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Accounting Policies of Salona Cotspin Ltd. Company

Mar 31, 2015

1. Basis of Accounting

The financial statements are prepared under historical cost convention, as a going concern and on accrual basis and in accordance with applicable Accounting Standards referred to in Section 133 of the Companies Act, 2013 and normally accepted accounting principles.

Accounting Standards referred to in Section 133 of the Companies Act, 2013 have been followed to the extent applicable in the preparation of annual accounts and no material departures are made.

2. Use of estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

3. Fixed Assets

(a) Fixed assets are stated at cost of acquisition, including and attributable cost for bringing the assets to its working condition for its intended use, less accumulated depreciation.

(b) Cenvat credit / Value Added Tax, where eligible, has been reduced from the cost of fixed assets.

4. Investments.

Investments classified as non - current and are carried at their cost unless there is a permanent diminution in value of investments. Dividend and yields if any, are accounted on their entitlement.

5. Inventories

Inventories are valued on the following basis.

a) Stores and Spares - Cost including excise duty if applicable

b) Raw Materials -Cotton - Lower Of Cost or Net Realisable Value

c) Finished Goods - Cotton hosiery yarn and Fabrics - Lower of Cost or Net Realisable Value.

d) By product - Net Realisable value

e) Work-in-progress - Lower of Cost or Net Realisable Value

First in - First out cost formula is used while determining the cost of all the above items, except cotton for which actual cost formula is used.

6. Provisions and Contingent Liabilities:

The Company recognizes a provision when there is a present obligaton as a result of an obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

7. Revenue Recognition

i. Accrual basis of accounting is followed by the company for all regular sources of income and expenses.

ii. Sales are accounted on transfer of property in goods to the buyers for a definite consideration; sales include exchange fluctuation gain / loss realised or incurred during the year in respect of export sales.

iii. Carbon credit is taken as income only when the credit is considered eligible for grant and realized from its users.

iv. Input credit against goods are accounted for by adjustments against cost of relevant goods; Unadjusted State VAT Credit is carried over as advance.

8. Depreciation and ammortisation

The Company provides for depreciation on written down value method applying the rates specified in Schedule II to the Companies Act, 2013.

For additions / deletions during the year prorata charge has been made from the date the asset is put into use. No depreciation is charged in the year of sale of the asset, which has no revenue impact. Intangible assets are ammortised over their estimated useful life.

9. Foreign Currency Transaction

Foreign currency transactions chargeable to revenue have been accounted for by adopting the exchange rate as per documents negotiated with the bankers. Export sales are net of exchange fluctuation gain / loss realised / incurred and accounted for as per realisation certificate received from the bankers. Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date or at forward exchange rate, as may be applicable.

10. Retirement Benefits

a) Retirement benefits such as periodical Contribution to Provident fund and Pension Fund being defined contribution plans are charged to revenue. Such contributions are on predetermined statutory rates payable to competent authority.

b) Gratuity, which is a defined benefit, is accrued and provided for based on independent actuarial valuations as at the balance sheet date. Gratuity claims are settled on the occuring of the event / claim.

c) The present value of the obligation under such plan is determined based on the actuarial valuation using the projected unit credit method which recognises each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the financial obligation.

d) Gratuity to working directors, the liability is ascetained on accounting principles as laid down by the formula prescribed by Payment of Gratuity Act,1972, and they are not funded but only provided for.

11. Borrowing Cost:

a) Borrowing costs including interest and other costs as specified in paragraph 4 of the accounting standard 16 incurred in connection with borrowing funds, if any,are capitalised as per the method prescribed in the said standard, with the value of the qualifying asset, which takes a substantial period exceeding 12 months to get ready for its intended use or sale.

b) Interest on borrowings, if any, attributable to acquisition of qualifying assets are capitalised and included in the cost of the asset, as considered appropriate.

12. Related Party Transactions:

Transactions with the directors or similar key management personnel of an enterprise with respect to the name of the related party and nature of the related party relationship where control exists have been disclosed irrespective of whether or not there have been transactions between the related parties.

