Accounting Policies of Sri Lakshmi Saraswathi Textiles (Arni) Ltd. Company

Mar 31, 2015

1. Basis of preparation and presentation of financial statements

i) The financial statements have been prepared under the historical cost concept and in accordance with generally accepted accounting polices, the mandatory Accounting Standards issued by the Institute of Chartered Accountants and notified under the Companies (Accounting Standards) Rules, 2006 and relevant provisions of Companies Act 2013, as adopted consistently by the company.

ii) The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

iii) All inventories, raw material, process stock, stores and spares and finished goods are valued at cost or net realizable value whichever is lower.

2. Use of Estimates

The preparation of financial statements is in accordance with generally accepted accounting principles and requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and disclosures of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates in the future period.

3. Tangible fixed assets

i) Tangible fixed assets are stated at cost of acquisition (net of CENVAT/ VAT wherever applicable) less accumulated depreciation/ amortization and impairment losses if any, except free hold land which is carried at cost less impairment losses if any. The cost comprises purchase prices, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditure relating to an item of fixed asset is added to its book value only if it increases the future benefits from the asset beyond its previous assessed standard of performance. All other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts are charged to the statement of profit and loss for the period as and when they occur.

ii) Depreciation for plant and machinery has been provided on Straight line method and for all other assets Written down value method has been followed.

iii) Gains or losses arising from disposal of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of such assets are recognized in the statement of profit and loss.

4. Intangible fixed assets

The cost of computer software that are installed are accounted at cost of acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any. Internally generated software is not capitalized and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

5. Investments

All investments being long term and non trade are stated at cost less permanent diminution in value if any.

6. Inventories

i) Inventories are valued at cost or net realizable value whichever is lower. Cost includes the cost incurred in bringing the inventories to their present location and condition.

ii) Raw materials, stores and spares are valued at cost or net realizable value whichever is lower. Cost includes the cost incurred in bringing the inventories to their present location and condition. For cost calculation of raw materials as it is not ordinarily inter changeable specific identification method is used. For cost calculation of stores and spares weighted average method is used.

iii) For valuation of finished goods / stock-in-process, cost includes material, direct labour, overheads (other than selling and administrative overheads) wherever applicable.

7. Revenue Recognition

i) Revenue is recognized to the extent that is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

ii) Sale of products is recognized when the significant risk and reward of ownership of the goods have been passed to the buyer. Sale value excludes excise duty, education cess, secondary and higher education cess, CST and VAT

iii) Dividend income, if any, is recognized when the company's right to receive dividend is established by the reporting date.

iv) Wind Mill Operation

The power generated at Wind Mill is fully consumed at mills and the maintenance expenses of the wind mills and cost of wheeling of power is charged to Statement of profit and loss.

8. Employee Benefits

i) Short-term employee benefits viz., salaries and wages are recognized as expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

ii) Defined contribution plan viz., contribution to provident fund is recognized as an expense in the statement of profit and loss for the year in which the employees have rendered services. The company contributes to provident fund administered by the Government on a monthly basis at 12% of employees basic salary. There are no other obligation other than the above defined contribution plan.

iii) Defined Benefit Plan.

Gratuity:

a) Company's liability towards gratuity in respect of employees who beneficially own shares in the company carrying more than 5% of the total voting power has been provided for on the basis of actuarial valuation and not funded.

b) Company's liability towards gratuity in respect of all other employees is worked out on the basis of actuarial valuation and is normally funded.

Leave:

As per policy of the company, unavailed leave, casual leave/ earned leave cannot be carried forward or encashed and hence there is no additional cost. The company recognize the cost as expense as and when the employee avails paid leave.

9. Provision, Contingent Liability and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as result of past events and it is probable that there will be outflow of resources. Contingent liabilities not provided for, are disclosed in the accounts by way of Notes. Contingent Assets are not recognized.

10. Borrowing Cost

Borrowing costs that are directly attributable to the acquisition, construction of qualifying assets are capitalized as part of the cost of those assets as per Accounting Standard 16. All other borrowing costs are charged to revenue.

