and Ahmedabad stock Exchanges in India.

b) Basis of Preparation of Accounts

The financial statements have been prepared to comply in all material aspects with the notified accounting standards by Companies Accounting Standards Rules, 2006, the provisions of the Companies Act,2013(to the extent notified) , the Companies Act, 1956 (to the extent applicable), along with the pronouncement /guidelines of the Institute of Chartered Accountants of India and of the Securities and Exchange Board of India(SEBI). The financial statements have been prepared under the historical cost convention on an accrual basis. The accountings policies have been consistently applied by the company with those used in the previous year 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.

c) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make judgments, estimates and assumptions that affect the reported amounts of Assets and Liabilities and disclosure of Contingent Liabilities on the date of the Financial Statements and the reported amounts of revenue and expenses during the reporting year. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes and useful life of intangible assets. Although these estimates are based on the management's best knowledge, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

d) Revenue Recognition

Revenue is recognized to the extent that it is probable that

the economic benefits will flow to the Company and the revenue can be reliably measured.

a) Sale of Goods: Sales are recognized when goods are supplied and are net of Sales Return.

b) Revenue from Services: Revenue from services is recognized as the service is performed based on agreements/arrangements with the concerned partiess

c) Interest: Interests on Investments are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

d) Dividends: Revenue is recognized when the Company's right to receive payment is established by the balance sheet date.

e) Export Benefits: Export Entitlements in the form of Duty Drawback are recognized in the Profit and Loss account when the right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

Exports benefits under DEPB/Focus License Scheme are recognized in the year of export itself provided there are no un certainty as to the amount of duty entitlement. Such export benefits are booked separately as revenue by creating a claim against it on the assets side.

e) Accounting of Claims

(a) Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claims payable are accounted for at the time of acceptance.

(b) Claim raised by Government Authorities regarding taxes and duties, which are disputed by the Company, are accounted based on merits of each claim.

f) Expenditure

Expenses are accounted for on accrual basis and provision is made for all known losses and liabilities.

g) Government Grant

The company receives sales tax incentive under the WBIP (A.I. Units) Scheme'1994 and the same is recognized as revenue in the period in which these are accrued and shown as income under the head "Other Operating revenue". The Company has not received any non-monetary assets at concessional rate or free of cost as Government Grant.

In respect of capital subsidy on special machinery from government (under TUF-Scheme), The grant is shown as deduction from the value of assets, when subsidy is received from the government.

h) Fixed Assets

(a) Tangible Assets: Tangible Assets are stated at their original cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price(net of modvat) and any attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to the acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.

(b) Intangible Assets & amortization: Intangible Assets are stated at acquisition cost, net of accumulated Amortisation and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over their estimated useful lives. The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the assets is significantly different from previous estimates, the amortization period is changed accordingly. The Intangible assets include Computer Software and Web Site Development cost .Amortization of Intangible Assets is made based on management's evaluation of duration of life cycle of intangible assets. The amortization rate used are :

Asset %

Computer Software: 40.00

Website Development cost: 33.33

c) Capital Work-in-progress: Capital work-in-progress comprises the cost of fixed assets that are not yet ready for their intended use at the reporting date.

(d) Depreciation: Depreciation on fixed assets is provided on Written down Value method (pro-rata on addition and disposed of during the period) at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. Individual Assets costing below Rs.5,000 are fully depreciated in the year of acquisition..

i) Investments

Investments are classified as Current and Noncurrent.

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long- term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. Provision is made for any diminution in the market value of long term investment where such diminution is considered permanent in nature.

j) Valuation of Inventories

Raw materials including packing materials are carried at the lower of cost and net realizable value. Cost is determined on FIFO Basis. Work in progress is carried at the lower of cost and net realizable value. Finished goods produced or purchased by the company are carried at lower of cost and net realizable value. Cost of finished goods and process stock includes cost of conversion and other cost incurred in bringing the inventories to their present locations and conditions. The company has valued inventory net of modvat benefits. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

k) Employee Benefits

(a) Defined Contribution Schemes such as provident fund, pension and employee's state insurance is charged to the Profit & Loss Accounts of the year when the contribution to the respective funds are due.