13. Leases :

Assets leased by the group in its capacity as lessee, where the Group has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

14. Earnings Per Share

Earnings per share is arrived by dividing profits attributable to shareholders by the number of equity shares.

15. Taxes on Income:

Current tax is determined as per the provisions of the Income - Tax, 1961 in respect of taxable income for the year and based on the expected outcome of assessments / appeals.

Deferred tax assets and liabilities are recognised on timing differences between accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognised and carried forward subject to consideration of prudence only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

16. Cash Flow Statements:

Cash Flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. Cash and cash equivalents include cash on hand and balnaces with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the company.

17. Impairment of Assets:

An asset is treated as impaired when the carrying amount of the asset exceeds its estimated recoverable value. Carrying amounts of fixed assets are reviewed at each balance sheet date to determine indications of impairment, if any, of those assets. If any such indication exists, the recoverable amount of the asset is estimated and an impairment loss equal to the excess of the carrying amount over its recoverable value is recognised as an impairment loss. The impairment loss, if any, recognized in prior accounting period is reversed if there is a change in estimate of recoverable amount.

18. Dividend

Dividend proposed by Directors, if any, is provided for in the books of accounts.

19. Deferred Revenue Expenditure:

Expenditure incurred in respect of replacement of a major WEG component has been treated as deferred revenue expenditure and are amortized over period of nine years.


Mar 31, 2014

1. Basis of Accounting

The financial statements are prepared under historical cost convention, as a going concern and on accrual basis and in accordance with applicable Accounting Standards referred to in Subsection 3C of Section 211 of the Companies Act, 1956 and normally accepted accounting principles.

Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 have been followed to the extent applicable in the preparation of annual accounts and no material departures are made.

2. Use of estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

3. Fixed Assets

Fixed assets are stated at cost of acquisition, including and attributable cost for bringing the assets to its working condition for its intended use, less accumulated depreciation.

CENVAT credit / Value Added Tax, where eligible, has been reduced from the cost of fixed assets.

4. Investments.

Investments classified as non - current and are carried at their cost unless there is a permanent diminution in value of investments. Dividend and yields if any are accounted on their entitlement.

5. Inventories

Inventories are valued on the following basis.

a) Stores and Spares - Cost including excise duty

b) Raw Materials - Cotton - Lower cost or Net Realisable Value

c) Finished Goods - Cotton hosiery yarn and Fabrics - Lower of Cost or Net Realisable Value.

d) By product - Net Realisable value

e) Process Stock - Lower of Cost or Net Realisable Value

First in - First out cost formula is used while determining the cost of all the above items, except cotton for which actual cost formula is used.

6. Provisions and Contingent Liabilities:

The Company recognizes a provision when there is a present obligation as a result of an obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that

may, but probably will not, require an outflow of resources. Where there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

7. Revenue Recognition

i. Accrual basis of accounting is followed by the company for all regular sources of income and expenses.

ii. Sales are accounted on transfer of property in goods to the buyers for a definite consideration; sales include exchange fluctuation gain / loss realised or incurred during the year in respect of export sales.

iii. Carbon credit is taken as income only when the credit is considered eligible for grant and realized from its users.

iv. Input credit against goods are accounted for by adjustments against cost of relevant goods; Unadjusted State VAT Credit is carried over as advance.

8. Depreciation and amortisation

The Company provides for depreciation on written down value method applying the rates specified in Schedule XIV to the Companies Act, 1956; (For items costing Rs.5000/-each or less, 100% depreciation has been charged). For additions during the year prorata charge has been made from the date the asset is put into use. No depreciation is charged in the year of sale of the asset, which has no revenue impact.

Intangible assets are ammortised over their estimated useful life. The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern as per the Revised Schedule VI.

9. Foreign Currency Transaction

Foreign currency transactions chargeable to revenue have been accounted for by adopting the exchange rate as per documents negotiated with the bankers. Export sales are net of exchange fluctuation gain / loss realised / incurred and accounted for as per realisation certificate received from the bankers. Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date or at forward exchange rate, as may be applicable.

