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Accounting Policies of RSWM Ltd. Company

Mar 31, 2015

I. BASIS OF ACCOUNTING

The financial statements are prepared on historical cost convention and on the accounting principles of going concern, in accordance with Generally Accepted Accounting Principles ('GAAP'), comprising of the Accounting Standard notified by the Companies (Accounting Standard) Rules, 2006 and recommendatory Accounting Standards (AS)-30,Guidance Notes and other authoritative guidance etc. issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 2013, on accrual basis, as adopted consistently by the Company.

USE OF ESTIMATES:

In preparation of the financial statements in confirmation with Generally Accepted Accounting Principle in India, management is required to make estimates & assumptions that affect the reported amount of assets & liabilities and the disclosures of contingent liabilities as at the financial reporting date. The amount of revenue & expenditure during the reported period and that of actual results could be different from those of estimates. Any revision to such estimates is recognized in the period in which the same are determined.

CLASSIFICATION OF ASSETS AND LIABILITIES AS CURRENT AND NON CURRENT

All assets and liabilities are classified as current or non-current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months has been considered by the Company for the purpose of current/ non-current classification of assets and liabilities.

II. REVENUE RECOGNITION

a) Sales revenue is recognized when property in the goods with all significant risk and rewards as well as the effective control of goods usually associated with ownership are transferred to the buyer, at a price and includes excise duty.

b) Promotional Benefits, Export Incentives and Export Growth Incentives are accounted for on accrual basis when reasonable certainty and their probable use within reasonable time in the normal course of business, is established.

c) Claims and refunds due from Government authorities and parties, though receivable / refundable are not recognized in the accounts, if the amount thereof is not ascertainable. These are accounted for as and when ascertained or admitted by the concerned authorities / parties in favour of the Company.

d) Claims lodged with insurance companies are recognized as Income on acceptance by the Insurance Company. The Excess / Shortfall of claims passed are adjusted in the year of receipt.

e) The Interest Subsidy under Technology Up-gradation Fund Scheme of Government of India and Rajasthan Investment Promotion Schemes of Government of Rajasthan are recognized on accrual basis and adjusted against the respective expenses.

f) Dividend from investment in shares are recognized when the right to receive dividend is established.

III. GOVERNMENT GRANTS

Government grant /subsidies are recognized on the reasonable assurance of receipt of subsidy and completion of all the conditions attached. If the grant/ subsidies is related to a particular expense then in that case, it is deducted from that expense in the year of recognition.

Government Subsidies relating to depreciable Fixed Assets are treated as Deferred Income as per Accounting Standard (AS)-12, 'Accounting for Government Grants' which are recognized in Statement of Profit & loss over the useful life of the respective assets.

The Capital Subsidy under Technology Up-gradation Fund Scheme from Government(s) on specified machinery is recognized on a systematic and rational basis by adopting Deferred Income Approach, in proportion of the applicable depreciation over the useful life of the respective assets, and is adjusted against the depreciation in the Statement of Profit and Loss

IV. INVENTORY VALUATION

a) Inventories are valued at historical cost and net realizable value whichever is lower on a consistent basis. Historical cost is determined on Actual / Weighted Average basis on relevant categories of Inventories. The net value is determined after providing for obsolete, slow moving and defective inventories, wherever necessary.

b) The cost of Inventories comprise all costs of purchase, costs of conversion and other direct costs incurred in bringing the inventories to their present location and condition.

V. INVESTMENTS

Non-Current Investments are stated at cost. In case of diminution in value other than temporary, the carrying amount is reduced to recognize the decline. Current Investments are carried at cost or fair value whichever is lower.

VI. TANGIBLE FIXED ASSETS, INTANGIBLE FIXED ASSETS AND CAPITAL WORK IN PROGRESS

a) Cost of Fixed Assets comprises of its purchase price, including import duties and other non-refundable taxes or levies carrying amount of foreign exchange fluctuation on loans against Fixed Assets, expenditure incurred in the course of construction or acquisition, Start-up, Reconditioning, Commissioning, test runs & experimental production and other attributable costs of bringing the assets to its working conditions for the purpose of use for the business.

b) Borrowing cost directly attributable and/or funds borrowed generally and used for the purpose of acquisition/construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized, at its capitalization rate to expenditure on that assets, for the period, until all activities necessary to prepare qualifying assets for its intended use are complete.

c) Assets retired from active use and held for disposal are stated at the lower of their net book value and / or realizable value and are shown separately. Any subsequent revision in net realizable value is credited to statement of Profit and loss to the extent of amount written off in earlier years.

d) Intangible Fixed assets acquired separately are measured on initial recognition at cost. Following initial reorganization, intangible assets are carried at cost less accumulated amortization and accumulated losses, if any. Internally generated Intangible assets are recognized, if and when the parameters laid down under Accounting Standard (AS)-26 'Intangible Assets' for recognition are satisfied.

e) Goodwill acquired and/or arising upon amalgamation is amortized over a period of 5 years from the appointed date in accordance with paragraph 19 of Accounting Standard (AS) -14, 'Accounting for Amalgamations'.

VII. LEASES

Where the Company is the lessee

Leases, where the lessor effectively retains substantially all the risks and benefits of the 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.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognized in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including depreciation are recognized as an expense in the statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc are recognized immediately in the Statement of Profit and Loss

VIII. DEPRECIATION AND AMORTISATION

Depreciation on Tangible Fixed Assets and Amortization on Intangible Assets has been provided as follows:-

a) For Plant and Machinery of Textile Division, Company has internally assessed the useful life considering use of the same wherever applicable on triple shift basis, which has also been evaluated by an external expert. These useful lives are amortized on Straight Line Method.

b) For Plant and Machinery of Power Generation Division also the useful life has been internally assessed, considering these assets use as a Continuous Process Plant and the same is also evaluated by an external expert. These useful lives are amortized on Straight Line Method.

c) All other tangible assets other than as specified above, are depreciated over its useful life specified in Schedule II of Companies Act, 2013 by using Straight Line Method.

d) Residual Value of All tangible and intangible assets is considered as 5%.

e) Leased assets of the Company are amortized over the useful life/operating period of the lease following Accounting Standard (AS)-19

f) (i) Intangible assets acquired by the Company are amortized over their useful life determined by the management on technical evaluation on straight line method.

(ii) Intangible assets arising out of irrevocable exclusive right to use under the Deposit Scheme of State Electricity Board guidelines and rules is also depreciated over its useful life determined by the management on technical evaluation /its residual period, on Straight Line Method.

g) Goodwill acquired and/or arising upon amalgamation is amortized over a period of 5 years from the date of acquisition and/or appointed date in accordance with Para 19 of Accounting Standard (AS) -14, 'Accounting for Amalgamation'

h) As a result the revised useful life of the assets determined are as under

S.No. Nature of Assets Effective Useful Lives

1. Plant & Machinery of Textile Division 9 years 2 months

2. Plant & Machinery for Power Generation 18 years

3. All other tangible assets As per Companies Act-2013

4. Intangible Assets

(a) Intangible Assets acquired 6 years

(b) Intangible Assets being right to use 18 years 4 months

(c) Goodwill 5 years

IX. IMPAIRMENT OF FIXED ASSETS

Factors giving rise to any indication of Impairment of the carrying amounts of Company's Assets are appraised at each Balance Sheet date by the Management to determine and provide/reverse an impairment loss following Accounting Standard (AS) -28, 'Impairment of Assets'.

X. FOREIGN EXCHANGE TRANSACTIONS/TRANSLATIONS

a) (i) Export and Import transactions not covered by a hedging instrument are accounted for at the prevailing conversion rates on the transaction date.

(ii) Monetary items denominated in Foreign Currency (except financial instruments designated as Hedge Instruments) and outstanding at year end are translated at year end conversion rates.

