Accounting Policies of Birla Cotsyn (India) Ltd. Company

Mar 31, 2015

1. CORPORATE INFORMATION

Birla Cotsyn (India) Limited ("the Company") is a public limited Company domiciled in India and incorporated under the provisions of the Companies Act, 2013 having its registered office at Dalamal House, first floor, Nariman Point, Mumbai 400 021.

The principal business of the Company is Cotton and Synthetic Yarn Manufacturing, Weaving of Grey Fabrics, Ginning & Pressing of Cotton Bales and Fabric Trading.

A. BASIS OF ACCOUNTING

The financial statements have been prepared to comply in all material aspects with the accounting standards specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Companies Act, 2013.

The Financial statements have been prepared under the historical cost convention except where specifically mentioned and in accordance with significant accounting policies as set out below. The policies have been consistently applied to both years presented. Certain Plant and Machinery, Buildings at Ghatanji, Dhule, Khamgaon and land at Ghatanji and Dhule are stated at revalued amounts, in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 2013, as adopted and consistently followed by the Company. The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis, except those associated with significant uncertainties.

B. GOING CONCERN ASSUMPTION

The financial statement of the Company has been prepared on going concern basis as in the opinion of the directors, at the time of their approval; there is a reasonable expectation that the Company will continue its operations for the foreseeable future. The Directors have examined the following points in order to ascertain the validity of going concern assumption.

a) The Company has incurred a loss of Rs.1,64,41,10,595/- during the year ended 31st March, 2015 and as of that date the Company's accumulated losses amount to Rs.345,55,84,162/- and it has a negative net worth of Rs.24,67,70,632/-. Further as of that date, Company's current liabilities exceeded its current assets by Rs.3,91,88,56,757/-.

b) The Company has defaulted in repayment of dues to financial institutions and banks for principal amount of Rs.232,43,04,243/- and interest amounting of Rs.106,35,40,174/- since May 2012. The Company has received notice issued by consortium of banks under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 for non-payment of principal and interest thereon after the due date by the Company and therefore all loans accounts became Non Performing Assets effective from respective dates mentioned in such notice. We are informed that the company is contesting the action taken under section 13(4) of SARFAESI Act and therefore the matter is sub-judice.

The company is exploring the possibilities of restructuring its liabilities, CDR/individual restructuring with banks and others creditors which will result in significant reduction of the liabilities and revive its ability to continue as a going concern. The management is hopeful of finalising a restructuring package soon.

Conditions explained above indicate existence of material uncertainty that may cast significant doubt of the Company's ability to continue as going concern due to which the Company may not be able to realise its assets and discharge its liabilities in the normal course of business. However, considering management plans relating to restructuring of debt and expected improvement in operating activities, the financial statement has been prepared on going concern basis.

C. USE OF ESTIMATES

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

D. TANGIBLE FIXED ASSETS

Tangible Fixed Assets are stated at cost of acquisition, which comprises of purchase price, freight, duties, taxes, borrowing cost and other attributable cost of bringing the asset to working condition for its intended use, except certain fixed assets, which are stated at revalued amount, net of impairment loss (If any) less accumulated depreciation / amortization.

E. DEPRECIATION

Depreciation on tangible fixed assets has been provided on Straight Line Method (SLM) as per the useful life prescribed in Schedule II to the Companies Act, 2013 except that:

a) In case of Plant and Machinery, Management estimates the useful life to be 15 years and the Company has considered depreciation on fulfilling the condition of continuous process plant.

b) Leasehold land is amortised over the period of lease.

c) Assets having individual value below Rs.5,000 are depreciated @ 100% and mobile phones are charged to revenue considering their useful life to be less than one year.

F. INTANGIBLE ASSETS AND AMORTISATION

Intangible assets acquired separately are measured on initial recognition cost. Intangible assets are amortised on a straight line basis over the estimated useful economic life. Expenditure on major computer software is amortised over the period of expected benefit not exceeding five years.

G. INVESTMENTS

Long term investments are stated at Cost. Provision for diminution is made if the decline in value is other than temporary in nature. Current Investments are carried at lower of cost and fair value

H. INVENTORIES

Inventories are valued as under:

a) Stores & Spare parts and packing materials are valued at lower of cost on FIFO basis (net of Cenvat) and net realizable value.

b) Raw materials at Synthetic unit is valued at lower of weighted average cost or net realizable Value and at Open End/ Spinning unit is valued at cost on specific identification method on lot wise basis or net realizable Value, whichever is lower.

c) Work in Process is valued at weighted average cost. However, materials held for use in the production of inventories are not written down below cost, if the finished products in which they are used and expected to be sold at or above cost.

d) Finished Goods are valued at lower of weighted average cost or net realizable Value. Cost for this purpose includes direct cost and attributable overheads

I. REVENUE RECOGNITION

a) Revenue from sale of products is recognised on transfer of all significant risks and rewards of ownership of the product on to the customers, which is generally on despatch of goods.

b) Export sales are accounted on the basis of the dates of bill of lading.

c) Export incentives are recognized in the year of export.

d) Revenue from Services rendered is recognized as per the terms of agreement /arrangement with the concerned parties.

e) Dividend income on investments is accounted for when the right to receive the payment is established. Interest income is recognised on accrual basis.

J. EMPLOYEE BENEFITS

a) All employee benefits payable within twelve months of rendering of the service are classified as short term benefits. Such benefits include salaries, wages, bonus, awards, ex-gratia etc, and are recognized in the period in which the employee renders the related services.

b) Retirement benefits in the form of Provident Fund/Family Pension Fund and Superannuation Fund, which are Defined Contribution Plans, are accounted on accrual basis and charged to the statement of profit and loss of the year.

c) Liabilities in respect of Gratuity, which is Defined Benefit Plans and Leave Encashment, are accrued for the amount, determined on the basis of an Independent actuarial valuation applying the Projected Unit Credit Method.

d) Actuarial gains/losses are recognized in the statement of profit and loss for the year.

K. FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are accounted at the exchange rate prevailing on the date of transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit and loss. In case of forward contracts (non speculative), the exchange differences are dealt with in the statement of profit and loss account over the period of contracts. Exchange difference arising on monetary items in substance form part of enterprises net investment in non integral foreign operation is accumulated in a foreign currency translation reserve till the disposal of the net Investment.

L. BORROWING COST

Borrowing cost that is attributable to acquisition of qualifying asset is capitalised as part of total cost of such assets. All other borrowing costs are recognised as expense in the period in which they are incurred.

M. LOAN PROCESSING CHARGES

All the expenses related to Loan Processing and Legal expenses for the same are deferred as in the opinion of the management the benefit from the same is available for the period of five years.

N. GOVERNMENT GRANTS

Grants in the nature of Interest subsidy under Technology Upgradation Fund Scheme (TUFS) and MEGA PROJECT subsidy from Government of Maharashtra under IPS Scheme 2007, are accounted for when it is reasonably certain that ultimate collection will be made. Government grants not specifically related to Fixed Assets are recognized in the statement of Profit and Loss in the year of accrual/ receipt.

O. TAXATION

Current tax is determined at the applicable rates based on assessable income.

Deferred tax is determined using the rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognised and carried forward only if there is reasonable certainty of its realisation. However in case of carried forward losses and unabsorbed depreciation under the Income Tax Act, 1961, the Deferred Tax Asset is recognised only if there is virtual certainty backed by convincing evidence of its realisation. Such assets are reviewed at each Balance Sheet date to reassess its realisation.

P. PROVISIONS, CONTIGENT LIABILITIES AND CONTINGENT ASSETS

The Company recognises a provision when there is a present obligation as a result of past event on which it is probable that there will be outflow of resources to settle the obligation in respect of which reliable estimates can be made.

Contingent liabilities are disclosed by way of note to the financial statements after careful evaluation by management of the facts and legal aspects of the matter involved.

Contingent assets are neither recognized nor disclosed.

Q. IMPAIRMENT OF ASSETS

a) The carrying amount of assets, other than inventories is reviewed at each Balance Sheet date to assess whether there is any indication of impairment in respect of such asset or group of assets (cash generating unit). If such indication exists, the recoverable amount of such asset or group of asset is estimated.

b) If such recoverable amount of asset or group of asset is less than its carrying amount, an impairment loss is reckoned by reducing the carrying amount to its recoverable amount. If there is an indication at balance sheet date that a previously assessed impairment loss no longer exist, the recoverable amount is reassessed and the asset is reflected at recoverable amount, subject to a maximum of depreciable historical cost.

R. APPLICATION OF SECURITIES PREMIUM ACCOUNT

Share Issue expenses are charged, first against available balance in Securities Premium Account

S. EXPENDITURE DURING CONSTRUCTION AND EXPENDITURE ON NEW PROJECTS

In case of new projects and in case of substantial modernisation / expansion at existing units of the Company, expenditure incurred prior to commencement of commercial production is capitalised.

T. ACCOUNTING OF CLAIMS

Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claims payable are accounted for at the time of acceptance.

Claims raised by Government Authorities regarding taxes and duties, are accounted for based on the merits of each claim. If same is disputed by the Company, these are shown as 'Contingent Liabilities'.

U. OPERATING LEASE

The leases where the lessor, effectively retains substantially all the risks and benefits of ownership of the leased items, are classified as operating leases. Operating lease payments are recognized as expenses in the Statement of Profit and Loss Account.

V. EARNINGS PER SHARE

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

W. SEGMENT REPORTING POLICIES

Primary Segment is identified based on the nature of products and services, the different risks and returns and the internal business reporting system. Secondary segment is identified based on geographical area in which major operating divisions of the Company operates.

X. CASH AND CASH EQUIVALENTS

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank, in hand (including cheques in hand) and short term investment with an original maturity of three months or less.

Cash flows are reported using indirect method as set out in Accounting Standard (AS) – 3 "Cash Flow Statement", whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accrual of past or future cash receipts or payments. The cash flow from operating, investing and financing activities of the Company are segregated based on the available information.

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Mar 31, 2014

A. basis of accounting

The financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211(3C) of the Companies Act, 1956 (which continues to be applicable in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 1956) and other relevant provisions of the Companies Act, 1956.

The Financial statements have been prepared under the historical cost convention except where specifically mentioned and in accordance with significant accounting policies as set out below. The policies have been consistently applied to both years presented. In the case of certain Plant and Machinery, Buildings at Ghatanji, Dhule, Khamgaon and land''s at Ghatanji & Dhule, which are stated at revalued amounts, in accordance with the generally accepted accounting principles in India and the provisions of The Companies Act, 1956, as adopted and consistently followed by the Company. The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis, except those associated with significant uncertainties.

Going concern assumption:

The financial statement of the Company has been prepared on going concern basis as in the opinion of the directors, at the time of their approval; there is a reasonable expectation that the Company will continue its operations for the foreseeable future. The directors have examined the following points in order to ascertain the validity of going concern assumption.

a) The Company incurred net loss of Rs. 54,54,76,827/- during the period ended 31st March, 2014 and as at that date the Company''s current liabilities exceeded its current assets by Rs.2,87,00,90,359/-. The company is exploring the possibilities of restructuring its liabilities CDR/individual restructuring with banks and others creditors which will result in significant reduction of the liabilities and revive its ability to continue as a going concern.

b) The banks have issued SARFAESI notice, however, the company is exploring the possibilities of restructuring its liabilities including CDR/individual restructuring with banks. Further, the company has secured relief under taking under Maharashtra Relief Undertakings (Special Provisions) Act (XCVI of 1958) which insulates and provides remedy for the enforcement in any proceedings pending before any court, tribunal, officer or authority against the company.

