Accounting Policies of Girnar Spintex Industries Ltd. Company

Mar 31, 2024

1.1 Basis for preparation of accounts

The accounts have been prepared in accordance with IND AS and Disclosures thereon
comply with requirements of IND AS, stipulations contained in Schedule- III- Division II
(revised) as applicable under Section 1 33 of the Companies Act, 201 3 read with Rule 7 of
the Companies (Accounts) Rules 2014, Companies (Indian Accounting Standards) Rules,
2015 as amended from time to time, other pronouncements of ICAI, provisions of the
Companies Act and Rules and guidelines issued by SEBI as applicable. 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 revised Schedule - III to the Companies Act,
201 3.

1.2 Use of Estimates

IND AS enjoins management to make estimates and assumptions related to financial statements
that affect reported amount of assets, liabilities, revenue, expenses and contingent liabilities
pertaining to the year. Actual result may differ from such estimates. Any revision in accounting
estimates is recognized prospectively in the period of change and material revision,
including its impact on financial statements, is reported in the notes to accounts in the year
of incorporation of revision.

1.3 Recognition of Income and Expenses

i. Revenue from sale contracts with customers is recognized when control of the goods or
services are transferred to the customer at an amount that reflects the consideration
entitled in exchange for those goods or services. The Company typically controls the
goods or services before transferring them to the customer. Generally, control is
transferred upon shipment of goods to the customer or when the goods are made
available to the customer, provided transfer of title to the customer occurs and the
Company has not retained any significant risks of ownership or future obligations with
respect to the goods transported.

ii. Interest Income is recognized on time proportion basis taking into account the amount
outstanding and the rate applicable.

iii. Other incomes have been recognized on accrual basis in financial statements except
for cash flow information.

1.4 Property, Plants and Equipment

These tangible assets are held for use in production, supply of goods or services or for
administrative purposes. These are recognized and carried under cost model i.e. cost less
accumulated depreciation and impairment loss, if any which is akin to recognition criteria
under erstwhile GAAP.

i. Cost includes freight, duties, taxes and other expenses directly incidental to
acquisition, bringing the asset to the location and installation including site
restoration up to the time when the asset is ready for intended use. Such Costs
also include Borrowing Cost if the recognition criteria are met.

ii. When a major inspection/repair occurs, its cost is recognized in the carrying
amount of the plant and equipment as a replacement if the re cognition criteria are
satisfied. Any remaining carrying amount of the cost of previous inspection/repair
is derecognized.

iii. Depreciation has been provided on straight line method in terms of expected life
span of assets as referred to in Schedule II of the Companies Act, 201 3.

iv. Components relevant to fixed assets, where significant are separately depreciated
on straight line basis in terms of their life span assessed by technical evaluation in

specific context.

v. On sales of fixed assets any profit earned/loss sustained towards
excess/shortfall of sale value Vis-a- vis carrying cost of assets is accounted for
in statement of profit and loss.

vi. The company has revalued its assets the effect of which has been given in F Y
2019-20 on the basis of valuation report by a registered valuer. In addition, in
respect of plant and equipment, the company has re-estimated the remaining
useful life of each of the asset in this category as at the year end and
depreciation for the whole year has been computed taking into account the
revalued figures and such re-estimated useful life.

1.5 Impairment of Non-Financial Assets

i. The Company assesses at each reporting date as to whether there is any
indication that any Property Plant and Equipment and Intangible Assets or
group of Assets, called Cash Generating Units (CGU) may be impaired. If
any such indication exists, the recoverable amount of an asset or CGU is
estimated to determine the extent of impairment, if any. When it is not possible
to estimate the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the CGU to which the asset belongs.

ii. An impairment loss is recognised in the Statement of Profit and Loss to the
extent, asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is higher of an asset’s fair value less cost of disposal and
value in use. Value in use is based on the estimated future cash flows,
discounted to their present value using pre-tax discount rate that reflects
current market assessments of the time value of money and risk specific to the
assets.

iii. The impairment loss recognised in prior accounting period is reversed if there has
been a change in the estimate of recoverable amount.

