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Accounting Policies of PBM Polytex Ltd. Company

Mar 31, 2015

(1) Corporate Information:

PBM Polytex Limited is a public company incorporated in India, its share are listed on the Bombay Stock Exchange and the Ahmedabad Stock Exchange. The Company is engaged in the manufacture and processing of yarn. The yarn is exported in considerable quantity.

(2) Basis of Preparation:

The financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Companies (Accounts) Rules 2014 and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

(3) Use of Estimates:

The presentation of financial statements in conformity with the GAAP requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates is recognized in the period in which the results are known / materialized.

(4) Fixed Assets:

Fixed Assets are stated at Cost or at Revalued Cost, net of CENVAT / VAT Credit less Accumulated Depreciation. All costs including financing costs till commencement of commercial production and Exchange rate variations relating to the Borrowing are capitalized / adjusted to the fixed assets.

(5) Depreciation: Depreciation has been provided as under during the year:

A) PETLAD AND BORGAON UNITS:

(a) On Assets other than Plant and Machineries:

Computed considering the useful life of the asset as prescribed under Schedule II of the Companies Act, 2013.

(b) On Plant and Machineries :

Computed considering the useful life of the asset as prescribed under Schedule II of the Companies Act, 2013 applicable to continues process plant (CPP) as certified the chartered Engineer.

(c) Leasehold Land: Amortized over the period of Lease.

B) WINDMILLS:

Computed considering the useful life of the asset as prescribed under Schedule II of the Companies Act, 2013.

The difference between the depreciation lower/excess charge than in the previous year as been adjust in the current year.

(6) Inventories:

The cost of various categories of inventory is determined as follows:

(a) Stores, Spares, Packing Material, Fuel & others - At Lower of Cost or Net realisable value

(b) Raw material - At Average value of Opening Stock and Purchase

(c) Stock - in - Process - At Lower of Cost or Net realisable value

(d) Finished Goods - At Lower of Cost or Net realisable value

(e) Material in Transit - At Cost

(f) Waste (Cotton and Yarn) - At Net Realisable value '

(7) Foreign Currency Transactions:

(a) Foreign currency transactions are accounted for at the exchange rate prevailing on the date of the transaction. All monetary foreign currency assets and liabilities are converted at the exchange rates prevailing on the date of the balance sheet. All exchange differences other than those relating to the acquisition of fixed assets from outside India are dealt with in the statement of profit and loss. Exchange gain or loss relating to fixed assets acquired from outside India is adjusted in the cost of respective fixed assets.

(b) In case of forward contracts, the gain / loss on contracts are treated as periodical expense or revenue. Any profit or loss arising on the cancellation or renewal of a forward exchange contract is recognized as income or expense for the year, except in case of a forward exchange contract relating to liabilities incurred for acquiring fixed assets from outside India, in which case, such profit or loss is adjusted in the cost of fixed assets.

(c) Exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognized in the statement of profit and loss in the reporting period in which the exchange rates change.

(8) Retirement Benefits:

(a) Provision for gratuity liability to employees is made on the basis of intimation received from Life Insurance Corporation of India on actuarial basis. Group Gratuity Fund is managed by the Life Insurance Corporation of India and SBI Life Insurance Co. Ltd.

(b) Leave encashment has been charged to the Revenue Account on the basis of liability ascertained as per the actuarial valuation.

(c) The Company's contribution to Provident Fund is charged to Revenue Account. ESIC is applicable only to Mumbai Office of the Company.

(d) Superannuation Fund: The Company contributes to Superannuation Trust for the Managerial Personnel of the Company as per the rules of the Trust.

(9) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(10) Revenue Recognition:

(a) Items of Income and Expenditure are recognized on accrual basis except Insurance Claims, DEPB / focus Marketing License and TUFS rebate which are accounted for on transfer or receipt.

(b) Expenses are net of taxes recoverable wherever applicable.

(11) Excise Duty, Cenvat Credit and VAT:

Excise Duty payable on finished goods is accounted for on clearance of goods. 50% of Cenvat Credit on capital goods is accounted for immediately on receipt and the balance is accounted in the next year.

In pursuance to Circular No. 795/28/2004 dated 28.07.2004 the Company (being textile manufacturer) has adopted policy of charging of "Optional" Excise Duty at "NIL" Rate or at applicable Rate as desired by the customer.