Accordingly, as per management confidence, the financial statement has been prepared on going concern basis.

b. use of estimates

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

C. TANGIBLE FIXED ASSETS

Tangible Fixed Assets are stated at cost of acquisition, which comprises of purchase price, freight, duties, taxes, borrowing cost and other attributable cost of bringing the asset to working condition for its intended use, except certain fixed assets, which are stated at revalued amount, net of impairment loss (If any) less accumulated depreciation / amortization.

D. DEPRECIATION

i) Depreciation on Fixed Asset has been provided on the Straight Line Method at the rates specified and in the manner prescribed under Schedule XIV of the Indian Companies Act, 1956. Leasehold land is amortised over the period of lease. And, the Company has considered depreciation rates on fulfilling the condition of continuous process plant.

ii) In respect of the revalued assets, the incremental depreciation attributable to the revaluation is recouped from the revaluation reserve on straight line basis.

iii) Assets having individual value below Rs. 5000 are depreciated @ 100% and mobile phones are charged to revenue considering their useful life to be less than one year.

E. INTANGIBLE ASSETS AND AMORTISATION

Intangible assets acquired separately are measured on initial recognition cost. Intangible assets are amortised on a straight line basis over the estimated useful economic life. Expenditure on major computer software is amortised over the period of expected benefit not exceeding five years.

F. INVESTMENTS

Long term investments are stated at Cost. Provision for diminution is made if the decline in value is other than temporary in nature.

Current Investments are carried at lower of cost and fair value

G. INVENTORIES

Inventories are valued as under:

i) Stores & Spare parts and packing materials are valued at lower of cost on FIFO basis (net of Cenvat) and net realizable value.

ii) Raw materials at Synthetic unit is valued at lower of weighted average cost or net realizable Value and at Open End/ Spinning unit is valued at cost on specific identification method on lot wise basis or net realizable Value, whichever is lower.

iii) Work in Process is valued at weighted average cost. However, materials held for use in the production of inventories are not written down below cost, if the finished products in which they are used and expected to be sold at or above cost.

iv) Finished Goods are valued at lower of weighted average cost or net realizable Value. Cost for this purpose includes direct cost and attributable overheads

H. REVENUE RECOGNITION

i) Revenue from sale of products is recognized on transfer of all significant risks and rewards of ownership of the product on to the customers, which is generally on despatch of goods.

ii) Export sales are accounted on the basis of the dates of bill of lading.

iii) Export incentives are recognized in the year of export.

iv) Revenue from Services rendered is recognized as per the terms of agreement /arrangement with the concerned parties.

v) Dividend income on investments is accounted for when the right to receive the payment is established. Interest income is recognised on accrual basis.

I. EMPLOYEE BENEFITS

a) All employee benefits payable within twelve months of rendering of the service are classified as short term benefits. Such benefits include salaries, wages, bonus, awards, ex-gratia etc, and are recognized in the period in which the employee renders the related services.

b) Retirement benefits in the form of Provident Fund / Family Pension Fund and Superannuation Fund, which are Defined Contribution Plans, are accounted on accrual basis and charged to the statement of profit and loss of the year.

c) Liabilities in respect of Gratuity, which is Defined Benefit Plans and Leave Encashment, are accrued for the amount, determined on the basis of an Independent actuarial valuation applying the Projected Unit Credit Method.

d) Actuarial gains/losses are recognized in the statement of profit and loss for the year.

J. FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are accounted at the exchange rate prevailing on the date of transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit and loss. In case of forward contracts (non speculative), the exchange differences are dealt with in the statement of profit and loss account over the period of contracts. Exchange difference arising on monetary items in substance form part of enterprises net investment in non integral foreign operation is accumulated in a foreign currency translation reserve till the disposal of the net Investment.

K. BORROWING COST

Borrowing cost that is attributable to acquisition of qualifying asset is capitalised as part of total cost of such assets. All other borrowing costs are recognised as expense in the period in which they are incurred.

L. LOAN PROCESSING CHARGES

All the expenses related to Loan Processing and Legal expenses for the same are deferred as in the opinion of the management the benefit from the same is available for the period of five years.

M. GOVERNMENT GRANTS

Grants in the nature of Interest subsidy under Technology Upgradation Fund Scheme (TUFS) and MEGA PROJECT subsidy from Government of Maharashtra under IPS Scheme 2007, are accounted for when it is reasonably certain that ultimate collection will be made. Government grants not specifically related to Fixed Assets are recognized in the statement of Profit and Loss in the year of accrual/ receipt.

N. TAXATION

Current tax is determined at the applicable rates based on assessable income.

Deferred tax is determined using the rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognised and carried forward only if there is reasonable certainty of its realisation. However in case of carried forward losses and unabsorbed depreciation under the Income Tax Act, 1961, the Deferred Tax Asset is recognised only if there is virtual certainty backed by convincing evidence of its realisation. Such assets are reviewed at each Balance Sheet date to reassess its realisation.

o. provisions, contingent liabilities and contingent assets

The Company recognises a provision when there is a present obligation as a result of past event on which it is probable that there will be outflow of resources to settle the obligation in respect of which reliable estimates can be made.

Contingent liabilities are disclosed by way of note to the financial statements after careful evaluation by management of the facts and legal aspects of the matter involved.

Contingent assets are neither recognized nor disclosed.

p. impairment OF ASSETS

i) The carrying amount of assets, other than inventories is reviewed at each Balance Sheet date to assess whether there is any indication of impairment in respect of such asset or group of assets (cash generating unit). If such indication exists, the recoverable amount of such asset or group of asset is estimated.

ii) If such recoverable amount of asset or group of asset is less than its carrying amount, an impairment loss is reckoned by reducing the carrying amount to its recoverable amount. If there is an indication at balance sheet date that a previously assessed impairment loss no longer exist, the recoverable amount is reassessed and the asset is reflected at recoverable amount, subject to a maximum of depreciable historical cost.

Q. APPLICATION OF SECURITIES PREMIUM ACCOUNT

Share Issue expenses are charged, first against available balance in Securities Premium Account

R. EXPENDITURE DURING CONSTRUCTION AND EXPENDITURE ON NEW PROJECTS

In case of new projects and in case of substantial modernisation / expansion at existing units of the Company, expenditure incurred prior to commencement of commercial production is capitalised.