1.6 Financial Instruments

i. Financial Assets

Initial Recognition and Measurement

All financial assets are recognized initially at fair value plus, in the case of financial
assets not recorded at fair value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.

Financial assets are classified, at initial recognition, as financial assets measured at
fair value or as financial assets measured at amortized cost.

Subsequent Measurement

For purpose of subsequent measurement, financial assets are classified in two broad
categories:

- Financial Assets at fair value

- Financial Assets at amortized cost

Where assets are measured at fair value, gains and losses are either recognized entirely
in the statement of profit and loss, or recognized in other comprehensive income.

A financial asset that meets the following two conditions is measured at amortized cost.

- Business Model Test: The objective of company''s business model is to hold the financial
asset to collect the contractual cash flows.

- Cash Flow Characteristics Test: The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payment of principal and interest on the
principal amount outstanding.

A financial asset that meets the following two conditions is measured at fair value
through OCI: -

- Business Model Test: The financial asset is held within a business model whose
objective is achieved by both collecting contractual cash flows and selling financial
assets.

- Cash Flow Characteristics Test: The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payment of principal and interest on the
principal amount outstanding.

All other financial assets are measured at fair value through profit and loss.

All equity investments are measured at fair value in the balance sheet, with value
changes recognized in the statement of profit and loss, except for those equity
investments for which the entity has elected irrevocable option to present value changes
in OCI.

Impairment of Financial Assets

The company assesses impairment based on expected credit losses (ECL) model at an
amount equal to:

- 1 2 months expected credit losses, or

- Lifetime expected credit losses

Depending upon whether there has been a significant increase in credit risk since initial
recognition.

However, for trade receivables, the company does not track the changes in credit risk.
Rather, it recognizes impairment loss allowances based on lifetime ECLs at each
reporting date, right from its initial recognition.

ii. Financial Liabilities

All financial liabilities are initially recognized at fair value and, in the case of
loans and borrowings and payables, net of directly attributable transaction costs.

Financial liabilities are classified as measured at amortized cost or Fair Value Through
Profit and Loss (FVTPL). A financial liability is classified as FVTPL if it is classified as held
for trading, or it is a derivative or is designated as such on initial recognition.
Financial Liabilities at FVTPL are measured at fair value and net gains or losses,
including any interest expense, are recognized in statement of profit and loss. Other
financial liabilities are subsequently measured at amortized cost using the effective
interest method. Interest expense and foreign exchange gains and losses are
recognized in statement of profit and loss. Any gain or loss on de-recognition is also
recognized in statement of profit and loss.

1.7 Fair Value Measurement

The company measures financial instruments at fair value at each balance sheet date.

Fair Value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement
date. The fair value measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for
the asset or liability.

The principal or the most advantageous market must be accessible by the company.

The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market
participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market
participant''s ability to generate economic benefits by using the asset in its highest
and best use or by selling it to another market participant that would use the asset in
its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and
for which sufficient data are available to measure fair value, maximizing the use of
relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorized within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair value measurement as a
whole:

- Level 1 - Quoted (unadjusted) market prices in active markets for identified assets or
liabilities

-Level 2 - Valuation techniques for which the lowest level of input that is significant to
the fair value measurement is directly or indirectly observable

- Level 3 - Valuation techniques for which the lowest level input that is significant to
the fair value measurement is unobservable

For the purpose of fair value disclosure, the Company has determined classes of assets
and liabilities on the basis of the nature, characteristics and risks of the asset or
liability and the level of the fair value hierarchy as explained above.

1.8 Inventories

Inventories are valued at the lower of cost or net realizable value. Cost includes
purchase price, duties, transport & handing costs and other costs directly attributable
to the acquisition and bringing the inventories to their present location and condition.

The cost in respect of raw materials, store and spares and packing material is determined
under the weighted average cost method.

Inventories of work in process and finished goods have been valued at weighted average
cost for the year. Such weighted average cost has been arrived taking the operation of
the plant at normal capacity.

Waste is valued at estimated net realizable value.