(b) Defined Benefit Plan - the cost of providing benefits is determined using the projected unit credit method with actuarial valuations being carried out at each Balance sheet date. Actuarial gain or losses are recognized in full in the statement of profit and loss for the period in which they occur.

(c) Short Term benefit are recognized in the Profit & Loss A/c relating to the year in which the employee has rendered services.

(d) Liability on account of other long term employees benefit are accounted for as and when such Liability arises as per the relevant legislation in force in India.

l) Taxes on Income

Tax expense comprises current and deferred Tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred taxes is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originates in one period and are capable of reversal in one or more subsequent periods.

Deferred tax Assets & Liabilities are measured using the Tax Rates & Tax Laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available.

Advance Taxes and Provisions for current taxes are presented in the Balance sheet after offsetting advance taxes paid and income tax provisions arising in the same tax jurisdiction and where the company is able to and intends to settle the assets and liability on a net basis.

m) Provision, Contingent Liabilities And Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed by way of notes on accounts. Contingent Assets are neither recognized nor disclosed in the financial statements. During the financial year the company has made provision for doubtful debts and doubtful advances to the extent of 100% of the total amount identified as doubtful debts and advances.

n) Borrowing Cost

Borrowing Cost relating to acquisition or construction of fixed assets which take substantial period of time to get ready for its intended use are capitalized as part of the cost of a qualifying asset to the extent they relate to the period till such assets are ready to be put to use. Other Borrowing Costs are recognized as an expense in the year in which they are incurred.

o) Foreign Currency Transaction

(a) Initial Recognition: Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion: Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(c) Exchange Differences: Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized a income or as expenses in the year in which they arise.

(d) Forward Exchange: Contracts (Derivative Instruments) not intended for trading or speculation purpose: The Company uses forward exchange forward contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount on the forward exchange contract is not recognized separately. Exchange difference on such contracts is recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expenses for the year.

p) Segment Reporting Policies:

Identification of Segments:

Primary Segment

Business Segment: The Company's operating operation comprises of only one primary segment viz. manufacturing and sale of knitwear's.

Secondary Segment

Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers.

- Sales within India include sales to customers located within India.

- Sales outside India include sales to customers located outside India.

q) Earnings per Share (Basic & Diluted)

Basic earnings (loss) per share are calculated by dividing the net profit or loss 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; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).

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

r) Impairment of assets

Impairment loss is recognized wherever the carrying amount of an assets is in excess of its recoverable amount and the same is recognized as an expenses in the statement of Profit & Loss and carrying amount of the assets is reduced to its recoverable amount.

Reversal of impairment losses recognized in prior year is recovered when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

s) Cash Flow Statement

Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating. Financing and investing activities of the Company are segregated. Cash and cash equivalents in the balance sheet comprise cash at bank, cash/cheques in hand and unpaid deposit account.

The Company has only one class of equity shares with a par value ofRs. 10/- per share. Each holder of equity shares is entitled to one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares are entitled to receive the remaining assets of the Company, after meeting all liabilities and distribution of all preferential amounts, in proportion to their shareholding.


Mar 31, 2013

A. Nature of Operation

Lux Industries Limited (the "Company") is engaged in the business of manufacturing & sale of knitwear's. The Manufacturing units of the company are located in Kolkata (West Bengal) and Tirupur, in the state of Tamilnadu. The Company is a public Limited company and its share is listed on the Kolkata and Ahmedabad stock Exchanges in India.

b. Basis of Preparation of Accounts

The financial statements have been prepared to comply in all material aspects with the notified accounting standards by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956, along with the pronouncement /guidelines of the Institute of Chartered Accountants of India and of the Securities and Exchange Board of India. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the company with those used in the previous year.

