Accounting Policies of Jakharia Fabric Ltd. Company

Mar 31, 2024

Note 2: Significant Accounting Policies:

a) Basis of preparation and presentation:

The Financial Statements of the company have been prepared in accordance with Generally
Accepted Accounting Principles in India (Indian GAAP). The company has prepared these
financial statements to comply in all material respect with the accounting standards notified
under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies
(Accounts) Rules, 2014. The financial statements have been prepared on an accrual basis and
under the historical cost convention. The accounting policies adopted in the preparation of
financial statements are consistent with those of previous year.

As per MCA notification dated 16 February 2015, Companies whose shares are listed on SME
exchange as referred to in Chapter XB of SEBI(Issue of capital and Disclosure Requirements)
Regulations, 2009, are exempted from compulsory requirement of adoption of IND-AS, as the
company is covered under the exempted category, it has not adopted IND-AS for preparation of
financial results.

b) Use of Estimates:

The preparation of financial statements in conformity with Indian GAAP requires the
management to make judgments, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the management’s best knowledge
of current events and actions, uncertainty about these assumptions and estimates could result in
the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in
future periods.

c) Current/Non -Current Classification:

All assets & liabilities are presented as Current or Non-Current as per the Company''s normal
operating cycle and other criteria set out in Schedule III of Companies Act, 2013. Based on
nature of business, the company has ascertained its operating cycle as 12 months for the purpose
of Current/Non-Current classification of assets and liabilities.

d) Property, Plant and Equipment:

Property, Plant and Equipment are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. Cost includes expenses related to acquisition, installation
of the concerned assets and any attributable cost of bringing the asset to the condition for the
intended use. Borrowing costs attributable to the acquisition or construction of a qualifying asset
are also capitalized as a part of the cost of the asset.

Depreciation on Property, Plant and Equipment:

Depreciation on Property, Plant and Equipment is calculated on a written down value basis using
the rates arrived at based on the useful lives estimated by the management. The estimated useful
life of the assets is as under:

*For this class of assets, based on internal technical assessment and past experience, the
Management believes that the useful life as given above, best represent the period over which the
Management expects the use of the assets. The useful lives of these assets are different from the
useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

The estimated useful lives and residual values are reviewed at the end of each reporting period,
with the effect of any changes in estimate being accounted for on a prospective basis.
De-recognition:

An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item of property, plant and equipment is determined
as the difference between the sales proceeds and the carrying amount of the asset and is
recognized in the Statement of Profit and Loss.

e) Impairment:

The carrying amounts of the Company’s Property Plant and Equipment and intangible assets are
reviewed at the end of each reporting period to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amounts are estimated in order
to determine the extent of impairment loss, if any. An impairment loss is recognized whenever
the carrying amount of an assets or its Cash Generating Unit (CGU) exceeds its recoverable
amount. The impairment loss, if any, is recognized in the Statement of Profit and Loss in the
period in which impairment takes place.

Recoverable amount is higher of an asset’s fair value less cost to sell and its value in use. Value in
use is the present value of estimated future cash flows expected to arise from the continuing use
of an asset and from its disposal at the end of its useful life. For calculating present value, future
cash flows are discounted using a pre-tax discount rate that reflects current market rates and the
risk specific to the assets. Fair value less cost to sell is the best estimate of the amount obtainable
from the sale of asset in an arm’s length transaction between knowledgeable, willing parties, less
the cost of disposal.

Where an impairment loss subsequently reverses, the carrying amount of a n asset is increases to
the revised estimate of its recoverable amount, however subject to the increased carrying amount

not exceeding the carrying amount that would have been determined (net of amortization or
depreciation) had no impairment loss been recognized for the asset in prior accounting periods.

f) Investment in Associate:

Non-current Investments in partnership firm is carried at cost less accumulated impairment
losses, if any. Where an indication of impairment exists, the carrying amount of the investments
is assessed and written down to its recoverable amount.

The Company is one of the partners having capital contribution ratio and profit-sharing ratio to
tune of about 97.24% in ‘M/s. Jakharia Industries’ (JI) a partnership firm wherein there are 5
other individual partners. According to the partnership deed (as amended from time to time),
key business decisions need unanimous approval of all the partners of the firm, irrespective of
their profit-sharing ratio and/or capital contribution ratio. JFL does not have exclusive power to
control the activities of JI and in turn, influence the returns earned from its investment in JI.
Therefore, the investment in JI is categorized as investment in Associate and is in line with AS-
23. Accordingly, the investment in JI has been accounted under the equity method and the same
is in line as required by AS-23.

g) Inventories:

Inventories are carried at lower of cost and net realizable value. Cost is ascertained on first-in¬
first out basis. The cost includes all costs of purchase and other costs incurred in bringing the
inventories to their present location and condition. Net realizable value is the estimated selling
prices in the ordinary course of business less estimated cost necessary to make the sale.

h) Borrowing Cost:

All borrowing costs are expensed in the period they are incurred. Borrowing cost includes
interest and ancillary costs incurred in connection with the arrangement of borrowing.

Borrowing costs directly attributable to the acquisition, construction or production of an asset
that necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalized as part of the cost of the respective asset.

i) Revenue recognition:

Revenue from services rendered is recognized on the basis of completion of job and dispatch
thereof to customers or on sale of products. Revenue is recognized on sale of products when no
significant uncertainty as to its determination or realization exists.

