Accounting Policies of Zenith Exports Ltd. Company

Mar 31, 2018

1. SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

1.1 Basis of Preparation

1.1.1 Compliance with Ind AS

These financial statements comply in aU material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the "Act") [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The financial statements up to year ended 31^st March 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act.

These financial statements are the first financial statements of the Company under Ind AS. Refer Note nos. 33 to 36 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

1.1.2 Classification of current and non-current

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Ind AS 1 - Presentation of financial Statements and 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 realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.

1.1.3 Historical Cost Convention

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention, except for the following:

i) Certain financial assets and liabilities (including derivative instruments) that is measured at fair value.

ii) Defined benefit plans - plan assets measured at fair value;

iii)Biological assets are measured at cost incurred for their plantation.

12 Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

13 Foreign Currency Translation

Foreign currency transactions are translated into Indian Rupee (INR) which is the functional currency (i.e. the currency of the primary economic environment in which the entity operates) using year end exchange rates.

Foreign Currency loans for financing Property, Plant and Equipment outstanding at the close of financial year are revolarised at appropriate bank exchange at the close of the year. The gain/loss for decrease/increase in rupee liability due to fluctuations in rates of exchange is adjusted to carrying amount of Property, Plant and Equipment acquired out of said loans. Income and Expenditure for the year are recorded as per prevailing bank rate on the date of transaction/negotiation.

As per usual practice followed by the company, the export sales transactions during the year are accounted for at Custom rate and at the end of the year at prevailing bank rate in respect of outstanding debtors. Difference between actual realization at custom rate and/ or bank rate is adjusted to Exchange Difference Account in Profit and Loss Account.

Gains or losses on cancellation of Forward Exchange Contracts are recognized in the Profit and Loss Account of the year in which they are cancelled.

14 Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of Export benefits. Incentive and are net of sales return, sales tax/ value added tax/Goods & Service Tax, trade allowances. The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and significant risk and reward incidental to sale of products is transferred to the buyer.

Export Sales are recognised on the basis of the date as mentioned in Shipping Bill/Bill of Lading. Value of the export sales is recognized at Custom Rates mentioned in the Shipping Bill.

Income & Expenditure are recognised on accrual basis. Export entitlements are recognised in the Profit & Loss account when the right to receive credit as per terms of the entitlement in respect of the exports made.

Domestic Sales are recorded on raising bills net off discounts, return and Applicable taxes. Accounting for Differential Custom Duty on wastage of Imported Raw Silk Yam determined as per the Input/output norms for EOU is accounted as and when the demand is raised by the customs authorities. Revenue in respect of Job charges is recognised based on the work performed and invoiced as per terms of specific contracts.

1.5 Government Grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other operating income.

Government grants relating to the acquisition/ construction of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other operating income.

However there is no such grant for the company in the current year.

1.6 Accounting for Taxes on Income

The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the end of the reporting period.

Deferred income tax is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabihties are offset when there is a legally enforceable right to offset current tax assets and liabilities. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liabihty simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

1.7 Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, other shortterm highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

1.8 Trade Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment, if any.

1.9 Inventories

Inventories are valued as under

a. Raw Materials : at cost which is arrived at on average cost basis.

b. Packing Materials : at average cost basis

c. Stores, Consumables & Spares : at average cost basis

d. Semi-finished Goods : at raw material cost and value added thereto upto the state of completion

e. Finished Goods : at cost or Net Realisable Value, whichever is lower

f. Waste ; at estimated realizable value

1.10 Biological Assets

Trees planted are measured at cost incurred for plantation.

1.11 Investments and Other Financial Assets

1.11.1 Classification

The Company classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

- those measured at amortised cost

The classification depends on the Company''s business model for managing the financial assets and the contractual terms of cash flows.

1.11.2 Measurement

At initial recognition, the Company measures a financial asset at its fair value. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments into the following categories:

Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method.

Fair value through other comprehensive income (FVOCI): Assets that are held for collections of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Interest income from these financial assets is included in other income using the effective interest rate method.

Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. Interest income from these financial assets is included in other income.

1.113 Impairment of financial assets

The Company measures the expected credit loss associated with its assets based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

1.11.4 Derecognition of financial assets

A financial asset is derecognised only when

- The Company has transferred the rights to receive cash flows from the financial asset, or Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset.

1.11.5 Income Recognition Interest Income

Interest Income from debt instruments is recognized using the effective interest rate method.

Dividends

Dividends are recognised in profit or loss only when the right to receive payment is established.

1.12 Financial liabilities

1.12.1 Initial recognition and measurement

The Company recognizes all the financial liabilities on initial recognition at fair value minus, in the case of a financial liability not at fair value through Profit or Loss, transaction costs that are directly attributable to the acquisition or issue of the financial liability.

The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.

1.12.2 Subsequent measurement

All the financial liabilities are classified as subsequently measured at amortised cost, except for those mentioned below.