S. ACCOUNTING OF CLAIMS

Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claims payable are accounted for at the time of acceptance.

Claims raised by Government Authorities regarding taxes and duties, are accounted for based on the merits of each claim. If same is disputed by the Company, these are shown as ''Contingent Liabilities''.

T. OPERATING LEASE

The leases where the lessor, effectively retains substantially all the risks and benefits of ownership of the leased items, are classified as operating leases. Operating lease payments are recognized as expenses in the Statement of Profit and Loss Account.

U. EARNINGS PER SHARE

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

V. SEGMENT REPORTING POLICIES

Primary Segment is identified based on the nature of products and services, the different risks and returns and the internal business reporting system. Secondary segment is identified based on geographical area in which major operating divisions of the Company operates.

W. CASH AND CASH EQUIVALENTS

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank, in hand (including cheques in hand) and short term investment with an original maturity of three months or less

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Jun 30, 2013

A) BASIS OF ACCOUNTING

The Financial statements have been prepared under the historical cost convention except where specifically mentioned and in accordance with significant accounting policies as set out below. The policies have been consistently applied to both years presented. In the case of certain Plant & Machinery, Buildings at Ghatanji, Dhule, Khamgaon and land''s at Ghatanji & Dhule, which are stated at revalued amounts, in accordance with the generally accepted accounting principles in India and the provisions of the Indian Companies Act, 1956, as adopted and consistently followed by the Company. The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis, except those associated with significant uncertainties.

b) USE OF ESTIMATES

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

Going concern assumption:

The financial statement of the Company has been prepared on going concern basis as in the opinion of the directors, at the time of their approval; there is a reasonable expectation that the Company will continue its operations for the foreseeable future. The directors have examined the following points in order to ascertain the validity of going concern assumption.

a) The Company incurred net loss of Rs. 1,396,945,888 during the period ended June 30, 2013 and, as of that date; the Company''s current liabilities exceeded its current assets by Rs. 2,325,087,902. The company is however exploring the possibilities of restructuring its liabilities including CDR/individual restructuring with banks which will result in significant reduction of the liabilities and revive its ability to continue as a going concern.

b) The banks have issued SARFAESI notice, however, the company is exploring the possibilities of restructuring its liabilities including CDR/individual restructuring with banks. Further, the company has secured relief under Maharashtra Relief Undertakings (Special Provisions) Act (XCVI of 1958) which insulates and provides remedy for the enforcement in any proceedings pending before any court, tribunal, officer or authority against the company.

Accordingly, as per management confidence, the financial statement has been prepared on going concern basis.

c) TANGIBLE FIXED ASSETS

Tangible Fixed Assets are stated at cost of acquisition, which comprises of purchase price, freight, duties, taxes, borrowing cost and other attributable cost of bringing the asset to working condition for its intended use, except certain fixed assets, which are stated at revalued amount, net of impairment loss (If any) less accumulated depreciation/ amortization.

d) DEPRECIATION

i) Depreciation on Fixed Asset has been provided on the Straight Line Method at the rates specified and in the manner prescribed under Schedule XIV of the Indian Companies Act, 1956. Leasehold land is amortised over the period of lease. And, the Company has considered depreciation rates on fulfilling the condition of continuous process plant.

ii) In respect of the revalued assets, the incremental depreciation attributable to the revaluation is recouped from the revaluation reserve on straight line basis.

iii) Assets having individual value below Rs. 5000 are depreciated @ 100% and mobile phones are charged to revenue considering their useful life to be less than one year.

e) INTANGIBLE ASSETS AND AMORTISATION

Intangible assets acquired separately are measured on initial recognition cost. Intangible assets are amortised on a straight line basis over the estimated useful economic life. Expenditure on major computer software is amortised over the period of expected benefit not exceeding five years.

f) INVESTMENTS

Long term investments are stated at Cost. Provision for diminution is made if the decline in value is other than temporary in nature. Current Investments are carried at lower of cost and fair value

g) REVENUE RECOGNITION

i) Revenue from sale of products is recognized on transfer of all significant risks and rewards of ownership of the product on to the customers, which is generally on despatch of goods.

ii) Export sales are accounted on the basis of the dates of bill of lading.

iii) Export incentives are recognized in the year of export.

iv) Revenue from Services rendered is recognized as per the terms in agreements/arrangements with the concerned parties.

v) Dividend income on investments is accounted for when the right to receive the payment is established. Interest income is recognised on accrual basis.

h) INVENTORIES

Inventories are valued as under:

i) Stores & Spare parts and packing materials are valued at lower of cost on FIFO basis (net of Cenvat) and net realisable value.

ii) Raw materials at Synthetic unit is valued at lower of weighted average cost or Net Realisable Value and at Open End/ Spinning unit is valued at cost on specific identification method on lot wise basis or Net Realisable Value, whichever is lower.

iii) Work in Process is valued at weighted average cost.

However, materials held for use in the production of inventories are not written down below cost, if the finished products in which they are used and expected to be sold at or above cost.

iv) Finished Goods are valued at lower of weighted average cost or Net Realisable Value. Cost for this purpose includes direct cost and attributable overheads

i) EMPLOYEE BENEFITS

i) All employee benefits payable within twelve months of rendering of the service are classified as short term benefits. Such benefits include salaries, wages, bonus, awards, ex-gratia etc, and are recognized in the period in which the employee renders the related services.

ii) Retirement benefits in the form of Provident Fund / Family Pension Fund and Superannuation Fund, which are Defined Contribution Plans, are accounted on accrual basis and charged to the profit and loss account of the year.

iii) Liabilities in respect of Gratuity, which is Defined Benefit Plans and Leave Encashment, are accrued for the amount, determined on the basis of an Independent actuarial valuation applying the Projected Unit Credit Method.

iv) Actuarial gains/losses are recognized in the statement of profit and loss for the year.

j) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are accounted at the exchange rate prevailing on the date of transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit and loss. In case of forward contracts (non speculative), the exchange differences are dealt with in the statement of profit and loss over the period of contracts. Exchange difference arises on monetary items in substance form part of enterprises net investment in non integral foreign operation is accumulated in a foreign currency translation reserve till the disposal of the net Investment.

k) BORROWING COST

Borrowing cost that is attributable to acquisition of qualifying asset is capitalised as part of total cost of such assets. All other borrowing costs are recognised as expense in the period in which they are incurred.