1.9 Employee Benefits

i. Short term employee benefits

Liabilities for wages and salaries, including non-monetary benefits that are expected to
be settled wholly within 12 months after the end of the period are recognized in respect
of employees'' services up to the end of the reporting period and are measured at the
amounts expected to be incurred when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in the balance sheet.

ii. Long term/Post Separation employee benefit plan

y Defined Contribution Plan:

The company''s contributions to recognized Provident Fund and Labour Welfare
Fund are charged to profit and loss account on accrual basis.

y Defined Benefit Plan:

The Company has accounted for the long term employee benefits in the form of
gratuity and leave encashment on the basis of valuation report of the actuary. Till
the year ending 31.03.2021 expenditure on defined benefits plans was accounted for
actual payment basis, the liability being not significant on accrual basis.

1.10 Income Tax and Deferred Tax

The liability of company on account of Income Tax is computed considering the
provisions of the Income Tax Act, 1961.

Deferred tax is provided using balance sheet approach on temporary differences
at the reporting date as difference between the tax base and the carrying
amount of assets and liabilities. Deferred tax is recognized subject to the
probability that taxable profit will be available against which the temporary
differences can be reversed.

Deferred tax assets and liabilities are measured at the tax rates that are expected
to apply in the year when the asset is realized or the liability is settled, based on
tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date. Deferred tax relating to items recognized outside profit or loss is
recognized outside profit or loss (either in other comprehensive income or in equity).

Deferred tax assets and deferred tax liabilities are offset if a legally
enforceable right exists to set off current tax assets against current tax liabilities
and the deferred taxes relate to the same taxable entity and the same taxation
authority.

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Mar 31, 2015

(a) SYSTEM OF ACCOUNTING

The Company follows the accrual system of accounting.

(b) OVERALL VALUATION POLICY

The accounts have been prepared under the historical cost convention.

(c) REVENUE RECOGNITION

Revenue on sale of goods is recognized on transfer of significant risks & rewards of ownership to the buyer and on reasonable certainty of the ultimate collection. Sales are net off sales tax, trade discounts and sales returns. Job work income is recognized when the finished goods are accepted by the principal. Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable

(d) VALUATION OF INVENTORY

Inventories are valued at lower of cost and net realizable value.

The cost in respect of raw materials, store and spares and packing material is determined under the Specific Identification of cost method. Cost is net of credit under CENVAT scheme, wherever applicable.

The cost in respect of work-in-progress and finished goods is determined using the weighted average cost method and includes direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity.

The cost in respect of the inventory produced (whether own production or on job work basis) is valued on the basis of labor and a proportion of manufacturing overheads based on normal operating capacity.

Waste is valued at estimated net realizable value.

(e) FIXED ASSETS

All fixed assets are stated at original cost less depreciation. Cost includes freight, duties (net of CENVAT), taxes and other incidental expenses relating to acquisition and installation.

(f) DEPRECIATION

Depreciation has been provided on written down value method in accordance with the rates prescribed under Schedule II to the Companies Act, 2013. On the basis of technical advice, the Company has treated its spinning Process Plant as a Continuous Process Plant and has provided depreciation accordingly.

(g) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency are accounted for at the exchange rates prevailing on the date of transaction. All monetary items denominated in foreign currency are translated at year end rates. Exchange differences arising on such transactions and also exchange differences arising on the settlement of such transactions are adjusted in the profit and loss account.

In case of forward contracts the premium or discount on all such contracts arising at the inception of each contract is recognized / mortised as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of such contract is recognized as income or expense for the period. (h) EMPLOYEE BENEFITS

i. Defined Contribution Plan

The company's contributions to recognized Provident Fund and Labor Welfare Fund are charged to profit and loss account on accrual basis. ii. Defined Benefit Plan Gratuity - The Gratuity plan, a defined benefit plan, provides a lump sum payment to vested employees, at the retirement or termination of employment, an amount based on the respective employees' last drawn salary and the years of employment with the Company. The liability with regard to Gratuity plan is accrued based on the actuarial valuation at the balance sheet date, carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the statement of profit and loss as income or expense. The Company has employees' Gratuity fund managed by Life Insurance Corporation of India ("LIC.).