1.12.3 Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Co. that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.

Gains or losses on liabilities held for trading are recognised in the profit or loss.

For liabilities designated as Fair Value through profit or loss, lair value gains/ losses attributable to changes in own credit risk are recognized in Other Comprehensive Income. These gains/ losses are not subsequently transferred to Profit or Loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the Statement of Profit and Loss.

1.13 Property, Plant and Equipment

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.

Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at 1^st April 2016measured as per the previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.

Depreciation methods, estimated useful lives and residual value

Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values on the basis of useful lives prescribed in Schedule II to the Companies Act, 2013, which are also supported by technical evaluation. Item of Fixed Assets for which related actual cost do not exceed Rs 0.05 lakhs are fully depreciated in the year of purchase. In respect of the following assets, useful lives different from Schedule II have been considered on the basis of technical evaluation, as under:-

The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other gains/ (losses).

1.14 Intangible Assets

Intangible Assets are recognized if the future economic benefits attributable to the assets are expected to flow to the Company and the cost of the asset can be measured reliably. No Intangible assets were acquired during the year ending 31^st March, 2018 as well as on 31^st March, 2017 and 1^st April, 2016.

1.15 Provision, Contingent Liabilities and Contingent Assets, legal or constructive

Provisions are recognised when there is a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

When there is a possible obligation or a present obligation and the likelihood of outflow of resources is remote, no provision or disclosure for contingent liability is made.

Contingent Assets are not recognised but are disclosed when an inflow of economic benefits is probable.

1.16 Employee Benefits

1.16.1 Short-term Employee Benefits

These are recognised at the undiscounted amount as expense for the year in which the related service is rendered.

1.16.2 Post-Employment Benefit Plans

(a) Defined Contribution Plans

(i)Gratuity Plan:

The Company has Defined Benefit Plan for post-employment benefit in the form of Gratuity for eligible employees, which is administered through a Group Gratuity Policy with Life Insurance Corporation of India (L.I.C). The Liability for the above Defined

Benefit Plan is provided on the basis of an actuarial valuation as carried out by LIC. The actuarial method used for measuring the liability is the Projected Unit Credit Method. In case of Unfunded Gratuity, payable to all eligible employees of the Company on death, permanent disablement and resignation as per the provisions of the Payment of Gratuity Act or as per the Company''s scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn basic salary.

ii) Leave Encashment

Eligible Employees can carry forward and encash leave upto death permanent disablement and resignation subject to maximum accumulation allowed upto 15 days for employees. The leave over and above 15 days is paid to employees as per the balance as on 3 March every year. Benefit would be paid at the time of separation based on the last drawn basic salary.

1.16.3 Bonus plans

The Company recognizes a liability and an expense for bonuses. The Company recognizes provision where contractually obliged or where there is a past practice that has created constructive obligation.

1.17 Equity

Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

1.18 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.

1.19 Earnings per Share

1.19.1 Basic earnings per share

Basic earnings per share is calculated by dividing:

- The profit/ loss attributable to owners of the Company

- By the weighted average number of equity shares outstanding during the financial year.

1.19.2 Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

- The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

1.20 Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases(net of any incentives received from the lessor) are charged to profit or loss on a straight line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.

1.21 Impairment of non-financial assets.

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher on an asset''s fair value less costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash flows from other assets or group of assets (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

U2 Derivative Instruments

(a) The Company enters into forward foreign exchange contracts/option contracts (derivatives) to mitigate the risk of changes in foreign exchange rate on forecasted transactions. The Company enters into derivative financial instruments where the counter party is a bank. Gains or losses on ineffective transactions of derivative contracts are recognized in the profit and loss account as they arose.

(b) Accounting for forward foreign exchange contracts are marked to market basis and the net loss after considering the offsetting effects on the underlying contracts, is charged to the Income Statement. Net Gains are ignored.

1.23 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

1.24 Use of Estimates

The Preparation of financial statements in conformity with the generally accepted accounting principles in India requires the management to make estimates and assumptions that affects the reported amount of assets and habihties as at the balance sheet date, the reported amount of revenue and expenses for the periods and disclosure of contingent liabilities at the balance sheet date. The estimates and assumptions used in the financial statements are based upon management''s evaluation of relevant facts and circumstances as of the date of financial statements. Actual results could differ from estimates.

125 Borrowing costs

Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and borrowing costs are charged to Statement of Profit and Loss.

1.26 Standards issued but not yet effective

The amendment to Ind AS 7, ''Statement of cash flows'', introduce an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. This includes changes arising from cash flows (e.g. draw downs and repayments of borrowings) and non-cash changes (i.e. changes in fair values). The Company is not expecting any material impact on the financial statements.

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Mar 31, 2015

1.1 Basis of Accounting

These financial statements have been prepared under historical cost convention from books of accounts maintained on an accural basis (unless otherwise stated hereinafter) in conformity with accounting principles generally accepted in India and comply with the Accounting Standard issued by the Institute of Chartered Accountants of India and referred to Sec.129 & 133 of the Companies Act, 2013, of India. The accounting policies applied by the company are consistent with those used in the previous year.