LOAN PROCESSING CHARGES

All the expenses related to Loan Processing and Legal expenses for the same are deferred as in the opinion of the management the benefit from the same is available for the period of five years.

l) GOVERNMENT GRANTS

Grants in the nature of Interest subsidy under Technology Upgradation Fund Scheme (TUFS) and MEGA PROJECT subsidy from Government of Maharashtra under IPS Scheme 2007, are accounted for when it is reasonably certain that ultimate collection will be made. Government grants not specifically related to Fixed Assets are recognised in the statement of profit and loss in the year of accrual/ receipt.

m) TAXATION

Current tax is determined at the applicable rates based on assessable income.

Deferred tax is determined using the rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognised and carried forward only if there is reasonable certainty of its realisation. However in case of carried forward losses and unabsorbed depreciation under the Income Tax Act, 1961, the Deferred Tax Asset is recognised only if there is virtual certainty backed by convincing evidence of its realisation. Such assets are reviewed at each Balance Sheet date to reassess its realisation.

n) PROVISIONS, CONTIGENT LIABILITIES AND CONTINGENT ASSETS

The Company recognises a provision when there is a present obligation as a result of past event on which it is probable that there will be outflow of resources to settle the obligation in respect of which reliable estimates can be made.

Contingent liabilities are disclosed by way of note to the financial statements after careful evaluation by management of the facts and legal aspects of the matter involved.

Contingent assets are neither recognized nor disclosed.

o) IMPAIRMENT OF ASSETS

i) The carrying amount of assets, other than inventories is reviewed at each Balance Sheet date to assess whether there is any indication of impairment in respect of such asset or group of assets (cash generating unit). If such indication exists, the recoverable amount of such asset or group of asset is estimated.

ii) If such recoverable amount of asset or group of asset is less than its carrying amount, an impairment loss is reckoned by reducing the carrying amount to its recoverable amount. If there is an indication at balance sheet date that a previously assessed impairment loss no longer exist, the recoverable amount is reassessed and the asset is reflected at recoverable amount, subject to a maximum of depreciable historical cost.

p) APPLICATION OF SECURITIES PREMIUM ACCOUNT

Share Issue expenses are charged, first against available balance in Securities Premium Account

q) EXPENDITURE DURING CONSTRUCTION AND EXPENDITURE ON NEW PROJECTS

In case of new projects and in case of substantial modernisation / expansion at existing units of the Company, expenditure incurred prior to commencement of commercial production is capitalised.

r) ACCOUNTING OF CLAIMS

Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claims payable are accounted for at the time of acceptance.

Claims raised by Government Authorities regarding taxes and duties, are accounted for based on the merits of each claim. If same is disputed by the Company, these are shown as ''Contingent Liabilities''.

s) OPERATING LEASE

The leases where the lessor, effectively retains substantially all the risks and benefits of ownership of the leased items, are classified as operating leases. Operating lease payments are recognized as expenses in the statement of profit and loss.

t) EARNINGS PER SHARE

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

u) SEGMENT REPORTING POLICIES

Primary Segment is identified based on the nature of products and services, the different risks and returns and the internal business reporting system. Secondary segment is identified based on geographical area in which major operating divisions of the Company operates.

v) CASH AND CASH EQUIVALENTS

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank, in hand (including cheques in hand) and short term investment with an original maturity of three months or less.

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Mar 31, 2012

A) BASIS OF ACCOUNTING

The Financial statements have been prepared under the historical cost convention except where impairment is made, and for certain Plant & Machinery, Buildings at Ghatanji, Dhule, Khamgaon and land's at Ghatanji & Dhule, which are stated at revalued amounts, in accordance with the generally accepted accounting principles in India and the provisions of the Indian Companies Act, I956, as adopted and consistently followed by the Company. The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis, except those associated with significant uncertainties.

b) PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENT

During the year ended March 3I, 20I2, the revised Schedule VI format as notified under the Companies Act I956, has become applicable to the Company for preparation and presentation of its financial statements. The adoption of the revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

c) USE OF ESTIMATES

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

d) TANGIBLE FIXED ASSETS

Tangible Fixed Assets are stated at cost of acquisition, which comprises of purchase price, freight, duties, taxes, borrowing cost and other attributable cost of bringing the asset to working condition for its intended use, except certain fixed assets, which are stated at revalued amount, net of impairment loss (If any) less accumulated depreciation/ amortization.

e) DEPRECIATION

i) Depreciation on Fixed Asset has been provided on the Straight Line Method at the rates specified and in the manner prescribed under Schedule XIV of the Indian Companies Act, I956. Leasehold land is amortised over the period of lease.

ii) In respect of the revalued assets, the incremental depreciation attributable to the revaluation is recouped from the revaluation reserve on straight line basis.

iii) Assets having individual value below Rs. 5000 are depreciated @ I00% and mobile phones are charged to revenue considering their useful life to be less than one year.

f) INTANGIBLE ASSETS AND AMORTISATION

Intangible assets acquired separately are measured on initial recognition cost. Intangible assets are amortised on a straight line basis over the estimated useful economic life. Expenditure on major computer software is amortised over the period of expected benefit not exceeding five years.

g) INVESTMENTS

Long term investments are stated at Cost. Provision for diminution is made if the decline in value is other than temporary in nature. Current Investments are carried at lower of cost and fair value

h) REVENUE RECOGNITION

i) Revenue from sale of products is recognized on transfer of all significant risks and rewards of ownership of the product on to the customers, which is generally on despatch of goods.

ii) Export sales are accounted on the basis of the dates of bill of lading.

iii) Export incentives are recognized in the year of export.

iv) Revenue from Services rendered is recognized as per the terms in agreements/arrangements with the concerned parties.

v) Dividend income on investments is accounted for when the right to receive the payment is established. Interest income is recognised on accrual basis.

i) INVENTORIES

Inventories are valued as under:

i) Stores & Spare parts and packing materials are valued at lower of cost on FIFO basis (net of Cenvat) and net realisable value.

ii) Raw materials at Synthetic unit is valued at lower of weighted average cost or Net Realisable Value and at Open End/ Spinning unit is valued at cost on specific identification method on lot wise basis or Net Realisable Value, whichever is lower.

iii) Work in Process is valued at weighted average cost.