Compensated Absences – The Company provides for the encashment of absence or absences with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measured the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

(i) INVESTMENTS

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

(j) BORROWING COST

Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which they are incurred.

(k) LEASES

The company has taken premises on lease. Lease rental in respect of operating lease arrangement are charged to Profit and Loss Account.

(l) TAXES ON INCOME

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit/(loss) for the year.

A provision is made for the current tax based on tax liability computed in accordance with the relevant tax rates and tax laws. Deferred tax assets are recognized for all deductible timing differences and carried forward to the extent it is reasonably certain that future taxable profit will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

(m) IMPAIRMENT OF ASSETS

At each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:

a) the provision for impairment, if any, required; or

b) the reversal, if any, required of impairment loss recognized in previous period.

Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined

a) In the case of an individual asset, on the higher of the net selling price and the value in use.

b) In the case of a cash-generating unit, on the higher of the cash generating units net selling price and value in use.

(Value in use is determined on the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life)

(n) GOVERNMENT GRANT

Government grants of the nature of promoter's contribution are credited to capital reserve and treated as part of shareholder's funds.

(o) PROVISIONS AND CONTINGENCIES

The company creates a provision when there is present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made.

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Mar 31, 2014

(a) SYSTEM OF ACCOUNTING

The Company follows the accrual system of accounting.

(b) OVERALL VALUATION POLICY

The accounts have been prepared under the historical cost convention.

(c) REVENUE RECOGNITION

Revenue on sale of goods is recognized on transfer of significant risks & rewards of ownership to the buyer and on reasonable certainty of the ultimate collection. Sales are net off sales tax, trade discounts and sales returns. Job work income is recognized when the finished goods are accepted by the principal. Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

(d) VALUATION OF INVENTORY

Inventories are valued at lower of cost and net realisable value.

The cost in respect of raw materials, store and spares and packing material is determined under the Specific Identification of cost method. Cost is net of credit under CENVAT scheme, wherever applicable.

The cost in respect of work-in-progress and finished goods is determined using the weighted average cost method and includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

The cost in respect of the inventory produced (whether own production or on job work basis) is valued on the basis of labour and a proportion of manufacturing overheads based on normal operating capacity.

Waste is valued at estimated net realisable value.

(e) FIXED ASSETS

All fixed assets are stated at original cost less depreciation. Cost includes freight, duties (net of CENVAT), taxes and other incidental expenses relating to acquisition and installation.

(f) DEPRECIATION

Depreciation has been provided on straight-line method in accordance with the rates prescribed under Schedule XIV to the Companies Act, 1956. On the basis of technical advice, the Company has treated its spinning Process Plant as a Continuous Process Plant and has provided depreciation accordingly.

(g) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency are accounted for at the exchange rates prevailing on the date of transaction. All monetary items denominated in foreign currency are translated at year end rates. Exchange differences arising on such transactions and also exchange differences arising on the settlement of such transactions are adjusted in the profit and loss account.

In case of forward contracts the premium or discount on all such contracts arising at the inception of each contract is recognized / amortised as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of such contract is recognized as income or expense for the period.

(h) EMPLOYEE BENEFITS

i. Defined Contribution Plan

The company''s contributions to recognized Provident Fund and Labour Welfare Fund are charged to profit and loss account on accrual basis.

ii. Defined Benefit Plan

Gratuity - The Gratuity plan, a defined benefit plan, provides a lump sum payment to vested employees, at the retirement or termination of employment, an amount based on the respective employees'' last drawn salary and the years of employment with the Company. The liability with regard to Gratuity plan is accrued based on the actuarial valuation at the balance sheet date, carried out by an independent actuary. Actuarial gain or loss is recognised immediately in the statement of profit and loss as income or expense. The Company has employees'' Gratuity fund managed by Life Insurance Corporation of India ("LIC").

Compensated Absences – The Company provides for the encashment of absence or absences with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measured the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

(i) INVESTMENTS

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

(j) BORROWING COST

Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which they are incurred.