1.2 use of estimates

The preparation of financial statements requires certain estimates and assumption to be made that effect the reported amount of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

1.3 Fixed Assets

(a) Fixed Assets are stated at the original cost of acquisition/installation. Such cost includes purchase price, incidental expenses directly related thereto and pre-operative expenses apportioned based on value. Fixed Assets are shown net of accumulated depreciation. CENVAT availed on capital goods purchased are shown at net value.

(b) Capital Work-in-Progress is stated at amount incurred upto the date of Balance Sheet.

1.4 Depreciation

(a) Depreciation is systematically allocated over the useful life of an asset as specified in Part-C of the schedule II of the Companies Act. 2013.

(b) Consequent to the enactment of Part-A of Schedule II of the Companies Act. 2013, the Company has reassessed the remaining useful life of Fixed Assets in accordance with the provisions prescribed under Schedule II. In case of assets which have completed their useful life, the carrying value (net of residual value) as on 1st April, 2014 amounting to Rs. 520.16 Lacs (net of Deferred Tax Rs.249.82 Lacs) has been recognised in Retained Earnings and in case of other assets the carrying value (net of residual value) is being depreciated over the revised remaining useful life. As a result of this change the depreciation charged for the year ended 31st March, 2015 is Lower by Rs.168.70 Lacs had the company continued with the previous rates under Companies Act, 1956.

(c) Depreciation on additions to fixed assets is provided on pro-rata basis from the date of acquisition or installation. Depreciation on assets sold, discarded, demolished or scrapped is provided up to the date on which said asset is sold, discarded, demolished or scrapped.

(d) Based on explanations given by way of Notes to Schedule II, of the Companies Act, 2013 and clarifications issued thereof, we (the Management of unit Zenith Spinners - Prop. Zenith Exports Limited) have evaluated and found that the machines used by the company are designed to work for 24 hours a day and hence such machines have been considered as a Continuous Process Plant and hence the adjustments to depreciation calculations have been made accordingly.

1.5 Investments

(a) Investments are stated at cost including expenses related thereto.

(b) Long Term Investments are stated at cost. The diminution, if any in the value of Investments is not recognised unless such diminution is considered permanent in nature.

(c) Current Investments are stated at Lower of cost or market value.

(d) Dividend is recognised when the right to receive is established.

1.6 Inventories

Inventories are valued as under

a) Raw Materials : at cost which is arrived at on average cost basis.

b) Packing Materials : at average cost basis.

c) Stores,Consumables & Spares : at average cost basis.

d) Semi-Finished Goods : at Raw Material cost and value added thereto upto the state of competion.

e) Finished Goods : at cost or net realisable value whichever is lower.

f) Waste : at estimated realisable value.

1. Short Term employee benefits

All employee benefits payable within twelve months of rendering the service are recognized in the period in which employee renders the related service.

2. Post Employment Benefits - (a) Defined Contribution plans

(i) Gratuity plan:

(a) The Company has Defined Benefit Plan for post employment benefit in the form of Gratuity for eligible employees, which is administered through a Group Gratuity Policy with Life Insurance Corporation of India (L.I.C). The Liability for the above Defined Benefit Plan is provided on the basis of an acturial valuation as carried out by L.I.C. The acturial method used for measuring the liability is the Projected Unit Credit Method.

(b) In case of Unfunded Gratuity is payable to all eligible employees of the Company on death, permanent disablement and resignation as per the provisions of the Payment of Gratuity Act or as per the Company's Scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn basic salary.

(ii) Leave Encashment:

Eligible employees can carry forward and encash leave upto death, permanent disablement and resignation subject to maximum accumulation allowed upto 15 days for employees. The Leave over and above 15 days is paid to employees as per the balance as on 31st March every year. Benefit would be paid at the time of separation based on the last drawn basic salary.

3. termination Benefits if any, are recognised as expenses to the Profit and Loss Account as and when incurred.

1.7 Foreign Currency transaction

a. Foreign Currency loans for financing fixed assets outstanding at the close of financial year are revolarised at appropriate bank exchange rate at the close of the year. The gain or loss for decrease/ increase in rupee liability due to fluctuations in rates of exchange is adjusted to carrying amount of Fixed Assets acquired out of said loans.

b. Income and Expenditure for the year are recorded as per prevailing bank rate on the date of transaction/ negotiation.

c. Current Assets and Liabilities outstanding at the close of the year ae translated/re-stated at contracted and/or appropriate bank exchange rates as on the last day of the financial year. The Loss or Gain, if any is recognised in the year of actual realisation in the Profit & Loss Account.

d. As per usual practice followed by the Company, the export sales transactions during the year are accounted for at Custom Rate and at the end of the year at Prevailing Bank Rate in respect of outstanding debtors. Difference between actual realisation at Custom Rate and/or Bank Rate are adjusted to Exchange Difference Account in Profit & Loss Account.

e. Gains or Losses on cancellation of Forward Exchange Contracts is recognised in the Profit & Loss account of the year in which they are cancelled.