11. Government Subsidy / Grant

Interest subsidy under the Technology Upgradation Fund Scheme (TUFs) is credited to the finance cost.

12. Foreign Currency Transactions

Foreign Currency Transactions are recorded at the rate of exchange prevailing on the date of the transaction. At the year end, all monetary assets and liabilities denominated in foreign currency are restated at the year end exchange rates. The premium / discount on forward contracts are amortized over the period of the contract. Exchange differences arising on actual payment/ realization and year end reinstatement referred to above are adjusted.

i) In respect of fixed assets acquired outside the country to the related cost of fixed assets and

ii) In all other cases in the statement of profit and loss.

13. Earning Per Share

Net profit after tax is divided by weighted average number of equity shares as stipulated in Accounting Standard 20.

14. Income Tax

The tax provision is considered as stipulated in Accounting Standard 22 and includes current and deferred tax liability. The company recognizes the accumulated deferred tax liability based on accumulated time difference using current tax rate. The company as a conservative measure, does not reckon deferred tax asset.

The company has considered credit entitlement of Minimum Alternate Tax (MAT) where it is reasonably certain that the credit will be available for set-off in accordance with the provision of the Income Tax Act, 1961.

15. Segment Reporting

As the company has only one business segment i.e., Textile and only one geographical segment, the segment reporting requirement as per Accounting Standard 17 is not applicable to the company

16. Impairment of Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the company's fixed assets. If any indication exists, an asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds recoverable amount.

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Mar 31, 2014

1. Basis of preparation and presentation of financial statements

i) The financial statements have been prepared under the historical cost concept and in accordance with generally accepted accounting polices, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and notified under the Companies (Accounting Standards) Rules, 2006 and relevant provisions of Companies Act 1956, as adopted consistently by the company.

ii) The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

iii) During the year all inventories, raw material, process stock, stores and spares and finished goods are valued at cost or net realizable value whichever is lower. Hitherto, raw materials, process stock and stores and spares are valued at cost and finished goods at cost or market price whichever is lower. However, this change does not have any impact in the financial statements.

2. Use of Estimates

The preparation of financial statements is in accordance with generally accepted accounting principles and requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and disclosures of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates in the future period.

3. Tangible fixed assets

i) Tangible fixed assets are stated at cost of acquisition (net of CENVAT/ VAT wherever applicable) less accumulated depreciation/ amortization and impairment losses if any, except free hold land which is carried at cost less impairment losses if any. The cost comprises purchase prices, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditure relating to an item of fixed asset is added to its book value only if it increases the future benefits from the asset beyond its previous assessed standard of performance. All other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts are charged to the statement of profit and loss for the period as and when they occur.

ii) Depreciation for plant and machinery has been provided on Straight line method and for all other assets Written down value method has been followed.

iii) Gains or losses arising from disposal of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of such assets are recognized in the statement of profit and loss.

4. Intangible fixed assets

The cost of computer software that are installed are accounted at cost of acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any. Internally generated software is not capitalized and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

5. Investments

All investments being long term and non trade are stated at cost less permanent diminution in value if any.

6. Inventories

i) Inventories are valued at cost or net realizable value whichever is lower. Cost includes the cost incurred in bringing the inventories to their present location and condition.

ii) Raw materials, stores and spares are valued at cost or net realizable value whichever is lower. Cost includes the cost incurred in bringing the inventories to their present location and condition. For cost calculation of Raw materials as it is not ordinarily inter changeable specific identification method is used. For cost calculation of stores and spares weighted average method is used.

iii) For valuation of finished goods / stock-in-process, cost includes material, direct labour, overheads (other than selling and administrative overheads) wherever applicable.

7. Revenue Recognition

i) Revenue is recognized to the extent that is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

ii) Sale of products is recognized when the significant risk and reward of ownership of the goods have been passed to the buyer. Sale value excludes excise duty, education cess, secondary and higher education cess, CST and VAT.

iii) Dividend income, if any, is recognized when the company''s right to receive dividend is established by the reporting date.

iv) Wind Mill Operation

The power generated at Wind Mill is fully consumed at mills and the maintenance expenses of the wind mills and cost of wheeling of power is charged to Statement of profit and loss .