(iii) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.

(iv) Borrowings in Foreign Currency have been recorded initially at the prevailing exchange rate on the date of availment. The Gain / Loss on Renewal / Payment of the Forward contract booking is accounted for in the Statement of Profit and Loss for the period. Premium or discounts arising on amount covered under Forward Contracts / Fixed Rate Contracts are amortized as expenses or income over the life of such contracts. The exchange gain / loss on un-hedged exposure are valued at the exchange rates prevailing at each balance sheet date.

b) Pursuant to The Institute of Chartered Accountants of India (ICAI) announcement "Accounting for Derivatives" on the early adoption of Accounting Standard (AS)-30 "Financial Instruments: Recognition and Measurement", the Company had early adopted the Accounting Standard (AS)-30 with effect from July 1, 2011, to the extent that such adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements.

The Company holds foreign currency forward contracts, designated as hedges of expected future sales of yarn/fabric to customers in countries other than India, for which the Company has highly probable forecasted transactions. As permitted by the risk management policy of the Company, the Company also has foreign currency forward contracts outstanding at end of the year designated as hedges of expected future purchases from suppliers in countries other than India for which the company has firm commitments. Foreign currency forward contracts and cross currency forward contracts are being used to hedge the foreign currency risk of the firm commitments.

The terms of the foreign currency forward contracts have been negotiated to match the terms of the commitments. Whenever there are highly probable transactions for which hedge accounting is claimed, and where significant element of hedge ineffectiveness occurs, the same is recognized in the Statement of Profit & Loss.

A financial instrument is designated as an effective hedge after the management objectively evaluates, at the inception of each contract as to whether the instrument is effective in offsetting the cash flows attributable to the hedged risk. The same evaluation is carried out at the end of each reporting period. In the absence of such hedge being identified or being continued to be identified as an effective hedge, the value thereof is taken to the Statement of Profit & Loss.

Exchange difference relating to effective cash flow hedge is accumulated in a Hedging Reserve account. Amounts from hedging reserve account are transferred in the Statement of Profit and Loss when-

I) the forecast transaction materializes, or

ii) the hedging instrument expires or is sold, terminated or exercised (except for the replacement or rollover of a hedging instrument into another hedging instrument where such replacement or rollover is part of the instrument's hedging strategy), or

iii) the hedge no longer meets the criteria for hedge accounting in Accounting Standard (AS)- 30, Financial Instruments, Recognition and Measurement.

iv) The Company revokes the designation.

Exchange difference relating to Fair Value Hedge effectiveness is measured on the reporting date and exchange difference of fair value hedge is recognized in the Statement of Profit & Loss.

Hedge effectiveness of financial instruments designated as Hedging instruments is evaluated at the end of each financial reporting period as per the risk management policy of the Company framed under requirements of Accounting Standard (AS) -30, 'Financial Instruments', Recognition and Measurement and Para 14A.9 of Foreign Exchange Management Act, 1999.

XI. REPLENISHMENT

Indigenous raw materials are to be used on occasions, for exports, to be subsequently replenished under Duty Free Entitlement Schemes of the Government of India. The cost of such indigenous raw materials is accounted for at its equivalent imported / duty free prices by adjusting the value of such entitlements granted for neutralization of the import duties and levies.

XII. EMPLOYEE BENEFITS

a) Defined Contribution Plan:

The Company makes defined contribution to Provident Fund and Superannuation Fund, which are accounted on accrual basis.

b) Defined Benefit Plan:

The Company's Liabilities on account of Gratuity and Earned Leave on retirement of employees are determined at the end of each financial year on the basis of actuarial valuation certificates obtained from Registered Actuary in accordance with the measurement procedure as per revised Accounting Standard (AS)-15, 'Employee Benefits'. These liabilities are funded on year-to-year basis by contribution to respective funds. The costs of providing benefits under these plans are also determined on the basis of actuarial valuation at each year end. Actuarial gains and losses for defined benefit plans are recognized in full in the period in which they occur in Statement of Profit & Loss.

XIII. TAXES ON INCOME

a) Taxes on Income are computed using Tax Deferral Assets or Liability Method where taxes accrue in the same period as the respective revenues and expenses arises. The differences that result between the profit offered for Income Tax and the profit as per financial statements are identified for recognition as Deferred Tax Liability being timing difference, that originate in one accounting period and reverse in another, based on the tax effect of the prevailing enacted regulations in force.

b) Deferred Tax Assets are recognized subject to prudence, only if there is virtual certainty that they will be realized and are subject to appropriate reviews at each balance sheet date. For the purpose of measurement of Deferred Tax Liability or Assets, the applicable tax rates and enacted regulations expected to apply in the year in which the temporary differences are expected to be recovered or settled are applied and due consideration of the relief available under the provisions of Chapter VI A of the Income Tax Act, are appropriately considered.

c) The Minimum Alternate Tax credit available is adjusted against the Deferred Tax Liability / Current Tax payable as per provision of the Income Tax Act, 1961

XIV. PROVISIONS AND CONTINGENT LIABILITIES / ASSETS

a) Provisions are made when the present obligation of a past event gives rise to a probable outflow, embodying economic benefits on settlement, and the amount of obligation can be reliably estimated.

b) Contingent Liability is disclosed after careful evaluation of facts, uncertainties and possibility of reimbursement, unless the possibility of an outflow of resources embodying economic benefits is remote.

c) Provisions and Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

d) Contingent Assets are neither accounted for nor disclosed in the financial statements.

XV. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) among the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity shares to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue, bonus element in a Rights issue to existing shareholders, share split, and reverse share split (consolidation of shares).

XVI. CASH & BANK BALANCES

Cash and bank balances for the purpose of cash flow statement comprise cash at bank, cash in hand, cheques in hand and other permissible instruments as per Accounting Standard (AS)-3, 'Cash flow statement.


Mar 31, 2014

I. BASIS OF ACCOUNTING

The financial statements are prepared on historical cost convention and on the accounting principles of going concern, in accordance with Generally Accepted Accounting Principles (''GAAP''), comprising of the mandatory and recommendatory Accounting Standards, Guidance Notes, etc. issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, on accrual basis, as adopted consistently by the Company.

USE OF ESTIMATES:

In preparation of the financial statements in confirmatory with Generally Accepted Accounting Principle in ndia, management is required to make estimates & assumptions that affected the reported amount of assets & liabilities and the disclosures of contingent liabilities as at the financial reporting date. The amount of revenue & expenditure during the reported period and that of actual results could be different from those of estimates. Any revision to such estimates is recognised in the period in which the same is determined.

CLASSIFICATION OF ASSETS AND LIABILITIES AS CURRENT AND NON CURRENT

All assets and liabilities are classified as current or non- current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months have been considered by the Company for the purpose of current/ non-current classification of assets and liabilities.

II. REVENUE RECOGNITION

a) Sales revenue is recognised when property in the goods with all significant risk and rewards as well as the effective control of goods usually associated with ownership are transferred to the buyer, at a price and ncludes excise duty.

b) Promotional Benefits, Export Incentives and Export Growth Incentives are accounted for on accrual basis when reasonable certainty and their probable use within reasonable time in the normal course of business, is established.

c) Claims and refunds due from Government authorities and parties, though receivable / refundable are not recognised in the accounts, if the amount thereof is not

ascertainable. These are accounted for as and when ascertained or admitted by the concerned authorities / parties in favour of the Company.

d) Claims lodged with insurance companies are recognised as Income on acceptance by the Insurance Company. The Excess / Shortfall of claims passed are adjusted in the year of receipt.

e) The Government(s) subsidies and Interest Subsidy under TUFS are recognised on accrual basis and adjusted against the respective expenses.