1.8 Recognition of Income & expenditure

a. Export Sales are recognised on the basis of the date as mentioned in Exchange Control Declaration (GR) Form at Main Division and Weaving Division, whereas Spinning Division considers Sales on the basis of "Bill of Lading" date. Export Sales are accounted for in accounts as per monthly Custom Rate for all the Divisions and shown in the account net of export return.

b. Income & Expenditure are recognised on accrual basis.

c. Export entitlements are recognised in the Profit & Loss account when the right to receive credit as per terms of the entitlement in respect of the exports made.

d. Domestic Sales are recorded on raising bills net off discounts, return and Sales Tax.

e. Accounting for Differential Custom Duty Differential custom duty on wastage of Imported Raw Silk Yarn determined as per the Input/Output norms for EOU is accounted as and when the demand is raised by the customs authorities.

f. Revenue in respect of Job charges is recognised based on the work performed and invoiced as per terms of specific contracts.

1.9 Borrowing Costs

Borrowing Costs which are directly attributable to the acquisition/construction of fixed Assets till the time such assets are ready for intended use,are capitalised as part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred.

1.10 Impairment of Assets

The carrying amount of Assets are reviewed at each Balance Sheet date to ascertain impairment based on internal/external factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

1.11 Accounting for Cenvat Credits/service tax/Value Added Tax

Cenvat credit and Value Added Tax available on Raw materials, Packing materials, fuels, Stores & Spares, Capital goods and service tax credit on services are accounted for by reducing purchase cost of the related materials or the capital assets or the expenses respectively as the case may be.

1.12 provisions,Contingent Liabilities & Contingent Assets

Contingent liabilities are the possible obligation of the past events, the existence of which will be confirmed only by the occurrence or non-occurrence of such event in future. These are not provided for and are disclosed by way of Notes on Accounts. Contingent Assets are not provided for or disclosed.

1.13 Government Grants

Capital grants relating to specific assets are reduced from the gross value of the Fixed Assets and capital grants for Project capital subsidy are credited to Capital Reserve. Other revenue grants are credited to Profit & Loss account or deducted from the related expenses.

1.14 derivative instruments

a) The Company enters into forward foreign exchange contracts/option contracts (derivatives) to mitigate the risk of changes in foreign exchange rate on forecasted transactions. The company enters into derivative financial instruments where the counter party is a bank.Gains or losses on ineffective transactions of derivative contracts are recognised in the profit and loss account as they arose.

b) Accounting for forward foreign exchange contracts are marked to market basis and the net loss after considering the offsetting effects on the underlying contracts, is charged to the Income Statement. Net gains are ignored.

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Mar 31, 2014

1. Convention

The financial statements have been prepared in accordance with generally accepted accounting principles and accounting standards issued by I.C.A.I. and as per the provisions of the Companies Act, 1956.

2. Basis of Accounting

The financial statements are prepared under historical cost convention following the accrual basis of accounting.

3. Fixed Assets

(a) Fixed Assets are stated at the original cost of acquisition/installation. Such cost includes purchase price, incidental expenses directly related thereto and pre-operative expenses apportioned based on value. Fixed Assets are shown net of accumulated depreciation. CENVAT availed on capital goods purchased are shown at net value.

(b) Capital Work-in-Progress is stated at amount incurred upto the date of Balance Sheet.

4. Depreciation

(a) Depreciation on fixed assets has been provided on the assets of Main Division at Kolkata on "Written down value method", for the Spinning Division at Ahmedabad and Weaving Division at Mysore on "Straight line method" at the rates as prescribed in Schedule XIV to the Companies Act, 1956 on prorata basis and the relevant accounting standard issued by the Institute of Chartered Accountants of India.In Spinning Division Plant & Machineries have been considered to be continuous process plant as defined in the said Schedule & on technical assessment and depreciation has been provided accordingly. In Weaving Division Depreciation has been charged on shift basis wherever applicable.

(b) Leasehold land are being amortised over the period of lease.

(c) Assets costing upto Rs. 0.05 Lacs are depreciated fully in the year of purchase/capitalisation.

(d) Depreciation is being provided prospectively over the residual life of the assets revolarised due to foreign exchange fluctuation wherever applicable.

5. Investments

(a) Investments are stated at cost including expenses related thereto.

(b) Long Term Investments are stated at cost. The diminution, if any in the value of Investments is not recognised unless such diminution is considered permanent in nature.

(c) Current Investments are stated at Lower of cost or market value.

(d) Dividend is recognised when the right to receive is established.

