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Accounting Policies of Hindoostan Mills Ltd. Company

Mar 31, 2017

I. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with rule 7 of the Companies (Accounts) Rules, 2016, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

II. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of Assets and Liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. The difference between the actual results and estimates are recognized in the year in which the results materialize/ are known.

III. Property, Plant and Equipment (Fixed Assets) and Intangible Assets:

1. Tangible Assets

i. Tangible Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed) and Borrowing Costs, if any.

ii. Machinery Spares which can be used only in connection with a particular item of Fixed Asset and the use of which is irregular, are capitalized at cost (net of Modvat / Cenvat credit availed)

2. Intangible Assets

Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to the Assets will flow to the enterprise and the cost of the assets can be measured reliably. The Intangible Assets are recorded at cost and are carried at cost less amortization and accumulated impairment losses, if any.

3. Assets taken on Lease:

i. Finance Lease

Assets taken on Finance Lease after April 1, 2001 are accounted for as Fixed Assets in accordance with the Accounting Standard -19 “Lease” (AS 19) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.

ii. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

IV. Depreciation/ Amortization:

(Refer Note 27B Point no. VI regarding Fixed Assets and

Depreciation)

A. Tangible Assets

1. Textile Unit:

i. Depreciation on Plant and Machinery is provided on Straight Line Method.

ii. Depreciation on Assets other than Plant and Machinery is provided on Written down value Method.

iii. Costs of Reeds are amortized over a period of 2 years.

iv. Cost of Imported Heald frames are amortized over a period of 5 years and Domestic Heald frame over a period of 3 years.

2. Engineering Unit:

i. Depreciation on Fixed Assets is provided on Straight Line Method for Assets acquired upto March 31, 2001.

ii. Depreciation on Fixed Assets is provided on Written down value Method for Assets acquired on or after April 1, 2001.

3. Composite Unit:

i. Depreciation on Plant and Machinery is provided on Straight Line Method.

ii. Depreciation on Fixed Assets other than Plant and Machinery is provided on Written down value Method.

4. Depreciation on additions to Fixed Assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

5. Depreciation on Assets sold, discarded, demolished or scrapped, is provided upto the date on which the said Asset is sold, discarded, demolished or scrapped.

6. Cost of Leasehold Land and Improvement is written off over the period of Lease.

B. Intangible Assets.

Intangible Assets are amortized in accordance with Accounting Standard 26 “Intangible Assets” (AS-26) issued by the Institute of Chartered Accountants of India and prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016.

V. Investments:

Long term Investments are stated at cost less diminution in the value of Investments, if any. Current Investments are stated at cost or market value whichever is lower.

VI. Inventories:

1. Textile Unit:

i. Raw Materials :

At monthly weighted average cost.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished Goods :

At quarterly weighted average cost or net realizable value whichever is lower.

2. Engineering Unit:

i. Raw Materials :

At cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished goods :

Finished Goods are valued at lower of cost or net realizable value.

3. Composite Unit:

i. Raw Materials :

At cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished Goods :

At cost or net realizable value whichever is lower.

Cost comprises of cost of materials, employee cost, factory overheads and other costs incurred in bringing the inventory to their present location and condition.

VII. Employee Benefits:

1. Defined Contribution Plan:

Employee Benefits in the form of contributions to Provident Fund, Employees State Insurance, Labour Welfare Fund managed by Government Authorities are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year on accrual basis.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

2. Defined Benefit Plan:

The liability for Leave Encashment and Gratuity is determined on actuarial basis as per the Accounting Standard-15 “Employee Benefits” (AS 15) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016.

VIII. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring Fixed Assets are adjusted in the carrying amount of the respective Fixed Assets. Exchange differences arising on settlement of other transactions are recognized in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported Fixed Assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognized in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / Discount arising on such forward exchange contract is amortized as income / expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognized as income or expense.

IX. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

X. Revenue Recognition:

1. Revenue from Domestic sale is recognized on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

2. Revenue from Export sale is recognized on transfer of significant risks and rewards of ownership based on Bill of lading date.

3. Dividend income is recognized when the right to receive dividend is established.

4. Revenue in respect of other income/claims, etc is recognized only when it is reasonably certain that ultimate collection will be made.

XI. Government Grants:

Grants are accounted for when it is reasonably certain that ultimate collection will be made.

XII. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on “Accounting for Taxes on Income” (AS-22) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognized for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

XIII. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

XIV. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying Assets are capitalized as part of the cost of such Assets in accordance with Accounting Standard - 16 on “Borrowing Costs” (AS-16) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

XV. Provision, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Other Notes to Accounts. Contingent assets are neither recognized nor disclosed in the Financial Statement.

XVI. Impairment of Fixed Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on Fixed Assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard - 28 “Impairment of Assets” (AS-28) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds its recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.


Mar 31, 2016

I. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with rule 7 of the Companies (Accounts) Rules , 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

II. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect reported amounts of Assets and Liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. The difference between the actual results and estimates are recognized in the year in which the results materialize/ are known.