III. GOVERNMENT GRANTS

Government grants are recognised on the reasonable assurance of receipt of subsidy and completion of all the conditions attached. If the grant is related to an expense then in that case it is deducted for that expense in the year of recognition.

Government Subsidies relating to depreciable Fixed Assets are treated as Deferred Income as per Accounting Standard- 12, which are recognised in Statement of Profit & loss over the useful life of the respective assets.

The Capital Subsidy under TUFS from Government(s) on specified machinery is recognised on a systematic and rational basis by adopting Deferred Income Approach, in proportion of the applicable depreciation over the useful life of the respective assets, and is adjusted against the depreciation in the Statement of Profit and Loss

IV. INVENTORY VALUATION

a) Inventories are valued at historical cost and net realisable value whichever is lower on a consistent basis. Historical cost is determined on Actual / Weighted Average basis on relevant categories of Inventories. The net value is determined after providing for obsolete, slow moving and defective inventories, wherever necessary.

b) The cost of Inventories comprise all costs of purchase, costs of conversion and other direct costs incurred in bringing the inventories to their present location and condition.

V. INVESTMENTS

Non-Current Investments are stated at cost. In case of diminution in value other than temporary, the carrying amount is reduced to recognise the decline. Current Investments are carried at cost or fair value whichever is lower.

VI. FIXED ASSETS, INTANGIBLE ASSETS AND CAPITAL WORK IN PROGRESS

a) Cost of Fixed Assets comprises of its purchase price, including import duties and other non-refundable taxes or levies carrying amount of foreign exchange fluctuation on loans against Fixed Assets up to March 31, 2003, expenditure incurred in the course of construction or acquisition, Start-up, Reconditioning, Commissioning, test runs & experimental production and other attributable costs of bringing the assets to its working conditions for the purpose of use for the business.

b) Borrowing cost directly attributable and/or funds borrowed generally and used for the purpose of acquisition/construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised, at its capitalisation rate to expenditure on that assets, for the period, until all activities necessary to prepare qualifying assets for its intended use are complete.

c) Assets retired from active use and held for disposal are stated at the lower of their net book value and / or realisable value and are shown separately.

d) Intangible assets acquired separately are measured on initial recognition at cost. Following initial reorganisation, intangible assets are carried at cost less accumulated amortisation and accumulated losses, if any. Internally generated intangible assets are recognised, if and when the parameters laid down under AS-26 (Intangible Assets) for recognition are satisfied.

VII. LEASES

Where the Company is the lessee

Leases, where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc are recognised immediately in the Statement of Profit and Loss

VIII. DEPRECIATION AND AMORTISATION

Depreciation on Fixed Assets and Amortisation on Intangible

Assets has been provided as follows:- a) On fixed assets existing on September 30,1987, on straight line method at the rates specified in circular No.1/86 of May 21, 1986, issued by the Department of Company Affairs.

b) On other fixed assets acquired and put to use after October 1, 1987 on straight-line method at the revised rates and in the manner specified in Schedule XIV to the Companies Act, 1956, as amended, vide Notification No.GSR-756 (E) dated 16th December, 1993 issued by the Department of Company Affairs, except: -

(i) On Plant and Machinery in the Power Generation Division on Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956 considering the same as ''Continuous Process

Plant.

(ii) Leased Assets are depreciated over the useful life / operating period of the lease.

(iii) Acquired Intangible Assets are amortised from the date of the assets being available for use on Straight Line basis over useful life determined by the Management on technical evaluation at the following rates:

1. Computer Software(s) 16.21% p.a.

2. Enabling Assets 5.28% p.a.

IX. IMPAIRMENT OF FIXED ASSETS

Factors giving rise to any indication of Impairment of the carrying amounts of Company''s Assets are appraised at each Balance Sheet date by the Management to determine and provide/reverse an impairment loss following Accounting Standard (AS- 28)- ''Impairment of Assets''.

X. FOREIGN EXCHANGE TRANSACTIONS/TRANSLATIONS

a) (i) Export and Import transactions not covered by a hedging instrument are accounted for at the prevailing conversion rates on the transaction date.

(ii) Monetary items denominated in Foreign Currency (except financial instruments designated as Hedge Instruments) and outstanding at year end are translated at year end conversion rates.

(iii) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

(iv) Borrowings in Foreign Currency have been recorded initially at the prevailing exchange rate on the date of a ailment. The Gain / Loss on Renewal / Payment of the Forward contract booking is accounted for in the Statement of Profit and Loss for the period. Premium or discounts arising on amount covered under Forward Contracts / Fixed Rate Contracts are amortised as expenses or income over the life of such contracts. The exchange gain / loss on un-hedged exposure are valued at the exchange rates prevailing at each balance sheet date.

b) Pursuant to The Institute of Chartered Accountants of India (ICAI) announcement "Accounting for Derivatives" on the early adoption of Accounting Standard AS 30 "Financial Instruments: Recognition and Measurement", the Company had early adopted the AS-30 with effect from July 1, 2011, to the extent that such adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements.

The company holds foreign currency forward contracts, designated as hedges of expected future sales of yarn/ fabric to customers in countries other than India, for which the company has highly probable forecasted transactions. As permitted by the risk management policy of the company, the company also has foreign currency forward contracts outstanding at end of the year designated as hedges of expected future purchases from suppliers in countries other than ndia for which the company has firm commitments. Foreign currency forward contracts and cross currency forward contracts are being used to hedge the foreign currency risk of the firm commitments.

The terms of the foreign currency forward contracts have been negotiated to match the terms of the commitments. Whenever there are highly probable transactions for which hedge accounting is claimed, and where significant element of hedge ineffectiveness occurs, the same is recognised in the Statement of Profit & Loss.

A financial instrument is designated as an effective hedge after the management objectively evaluates, at the inception of each contract as to whether the

instrument is effective in offsetting the cash flows attributable to the hedged risk. The same evaluation is carried out at the end of each reporting period. In the absence of such hedge being identified or being continued to be identified as an effective hedge, the value thereof is taken to the Statement of Profit & Loss.

Exchange difference relating to effective cash flow hedge is accumulated in a Hedging Reserve account. Amounts from hedging reserve account are transferred in the Statement of Profit and Loss when- i) the forecast transaction materialises, OR

ii) the hedging instrument expires or is sold, terminated or exercised (except for the replacement or rollover of a hedging instrument into another hedging instrument where such replacement or rollover is part of the instrument''s hedging strategy), OR

iii) the hedge no longer meets the criteria for hedge accounting in AS 30, OR,

iv) the Company revokes the designation,

Exchange difference relating to Fair Value Hedge effectiveness is measured on the reporting date and exchange difference of fair value hedge is recognised in the Statement of Profit & Loss.

Hedge effectiveness of financial instruments designated as Hedging instruments is evaluated at the end of each financial reporting period as per the risk management policy of the Company framed under requirements of AS 30 and Para 14A.9 of FEMA.

XI. REPLENISHMENT

Indigenous raw materials are to be used on occasions, for exports, to be subsequently replenished under Duty Free Entitlement Schemes of the Government of India. The cost of such indigenous raw materials is accounted for at its equivalent imported / duty free prices by adjusting the value of such entitlements granted for neutralisation of the import duties and levies.

XII. EMPLOYEE BENEFITS

a) Defined Contribution Plan:

The company makes defined contribution to Provident Fund and Superannuation Fund, which are accounted on accrual basis.

b) Defined Benefit Plan:

The Company''s Liabilities on account of Gratuity and Earned Leave on retirement of employees are determined at the end of each financial year on the basis of actuarial valuation certificates obtained from Registered Actuary in accordance with the measurement procedure as per revised AS-15. These liabilities are funded on year-to-year basis by contribution to respective funds. The costs of providing benefits under these plans are also determined on the basis of actuarial valuation at each year end. Actuarial gains and losses for defined benefit plans are recognised in full in the period in which they occur in statement of Profit & Loss.

