Mar 31, 2023
Nandan Denim Limited is a public limited Company incorporated and domiciled in India and its shares are traded on the National Stock Exchange of India Ltd (âNSE'') and BSE Limited (âBSE''), in India. The registered office of the Company is situated at Survey No. 198/1 & 203/2 Saijpur-Gopalpur, Pirana Road, Piplej, Ahmedabad-382405-Gujarat.
The Company is principally engaged in the manufacturing and Sale of fabrics including Denim, Yarn and Shirting etc. The Company has manufacturing facilities located at Piplej and Bareja, Gujarat.
These financial statements presented in Indian Rupee with figures rounded off to nearest rupees in lakhs except otherwise indicated were approved and adopted by Board of Directors of the Company in their meeting held on 29th May, 2023.
These individual financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis, except for certain financial instruments which are measured at fair values. The Ind AS is prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and amendments thereto.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The Company retains the presentation and classification of items in the financial statements from one period to the next.
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgements and assumptions. These estimates, judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgements and the use of assumptions in financial statements have been specified in Note
estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in financial statements in the period in which the changes are made and, if material, their effects are disclosed in these notes to the individual financial statements.
1.4 Critical Accounting Estimates and Judgement used in application of Accounting Policies
a. Income Taxes
Significant judgements are involved in determining the provision for Income Taxes, including amount expected to be paid / recovered for uncertain tax positions. (Also refer Note 19 and 33)
b. Property, Plant and Equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful life and residual values of the Company''s assets are determined by the Management at the time the asset is acquired and reviewed periodically, including at each financial year end. The life is based on historical experience with similar assets as well as anticipation of future events, which may impact their life such as changes in technology. (Refer Note 3)
c. Impairment of Financial Assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on empirical evidence available without undue cost or effort, existing market conditions as well as forward looking estimates at the end of each reporting period. (Refer Note 9 and 35.3.3)
d. Defined Benefit Plan
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligations is determined using actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and attrition rate. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions.
1.4 below. Accounting estimates could change from period to period. Actual results could differ from
All assumptions are reviewed at each reporting date. (Refer Note 29, 29.1 and 29.2)
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets, where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair values of financial instruments. (Refer Note 35)
Note 2
The company manufactures Denim Cloth, Shirting Cloth and Yarn and trades Cotton and Coal. The company also render job work service. Revenue from the sale of goods is recognized at a point in time when the control of the products has transferred which generally coincides with dispatch of products to customers in case of domestic sales and on the basis of bill of lading in the case of export sales.
At that point in time, the customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset or to restrict the access of other entities to those benefits.
The time taken from entering into order and sale is less than 12 months and the normal credit period offered to customers is also less than 12 months. The company offers trade Discount, Quantity Discount, cash Discount, Discount for Shortage or quality issue discount which are factored while determining transaction price. Revenue is recognised such that significant reversal is not highly probable. The reconciliation between the contract price and revenue recognised is given in Note 24.
When the consideration is received, before the Company transfers goods to the customer, the Company present the consideration as a contract liability.
Revenue from Job work service contracts:
i) The revenue relating to Job Work service contracts are recognised at point in time as control is transferred to the customer on dispatch of goods to them and
ii) the revenue relating to supplies are measured in line with policy set out in 2.1.1.a
I n respect of indivisible contracts, the revenues are recognised over a period of time, measured as per (i) above.
When the consideration is received, before the Company transfers goods to the customer, the Company shall present the consideration as a contract liability and when the services rendered by the Company exceed the payment, a contract asset is recognised excluding any amount presented as receivable.
Dividend income from investments is recognised when the Company''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income is calculated by applying the effective interest rate to the gross carrying amount of the financial assets except when the financial asset is credit-impaired in which case the effective interest rate is applied to the amortised cost of the financial asset.Effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s gross carrying amount on initial recognition.
Export entitlements are recognized in the Statement of Profit and Loss when the right to receive credit as per the terms of scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds. (Refer Note 2.1.11)
Subsidy under Textiles Up gradation Fund Scheme (TUFS), Gujarat Textile Policy or any other subsidy are recognized when there is reasonable certainty
regarding the realization of the same. (Refer Note 2.1.11)
Insurance claims are recognized when there is reasonable certainty regarding the realization of the same at an amount estimated by the management to the extent that it is highly probable that a significant reversal in the amount recognised will not occur at the time of actual receipt of the claim amount. At the end of each reporting period, the estimated amount is updated, if required, to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period.
Inventories are measured at cost and net realizable value, whichever is lower. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale. Cost in respect of raw materials and stock in trade are determined on FIFO basis. Costs in respect of all other Inventories are computed on weighted average basis method. Finished goods and process stock include cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.
Inventories are written down to net realizable value item by item except where it is appropriate to group similar or related items. When a decline in the price of materials, indicates that the cost of the finished products exceeds net realizable value, the materials are written down to their replacement cost. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed so that the new carrying amount is the lower of the cost and the revised net realizable value. Inventories are recognised as expense in the period in which the related revenue is recognised.
Property, plant and equipment are tangible items that are held for use in the production or supply of goods and services, rental to others or for administrative purposes and are expected to be used during more than one period. The cost of an item of property, plant and equipment is
recognised as an asset if and only, if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Freehold land is carried at cost less accumulated impairment losses. All other items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost of an item of property, plant and equipment comprises:
⢠Its purchase price, all costs including financial costs till commencement of commercial production are capitalized to the cost of qualifying assets. Goods & Service Tax credit, if any, are accounted for by reducing the cost of capital goods;
⢠Any other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately on straight-line method. Parts of plant and equipment that are technically advised to be replaced at prescribed intervals / periods of operation, insurance spares and cost of inspection / overhauling are depreciated separately based on their specific useful life provided these are of significant amounts. The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset. Depreciable amount of an item of property, plant and equipment is arrived at after deducting estimated residual value. The depreciable amount of an asset is allocated on a systematic basis over its useful life as disclosed in Note 3. The Company reviews the residual value and useful life at each financial year-end and, if expectations differ from previous estimates, the residual value and useful lives are changed prospectively and accounted for as a change in accounting estimate. Depreciation commences when the item of property, plant and equipment is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation ceases at the earlier of the date that the asset is
classified as held for sale (or included in a disposal group that is classified as held for sale) and the date that the asset is derecognized. The Company reviews the depreciation method at each financial year-end and if, there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the method is changed to reflect the changed pattern. Such a change is accounted as a change in accounting estimate on prospective basis.
The Company recognises compensation from third parties for items of property, plant and equipment that were impaired, lost or given up in profit or loss when the compensation becomes receivable.
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss from the derecognition of an item of property, plant and equipment is recognised in profit or loss when the item is derecognized.
As a Lessee
At inception of a contract, the company assesses whether a contract is, or contains, a lease. A contract is or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether: (i) the contract involves the use of an identified asset (ii) the company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and (iii) the company has the right to direct the use of the asset.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from
the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of Property, Plant and Equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently measured as given below:
(a) increasing the carrying amount to reflect interest on the lease liability;
(b) r educing the carrying amount to reflect the lease payments made; and
(c) r emeasuring the carrying amount to reflect any reassessment or lease modifications.
I t is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected not to recognise right-to-use assets and lease liabilities for short-term lease that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as expense on straight line basis as per the terms of the lease.
Short-term employee benefits are employee benefits (other than termination benefits) that
are expected to be settled wholly before twelve months after the end of the reporting period in which the employees render the related service. Short-term employee benefits include salaries, wages, social security contributions, bonus, paid annual leave etc. Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Post-employment benefits are benefits (other than termination benefits and short-term employee benefits) that are payable after the completion of employment. Post-employment benefits are identified under defined contribution plans and defined benefit plans.
Post-employment benefits are identified under defined contribution plans if the Company has no obligation other than to contribute a fixed amount of money to a fund. Employees may contribute to the fund along with the Company. Contributions to the Employees'' Regional Provident Fund and Superannuation Fund are recognised as defined contribution plan. Such contributions are recognised as liability and expenses during the period in which the employees perform the services. Any excess contributions to the fund are recognised as an asset.
Post-employment benefits in the form of Gratuity are considered as defined benefit plan and determined on actuarial valuation using the projected unit credit method at the balance sheet date. Actuarial Gains or Losses through remeasurement of the net obligation of a defined benefit liability or asset is recognised in Other Comprehensive Income. Such re-measurements are not reclassified to Statement of Profit and Loss in subsequent periods.
Gratuity is funded through a trust for which a policy with SBI Life Insurance company Limited has been taken.
Employee Benefits that are neither short-term employee benefit nor post-employment benefit nor termination benefits are other long-term employee benefits. Entitlements to annual leave and sick leave are recognized when they accrue to employees. Sick leave can only be availed while
annual leave can be either availed or encashed subject to a restriction on the maximum number of accumulated leave. The Company determines the liability for such accumulated leaves using the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss.
Assistance by government in the form of transfers of resources to the Company in return for past or future compliance with certain conditions relating to operating activities of the entity other than those which cannot reasonably have a value placed upon them or those that cannot be distinguished from normal trading transactions of the Company are termed as government grants. All government grants are identified as either relating to assets or relating to income. Government grants whose primary condition is that a Company qualifying for them should purchase, construct or otherwise acquire long-term assets are identified as grants related to assets. Grants other than those related to assets are identified as related to income. Government grants are recognised when there is a reasonable assurance that the Company will comply with the conditions attaching to them and the grants will be received. A forgivable loan from government is treated as a government grant when there is a reasonable assurance that the entity will meet the terms for forgiveness of the loan. The Company recognises Government grants in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Grants related to assets, including non-monetary grants at fair value, are presented in the balance sheet as deferred income. Deferred income is recognised in profit or loss on the basis the related assets are depreciated or amortised if they are related to asset or under other income when the grant becomes receivable. Grants related to income are presented in profit or loss under other income. Grants received in advance before fulfilment of conditions are recognised as Other Liability classified into current or noncurrent, as appropriate in the circumstances of the case.
Functional currency of the Company is Indian rupee. The financial statements have been presented under its functional currency. Any transaction that is denominated in a currency other than the functional currency is regarded as foreign currency transaction. All foreign currency transactions are recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. In case of consideration received or paid in advance, the exchange rate prevailing on the date of receipt or payment of advance is considered when subsequently the related asset is given up or received to the extent of advance consideration.