All assets and liabilities have been classified as current or non current as per the operating cycle criteria set out in the revised schedule VI to the Companies Act, 1956.

c. Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make judgments, estimates and assumptions that affect the reported amounts of Assets and Liabilities and disclosure of Contingent Liabilities on the date of the Financial Statements and the reported amounts of revenue and expenses during the reporting year. Although these estimates are based on the management's best knowledge, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

d. Revenue Recognition

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

a. Sale of Goods: Sales are recognized when goods are supplied and are net of Sales Return.

b. Revenue from Services: Revenue from services is recognized as the service is performed based on agreements/arrangements with the concerned parties.

c. Interest: Interests on Investments are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

d. Dividends: Revenue is recognized when the shareholders' right to receive payment is established by the balance sheet date.

e. Export Benefits: Export Entitlements in the form of Duty Drawback are recognized in the Profit and Loss account when the right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

Exports benefits under DEPB/Focus Licence Scheme are recognized in the year of export itself provided there are no uncertainity as to the amount of duty entitlement. Such export benefits are booked separately as revenue by creating a claim against it on the assets side.

e. Accounting of Claims

a. Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claims payable are accounted for at the time of acceptance.

b. Claim raised by Government Authorities regarding taxes and duties, which are disputed by the Company, are accounted based on merits of each claim.

f. Expenditure

Expenses are accounted for on accrual basis and provision is made for all known losses and liabilities.

g. Government Grant

The company receives sales tax incentive under the WBIP (A.I. Units) Scheme'1994 and the same is recognized as revenue in the period in which these are accrued and shown as income under the head "Other Operating revenue". The Company has not received any non-monetary assets at concessional rate or free of cost as Government Grant.

In respect of capital subsidy on special machinery from government (under TUF-Scheme), The grant is shown as deduction from the value of assets, when subsidy is received from the government.

h. Fixed Assets

a. Tangible Assets: Tangible Assets are stated at their original cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price(net of modvat) and any attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to the acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.

b. Intangible Assets: Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated useful lives. The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the assets is significantly different from previous estimates, the amortization period is changed accordingly. The Intangible assets include Computer Software and Web Site Development cost .Amortization of Intangible Assets is made based on management's evaluation of duration of life cycle of intangible assets. The amortization rate used are :

Asset % Computer Software: 40.00 Website Development cost: 33.33

c. Depreciation: Depreciation on fixed assets is provided on Written down Value method (pro-rata on addition and disposed off during the period) at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. Individual Assets costing below ' 5,000 are fully depreciated in the year of acquisition.

i. Investments

Investments are classified as Current and Non current. Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. Provision is made for any diminution in the market value of long term investment where such diminution is considered permanent in nature.

j. Valuation of Inventories

Raw materials including packing materials are carried at the lower of cost and net realizable value. Cost is determined on FIFO Basis. Work in progress is carried at the lower of cost and net realizable value. Finished goods produced or purchased by the company are carried at lower of cost and net realizable value. Cost of finished goods and process stock includes cost of conversion and other cost incurred in bringing the inventories to their present locations and conditions. The company has valued inventory net of modvat benefits. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

k. Employee Benefits

a. Defined Contribution Schemes such as provident fund, pension and employee's state insurance is charged to the Profit & Loss Accounts of the year when the contribution to the respective funds are due.

b. Defined Benefit Plan - the cost of providing benefits is determined using the projected unit credit method with actuarial valuations being carried out at each Balance sheet date. Actuarial gain or losses are recognized in full in the statement of profit and loss for the period in which they occur.

c. Short Term benefit are recognized in the Profit & Loss A/c relating to the year in which the employee has rendered services.

d. Liability on account of other long term employees benefit are accounted for as and when such Liability arises as per the relevant legislation in force in India.

l. Taxes on Income

Tax expense comprises current and deferred Tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance withthe Indian Income Tax Act. Deferred taxes is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originates in one period and are capable of reversal in one or more subsequent periods.