10. Retirement Benefits

a) Retirement benefits such as periodical Contribution to Provident fund and Pension Fund being defined contribution plans are charged to revenue. Such contributions are on predetermined statutory rates payable to competent authority.

b) Gratuity, which is a defined benefit, is accrued and provided for based on independent actuarial valuations as at the balance sheet date. Gratuity claims are settled on the occurring of the event / claim.

c) The present value of the obligation under such plan is determined based on the actuarial valuation using the projected unit credit method which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up to the financial obligation.

d) Gratuity to working directors, the liability is ascertained on accounting principles as laid down by the formula prescribed by Payment of Gratuity Act, 1972, and they are not funded but only provided for.

11. Borrowing Cost:

Borrowing costs in including interest and other costs as specified in paragraph 4 of the accounting standard 16 incurred in connection with borrowing funds, if any, are capitalized as per the method prescribed in the said standard, with the value of the qualifying asset, which takes a substantial period exceeding 12 months to get ready for its intended use or sale.

Interest on borrowings, if any, attributable to acquisition of qualifying assets are capitalised and included in the cost of the asset, as appropriate.

12. Related Party Transactions:

Transactions with the directors or similar key management personnel of an enterprise with respect to the name of the related party and nature of the related party relationship where control exists have been disclosed irrespective of whether or not there have been transactions between the related parties.

13. Leases:

Assets leased by the Group in its capacity as lessee, where the Group has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

14. Earnings per Share:

Earnings per share is arrived by dividing profits attributable to shareholders by the number of equity shares

15. Taxes on Income:

Current tax is determined as per the provisions of the Income - Tax, 1961 in respect of taxable income for the year and based on the expected outcome of assessments / appeals.

Deferred tax assets and liabilities are recognised on timing differences between accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets, other than those arising on account of unabsorbed depreciation or carry forward of losses under tax laws, are recognised and carried forward subject to consideration of prudence only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

16. Cash Flow Statements:

Cash Flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. Cash and cash equivalents

include cash on hand and balance with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the company.

17. Impairment of Assets:

An asset is treated as impaired when the carrying amount of the asset exceeds its estimated recoverable value. Carrying amounts of fixed assets are reviewed at each balance sheet date to determine indications of impairment, if any, of those assets. If any such indication exists, the recoverable amount of the asset is estimated and an impairment loss equal to the excess of the carrying amount over its recoverable value is recognised as an impairment loss. The impairment loss, if any, recognized in prior accounting period is reversed if there is a change in estimate of recoverable amount.

18. Dividend

Dividend proposed by Directors, if any, is provided for in the books of accounts.

19. Deferred Revenue Expenditure:

Expenditure incurred in respect of replacement of a major WEG component has been treated as deferred revenue expenditure and are amortized over period of nine years.

a No Shares have been issued during the year

b No shares have been Bought back during the year

c No shares have been forfeited during the year

iii) Specified details on each class of shares for a period of five years immediately preceding the date as at which Balance Sheet is prepared :-

a Aggregate Number and class of Shares allotted for contract without payment being received in cash.

There were no shares allotted for contract without payment being received in cash during the reporting period nor in the preceding five years

b Aggregate number and Class of shares allotted as fully paid by way of bonus shares (Fully paid-up)

No bonus shares were allotted during the reporting period nor in the preceding five years. c Aggregate number and Class of shares bought back

No shares were bought back during the reporting period nor in the preceding five years.

iv) Details of Shareholders holding more than five percent of equity shares:

v) Rights, Preferences and restrictions attaching to each class of shares including restrictions on distribution of dividends and repayments of capital:

The Company has only one class of share namely equity shares having a par value of Rs.10 each. Each shareholder is eligible for one vote for every share held. The dividend approved by the shareholders in any annual general meeting and in case of any interim dividend declared, is payable to the equity shareholders in proportion to their holding. The equity shareholders are eligible to receive the remaining assets of the Company on the occurrence of an event, requiring repayment of capital, in proportion to their shareholding.

vii) Terms of any securities convertible into Equity/Preference Shares issued along with earliest date of conversion in descending order starting from earliest such date:

There are no securities convertible into equity or preference shares

viii) Shares reserved for issue under option and Contract/ Commitments for the sale of shares / disinvestment including terms and amounts:

There are no shares reserved under any option

(a) (ii) Term Loans from Banks

Nature of Security and Details of Guarantee

a. The above facilities are secured on first charge on the specific fixed assets acquired besides a charge on all other fixed assets

b. All the above facilities pursuant to an agreement rank pari passu amongst the bankers and the company.

c. Rs.34.69 Lacs Per instalment (Number of instalment varies from time to time) by mortgage of the personal property of the Joint Managing Director

d. Managing Director and joint managing director have furnished their personal guarantee to bankers for the loans so availed and the guarantee is for the amount outstanding to the said bankers.

e. The details of security listed above also covers for current maturities of long term debts for the above term loans

The Liability to Sales Tax deferral scheme is fully secured on the gross value of fixed assets acquired by the undertaking and is personally guaranteed by the Managing Director.

The Hire Purchase finance credits have been secured by the hypothecation of the vehicles acquired for which necessary endorsement for the hypothecation is made in vehicle registration certificate furnished by the Regional Transport Authority

(Terms of repayment - exceeding 24 months and carrying rate of interest of 12% per annum) (Amount of Loan Repayable per period is variable and depends upon the amount availed earlier)

(ii) Nature of Security and terms of guarantee

a The above facilities are secured by way of hypothecation and / or pledge of stocks in trade, besides a first charge on its fixed assets

b All the above facilities are pursuant to an agreement rank Pari passu amongst the bankers and the company has created an equitable mortgage by deposit of the title deeds for the credit facilities availed. The equitable mortgage is registered with the Registrar of Assurances, while a charge is registered with the Registrar of Companies.

c The loans are further secured by mortgage of the personal property of the Joint Managing Director.

d Managing Director and joint managing director have furnished their personal guarantee to bankers for the loans so availed and the guarantee is for the amount outstanding to the said bankers.


Mar 31, 2012

(1) BASIS OF ACCOUNTING:

The financial statements are prepared under historical cost convention and on accrual basis and in accordance with applicable Accounting Standards referred to in Subsection 3C of Section 211 of the Companies Act, 1956 and normally accepted accounting principles. The accounting is on the basis of a going concern concept. Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 have been followed to the extend applicable in the preparation of annual accounts and no material departures are made.

(2) USE OF ESTIMATES:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

(3) INVENTORIES:

Inventories are valued on the following basis :-

a) Stores and Spares - Cost including excise duty

b) Raw Materials - Cotton - Lower cost or Net Realisable Value

c) Finished Goods - Cotton hosiery yarn and Fabrics - Lower of Cost or Net Realisable Value.

d) By product - Net Realisable value

e) Process Stock - Lower of Cost or Net Realisable Value

(4) CASH FLOW STATEMENTS:

Cash Flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. Cash and cash equivalents include cash on hand and balances with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the company.

(5) DEPRECIATION AND AMORTISATION

The Company provides for depreciation on written down value method applying the rates specified in Schedule XIV to the Companies Act, 1956; (For items costing Rs.5000/-each or less, 100% depreciation has been charged). For additions during the year prorata charge has been made from the date the asset is put into use. No depreciation is charged in the year of sale of the asset, which has no revenue impact. Intangible assets are ammortised over their estimated useful life. The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern as per the Revised Schedule VI.

(6) REVENUE RECOGNITION:

i. Accrual basis of accounting is followed by the company for all regular sources of income and expenses.

ii. Sales are accounted on transfer of property in goods to the buyers for a definite consideration; Sales include exchange fluctuation gain/loss realised or incurred during the year in respect of export sales.

iii. Carbon Credit is taken as income only when the credit is considered eligible for grant and realized from its users.

ii. The value of eligible CENVAT Cr edit against Central Excise Duty paid has been adjusted against the relevant materials purchased and inventory of materials has been valued at rates net of CENVAT Credit.

iii. CENVAT Cr edit availed has been adjusted against Central Excise duty incurred on finished goods despatched and unavailed deferred CENVAT Credit are carried over as advance.

iv. Input credit against remaining goods are accounted for by adjustments against cost of relevant goods; Unadjusted StateVAT Credit is carried over as advance.