1. foreign currency monetary items are translated using the exchange rate for immediate delivery at the end of the reporting period;
2. non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and
3. non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured.
Exchange difference arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognised in profit or loss in the period in which they arise.
I nterest and other costs that the Company incurs in connection with the borrowing of funds are identified as borrowing costs. The Company capitalises borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which it is incurred. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. The Company identifies the borrowings into specific borrowings and general borrowings. Specific borrowings are borrowings that are specifically taken for the purpose of obtaining a qualifying asset. General borrowings include all other borrowings except the amount outstanding as on the balance sheet date of specific borrowings for assets that are not yet ready for use. Borrowing cost incurred actually
on specific borrowings are capitalised to the cost of the qualifying asset. For general borrowings, the Company determines the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on the qualifying asset based on the weighted average of the borrowing costs applicable to general borrowings. The capitalisation on borrowing costs commences when the Company incurs expenditure for the asset, incurs borrowing cost and undertakes activities that are necessary to prepare the asset for its intended use or sale. The capitalisation of borrowing costs is suspended during extended periods in which active development of a qualifying asset is suspended. The capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company classifies financial instruments issued into financial liability and equity based on the substance of the arrangement and the contractual terms. Significant judgement is required to assess whether a particular asset is a financial instrument or otherwise. An asset that represents a contractual right to receive cash that is subject to other than only passage of time or cannot be sold independently of other operating rights have not been presented as financial assets. Such assets are mainly in the nature of security deposits and investments in equity shares for receiving services from third parties including government-controlled organisations.
Financial assets include cash and cash equivalents, trade and other receivables, investments in securities and other eligible current and noncurrent assets. At initial recognition, all financial assets are measured at fair value except for trade receivable that that initially measured at transaction price. Financial assets are subsequently classified and measured under one of the following three categories according to the purpose for which they are held and contractual cash flow characteristics. Financial assets are reclassified only when the purpose for which they are held changes. Financial assets are derecognised when the right to cash flows from the financial asset
expires or when the financial asset is transferred resulting in transfer of significant risks and rewards to the buyer. Where significant risks and rewards are retained on transfer of a financial asset, the financial asset is not derecognised, and a financial liability is recognised for the consideration received. Where the transfer of financial asset results in partial transfer of risks and rewards, the asset is derecognised if the buyer obtains the right to sell the asset to third party unilaterally without attaching any conditions else the financial asset continues to be recognised to the extent of continuing involvement
The company subsequently measures the following financial assets at amortised cost by applying the Effective Interest Rate (EIR) method to the gross carrying amount of the financial asset except for financial assets that are credit-impaired in which case the effective interest rate is applied to the amortised cost. Financial assets at amortised cost, at the date of initial recognition, are held to collect contractual cash flows and have contractual terms that are consistent with a basic lending arrangement comprising of cash flows on specified dates that are solely payments of principal and interest on principal amount outstanding. The losses arising from impairment are recognised in the profit or loss.
Comprehensive Income (FVOCI)
Financial asset at FVOCI, at the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates, as well as held for selling. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognised in Other Comprehensive Income (OCI). Interest income calculated using the Effective Interest Rate (EIR) method, impairment gain or loss and foreign exchange gain or loss are recognised in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in Other Comprehensive Income is reclassified from the OCI to Statement of Profit and Loss.
or Loss (FVPL)
Financial Assets at FVPL, at the date of initial recognition, are held for trading, or which are measured neither at Amortised Cost nor at Fair Value through OCI. Therefore, they are
subsequently measured at each reporting date at fair value, with all fair value movements recognised in the Statement of Profit and Loss.
The Company recognizes the impairment on financial assets based on the expected credit loss model for the financial assets which are not measured at fair value through profit or loss. In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognized as loss allowance. In case of other financial assets, expected credit losses are measured at an amount equal to 12-month ECL unless there has been significant increase in credit risk from initial recognition in which case these are measured at lifetime expected credit loss. The amount of expected credit losses or reversal that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in the profit and loss for the period.
derecognition of financial liabilities
Financial liabilities include long-term and shortterm loans and borrowings, trade and other payables and other eligible current and noncurrent liabilities. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and other payables, net of directly attributable transaction costs. The Company derecognises a financial liability when the obligation specified in the contract is discharged, cancelled or expires.
After initial recognition, financial liabilities are classified under one of the following two categories:
After initial recognition, such financial liabilities are subsequently measured at amortised cost by applying the Effective Interest Rate (EIR) method to the gross carrying amount of the financial liability. The EIR amortisation is included in finance expense in the statement profit or loss.
Profit or Loss (FVPL)
Financial Liabilities at FVPL are those which are designated as such on initial recognition, or which are held for trading. Fair value gains / losses attributable to changes in own credit risk
is recognised in OCI. These gains /losses are not subsequently transferred to Statement of Profit and Loss. All other changes in fair value of such liabilities are recognised in the Statement of Profit and Loss.
Derivative instruments such as forward foreign currency contracts, interest rate swaps and option contracts are used to hedge foreign currency risks and interest rate risk. Such derivatives are initially recognised at their fair values on the date on which a derivative contract is entered into and are subsequently re-measured at fair value on each reporting date. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Basic earnings per share is calculated by dividing the profit or loss for the period attributable to the equity holders of the Company by the weighted average number of ordinary shares outstanding during the year. 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. (Refer Note 32)
The Company reviews the carrying amount of its Property, Plant and Equipment, including Capital Work in progress of a âCash Generating Unitâ (CGU) at the end of each reporting period to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the Cash Generating Unit to which the asset belongs.
Recoverable Amount is determined:
i) I n case of individual asset, at higher of the fair value less cost to disposal and value in use; and
ii) In case of cash generating unit (group of assets that generates identified, independent cash flows), at the higher of the cash generating unit''s fair value less cost to sell and the value in use.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of Profit and Loss.
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. 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 embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made. Contingent assets are not recognised but disclosed where an inflow of economic benefits is probable.
The Company identifies an identifiable nonmonetary asset without physical substance as an intangible asset. The Company recognises an intangible asset if it is probable that expected future economic benefits attributable to the
asset will flow to the entity and the cost of the asset can be measured reliably. An intangible asset is initially measured at cost unless acquired in a business combination in which case an intangible asset is measured at its fair value on the date of acquisition. The Company identifies research phase and development phase of an internally generated intangible asset. Expenditure incurred on research phase is recognised as an expense in the profit or loss for the period in which incurred. Expenditure on development phase are capitalised only when the Company is able to demonstrate the technical feasibility of completing the intangible asset, the ability to use the intangible asset and the development expenditure can be measured reliably. The Company subsequently measures all intangible assets at cost less accumulated amortisation less accumulated impairment. An intangible asset is amortised on a straight-line basis over its useful life. Amortisation commences when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by management. Amortisation ceases at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) and the date that the asset is derecognised. The amortisation charge for each period is recognised in profit or loss unless the charge is a part of the cost of another asset. The amortisation period and method are reviewed at each financial year end. Any change in the period or method is accounted for as a change in accounting estimate prospectively. The Company derecognises an intangible asset on its disposal or when no future economic benefits are expected from its use or disposal and any gain or loss on derecognition is recognised in profit or loss as gain / loss on derecognition of asset.
Income tax expense represents the sum of tax currently payable and deferred tax. Tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Current tax is determined on income for the year chargeable to tax in accordance on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Current tax items are recognised in correlation to the underlying transaction either in profit or loss or OCI or directly in equity. The Company has provided for the tax
liability based on the significant judgment that the taxation authority will accept the tax treatment.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, unabsorbed losses and tax credits to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, unabsorbed losses and tax credits will be utilised. The carrying amount of deferred tax assets is reviewed at the end of financial year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is expected to be settled or the asset realised, based on tax rates and tax laws that have been substantively enacted by the balance sheet date. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
The Company classifies assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one year from the date of classification. Assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell. Non-current assets are not depreciated or amortized.
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above. Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for asset or liability
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
Level 1 â quoted market prices in active markets for identical assets or liabilities
Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 â inputs that are unobservable for the asset or liability
For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period and discloses the same.
The Chief Operational Decision Maker (CODM) monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segments are reported in a manner consistent with the internal reporting to the CODM.
Accordingly, the Board of Directors of the Company is CODM for the purpose of segment
reporting. Refer note 41 for segment information presented.
The Company recognises a liability for dividends to equity holders of the Company when the dividend is approved by the shareholders. A corresponding amount is recognized directly in equity.
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are shortterm balances (with an original maturity of three months or less from the date of acquisition), which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2022 vide notification no. G.S.R 255(E) dated 31st March, 2023. Given below are the amendment made in brief and their possible impact on the financial statements of the company. The company will apply the amendments from 1st April, 2023 being the effective date of the amendments:
Disclosure of Accounting Policies, amended paragraphs 7, 10, 114, 117 and 122, added paragraphs 117A-117E and deleted paragraphs 118, 119 and 121. The amendments to Ind AS 1 are applicable for annual reporting periods beginning on or after 1st April, 2023. The amendment seeks to replace significant accounting policies with material accounting policy information
and provides guidance on material accounting policy information. The amendment require complete review of existing disclosure of accounting policies and may involve redrafting, removing some of the accounting policies now being disclosed or adding new accounting policy disclosures. The company is reviewing its accounting policy disclosure to change the same as per the amendments.
Definition of Accounting Estimates, amended paragraphs 5, 32, 34, 38 and 48 and added paragraphs 32A, 32B and 34A. These amendments are applicable for annual reporting periods beginning on or after 1st April, 2023. The amendment replaces the definition of changes in accounting estimates with a new definition of accounting estimates and provides guidance on that definition, what are regarded as changes in accounting estimates and how to apply changes in accounting estimates. The amendments shall be applied to changes in accounting estimates and changes in accounting policies that occur on or after 1st April, 2023. Therefore, the amendments have no impact on the financial position, financial performance or the cash flows of the entity in the current and previous year.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction, amended paragraphs 15, 22 and 24 and added paragraph 22A. The amendment clarifies that in case, where at the time of initial recognition, equal amount of taxable and deductible temporary
differences arise, the initial recognition exemption does not apply and the company shall recognise deferred tax liability and deferred tax asset on gross basis on that date of initial recognition depending on the applicable tax law. This happens typically when a lease liability and right-of-use asset is recognised initially or when decommissioning obligations are initially recognised and the same is added to the cost of the item of property, plant and equipment. If the application of this requirement results in unequal amount of deferred tax asset and deferred tax liability, the difference shall be recognised in profit or loss. These amendments are to be applied for annual reporting periods beginning on or after 1st April, 2023 to transactions that occur on or after the beginning of 1st April, 2022. The amendment also requires deferred tax assets and deferred tax liabilities to be recognised on 1st April, 2022 based on the carrying amounts of the lease liability and right-of-use asset as on 1st April, 2022 and recognise any difference in opening balance of retained earnings or another component of equity, where appropriate, if the company has applied the initial recognition exemption requirements earlier or had recognised deferred tax assets and deferred tax liabilities on net basis. The same is also required for decommissioning obligations recognised initially and added to the cost of the item of property, plant and equipment. As the company has recognised deferred tax assets and deferred tax liabilities on gross basis on lease liability and right-of use assets, the amendment has no impact of the financial statements. Further, the requirements relating to decommissioning obligations are not applicable to the company.