III. Fixed Assets:

1. Tangible Fixed Assets

i. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed) and Borrowing Costs, if any.

ii. Machinery Spares which can be used only in connection with a particular item of Fixed Asset and the use of which is irregular, are capitalized at cost (net of Modvat / Cenvat credit availed)

2. Intangible Fixed Assets

Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the Assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less amortization and accumulated impairment losses, if any.

3. Assets taken on Lease:

i. Finance Lease

Assets taken on Finance Lease after April 1, 2001 are accounted for as Fixed Assets in accordance with the Accounting Standard-19 “Lease” (AS 19) issued by the

Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act , 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability. ii. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

IV. Depreciation/ Amortization

(See note no. 2713 VI regarding Fixed Assets and the Depreciation)

A. Tangible Fixed Assets

1. Textile Unit:

i. Depreciation on Plant and Machinery is provided on Straight Line Method.

ii. Depreciation on Assets other than Plant and Machinery is provided on Written down value Method.

iii. Costs of Reeds are amortized over a period of 2 years.

iv. Cost of Imported Held frames are amortized over a period of 5 years and Domestic Heal frame over a period of 3 years.

2. Engineering Unit:

i. Depreciation on Fixed Assets is provided on Straight Line Method for Assets acquired up to March 31, 2001.

ii. Depreciation on Fixed Assets is provided on Written down value Method for Assets acquired on or after April 1, 2001.

3. Composite Unit:

i. Depreciation on Plant and Machinery is provided on Straight Line Method.

ii. Depreciation on Fixed Assets other than Plant and Machinery is provided on Written down value Method.

4. Depreciation on additions to Fixed Assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

5. Depreciation on Assets sold, discarded, demolished or scrapped, is provided up to the date on which the said Asset is sold, discarded, demolished or scrapped.

6. Cost of Leasehold Land is written off over the period of Lease.

B. Intangible Assets.

Intangible Assets are amortized in accordance with Accounting Standard 26 “Intangible Assets” (AS-26) issued by the Institute of Chartered Accountants of India and prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014.

V. Investments:

Long term Investments are stated at cost less diminution in the value of Investments, if any. Current Investments are stated at cost or market value whichever is lower.

VI. Inventories:

1. Textile Unit:

i. Raw Materials :

At monthly weighted average cost.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished Goods :

At quarterly weighted average cost or net realizable value whichever is lower.

2. Engineering Unit:

i. Raw Materials :

At cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished goods :

Finished Goods are valued at lower of cost or net realizable value.

3. Composite Unit:

i. Raw Materials :

At cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished Goods :

At cost or net realizable value whichever is lower.

Cost comprises of cost of materials, employee cost, factory overheads and other costs incurred in bringing the inventory to their present location and condition.

VII. Employee Benefits:

1. Defined Contribution Plan:

Employee Benefits in the form of contributions to Provident Fund, Employees State Insurance, Labour Welfare Fund managed by Government Authorities are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year on accrual basis.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

2. Defined Benefit Plan:

The liability for Leave Encashment and Gratuity is determined on actuarial basis as per the Accounting Standard -15 “Employee Benefits” (AS-15) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014.

VIII. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are affected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring Fixed Assets are adjusted in thecarrying amount of the respective Fixed Assets. Exchange differences arising on settlement of other transactions are recognized in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported Fixed Assets) denominated in foreign currency and not covered by forward contracts are restated using exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognized in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / Discount arising on such forward exchange contract is amortized as income / expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognized as income or expense.

IX. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

X. Revenue Recognition:

1. Revenue from Domestic sale is recognized on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

2. Revenue from Export sale is recognized on transfer of significant risks and rewards of ownership based on Bill of lading date.

3. Dividend income is recognized when the right t receive dividend is established.

4. Revenue in respect of other income/claims, etc is recognized only when it is reasonably certain that ultimate collection will be made.

XI. Government Grants:

Grants are accounted for when it is reasonably certain that ultimate collection will be made.

XII. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on “Accounting for Taxes on Income” (AS-22) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognized for future tax consequence attributable to timing difference

between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

Xm. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

XIV. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying Assets are capitalized as part of the cost of such Assets in accordance with Accounting Standard - 16 on “Borrowing Costs” (AS-16) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

XV. Provision, Contingent liabilities and Contingent Assets: (AS-29)

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that

, there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Other Notes to Accounts. Contingent assets are neither recognized nor disclosed in the Financial Statement.

XVI. Impairment of Fixed Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on Fixed Assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard-28 “Impairment of Assets”(AS-28) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.

IV. The Board of Directors has recommend dividend of'' 4.50 per share on 16,64,548 Equity Shares of Rs, 10/- each aggregating to Rs, 90.15 lakhs (Inclusive of Dividend Distribution Tax of Rs,15.25 lakhs).

V. The Memorandum of Settlement between Hindoostan Mills Limited and the Karad Taluka Girani Kamagar Sangh, Karad (Sangh) expired on 31st December, 2015. The Charter of Demands has been submitted by Sangh to the Management. The negotiations between the Management and the Sangh are in progress and accordingly, the Company has made a provision on an estimated basis which will be adjusted in the year in which finality is reached.