6. Inventories

Inventories are valued as under

a) Raw Materials : at cost which is arrived at on average cost basis.

b) Packing Materials : at average cost basis.

c) Stores, Consumables & Spares : at average cost basis.

d) Semi-Finished Goods : at Raw Material cost and value added thereto upto the state of completion.

e) Finished Goods : at cost or net realisable value whichever is lower.

f) Waste : at estimated realisable value.

7. Employee Benefits

1. Short Term employee benefits

All employee benefits payable within twelve months of rendering the service are recognized in the period in which employee renders the related service.

2. Post Employment Benefits

(a) Defined Contribution plans Gratuity Plan:

Gratuity is payable to all eligible employees of the Company on death, permanent disablement and resignation as per the provisions of the Payment of Gratuity Act or as per the Company''s Scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn basic salary.

Leave Encashment:

Eligible employees can carry forward and encash leave upto death, permanent disablement and resignation subject to maximum accumulation allowed upto 15 days for employees. The Leave over and above 15 days is paid to employees as per the balance as on 31st March every year. Benefit would be paid at the time of seperation based on the last drawn basic salary.

(b) Defined Benefit Obligation Plans

The present value of the obligation under such plans, is determined based on an actuarial valuation, using the projected Unit Credit Actuarial Method, carried out (approximately) at the close of the year. Actuarial gains and losses arising on such valuation are recognised immediately in the Profit and Loss Account.

3. Termination Benefits are charged to the Profit and Loss Account in the year in which they are incurred.

8. Foreign Currency Transaction

a. Foreign Currency loans for financing fixed assets outstanding at the close of financial year are revolarised at appropriate bank exchange rate at the close of the year. The gain or loss for decrease/increase in rupee liability due to fluctuations in rates of exchange is adjusted to carrying amount of Fixed Assets acquired out of said loans.

b. Income and Expenditure for the year are recorded as per prevailing bank rate on the date of transaction/ negotiation.

c. Current Assets and Liabilities outstanding at the close of the year are translated/re-stated at contracted and/or appropriate bank exchange rates as on the last day of the financial year. The Loss or Gain, if any is recognised in the year of actual realisation in the Profit & Loss Account.

d. As per usual practice followed by the Company, the export sales transactions during the year are accounted for at Custom Rate and at the end of the year at Prevailing Bank Rate in respect of outstanding debtors. Difference between actual realisation at Custom Rate and/or Bank Rate are adjusted to Exchange Difference Account in Profit & Loss Account.

e. Gains or Losses on cancellation of Forward Exchange Contracts is recognised in the Profit & Loss account of the year in which they are cancelled.

9. Recognition of Income & Expenditure

a. Export Sales are recognised on the basis of the date as mentioned in Exchange Control Declaration (GR) Form at Main Division and Weaving Division, whereas Spinning Division considers Sales on the basis of "Bill of Lading" date. Export Sales are accounted for in accounts as per monthly Custom Rate for all the Divisions and shown in the account net of export return.

b. Income & Expenditure are recognised on accrual basis.

c. Export entitlements are recognised in the Profit & Loss account when the right to receive credit as per terms of the entitlement in respect of the exports made.

d. Domestic Sales are recorded on raising bills net off discounts, return and Sales Tax.

e. Accounting for Differential custom duty

Differential custom duty on wastage of Imported Raw Silk Yarn determined as per the Input/Output norms for EOU is accounted as and when the demand is raised by the customs authorities.

f. Revenue in respect of Job charges is recognised based on the work performed and invoiced as per terms of specific contracts.

10. Borrowing Costs

Borrowing Costs which are directly attributable to the acquisition/construction of fixed Assets till the time such assets are ready for intended use, are capitalised as part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred.

11. Impairment of Assets

The carrying amount of Assets are reviewed at each Balance Sheet date to ascertain impairment based on internal/external factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

12. Accounting for Cenvat Credits/Service Tax/Value Added Tax

Cenvat credit and Value Added Tax available on Raw materials, Packing materials, fuels, Stores & Spares, Capital goods and service tax credit on services are accounted for by reducing purchase cost of the related materials or the capital assets or the expenses respectively as the case may be.

13. Provisions,Contingent Liabilities & Contingent Assets

Contingent liabilities are the possible obligation of the past events, the existence of which will be confirmed only by the occurrence or non-occurrence of such event in future. These are not provided for and are disclosed by way of Notes on Accounts. Contingent Assets are not provided for or disclosed.

14. Government Grants

Capital grants relating to specific assets are reduced from the gross value of the Fixed Assets and capital grants for Project capital subsidy are credited to Capital Reserve. Other revenue grants are credited to Profit & Loss account or deducted from the related expenses.