Mar 31, 2018
Note 1.1 Significant Accounting Policies
1.1.1 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of Excise duty and net of returns, Trade Allowances, Rebates, other similar allowances, Value Added Taxes, Goods and Service Tax and amounts collected on behalf of third parties, if any.
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Companyâs activities as described below:
1.1.1.a Sale of Goods
Revenue from the sale of goods is recognised when the goods are delivered, and titles have passed, at which moment all the following conditions are satisfied:
- The Company has transferred to the buyer significant risks and rewards of ownership of the goods;
- The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
- The amount of revenue can be measured reliably;
- It is probable that economic benefits associated with the transaction will flow to the Company; and
- The costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.1.1.b Dividend Income
Dividend income from investments is recognised when the Companyâs right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
1.1.1.c Interest Income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal amount outstanding and at the effective interest rate. Effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
1.1.1.d Export Incentives
Export entitlements are recognized in the Statement of Profit and Loss when the right to receive credit as per the terms of scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds. (Refer Note 2.1.6)
1.1.1.e Subsidy
Subsidy under Textiles Upgradation Fund Scheme (TUFS) and claims in respect of insurance are recognized when there is reasonable certainty regarding the realization of the same. (Refer Note 2.1.6)
1.1.2 Inventories
Inventories are measured at cost and net realizable value, whichever is lower. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make sale. Cost in respect of raw materials and stock in trade are determined on FIFO basis. Costs in respect of all other Inventories are computed on weighted average basis method. Finished goods and process stock include cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.
Inventories are written down to net realizable value item by item except where it is appropriate to group similar or related items. When a decline in the price of materials, indicates that the cost of the finished products exceeds net realizable value, the materials are written down to their replacement cost. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed so that the new carrying amount is the lower of the cost and the revised net realizable value. Inventories are recognised as expense in the period in which the related revenue is recognised.
1.1.3 Property, Plant and Equipment
1.1.3.a Recognition of Property, Plant and Equipment
Property, plant and equipment are tangible items that are held for use in the production or supply of goods and services, rental to others or for administrative purposes and are expected to be used during more than one period. The cost of an item of property, plant and equipment is recognised as an asset if an only if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Freehold land is carried at cost less accumulated impairment losses. All other items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost of an item of property, plant and equipment comprises:
- Its purchase price, all costs including financial costs till commencement of commercial production are capitalized to the cost of qualifying assets. CENVAT/Tax credit, if any, are accounted for by reducing the cost of capital goods;
- Any other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
1.1.3.b Depreciation of Property, Plant and Equipment
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately on straight-line method. Parts of plant and equipment that are technically advised to be replaced at prescribed intervals / periods of operation, insurance spares and cost of inspection / overhauling are depreciated separately based on their specific useful life provided these are of significant amounts. The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset. Depreciable amount of an item of property, plant and equipment is arrived at after deducting estimated residual value. The depreciable amount of an asset is allocated on a systematic basis over its useful life as disclosed in Note 3. The Company reviews the residual value and useful life at each financial year-end and, if expectations differ from previous estimates, the residual value and useful lives are changed prospectively and accounted for as a change in accounting estimate. Depreciation commences when the item of property, plant and equipment is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation ceases at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) and the date that the asset is derecognized. The Company review the depreciation method at each financial year-end and if, there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the method is changed to reflect the changed pattern. Such a change is accounted as a change in accounting estimate on prospective basis.
1.1.3.c Compensation for Impairment
The Company recognises compensation from third parties for items of property, plant and equipment that were impaired, lost or given up in profit or loss when the compensation becomes receivable.
1.1.3.d Derecognition of Property, Plant and Equipment
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss from the derecognition of an item of property, plant and equipment is recognised in profit or loss when the item is derecognized.
1.1.3.e Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at the beginning of 1st April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.
1.1.4 Leases
The Company determines an arrangement as a lease based on the substance of the arrangement after assessing whether the arrangement is dependent on the use of specific asset or assets and whether the arrangement conveys a right to use the asset or assets. The Company classifies all leases into finance and operating leases at the earlier of the date of the lease agreement and the date of commitment by the parties to the principal provisions of the lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. The Company has applied accounting for leases for assets taken on lease. The Company has not given assets on lease.
1.1.4.a Finance lease as lessee
The Company recognises property leased under finance leases at the lower of the fair value of the lease property and present value of minimum lease payments. Lease payments are discounted at the interest rate implicit in the lease to calculate present value of minimum lease payments. Initial direct costs are added to the amount recognised as an asset. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. Contingent rents are charged as expenses in the period in which they are incurred. The leased property is depreciated as per the depreciation policy specified in Note
1.1.3.
1.1.4.b Operating lease as lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed or the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. Where payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, lease expense is recognised based on the contractual lease payments. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
1.1.5 Employee Benefits
1.1.5.a Short-term Employee Benefits
Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be settled wholly before twelve months after the end of the reporting period in which the employees render the related service. Short-term employee benefits include salaries, wages, social security contributions, bonus, paid annual leave etc. Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
1.1.5.b Post-employment Benefits
Post-employment benefits are benefits (other than termination benefits and short-term employee benefits) that are payable after the completion of employment. Post-employment benefits are identified under defined contribution plans and defined benefit plans.
1.1.5.b.i Defined Contribution Plans
Post-employment benefits are identified under defined contribution plans if the Company has no obligation other than to contribute a fixed amount of money to a fund. Employees may contribute to the fund along with the Company. Contributions to the Employeesâ Regional Provident Fund and Superannuation Fund are recognised as defined contribution plan. Such contribution are recognised as liability and expenses during the period in which the employees perform the services. Any excess contributions to the fund are recognised as an asset.
1.1.5.b.ii Defined Benefit Plans
Post-employment benefits are identified under defined benefit plans if the Company is obligated to provide a defined return on contributions to the fund over and above its contributions to the fund. Such contributions to the fund may also include contributions by the employees. Postemployment benefits in the form of Gratuity are considered as defined benefit plan and determined on actuarial valuation using the projected unit credit method at the balance sheet date. Actuarial Gains or Losses through re-measurement of the net obligation of a defined benefit liability or asset is recognised in Other Comprehensive Income. Such re-measurements are not reclassified to Statement of Profit and Loss in subsequent periods.
Gratuity is funded through a trust for which a policy with Life Insurance Corporation of India has been taken.
1.1.5.c Other long-term employment benefits
Employee Benefits that are neither short-term employee benefit nor post-employment benefit nor termination benefits are other long-term employee benefits. Entitlements to annual leave and sick leave are recognized when they accrue to employees. Sick leave can only be availed while annual leave can be either availed or encashed subject to a restriction on the maximum number of accumulation leave. The Company determines the liability for such accumulated leaves using the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss.
1.1.6 Government Grants
Assistance by government in the form of transfers of resources to the Company in return for past or future compliance with certain conditions relating to operating activities of the entity other than those which cannot reasonably have a value placed upon them or those that cannot be distinguished from normal trading transactions of the Company are termed as government grants. All government grants are identified as either relating to assets or relating to income. Government grants whose primary condition is that a Company qualifying for them should purchase, construct or otherwise acquire long-term assets are identified as grants related to assets. Grants other than those related to assets and identified as related to income. Government grants are recognised when there is a reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received. A forgiveable loan from government is treated as a government grant when there is a reasonable assurance that the entity will meet the terms for forgiveness of the loan. The company recognises Government grants in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Grants related to assets, including non-monetary grants at fair value, are presented in the balance sheet at deferred income. Deferred income is recognised in profit or loss on the basis the related assets are depreciated or amortised if they are related to asset or under other income when the grant becomes receivable. Grants related to income are presented in profit or loss under other income. Grants received in advance before fulfilment of conditions are recognised as Other Liability classified into current or non-current, as appropriate in the circumstances of the case.
1.1.7 Foreign currency transactions and translations
Functional currency of the Company is Indian rupee. The financial statements have been presented under its functional currency. Any transaction that is denominated in a currency other than the functional currency is regarded as foreign currency transaction. All foreign currency transactions are recorded, on initial recognition in the functional currency, by apply to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. In case of consideration received in advance, the exchange rate prevailing on the date of receipt or payment of advance is considered when subsequently the related asset is given up or received to the extent of advance consideration.
At the end of the reporting period:
1. foreign currency monetary items are translated using the exchange rate for immediate delivery at the end of the reporting period;
2. non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and
3. non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured.
Exchange difference arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognised in profit or loss in the period in which they arise.
1.1.8 Borrowing Costs
Interest and other costs that the Company incurs in connection with the borrowing of funds are identified as borrowing costs. The Company capitalises borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which it is incurred. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. The Company identifies the borrowings into specific borrowings and general borrowings. Specific borrowings are borrowings that are specifically taken for the purpose of obtaining a qualifying asset. General borrowings include all other borrowings and also the amount outstanding as on the balance sheet date of specific borrowings. Borrowing cost incurred actually on specific borrowings are capitalised to the cost of the qualifying asset. For general borrowings, the company determines the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on the qualifying asset based on the weighted average of the borrowing costs applicable to general borrowings. The capitalisation on borrowing costs commences when the company incurs expenditure for the asset, incurs borrowing cost and undertakes activities that are necessary to prepare the asset for its intended use or sale. The capitalisation of borrowing costs is suspended during extended periods in which active development of a qualifying asset is suspended. The capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.