XIII. TAXES ON INCOME

a) Taxes on Income are computed using Tax Deferral Assets or Liability Method where taxes accrue in the same period as the respective revenues and expenses arises. The differences that result between the profit offered for Income Tax and the profit as per financial statements are identified for recognition as Deferred Tax Liability timing difference, that originate in one accounting period and reverse in another, based on the tax effect of the prevailing enacted regulations in force.

b) Deferred Tax Assets are recognised subject to prudence, only if there is virtual certainty that they will be realised and are subject to appropriate reviews at each balance sheet date. For the purpose of measurement of Deferred Tax Liability or Assets, the applicable tax rates and enacted regulations expected to apply in the year in which the temporary differences are expected to be recovered or settled are applied and due consideration of the relief available under the provisions of Chapter VI A of the Income Tax Act, are appropriately considered.

c) The Minimum Alternate Tax credit available is adjusted against the Deferred Tax Liability / Current Tax payable as per provision of the Income Tax Act.

XIV. PROVISIONS AND CONTINGENT LIABILITIES / ASSETS

a) Provisions are made when the present obligation of a past event gives rise to a probable outflow, embodying economic benefits on settlement, and the amount of obligation can be reliably estimated.

b) Contingent Liability is disclosed after careful

evaluation of facts, uncertainties and possibility of reimbursement, unless the possibility of an outflow of resources embodying economic benefits is remote.

c) Provisions and Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

d) Contingent Assets are neither accounted for nor disclosed in the financial statements.

XV. EARNING PER SHARE

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) among the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity shares to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split, and reverse share split (consolidation of shares).

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

XVI. CASH AND CASH EQUIVALENTS BANK BALANCES

Cash and bank balances for the purposes of cash flow statement comprise cash at bank, Cash in hand, cheques in hand and other permissible instruments as per Accounting Standard AS 3.

XVII. OTHERS

Amounts related to previous years, arisen / settled during the year are debited / credited to respective heads of accounts.

2. There are no shares issued for consideration other than cash in the last 5 financial years. However, 1,35,13,607 Equity shares of Rs. 10/- each were issued as fully paid up bonus shares by capitalisation of reserves in earlier years. 12,28,689 Equity shares of Rs. 10/- each were issued for consideration other than cash,pursuant to the scheme of merger of erstwhile Jaipur Polyspin Limited and Mordi Textiles & Processors Limited as approved by the Hon''ble High Court of Rajasthan.

3. The number of issued, subscribed and fully paid up shares remained unchanged during the year as there were no buy back or issue of share capital.

4. The Company has only one class of equity shares having a par value of Rs. 10/-. Each holder of equity shares is entitled to one vote per share. There are no restrictions attached to any equity shares. The Company declares and pays dividends, if any, in Indian rupees. During the year ended 31st March 2014, the amount of per share dividend recognised as distribution to equity share holders was Rs. 12.50 (Previous year Rs. 10/-). The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares 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 respective shareholders.

1. All investments have been classified as non-trade investments based on the management''s business assessment and legal expert, relied upon by the auditors.

2. The cost of investment in Cheslind Textiles Limited includes Rs. 397.39 lacs (Previous year Rs. 397.39 lacs) acquisition charges such as brokerage, fees, duties, legal & professional fees and other incidental expenses incurred in the process of acquisition.

3. 76,28,950 Equity shares of Cheslind Textile Limited are pledged as collateral security with IDBI Bank Limited against loan taken by Cheslind Textile Limited.

4. Company had accepted Bhilwara Energy Limited offer of Right Shares on 11th March 2013 and paid application money of Rs. 7.00 Cr. against allotment of 13,22,782 Equity shares of Rs. 139.30 each ( Including premium of Rs. 129.30). During the Year 2013-14, remaining amount of Rs. 11.43 Cr. also was paid against allotment of 13,22,782 Equity shares.


Mar 31, 2013

I. BASIS OF ACCOUNTING

The financial statements are prepared on historical cost convention and on the accounting principles of going concern, in accordance with Generally Accepted Accounting principles (''GAAp''), comprising of the mandatory Accounting Standards, Guidance Notes etc. issued by the institute of Chartered Accountants of india and the provisions of the Companies Act, 1956, on accrual basis, as adopted consistently by the Company.

USE OF ESTIMATES:

in preparation of the financial statements in confirmatory with Generally Accepted Accounting principle in india, Management is required to make estimates & assumptions that affected the reported amount of assets & liabilities and the disclosures of contingent liabilities as at the financial reporting date. The amount of revenue & expenditure during the reported period and that of actual results could be different from those of estimates. Any revision to such estimates is recognised in the period in which the same is determined.

II. REVENUE RECOGNITION

a) Sales revenue is recognised when property in the goods with all significant risk and rewards as well as the effective control of goods usually associated with ownership are transferred to the buyer, at a price and includes excise duty.

b) promotional Benefits, Export incentives and Export Growth incentives are accounted for on accrual basis when reasonable certainty and their probable use within reasonable time in the normal course of business, is established.

c) Claims and refunds due from Government authorities and parties, though receivable / refundable are not recognised in the accounts, if the amount thereof is not ascertainable. These are accounted for as and when ascertained or admitted by the concerned authorities / parties in favour of the Company.

d) Claims lodged with insurance companies are recognised as income on acceptance by the insurance Company. The Excess / Shortfall of claims passed are adjusted in the year of receipt.

e) The Government Subsidies and interest Subsidy under TuFS are recognised on accrual basis and adjusted against the respective expenses.

III. GOVERNMENT GRANTS

Government Grants & subsidies are recognised on the reasonable assurance of receipt of subsidy and completion of all the conditions attached. if the grant is related to an expense then in that case it is deducted for that expense in the year of grant of subsidy.

Government Subsidies relating to depreciable Fixed Assets are treated as deferred income as per Accounting Standard AS-12, which are recognised in Statement of profit & Loss over the useful life of the respective assets.

The Capital Subsidy under TuFS from Ministry of Textiles on specified processing machinery is recognised on a systematic and rational basis by adopting deferred income Approach, in proportion of the applicable depreciation over the useful life of the respective assets, and is adjusted against the depreciation in the Statement of profit and Loss.

IV. INVENTORY VALUATION

a) inventories are valued at historical cost and net realisable value whichever is lower on a consistent basis. Historical cost is determined on Actual / Weighted Average basis on relevant categories of inventories. The net value is determined after providing for obsolete, slow moving and defective inventories, wherever necessary.

b) The cost of inventories comprise all costs of purchase, costs of conversion and other direct costs incurred in bringing the inventories to their present location and condition.

V. INVESTMENTS

Non-Current investments are stated at cost. in case of diminution in value other than temporary, the carrying amount is reduced to recognise the decline. Current investments are carried at cost or fair value whichever is lower.

VI. FIXED ASSETS, INTANGIBLE ASSETS AND CAPITAL WORK IN PROGRESS

a) Cost of Fixed Assets comprises of its purchase price, including import duties and other non-refundable taxes or levies, foreign exchange fluctuation on loans against Fixed Assets up to 31st March, 2003, expenditure incurred in the course of construction or acquisition, Start-up, Reconditioning, Commissioning, test runs & experimental production and other attributable costs of bringing the assets to its working conditions for the purpose of use for the business.

b) Borrowing cost directly attributable and/or funds borrowed generally and used for the purpose of acquisition/construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised, at its capitalisation rate to expenditure on that assets, for the period, until all activities necessary to prepare qualifying assets for its intended use are complete.

c) Assets retired from active use and held for disposal are stated at the lower of their net book value and / or realisable value and are shown separately.

d) intangible assets acquired separately are measured on initial recognition at cost. Following initial reorganisation, intangible assets are carried at cost less accumulated amortisation and accumulated losses, if any. internally generated intangible assets are recognised, if and when the parameters laid down under AS-26 (intangible Assets) for recognition are satisfied.