Deferred tax Assets & Liabilities are measured using the Tax Rates & Tax Laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available.

Advance Taxes and Provisions for current taxes are presented in the Balance sheet after offsetting advance taxes paid and income tax provisions arising in the same tax jurisdiction and where the company is able to and intends to settle the assets and liability on a net basis.

m. Provision, Contingent Liabilities And Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed by way of notes on accounts. Contingent Assets are neither recognized nor disclosed in the financial statements. During the financial year the company has made provision for doubtful debts and doubtful advances to the extent of 100% of the total amount identified as doubtful debts and advances.

n. Borrowing Cost

Borrowing Cost relating to acquisition or construction of fixed assets which take substantial period of time to get ready for its intended use are capitalized as part of the cost of a qualifying asset to the extent they relate to the period till such assets are ready to be put to use. Other Borrowing Costs are recognized as an expense in the year in which they are incurred.

o. Foreign Currency Transaction

a. Initial Recognition: Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

b. Conversion: Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non - monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

c. Exchange Differences: Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise except those arising from investments in non - integral operations.

d. Forward Exchange: Contracts (Derivative Instruments) not intended for trading or speculation purpose: The Company uses derivative financial instruments including forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange difference on such contracts is recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expenses for the year.

p. Segment Reporting Policies

Identification of Segments:

Primary Segment

Business Segment: The Company's operating operation comprises of only one primary segment viz. manufacturing and sale of knitwear's.

Secondary Segment

Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers.

* Sales within India include sales to customers located within India.

* Sales outside India include sales to customers located outside India.

q. Earnings per Share (Basic & Diluted)

Basic earnings (loss) per share are calculated by dividing the net profit or loss 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; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

r. Impairment of assets

Impairment loss is recognized wherever the carrying amount of an assets is in excess of its recoverable amount and the same is recognized as an expenses in the statement of Profit & Loss and carrying amount of the assets is reduced to its recoverable amount.

Reversal of impairment losses recognized in prior year is recovered when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

s. Cash Flow Statement

Cash fl ows are reported using indirect method, whereby profi t before tax is adjusted for the eff ects transactions of a noncash nature and any deferrals or accruals of past or future cash receipts or payments. Th e cash fl ows from operating. Financing and investing activities of the Company are segregated. Cash and cash equivalents in the balance sheet comprise cash at bank, cash/cheques in hand and short-term investments with an original maturity of three months or less.


Mar 31, 2012

A) Nature of Operation

The Company is engaged in the business of manufacturing & sale of knitwears.

b) Basis of Preparation ofAccounts

The financial statements have been prepared to comply in all material aspects with the notified accounting standards by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The accountings policies have been consistently applied by the company with those used in the previous year. All assets and liabilities have been classified as current or non- current as per the operating cycle criteria set out in the Revised Schedule VI to the Companies Act, 1956.

c) Use of Estimates

The preparation of financial statements in conformity with GenerallyAccepted Accounting Principles requires the management to makejudgments, estimates and assumptions that affect the reported amounts of Assets and Liabilities and disclosure of Contingent Liabilities on the date of the Financial Statements and the reported amounts of revenue and expenses during the reporting year. Although these estimates are based on the management's best knowledge, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

d) Revenue Recognition

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

a) Sale of Goods : Sales are recognized when goods are supplied and are net of Sales Return.

b) Revenue from Services : Revenue from services is recognized as the service is performed based on agreements/ arrangements with the concerned parties

c) Interest: Interest on investments are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

d) Dividends : Revenue is recognized when the shareholders' right to receive payment is established by the balance sheet date.

e) Export Benefits : Export Entitlements in the form of Duty

Drawbacks are recognized in the Statement of Profit and Loss when the right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection ofthe relevant export proceeds.