1.1.9 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company classifies financial instruments issued into financial liability and equity based on the substance of the arrangement and the contractual terms. Significant judgement is required to assess whether a particular asset is a financial instrument or otherwise. An asset that represents a contractual right to receive cash that is subject to other than only passage of time or cannot be sold independently of other operating rights have not been presented as financial assets. Such assets are mainly in the nature of security deposits and investments in equity shares for receiving services from third parties including government-controlled organisations.
1.1.9.a Recognition, classification, measurements and derecognition of Financial Assets
Financial assets include cash and cash equivalents, trade and other receivables, investments in securities and other eligible current and non-current assets. At initial recognition, all financial assets are measured at fair value. Such financial assets are subsequently classified and measured under one of the following three categories according to the purpose for which they are held and contractual Cash Flow characteristics. Financial assets are reclassified only when the purpose for which they are held changes. Financial assets are derecognised when the right to cash flows from the financial asset expires or when the financial asset is transferred resulting in transfer of significant risks and rewards to the buyer. Where significant risks and rewards are retained on transfer of a financial asset, the financial asset is not derecognised, and a financial liability is recognised for the consideration received. Where the transfer of financial asset results in partial transfer of risks and rewards, the asset is derecognised if the buyer obtains the right to sell the asset to other party unilaterally without attaching any conditions otherwise the financial asset continues to the recognised to the extent of continuing involvement.
1.1.9.a.i Financial Assets at amortised cost
Financial assets at amortised cost, at the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates. These financial assets are intended to be held until maturity. Therefore, they are subsequently measured at amortised cost by applying the Effective Interest Rate (EIR) method to the gross carrying amount of the financial asset. The EIR amortisation is included as interest income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
1.1.9.a.ii Financial asset at Fair Value through Other Comprehensive Income (FVOCI)
Financial asset at FVOCI, at the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates, as well as held for selling. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognised in Other Comprehensive Income (OCI). Interest income calculated using the Effective Interest Rate (EIR) method, impairment gain or loss and foreign exchange gain or loss are recognised in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in Other Comprehensive Income is reclassified from the OCI to Statement of Profit and Loss.
1.1.9.a.iii Financial assets at Fair Value through Profit or Loss (FVPL)
Financial Assets at FVPL, at the date of initial recognition, are held for trading, or which are measured neither at Amortised Cost nor at Fair Value through OCI. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognised in the Statement of Profit and Loss.
1.1.9.b Impairment of Financial Assets
The Company recognizes the impairment on financial assets based on the expected credit loss model for the financial assets which are not measured at fair value through profit or loss. In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognized as loss allowance. In case of other financial assets expected credit losses are measured at an amount equal to 12-month ECL unless there has been significant increase in credit risk from initial recognition in which case these are measured at lifetime expected credit loss. The amount of expected credit losses or reversal that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in the profit and loss for the period.
1.1.9.c Recognition, classification, measurement and derecognition of financial liabilities
Financial liabilities include long-term and shortterm loans and borrowings, trade and other payables and other eligible current and noncurrent liabilities. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and other payables, net of directly attributable transaction costs. The Company derecognises a financial liability when the obligation specified in the contract is discharged, cancelled or expires.
After initial recognition, financial liabilities are classified under one of the following two categories:
1.1.9.c.i Financial liabilities at amortised cost
After initial recognition, such financial liabilities are subsequently measured at amortised cost by applying the Effective Interest Rate (EIR) method to the gross carrying amount of the financial liability. The EIR amortisation is included in finance expense in the statement profit or loss.
1.1.9.c.ii Financial liabilities at Fair Value through Profit or Loss (FVPL)
Financial Liabilities at FVPL are those which are designated as such on initial recognition, or which are held for trading. Fair value gains / losses attributable to changes in own credit risk is recognised in OCI. These gains /losses are not subsequently transferred to Statement of Profit and Loss. All other changes in fair value of such liabilities are recognised in the Statement of Profit and Loss.
1.1.9.d Derivative Financial Instruments
Derivative instruments such as forward foreign currency contracts, interest rate swaps and option contracts are used to hedge foreign currency risks and interest rate risk. Such derivatives are initially recognised at their fair values on the date on which a derivative contract is entered into and are subsequently re-measured at fair value on each reporting date. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
1.1.10 Off-setting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise assets and settle liabilities simultaneously.
1.1.11 Earnings per Share
Basic earnings per share is calculated by dividing the profit or loss for the period attributable to the equity holders of the company by the weighted average number of ordinary shares outstanding during the year. 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. (Refer Note 31)
1.1.12 Impairment of Non-Financial Assets
The Company reviews the carrying amounts of its Property, Plant and Equipment, including Capital Work in progress of a âCash Generating Unitâ (CGU) at the end of each reporting period to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the Cash Generating Unit to which the asset belongs.
Recoverable amount is determined:
i) In case of individual asset, at higher of the fair value less cost to sell and value in use; and
ii) In case of cash generating unit (a Company of assets that generates identified, independent cash flows), at the higher of the cash generating unitâs fair value less cost to sell and the value in use.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of Profit and Loss.
1.1.13 Provisions, Contingent Liabilities and Contingent Assets
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. 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 embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made. Contingent assets are not recognised but disclosed where an inflow of economic benefits is probable.
1.1.14 Intangible Assets
The Company identifies an identifiable non-monetary asset without physical substance as an intangible asset. The Company recognises an intangible asset if it is probable that expected future economic benefits attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. An intangible asset is initially measured at cost unless acquired in a business combination in which case an intangible asset is measured at its fair value on the date of acquisition. The Company identifies research phase and development phase of an internally generated intangible asset. Expenditure incurred on research phase is recognised as an expense in the profit or loss for the period in which incurred. Expenditure on development phase are capitalised only when the Company is able to demonstrate the technical feasibility of completing the intangible asset, the ability to use the intangible asset and the development expenditure can be measured reliably. The Company subsequently measures all intangible assets at cost less accumulated amortisation less accumulated impairment. An intangible asset is amortised on a straight-line basis over its useful life. Amortisation commences when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by management. Amortisation ceases at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) and the date that the asset is derecognised. The amortisation charge for each period is recognised in profit or loss unless the charge is a part of the cost of another asset. The amortisation period and method are reviewed at each financial year end. Any change in the period or method is accounted for as a change in accounting estimate prospectively. The Company derecognises an intangible asset on its disposal or when no future economic benefits are expected from its use or disposal and any gain or loss on derecognition is recognised in profit or loss as gain / loss on derecognition of asset.
1.1.14.a Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at the beginning of 1st April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.
1.1.15 Income Taxes
Income tax expense represents the sum of tax currently payable and deferred tax. Tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
1.1.15.a Current Tax
Current Tax includes provision for income tax computed at the tax rate applicable as per Income Tax Act, 1961. Tax on profit for the period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provision of the relevant tax laws and based on expected outcome of assessments / appeals.
1.1.15.b Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, unabsorbed losses and tax credits to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, unabsorbed losses and tax credits will be utilised. The carrying amount of deferred tax assets is reviewed at the end of financial year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is expected to be settled or the asset realised, based on tax rates and tax laws that have been substantively enacted by the balance sheet date. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
1.1.16 Assets Held for Sale
The Company classifies assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one year from the date of classification. Assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell. Noncurrent assets are not depreciated or amortized.
1.1.17 Fair Value Measurement
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for asset or liability, or
- In the absence of a principal market, in the most advantageous market for asset or liability
All assets and liabilities for which fair value is
measured or disclosed in the financial statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
Level 1 â quoted market prices in active markets for identical assets or liabilities
Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 â inputs that are unobservable for the asset or liability
For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization at the end of each reporting period and discloses the same.
1.1.18 Segment Reporting
The Chief Operational Decision Maker (CODM) monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segments are reported in a manner consistent with the internal reporting to the CODM.
Accordingly, the Board of Directors of the Company is CODM for the purpose of segment reporting. Refer note 38 for segment information presented.
1.1.19 Dividend
The Company recognises a liability for dividends to equity holders of the Company when the dividend is approved by the shareholders. A corresponding amount is recognised directly in equity.
1.1.20 Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
1.1.21 Statement of Cash flows
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
Mar 31, 2016
i) Basis of Preparation of financial Statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been prepared as a going concern on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
ii) Use of estimates
In preparing the Company''s financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.
iii) Fixed Assets
Fixed Assets are stated at cost of acquisition less accumulated depreciation. All costs including financial costs till commencement of commercial production are capitalized to the cost of qualifying assets. CENVAT credit, Grants, Foreign Exchange Fluctuation claims SHIS Licenses and other credits, if any are accounted for by reducing the cost of capital goods.
When assets are retired from active use, the same are valued at lower of Net Book Value and Net realizable Value.
When assets are disposed, their cost is removed from the financial statements. The gain or loss arising on the disposal of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss for the relevant financial year.
iv) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs, including financing costs in respect of qualifying assets till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.
Intangible assets are amortized on a straight - line basis over their estimated useful lives. A rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use is considered by the management.
When assets are retired from active use, the same are valued at lower of Net Book Value and Net realizable Value.
The gain or loss arising on the disposal of an intangible asset is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognized as income or expenses in the Statement of Profit and Loss in the year or disposal.
v) Depreciation
Depreciation on fixed assets (excluding intangible assets) of the company is provided on straight-line method on the basis of useful life of assets as specified under Schedule II of the Companies Act, 2013 except depreciation on incremental cost arising on account of translation of foreign currency liabilities incurred for the purpose of acquiring fixed assets, which is amortized over the residual life of the respective asset. Intangible assets are amortized on a straight - line basis over their estimated useful lives. A rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use is considered by the management.
When assets are disposed or retired, their cost is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss for the relevant financial year.
vi) Impairment of Assets
The Management Periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amounts.
vii) Investments
Non-Current Investments are stated at cost. Provision is only made to recognize a decline other than temporary, in the value of investments.
viii) Inventories
(a) Inventories are valued at the Lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and estimated cost necessary to make sale. Cost in respect of raw materials and Stock in Trade are determined on FIFO basis. Costs in respect of all other Inventories are computed on weighted average basis method. Finished goods and process stock include cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.
(b) Waste is valued at estimated net realizable value.
ix) Excise duty
In view of the excise duty exemption route adopted by the Company from 13.07.2004 vide notification no. 30/2004 - dated 09.07.2004 of Central Excise Act, 1944 "Exemption to specified goods of public interest", the Company does not have obligation for payment of excise duty.
x) Revenue Recognition
(a) Revenue from sale of goods is recognized when significant risks and rewards in respect of ownership of the products are transferred to the customers net of rate difference and discount given.