VAT credit on raw material (including processing materials, consumable stores and packing materials) and capital goods is accounted on purchase and actual receipt of the same.

(12) Earning Per Share:

The earnings considered in ascertaining the Company's E.P.S. comprise the net profit after tax divided by the number of shares.

(13) Taxation:

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. A provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws. A provision is made for deferred tax asset for all timing differences arising between taxable incomes and accounting income at currently enacted tax rates. Deferred tax assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

(14) Segment Accounting:

The Company manufactures and deals in single product i.e. Cotton Yarn only and therefore, Accounting Standard 17 on Segment Reporting is not applicable.

(15) Investments:

Long Term Investments are carried at cost. Temporary diminution in value of such investments, if any, is ignored.

(16) Provisions and contingencies:

A provision is recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a probable obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed.

(17) Impairment Loss:

Impairment Loss, if any, is provided to the extent the carrying amount of assets exceed their recoverable amounts. Recoverable amount is that which is higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. Net Selling Price is the amount obtainable from sale of the asset on arms length basis between knowledgeable and willing parties less the cost of disposal.


Mar 31, 2014

(1) Basis of Accounting:

The financial statements have been prepared on historical cost convention in accordance with the Generaly Accepted Accounting Principles (GAAP) and the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act 1956.

(2) Use of Estimates:

The presentation of financial statements in conformity with the GAAP requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates is recognized in the period in which the results are known / materialized.

(3) Fixed Assets:

Fixed Assets are stated at Cost or at Revalued Cost, net of CENVAT / VAT Credit less Accumulated Depreciation. Al costs including financing costs til commencement of commercial production and Exchange rate variations relating to the Borowing are capitalized / adjusted to the fixed assets.

(4) Depreciation: Depreciation has been provided as under:

A) PETLAD AND BORGAON UNITS:

(a) On Assets other than Plant and Machineries and Electrical Installations:

On Straight Line Method at the rates mentioned under Notification No. GSR 756(E) dated 16.12.1993 read with Schedule XIV of the Act.

(b) On Plant and Machineries & Electrical Instalations:

On Straight Line Method at the rates applicable to Continuous Process Plant (CPP) as defined in Schedule XIV and certified by the Chartered Engineer.

(c) Leasehold Land: Amortized over the period of Lease.

B) WINDMILLS:

On Plant and Machineries and Electrical Instalations on written down value at the rates prescribed in clause II (i-a) of Schedule XIV of the Companies Act.

(5) Inventories:

(a) Stores, Spares, Packing Materials, Fuel & others- At Lower of Cost or Net realizable value

(b) Raw materials- At Average Value of Opening Stock and Purchases

(c) Stock-in-Process- At Lower of Cost or Net Realizable Value

(d) Finished Goods- At Lower of Cost or Net Realizable Value

(e) Material in Transit- At Cost

(f) Waste (Cotton/Yarn)- At Net Realizable Value

(6) Foreign Curency Transactions:

(a) Foreign curency transactions are accounted for at the exchange rate prevailing on the date of the transaction. Al monetary foreign curency assets and liabilities are converted at the exchange rates prevailing on the date of the balance sheet. Al exchange differences other than those relating to the acquisition of fixed assets from outside India are dealt with in the statement of profit and loss. Exchange gain or loss relating to fixed assets acquired from outside India is adjusted in the cost of respective fixed assets.

(b) In case of forward contracts, the gain / loss on contracts is treated as periodical expense or revenue. Any profit or loss arising on the cancelation or renewal of a forward exchange contract is recognized as income or expense for the year, except in case of a forward exchange contract relating to liabilities incured for acquiring fixed assets from outside India, in which case, such profit or loss is adjusted in the cost of fixed assets.

(c) Exchange difference is calculated as the difference between the foreign curency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the coresponding foreign curency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognized in the statement of profit and loss in the reporting period in which the exchange rates change.

(7) Retirement Benefits:

(a) Provision for gratuity liability to employees is made on the basis of intimation received from Life Insurance Corporation of India on actuarial basis. Group Gratuity Fund is managed by the Life Insurance Corporation of India and SBI Life Insurance Co. Ltd.

(b) Leave encashment has been charged to the Revenue Account on the basis of liability ascertained as per the actuarial valuation.