However, materials held for use in the production of inventories are not written down below cost, if the finished products in which they are used and expected to be sold at or above cost.

iv) Finished Goods are valued at lower of weighted average cost or Net Realisable Value. Cost for this purpose includes direct cost and attributable overheads

j) EMPLOYEE BENEFITS

i) All employee benefits payable within twelve months of rendering of the service are classified as short term benefits. Such benefits include salaries, wages, bonus, awards, ex-gratia etc, and are recognized in the period in which the employee renders the related services.

ii) Retirement benefits in the form of Provident Fund / Family Pension Fund and Superannuation Fund, which are Defined Contribution Plans, are accounted on accrual basis and charged to the profit and loss account of the year.

iii) Liabilities in respect of Gratuity, which is Defined Benefit Plans and Leave Encashment, are accrued for the amount, determined on the basis of an Independent actuarial valuation applying the Projected Unit Credit Method.

iv) Actuarial gains/losses are recognized in the profit and loss account for the year.

k) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are accounted at the exchange rate prevailing on the date of transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the profit and loss account. In case of forward contracts (non speculative), the exchange differences are dealt with in the profit and loss account over the period of contracts. Exchange difference arises on monetary items in substance form part of enterprises net investment in non integral foreign operation is accumulated in a foreign currency translation reserve till the disposal of the net Investment.

l) BORROWING COST

Borrowing cost that is attributable to acquisition of qualifying asset is capitalised as part of total cost of such assets. All other borrowing costs are recognised as expense in the period in which they are incurred.

LOAN PROCESSING CHARGES

All the expenses related to Loan Processing and Legal expenses for the same are deferred as in the opinion of the management the benefit from the same is available for the period of five years.

m) GOVERNMENT GRANTS

Grants in the nature of Interest subsidy under Technology Upgradation Fund Scheme (TUFS) and MEGA PROJECT subsidy from Government of Maharashtra under IPS Scheme 2007, are accounted for when it is reasonably certain that ultimate collection will be made. Government grants not specifically related to Fixed Assets are recognised in the Profit and Loss Account in the year of accrual/ receipt.

n) TAXATION

Current tax is determined at the applicable rates based on assessable income.

Deferred tax is determined using the rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognised and carried forward only if there is reasonable certainty of its realisation. However in case of carried forward losses and unabsorbed depreciation under the Income Tax Act, 1961, the Deferred Tax Asset is recognised only if there is virtual certainty backed by convincing evidence of its realisation. Such assets are reviewed at each Balance Sheet date to reassess its realisation.

o) PROVISIONS, CONTIGENT LIABILITIES AND CONTINGENT ASSETS

The Company recognises a provision when there is a present obligation as a result of past event on which it is probable that there will be outflow of resources to settle the obligation in respect of which reliable estimates can be made.

Contingent liabilities are disclosed by way of note to the financial statements after careful evaluation by management of the facts and legal aspects of the matter involved.

Contingent assets are neither recognized nor disclosed.

p) IMPAIRMENT OF ASSETS

i) The carrying amount of assets, other than inventories is reviewed at each Balance Sheet date to assess whether there is any indication of impairment in respect of such asset or group of assets (cash generating unit). If such indication exists, the recoverable amount of such asset or group of asset is estimated.

ii) If such recoverable amount of asset or group of asset is less than its carrying amount, an impairment loss is reckoned by reducing the carrying amount to its recoverable amount. If there is an indication at balance sheet date that a previously assessed impairment loss no longer exist, the recoverable amount is reassessed and the asset is reflected at recoverable amount, subject to a maximum of depreciable historical cost.

q) APPLICATION OF SECURITIES PREMIUM ACCOUNT

Share Issue expenses are charged, first against available balance in Securities Premium Account

r) EXPENDITURE DURING CONSTRUCTION AND EXPENDITURE ON NEW PROJECTS

In case of new projects and in case of substantial modernisation / expansion at existing units of the Company, expenditure incurred prior to commencement of commercial production is capitalised.

s) ACCOUNTING OF CLAIMS

Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claims payable are accounted for at the time of acceptance.

Claims raised by Government Authorities regarding taxes and duties, are accounted for based on the merits of each claim. If same is disputed by the Company, these are shown as 'Contingent Liabilities' .

t) OPERATING LEASE

The leases where the lessor, effectively retains substantially all the risks and benefits of ownership of the leased items, are classified as operating leases. Operating lease payments are recognized as expenses in the Statement of Profit and Loss.

u) EARNINGS PER SHARE

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

v) SEGMENT REPORTING POLICIES

Primary Segment is identified based on the nature of products and services, the different risks and returns and the internal business reporting system. Secondary segment is identified based on geographical area in which major operating divisions of the Company operates.

w) CASH AND CASH EQUIVALENTS

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank, in hand (including cheques in hand) and short term investment with an original maturity of three months or less.

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Mar 31, 2011

A. System of Accounting :

The Financial statements have been prepared under the historical cost convention except where impairment is made, and for certain Plant & Machinery, Buildings at Ghatanji, Dhule, Khamgaon and land's at Ghatanji & Dhule, which are stated at revalued amounts, in accordance with the generally accepted accounting principles in India and the provisions of the Indian Companies Act, 1956, as adopted and consistently followed by the Company. The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis, except those associated with significant uncertainties.