VII. LEASES

Where the Company is the lessee

Leases, where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased item, are classified as operating leases. operating lease payments are recognised as an expense in the Statement of profit and Loss on a straight line basis over the lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Statement of profit and Loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the statement of profit and Loss. initial direct costs such as legal costs, brokerage costs etc are recognised immediately in the Statement of profit and Loss

VIII. DEPRECIATION AND AMORTISATION

Depreciation on Fixed Assets and Amortisation on Intangible Assets has been provided as follows:-

a) on fixed assets existing on September 30,1987, on straight line method at the rates specified in circular No.1/86 of May 21, 1986, issued by the department of Company Affairs.

b) on other fixed assets acquired and put to use after october 1, 1987 on straight-line method at the revised rates and in the manner specified in Schedule XiV to the Companies Act, 1956, as amended, vide notification No.GSR-756 (E) dated 16th december, 1993 issued by the department of Company Affairs, except: -

i) on plant and Machinery in the power Generation division on Straight Line Method at the rates specified in Schedule XiV to the Companies Act, 1956 considering the same as ''Continuous process plant''.

ii) Leased Assets are depreciated over the useful life /operating period of the lease.

iii) Acquired intangible Assets are amortised from the date of the assets being available for use on Straight Line basis over useful life determined by the Management on technical evaluation at the following rates:

1. Computer Software - 16.21% p.a.

2. Enabling Assets - 5.28% p.a.

IX. IMPAIRMENT OF FIXED ASSETS

Factors giving rise to any indication of impairment of the carrying amounts of Company''s Assets are appraised at each Balance Sheet date by the Management to determine and provide/reverse an impairment loss following Accounting Standard AS-28 ''impairment of Assets''.

X. FOREIGN EXCHANGE TRANSACTIONS/TRANSLATIONS

a) (i) export and import transactions not covered by a hedging instrument are accounted for at the prevailing conversion rates on the transaction date.

(ii) Monetary items denominated in Foreign Currency (except financial instruments designated as Hedge Instruments) and outstanding at year end are translated at year end conversion rates.

(iii) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

(iv) Borrowings in Foreign Currency have been recorded initially at the prevailing exchange rate on the date of availment. The gain / loss on Renewal / Payment of the Forward contract booking is accounted for in the Statement of Profit and Loss for the period. Premium or discounts arising on amount covered under Forward Contracts / Fixed Rate Contracts are amortised as expenses or income over the life of such contracts. The exchange gain / loss on un-hedged exposure are valued at the exchange rates prevailing at each balance sheet date.

b) Pursuant to The Institute of Chartered Accountants of India (ICAI) announcement "Accounting for Derivatives" on the early adoption of Accounting Standard AS-30 "Financial Instruments: Recognition and Measurement", the Company had early adopted the AS-30 with effect from July 1, 2011, to the extent that such adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements.

The Company holds foreign currency forward contracts, designated as hedges of expected future sales of yarn/fabric to customers in countries other than India, for which the Company has highly probable forecasted transactions. As permitted by the risk management policy of the Company, the Company also has foreign currency forward contracts outstanding at end of the year designated as hedges of expected future purchases from suppliers in countries other than India for which the Company has firm commitments. Foreign currency forward contracts and cross currency forward contracts are being used to hedge the foreign currency risk of the firm commitments.

The terms of the foreign currency forward contracts have been negotiated to match the terms of the commitments. Whenever there are highly probable transactions for which hedge accounting is claimed and where significant element of hedge ineffectiveness occurs, the same is recognised in the Statement of Profit & Loss.

A financial instrument is designated as an effective hedge after the management objectively evaluates, at the inception of each contract as to whether the instrument is effective in offsetting the cash flows attributable to the hedged risk. The same evaluation is carried out at the end of each reporting period. In the absence of such hedge being identified or being continued to be identified as an effective hedge, the value thereof is taken to the Statement of Profit and Loss.

Exchange difference relating to effective cash flow hedge is accumulated in a Hedging Reserve account. Amounts from Hedging Reserve account are transferred in the Statement of Profit and Loss when-

i) the forecast transaction materialises, OR

ii) the hedging instrument expires or is sold, terminated or exercised (except for the replacement or rollover of a hedging instrument into another hedging instrument where such replacement or rollover is part of the instrument''s hedging strategy), OR

iii) the hedge no longer meets the criteria for hedge accounting in AS-30, OR,

iv) the Company revokes the designation, Exchange difference relating to Fair Value Hedge effectiveness is measured on the reporting date and exchange difference of fair value hedge is recognised in the Statement of Profit & Loss. Hedge effectiveness of financial instruments designated as Hedging instruments is evaluated at the end of each financial reporting period as per the risk management policy of the Company framed under requirements of AS 30 and Para 14A.9 of FEMA.

XI. REPLENISHMENT

Indigenous raw materials had to be used on occasions, for exports, to be subsequently replenished under Duty Free Entitlement Schemes of the Government of India. Therefore, the cost of such indigenous raw materials has been accounted for at its equivalent imported / duty free prices by adjusting the value of such entitlements granted for neutralisation of the import duties and levies.

XII. EMPLOYEE BENEFITS

a) Defined Contribution Plan:

The Company makes defined contribution to provident Fund and Superannuation Fund, which are accounted on accrual basis.

b) Defined Benefit Plan:

The Company''s Liabilities on account of Gratuity and Earned leave on retirement of employees are determined at the end of each financial year on the basis of actuarial valuation certificates obtained from Registered Actuary in accordance with the measurement procedure as per revised AS-15. These liabilities are funded on year-to-year basis by contribution to respective funds. The costs of providing benefits under these plans are also determined on the basis of acturial valuation at each year end. Actuarial gains and losses for defined benefit plans are recognised in full in the period in which they occur in Statement of profit and Loss.

XIII. TAXES ON INCOME

a) Taxes on income are computed using Tax deferral Assets or Liability Method where taxes accrues in the same period as the respective revenues and expenses arises. The differences that result between the profit offered for income Tax and the profit as per Financial Statements are identified for recognition as deferred Tax Liability timing difference, that originate in one accounting period and reverse in another, based on the tax effect of the prevailing enacted regulations in force.

b) deferred Tax Assets are recognised subject to prudence, only if there is virtual certainty that they will be realised and are subject to appropriate reviews at each balance sheet date. For the purpose of measurement of deferred Tax Liability or Assets, the applicable tax rates and enacted regulations expected to apply in the year in which the temporary differences are expected to be recovered or settled are applied and due consideration of the relief available under the provisions of Chapter Vi A of the income Tax Act, are appropriately considered.

c) The Minimum Alternate Tax credit available has been adjusted against the deferred Tax Liability / Current Tax payable as per provision of the income Tax Act.

XIV. PROVISIONS AND CONTINGENT LIABILITIES / ASSETS

provisions are made when the present obligation of a past event gives rise to a probable outflow, embodying economic benefits on settlement and the amount of obligation can be reliably estimated.

Contingent Liability is disclosed after careful evaluation of facts, uncertainties and possibility of reimbursement, unless the possibility of an outflow of resources embodying economic benefits is remote.

provisions and Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent Assets are neither accounted for nor disclosed in the Financial Statements.

XV. EARNING PER SHARE

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) among the weighted average number of equity shares outstanding during the period. partly paid equity shares are treated as a fraction of an equity shares to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split, and reverse share split (consolidation of shares).

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

XVI. CASH AND CASH EQUIVALENTS BANK BALANCES

Cash and Bank balances for the purposes of Cash Flow Statement comprise cash at bank, Cash in Hand, Cheques in Hand and other permissible instruments as per Accounting Standard AS-3.