(c) The Company''s contribution to Provident Fund is charged to Revenue Account. ESIC is applicable only to Mumbai Office of the company.

(d) Superannuation Fund: The Company contributes to Superannuation Trust for the Managerial Personnel of the company as per the rules of the Trust.

(8) Borowing Cost:

Borowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Al other borowing costs are charged to revenue.

(9) Revenue Recognition:

Items of Income and Expenditure are recognized on accrual basis except Insurance Claims, DEPB / focus Marketing License and TUFS rebate which are accounted for on transfer or receipt.

(10) Excise Duty, Cenvat Credit and VAT:

Excise Duty payable on finished goods is accounted for on clearance of goods. 50% of Cenvat Credit on capital goods is accounted for immediately on receipt and the balance is accounted in the next year.

In pursuance to Circular No. 795/28/2004 dated 28.07.2004 the Company (being textile manufacturer) has adopted policy of charging of "Optional" Excise Duty at "NIL" Rate or at applicable Rate as desired by the customer.

VAT credit on raw material (including processing materials, consumable stores and packing materials) and capital goods is accounted on purchase and actual receipt of the same.

(11) Earning Per Share:

The earnings considered in ascertaining the company''s E.P.S. comprise the net profit after tax divided by the number of shares.

(12) Taxation:

Tax expense for the year, comprising curent tax and defered tax is included in determining the net profit for the year. A provision is made for the curent tax based on tax liability computed in accordance with relevant tax rates and tax laws. A provision is made for defered tax asset for al timing differences arising between taxable incomes and accounting income at curently enacted tax rates.

Defered tax assets are recognized only if there is reasonable certainty that they wil be realized and are reviewed for the appropriateness of their respective carying values at each balance sheet date.

(13) Segment Accounting:

The Company manufactures and deals in single product i.e. Cotton Yarn only and therefore, Accounting Standard 17 on Segment Reporting is not applicable.

(14) Investments:

Long Term Investments are caried at cost. Temporary diminution in value of such investments, if any, is ignored.

(15) Provisions and contingencies:

A provision is recognized when the company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow wil be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the company has a probable obligation where it is not probable that an outflow of resources wil be required to settle it. Contingent assets are neither recognized nor disclosed.

(16) Impairment Loss:

Impairment Loss, if any, is provided to the extent the carying amount of assets exceed their recoverable amounts. Recoverable amount is that which is higher of an asset''s net seling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. Net Seling Price is the amount obtainable from sale of the asset on arms length basis between knowledgeable and wiling parties less the cost of disposal.


Mar 31, 2013

(1) Basis of Accountng:

The fnancial statements have been prepared on hstorcal cost conventon n accordance wth the Generaly Accepted Accountng Prnciples (GAAP) and the Accountng Standards ssued by the Insttute of Chartered Accountants of Inda and the provisons of the Companes Act 1956.

(2) Use of Estmates:

The presentaton of fnancial statements n conformty wth the GAAP requres estmates and assumptons to be made that affect the reported amount of assets and liablities on the date of the fnancial statements and the reported amount of revenues and expenses durng the reportng perod. Dfference between the actual result and estmates s recognzed n the perod n whch the results are known / materalized.

(3) Fxed Assets:

Fxed Assets are stated at Cost or at Revalued Cost, net of CENVAT / VAT Credt less Accumulated Depreciaton. Al costs ncludng fnancing costs tl commencement of commercial producton and Exchange rate varatons relatng to the Borrowng are captalized / adjusted to the fxed assets.

(4) Depreciaton: Depreciaton has been provided as under:

A) PETLAD AND BORGAON UNITS:

(a) On Assets other than Plant and Machneres and Electrcal Installatons:

On Straght Lne Method at the rates mentoned under Notfcaton No. GSR 756(E) dated 16.12.1993 read wth Schedule XIV of the Act.

(b) On Plant and Machneries & Electrcal Instalatons:

On Straght Lne Method at the rates applicable to Contnuous Process Plant (CPP) as defned n Schedule XIV and certfed by the Chartered Engineer.

(c) Leasehold Land: Amortzed over the perod of Lease.

B) WINDMILLS:

On Plant and Machneres and Electrcal Instalatons on wrtten down value at the rates prescrbed n clause II (-a) of Schedule XIV of the Companes Act.