15. Derivative Instruments

a) The Company enters into forward foreign exchange contracts/option contracts (derivatives) to mitigate the risk of changes in foreign exchange rate on forecasted transactions. The company enters into derivative financial instruments where the counter party is a bank. Gains or losses on ineffective transactions of derivative contracts are recognised in the profit and loss account as they arose.

b) Accounting for forward foreign exchange contracts are marked to market basis and the net loss after considering the offsetting effects on the underlying contracts, is charged to the Income Statement Net gains are ignored.

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Mar 31, 2012

4.1 Convention

The financial statements have been prepared in accordance with generally accepted accounting principles and accounting standards issued by I.C.A.I. and as per the provisions of the Companies Act, 1956.

1.2 Basis of Accounting

The financial statements are prepared under historical cost convention following the accrual basis of accounting.

1.3 Fixed Assets

a. Fixed Assets are stated at the original cost of acquisition / installation. Such cost includes purchase price, incidental expenses directly related thereto and pre-operative expenses apportioned based on value. Fixed Assets are shown net of accumulated depreciation. CENVAT availed on capital goods purchased are shown at net value.

b. Capital Work-in-Progress is stated at amount incurred upto the date of Balance Sheet.

1.4 Depreciation

a. Depreciation on fixed assets has been provided on the assets of Main Division at Kolkata on "Written down value method", for the Spinning Division at Ahmedabad and Weaving Division at Mysore on "Straight line method" at the rates as prescribed in Schedule XIV to the Companies Act, 1956 on prorata basis and the relevant accounting standard issued by the Institute of Chartered Accountants of India. In Spinning Division Plant & Machineries have been considered to be continuous process plant as defined in the said Schedule & on technical assessment and depreciation has been provided accordingly. In Weaving Division Depreciation has been charged on shift basis wherever applicable.

b. Leasehold land are being amortised over the period of lease.

c. Assets costing upto Rs. 0.05 lacs are depreciated fully in the year of purchase/capitalisation.

d. Depreciation is being provided prospectively over the residual life of the assets revolarised due to foreign exchange fluctuation wherever applicable.

1.5 Investments

a. Investments are stated at cost including expenses related thereto.

b. Long Term Investments are stated at cost. The diminution, if any in the value of Investments is not recognised unless such diminution is considered permanent in nature.

c. Current Investments are stated at Lower of cost or market value.

d. Dividend is recognised when the right to receive is established.

1.6 Inventories

Inventories are valued as under :-

a) Raw Materials : at cost which is arrived at on average cost basis

b) Packing Materials : at average cost basis

c) Stores, Consumables & Spares : at average cost basis

d) Semi-Finished Goods : at Raw Material cost and value added thereto upto the state of completion

e) Finished Goods : at cost or net realisable value whichever is lower

f) Waste : at estimated realisable value

26.7 Employee Benefits

1. Short Term employee benefits

All employee benefits payable within twelve months of rendering the service are recognized in the period in which employee renders the related service.

2. Post Employment Benefits

a. Defined Contribution plans Gratuity Plan :

Gratuity is payable to all eligible employees of the Company on death, permanent disablility and resignation as per provisions of the Payment of Gratuity Act or as per the Company's Scheme whichever is more beneficial. Benefit would be paid at the time of seperation based on the last drawn basic salary.

Leave Encashment :

Eligible Employees can carry forward and encash leave upto death, permanent disablility and resignation subject to maximum accumulation allowed upto 15 days for employees. The Leave over and above 15 days is paid to employees as per the balance as on 31st March every year. Benefit would be paid at the time of seperation based on the last drawn basic salary.

b. Defined Benefit Obligation Plans :

The present value of the obligation under such plans, is determined based on an actuarial valuation, using the projected Unit Credit Actuarial Method, carried out (approximately) at the close of the year. Actuarial gains and losses arising on such valuation are recognised immediately in the Profit & Loss Account.

3. Termination Benefits are charged to the Profit and Loss Account in the year in which they are incurred.

4 Foreign Currency Transaction

a. Foreign Currency loans for financing fixed assets outstanding at the close of financial year are revolarised at appropriate bank exchange rate at the close of the year. The gain or loss for decrease / increase in rupee liability due to fluctuations in rates of exchange is adjusted to carrying amount of Fixed Assets acquired out of said loans.

b. Income and Expenditure for the year are recorded as per prevailing bank rate on the date of transaction / negotiation.

c. Current Assets and Liabilities outstanding at the close of the year are translated / re-stated at contracted and / or appropriate bank exchange rates as on the last day of the financial year. The Loss or Gain, if any is recognised in the year of actual realisation in the Profit & Loss Account.

d. As per usual practice followed by the Company, the export sales transactions during the year are accounted for at Custom Rate and at the end of the year on Prevailing Bank Rate in respect of outstanding debtors. Difference between actual realisation of Custom Rate and/or Bank Rate are adjusted to Exchange Difference Account in Profit & Loss Account.

e. Gains or Losses on cancellation of Forward Exchange Contracts is recognised in the Profit & Loss Account of the year in which they are cancelled.

