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Accounting Policies of Gujarat Cotex Ltd. Company

Mar 31, 2014

I) Basis of Accounting:

The financial statements are prepared under historical cost convention on accrual basis of accounting and in accordance with the Accounting Standards prescribed under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

ii) Use of Estimates :

The presentation of 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. Difference between the actual results and estimates are recognized in the period in which the results are known /materialized.

iii) Revenue Recognition & other Accounting Policies:

(a) The Company recognize revenue on the sale of products when risks and rewards of the ownership is transfer to the customer. Sales are accounted net of amount recovered towards excise duty, Sales Tax and sales Returns.

(b) Sales returns are accounted on actual receipt of return goods/settlements of claims.

(c) Services are accounted for pro-rata over the period of contract. iv) Fixed Assets & Depreciation :

a) Fixed Assets are stated at cost of acquisition / Construction, cost of improvement and any attributable cost of bringing the asset to its working condition for intended use or at revalued amounts wherever such assets have been revalued less accumulated depreciation.

b) Depreciation on all assets are provided on written down value method specified in Income Tax Act, 1961.

v) Intangible Assets and Amortization :

Intangible assets are measured at cost and written off 10% every year. vi) Borrowing Cost :

As informed to us, there are no borrowing cost applicable to the Company. vii) Foreign Currency Transactions:

As informed to us, there are "''NO Foreign Currency Transactions". viii) Employee Benefits

a) Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages and the expected cost of bonus are recognized in the period in which an employee renders the related services.

b) Post-Employment Benefits:

i. Defined Contribution Plans:

The Company''s Statutory Provident Fund, Employees'' Super-annuation Fund and Employee State Insurance Scheme are defined contribution plans. As informed to us No Such Benefits are applicable to the Company and hence No Such provisions are made.

ii. Defined Benefit Plan:

The Employees'' Group Gratuity Fund is the Company''s defined benefit plan for which Company has not taken Group Gratuity cum Life Insurance Policy from Life Insurance Corporation of India. As informed to us No Gratuity or any benefits are applicable to the Company and hence not provided.

ix) Taxation :

Income Tax comprises of Current Tax and net changes in Deferred Tax Assets or Liability during the period. Current Tax is determined as the amount of tax payable in respect of taxable income for the period as per the enacted Tax Regulations.

Deferred Tax Assets and Liabilities are recognized for the future tax consequences of timing differences between the book profit and tax profit. Deferred Tax Assets and Liabilities other than on carry forward losses and unabsorbed depreciation under tax laws are recognized when it is reasonably certain that there will be future taxable income. Deferred Tax Asset on carry forward losses and unabsorbed depreciation, if any, are recognized when it is virtually certain that there will be future taxable profit. Deferred Tax Assets and liabilities are measured using substantively enacted tax rates. The effect on Deferred Tax Assets and Liabilities of a change in tax rates is recognized in the Statement of Profit & Loss in the period of substantive enactment of the change

x) Valuation of Stock:

As informed to us Company has No Stock on Hand and hence Valuation is not Applicable.. xi) Leases:

No Assets acquired on Lease.

xii) Provision for Bad and Doubtful debts:

Provision is made in accounts for Bad and Doubtful Debts as and when the same in opinion of the Management are considered doubtful of recovery.

xiii) Liquidated Damages :

As informed to us there are No Liquidated Damages to the Company and hence no Provision made.

xiv) Impairment of Fixed Assets :

Consideration is given at each Balance Sheet date to determine whether there is any indication of carrying amount of the Company''s fixed assets. If there is any indication of impairment based on internal / external factors, then asset''s recoverable amount is estimated.

xv) Investment:

Long-term investments are carried at cost. Provision for diminution is not made to recognize a decline, in value of long-term investments and is determined separately for each individual investment.

xvi) Research & Development:

As informed to us there are No Research and Development Expenses incurred by the Company.

xvii) Provisions, contingent liabilities and contingent assets:

As informed to us there are Not required for such provisions and hence the same are not made by the Company.

xviii) Cash Flow Statement:

Cash flows are reported using the indirect method, whereby profit/ (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

Cash comprises cash on hand and demand deposits with banks. Cash Equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

xix) Earnings per Share:

Basic earnings per share is calculated by dividing the net profit after tax for the period attributable to the equity shareholders of the Company by weighted average number of equity shares outstanding during the period.