(5) Inventores:

(a) Stores, Spares, Packing Materal, Fuel & others- At Cost (Weghted Average Method)

(b) Raw materals- At Lower of Cost or Net Realizable Value

(c) Stock-n-Process- At Lower of Cost or Net Realizable Value

(d) Fnshed Goods- At Lower of Cost or Net Realizable Value

(e) Materal in Transt- At Cost (Specifc Cost Method)

(f) Cotton / Yarn Waste- At Net Realizable Value

(6) Foregn Currency Transactions:

(a) Foregn currency transactons are accounted for at the exchange rate prevaling on the date of the transaction. Al monetary foregn currency assets and liablites are converted at the exchange rates prevaling on the date of the balance sheet. Al exchange dfferences other than those relatng to the acquston of fxed assets from outsde Inda are dealt wth n the statement of proft and loss. Exchange gan or loss relatng to fxed assets acqured from outsde Inda s adjusted n the cost of respective fxed assets.

(b) In case of forward contracts, the gan / loss on contracts s treated as perodcal expense or revenue. Any proft or loss arsng on the cancelaton or renewal of a forward exchange contract s recognzed as ncome or expense for the year, except n case of a forward exchange contract relatng to liablites ncurred for acqurng fxed assets from outsde Inda, n whch case, such proft or loss s adjusted n the cost of fxed assets.

(c) Exchange dfference s calculated as the dfference between the foregn currency amount of the contract translated at the exchange rate at the reportng date, or the settlement date where the transaction s settled durng the reportng perod, and the correspondng foregn currency amount translated at the later of the date of ncepton of the forward exchange contract and the last reportng date. Such exchange dfferences are recognzed n the statement of proft and loss n the reportng perod n whch the exchange rates change.

(7) Retrement Benefits:

(a) Provison for gratuty liablity to employees s made on the bass of ntmaton receved from Lfe Insurance Corporaton of Inda on actuaral bass. Group Gratuty Fund s managed by the Lfe Insurance Corporaton of Inda and SBI Lfe Insurance Co. Ltd.

(b) Leave encashment has been charged to the Revenue Account on the bass of liablity ascertaned as per the actuaral valuaton.

(c) The Company''s contrbuton to Provident Fund s charged to Revenue Account. ESIC s applicable only to Mumba Offce of the company.

(d) Superannuaton Fund: The Company contrbutes to Superannuaton Trust for the Manageral Personnel of the company as per the rules of the Trust.

(8) Borrowng Cost:

Borrowng costs that are attrbutable to the acquston or construction of qualifying assets are captalized as part of the cost of such assets. A qualifying asset s one that necessarly takes substantal perod of tme to get ready for ts ntended use. Al other borrowng costs are charged to revenue.

(9) Revenue Recogntion:

Items of Income and Expendture are recognzed on accrual bass except Insurance Claims, DEPB / focus Marketng Lcense and TUFS rebate whch are accounted for on transfer or recept.

(10) Excise Duty, Cenvat Credit and VAT:

Excise Duty payable on fnshed goods s accounted for on clearance of goods. 50% of Cenvat Credt on captal goods s accounted for mmedately on recept and the balance s accounted n the next year. In pursuance to Crcular No. 795/28/2004 dated 28.07.2004 the Company (beng textle manufacturer) has adopted policy of charging of "Optonal" Excise Duty at "NIL" Rate or at 4% Rate as desred by the customer. VAT credt on raw materal (ncludng processng materals, consumable stores and packing materals) and captal goods s accounted on purchase and actual recept of the same.

(11) Earning Per Share:

The earnngs consdered n ascertanng the company''s E.P.S. comprse the net proft after tax dvided by the number of shares.

(12) Taxaton:

Tax expense for the year, comprsng current tax and deferred tax s ncluded n determnng the net proft for the year. A provison s made for the current tax based on tax liablity computed n accordance wth relevant tax rates and tax laws. A provison s made for deferred tax asset for al tmng dfferences arsng between taxable ncomes and accountng ncome at currently enacted tax rates.

Deferred tax assets are recognzed only f there s reasonable certanty that they wl be realized and are reviewed for the approprateness of ther respective carrying values at each balance sheet date.

(13) Segment Accountng:

The Company manufactures and deals n sngle product .e. Cotton Yarn only and therefore, Accountng Standard 17 on Segment Reportng s not applicable.