XVII. OTHERS

Amounts related to previous years, arisen / settled during the year have been debited / credited to respective heads of accounts.


Mar 31, 2012

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.

Where the Company is the Lessor

Assets subject to operating leases are included in Fixed Assets. Lease income is recognized in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including depreciation are recognized as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the Statement of Profit and Loss.

I. Depreciation and Amortisation

Depreciation on Fixed Assets and Amortization on Intangible Assets has been provided as follows:-

a) On Fixed Assets existing on September 30,1987, on straight line method at the rates specified in Circular No.1/86 of May 21, 1986, issued by the Department of Company Affairs.

b) On other Fixed Assets acquired and put to use after October 1, 1987 on straight-line method at the revised rates and in the manner specified in Schedule XIV to the Companies Act, 1956, as amended, vide Notification No.GSR-756 (E) dated 16th December, 1993 issued by the Department of Company Affairs, except: -

i) On Plant and Machinery in the Power Generation Division on straight line method at the rates specified in Schedule XIV to the Companies Act, 1956, considering the same as 'Continuous Process Plant'.

ii) Leased Assets are depreciated over the useful life / operating period of the lease.

iii) Acquired Intangible Assets are amortized from the date of the assets are available for use on straight line basis over useful life determined by the Management on technical evaluation at the following rates:

1. Computer Software - 16.21% p.a.

2. Enabling Assets - 5.28% p.a.

II. Impairment of Fixed Assets

Factors giving rise to any indication of Impairment of the carrying amounts of the Company's Assets are appraised at each Balance Sheet date by the Management to determine and provide / reverse an impairment loss following AS- 28 ('Impairment of Assets').

III. Foreign Exchange transactions/Translations

a) i) Export and Import transactions not covered by a hedging instrument are accounted for at the prevailing conversion rates on

the transaction date.

ii) Monetary items denominated in Foreign Currency (except financial instruments designated as Hedge Instruments) and outstanding at year end are translated at year end conversion rates.

iii) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.

iv) Borrowings in Foreign Currency have been recorded initially at the prevailing exchange rate on the date of availment. The Gain / Loss on Renewal / Payment of the Forward contract booking is accounted for in the Statement of Profit and Loss for the period. Premium or discounts arising on amount covered under Forward Contracts / Fixed Rate Contracts are amortized as expenses or income over the life of such contracts. The exchange gain / loss on un-hedged exposure are valued at the exchange rates prevailing at each Balance Sheet date.

b) Pursuant to The Institute of Chartered Accountants of India (ICAI) announcement "Accounting for Derivatives" on the early adoption of AS-30 "Financial Instruments: Recognition and Measurement", the Company had early adopted the AS-30 with effect from July 1, 2011, to the extent that such adoption does not conflict with existing mandatory Accounting Standards and other authoritative pronouncements, Company Law and other regulatory requirements.

The Company holds foreign currency forward contracts, designated as hedges of expected future sales of yarn / fabric to customers in countries other than India, for which the Company has highly probable forecasted transactions. As permitted by the Risk Management Policy of the Company, the Company also has foreign currency forward contracts outstanding at end of the year designated as hedges of expected future purchases from suppliers in countries other than India for which the Company has firm commitments. Foreign currency forward contracts and cross currency forward contracts are being used to hedge the foreign currency risk of the firm commitments.

The terms of the foreign currency forward contracts have been negotiated to match the terms of the commitments. Whenever there are highly probable transactions for which hedge accounting is claimed, and where significant element of hedge ineffectiveness occurs, the same is recognized in the Statement of Profit and Loss.

A financial instrument is designated as an effective hedge after the Management objectively evaluates at the inception of each contract as to whether the instrument is effective in offsetting the cash flows attributable to the hedged risk. The same evaluation is carried out at the end of each reporting period. In the absence of such hedge being identified or being continued to be identified as an effective hedge, the value thereof is taken in the Statement of Profit and Loss.

Exchange difference relating to effective cash flow hedge is accumulated in a Hedging Reserve Account. Amounts from Hedging Reserve Account are transferred in the Statement of Profit and Loss when-

i) the forecast transaction materializes, or

ii) the Hedging instrument expires or is sold, terminated or exercised (except for the replacement or rollover of a Hedging Instrument into another Hedging instrument where such replacement or rollover is part of the instrument's Hedging strategy), or

iii) the Hedge no longer meets the criteria for Hedge accounting in AS - 30, or

iv) the Company revokes the designation.

Exchange difference relating to Fair Value Hedge effectiveness is measured on the reporting date and exchange difference of fair value hedge is recognized in the Statement of Profit and Loss.

Hedge effectiveness of financial instruments designated as Hedging Instruments is evaluated at the end of each financial reporting period as per the Risk Management Policy of the Company framed under requirements of AS - 30 and Para 14A.9 of FEMA.

IV. Replenishment

Indigenous raw materials had to be used on occasions, for exports, to be subsequently replenished under Duty Free Entitlement Schemes of the Government of India. Therefore, the cost of such indigenous raw materials has been accounted for at its equivalent imported / duty free prices by adjusting the value of such entitlements granted for neutralization of the import duties and levies.

V. Employee Benefits

a) Defined Contribution Plan:

The Company makes defined contribution to Provident Fund and Superannuation Fund, which are accounted on accrual basis.

b) Defined Benefit Plan:

The Company's Liabilities on account of Gratuity and Earned leave on retirement of employees are determined at the end of each financial year on the basis of actuarial valuation certificates obtained from Registered Actuary in accordance with the measurement procedure as per revised AS-15. These liabilities are funded on year-to-year basis by contribution to respective funds. The cost of providing benefits under these plans are also determined on the basis of actuarial valuation at each year end. Actuarial gains and losses for defined benefit plans are recognized in full in the period in which they occur in Statement of Profit and Loss.

VI. Taxes on Income

a) Taxes on Income are computed using Tax Deferral Assets or Liability Method where taxes accrue in the same period, the respective revenues and expenses arises. The differences that result between the profit offered for Income Tax and the profit as per Financial Statements are identified and Deferred Tax Liability is recognized for timing difference, that originate in one accounting period and reverse in another, based on the tax effect of the prevailing enacted regulations in force.

b) Deferred Tax Assets are recognized subject to prudence, only if there is virtual certainty that they will be realized and are subject to appropriate reviews at each Balance Sheet date. For the purpose of measurement of Deferred Tax Liability or Assets, the applicable tax rates and enacted regulations expected to apply in the year in which the temporary differences are expected to be recovered or settled are applied and due consideration of the relief available under the provisions of Chapter VI A of the Income Tax Act, are appropriately considered.

c) The Minimum Alternate Tax credit available has been adjusted against the Deferred Tax Liability / Current Tax payable as per provision of the Income Tax Act.

VII. Provisions and Contingent Liabilities / Assets

a) Provisions are made when the present obligation of a past event gives rise to a probable outflow, embodying economic benefits on settlement, and the amount of obligation can be reliably estimated.

b) Contingent Liability is disclosed after careful evaluation of facts, uncertainties and possibility of reimbursement, unless the possibility of an outflow of resources embodying economic benefits is remote.

c) Provisions and Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

d) Contingent Assets are neither accounted for nor disclosed in the Financial Statements.

VIII. Earning Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to Equity Shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of Equity Shares outstanding during the period. Partly paid Equity Shares are treated as a fraction of an Equity Shares to the extent that they were entitled to participate in dividends relative to a fully paid Equity Share during the reporting period. The weighted average number of Equity Shares outstanding during the period is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).

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

IX. Cash and Bank Balances

Cash and bank balances for the purposes of Cash Flow Statement comprise cash at bank, cash in hand, cheques in hand and other permissible instruments as per AS - 3.