Exports benefits under DEPB/Focus Licence Scheme are recognized in the year of export itself provided there are no uncertainity as to the amount of duty entitlement. Such export benefits are booked separately as revenue by creating a claim against it on the assets side.

e) Accounting ofClaims

(a) Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claims payable are accounted for at the time of acceptance.

(b) Claim raised by GovernmentAuthorities regarding taxes and duties, which are disputed by the Company, are accounted based on merits of each claim.

f) Expenditure

Expenses are accounted for on accrual basis and provision is made for all known losses and liabilities.

g) Government Grant

The Company receives sales tax incentive under the WBIP (A.I. Units) Scheme 1994 and the same is recognized as revenue in the period in which these are accrued and shown as income under the head "Other Operating Revenue". The Company has not received any non-monetary assets at concessional rate or free of cost as Government Grant.

In respect of capital subsidy on special machinery from government (under TUF-Scheme) The grant is shown as deduction from the value of assets, when subsidy is received from the government.

h) Fixed Assets

(a) Tangible Assets : Tangible Assets are stated at their original cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price(net of modvat) and any attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to the acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.

(b) Intangible Assets : Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated useful lives. The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the assets is significantly different from previous estimates, the amortization period is changed accordingly. The Intangible assets include Computer Software and Web Site Development cost. Amortization of IntangibleAssets is made based on management's evaluation of duration of life cycle of intangible assets. The amortization rate used are:

Asset %

Computer Software: 40.00

Website Development cost: 33.33

(c) Depreciation : Depreciation on fixed assets is provided on Written down Value method (pro-rata on addition and disposed off during the period) at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. Individual Assets costing below Rs. 5,000 are fully depreciated in the year of acquisition..

i) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. Provision is made for any diminution in the market value of long term investment where such diminution is considered permanent in nature.

j) Valuation of Inventories

Raw materials, packing material, work in progress and finished goods are valued at lower of cost and net realizable value. The cost of inventories comprise of all costs of purchase, cost of conversion & other cost incurred in bringing the inventories to their present location & conditions. Excise duty on finished goods lying in factories is considered for valuation of inventories, as per the guidelines of the ICAI, The company has valued inventory net of modvat benefits. When there is a decline in the price of materials & it is estimated that cost of the finished goods will exceed net realizable value, the materials are written down to net realizable value and in such circumstances the replacement cost of the materials are taken as net realizable value. However, raw 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. Cost is determined on FIFO basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessaryto make the sale.

k) Employee Benefits

(a) Defined Contribution Schemes such as provident fund, pension and employees state insurance is charged to the Profit & Loss Accounts of the year when the contribution to the respective funds are due.

(b) Defined Benefit Plan - the present value of the obligation under such plan is determined based on an actuarial valuation made on 23rd April, 2012 using the projected unit credit method. Actuarial gain and losses arising on such valuation are recognized immediately in Profit and Loss Account.

Under the PUC method a 'projected accrued benefit' is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the plan

(c) Short Term benefit are recognized in the Statement of Profit & Loss relating to the year in which the employee has rendered services.

(d) Liability on account of other long term employees benefit are accounted for as and when such Liability arises as per the relevant legislation in force in India.

l) Taxes on Income

Tax expense comprises current and deferred Tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred taxes is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originates in one period and are capable of reversal in one or more subsequent periods.

Deferred taxAssets & Liabilities are measured using theTax Rates & Tax Laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred TaxAssets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available.

m) Provision, Contingent Liabilities And ContingentAssets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed by way of notes on accounts. Contingent Assets are neither recognized nor disclosed in the financial statements. It is the policy of the company to make provision for doubtful debts and doubtful advances to the extent of 50% of the total amount identified as doubtful advances.

n) Borrowing Cost

Borrowing Cost relating to acquisition or construction of fixed assets which take substantial period of time to get ready for its intended use are capitalized as part of the cost of a qualifying asset to the extent they relate to the period till such assets are ready to be put to use. Other Borrowing Costs are recognized as an expense in the year in which they are incurred.

o) Foreign CurrencyTransaction

(a) Initial Recognition: Foreign currencytransactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion: Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

(c) Exchange Differences : Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized a income or as expenses in the year in which they arise except those arising from investments in non-integral operations.