8. Employee Benefits

i) Short term employee benefits viz., salaries and wages are recognized as expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

ii) Defined contribution plan viz., contribution to provident fund is recognized as an expense in the statement of profit and loss for the year in which the employees have rendered services. The company contributes to provident fund administered by the Government on a monthly basis at 12% of employees basic salary. There are no other obligation other than the above defined contribution plan.

iii) Defined Benefit Plan.

Gratuity:

a) Company''s liability towards gratuity in respect of employees who beneficially own shares in the company carrying more than 5% of the total voting power has been provided for on the basis of actuarial valuation and not funded.

b) Company''s liability towards gratuity in respect of all other employees is worked out on the basis of actuarial valuation and is funded.

Leave:

As per policy of the company, unavailed leave, casual leave/ earned leave cannot be carried forward or encashed and hence there is no additional cost. The company recognize the cost as expense as and when the employee avails paid leave.

9. Provision, Contingent Liability and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as result of past events and it is probable that there will be outflow of resources. Contingent liabilities not provided for, are disclosed in the accounts by way of Notes. Contingent Assets are not recognized.

10. Borrowing Cost

Borrowing costs that are directly attributable to the acquisition, construction of qualifying assets are capitalized as part of the cost of those assets as per Accounting Standard 16. All other borrowing costs are charged to revenue.

11. Government Subsidy / Grant

Interest subsidy under the Technology Up gradation Fund Scheme (TUFs) is credited to the finance cost.

12. Foreign Currency Transactions

Foreign Currency Transactions are recorded at the rate of exchange prevailing on the date of the transaction. At the year end, all monetary assets and liabilities denominated in foreign currency are restated at the year end exchange rates. The premium / discount on forward contracts are amortised over the period of the contract. Exchange differences arising on actual payment/ realization and year end reinstatement referred to above are adjusted.

i) In respect of fixed assets acquired outside the country to the related cost of fixed assets and

ii) In all other cases in the statement of profit and loss.

13. Earning Per Share

Net profit after tax is divided by weighted average number of equity shares as stipulated in Accounting Standard 20.

14. Income Tax

The tax provision is considered as stipulated in Accounting Standard 22 and includes current and deferred tax liability. The company recognizes the accumulated deferred tax liability based on accumulated time difference using current tax rate.

The company has considered credit entitlement of Minimum Alternate Tax (MAT) where it is reasonably certain that the credit will be available for set-off in accordance with the provision of the Income Ta x Act, 1961.

15. Segment Reporting

As the company has only one business segment i.e., Textile and only one geographical segment, the segment reporting requirement as per Accounting Standard 17 is not applicable to the company

16. Impairment of Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the company''s fixed assets. If any indication exists, an asset''s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds recoverable amount.

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Mar 31, 2013

1. ACCOUNTING CONCEPTS Financial statements are based on historical cost concept. Mercantile system of accounting has been followed and income and expenditure are recognized on accrual basis.

2.FIXED ASSETS AND DEPRECIATION ( IN ACCORDANCE WITH AS -10 ISSUED BY ICAI ) Fixed assets are stated at cost of acquisition.

METHOD OF PROVIDING DEPRECIATION ( IN ACCORDANCE WITH AS - 6 ISSUED BY ICAI ) Depreciation for Plant and Machinery has been provided on Straight Line Method and for other assets on Written Down Value Method.

RATE OF DEPRECIATION ADOPTED

On all assets acquired upto 31-03-1987, depreciation has been provided at the then prevailing rate of depreciation as per Income Tax rules. For assets acquired from 01-04-1987, rates given in Schedule XIV to the Companies Act, 1956 have been adopted.

3. INVESTMENTS (IN ACCORDANCE WITH AS -13 ISSUED BY ICAI) Investments are stated at cost

4. INVENTORY VALUATION (IN ACCORDANCE WITH AS - 2 ISSUED BY ICAI) Raw Materials, Process stock and stores & spares - Valued at cost. Finished Goods - Valued at cost or Market price, whichever is lower.