(b) Dividend on Investment is recognized when the right to receive the payment is established.
(c) Exports entitlement under the FPS/FMS scheme are recognized in the Statement of Profit and Loss Account when the right to receive credit as per the terms of scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
(d) Subsidy under Textiles Up gradation Fund Scheme (TUFS) is recognized when there is reasonable certainty regarding the realization of the same.
xi) Government Grants & Other Claims
Revenue grant including subsidy / rebates, claims etc., are deducted from the related expenses. Grants relating to fixed assets are adjusted in the cost of such assets as and when the ultimate reliability of such grant etc., are established / realized.
xii) Borrowing costs
Borrowing costs, which are attributable to acquisition or construction of qualifying assets, are capitalized as part of cost of such assets till such assets are ready for its intended use. A qualifying asset is one, which necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue. Capitalization of borrowing cost is suspended when active development is interrupted or completed.
xiii) Leases
Where the Company is the lessee
Leases, wherein the less or effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
xiv) Employee benefits
(a) The employee and Company make monthly fixed Contribution to Government of India Employee''s Provident fund equal to a specified percentage of the covered employee''s salary, Provision for the same is made in the year in which service are rendered by the employees.
(b) The Liability for Gratuity to employee, which is a defined benefit plan, is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain/Loss in respect of the same is charged to the profit and loss account.
(c) Short Term benefits are recognized as an expense at the undiscounted amounts in the Statement of Profit and Loss of the year in which the related service is rendered.
xv) Foreign Currency Transactions / Exchange Fluctuation
(a) Monetary Transactions related to foreign currency are accounted for at the equivalent rupee converted at the rates prevailing at the time of respective transactions and outstanding in respect thereof are translated at period end rates. Exchange difference is charged to the revenue account except arising on account of conversion related to the purchase of fixed asset is adjusted therewith if initial period of buyers credit arrangements is in excess of 360 days.
(b) Non-monetary foreign currency items are carried at cost.
xvi) Provision for Current Tax & Deferred Tax
Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or subsequently enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is virtual certainty that the assets will be realized in future.
xvii) Provisions and Contingencies
A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to accounts. Contingent Assets are neither recognized nor disclosed in the financial statement.
xviii)Earnings per Share
Basic earnings per share is calculated by dividing net profit after tax for the year attributable to Equity Shareholders of the company by the weighted average number of Equity Shares issued during the year. Diluted earnings per share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.
Refer Note Number 41 for details of basic and diluted shares
The company has only One class of shares referred to as Equity shares having face value of ''10/-. Each Holder of One share is entitled to One vote per share.
During the year ended on 31st March 2016, the company has recommended Dividend of '' Nil (P.Y.''1/-) per share as distribution to its Equity Shareholders. An interim dividend of Rs,0.80/-(P.Y. ''0.60/-) per share was declared at the meeting of the Board of Directors held on 12th February, 2016 and the same has been paid. Second interim dividend of ''0.80/- (P.Y. '' Nil) per share was declared at the meeting of the Board of Directors held on 11th March, 2016 and the same has been paid.
The Company declares and pays dividend in Indian Rupees.
No Shares has been reserved for issue under options or contracts/commitments for the shares/disinvestment.
The company has not issued any shares in pursuance to a contract without receiving the payment in cash during the last five years. The company has also not issued any bonus share during last five years.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholder.
The details of shareholders holding more than 5% shares as at 31/03/2016 and 31/03/2015 is set out below.
Money received against share warrants represents amounts received towards warrants which entitles the warrant holder, the option to apply for and be allotted equivalent number of equity shares of the face value of Rs 10 each.
During the current year, the Company issued to Foreign Institutional Investor 2,500,000 Convertible warrants at issue price of ''200 each, having option to apply for and be allotted an equivalent number of equity shares of a face value of '' 10 each at a premium of '' 190 each determined in accordance with Regulation 76 of SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 ("SEBI ICDR Regulations"). The holder of the warrants would need to exercise the option to subscribe to shares on or before May 9, 2017 upon payment of the balance amount of Rs, 250,000,000/-.
*, 4 Term Loans & Buyers Credit arrangements under Consortium finance are secured by first charge on the entire Fixed Assets of the company both present and future, second charge on Book Debts, Stock and other Current Assets of the Company and also further guaranteed by personal guarantee of promoter directors.
*** Vehicle Loans are secured by Hypothecation of Vehicles.
Interest:
* Term Loans carry an interest rate which shall be State Bank of India rate or the base rate of the respective rupee lender plus the spread, whichever is higher, payable on monthly basis.
** Buyers Credit arrangements for a period up to 90 days carry an interest rate ranging between 3ML 58 BPS PA to 3ML 75 BPS PA and interest rate up to up to 180 days carry an interest rate ranging between in case of 6ML Libor 31 BPS PA to 6ML Libor 190 BPS PA
*** Vehicle Loans carry an interest rate ranging between 10.50% to 11.01% p.a.
@ Working Capital loans under consortium finance are secured by first charge on Book Debts, Stocks and other Current Assets and second charge on all the Fixed Assets both present and future of the Company and also further guaranted by Promoter Directors.
Mar 31, 2015
I) Basis of Preparation of financial Statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act"), as applicable. The financial
statements have been prepared as a going concern on accrual basis under
the historical cost convention. The accounting policies adopted in the
preparation of the financial statements are consistent with those
followed in the previous year.
ii) Use of estimates
In preparing the Company's financial statements in conformity with the
accounting principles generally accepted in India, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognized prospectively in the current and future
periods.
iii) Fixed Assets
Fixed Assets are stated at cost of acquisition less accumulated
depreciation. All costs including financial costs till commencement
of commercial production are capitalized to the cost of qualifying
assets. CENVAT credit, Grants, Foreign Exchange Fluctuation claims
SHISH Licenses and EPCG claims on capital goods are accounted for by
reducing the cost of capital goods.
When assets are retired from active use, the same are valued at lower
of Net Book Value and Net realizable Value.
When assets are disposed, their cost is removed from the financial
statements. The gain or loss arising on the disposal of an asset is
determined as the difference between sales proceeds and the carrying
amount of the asset and is recognized in Statement of Profit and Loss
for the relevant financial year.
iv) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortization. All costs, including financing
costs in respect of qualifying assets till commencement of commercial
production, net charges on foreign exchange contracts and adjustments
arising from exchange rate variations attributable to the intangible
assets are capitalized.
Intangible assets are amortized on a straight - line basis over their
estimated useful lives. A rebuttable presumption that the useful life
of an intangible asset will not exceed ten years from the date when the
asset is available for use is considered by the management.
When assets are retired from active use, the same are valued at lower
of Net Book Value and Net realizable Value.
The gain or loss arising on the disposal of an intangible asset is
determined as the difference between net disposal proceeds and the
carrying amount of the asset and is recognized as income or expenses in
the Statement of Profit and Loss in the year or disposal.
v) Depreciation
Depreciation on fixed assets (excluding intangible assets) of the
company is provided on straight-line method on the basis of useful life
of assets as specified under Schedule II of the Companies Act, 2013
except depreciation on incremental cost arising on account of
translation of foreign currency liabilities incurred for the purpose of
acquiring fixed assets, which is amortized over the residual life of
the respective asset. Intangible assets are amortized on a straight -
line basis over their estimated useful lives. A rebuttable presumption
that the useful life of an intangible asset will not exceed ten years
from the date when the asset is available for use is considered by the
management.
When assets are disposed or retired, their cost is removed from the
financial statements. The gain or loss arising on the disposal or
retirement of an asset is determined as the difference between sales
proceeds and the carrying amount of the asset and is recognized in
Statement of Profit and Loss for the relevant financial year.
vi) Impairment of Assets
The Management Periodically assesses using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognizes an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount. The impairment loss recognized in prior accounting periods is
reversed if there has been a change in the estimate of recoverable
amounts.
vii) Investments
Non-Current Investments are stated at cost. Provision is only made to
recognize a decline other than temporary, in the value of investments.
viii) Inventories
(a) Inventories are valued at the Lower of cost or net realizable
value. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated cost of completion and
estimated cost necessary to make sale. Cost in respect of raw
materials and Stock in Trade are determined on FIFO basis. Costs in
respect of all other Inventories are computed on weighted average
basis method. Finished goods and process stock include cost of conver-
sion and other costs incurred in acquiring the inventory and bringing
them to their present location and condition.
(b) Waste is valued at estimated net realizable value.
ix) Excise duty
In view of the excise duty exemption route adopted by the Company from
13.07.2004 vide notification no. 30/2004 - dated 09.07.2004 of Central
Excise Act, 1944 "Exemption to specified goods of public interest", the
Company does not have obligation for payment of excise duty from that
date.
x) Revenue Recognition
(a) Revenue from sale of goods is recognized when significant risks and
rewards in respect of ownership of the products are transferred to the
customers net of rate difference and discount given.
(b) Dividend on Investment is recognized when the right to receive the
payment is established.
(c) Exports entitlement under the Duty Entitlement Pass Book (DEPB)/FMS
scheme are recognized in the Statement of Profit and Loss Account when
the right to receive credit as per the terms of scheme is established
in respect of the exports made and where there is no significant
uncertainty regarding the ultimate collection of the relevant export
proceeds.
(d) Subsidy under Textiles Up gradation Fund Scheme (TUFS) is recognized
when there is reasonable certainty regarding the realization of the
same.
xi) Government Grants & Other Claims
Revenue grant including subsidy / rebates, claims etc., are deducted
from the related expenses. Grants relating to fixed assets are adjusted
in the cost of such assets as and when the ultimate reliability of
such grant etc., are established / realized.
xii) Borrowing costs
Borrowing costs, which are attributable to acquisition or construction
of qualifying assets, are capitalized as part of cost of such assets
till such assets are ready for its intended use. A qualifying asset is
one, which necessarily takes substantial period of time to get ready
for intended use. All other borrowing costs are charged to revenue.
Capitalization of borrowing cost is suspended when active development
is interrupted or completed.
xiii) Leases
Where the Company is the lessee
Leases, wherein the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
xiv) Employee benefits
(a) The employee and Company make monthly fixed Contribution to
Government of India Employee's Provident fund equal to a specified
percentage of the covered employee's salary, Provision for the same is
made in the year in which service are rendered by the employees.