VI. FIXED ASSETS AND DEPRECIATION :

Consequent to the enactment of the Companies Act, 2013 (the Act) and its applicability for accounting periods commencing on or after 1st April, 2014, the Companies has re-worked depreciation with reference to the useful lives of Fixed Assets prescribed by PART ‘C’ of Schedule II to the Act. Where the remaining useful life of an Asset is nil, the carrying amount of the Asset after retaining the residual value, as at 1st April, 2014 has been adjusted to the General Reserve. In other cases the carrying values have been depreciated over the remaining useful lives of the Assets and recognized in the Statement of Profit and Loss.

Since then, as per the amendment dated 20th August, 2014, the useful life specified in Part C- of Schedule II has been defined to mean that if the cost of a Part of Asset is significant to the total cost of the Assets and useful life of that part is different from the useful life of the remaining Assets, useful life of that significant part shall be determined separately and depreciated accordingly.

In the opinion of the Management, the Company’s Assets are such that there are no significant parts thereof whose life would be different than the useful life of the whole Asset (The management opinion on component accounting being technical in nature the same is relied upon by the Auditors). Consequently, the Company has continued to provide depreciation in respect of all its Assets on the basis as was followed in the financial year 2014-15, i.e. based on useful lives of the respective Assets.

VII. INVESTMENTS:

The Investment of 42 Shares in Yeshwant Sahakari Sakhar Karkhana Ltd. (Society), are held in the names of two Directors of the Company, being its nominees, as required by the bye-laws of the Society.

VIII. Property under Development reflected as Stock-in-Trade was written down to '' 1 lakh in the earlier year as a measure of prudence. The settlement of account is a matter of dispute between the company (owner) and developer and there are claims and counter claims. The matter has been referred to arbitration in 2002. The impact of Arbitration Award will be recognised in the books of accounts as and when finality in the matter is reached.

Note : Dues to Mcro and Small enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Company and relied upon by the Auditors.

X. During the year, under the New Textile Policy, 2012, as per Government Resolution (GR) dated 19th January, 2016, the Company is entitled to an Interest Subsidy for the period from May 2014 to June 2015 aggregating to Rs,93.76 Lacs. The Company is of the view that it will receive the Interest Subsidy for the Period from July 2015 to 31st March, 2016 aggregating to '' 80.76 Lacs as and when the processing is completed by the Ministry of Textiles. Accordingly, the Company has recognized Interest Subsidy on “accrual basis” for the period from May 2014 to 31st March, 2016 aggregating toRs, 174.52 Lacs as Other Income.

XI. CURRENT TAX :

In view of losses for the year ended 31st March 2016, no provision for Income Tax and Minimum Alternate Tax under Section 115JB of Income Tax Act, 1961 is required to be made.

DEFERRED TAX :

In accordance with Accounting Standard 22 on “Accounting for Taxes on Income” ( AS - 22) as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014, Deferred Tax Assets consist of substantial amounts of carry forward losses and unabsorbed depreciation under the Income Tax Act, 1961. However, since the availability of sufficient future taxable income against which they said benefits can be set off is not possible to be ascertained with virtual certainty, the Deferred Tax Assets have not been recognized as a measure of abundant caution.


Mar 31, 2015

I. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, provision of the Act(to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

II. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of Assets and Liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. The difference between the actual results and estimates are recognised in the year in which the results materialize/ are known.

III. Fixed Assets:

1. Tangible Fixed Assets

i. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed) and Borrowing Costs, if any.

ii. Machinery Spares which can be used only in connection with a particular item of fixed asset and the use of which is irregular, are capitalised at cost (net of Modvat / Cenvat credit availed)

iii. Fixed Assets declared surplus are valued as follows:

- Material items of Assets at lower of net realizable value and net book value.

- At net book value if the value is not material.

2. Intangible Fixed Assets

Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to the Assets will flow to the enterprise and the cost of the Assets can be measured reliably. The Intangible Assets are recorded at cost and are carried at cost less depreciation /amortization and accumulated impairment losses, if any.

3. Assets taken on Lease:

i. Finance Lease

Assets taken on finance lease after April 1, 2001 are accounted for as Fixed Assets in accordance with the Accounting Standard -19 "Lease" (AS 19) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014. Accordingly, the Assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.

ii. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

IV. Depreciation/ Amortization

A. Tangible Fixed Assets

1. Textile Unit:

i. Depreciation on all the Plant and Machineries is provided on the Straight Line Method in accordance with Schedule II to the Companies Act, 2013.

ii. Depreciation on Assets other than Plant and Machineries is provided on the Written Down Method in accordance with Schedule II to the Companies Act, 2013.

iii. Costs of Reeds are written off over a period of 2 years.

2. Engineering Unit:

i. Depreciation on Fixed Assets is provided on the Straight Line Method for the Assets acquired upto March 31, 2001 in accordance with Schedule II to the Companies Act, 2013.

ii. Depreciation on Fixed Assets is provided on the Written Down Method for the Assets acquired on or after April 1, 2001 in accordance with Schedule II to the Companies Act, 2013.