5. RETIREMENT BENEFITS (IN ACCORDANCE WITH AS -15 ISSUED BY ICAI) a. Liability for Gratuity

i) Company''s Liability towards Gratuity in respect of Directors on full time employment who beneficially own shares in the Company carrying more than 5% of the total voting power has been provided for and not funded. The liability on this account, provided for and not funded, is Rs.25.45 lakhs as on 31.03.2013

ii) Company''s liability towards Gratuity in respect of all other employees is worked out on actuarial basis and is funded.

b. Contribution to Provident Fund is made as per the provisions of Employees'' Provident Funds and

Miscellaneous Provisions Act, 1952 and remitted to the Provident Fund Commissioner.

c. Liability on account of leave salary has been provided for in accordance with the scheme in force.

6. RELATED PARTY DISCLOSURES (IN ACCORDANCE WITH AS -18 ISSUED BY ICAI)

a) List of Related Parties

Associate Company B.R. Theatres and Industrial Concern Pvt. Ltd.,

b) Key Management Personal

Name of the related Party Nature of relationship

i) Sri R.Srihari Managing Director

ii) Sri S.Balakrishna Wholetime Director

iii) Sri R.Padmanaban Technical Director

7. CONTINGENCIES (IN ACCORDANCE WITH AS -29 ISSUED BY ICAI)

Contingent liabilities are indicated by way of notes forming part of Accounts.

8. INCOME IN FOREIGN EXCHANGE (IN ACCORDANCE WITH AS -111SSUED BY ICAI)

Export sales in foreign currency are accounted at the exchange rates prevailing on the date of invoice/ negotiation of documents where such sales are not covered by forward contracts.

9. EXPENDITURE IN FOREIGN EXCHANGE (IN ACCORDANCE WITH AS -11 ISSUED BY ICAI)

Expenditure in foreign currency is accounted at the actual amount spent and provision for expenses to be paid in foreign currency has been made at the rate of exchange prevailing on the Balance sheet date.

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Mar 31, 2012

1. ACCOUNTING CONCEPTS

Financial statements are based on historical cost concept. Mercantile system of accounting has been followed and income and expenditure are recognized on accrual basis.

2. FIXED ASSETS AND DEPRECIATION (IN ACCORDANCE WITH AS -10 ISSUED BY ICAI)

Fixed assets are stated at cost of acquisition.

METHOD OF PROVIDING DEPRECIATION ( IN ACCORDANCE WITH AS - 6 ISSUED BY ICAI ) Depreciation for Plant and Machinery has been provided on Straight Line Method and for other assets on Written Down Value Method.

RATE OF DEPRECIATION ADOPTED

On all assets acquired upto 31-03-1987, depreciation has been provided at the then prevailing rate of depreciation as per Income Tax rules. For assets acquired from 01-04-1987, rates given in Schedule XIV to the Companies Act, 1956 have been adopted.

3. INVESTMENTS (IN ACCORDANCE WITH AS -13 ISSUED BY ICAI)

Investments.are stated at cost

4. INVENTORY VALUATION (IN ACCORDANCE WITH AS - 2 ISSUED BY ICAI)

Raw Materials, Process stock and stores & spares - Valued at cost.

Finished Goods - Valued at cost or Market price, whichever is lower.

5. RETIREMENT BENEFITS (IN ACCORDANCE WITH AS -15 ISSUED BY ICAI)

a. Liability for Gratuity ,

i) Company's Liability towards Gratuity in respect of Directors on full time employment who beneficially own shares in the Company carrying more than 5% of the total voting power has been provided for and not funded. The liability on this account, provided for and not funded, is Rs.24.58 lakhs as on

31.03.2012

ii) Company's liability towards Gratuity in respect of all other employees is worked out on actuarial basis and is funded.

b. Contribution to Provident Fund is made as per the provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and remitted to the Provident Fund Commissioner.

c. Liability on account of leave salary has been provided for in accordance with the scheme in force.