(b) The Liability for Gratuity to employee, which is a defined benefit
plan, is determined on the basis of actuarial Valuation based on
Projected Unit Credit method. Actuarial gain/Loss in respect of the
same is charged to the profit and loss account.
(c) Short Term benefits are recognized as an expense at the
undiscounted amounts in the Statement of Profit and Loss of the year in
which the related service is rendered.
xv) Foreign Currency Transactions / Exchange Fluctuation
(a) Monetary Transactions related to foreign currency are accounted for
at the equivalent rupee converted at the rates prevailing at the time
of respective transactions and outstanding in respect thereof are
translated at period end rates. Exchange difference is charged to the
revenue account except arising on account of conversion related to the
purchase of fixed asset is adjusted therewith if initial period of
buyers credit arrangements is in excess of 360 days.
(b) Non-monetary foreign currency items are carried at cost.
xvi) Provision for Current Tax & Deferred Tax
Provision for current tax is made in accordance with the provisions of
the Income Tax Act, 1961. Deferred Tax resulting from "timing
difference" between taxable and accounting income is accounted for
using the tax rates and laws that are enacted or subsequently enacted
as on the balance sheet date. Deferred tax asset is recognized and
carried forward only to the extent that there is virtual certainty that
the assets will be realized in future.
xvii) Provisions and Contingencies
A provision is recognized when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
A disclosure for a contingent liability is made when there is a
possible or present obligation that may, but probably will not require
an outflow of resources. Contingent liabilities are not recognized but
are disclosed in the notes to accounts. Contingent Assets are neither
recognized nor disclosed in the financial statement.
xviii) Earnings per Share
Basic earnings per share is calculated by dividing net profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earnings per share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
Mar 31, 2014
I) Basis of Preparation of financial Statements
The financial statements have been prepared to comply with the
Accounting Standards referred to in the Companies (Accounting
Standards) Rule, 2006 issued by the Central Government in exercise of
the power conferred under sub- section ( I ) (a) of section 642 and the
relevant provisions of the Companies Act, 1956 (the ''Act''). The
accounts are prepared on historical cost convention on an accrual
basis. The accounting policies have been consistently applied by the
Company and are consistent with those used in the previous year.
ii) Use of estimates
In preparing the Company''s financial statements in conformity with the
accounting principles generally accepted in India, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognised prospectively in the current and future
periods.
iii) Fixed Assets
Fixed Assets are stated at cost of acquisition less accumulated
depreciation. All costs including financial costs till commencement of
commercial production are capitalized to the cost of qualifying assets.
CENVAT credit, Grants, Foreign Exchange Fluctuation claims and EPCG
claims on capital goods are accounted for by reducing the cost of
capital goods. When assets are disposed or retired, their cost is
removed from the financial statements. The gain or loss arising on the
disposal or retirement of an asset is determined as the difference
between sales proceeds and the carrying amount of the asset and is
recognised in Statement of Profit and Loss for the relevant financial
year.
iv) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortization. All costs, including financing
costs in respect of qualifying assets till commencement of commercial production, net charges on foreign exchange contracts and adjustments
arising from exchange rate variations attributable to the intangible
assets are capitalized.
Intangible assets are amortised on a straight  line basis over their
estimated useful lives. A rebuttable presumption that the useful
life of an intangible asset will not exceed ten years from the date
when the asset is available for use is considered by the management.
The gain or loss arising on the disposal or retirement of an intangible
asset is determined as the difference between net disposal proceeds
and the carrying amount of the asset and is recognised as income or
expenses in the Statement of Profit and Loss in the year or disposal.
v) Depreciation
Depreciation on fixed assets (excluding intangible assets) of the
company is provided on straight-line method at the rates and in the
manner specified in Schedule XIV to the Companies Act, 1956, except
depreciation on incremental cost arising on account of translation of
foreign currency liabilities incurred for the purpose of acquiring
fixed assets, which is amortized over the residual life of the
respective asset. Intangible assets are amortised on a straight  line
basis over their estimated useful lives. A rebuttable presumption that
the useful life of an intangible asset will not exceed ten years from
the date when the asset is available for use is considered by the
management.
When assets are disposed or retired, their cost is removed from the
financial statements. The gain or loss arising on the disposal or
retirement of an asset is determined as the difference between sales
proceeds and the carrying amount of the asset and is recognized in
Statement of Profit and Loss for the relevant financial year.
vi) Impairment of Assets
The Management Periodically assesses using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognizes an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount. The impairment loss recognised in prior accounting periods is
reversed if there has been a change in the estimate of recoverable
amounts.
vii) Investments
Non-Current Investments are stated at cost. Provision is only made to
recognize a decline other than temporary, in the value of investments.
viii) Inventories
(a) Inventories are valued at the Lower of cost or net realizable
value. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated cost of completion and
estimated cost necessary to make sale. Cost in respect of raw materials
and Stock in Trade are determined on FIFO basis. Costs in respect of
all other Inventories are computed on weighted average basis method.
Finished goods and process stock include cost of conversion and other
costs incurred in acquiring the inventory and bringing them to their
present location and condition.
(b) Waste is valued at estimated net realizable value.
ix) Excise duty
In view of the excise duty exemption route adopted by the Company from
13.07.2004 vide notification no. 30/2004 - dated 09.07.2004 of Central
Excise Act, 1944 "Exemption to specified goods of public interest", the
Company does not have obligation for payment of excise duty from that
date.
x) Revenue Recognition
(a) Revenue from sale of goods is recognized when significant risks and
rewards in respect of ownership of the products are transferred to the
customers net of rate difference and discount given.
(b) Dividend on Investment is recognized when the right to receive the
payment is established.
(c) Exports entitlement under the Duty Entitlement Pass Book (DEPB)/FMS
scheme are recognized in the Statement of Profit and Loss Account when
the right to receive credit as per the terms of scheme is established
in respect of the exports made and where there is no significant
uncertainty regarding the ultimate collection of the relevant export
proceeds.
(d) Subsidy under Textiles Upgradation Fund Scheme (TUFS) is recognized
when there is reasonable certainty regarding the realization of the
same.
xi) Government Grants & Other Claims
Revenue grant including subsidy / rebates, claims etc., are deducted
from the related expenses. Grants relating to fixed assets are adjusted
in the cost of such assets as and when the ultimate realizability of
such grant etc., are established / realized.
xii) Borrowing costs
Borrowing costs, which are attributable to acquisition or construction
of qualifying assets, are capitalized as part of cost of such assets
till such assets are ready for its intended use. A qualifying asset is
one, which necessarily takes substantial period of time to get ready
for intended use. All other borrowing costs are charged to revenue.
Capitalization of borrowing cost is suspended when active development
is interrupted or completed.
xiii) Leases
Where the Company is the lessee
Leases, wherein the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
xiv) Employee benefits
(a) The employee and Company make monthly fixed Contribution to
Government of India Employee''s Provident fund equal to a specified
percentage of the covered employee''s salary, Provision for the same is
made in the year in which service are rendered by the employees.
(b) The Liability for Gratuity to employee, which is a defined benefit
plan, is determined on the basis of actuarial Valuation based on
Projected Unit Credit method. Actuarial gain/Loss in respect of the
same is charged to the profit and loss account.
(c) Short Term benefits are recognised as an expense at the
undiscounted amounts in the Statement of Profit and Loss of the year in
which the related service is rendered.
xv) Foreign Currency Transactions / Exchange Fluctuation
(a) Monetary Transactions related to foreign currency are accounted for
at the equivalent rupee converted at the rates prevailing at the time
of respective transactions and outstanding in respect thereof are
translated at period end rates. Exchange difference is charged to the
revenue account except arising on account of conversion related to the
purchase of fixed asset is adjusted therewith if initial period of
buyers credit arrangements is in excess of 360 days.
(b) Non-monetary foreign currency items are carried at cost.
xvi) Provision for Current Tax & Deferred Tax
Provision for current tax is made in accordance with the provisions of
the Income Tax Act, 1961. Deferred Tax resulting from "timing
difference" between taxable and accounting income is accounted for
using the tax rates and laws that are enacted or subsequently enacted
as on the balance sheet date. Deferred tax asset is recognised and
carried forward only to the extent that there is virtual certainty that
the assets will be realized in future.
xvii) Provisions and Contingencies
A provision is recognized when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. A disclosure for a contingent liability
is made when there is a possible or present obligation that may, but
probably will not require an outflow of resources. Contingent
liabilities are not recognized but are disclosed in the notes to
accounts. Contingent Assets are neither recognized nor disclosed in
the financial statement.
xviii) Earning per Share
Basic earning per share is calculated by dividing net profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earning per share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
Refer Note Number 37 for details of basic and diluted shares
The company has only one class of shares referred to as equity shares
having face value of Rs.10/-. Each holder of one share is entitled to
one vote per share.
During the year ended on 31st March, 2014, the Company has recommended
Dividend of Rs. 0.60/- (P.Y. Rs. 1.20/-) per share as distributions to
Equity Share holders. An interim dividend of Rs. 0.60/- per share was
declared at the meeting of the Board of Directors held on 4th February,
2014 and the same has been paid (P.Y. Rs. Nil).
The Company declares and pays dividends in Indian Rupees. The Final
dividend proposed by the Board of Director is subject to the approval
of shareholders in ensuing Annual General Meeting.
No Shares has been reserved for issue under options or
contracts/commitments for the shares/disinvestment.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholder.
The details of shareholders holding more than 5% shares as at
31/03/2014 and 31/03/2013 is set out below.
Aggregate No.of 151830188 Shares of Face Value of Rs.1 were (Now
reduced to 15183019 Shares of Rs.10) issued in the year 2006-07 as
Bonus.
* General reserve is created out of profit in accordance with Companies
(Transfer of Profit to Reserve) Rule, 1975 and is distributable in
accordance with Companies(Distribution of dividend out of Reserve)
Rules 1975.
Security:
*,** Term Loans & Buyers Credit arrangements under Consortium finance
are secured by first charge on the entire Fixed
Assets of the company both present and future, second charge on Book
Debts, Stock and other Current Assets of the
Company and also further guaranted by personal guarantee of promoter
directors. *** Corporate Loan is secured by subservient charge on
fixed and current assets of the company and also by way of pledge
of equity shares of the company belonging to directors and personal
guarantee of promoter directors. **** Vehicle Loans are secured by
Hypothication of Vehicles. Interest: * Term Loans carry an interest
rate which shall be State Bank of India rate or the base rate of the
respective rupee
lender plus the spread,which ever is higher, payable on monthly basis.