(k) LEASES

The company has taken premises on lease. Lease rental in respect of operating lease arrangement are charged to Profit and Loss Account.

(l) TAXES ON INCOME

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit/(loss) for the year.

A provision is made for the current tax based on tax liability computed in accordance with the relevant tax rates and tax laws. Deferred tax assets are recognized for all deductible timing differences and carried forward to the extent it is reasonably certain that future taxable profit will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

(m) IMPAIRMENT OF ASSETS

At each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:

a) the provision for impairment, if any, required; or

b) the reversal, if any, required of impairment loss recognised in previous period.

Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined

a) In the case of an individual asset, on the higher of the net selling price and the value in use.

b) In the case of a cash-generating unit, on the higher of the cash generating units net selling price and value in use. (Value in use is determined on the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life)

(n) GOVERNMENT GRANT

Government grants of the nature of promoter''s contribution are credited to capital reserve and treated as part of shareholder''s funds.

(o) PROVISIONS AND CONTINGENCIES

The company creates a provision when there is present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made.

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Mar 31, 2012

(a) SYSTEM OF ACCOUNTING

The Company follows the accrual system of accounting.

(b) OVERALL VALUATION POLICY

The accounts have been prepared under the historical cost convention.

(c) REVENUE RECOGNITION

Revenue on sale of goods is recognized on transfer of significant risks & rewards of ownership to the buyer and on reasonable certainty of the ultimate collection. Sales are net off sales tax, trade discounts and sales returns.

Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

(d) VALUATION OF INVENTORY

Inventories are valued at lower of cost and net realisable value.

The cost in respect of raw materials, store and spares and packing material is determined under the Specific Identification of cost method. Cost are net of credit under CENVAT scheme, wherever applicable.

The cost in respect of work-in-progress and finished goods is determined using the weighted average cost method and includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Waste is valued at estimated net realisable value.

(e) FIXED ASSETS

All fixed assets are stated at original cost less depreciation. Cost includes freight, duties (net of CENVAT), taxes and other incidental expenses relating to acquisition and installation.

(f) DEPRECIATION

Depreciation has been provided on straight-line method in accordance with the rates prescribed under Schedule XIV to the Companies Act, 1956. On the basis of technical advice, the Company has treated its spinning Process Plant as a Continuous Process Plant and has provided depreciation accordingly.

(g) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency are accounted for at the exchange rates prevailing on the date of transaction. All monetary items denominated in foreign currency are translated at year end rates. Exchange differences arising on such transactions and also exchange differences arising on the settlement of such transactions are adjusted in the profit and loss account.

In case of forward contracts the premium or discount on all such contracts arising at the inception of each contract is recognized / amortised as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of such contract is recognized as income or expense for the period.

(h) EMPLOYEE BENEFITS

i. Defined Contribution Plan

The company's contributions to recognized Provident Fund and Labour Welfare Fund are charged to profit and loss account on accrual basis.

ii. Defined Benefit Plan

Gratuity - The Gratuity plan, a defined benefit plan, provides a lump sum payment to vested employees, at the retirement or termination of employment, an amount based on the respective employees' last drawn salary and the years of employment with the Company. The liability with regard to Gratuity plan is accrued based on the actuarial valuation at the balance sheet date, carried out by an independent actuary. Actuarial gain or loss is recognised immediately in the statement of profit and loss as income or expense. The Company has employees' Gratuity fund managed by Life Insurance Corporation of India ("LIC").

Compensated Absences - The Company provides for the encashment of absence or absences with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measured the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

(i) INVESTMENTS

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

(j) BORROWING COST

Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which they are incurred.

(k) LEASES

The company has taken premises on lease. Lease rental in respect of operating lease arrangement are charged to Profit and Loss Account.

(l) TAXES ON INCOME

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit/(loss) for the year.

A provision is made for the current tax based on tax liability computed in accordance with the relevant tax rates and tax laws. Deferred tax assets are recognized for all deductible timing differences and carried forward to the extent it is reasonably certain that future taxable profit will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

(m) IMPAIRMENT OF ASSETS

At each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:

a) the provision for impairment, if any, required; or

b) the reversal, if any, required of impairment loss recognised in previous period.

Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

Recoverable amount is determined

a) In the case of an individual asset, on the higher of the net selling price and the value in use.

b) In the case of a cash-generating unit, on the higher of the cash generating units net selling price and value in use.

(Value in use is determined on the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life)

(n) GOVERNMENT GRANT

Government grants of the nature of promoter's contribution are credited to capital reserve and treated as part of shareholder's funds.

(o) PROVISIONS AND CONTINGENCIES

The company creates a provision when there is present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made.

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Mar 31, 2011

1 SYSTEM OF ACCOUNTING

The Company follows the accrual system of accounting

2 OVERALL VALUATION POLICY

The accounts have been prepared under the historical cost convention.

3 REVENUE RECOGNITION

Revenue on sale of goods is recognized on transfer of significant risks & rewards of ownership to the buyer and on reasonable certainty of the ultimate collection. Sales are net off sales tax, trade discounts and sales returns.

Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable

4 VALUATION OF INVENTORY

Inventories are valued at lower of cost and net realisable value.

The cost in respect of raw materials, store and spares and packing material is determined under the Specific Identification of cost method. Cost are net of credit under CENVAT scheme, wherever applicable.

The cost in respect of work-in-progress and finished goods is determined using the weighted average cost method and includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Waste is valued at estimated net realisable value.

5 FIXED ASSETS

All fixed assets are stated at original cost less depreciation. Cost includes freight, duties (net of CENVAT), taxes and other incidental expenses relating to acquisition and installation.

6 DEPRECIATION

Depreciation has been provided on straight-line method in accordance with the rates prescribed under Schedule XIV to the Companies Act, 1956. On the basis of technical advice, the Company has treated its spinning Process Plant as a Continuous Process Plant and has provided depreciation accordingly.

7 FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency are accounted for at the exchange rates prevailing on the date of transaction. All monetary items denominated in foreign currency are translated at year end rates. Exchange differences arising on such transactions and also exchange differences arising on the settlement of such transactions are adjusted in the profit and loss account.

In case of forward contracts the premium or discount on all such contracts arising at the inception of each contract is recognized / amortised as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of such contract is recognized as income or expense for the period.

8 EMPLOYEE BENEFITS

a Defined Contribution Plan

The company's contributions to recognized Provident Fund and Labour Welfare Fund are charged to profit and loss account on accrual basis.

b Defined Benefit Plan

Gratuity - The Gratuity plan, a defined benefit plan, provides a lump sum payment to vested employees, at the retirement or termination of employment, an amount based on the respective employees' last drawn salary and the years of employment with the Company. The liability with regard to Gratuity plan is accrued based on the actuarial valuation at the balance sheet date, carried out by an independent actuary. Actuarial gain or loss is recognised immediately in the statement of profit and loss as income or expense. The Company has employees' Gratuity fund managed by Life Insurance Corporation of India ("LIC”).

Compensated Absences – The Company provides for the encashment of absence or absences with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measured the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

9 INVESTMENTS

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

10. BORROWING COST

Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which they are incurred.

11. LEASES

The company has taken premises on lease. Lease rental in respect of operating lease arrangement are charged to Profit and Loss Account.

12. TAXES ON INCOME

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit/(loss) for the year.

A provision is made for the current tax based on tax liability computed in accordance with the relevant tax rates and tax laws. Deferred tax assets are recognized for all deductible timing differences and carried forward to the extent it is reasonably certain that future taxable profit will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

13. IMPAIRMENT OF ASSETS

At each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:

a) the provision for impairment, if any, required; or

b) the reversal, if any, required of impairment loss recognised in previous period.

Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

Recoverable amount is determined

a) In the case of an individual asset, on the higher of the net selling price and the value in use.

b) In the case of a cash-generating unit, on the higher of the cash generating units net selling price and value in use.

(Value in use is determined on the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life)

14. GOVERNMENT GRANT

Government grants of the nature of promoter's contribution are credited to capital reserve and treated as part of shareholder's funds.

15. PROVISIONS AND CONTINGENCIES

The company creates a provision when there is present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made.