(14) Investments:

Long Term Investments are carred at cost. Temporary dmnuton n value of such nvestments, f any, s gnored.

(15) Provisons and contngencies:

A provison s recognzed when the company has a legal and constructve obligaton as a result of a past event, for whch t s probable that cash outflow wl be requred and a reliable estmate can be made of the amount of the obligaton. A contngent liablity s dsclosed when the company has a possble or present obligaton where t s not probable that an outflow of resources wl be requred to settle t. Contngent assets are nether recognzed nor dsclosed.

(16) Imparment Loss:

Imparment Loss, f any, s provided to the extent the carrying amount of assets exceed ther recoverable amounts. Recoverable amount s that whch s hgher of an asset''s net seling prce and ts value n use. Value n use s the present value of estmated future cash flows expected to arse from the contnung use of the assets and from ts dsposal at the end of ts useful life. Net Seling Prce s the amount obtanable from sale of the asset on arms length bass between knowledgeable and wling partes less the cost of dsposal.


Mar 31, 2012

(1) Basis of Accounting:

The financial statements have been prepared on historical cost convention in accordance with the Generally Accepted Accounting Principles (GAAP) and the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act 1956.

(2) Use of Estimates:

The presentation of financial statements in conformity with the GAAP requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimate s i s recognized in the period in which the results are known / materialized.

(3) Fixed Assets:

Fixed Assets are stated at Cost or at Revalued Cost, net of CENVAT / VAT Credit less Accumulated Depreciation. All costs including financing costs till commencement of commercial production and Exchange rate variations relating to the Borrowing are capitalized / adjusted to the fixed assets.

(4) Depreciation: Depreciation has been provided as under:

A) PETLAD AND BORGAON UNITS:

(a) On Assets other than Plant and Machineries and Electrical Installations:

On Straight Line Method at the rates mentioned under Notification No. GSR 756(E) dated 16.12.1993 read with Schedule XIV of the Act.

(b) On Plant and Machineries & Electrical Installations:

On Straight Line Method at the rates applicable to Continuous Process Plant (CPP) as defined in Schedule XIV and certified by the Chartered Engineer.

(c) Leasehold Land: Amortized over the period of Lease.

B) WINDMILLS:

On Plant and Machineries and Electrical Installations on written down value at the rates prescribed in clause II (i-a) of Schedule XIV of the Companies Act.

(5) Inventories:

(a) Stores, Spares, Packing Material, Fuel & others- At Cost (Weighted Average Method)

(b) Raw materials- At Lower of Cost or Net Realizable Value

(c) Stock-in-Process- At Lower of Cost or Net Realizable Value

(d) Finished Goods- At Lower of Cost or Net Realizable Value

(e) Material in Trans it- At Cost (Specific Cost Method)

(f) Cotton / Yarn Waste- At Net Realizable Value

(6) Foreign Currency Transactions:

(a) Foreign currency transactions are accounted for at the exchange rate prevailing on the date of the transaction. All monetary foreign currency assets and liabilities are converted at the exchange rates prevailing on the date of the balance sheet. All exchange differences other than those relating to the acquisition of fixed assets from outside India are dealt with in the statement of profit and loss. Exchange gain or loss relating to fixed assets acquired from outside India is adjusted in the cost of respective fixed assets.

(b) In case of forward contracts, the gain / loss on contracts is treated as periodical expense or revenue. Any profit or loss arising on the cancellation or renewal of a forward exchange contract is recognized as income or expense for the year, except in case of a forward exchange contract relating to liabilities incurred for acquiring fixed assets from outside India, in which case, such profit or loss is adjusted in the cost of fixed assets.

(c) Exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognized in the statement of profit and loss in the reporting period in which the exchange rates change.

(7) Retirement Benefits:

(a) Provision for gratuity liability to employees is made on the basis of intimation received from Life Insurance Corporation of India on actuarial basis. Group Gratuity Fund is managed by the Life Insurance Corporation of India and SBI Life Insurance Co. Ltd.

(b) Leave encashment has been charged to the Revenue Account on the basis of liability ascertained as per the actuarial valuation.

(c) The Company's contribution to Provident Fund is charged to Revenue Account. ESIC is applicable only to Mumbai Office of the company.

(d) Superannuation Fund: The Company contributes to Superannuation Trust for the Managerial Personnel of the company as per the rules of the Trust.