3. Composite Unit:

i. Depreciation on all the Plant and Machineries is provided on the Straight Line Method in accordance with Schedule II to the Companies Act, 2013.

ii. Depreciation on all Fixed Assets other than Plant and Machineries is provided on the Written Down Method in accordance with Schedule II to the Companies Act, 2013.

4. Depreciation on additions to Fixed Assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

5. Depreciation on Assets sold, discarded, demolished or scrapped, is provided upto the date on which the said Asset is sold, discarded, demolished or scrapped.

6. Cost of Leasehold Land is written off over the period of Lease.

B. Intangible Assets

1. Tenancy Rights:

Management is of the opinion that the Tenancy Rights need not be amortized.

2. Other Intangible Assets:

Intangible Assets are Amortized in accordance with Accounting Standard 26 "Intangible Assets" (AS-26) issued by the Institute of Chartered Accountants of India and prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014.

V. Investments:

Long term Investments are stated at cost less diminution in the value of Investments, if any. Further, Current Investments are stated at cost or market value whichever is lower.

VI. Inventories:

1. Textile Unit:

1. Raw Materials :

At monthly average cost or net realizable value whichever is lower.

ii. Stores and Spares :

At cost or net realizable value whichever is lower.

iii. Process Stock and Finished Goods :

At quarterly average cost or net realizable value whichever is lower.

2. Engineering Unit:

i. Raw Materials :

At cost or net realizable value whichever is lower.

ii. Process stock :

Cost comprises of Raw Material cost and processing cost.

iii. Stores and Other Consumables :

Stores and Other Consumables are valued at cost. Cost is considered on First in First out Basis.

iv. Finished Goods :

Finished Goods are valued at lower of cost or net realizable value.

3. Composite Unit:

i. Raw Materials :

At cost or net realizable value whichever is lower

ii. Stores and Spares :

At cost or net realizable value whichever is lower

iii. Process Stock and Finished Goods :

At cost or net realizable value whichever is lower

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

VII. Employee Benefits:

1. Defined Contribution Plan:

Employee Benefits in the form of contributions to Provident Fund, Employees State Insurance, Labour Welfare Fund managed by Government Authorities are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year on accrual basis.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

2. Defined Benefit Plan:

The liability for Leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard -15 "Employee Benefits" (AS 15) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014.

VIII. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring Fixed Assets from a country outside India are adjusted in carrying amount of the respective Fixed Assets. Exchange differences arising on settlement of other transactions are recognised in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported Fixed Assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognised in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / Discount arising on such forward exchange contract is amortised as income/expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognised as income or expense.

IX. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

X. Revenue Recognition:

1. Revenue from Domestic sale is recognised on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

2. Revenue from Export sale is recognised on transfer of significant risks and rewards of ownership which is based on Bill of Lading date.

3. Dividend income is recognised when the right to receive dividend is established.

4. Income from Property Development is accounted on pro-rata basis taking into consideration amount receivable for property development, number of flats sold and construction work completed.

5. Revenue in respect of other income/claims, etc is recognised only when it is reasonably certain that ultimate collection will be made.

6. Revenue in respect of Government Grants is recognised on receipt basis.

XI. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on "Accounting for Taxes on Income" (AS-22) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognised for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at

relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

XII. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

XIII. Borrowing Costs:

Borrowing Costs that are attributable to the acquisition or construction of qualifying Assets are capitalized as part of the cost of such Assets in accordance with Accounting Standard - 16 on "Borrowing Costs" (AS-16) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

XIV. Provision, Contingent Liabilities and Contingent Assets: (AS-29)

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the Notes. Contingent Assets are neither recognised nor disclosed in the Financial Statement.

XV. Impairment of Fixed Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on Fixed Assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard - 28 "Impairment of Assets" (AS-28) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognised in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.


Mar 31, 2014

I. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

II. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. The difference between the actual results and estimates are recognised in the year in which the results materialize/ are known.

III. Fixed Assets:

1. Tangible Fixed Assets

i. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed)

ii. Machinery Spares which can be used only in connection with a particular item of fixed asset and the use of which is irregular, are capitalised at cost (net of Modvat / Cenvat credit availed)

2. Intangible Fixed Assets

Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less depreciation /amortization and accumulated impairment losses, if any.

3. Assets taken on Lease:

i. Finance Lease

Assets taken on finance lease after April 1, 2001 are accounted for as fixed assets in accordance with the Accounting Standard -19 "Lease" (AS 19) issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.

ii. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

IV. Depreciation/ Amortization:

A. Tangible Fixed Assets

1. Textile Unit:

i. Depreciation on all the Plant & Machineries is provided on the Straight Line Method in accordance with Schedule XIV to the Companies Act, 1956.

ii. Depreciation on assets other than Plant & Machineries is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

iii. Costs of Reeds are written off over a period of 2 years.