Use of Estimates:

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

B. Fixed Assets :

Fixed Assets are stated at cost of acquisition, which comprises of purchase price, freight, duties, taxes, borrowing cost and other attributable cost of bringing the asset to working condition for its intended use, except certain fixed assets, which are stated at revalued amount, net of impairment loss (If any) less accumulated depreciation/ amortization.

C. Depreciation/ Amortisation :

i) Depreciation on Fixed Asset has been provided on the Straight Line Method at the rates specified and in the manner prescribed under Schedule XIV of the Indian Companies Act, 1956. Leasehold land is amortised over the period of lease.

ii) In respect of the revalued assets, the incremental depreciation attributable to the revaluation is recouped from the revaluation reserve on straight line basis.

iii) Assets having individual value below Rs. 5000 are depreciated @ 100% and mobile phones are charged to revenue considering their useful life to be less than one year.

D. Investments:

Long term investments are stated at Cost. Provision for diminution is made if the decline in value is other than temporary in nature. Current Investments are carried at lower of cost and fair value

E. Revenue Recognition:

i) Revenue from sale of products is recognized on transfer of all significant risks and rewards of ownership of the product on to the customers, which is generally on despatch of goods.

ii) Export sales are accounted on the basis of the dates of bill of lading.

iii) Export incentives are recognized in the year of export.

iv) Revenue from Services rendered is recognized as per the terms in agreements/arrangements with the concerned parties. v) Dividend income on investments is accounted for when the right to receive the payment is established. Interest income is recognised on accrual basis.

F. Inventories:

Inventories are valued as under:

i) Stores & Spare parts and packing materials are valued at lower of cost (net of Cenvat) and net realisable value on FIFO basis.

ii) Raw materials at Synthetic unit is valued at lower of cost or weighted average cost on FIFO basis and at Open End/ Spinning unit is valued at lower of cost or on specific identification method on lot wise basis.

iii) Work in Process is valued at weighted average cost.However, materials held for use in the production of inventories are not written down cost, if the finished products in which they are used and expected to be sold at or above cost.

iv) Finished Goods are valued at lower of weighted average cost or Net Realisable Value on FIFO basis. Cost for this purpose includes direct cost and attributable overheads

G. Employee Benefits:

a) All employee benefits payable within twelve months of rendering of the service are classified as short term benefits. Such benefits include salaries, wages, bonus, awards, exgratia etc, and are recognized in the period in which the employee renders the related services.

b) Retirement benefits in the form of Provident Fund / Family Pension Fund and Superannuation Fund, which are Defined Contribution Plans, are accounted on accrual basis and charged to the profit and loss account of the year.

c) Liabilities in respect of Gratuity, which is Defined Benefit Plans and Leave Encashment, are accrued for the amount, determined on the basis of an Independent actuarial valuation applying the Projected Unit Credit Method.

d) Actuarial gains/losses are recognized in the profit and loss account for the year.

H. Foreign currency transactions:

Transactions in foreign currencies are accounted at the exchange rate prevailing on the date of transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the profit and loss account. In case of forward contracts (non speculative), the exchange differences are dealt with in the profit and loss account over the period of contracts. Exchange difference arises on monetary items in substance form part of enterprises net investment in non integral foreign operation is accumulated in a foreign currency translation reserve till the disposal of the net Investment.

I. Borrowing Cost:

Borrowing cost that is attributable to acquisition of qualifying asset is capitalised as part of total cost of such assets. All other borrowing costs are recognised as expense in the period in which they are incurred.

J. Government Grants:

Grants in the nature of Interest subsidy under Technology Upgradation Fund Scheme (TUFS) and MEGA PROJECT subsidy from Government of Maharashtra under IPS Scheme 2007, are accounted for when it is reasonably certain that ultimate collection will be made. Government grants not specifically related to Fixed Assets are recognised in the Profit and Loss Account in the year of accrual/ receipt.

K. Taxation:

Current tax is determined at the applicable rates based on assessable income.

Deferred tax is determined using the rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognised and carried forward only if there is reasonable certainty of its realisation. However in case of carried forward losses and unabsorbed depreciation under the Income Tax Act, 1961, the Deferred Tax Asset is recognised only if there is virtual certainty backed by convincing evidence of its realisation. Such assets are reviewed at each Balance Sheet date to reassess its realisation.

L. Provisions, Contingent Liabilities and Contingent Assets:

The Company recognises a provision when there is a present obligation as a result of past event on which it is probable that there will be outflow of resources to settle the obligation in respect of which reliable estimates can be made.

Contingent liabilities are disclosed by way of note to the financial statements after careful evaluation by management of the facts and legal aspects of the matter involved. Contingent assets are neither recognized nor disclosed. M. Impairment of Assets:

a) The carrying amount of assets, other than inventories is reviewed at each Balance Sheet date to assess whether there is any indication of impairment in respect of such asset or group of assets (cash generating unit). If such indication exists, the recoverable amount of such asset or group of asset is estimated.

b) If such recoverable amount of asset or group of asset is less than its carrying amount, an impairment loss is reckoned by reducing the carrying amount to its recoverable amount. If there is an indication at balance sheet date that a previously assessed impairment loss no longer exist, the recoverable amount is reassessed and the asset is reflected at recoverable amount, subject to a maximum of depreciable historical cost.

N. Application of Securities Premium Account:

Share Issue expenses are charged, first against available balance in Securities Premium Account

O. Expenditure during construction and expenditure on new projects:

In case of new projects and in case of substantial modernisation / expansion at existing units of the Company, expenditure incurred prior to commencement of commercial production is capitalised.

P. Accounting of Claims:

Claims receivable are accounted for at the time when reasonable certainty of receipt is established. Claims payable are accounted for at the time of acceptance.