(d) Forward Exchange : Contracts (Derivative Instruments) not intended for trading or speculation purpose: The Company uses derivative financial instruments including forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange difference on such contracts is recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expenses for the year.

p) Segment Reporting Policies Identification of Segments Primary Segment

Business Segment: The Company's operating operation comprises of only one primary segment viz. manufacturing and sale of knitwear's.

Secondary Segment

Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers.

* Sales within India include sales to customers located within India.

* Sales outside India include sales to customers located outside India.

q) Earnings per Share (Basic & Diluted)

Basic earnings (loss) per share are calculated by dividing the net profit or loss 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; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

r) Impairment of assets:

Impairment loss is recognized wherever the carrying amount of an assets is in excess of its recoverable amount and the same is recognized as an expenses in the statement of Profit & Loss and carrying amount of the assets is reduced to its recoverable amount.

Reversal of impairment losses recognized in prior year is recovered when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

s) Cash Flow Statement

Cash Flows are reported using indirect method, whereby profit before tax is adjusted for the effects transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating financing and investing activities of the Company are segregated. Cash and cash equivalents in the Balance Sheet comprise cash at bank, cash/cheques in hand and short-term investments with an original maturity of three months or less.

The Company has only one class of equity shares with a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company ,the holders of equity share are entitled to receive the remaining assets of the Company, after meeting all liabilities and distribution of all preferential amounts, in proportion to their shareholding.


Mar 31, 2011

1. Nature of Operation

The Company is engaged in the business of manufacturing & sale of knitwear's.

2. Basis of Preparation of Accounts

The financial statements have been prepared to comply in all material aspects with the notified accounting standards by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The accountings policies have been consistently applied by the company except for the change in accounting policy discussed more fully below and are consistent with those used in the previous year.

3. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on 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 revision to accounting estimates is recognized in accordance with the requirements of the respective accounting standard.

4. Revenue Recognition

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

(a) Sale of Goods: Sales are recognized when goods are supplied and are net of Sales Return.

(b) Job Charges: Job Charges are recognized as and when the products are ready for dispatch in packed condition.

(c) Interest: Interests on Investments are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

(d) Dividends: Revenue is recognized when the shareholders' right to receive payment is established by the balance sheet date.

(e) Export Benefits: Export Entitlements in the form of Duty Drawback are recognized in the Profit and Loss account when the right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

5. Accounting of Claims

(a) Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claim payable are accounted at the time of acceptance.

(b) Claim raised by Government Authorities regarding taxes and duties, which are disputed by the Company, are accounted based on merits of each claim.

6. Expenditure

Expenses are accounted for on accrual basis and provision is made for all known losses and liabilities.

7. Government Grant:

The company receives sales tax incentive under the WBIP (A.I. Units) Scheme'1994 and the same is recognized as revenue in the period in which these are accrued and shown as income under the head "Other Income" under Schedule 10. The Company has not received any non-monetary assets at concessional rate or free of cost as Government Grant.

8. Fixed Assets

(a) Tangible Assets: Fixed Assets are stated at their original cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to the acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.

(b) Intangible Assets: Intangible Assets are recognized only if it is possible that the future economic benefits that are attributable to the enterprise and the costs of assets can be measured reliably. The Intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any.

(c) Depreciation / Amortization: Depreciation on fixed

assets is provided on Written down Value method (pro-rata on addition and disposed off during the period) at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. Fixed Assets costing below Rs. 5,000 are fully depreciated in the year of acquisition. Amortization is made based on management's evaluation of duration of life cycle of intangible assets.

9. Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. Provision is made for any diminution in the market value of long term investment where such diminution is considered permanent in nature.