2. Roll Manufacturing Unit:

i. Depreciation on Fixed Assets is provided on the Straight Line Method for the assets acquired upto March 31, 2001 in accordance with Schedule XIV to the Companies Act, 1956.

ii. Depreciation on Fixed Assets is provided on the Written Down Method for the assets acquired on or after April 1, 2001 in accordance with Schedule XIV to the Companies Act, 1956.

3. Technical Fabric Unit:

i. Depreciation on all the Plant and Machineries is provided on the Straight Line Method in accordance with Schedule XIV to the Companies Act, 1956.

ii. Depreciation on all Fixed Assets other than Plant and Machineries is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

4. Depreciation on additions to fixed assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

5. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said asset is sold, discarded, demolished or scrapped.

6. Cost of Leasehold Land is written off over the period of Lease.

B. Intangible Assets

Intangible Assets are amortised in accordance with Accounting Standard 26 "Intangible Assets" (AS-26) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006.

V. Investments:

Long term investments are stated at cost less diminution in the value of investments, if any. Further, current investments are stated at cost or market value whichever is lower.

VI. Inventories:

1. Textile Unit:

i. Raw Materials :

At monthly average cost or net realizable value whichever is lower.

ii. Stores and Spares :

At cost or net realizable value whichever is lower.

iii. Process Stock and Finished Goods :

At quarterly average cost or net realizable value whichever is lower.

2. Roll Manufacturing Unit:

i. Raw Materials :

At cost or net realizable value whichever is lower.

ii. Process Stock :

Cost comprises of Raw Material cost and processing cost.

iii. Stores & Other Consumables :

Stores & Other Consumables are valued at cost. Cost is considered on First in First out Basis.

iv. Finished Goods :

Finished Goods are valued at lower of cost or net realizable value.

3. Technical Fabric Unit:

i. Raw Materials :

At cost or net realizable value whichever is lower. ii. Stores and Spares :

At cost or net realizable value whichever is lower. iii. Process Stock and Finished Goods :

At cost or net realizable value whichever is lower.

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

VII. Employee Benefits:

1. Denned Contribution Plan:

Employee Benefits in the form of contributions to Provident Fund, Employees State Insurance, Labour Welfare Fund managed by Government Authorities are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year on accrual basis.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

2. Denned Benefit Plan:

The liability for Leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard -15 "Employee Benefits" (AS 15) issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006.

VIII. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring fixed assets from a country outside India, are adjusted in carrying amount of the respective fixed assets. Exchange differences arising on settlement of other transactions are recognised in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported fixed assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognised in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / discount arising on such forward exchange contract is amortised as income / expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognised as income or expense.

IX. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

X. Revenue Recognition:

1. Revenue from domestic sale is recognised on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

2. Revenue from Export sale is recognised on transfer of significant risks and rewards of ownership which is based on Bill of lading date.

3. Dividend income is recognised when the right to receive dividend is established.

4. Income from Property Development is accounted on pro-rata basis taking into consideration amount receivable for property development, number of flats sold and construction work completed.

5. Revenue in respect of other income/claims, etc is recognised only when it is reasonably certain that ultimate collection will be made.

6. Revenue in respect of Government Grants is recognised on receipt basis.

XI. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on "Accounting for Taxes on Income" (AS-22) issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/ recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognised for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

XII. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

XIII. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets in accordance with Accounting Standard - 16 on "Borrowing Costs" (AS-16) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules, 2006. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

XIV Provision, Contingent liabilities and Contingent Assets:

(AS-29)

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the Notes. Contingent assets are neither recognised nor disclosed in the Financial Statement.

XV Impairment of Fixed Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard - 28 "Impairment of Assets" (AS- 28) issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognised in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.

I. Basis of Preparation of Financial Statements:

The accounts for the year ended March 31, 2014 are prepared in accordance with the provisions of the Companies Act, 1956 read with of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs.

II. Amalgamation of Hindoostan Technical Fabrics Ltd with the Company.

i. Pursuant to the Scheme of Amalgamation of Hindoostan Technical Fabrics Ltd a wholly owned Subsidiary ("Transferor Company") with the Company, as sanctioned by the Hon''ble High Court of Bombay vide their order dated - October 10, 2014, the Assets and Liabilities of the Transferor Company were transferred to and vested with the Company with effect from the appointed date, April 1, 2013.

ii. The Transferor Company is engaged in the business of manufacturing of composite fabric.

iii. The amalgamation has been accounted for under the ''Pooling of interest'' method as prescribed by Accounting Standard 14 ''Accounting for Amalgamations" notified under the Companies (Accounting Standards) Rules, 2006 (as amended). Accordingly the Assets and Liabilities of the Transferor Company as at April 1, 2013, have been taken over at their book values.

iv Consequent to the Scheme of Amalgamation, the Authorized Equity Share Capital of the Company stands increased from 2,27,67,500 Equity Shares of Rs.10/- each, aggregating to Rs.2,276.75 lakhs to 2,77,67,500 Equity Shares of Rs.10/- each aggregating to Rs.2,776.75 lakhs.

v. As per the Scheme of Amalgamation, the Debit balance in Statement of Profit and Loss of the Transferor Company as on March 31,2013 of Rs.186.68 lakhs has been adjusted in the Surplus in Reserves and Surplus.

vi. Details of Assets and Liabilities taken over in Amalgamation:


Mar 31, 2013

1. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

2. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize/are known.