(8) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(9) Revenue Recognition:

Items of Income and Expenditure are recognized on accrual basis except Insurance Claims and TUFS rebate which are accounted for on transfer or receipt.

(10) Excise Duty, Cenvat Credit and VAT:

Excise Duty payable on finished goods is accounted for on clearance of goods. 50% of Cenvat Credit on capital goods is accounted for immediately on receipt and the balance is accounted in the next year.

In pursuance to Circular No. 795/28/2004 dated 28.07.2004 the Company (being textile manufacturer) has adopted policy of charging of "Optional" Excise Duty at "NIL" Rate or at 4% Rate as desired by the customer.

VAT credit on raw material (including processing materials, consumable stores and packing materials) and capital goods is accounted on purchase and actual receipt of the same.

(11) Earning Per Share:

The earnings considered in ascertaining the company's E.P.S. comprise the net profit after tax divided by the number of shares.

(12) Taxation:

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. A provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws. A provision is made for deferred tax asset for all timing differences arising between taxable incomes and accounting income at currently enacted tax rates.

Deferred tax assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

(13) Segment Accounting:

The Company manufactures and deals in single product i.e. Cotton Yarn only and therefore, Accounting Standard 17 on Segment Reporting is not applicable.

(14) Investments:

Long Term Investments are carried at cost. Temporary diminution in value of such investments, if any, is ignored.

(15) Provisions and contingencies:

A provision is recognized when the company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed.

(16) Impairment Loss:

Impairment Loss, if any, is provided to the extent the carrying amount of assets exceed their recoverable amounts. Recoverable amount is that which is higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. Net Selling Price is the amount obtainable from sale of the asset on arms length basis between knowledgeable and willing parties less the cost of disposal.


Mar 31, 2011

(1) Basis of Accounting:

The financial statements have been prepared on historical cost convention in accordance with the Generally Accepted Accounting Principles (GAAP) and the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act 1956.

(2) Use of Estimates:

The presentation of financial statements in conformity with the GAAP requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates is recognized in the period in which the results are known/materialized.

(3) Fixed Assets:

Fixed Assets are stated at Cost or at Revalued Cost, net of CENVAT / VAT Credit less Accumulated Depreciation. All costs including financing costs till commencement of commercial production and Exchange rate variations relating to the Borrowing are capitalized / adjusted to the fixed assets.

(4) Depreciation: Depreciation has been provided as under:

A) PETLAD UNIT:

(a) On Assets other than Plant and Machinery and Electrical Installations:

On Straight Line Method at the rates mentioned under Notification No. GSR 756(E) dated 16.12.1993 read with Schedule XIV of the Act.

(b) On Plant and Machineries & Electrical Installations:

On Straight Line Method at the rates applicable to Continuous Process Plant (CPP) as defined in Schedule XIV and certified by the Chartered Engineer.

B) BORGAON UNIT:

(a) On Assets other than Plant and Machinery and Electrical Installations:

On Straight Line Method at the rates mentioned under Notification No. GSR 756(E) dated 16.12.1993 read with Schedule XIV of the Act.

(b) On Plant and Machineries & Electrical Installations:

On Straight Line Method at the rates applicable to Continuous Process Plant (CPP) as defined in Schedule XIV and certified by the Chartered Engineer.

(c) Leasehold Land: Amortized over the period of Lease.

C) WINDMILLS:

On Plant and Machinery and Electrical Installations on written down value at rates prescribed in clause II (a) of Schedule XIV of the Companies Act.

(5) Inventories:

(a) Stores, Spares, Packing Material, Fuel & others- At Cost (Weighted Average Method)

(b) Raw materials- At Lower of Cost or Net Realizable Value

(c) Stock-in-Process- At Lower of Cost or Net Realizable Value

(d) Finished Goods- At Lower of Cost or Net Realizable Value (e) Material in Transit- At Cost (Specific Cost Method)

(f) Cotton / Yarn Waste- At Net Realizable Value

(6) Foreign Currency Transactions:

(a) Foreign currency transactions are accounted for at the exchange rate prevailing on the date of the transaction. All monetary foreign currency assets and liabilities are converted at the exchange rates prevailing on the date of the balance sheet. All exchange differences other than those relating to the acquisition of fixed assets from outside India are dealt with in the profit and loss account. Exchange gain or loss relating to fixed assets acquired from outside India is adjusted in the cost of respective fixed assets.