X. Others

Besides debit / credit in previous year adjustment account, amounts related to previous years, arisen / settled during the year have been debited / credited to respective heads of accounts.


Mar 31, 2011

1. General

The financial statements are prepared on historical cost convention and on the accounting principles of going concern, in accordance with Generally Accepted Accounting Principles ('GAAP'), comprising of the mandatory Accounting Standards, Guidance Notes, etc. issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, on accrual basis, as adopted consistently by the Company.

2. Revenue recognition

a) Sales revenue is recognised when property in the goods with all significant risk and rewards as well as the effective control of goods usually associated with ownership are transferred to the buyer, at a price and includes excise duty.

b) Promotional Benefits, Export Incentives and Export Growth Incentives are accounted for on accrual basis when virtual certainty and their probable use within reasonable time in the normal course of business, is established.

c) Claims and refunds due from Government authorities and parties, though receivable / refundable are not recognised in the accounts, if the amount thereof is not ascertainable. These are accounted for as and when ascertained or admitted by the concerned authorities / parties in favour of the Company.

d) Claims lodged with insurance companies are recognised as Income on acceptance by the Insurance Company. The Excess / Shortfall of claims passed are adjusted in the year of receipt.

e) The Government subsidies and Interest Subsidy under TUFS are recognised on accrual basis and adjusted against the respective expenses.

3. Government capital grants

The Capital Subsidy under TUFS from Ministry of Textiles on specified processing machinery is recognised on a systematic and rational basis by adopting Deferred Income Approach in proportion of the applicable depreciation over the useful life of the respective assets and is adjusted against the depreciation in the Profit and Loss Account.

4. Inventory valuation

a) Inventories are valued at historical cost and net realisable value whichever is lower on a consistent basis. Historical cost is determined on FIFO / Weighted Average basis on relevant categories of Inventories and net realisable value, after providing for obsolete, slow moving and defective inventories, wherever necessary.

b) The cost of Inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

5. Investments

Long Term Investments are stated at cost. In case of diminution in value other than temporary, the carrying amount is reduced to recognise the decline. Current Investments are carried at cost or fair value whichever is lower.

6. Fixed assets, intangible assets and capital work in progress

a) Cost of Fixed Assets comprises of its purchase price including import duties and other non-refundable taxes or levies, foreign exchange fluctuation on loans against Fixed Assets up to 31st March, 2003, expenditure incurred in the course of construction or acquisition, Start-up, Reconditioning, Commissioning, test runs & experimental production and other attributable costs of bringing the assets to its working conditions for the purpose of use for the business.

b) Borrowing cost directly attributable and/or funds borrowed generally and used for the purpose of acquisition/construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised, at its capitalisation rate to expenditure on that assets, for the period, until all activities necessary to prepare qualifying assets for its intended use are complete.

c) Assets retired from active use and held for disposal are stated at the lower of their net book value and / or realisable value and are shown separately.

d) Expenditure incurred on acquisition of Intangibles are accounted for as Intangible Assets on completion, being identifiable non- monetary assets without physical substance, at the acquisition cost, in accordance with AS 26 on Intangible Assets.

7. Depreciation and amortisation

Depreciation on Fixed Assets and Amortisation on Intangible Assets has been provided as follows:- a) On fixed assets existing on 30th September,1987, on straight line method at the rates specified in circular No.1/86 of 21st May, 1986, issued by the Department of Company Affairs.

b) On other fixed assets acquired and put to use after 1st October, 1987 on straight-line method at the revised rates and in the manner specified in Schedule XIV to the Companies Act, 1956, as amended, vide Notification No.GSR-756 (E) dated 16th December, 1993 issued by the Department of Company Affairs, except: -

i) On Plant and Machinery in the Power Generation Division on Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956 considering the same as 'Continuous Process Plant'.

ii) Leased Assets are depreciated over the operating period of lease.

iii) Acquired Intangible Assets are amortised from the date of the assets are available for use on Straight Line basis over useful life determined by the Management on Technical evaluation at the following rates:

1. Computer Software - 16.21% p.a.

2. Enabling Assets - 5.28% p.a.

8. Impairment of fixed assets

Factors giving rise to any indication of Impairment of the carrying amounts of the Company's Assets are appraised at each Balance Sheet date by the Management to determine and provide/reverse an impairment loss following Accounting Standard (AS- 28)- 'Impairment of Assets'.

9. Foreign exchange

a) Foreign exchange transactions relating to Imports and Exports are recognised at the applicable forward cover rate or exchange rates prevailing on the date of transactions / negotiation of documents.

b) Borrowings in Foreign Currency have been recorded initially at the prevailing exchange rate on the date of availment. The Gain/ Loss on Renewal / Payment of the Forward contract booking is accounted for in the Profit and Loss Account for the period. Premium or discounts arising on amount covered under Forward Contracts / Fixed Rate Contracts are amortised as expenses or income over the life of such contracts. The exchange gain / loss on un-hedged exposure are valued at the exchange rates prevailing at the each balance sheet date.

c) Exchange gain or loss on outstanding derivatives transactions are computed on mark to market basis on the closing dates and accounted for as expense or income of the period.

10. Miscellaneous expenditure

a) Share and debenture issue Expenses are amortised equally over a period of five years or earlier on annual appraisal / impairment/ redemption.

b) Premium paid on prepayment / resetting of interest liability on term loans is amortised over remaining period of respective term loans.

11. Replenishment

Indigenous raw materials had to be used on occasions, for exports, to be subsequently replenished under Duty Free Entitlement Schemes of the Government of India. Therefore, the cost of such indigenous raw materials has been accounted for at its equivalent imported / duty free prices by adjusting the value of such entitlements granted for neutralisation of the import duties and levies.

12. Employee benefits

a) Defined Contribution Plan:

The Company makes defined contribution to Provident Fund and Superannuation Fund, which are accounted on accrual basis.

b) Defined Benefit Plan:

The Company's Liabilities on account of Gratuity and Earned leave on retirement of employees are determined at the end of each financial year on the basis of actuarial valuation certificates obtained from Registered Actuary in accordance with the measurement procedure as per revised AS-15. (These liabilities are funded on year-to-year basis by contribution to respective funds).

13. Taxes on income

a) Taxes on Income are computed using Tax Deferral Assets or Liability Method where taxes accrue in the same period, the respective revenues and expenses arises. The differences that result between the profit offered for Income Tax and the profit as per financial statements are identified and Deferred Tax Liability is recognised for timing difference, that originate in one accounting period and reverse in another, based on the tax effect of the prevailing enacted regulations in force.

b) Deferred Tax Assets are recognised subject to prudence, only if there is virtual certainty that they will be realised and are subject to appropriate reviews at each balance sheet date. For the purpose of measurement of Deferred Tax Liability or Assets, the applicable tax rates and enacted regulations expected to apply in the year in which the temporary differences are expected to be recovered or settled are applied and due consideration of the relief available under the provisions of Chapter VI A of the Income Tax Act, are appropriately considered.

c) The Minimum Alternate Tax credits available has been adjusted against the Deferred Tax Liability / Current Tax payable as per provision of the Income Tax Act.

14. Provisions and contingent liabilities / assets

a) Provisions are made when the present obligation of a past event gives rise to a probable outflow, embodying economic benefits on settlement, and the amount of obligation can be reliably estimated.

b) Contingent Liability is disclosed after careful evaluation of facts, uncertainties and possibility of reimbursement, unless the possibility of an outflow of resources embodying economic benefits in remote.

c) Provisions and Contingent Liabilities / Assets are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

15. Others

Besides debit / credit in previous year adjustment account, amounts related to previous years, arisen / settled during the year have been debited / credited to respective heads of accounts.












Mar 31, 2010

1. GENERAL

The financial statements are prepared on historical cost convention and on the accounting principles of going concern, in accordance with Generally Accepted Accounting Principles (GAAP), comprising of the mandatory Accounting Standards, Guidance Notes, etc. issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, on accrual basis, as adopted consistently by the Company.