3. Fixed Assets:

A. Tangible Fixed Assets

a. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed)

b. Machinery Spares which can be used only in connection with a particular item of fixed asset and the use of which is irregular, are capitalised at cost (net of Modvat / Cenvat credit availed)

B. Intangible Fixed Assets

Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less depreciation /amortization and accumulated impairment losses, if any.

C. Assets taken on Lease:

a. Finance Lease

Assets taken on finance lease after April 1,2001 are accounted for as fixed assets in accordance with the Accounting Standard 19 "Lease" (AS 19) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.

b. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

4. Depreciation of Tangible Fixed Assets: I. Textile Unit:

a. Depreciation on all the Plant & Machineries acquired is provided on the Straight Line Method in accordance with Schedule XIV to the Companies Act, 1956.

b. Depreciation on assets other than Plant & Machineries acquired is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

c. Cost of Reeds are written off over the period of 2 years.

II. Roll Manufacturing Unit:

a. Depreciation on Fixed Assets is provided on the Straight Line Method for the assets acquired upto March 31, 2001 in accordance with Schedule XIV to the Companies Act, 1956.

b. Depreciation on Fixed Assets acquired after April 1, 2001 is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

III. Depreciation on additions to fixed assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

IV. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said asset is sold, discarded, demolished or scrapped.

V. Cost of Leasehold Land is written off over the period of Lease.

5. Investments:

Long term investments are stated at cost less diminution in the value of investments'', if any. Further, current investments are stated at cost or market value whichever is lower.

6. Inventories:

a. Textile Unit:

i. Raw Materials

At monthly average cost or net realizable value whichever is lower.

ii. Process Stock and Finished Goods

At quarterly average cost or net realizable value whichever is lower.

iii. Stores and Spares

At cost or net realizable value whichever is lower.

b. Roll Manufacturing Unit:

Stock of Raw Materials, Stores & Other Consumables and Semi Finished Goods are valued at lower of cost or net realisable value and for this purpose cost is determined on following basis:

i. Raw Materials

At cost or net realizable value whichever is lower.

ii. Process stock

Cost comprises of Raw Material cost and processing cost.

iii. Stores & Other Consumables

Stores & Other Consumables are valued at cost. Cost is considered on First in First out Basis.

iv. Finished goods

Finished Goods are valued at lower of cost or net realizable value.

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

7. Employee Benefits:

Defined Contribution Plan:

Employee Benefit in the form of contribution to Provident Fund managed by Government Authorities, Employees State Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year when the contributions to the respective funds are due.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

Defined Benefit Plan:

The liability for Leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard 15 "Employee Benefits" (AS-15) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006.

8. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring fixed assets from a country outside India, are adjusted in carrying amount of the respective fixed assets. Exchange differences arising on settlement of other transactions are recognized in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported fixed assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recogn ized in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / discount arising on such forward exchange contract is amortised as income / expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognized as income or expense.

9. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

10. Revenue Recognition:

a. Revenue from domestic sale is recognized on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

b. Revenue from Export sale is recognized on transfer of significant risks and rewards of ownership which is based on Bill of lading date.

c. Dividend income is recognized when the right to receive dividend is established.

d. Income from property development is accounted on pro-rata basis taking into consideration amount receivable for property development, number of flats sold and construction work completed.

e. Revenue in respect of other income/claims, etc is only when it is reasonably certain that ultimate collection will be made.

11. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on "Accounting for Taxes on Income" (AS-22) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognized for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

12. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

13. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying* assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

14. Provision, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Notes. Contingent assets are neither recognized nor disclosed in the Financial Statement.

15. Impairment of Fixed Assets:

At the end of the each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with the Accounting Standard 28 "Impairment of Assets" (AS 28) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules, 2006. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.


Mar 31, 2012

1. Basis of Preparation of Financial statements:

These fnancial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

2. Use of estimates:

The preparation of fnancial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of fnancial statements and reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize/are known.

3. Fixed assets:

a. tangible Fixed assets

a. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed)

b. Machinery Spares which can be used only in connection with a particular item of fxed asset and the use of which is irregular, are capitalised at cost (net of Modvat / Cenvat credit availed)

B. Intangible Fixed assets

Intangible assets are recognized only if it is probable that the future economic benefts that are attributable to the assets will fow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less depreciation /amortization and accumulated impairment losses, if any.

C. assets taken on Lease:

a. Finance Lease

Assets taken on fnance lease after April 1, 2001 are accounted for as fxed assets in accordance with the Accounting Standard 19 ''Lease'' (AS 19) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between fnance charge and reduction of outstanding liability.

b. operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classifed as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

4. Depreciation of tangible Fixed assets: I. textile Unit:

a. Depreciation on all the Plant & Machineries acquired is provided on the Straight Line Method in accordance with Schedule XIV to the Companies Act, 1956.

b. Depreciation on assets other than Plant & Machineries acquired is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

c. Cost of Reeds are written off over the period of 2 years.