Claims raised by Government Authorities regarding taxes and duties, are accounted for based on the merits of each claim. If same is disputed by the Company, these are shown as 'Contingent Liabilities'.

Q. Operating Lease :

The leases where the lessor, effectively retains substantially all the risks and benefits of ownership of the leased items, are classified as operating leases. Operating lease payments are recognized as expenses in the Profit and Loss Account.

R. Earnings per Share :

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

S. Segment Reporting Policies :

Primary Segment is identified based on the nature of products and services, the different risks and returns and the internal business reporting system. Secondary segment is identified based on geographical area in which major operating divisions of the Company operates. T. Cash and Cash Equivalents :

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank, in hand (including cheques in hand) and short term investment with an original maturity of three months or less. U. Loan processing charges :

All the expenses related to Loan Processing and Legal expenses for the same are deferred as in the opinion of the management the benefit from the same is available for the period of five years.

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Mar 31, 2010

A. System of Accounting :

The Financial statements have been prepared under the historical cost convention except for certain Plant & Machinery, Buildings at Ghatanji, Dhule, Khamgaon and land’s at Ghatanji & Dhule, which are stated at revalued amounts, in accordance with the generally accepted accounting principles in India and the provisions of the Indian Companies Act, 1956, as adopted and consistently followed by the Company. The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis, except those associated with significant uncertainties.

B. Fixed Assets :

Fixed Assets are stated at cost of acquisition, which comprises of purchase price, freight, duties, taxes, borrowing cost and other attributable cost of bringing the asset to working condition for its intended use, except certain fixed assets, which are stated at revalued amount, net of impairment loss less accumulated depreciation/ amortization.

C. Depreciation :

i) Depreciation on Fixed Asset has been provided on the Straight Line Method at the rates specified and in the manner prescribed under Schedule XIV of the Indian Companies Act, 1956. Leasehold land is amortised over the period of lease.

ii) In respect of the revalued assets, the incremental depreciation attributable to the revaluation is recouped from the revaluation reserve on straight line basis.

D. Investments :

Long term investments are stated at Cost. Provision for diminution is made if the decline in value is other than temporary in nature.

E. Revenue Recognition:

i) Revenue from sale of products are recognized on transfer of all significant risks and rewards of ownership of the product on to the customers, which is generally on despatch of goods.

ii) Export sales are accounted on the basis of the dates of bill of lading.

iii) Export incentives are recognized in the year of export and included in the turnover.

iv) Revenue from Services rendered is recognized as per the terms in agreements/arrangements with the concerned parties.

F. Inventories:

Inventories are valued as under:

i) Stores & Spare parts, at cost.

ii) Raw materials and packing materials, at cost.

iii) Finished Goods :

a) Manufactured Goods at lower of cost or net realisable value.

b) Goods for trade, at lower of cost or net realisable value.

Cost of purchased material is determined on the weighted average basis. Cost of Goods in Process and Finished Goods includes Material cost, Labour cost and Manufacturing Overheads.

G. Employee Benefits:

a) All employee benefits payable within twelve months of rendering of the service are classified as short term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia etc, and are recognized in the period in which the employee renders the related services.

b) Retirement benefits in the form of Provident Fund / Family Pension Fund and Superannuation Fund, which are Defined Contribution Plans, are accounted on accrual basis and charged to the profit and loss account of the year.

c) Liabilities in respect of Gratuity, which is Defined Benefit Plans and Leave Encashment, are accrued for the amount, determined on the basis of an Independent actuarial valuation applying the Projected Unit Credit Method.

d) Actuarial gains/losses are recognized in the profit and loss account for the year.

H. Foreign currency transactions:

All Foreign Currency transactions are recorded at the rates of exchange prevailing on the date of transaction. Monetary foreign currency assets and liabilities outstanding at the close of financial year are revalorised at the exchange rates prevailing on the balance sheet date. Resultant Exchange differences are recognised in the Profit and Loss Account.

I. Borrowing Cost:

Borrowing cost that is attributable to acquisition of qualifying asset is capitalised as part of total cost of such assets. All other borrowing costs are recognised as expense in the period in which they are incurred.

J. Government Grants:

Grants received against specific fixed assets are adjusted to the cost of the assets. Revenue grants are recognized in the profit and loss account in accordance with the related scheme and in the period in which these accrue.

K. Taxation:

Current tax is determined at the applicable rates based on assessable income.

Deferred tax is determined using the rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognised and carried forward only if there is reasonable certainty of its realisation. However in case of carried forward losses and unabsorbed depreciation under the Income Tax Act, 1961, the Deferred Tax Asset is recognised only if there is virtual certainty backed by convincing evidence of its realisation. Such assets are reviewed at each Balance Sheet date to reassess its realisation.

L. Provisions, Contingent Liabilities and Contingent Assets:

The Company recognises a provision when there is a present obligation as a result of past event on which it is probable that there will be outflow of resources to settle the obligation in respect of which reliable estimates can be made.

Contingent liabilities are disclosed by way of note to the financial statements after careful evaluation by management of the facts and legal aspects of the matter involved.

Contingent assets are neither recognized nor disclosed.

M. Impairment of Assets:

a) The carrying amount of assets, other than inventories is reviewed at each Balance Sheet date to assess whether there is any indication of impairment in respect of such asset or group of assets (cash generating unit). If such indication exists, the recoverable amount of such asset or group of asset is estimated.

b) If such recoverable amount of asset or group of asset is less than its carrying amount, an impairment loss is reckoned by reducing the carrying amount to its recoverable amount. If there is an indication at balance sheet date that a previously assessed impairment loss no longer exist, the recoverable amount is reassessed and the asset is reflected at recoverable amount, subject to a maximum of depreciable historical cost.

N. Application of Securities Premium Account:

Share Issue expenses are charged, first against available balance in Securities Premium Account

O. Expenditure during construction and expenditure on new projects:

In case of new projects and in case of substantial modernisation / expansion at existing units of the Company, expenditure incurred prior to commencement of commercial production is capitalised.