5 Recognition of Income & Expenditure

a. Export Sales are recognised on the basis of the date as mentioned in Exchange Control Declaration (GR) Form at Main Division and Weaving Division, whereas Spinning Division considers Sales on the basis of "Bill of Lading" date. Export Sales are accounted for in accounts as per monthly Custom Rate for all the Divisions and shown in the account net of export return.

b. Income & Expenditure are recognised on accrual basis.

c. Export entitlements are recognised in the Profit & Loss account when the right to receive credit as per terms of the entitlement in respect of the exports made.

d. Domestic Sales are recorded on raising bills net off discounts, return and Sales Tax.

e. Accounting for Differential custom duty

Differential custom duty on wastage of Imported Raw Silk Yarn determined as per the Input/ Output norms for EOU is accounted as and when the demand is raised by the customs authorities.

f. Revenue in respect of Job charges is recognised based on the work performed and invoiced as per terms of specific contracts.

6. Borrowing Costs

Borrowing Costs which are directly attributable to the acquisition/construction of Fixed Assets till the time such assets are ready for intended use, are capitalised as part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred.

7. Impairment of Assets

The carrying amount of Assets are reviewed at each Balance Sheet date to ascertain impairment based on internal/external factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

8. Accounting for Cenvat Credits/Service Tax/Value Added Tax Cenvat credit and Value Added Tax available on Raw materials, Packing materials, fuels, Stores & Spares, Capital goods and service tax credit on services are accounted for by reducing purchase cost of the related materials or the capital assets or the expenses respectively as the case may be.

9. Provisions, Contingent Liabilities & Contingent Assets

Contingent Liabilities are the possible obligation of the past events, the existence of which will be confirmed only by the occurance or non-occurance of such event in future. These are not provided for and are disclosed by way of Notes on Accounts. Contingent Assets are not provided for or disclosed.

10. Government Grants

Capital grants relating to specific assets are reduced from the gross value of the Fixed Assets and capital grants for Project capital subsidy are credited to Capital Reserve. Other revenue grants are credited to Profit & Loss account or deducted from the related expenses.

11. Derivative Instruments

a) The Company enters into forward foreign exchange contracts / option contracts (derivatives) to mitigate the risk of changes in foreign exchange rate on forecasted transactions. The Company enters into derivative financial instruments where the counterparty is a bank. Gains or losses on ineffective transactions of derivative contracts are recognised in the profit and loss account as they arose.

b) Accounting for forward foreign exchange contracts are marked to market basis and the net loss after considering the offsetting effects on the underlying contracts, is charged to the Income Statement. Net gains are ignored.

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Mar 31, 2010

The financial statements have been prepared in accordance with generally accepted accounting principles and accounting standards issued by I.C.A.I. and as per the provisions of the Companies Act, 1956.

i) Basis of Accounting

The financial statements are prepared under historical cost convention following the accrual basis of accounting.

ii) Fixed Assets

a. Fixed Assets are stated at the original cost of acquisition / installation. Such cost includes purchase price, incidental expenses directly related thereto and pre-operative expenses apportioned based on value. Fixed Assets are shown net of accumulated depreciation. CENVAT availed on capital goods purchased are shown at net value.

b. Capital Work-in-Progress is stated at amount incurred upto the date of Balance Sheet.

iii) Depreciation

a. Depreciation on fixed assets has been provided on the assets of Main Division at Kolkata on "Written down value method", for the Spinning Division at Ahmedabad and Weaving Division at Mysore on "Straight line method" at the rates as prescribed in Schedule XIV to the Companies Act, 1956 on prorata basis and the relevant accounting standard issued by the Institute of Chartered Accountants of India. In Spinning Division Plant & Machineries have been considered to be continuous process plant as defined in the said Schedule & on technical assessment and depreciation has been provided accordingly. In Weaving Division Depreciation has been charged on shift basis wherever applicable.

b. Leasehold land are being amortised over the period of lease.

c. Assets costing upto Rs. 0.05 lacs are depreciated fully in the year of purchase/capitalisation.

d. Depreciation is being provided prospectively over the residual life of the assets revolarised due to foreign exchange fluctuation wherever applicable.

iv) Investments

a. Investments are stated at cost including expenses related thereto.

b. Long Term Investments are stated at cost. The diminution, if any in the value of Investments is not recognised unless such diminution is considered permanent in nature.

c. Current Investments are stated at Lower of cost or market value.

d. Dividend is recognised when the right to receive is established.

v) Inventories

Inventories are valued as under :-

a) Raw Materials : at cost which is arrived at on average

cost basis

b) Packing Materials : at average cost basis

c) Stores, Consumables

& Spares : at average cost basis

d) Semi-Finished Goods : at Raw Material cost and value added thereto upto the state of completion

e) Finished Goods : at cost or net realisable value whichever

is lower

f) Waste : at estimated realisable value

vi) Employee Benefits

1. Short Term employee benefits : All employee benefits payable within twelve months of rendering the service are recognized in the period in which the employee renders the related service.