II. Roll Manufacturing Unit:

a. Depreciation on Fixed Assets is provided on the Straight Line Method for the assets acquired upto March 31, 2001 in accordance with Schedule XIV to the Companies Act, 1956.

b. Depreciation on Fixed Assets acquired after April 1, 2001 is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

III. Depreciation on additions to fxed assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

I V. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said asset is sold, discarded, demolished or scrapped.

V. Cost of Leasehold Land is written off over the period of Lease.

5. Investments:

Long term investments are stated at cost less diminution in the value of investments, if any. Further, current investments are stated at cost or market value whichever is lower.

6. Inventories:

a. textile Unit:

i. Raw Materials

At monthly average cost or net realizable value whichever is lower.

ii. Process Stock and Finished Goods

At quarterly average cost or net realizable value whichever is lower.

iii. Stores and Spares

At cost or net realizable value whichever is lower.

b. Roll Manufacturing Unit:

Stock of Raw Materials, Stores & Other Consumables and Semi Finished Goods are valued at lower of cost or net realisable value and for this purpose cost is determined on following basis:

i. Raw Materials

At cost or net realizable value whichever is lower.

ii. Process stock

Cost comprises of Raw Material cost and processing cost.

iii. Stores & Other Consumables

Stores & Other Consumables are valued at cost. Cost is considered on First in First out Basis.

iv. Finished goods

Finished Goods are valued at lower of cost or net realizable value.

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

7. Employee Benefts:

Defned Contribution Plan:

Employee Beneft in the form of contribution to Provident Fund managed by Government Authorities, Employees State Insurance Corporation and Labour Welfare Fund are considered as defned contribution plan and the same is charged to the Statement of Proft and Loss for the year when the contributions to the respective funds are due.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defned Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

Defned Beneft Plan:

The liability for Leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard 15 ''Employee Benefts'' (AS-15) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006.

8. Foreign Currency transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring fxed assets from a country outside India, are adjusted in carrying amount of the respective fxed assets. Exchange differences arising on settlement of other transactions are recognized in the Statement of Proft and Loss.

Monetary items (other than those related to acquisition of imported fxed assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recogn ized in the Statement of Proft and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / discount arising on such forward exchange contract is amortised as income / expense over the life of the contract. Any proft / loss arising on cancellation of such forward exchange contract are recognized as income or expense.

9. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

10. Revenue Recognition:

a. Revenue from domestic sale is recognized on transfer of signifcant risks and rewards of ownership which is based on the dispatch of goods.

b. Revenue from Export sale is recognized on transfer of signifcant risks and rewards of ownership which is based on Bill of lading date.

c. Dividend income is recognized when the right to receive dividend is established.

d. Income from property development is accounted on pro-rata basis taking into consideration amount receivable for property development, number of fats sold and construction work completed.

e. Revenue in respect of other income/claims, etc is only when it is reasonably certain that ultimate collection will be made.

11. taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard – 22 on ''Accounting for Taxes on Income'' (AS-22) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognized for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

12. accounting of Value added tax (Vat):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

13. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

14. Provision, Contingent Liabilities and Contingent assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outfow of resources. Contingent liabilities are not recognized but are disclosed in the Notes. Contingent assets are neither recognized nor disclosed in the Financial Statement.

15. Impairment of Fixed assets:

At the end of the each year, the Company determines whether a provision should be made for impairment loss on fxed assets by considering the indications that an impairment loss may have occurred in accordance with the Accounting Standard 28 ''Impairment of Assets'' (AS 28) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules, 2006. An impairment loss is charged to the Statement of Proft and Loss in the year in which an asset is identifed as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.


Mar 31, 2011

A. Basis of accounting:

The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis. Financial statements are based on historical cost.

Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize/ are known.

1. Fixed assets and Depreciation:

Fixed Assets are recorded at cost of acquisition or construction.

Depreciation for the year is provided on the written down value except on Plant and Machinery at Ambernath Plant acquired before 2001 and Plant and Machinery at Karad Plant which is provided on straight line method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

2. Investments:

Long term investments are stated at cost less diminution in the investments if any. Further current investments are stated at cost or market value whichever is lower.

Investment made through Portfolio Management Services account is reflected by way of opening and closing stock and no transaction wise details have been shown.

3. Inventories:

A) Ambernath Unit:

Stock of raw materials, packing materials and semi finished goods are valued at lower of cost or net realisable value and for this purpose cost is determined on following basis:

1. Raw Materials

At cost or net realisable value whichever is lower. Cost includes incidental expenses like freight transport, custom duty etc.

2. Process stock

Cost comprises of Raw Material cost and processing cost.

3. Packing Materials

Packing materials are valued at cost. Cost is considered on First In First Out Basis

4. Finished goods

Finished Goods are valued at lower of cost or net realisable value and for this purpose the cost is determined on job costing basis.