10. Valuation of Inventories

Raw materials, packing material, work in progress and finished goods are valued at lower of cost and net realizable value. The cost of inventories comprise of all costs of purchase, cost of conversion & other cost incurred in bringing the inventories to their present location & conditions. When there is a decline in the price of materials & it is estimated that cost of the finished goods will exceed net realizable value, the materials are written down to net realizable value and in such circumstances the replacement cost of the materials are taken as net realizable value. However, raw 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. Cost is determined on FIFO basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

11. Employee Benefits

(a) Defined Contribution Plan such as provident fund, pension and employees state insurance is charged to the Profit & Loss Accounts of the year when the contribution to the respective funds are done.

(b) Defined Benefit Plan - the present value of the obligation under such plan is determined based on an actuarial valuation made on May 3rd, 2010 using the projected unit credit method. Actuarial gain and losses arising on such valuation are recognized immediately in Profit and Loss Account.

Under the PUC method a 'projected accrued benefit' is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the plan.

(c) Short Term benefit are recognized in the Profit & Loss A/c relating to the year in which the employee has rendered services.

(d) Liability on account of other long term employees benefit are accounted for as and when such liability arises as per the relevant legislation in force in India.

12. Taxes on Income

Tax expense comprises current and deferred Tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred taxes is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originates in one period and are capable of reversal in one or more subsequent periods. Deferred tax Assets & Liabilities are measured using the Tax Rates & Tax Laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognized only to the extent that there is reasonable certainty that sufficient future taxes income will be available.

13. Provision, Contingent Liabilities And Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed by way of notes on accounts. Contingent Assets are neither recognized nor disclosed in the financial statements. It is the policy of the company to make provision for doubtful debts and doubtful advances to the extent of 50% of the total amount identified as doubtful advances.

14. Deferred Revenue Expenditure

Share issue expenses are amortized over a period of five years.

15. Borrowing Cost

Borrowing Cost relating to acquisition or construction of fixed assets which take substantial period of time to get ready for its intended use are capitalized as part of the cost of a qualifying asset to the extent they relate to the period till such assets are ready to be put to use. Other Borrowing Costs are recognized as an expense in the year in which they are incurred.

16. Foreign Currency Transaction

(a) Initial Recognition: Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion: Foreign currency monetary items are reported using the closing rate. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non - monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

(c) Exchange Differences : Exchange differences arising on the settlement of monetary items or on reporting Company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as a income or as expenses in the year in which they arise except those arising from investments in non - integral operations.

(d) Forward Exchange: Contracts (Derivative Instruments) not intended for trading or speculation purpose: The Company uses derivative financial instruments including forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract Exchange difference on such contracts is recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expenses for the year.

17. Segment Reporting Policies

(a) Identification of Segments

Primary Segment

Business Segment: The Company's operating operation comprises of only one primary segment viz. manufacturing and sale of knitwear's.

Secondary Segment

Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers.

* Sales within India include sales to customers located within India.

* Sales outside India include sales to customers located outside India.

(b) Allocation of Common Costs

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

(c) Unallocated Items

The Corporate and other segment include general corporate income and expense items, which are not allocated to any segment.

18. Earnings per Share (Basic & Diluted)

Basic earnings (loss) per share are calculated by dividing the net profit or loss 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; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).

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

19. Impairment of assets:

Impairment loss is recognized wherever the carrying amount of an assets is in excess of its recoverable amount and the same is recognized as an expenses in the statement of Profit & Loss and carrying amount of the assets is reduced to its recoverable amount.

Reversal of impairment losses recognized in prior year is recovered when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

20. Cash Flow Statement

Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating. Financing and investing activities of the Company are segregated. Cash and cash equivalents in the balance sheet comprise cash at bank, cash/cheques in hand and short-term investments with an original maturity of three months or less.

21. Proposed Dividend

Dividend proposed by the Board of Directors is provided for in the accounts, pending approval at the Annual General Meeting.

 
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