(7) FIXED ASSETS:

a. Fixed assets are stated at cost of acquisition, including and attributable cost for bringing the assets to its working condition for its intended use, less accumulated depreciation.

b. CENVAT Credit / Value Added Tax, where eligible, has been reduced from the cost of fixed assets.

(8) FOREIGN CURRENCY TRANSACTIONS:

Foreign currency transcations chargeable to revenue have been accounted for by adopting the exchange rate as per documents negotiated with the bankers. Export sales are net of exchange fluctuation gain/loss realised/incurred and accounted for as per realisation certificate received from the bankers. Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date or at forward exhange rate, as may be applicable.

(9) INVESTMENTS:

Investments classified as Non-current and are carried at their cost unless there is a permanent diminution in value of investments. Dividend and yields if any, are accounted on actual receipt.

(10)RETIREMENT BENEFITS:

a. Retirement benefits such as periodical Contribution to Provident fund and Pension Fund being defined contribution plans are charged to revenue. Such contributions are on predetermined statutory rates payable to competent authority

b. Gratuity, which is a defined benefit, is accrued and provided for based on independent actuarial valuations as at the balance sheet date. Gratuity claims are settled on the occuring of the event/claim.

c. Gratuity to working directors, the liability is ascertained on accounting principles as laid down by the formula prescribed by Payment of Gratuity Act, 1972, and they are not funded but only provided for.

(11)BORROWING COSTS:

Interest on borrowings, if any attributable to acquisition of qualifying assets are capitalised and included in the cost of the asset, as appropriate.

(12)LEASES:

Assets leased by the Group in its capacity as lessee, where the Group has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

(13) TAXES ON INCOME:

Current Tax is determined as per the provisions of the Income - Tax Act,1961 in respect of taxable income for the year and based on the expected outcome of assessments/appeals.

Deferred Tax assets and liabilities are recognized on timing differences between accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred Tax assets, other than those arising on account of unabsorbed depreciation or carry forward of losses under tax laws, are recognized and carried forward subject to consideration of prudence only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

(14) IMPAIRMENT OF ASSETS:

An asset is treated as impaired when the carrying amount of the asset exceeds its estimated recoverable value. Carrying amounts of fixed assets are reviewed at each balance sheet date to determine indications of impairment, if any, of those assets. If any such indication exists, the recoverable amount of the asset is estimated and an impairment loss equal to the excess of the carrying amount over its recoverable value is recognised as an impairment loss. The impairment loss, if any recognized in prior accounting period is reversed if there is a change in estimate of recoverable amount.

(15) PROVISIONS AND CONTINGENT LIABILITIES :

The Company recognizes a provision when there is a present obligation as a result of an obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

(16) DIVIDEND:

Dividend proposed by Directors, if any, is provided for in the books of accounts.

(17) DEFERRED REVENUE EXPENDITURE:

Expenditure incurred in respect of replacement of a major WEG component has been treated as deferred revenue expenditure and are amortized over period of nine years.


Mar 31, 2010

(A) METHOD OF ACCOUNTING:

The accounts have been prepared on historical cost conversion method and as a going concern, complying in all material aspects with applicable accounting principles and practices and in accordance with the notified Accounting Standards.

(B) USE OF ESTIMATES:

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that effect the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the period in which the results are known/materialized.

(C) FTXED ASSETS:

i. Fixed assets are stated at cost and are inclusive of pre-operative expenses capitalised less accumulated depreciation.

(D) INVESTMENTS:

All the investments are treated as Non-current and Valued at Cost; provision for fall in value (other than temporary) is considered, if material and necessary.

(E) VALUATION OF INVENTORIES :

Inventories as at the close of the year are valued as stated below and quantities adopted are as certified by the management:-

i) Raw Materials : at lot wise cost

ii) Finished goods - Yarn : lower of cost or net realisable value

- Fabric : lower of cost or net realisable value

- Saleable waste : net realisable value / since, realised rates

iii) Stock in process : at cost

iv) Stock of packing : at cost

materials and Staqes/Spares

First - in - First - out formula is used while determining the cost of all the above items except cotton for which actual cost formula is used.