B) Karad Unit:

1) Stores and Spares

At weighted average cost or net realizable value whichever is lower.

2) Raw Materials

At monthly average cost or net realizable value whichever is lower.Cost includes incidental expenses like freight, transport etc.

3) Process Stock and Finished Goods

At monthly average cost or net realizable value whichever is lower.

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

4. Employee Benefits:

Contributions payable to the Company's Superannuation Scheme of L.l.C and Provident Fund are charged to revenue. The provision for leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard (AS- 15) as per Companies (Accounting Standards) Rules, 2006.

5. Foreign currency transactions:

Transactions in foreign currency are recorded at prevailing rates i.e. in the original rate of exchange in force at the time the transactions are effected. Monetary items in the nature of current assets and liabilities denominated in foreign currencies, to the extent not covered by foreign exchange contracts, are accounted at the exchange rates prevailing on the Balance Sheet date. Gains/losses arising out of fluctuations in exchange rates are accounted for in the profit and loss account except where they relate to the acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets as required under schedule VI of the Companies Act, 1956

6. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on " Accounting for Taxes on Income" (AS-22) issued by the Institute of Chartered Accountants of India. Tax expenses comprises both current tax and deferred tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognized for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

7. Revenue Recognition:

a) Revenue from domestic sale is recognized on transfer of significant risks and rewards of ownership.

b) Revenue from export sale (including duty drawback) is recognized on transfer of significant risks and rewards of ownership.

c) Dividend income is recognized when the right to receive dividend is established.

d) Revenue in respect of insurance/other claims, interest etc. is recognized only when it is reasonably certain that ultimate collection will be made.

8. Accounting of value added tax :

VAT input credit is accounted on accrual basis on purchase of materials / goods.

9. Provision, Contingent liabilities and Contingent Assets:

Provision involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Notes. Contingents assets are neither recognized nor disclosed in the Financial Statement.

10. Impairment of Fixed Assets:

At the end of the each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with the Accounting Standard (AS 28) "Impairment of Assets" issued by the Institute of Chartered Accountants of India. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.


Mar 31, 2010

(a) Basis of accounting:

The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis. Financial statements are based on historical cost.

(b) Fixed assets and depreciation:

i) All fixed assets are stated at cost of acquisition less accumulated depreciation.

ii) Depreciation for the year is provided on the written down value and straight line method at the rates prescribed in Schedule XIV to the Companies Act, 1956 as under:

a) Fixed assets of erstwhile Eck Haubold and Laxmi Limited acquired after April 1985 on the straight line method.

b) All other assets on the written down value method.

(c) Investments:

Long term investments are stated at cost as there is no diminution in the value of investments. Further short term investments are stated at cost or market value whichever is lower.

(d) Inventories:

1) Stock of raw materials, packing materials and semi finished goods are valued at lower of cost or net realisable value and for this purpose cost is determined on following basis:

a) Raw materials and semi finished goods

- First-in-first-out method except Cotton, Brown Papers & Steel (Kgs)

- Cotton hard waste, Brown Papers & Steel (Kgs) — weighted average basis

b) Packing Materials - First-in-first-out method

However, the aforesaid items are not valued below cost as the finished goods in which they are to be incorporated are expected to be sold at or above cost.

2) Raw materials, stores, packing materials, tools etc., are accounted on net basis.

3) Finished goods are valued at lower of cost or net realisable value and for this purpose the cost is determined on job costing basis.

(e) Lease rent:

Annual contractual lease rent received/accrued is credited to the profit and loss account

(f) Employee Benefits:

(i) Snort Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits and they are recognised in the period in which the employee render service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expenses) after deducting any amount already paid.

(ii) Post Employment Benefits:

(a) Defined Benefits Plan Defined Benefit Gratuity Plan. The Company operates defined benefits Gratuity Plans for employees, which is unfunded.

The cost of providing defined benefits is determined using the Projected Unit Credit Method with actuarial valuation being carried out at each balance sheet date. Past service cost is recognised immediately to the extent that the benefits are already vested, else is amortised on a straight- line over the average period until the amended benefits become vested.

The defined benefit obligation recognised in the balance sheet represent the present value of the defined obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost.

The estimates of rate of escalation in salary considered in actuarial valuation, taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

Other Long Term Employee Benefits;

Entitlements to annual leaves are recognised when they accrue to employees. Annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulation of leaves. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit Method with actuarial valuations being carried out at each balance sheet date.

g) Foreign currency transactions:

Transactions in foreign currency are recorded at prevailing rates. Monetary items in the nature of current assets and liabilities denominated in foreign currencies, to the extent not covered by foreign exchange contracts, are transacted at the exchange rates prevailing on the Balance Sheet date. Gains/losses arising out of fluctuations in exchange rates are accounted for in the profit and loss account except where they relate to the acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets as required under schedule VI of the Companies Act, 1956.

h) Taxes on income:

Income-tax expenses comprises of current tax and deferred tax. The deferred tax charge or credit is recognised using current tax rates.

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