2. REVENUE RECOGNITION

a) Sales revenue is recognized when property in the goods with all significant risk and rewards as well as the effective control of goods usually associated with ownership are transferred to the buyer, at a price and includes excise duty.

b) Promotional Benefits, Export Incentives and Export Growth Incentives are accounted for on accrual basis when virtual certainty and their probable use within reasonable time in the normal course of business, is established.

c) Claims and refunds due from Government authorities and parties, though receivable / refundable are not recognized in the accounts, if the amount thereof is not ascertainable. These are accounted for as and when ascertained or admitted by the concerned authorities / parties in favour of the Company.

d) Claims lodged with insurance companies are recognized as Income on acceptance by the Insurance Company. The Excess / Shortfall of claims passed are adjusted in the year of receipt.

e) The Interest Subsidy under TUFS is recognized on accrual basis and adjusted against the Interest expenses on Term Loans.

3. GOVERNMENT CAPITAL GRANTS

The Capital Subsidy under TUFS from Ministry of Textiles on specified processing machinery is recognized on a systematic and rational basis by adopting Deferred Income Approach in proportion of the applicable depreciation over the useful life of the respective assets and is adjusted against the depreciation in the Profit and Loss Account.

4. INVENTORY VALUATION

a) Inventories are valued at historical cost and net realizable value whichever is lower on a consistent basis. Historical cost is determined on FIFO / Weighted Average basis on relevant categories of Inventories and net realizable value, after providing for obsolete, slow moving and defective inventories, wherever necessary.

b) The cost of Inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

5. INVESTMENTS

Long Term Investments are stated at cost. In case of diminution in value other than temporary, the carrying amount is reduced to recognize the decline. Current Investments are carried at cost or fair value whichever is lower.

6. FIXED ASSETS, INTANGIBLE ASSETS AND CAPITAL WORK IN PROGRESS

a) Cost of Fixed Assets comprises of its purchase price including import duties and other non- refundable taxes or levies, foreign exchange fluctuation on loans against Fixed Assets up to 31st March, 2003, expenditure incurred in the course of construction or acquisition, Start- up, Reconditioning, Commissioning, test runs & experimental production and other attributable costs of bringing the assets to its working conditions for the purpose of use for the business.

b) Borrowing cost directly attributable and/or funds borrowed generally and used for the purpose of acquisition/construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized, at its capitalization rate to expenditure on that assets, for the period, until all activities necessary to prepare qualifying assets for its intended use are complete.

c) Assets retired from active use and held for disposal are stated at the lower of their net book value and / or realizable value and are shown separately.

d) Expenditure incurred on acquisition of Intangibles are accounted for as Intangible Assets on completion, being identifiable non-monetary assets without physical substance, at the acquisition cost, in accordance with AS 26 on Intangible Assets.

7. DEPRECIATION AND AMORTISATION

Depreciation on Fixed Assets and Amortization on Intangible Assets has been provided as follows:- a) On fixed assets existing on 30th September, 1987, on straight line method at the rates specified in circular No.1/86 of 21st May, 1986, issued by the Department of Company Affairs.

b) On other fixed assets acquired and put to use after 1st October, 1987 on straight-line method at the revised rates and in the manner specified in Schedule XIV to the Companies Act, 1956, as amended, vide Notification No.GSR-756 (E) dated 16th December, 1993 issued by the Department of Company Affairs, except: -

i) On Plant and Machinery in the Power Generation Division on Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956 considering the same as Continuous Process Plant.

ii) Leased Assets are depreciated over the operating period of lease.

iii) Acquired Intangible Assets are amortised from the date of the assets are available for use on Straight Line basis over useful life determined by the Management on Technical evaluation at the following rates:

1. Computer Software - 16.21% p.a.

2. Enabling Assets - 5.28% p.a.

8. IMPAIRMENT OF FIXED ASSETS

Factors giving rise to any indication of Impairment of the carrying amounts of the Companys Assets are appraised at each Balance Sheet date by the Management to determine and provide/ reverse an impairment loss following Accounting Standard (AS- 28)- Impairment of Assets.

9. FOREIGN EXCHANGE

a) Foreign exchange transactions relating to Imports and Exports are recognized at the applicable forward cover rate or exchange rates prevailing on the date of transactions / negotiation of documents.

b) Borrowings in Foreign Currency have been recorded initially at the prevailing exchange rate on the date of availment. The Gain / Loss on Renewal / Payment of the Forward contract booking is accounted for in the Profit and Loss Account for the period. Premium or discounts arising on amount covered under Forward Contracts / Fixed Rate Contracts are amortized as expenses or income over the life of such contracts. The exchange gain / loss on un- hedged exposure are valued at the exchange rates prevailing at the each balance sheet date.

c) Exchange gain or loss on outstanding derivatives transactions are computed on mark to market basis on the closing dates and accounted for as expense or income of the period.

10. MISCELLANEOUS EXPENDITURE

a) Preliminary, Share and Debenture issue Expenses are amortized equally over a period of five years or earlier on annual appraisal / impairment / redemption.

b) Premium paid on prepayment / resetting of interest liability on term loans is amortized over remaining period of respective term loans.

c) Other Deferred Revenue Expenses are amortized over a period of five years or earlier on annual appraisal or cessation of benefit.

11. REPLENISHMENT

Indigenous raw materials had to be used on occasions, for exports, to be subsequently replenished under Duty Free Entitlement Schemes of the Government of India. Therefore, the cost of such indigenous raw materials has been accounted for at its equivalent imported / duty free prices by adjusting the value of such entitlements granted for neutralization of the import duties and levies.

12. EMPLOYEE BENEFITS

a) Defined Contribution Plan

The Company makes defined contribution to Provident Fund and Superannuation Fund, which are accounted on accrual basis.

b) Defined Benefit Plan

The Companys Liabilities on account of Gratuity and Earned leave on retirement of employees are determined at the end of each financial year on the basis of actuarial valuation certificates obtained from Registered Actuary in accordance with the measurement procedure as per revised AS-15. (These liabilities are funded on year-to-year basis by contribution to respective funds).

13. TAXES ON INCOME

a) Taxes on Income are computed using Tax Deferral Assets or Liability Method where taxes accrue in the same period, the respective revenues and expenses arises. The differences that result between the profit offered for Income Tax and the profit as per financial statements are identified and Deferred Tax Liability is recognized for timing difference, that originate in one accounting period and reverse in another, based on the tax effect of the prevailing enacted regulations in force.

b) Deferred Tax Assets are recognized subject to prudence, only if there is virtual certainty that they will be realized and are subject to appropriate reviews at each balance sheet date. For the purpose of measurement of Deferred Tax Liability or Assets, the applicable tax rates and enacted regulations expected to apply in the year in which the temporary differences are expected to be recovered or settled are applied and due consideration of the relief available under the provisions of Chapter VI A of the Income Tax Act, are appropriately considered.

c) The Minimum Alternate Tax credits available has been adjusted against the Deferred Tax Liability / Current Tax payable as per provision of the Income Tax Act.

14. PROVISIONS AND CONTINGENT LIABILITIES/ASSETS

a) Provisions are made when the present obligation of a past event gives rise to a probable outflow, embodying economic benefits on settlement, and the amount of obligation can be reliably estimated.

b) Contingent Liability is disclosed after careful evaluation of facts, uncertainties and possibility of reimbursement, unless the possibility of an outflow of resources embodying economic benefits in remote.

c) Provisions and Contingent Liabilities / Assets are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

15. OTHERS

Besides debit / credit in previous year adjustment account, amounts related to previous years, arisen / settled during the year have been debited / credited to respective heads of accounts.



 
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