2. Post Employment Benefits : a. Defined Contribution plans

Gratuity Plan :

Gratuity is payable to all eligible

employees of the Company on death,

permanent disablement and resignation

in terms of the provisions of the

Payment of Gratuity Act or as per

the Companys Scheme whichever is

more beneficial. Benefit would be

paid at the time of seperation based

on the last drawn basic salary.

Leave Encashment :

Eligible Employees can carry forward

and encash leave upto death,

permenent disablement and resignation

subject to maximum accumulation

allowed at 15 days for employees.

The Leave over and above 15 days for

employees is encashed and paid to

employees as per the balance as on

31st March every year. Benefit would

be paid at the time of seperation

based on the last drawn basic salary.

b. Defined Benefit Obligation Plans :

The present value of the obligation

under such plans, is determined

based on an actuarial valuation,

using projected Unit Credit Actuarial

Method, carried out (approximately)

at the close of the year. Actuarial

gains and losses arising on such

valuation are recognised immediately

in the Profit & Loss Account.

3. Termination Benefits are charged to the Profit and Loss Account in the year in which they are incurred. vii) Foreign Currency Transaction

a. Foreign Currency loans for financing fixed assets outstanding at the close of financial year are revolarised at appropriate bank exchange rate at the close of the year. The gain or loss for decrease / increase in rupee liability due to fluctuations in rates of exchange is adjusted to carrying amount of Fixed Assets acquired out of said loans.

b. Income and Expenditure for the year are recorded as per prevailing bank rate on the date of transaction / negotiation.

c. Current Assets and Liabilities outstanding at the close of the year are translated / re-stated at contracted and / or appropriate bank exchange rates as on the last day of the financial year. The Loss or Gain, if any is recognised in the year of actual realisation in the Profit & Loss Account.

d. As per usual practice followed by the company, the export sales transactions during the year are accounted for on Custom Rate and at the end of the year on Prevailing Bank Rate in respect of outstanding debtors. Difference between actual realisation of Custom Rate and/or Bank Rate are adjusted to Exchange Difference Account in Profit & Loss Account.

e. Gains or Losses on cancellation of Forward Exchange Contracts is recognised in the Profit & Loss Account of the year in which they are cancelled.

viii) Recognition of Income & Expenditure

a. Export Sales are recognised on the basis of the date as mentioned in Exchange Control Declaration (GR) Form at Main Division and Weaving Division, whereas Spinning Division considers Sales on the basis of “Bill of Lading” date. Export Sales are accounted for in accounts as per monthly Custom Rate for all the Divisions and shown in the account net of export return.

b. Income & Expenditure are recognised on accrual basis.

c. Export entitlements are recognised in the Profit & Loss account when the right to receive credit as per terms of the entitlement in respect of the exports made.

d. Domestic Sales are recorded on raising bills net off discounts, return and Sale Tax.

e. Accounting for Differential custom duty

Differential custom duty on wastage of Imported Raw Silk Yarn determined as per the Input/ Output norms for EOU is accounted as and when the demand is raised by the customs authorities.

f. Revenue in respect of Job charges is recognised based on the work performed and invoiced as per terms of specific contracts.

ix) Borrowing Costs

Borrowing Costs which are directly attributable to the acquisition/construction of fixed Assets till the time such assets are ready for intended use, are capitalised as part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred.

x) Impairment of Assets

The carrying amount of Assets are reviewed at each Balance Sheet date to ascertain impairment based on internal/external factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

xi) Accounting for Cenvat Credits/Service Tax/Value Added Tax

Cenvat credit and Value Added Tax available on Raw materials, Packing materials, fuels, Stores & Spares, Capital goods and service tax credit on services are accounted for by reducing purchase cost of the related materials or the capital assets or the expenses respectively as the case may be.

xii) Provisions, Contingent Liabilities & Contingent Assets

Contingent Liabilities are the possible obligation of the past events, the existence of which will be confirmed only by the occurance or non-occurance of such event in future. These are not provided for and are disclosed by way of Notes on Accounts. Contingent Assets are not provided for or disclosed.

xiii) Government Grants

Capital grants relating to specific assets are reduced from the gross value of the Fixed Assets and capital grants for Project capital subsidy are credited to Capital Reserve. Other revenue grants are credited to Profit & Loss account or deducted from the related expenses.

xiv) Derivative Instruments

a) The Company enters into forward foreign exchange contracts / option contracts (derivatives) to mitigate the risk of changes in foreign exchange rate on forecasted transactions. The Company enters into derivative financial instruments where the counterparty is a bank. Gains or losses on ineffective transactions of derivative contracts are recognised in the profit and loss account as they arose.

b) Accounting for forward foreign exchange contracts are marked to market basis and the net loss after considering the offsetting effects on the underlying contracts, is charged to the Income Statement. Net gains are ignored.