(F) FOREIGN CURRENCY TRANSACTIONS:

Foreign currency transcations chargeable to revenue have been accounted for by adopting the exchange rate as per documents negotiated with the bankers. Export sales are net of exchange fluctuation gain/loss realised/incurred and accounted for as per realisation certificate received from the bankers.

(G) REVENUE RECOGNITION:

i. Accrual basis of accounting is followed by the company for all regular sources of income and expenses.

ii. Sales are accounted on transfer of property in the goods to the buyers for a definite consideration; Sales include exchange fluctuation gain/loss realised or incurred during the year in respect of export sales.

iii. Carbon Credit is taken as income only when the credit is considered eligible for grant and realized from its users.

(H) DEPRECIATION:

Provision for Depreciation on Fixed Assets has been made adopting the Written Down Value Method and the rates prescribed in Schedule XVI of the Companies Act, 1956; (For items costing Rs.5000/- each or less, 100% depreciation has been charged.) For additions during the year prorata charge has been charged.) For additions during the year prorata charge has been made from the date the asset is put into use; No depreciation is charged in the year of sale of the asset.

(I) BORROWING COSTS:

Interest on borrowings, if any, attributable to acquisition of qualifying assets are capitalised and included in the cost of the asset, as appropriate.

(J) EARNINGS PER SHARE:

Basic Earnings per share is calculated by dividing the Net Profit after tax attributable to the shareholders by the weighted average number of Equity Shares outstanding during the year.

(K) RETIREMENT BENEFITS:

Gratuity, which is a defined benefit, is accrued and provided for based on independent acturarial valuations as at the balance sheet date. Gratuity claims are settled on the occuring of the event/claim.

Contributions payable to Provident Funds which is a defined contribution scheme, is charged to the profit and loss account. Such contributions are on predetermined statutory rates payable to competent authority.

(L) TAXES ON INCOME:

Current Tax is determined as per the provisions of the Income - Tax Act,1961 in respect of taxable income for the year and based on the expected outcome of assessments/appeals.

Deferred Tax assets and liabilities are recognized on timing differences between accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred Tax assets, other than those arising on account of unabsorbed depreciation or carry forward of losses under tax laws, are recognized and carried forward subject to consideration of prudence only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

(M) PROVISIONS AND CONTINGENT LIABILITIES:

The Company recognizes a provision when there is a present obligation as a result of an obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

(N) CASH FLOW STATEMENTS:

Cash Flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. Cash and cash equivalents include cash on hand and balances with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the company.

(O) IMPAIRMENT OF ASSETS:

An asset is treated as impaired when the carrying amount of the asset exceeds its estimated recoverable value. Carrying amounts of fixed assets are reviewed at each balance sheet date to determine indications of impairment, if any, of those assets. If any such indication exists, the recoverable amount of the asset is estimated and an impairment loss equal to the excess of the carrying amount over its recoverable value is recognised as an impairment loss. The impairment loss, if any, recognized in prior accounting period is reversed if there is a change in estimate of recoverable amount.

(P) CENVAT AND STATE VAT FOR INPUTS :

i. The value of eligible CENVAT Credit against Central Excise duty paid on purchase of capital goods has been deducted from the cost of relevant plant & machinery capitalised.

ii. The value of eligible CENVAT Credit against Central Excise Duty paid has been adjusted against the relevant materials purchased and inventory of materials has been valued at rates net of CENVAT Credit.

iii. CENVAT Credit availed has been adjusted against Central Excise duty incurred on finished goods despatched and unavailed deferred CENVAT Credit are carried over as advance.

iv. STATE VAT - INPUT Credit against Capital goods are adjusted against relevant asset and net amount capitalised; Input credit against remaining goods are accounted for by adjustments against cost of relevant goods; Unadjusted State VAT Credit is carried over as advance.

(Q) DEFERRED REVENUE EXPENDITURE:

Expenditure incurred in respect of replacement of a major WEG component has been treated as deferred revenue expenditure and are amortized over period of nine years.

 
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