** Buyers Credit arrangements for a period upto 180 days carry an
interest rate ranging between in case of 6ML Libor 48
basis points to 6ML Libor 200 basis points. *** Corporate Loan carry
an interest rate 13.50 % p. a. payable on monthly basis. ****
Borrowing from related party do not carry any Interest. ***** Vehicle
Loans carry an interest rate ranging between 10.38% to 12.96% p.a.
Security :
@ Working Capital loans under consortium finance are secured by first
charge on Book Debts, Stocks and other Current Assets and second charge
on all the Fixed Assets both present and future of the Company and also
further guaranted by some of the Directors.
The Current Account balance includes Rs. 1,988,807/- (P.Y.
Rs.779,692/-) towards unclaimed dividend and Rs.125,704/- (P.Y.
Rs.125,704/-) towards unclaimed Rights Issue Refund which have been
kept in separate earmarked accounts and no transactions except for the
stated purpose are done through such account.
The expected benefits are based on the same assumptions used to measure
Group''s gratuity obligations as at 31st March,2014.The Company is
expected to contribute Rs.2000000/- to gratuity funds for the year
ended 31st March,2014.
Mar 31, 2013
I) Basis of Preparation of financial Statements
The financial statements have been prepared to comply with the
Accounting Standards referred to in the Companies (Accounting
Standards) Rule, 2006 issued by the Central Government in exercise of
the power conferred under sub- section ( I ) (a) of section 642 and the
relevant provisions of the Companies Act, 1956 (the ''Act''). The
accounts are prepared on historical cost convention on an accrual
basis. The accounting policies have been consistently applied by the
Company and are consistent with those used in the previous year.
ii) Use of estimates
In preparing the Company''s financial statements in conformity with the
accounting principles generally accepted in India, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognised prospectively in the current and future
periods.
iii) Fixed Assets
Fixed Assets are stated at cost of acquisition less accumulated
depreciation. All costs including financial costs till commencement of
commercial production are capitalized to the cost of qualifying assets.
CENVAT credit, Grants, Foreign Exchange Fluctuation claims and EPCG
claims on capital goods are accounted for by reducing the cost of
capital goods.
When assets are disposed or retired, their cost is removed from the
financial statements. The gain or loss arising on the disposal or
retirement of an asset is determined as the difference between sales
proceeds and the carrying amount of the asset and is recognised in
Statement of Profit and Loss for the relevant financial year.
iv) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortization. All costs, including financing
costs in respect of qualifying assets till commencement of commercial
production, net charges on foreign exchange contracts and adjustments
arising from exchange rate variations attributable to the intangible
assets are capitalized.
Intangible assets are amortised on a straight  line basis over their
estimated useful lives. A rebuttable presumption that the useful life
of an intangible asset will not exceed ten years from the date when the
asset is available for use is considered by the management.
The gain or loss arising on the disposal or retirement of an intangible
asset is determined as the difference between net disposal proceeds and
the carrying amount of the asset and is recognised as income or
expenses in the Statement of Profit and Loss in the year or disposal.
v) Depreciation
Depreciation on fixed assets (excluding intangible assets) of the
company is provided on straight-line method at the rates and in the
manner specified in Schedule XIV to the Companies Act, 1956, except
depreciation on incremental cost arising on account of translation of
foreign currency liabilities incurred for the purpose of acquiring
fixed assets, which is amortized over the residual life of the
respective asset. Intangible assets are amortised on a straight  line
basis over their estimated useful lives. A rebuttable presumption that
the useful life of an intangible asset will not exceed ten years from
the date when the asset is available for use is considered by the
management. When assets are disposed or retired, their cost is removed
from the financial statements. The gain or loss arising on the disposal
or retirement of an asset is determined as the difference between sales
proceeds and the carrying amount of the asset and is recognised in
Statement of Profit and Loss for the relevant financial year.
vi) Impairment of Assets
The Management Periodically assesses using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognizes an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount. The impairment loss recognised in prior accounting periods is
reversed if there has been a change in the estimate of recoverable
amounts.
vii) Investments
Non-Current Investments are stated at cost. Provision is only made to
recognize a decline other than temporary, in the value of investments.
viii)Inventories
(a) Inventories are valued at the Lower of cost or net realizable
value. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated cost of completion and
estimated cost necessary to make sale. Cost in respect of raw materials
and Stock in Trade are determined on FIFO basis. Costs in respect of
all other Inventories are computed on weighted average basis method.
Finished goods and process stock include cost of conversion and other
costs incurred in acquiring the inventory and bringing them to their
present location and condition.
(b) Waste is valued at estimated net realizable value.
ix) Excise duty
In view of the excise duty exemption route adopted by the Company from
13.07.2004 vide notification no. 30/2004 - dated 09.07.2004 of Central
Excise Act, 1944 "Exemption to specified goods of public interest", the
Company does not have obligation for payment of excise duty from that
date.
x) Revenue Recognition
(a) Revenue from sale of goods is recognized when significant risks and
rewards in respect of ownership of the products are transferred to the
customers net of rate difference and discount given.
(b) Dividend on Investment is recognized when the right to receive the
payment is established.
(c) Exports entitlement under the Duty Entitlement Pass Book (DEPB)/FMS
scheme are recognized in the Statement of Profit and Loss Account when
the right to receive credit as per the terms of scheme is established
in respect of the exports made and where there is no significant
uncertainty regarding the ultimate collection of the relevant export
proceeds.
(d) Subsidy under Textiles Upgradation Fund Scheme (TUFS) is recognized
when there is reasonable certainty regarding the realization of the
same.
xi) Government Grants & Other Claims
Revenue grant including subsidy / rebates, claims etc., are deducted
from the related expenses. Grants relating to fixed assets are adjusted
in the cost of such assets as and when the ultimate realizability of
such grant etc., are established / realized.
xii) Borrowing costs
Borrowing costs, which are attributable to acquisition or construction
of qualifying assets, are capitalized as part of cost of such assets
till such assets are ready for its intended use. A qualifying asset is
one, which necessarily takes substantial period of time to get ready
for intended use. All other borrowing costs are charged to revenue.
Capitalization of borrowing cost is suspended when active development
is interrupted or completed.
xiii) Leases
Where the Company is the lessee
Leases, wherein the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
xiv) Employee benefits
(a) The employee and Company make monthly fixed Contribution to
Government of India Employee''s Provident fund equal to a specified
percentage of the covered employee''s salary, Provision for the same is
made in the year in which service are rendered by the employees.
(b) The Liability for Gratuity to employee, which is a defined benefit
plan, is determined on the basis of actuarial Valuation based on
Projected Unit Credit method. Actuarial gain/Loss in respect of the
same is charged to the profit and loss account.
(c) Short Term benefits are recognised as an expense at the
undiscounted amounts in the Statement of Profit and Loss of the year in
which the related service is rendered.
xv) Foreign Currency Transactions / Exchange Fluctuation
(a) Monetary Transactions related to foreign currency are accounted for
at the equivalent rupee converted at the rates prevailing at the time
of respective transactions and outstanding in respect thereof are
translated at period end rates. Exchange difference is charged to the
revenue account except arising on account of conversion related to the
purchase of fixed asset is adjusted therewith if initial period of
buyers credit arrangements is in excess of 360 days.
(b) Non-monetary foreign currency items are carried at cost.
xvi) Provision for Current Tax & Deferred Tax
Provision for current tax is made in accordance with the provisions of
the Income Tax Act, 1961. Deferred Tax resulting from "timing
difference" between taxable and accounting income is accounted for
using the tax rates and laws that are enacted or subsequently enacted
as on the balance sheet date. Deferred tax asset is recognised and
carried forward only to the extent that there is virtual certainty that
the assets will be realized in future.
xvii) Provisions and Contingencies
A provision is recognized when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. A disclosure for a contingent liability
is made when there is a possible or present obligation that may, but
probably will not require an outflow of resources. Contingent
liabilities are not recognized but are disclosed in the notes to
accounts. Contingent Assets are neither recognized nor disclosed in the
financial statement.
xviii) Earning per Share
Basic earning per share is calculated by dividing net profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earning per share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
Mar 31, 2012
I) Basis of Preparation of financial Statements
The financial statements are prepared on accrual basis in accordance
with the generally accepted accounting principles as adopted
consistently by the company and according to the provisions of the
Companies Act, 1956.
ii) Fixed Assets
Fixed Assets are stated at cost of acquisition less accumulated
depreciation. All costs including financial costs till commencement of
commercial production are capitalized. Net charges arising from
exchange rate variation relating to liability incurred for the purpose
of acquiring fixed assets are capitalized as part of cost of Fixed
assets which were hereto charged to revenue. CENVAT credit and EPCG
claims on capital goods are accounted for by reducing the cost of
capital goods.
iii) Depreciation
Depreciation on fixed assets (excluding intangible assets) of the
company is provided on straight-line method at the rates and in the
manner specified in Schedule XIV to the Companies Act, 1956, except
depreciation on incremental cost arising on account of translation of
foreign currency liabilities incurred for the purpose of acquiring
fixed assets, which is amortized over the residual life of the assets.
iv) Investments
Long Term Investments are stated at cost. Provision is only made to
recognize a decline other than temporary, in the value of investments.
v) Inventories
(a) Inventories are valued at the Lower of cost or net realizable
value. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated cost of completion and
estimated cost necessary to make sale. Cost in respect of raw material
and trading goods are determined on FIFO basis. Cost in respect of
process and finished goods are computed on weighted average basis
method. Finished goods and process stock includes cost of conversion
and other costs incurred in acquiring the inventory and bringing them
to their present location and condition.
(b) Waste is valued at estimated net realizable value.
vi) Revenue Recognition
(a) Revenue from sale of goods is recognized when significant risks and
rewards in respect of ownership of the products are transferred to the
customers net of rate difference and discount given.
(b) Dividend on Investment is recognized when the right to receive the
payment is established.
(c) Exports entitlement under the Duty Entitlement Pass Book (DEPB)
scheme are recognized in the Profit and Loss Account when the right to
receive credit as per the terms of scheme is established in respect of
the exports made and where there is no significant uncertainty
regarding the ultimate collection of the relevant export proceeds.