*The Company has provided corporate guarantee for USD 42.50 million jointly with Spentex Industries Limited for the loan given to Spentex (Netherlands), B.V. by Lehman and SBI. The company has been legally advised that guarantee given to Lehman is no longer valid as Lehman did not comply with the terms and conditions of the loan agreement based on which guarantee was given.

As certified by the management based on the available information.

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Mar 31, 2010

1 SYSTEM OF ACCOUNTING

The Company follows the accrual system of accounting.

2 OVERALL VALUATION POLICY

The accounts have been prepared under the historical cost convention.

3 REVENUE RECOGNITION

Revenue on sale of goods is recognized on transfer of significant risks & rewards of ownership to the buyer and on reasonable certainty of the ultimate collection. Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable

4 VALUATION OF INVENTORY

Inventories are valued at lower of cost and net realisable value.

The cost in respect of raw materials, store and spares and packing material is determined under the Specific Identification of cost method. The cost in respect of work-in-progress and finished goods is determined using the weighted average cost method and includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Waste is valued at estimated net realisable value.

5 FIXED ASSETS

All fixed assets are stated at original cost less depreciation. Cost includes freight, duties (net of MODVAT/ CENVAT), taxes and other incidental expenses relating to acquisition and installation.

6 DEPRECIATION

Depreciation has been provided on straight-line method in accordance with the rates prescribed under Schedule XIV to the Companies Act, 1956. On the basis of technical advice, the Company has treated its spinning Process Plant as a Continuous Process Plant and has provided depreciation accordingly.

7 FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency are accounted for at the exchange rates prevailing on the date of transaction. All monetary items denominated in foreign currency are translated at year end rates. Exchange differences arising on such transactions and also exchange differences arising on the settlement of such transactions are adjusted in the profit and loss account.

The gain/losses arising on repayment and restatement of foreign exchange liabilities incurred to acquire fixed assets from a country outside India are adjusted in the carrying cost of fixed asset.

In case of forward contracts the premium or discount on all such contracts arising at the inception of each contract is recognized / amortised as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of such contract is recognized as income or expense for the period.

8 EMPLOYEE BENEFITS

a Defined Contribution Plan

The companys contributions to recognized Provident Fund and Labour Welfare Fund are charged to profit and loss account on accrual basis.

b Defined Benefit Plan

Gratuity - The Gratuity plan, a defined benefit plan, provides a lump sum payment to vested employees, at the retirement or termination of employment, an amount based on the respective employees last drawn salary and the years of employment with the Company. The liability with regard to Gratuity plan is accrued based on the actuarial valuation at the balance sheet date, carried out by an independent actuary. Actuarial gain or loss is recognised immediately in the statement of profit and loss as income or expense. The Company has employees Gratuity fund managed by Life Insurance Corporation of India (“LIC”)

Compensated Absences - The Company provides for the encashment of absence or absences with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measured the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

9 INVESTMENTS

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

10. BORROWING COST

Borrowing cost, less any income on the temporary investment out of these borrowings, that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which they are incurred.

11. LEASES

The company has taken premises on lease. Lease rental in respect of operating lease arrangement are charged to Profit and Loss Account.

12. TAXES ON INCOME

Tax expense for the year, comprising current tax, deferred tax, fringe benefit tax is included in determining the net profit/(loss) for the year.

A provision is made for the current tax and fringe benefit tax based on tax liability computed in accordance with the relevant tax rates and tax laws. Deferred tax assets are recognized for all deductible timing differences and carried forward to the extent it is reasonably certain that future taxable profit will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

13. IMPAIRMENT OF ASSETS

At each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:

a) the provision for impairment, if any, required; or

b) the reversal, if any, required of impairment loss recognised in previous period.

Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

Recoverable amount is determined

a) In the case of an individual asset, on the higher of the net selling price and the value in use.

b) In the case of a cash-generating unit, on the higher of the cash generating units net selling price and value in use.

(Value in use is determined on the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life)

14. PROVISIONS AND CONTINGENCIES

The company creates a provision when there is present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made.