6. RELATED PARTY DISCLOSURES (IN ACCORDANCE WITH AS -18 ISSUED BY ICAI)

a) List of Related Parties

Associate Company Nil

b) Key Management Personal

Name of the related Party , Nature of relationship

i) Sri R.Srihari Managing Director

ii) Sri S.Balakrishna Wholetime Director

iii) Sri R.Padmanaban Technical Director

c) Particulars of Transaction with Related Parties.

I) Transaction with Associate Company Nil

II) Details of Transaction relating to persons referred to in item ( b) above.

Remuneration - Rs 34,34,511/-( Previous year - Rs. 34,42,769/-)

I ill Details of Transaction relating to Interest paid for short term loans Rs.6,05,733/- (Previous year - Rs.3,00,000/-) ‘

7. DEFERRED TAX LIABILITY (IN ACCORDANCE WITH AS -22 ISSUED BY ICAI)

Rs.

Opening Deferred tax liability as on 01-04-2011 1,78,48,245

Less:- Transferred from P & L account during 2011-12 1,78,48,245

Closing Deferred tax liability as on 31-03-20t2 NiJ

8. CONTINGENCIES (IN ACCORDANCE WITH AS-29 ISSUED BY ICAI)

Contingent liabilities are indicated by way of notes forming part of Accounts.

9. INCOME IN FOREIGN EXCHANGE (IN ACCORDANCE WITH AS-11 ISSUED BY ICAI)

Export sales in foreign currency are accounted at the exchange rates prevailing on the date of invoice/ negotiation of documents where such sales are not covered by forward contracts.

10. EXPENDITURE IN FOREIGN EXCHANGE (IN ACCORDANCE WITH AS-11 ISSUED BY ICAI)

Expenditure in foreign currency is accounted at the actual amount spent and provision for expenses to be paid in foreign currency has been made at the rate of exchange prevailing on the Balance sheet -date.

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Mar 31, 2010

1. ACCOUNTING CONCEPTS

Financial statements are based on historical cost concept. Mercantile system of accounting has been followed and income and expenditure are recognised on accrual basis.

2. FIXED ASSETS AND DEPRECIATION (IN ACCORDANCE WITH AS -10 ISSUED BY ICAI )

Fixed assets are stated at cost of acquisition.

METHOD OF PROVIDING DEPRECIATION (IN ACCORDANCE WITH AS - 6 ISSUED BY ICAI)

Depreciation for Plant and Machinery has been provided on Straight Line Method and for other assets on Written Dowi Value Method.

RATE OF DEPRECIATION ADOPTED

On all assets acquired upto 31-03-1987, depreciation has been provided at the then prevailing rate of depreciation a; per Income Tax rules. For assets acquired from 01-04-1987, rates given in Schedule XIV to the Companies Act, 1950 have been adopted.

3. INVESTMENTS (IN ACCORDANCE WITH AS -13 ISSUED BY ICAI)

Investments are stated at cost

4. INVENTORY VALUATION ( IN ACCORDANCE WITH AS - 2 ISSUED BY ICAI )

Raw Materials, Process stock and stores S spares - Valued at cost. Finished Goods - Valued at cost or Market price, whichever is lower.

5. RETIREMENT BENEFITS (IN ACCORDANCE WITH AS -15 ISSUED BY ICAI)

a. Liability for Gratuity

I) Companys Liability towards Gratuity in respect of Directors on full time employment who beneficially own shares in the Company carrying more than 5% of the total voting power has been provided for and not funded. The liability on this account, provided for and not funded, is Rs.22.85 lakhs as on 31.03.2010

ii) Companys liability towards Gratuity in respect of all other employees is worked out on actuarial basis. The total liability as on 31.03.2010 is Rs.150.77 lakhs. Out of which Rs.54.38 lakhs has been funded and balance Rs.96.39 lakhs is yet to be funded.

b. Contribution to Provident Fund is made as per the provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952 and remitted to the Provident Fund Commissioner.

c. Liability on account of leave salary has been provided for in accordance with the scheme in force.