(d) Subsidy under Textiles Upgradation Fund Scheme (TUFS) is recognized
when there is reasonable certainty regarding the realization of the
same.
vii) Borrowing costs
Borrowing costs, which are attributable to acquisition or construction
of qualifying assets, are capitalized as part of cost of such assets
till such assets are ready for its intended use. A qualifying asset is
one, which necessarily takes substantial period of time to get ready
for intended use. All other borrowing costs are charged to revenue.
viii) Employee benefits
(a) The employee and Company make monthly fixed Contribution to
Government of India Employee's Provident fund equal to a specified
percentage of the covered employee's salary, Provision for the same is
made in the year in which service are rendered by the employees.
(b) The Liability for Gratuity to employee, which is a defined benefit
plan, is determined on the basis of actuarial Valuation based on
Projected Unit Credit method. Actuarial gain/Loss in respect of the
same is charged to the profit and loss account.
ix) Foreign Currency Transactions / Exchange Fluctuation
(a) Monetary Transactions related to foreign currency are accounted for
at the equivalent rupee converted at the rates prevailing at the time
of respective transactions and outstanding in respect thereof are
translated at period end rates. Exchange difference is charged to the
revenue account except arising on account of conversion related to the
purchase of fixed asset is adjusted therewith.
(b) Non-monetary foreign currency items are carried at cost.
x) Provision for Current Tax & Deferred Tax:
Provision for current tax is made in accordance with the provisions of
the Income Tax Act, 1961. Deferred Tax resulting from timing
differences between book and tax profit is accounted for under the
liability method, using the tax rates and laws that have been enacted
or substantially enacted on the balance sheet date, to the extent that
the timing differences are expected to crystallise.
xi) Provisions and Contingencies
A provision is recognized when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
A disclosure for a contingent liability is made when there is a
possible or present obligation that may, but probably will not require
an outflow of resources.
xii) Impairment
The management periodically assesses, using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognizes an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount.
xiii) Government Grants & Other Claims
Revenue grant including subsidy / rebates, claims etc., are deducted
from the related expenses. Grants relating to fixed assets are adjusted
in the cost of such assets as and when the ultimate realizability of
such grant etc., are established / realized.
xiv) Earning per Share
Basic earning per share is calculated by dividing net profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earning per share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
Mar 31, 2011
I) Basis of Preparation of Financial Statements
The Financial statements are prepared on accrual basis in accordance
with the generally accepted accounting principles as adopted
consistently by the company and according to the provisions of the
Companies Act, 1956.
ii) Fixed Assets
Fixed Assets are stated at cost of acquisition less accumulated
depreciation. All costs including financial costs till commencement of
commercial production are capitalized. Net charges arising from
exchange rate variation relating to liability incurred for the purpose
of acquiring fixed Assets are capitalized as part of cost of Fixed
assets which were hereto charged to revenue. CENVAT credit and EPCG
claims on capital goods are accounted for by reducing the cost of
capital goods.
iii) Depreciation
Depreciation on fixed Assets (excluding intangible assets) of the
company is provided on straight-line method at the rates and in the
manner specified in Schedule XIV to the Companies Act, 1956, except
depreciation on incremental cost arising on account of translation of
foreign currency liabilities incurred for the purpose of acquiring
fixed Assets, which is amortized over the residual life of the assets.
iv) Investments
Long Term Investments are stated at cost. Provision is only made to
recognize a decline other than temporary, in the value of investments.
v) Inventories
(a) Inventories are valued at the lower of cost or net realizable
value. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated cost of completion and
estimated cost necessary to make sale. Cost in respect of raw material
and trading goods are determined on FIFO basis. Cost in respect of
process and finished goods are computed on weighted average basis
method. Finished goods and process stock includes cost of conversion
and other costs incurred in acquiring the inventory and bringing them
to their present location and condition.
(b) Waste is valued at estimated net realizable value.
vi) Revenue Recognition
(a) Revenue from sale of goods is recognized when significant risks and
rewards in respect of ownership of the products are transferred to the
customers net of rate difference and discount given.
(b) Dividend on Investment is recognized when the right to receive the
payment is established.
(c) Exports entitlement under the Duty Entitlement Pass Book (DEPB)
scheme are recognized in the Profit and Loss Account when the right to
receive credit as per the terms of scheme is established in respect of
the exports made and where there is no significant uncertainty
regarding the ultimate collection of the relevant export proceeds.
(d) Subsidy under Textiles Upgradation Fund Scheme (TUFS) is recognized
when there is reasonable certainty regarding the realization of the
same.
vii) Borrowing costs
Borrowing costs, which are attributable to acquisition or construction
of qualifying assets, are capitalized as part of cost of such assets
till such assets are ready for its intended use. A qualifying asset is
one, which necessarily takes substantial period of time to get ready
for intended use. All other borrowing costs are charged to revenue.
viii) Employee benefits
(i) The employee and Company make monthly fixed Contribution to
Government of India Employee's Provident Fund equal to a specified
percentage of the covered employee's salary, provision for the same is
made in the year in which service are rendered by the employees.
(ii) The Liability for Gratuity to employee, which is a defined benefit
plan, is determined on the basis of actuarial Valuation based on
Projected Unit Credit method. Actuarial gain/loss in respect of the
same is charged to the profit and loss account.
ix) Foreign Currency Transactions / Exchange Fluctuation
(a) Monetary Transactions related to foreign currency are accounted for
at the equivalent rupee converted at the rates prevailing at the time
of respective transactions and outstanding in respect thereof are
translated at period end rates. Exchange difference is charged to the
revenue account except arising on account of conversion related to the
purchase of fixed asset is adjusted therewith.
(b) Non-monetary foreign currency items are carried at cost.
x) Provisions and Contingencies
A provision is recognized when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. A disclosure for a contingent liability
is made when there is a possible or present obligation that may, but
probably will not require an outflow of resources.
xi) Impairment
The management periodically assesses, using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognizes an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount.
xii) Government Grants & Other Claims
Revenue grant including subsidy / rebates, claims etc., are deducted
from the related expenses. Grants relating to fixed assets are adjusted
in the cost of such assets as and when the ultimate realizability of
such grant etc., are established / realized.
xiii) Earning per Share
Basic earning per share is calculated by dividing net profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earning per share is calculated by dividing net profit
attributable to equity shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
Mar 31, 2010
I) Basis of Preparation of financial Statements
The financial statements are prepared on accrual basis in accordance
with the generally accepted accounting principles as adopted
consistently by the company and according to the provisions of the
Companies Act, 1956.
ii) Fixed Assets
Fixed Assets are stated at cost of acquisition less accumulated
depreciation. All costs including financial costs till commencement of
commercial production are capitalized. Net charges arising from
exchange rate variation relating to liability incurred for the purpose
of acquiring fixed assets are capitalized as part of cost of Fixed
assets which were hereto charged to revenue. Cenvat credit and EPCG
claims on capital goods are accounted for by reducing the cost of
capital goods.
iii) Depreciation
Depreciation on fixed assets (excluding intangible assets) of the
company is provided on straight-line method at the rates and in the
manner specified in Schedule XIV to the Companies Act, 1956, except
depreciation on incremental cost arising on account of translation of
foreign currency liabilities incurred for the purpose of acquiring
fixed assets, which is amortized over the residual life of the assets.
iv) Investments
Long Term Investments are stated at cost. Provision is only made to
recognize a decline other than temporary, in the value of investments.
v) Inventories
(a) Inventories are valued at the Lower of cost or net realizable
value. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated cost of completion and
estimated cost necessary to make sale. Cost in respect of raw material
and trading goods are determined on FIFO basis. For better
presentation, the company has changed the cost formula used for valuing
cotton bales from specific costing to FIFO basis, having no impact on
the profit for the year. Cost in respect of process and finished goods
are computed on weighted average basis method. Finished goods and
process stock includes cost of conversion and other costs incurred in
acquiring the inventory and bringing them to their present location and
condition.
(b) Waste is valued at estimated net realizable value.
vi) Revenue Recognition
(a) Revenue from sale of goods is recognised when significant risks and
rewards in respect of ownership of the products are transferred to the
customers net of rate difference and discount given.
(b) Dividend on Investment is recognised when the right to receive the
payment is established.
(c) Exports entitlement under the Duty Entitlement Pass Book (DEPB)
scheme are recognised in the Profit and Loss Account when the right to
receive credit as per the terms of scheme is established in respect of
the exports made and where there is no significant uncertainty
regarding the ultimate collection of the relevant export proceeds.
(d) Subsidy under Textiles Upgradation Fund Scheme (TUFS) is recognized
when there is reasonable certainty regarding the realization of the
same.
vii) Borrowing costs
Borrowing costs, which are attributable to acquisition or construction
of qualifying assets, are capitalized as part of cost of such assets
till such assets are ready for its intended use. A qualifying asset is
one, which necessarily takes substantial period of time to get ready
for intended use. All other borrowing costs are charged to revenue.
viii) Employee benefits
(i) The employee and Company make monthly fixed Contribution to
Government of India EmployeeÃs Provident fund equal to a specified
percentage of the covered employeeÃs salary, Provision for the same is
made in the year in which service are rendered by the employees.
(ii) The Liability for Gratuity to employee, which is a defined benefit
plan, is determined on the basis of actuarial Valuation based on
Projected Unit Credit method. Actuarial gain/Loss in respect of the
same is charged to the profit and loss account.
ix) Foreign Currency Transactions / Exchange Fluctuation
(a) Monetary Transactions related to foreign currency are accounted for
at the equivalent rupee converted at the rates prevailing at the time
of respective transactions and outstanding in respect thereof are
translated at period end rates. Exchange difference is charged to the
revenue account except arising on account of conversion related to the
purchase of fixed asset is adjusted therewith.
(b) Non-monetary foreign currency items are carried at cost.
x) Provisions and Contingencies
A provision is recognized when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
A disclosure for a contingent liability is made when there is a
possible or present obligation that may, but probably will not require
an outflow of resources.
xi) Impairment
The management periodically assesses, using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognises an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount.
xii) Government Grants & Other Claims
Revenue grant including subsidy / rebates, claims etc., are deducted
from the related expenses. Grants relating to fixed assets are adjusted
in the cost of such assets as and when the ultimate realizability of
such grant etc., are established / realized.
xiii)Earning Per Share
Basic earning per share is calculated by dividing net profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earning per share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
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