(b) In case of forward exchange contracts, the cost of contracts is amortized over the period of contract. Any profit or loss arising on the cancellation or renewal of a forward exchange contract is recognized as income or expense for the year, except in case of a forward exchange contract relating to liabilities incurred for acquiring fixed assets from outside India, in which case, such profit or loss is adjusted in the cost of fixed assets.

(c) Exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognized in the profit and loss account in the reporting period in which the exchange rates change.

(7) Retirement Benefits:

(a) Provision for gratuity liability to employees is made on the basis of intimation received from Life Insurance Corporation of India on actuarial basis. Group Gratuity Fund is managed by the Life Insurance Corporation of India and SBI Life Insurance Co. Ltd.

(b) Leave encashment has been charged to the Revenue Account on the basis of liability ascertained as per the actuarial valuation.

(c) The Company's contribution to Provident Fund is charged to Revenue Account. ESIC is applicable only to Mumbai Office of the company.

(d) Superannuation Fund: The Company contributes to Superannuation Trust for the Managerial Personnel of the company as per the rules of the Trust.

(8) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(9) Revenue Recognition:

Items of Income and Expenditure are recognized on accrual basis except Insurance Claims, TUFS rebate, and export incentives like Duty Drawback, DEPB, and Interest Subsidy, which are accounted for on transfer or receipt.

(10) Excise Duty, Cenvat Credit and VAT:

Excise Duty payable on finished goods is accounted for on clearance of goods. 50% of Cenvat Credit on capital goods is accounted for immediately on receipt and the balance is accounted in the next year.

In pursuance to Circular No. 795/28/2004 dated 28.07.2004 the Company (being textile manufacturer) has adopted policy of charging of "Optional" Excise Duty at "NIL" Rate or at 4% Rate as desired by the customer.

VAT credit on raw material (including processing materials, consumable stores and packing materials) and capital goods is accounted on purchase and actual receipt of the same.

(11) Earning Per Share:

The earnings considered in ascertaining the company's E.P.S. comprise the net profit after tax divided by the number of shares.

(12) Taxation:

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. A provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws. A provision is made for deferred tax asset for all timing differences arising between taxable incomes and accounting income at currently enacted tax rates.

Deferred tax assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

(13) Segment Accounting:

The Company manufactures and deals in single product i.e. Cotton Yarn only and therefore, Accounting Standard 17 on Segment Reporting is not applicable.

(14) Investments:

Long Term Investments are carried at cost. Temporary diminution in value of such investments, if any, is ignored.

(15) Provisions and contingencies:

A provision is recognized when the company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed.

(16) Impairment Loss:

Impairment Loss, if any, is provided to the extent the carrying amount of assets exceed their recoverable amounts. Recoverable amount is that which is higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. Net Selling Price is the amount obtainable from sale of the asset on arms length basis between knowledgeable and willing parties less the cost of disposal.


Mar 31, 2010

(1) Basis of Accounting:

The financial statements have been prepared on historical cost convention in accordance with the Generally Accepted Accounting Principles (GAAP) and the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act 1956.

(2) Use of Estimates:

The presentation of financial statements in conformity with the GAAP requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates is recognised in the period in which the results are known/materialised.

(3) Fixed Assets :

Fixed Assets are stated at Cost or at Revalued Cost, net of CENVAT / VAT Credit less Accumulated Depreciation. All costs including financing costs till commencement of commercial production and Exchange rate variations relating to the Borrowing are capitalised / adjusted to the fixed assets.

(4) Depreciation: Depreciation has been provided as under:

A) PETLAD UNIT:

(a) On Assets other than Plant and Machinery and Electrical Installations: On Straight Line Method at the rates mentioned under Notification No. GSR 756(E) dated 16.12.1993 read with Schedule XIV of the Act.

(b) On Plant and Machineries & Electrical Installations: On Straight Line Method at the rates applicable to Continuous Process Plant (CPP) as defined in Schedule XIV and certified by the Chartered Engineer.

B) BORGAON UNIT:

(a) On Assets other than Plant and Machinery and Electrical Installations: On Straight Line Method at the rates mentioned under Notification No. GSR 756(E) dated 16.12.1993 read with Schedule XIV of the Act.

(b) On Plant and Machineries & Electrical Installations: On Straight Line Method at the rates applicable to Continuous Process Plant (CPP) as defined in Schedule XIV and certified by the Chartered Engineer.

(c) Leasehold Land : Amortized over the period of Lease.

C) WINDMILLS :

On Plant and Machinery and Electrical Installations on written down value at rates prescribed in clause II(a) of Schedule XIV of the Companies Act.

(5) Inventories:

(a) Stores, Spares, Packing Material & Fuel- At Cost (Weighted Average Method)

(b) Raw materials- At Lower of Cost or Net Realisable Value

(c) Stock-in-Process- At Lower of Cost or Net Realisable Value

(d) Finished Goods- At Lower of Cost or Net Realisable Value

(e) Material in Transit- At Cost (Specific Cost Method)

(f) Cotton / Yarn Waste- At Net Realisable Value

(6) Foreign Currency Transactions:

(a) Foreign currency transactions are accounted for at the exchange rate prevailing on the date of the transaction. All monetary foreign currency assets and liabilities are converted at the exchange rates prevailing on the date of the balance sheet. All exchange differences other than those relating to the acquisition of fixed assets from outside India are dealt with in the profit and loss account. Exchange gain or loss relating to fixed assets acquired from outside India is adjusted in the cost of respective fixed assets.

(b) In case of forward exchange contracts, the cost of contracts is amortised over the period of contract. Any profit or loss arising on the cancellation or renewal of a forward exchange contract is recognized as income or expense for the year, except in case of a forward exchange contract relating to liabilities incurred for acquiring fixed assets from outside India, in which case, such profit or loss is adjusted in the cost of fixed assets.

(c) Exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognized in the profit and loss account in the reporting period in which the exchange rates change.

(7) Retirement Benefits:

(a) Provision for gratuity liability to employees is made on the basis of intimation received from Life Insurance Corporation of India on actuarial basis. Group Gratuity Fund is managed by the Life Insurance Corporation of India and SBI Life Insurance Co. Ltd.

(b) Leave encashment has been charged to the Revenue Account on the basis of liability ascertained as per the actuarial valuation.

(c) The Company’s contribution to Provident Fund is charged to Revenue Account. ESIC is applicable only to Mumbai Office of the company.

(d) Superannuation Fund: The Company contributes to Superannuation Trust for the Managerial Personnel of the company as per the rules of the Trust.

(8) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(9) Revenue Recognition:

Items of Income and Expenditure are recognised on accrual basis except Insurance Claims, TUFS rebate, export incentives like Duty Drawback, DEPB, Interest Subsidy, which are accounted for on transfer or receipt.

(10) Excise Duty, Cenvat Credit and VAT:

Excise Duty payable on finished goods is accounted for on clearance of goods. 50% of Cenvat Credit on capital goods is accounted for immediately on receipt and the balance is accounted in the next year.

In pursuance to Circular No. 795/28/2004 dated 28.07.2004 the Company (being textile manufacturer) has adopted policy of charging of "Optional" Excise Duty at "NIL" Rate or at 4% Rate as desired by the customer.

VAT credit on raw material (including processing materials, consumable stores and packing materials) and capital goods is accounted on purchase and actual receipt of the same.

(11) Earning Per Share:

The earnings considered in ascertaining the companys E.P.S. comprise the net profit after tax divided by the number of shares.

(12) Taxation:

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. A provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws. A provision is made for deferred tax asset for all timing differences arising between taxable income and accounting income at currently enacted tax rates.

Deferred tax assets are recognised only if there is reasonable certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

(13) Segment Accounting:

The Company manufactures and deals in single product i.e. Cotton Yarn only and therefore, Accounting Standard 17 on Segment Reporting is not applicable.

(14) Investments:

Long Term Investments are carried at cost. Temporary diminution in value of such investments, if any, is ignored.

(15) Provisions and contingencies:

A provision is recognized when the company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed.

(16) Impairment Loss:

Impairment Loss, if any, is provided to the extent the carrying amount of assets exceed their recoverable amounts. Recoverable amount is that which is higher of an asset’s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. Net Selling Price is the amount obtainable from sale of the asset on arms length basis between knowledgeable and willing parties less the cost of disposal.

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