Interest income is accrued on a time proportion basis, by reference to the principal outstanding
and the effective interest rate applicable.

j) Employee benefits:

Defined contribution plans and short-term employee benefits such as salary, bonus, provident
fund etc. are charged to Profit & Loss account as incurred. The present value of the obligations
under defined benefits plan is determined based on an actuarial valuation using the Projected
Unit Credit Method. Actuarial gain and losses arising on such valuation are recognized
immediately in the Profit & Loss account.

k) Foreign currency translation:

i. Initial recognition:

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign
currency amount the standard exchange rate determined at the transaction date.

ii. Conversion:

Foreign currency monetary items are retranslated using the exchange rate prevailing at the
reporting date. Non-monetary items, which are measured in terms of historical cost denominated
in a foreign currency, are reported using the exchange rate at the date of the transaction. Non¬
monetary items, which are measured at fair value or other similar valuation denominated in a
foreign currency, are translated using the exchange rate at the date when such value was
determined

iii. Exchange differences:

The Company accounts for exchange differences arising on translation/ settlement of foreign
currency monetary items as below:

1) Exchange differences arising on long-term foreign currency monetary items related to
acquisition of a fixed asset are capitalized and depreciated over the remaining useful life of
the asset.

2) All other exchange differences are recognized as income or as expenses in the period in
which they arise.

l) Taxes on Income:

Current Tax: Current income-tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing
in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized directly in equity is recognized in equity and not
in the statement of profit and loss.

Deferred Tax: Deferred tax is measured on based on the tax rate and tax laws enacted or
substantially enacted at the balance date. Deferred tax assets are recognized only if there is
reasonable/virtual certainty that they will be realized.

---

Mar 31, 2018

Notes to Financial Statement

(All amounts in Indian rupees unless otherwise stated)

Corporate Information:

Jakharia Fabrics Private Limited is a process house of yarn and fabric. The Company is in the line of activity of fabric / garment manufacture, processing yam and fabric and also trader in textile items. The Company was established on 22 June, 2007 and has its processing units at Saravali MIDC Bhiwandi Dist Thane & Tarapur MIDC, Dist. Palghar. The said units are working with 100% utilization capacity.

Event Occurring After Balance Sheet Date:

On April 27, 2018 the company has received certificate of incorporation consequent upon conversion to public limited company. Further on June 01, 2018 the company has also received in principle approval for Initial public issue of 10,92,000 as NSE emerge from National Stock Exchange of India limited.

1. Basis of Preparation:

The Financial Statements of the company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respect with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent With those of previous year, except for the change in accounting policy explained below

1.1 Summary of significant accounting policies:

a. Use of Estimates:

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

b. Property, Plant and Equipment:

Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Items of stores and spares that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life.

Gains or losses arising from derecognition of Property, Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized,

c. Depreciation & Amortisation;

Depreciation on Property, Plant and Equipment is calculated on a Written Down Value basis using the rates arrived at based on the useful lives estimated by the management. The identified components are depreciated separately over their useful lives; the remaining assets are depreciated over the life of the principal asset.

The Company has assessed the following useful life to depreciate and amortize on its property, plant and equipment and intangible assets respectively.

Particulars	Useful Lives of the Assets estimated by the management (years)
Factory Building	30
Building	60
Plant & Machinery	25
Electrical & Fitting	10
Furniture & Fixtures	10
Vehicles	8
Computers	3
Air Conditioner	5
Laboratory	10
Office Equipment	5

d. Classification of Current/Non -Current Assets and Liabilities:

AH assets & liabilities are presented as Current or Non-Current as per the Company''s normal operating cycle and other criteria set out in Schedule III of Companies Act, 2013. Based on nature of business, the company has ascertained its operating cycle as 12 months for the purpose of Current/Non-Current classification of assets and liabilities.

e. Borrowing Cost:

All borrowing costs are expensed in the period they are incurred. Borrowing cost includes interest and ancillary costs incurred in connection with the arrangement of borrowing, Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset.

f. Investments:

Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of the investments.

Investments other than long-term investments being current investments are valued at cost or fair value whichever is lower, determined on an individual basis.

On disposal of an investment, the difference between the carrying amount and the net disposal proceeds is recognised in the Statement of Profit and Loss.

Investments which are readily realisable and intended to be held for not more than one year from Balance Sheet date, are classified as current investments. All other investments are classified as non-current investments. However, that part of long term investments which are expected to be realised within twelve months from the Balance sheet date is presented under "Current Investments" in consonance with the current / non-current classification under Schedule III of the Companies Act, 2013.

g. Investments in Associates:

The Company is one of the partners having capital contribution ratio and profit sharing ratio to tune of about 88% in ''M/s. Jakharia Industries'' a partnership firm wherein there are 5 other individual partners. According to the partnership deed (as amended from time to time), key business decisions need unanimous approval of all the partners of the firm, irrespective of their profit sharing ratio and/or capital contribution ratio. In view of the same, the company does not have exclusive power to control the activities of the firm and in turn, influence the returns earned from its investment in the firm. Thus, the investment in firm is categorized as investment in Associate.

Further, the firm is still in its pre- operation phase and operations have not started till the date of financial statements. Consequently, amount of post-acquisition profits is nil.

h. Revenue recognition:

Revenue from services rendered is recognized on the basis of completion of job on dispatch thereof to customers or on sale of products. Revenue is recognized on sale of products when no significant uncertainty as to its determination or realization exists.

i. Inventories:

Inventories are carried at lower of cost and net realizable value. Cost is ascertained on first-in-first out basis. The cost includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling prices in the ordinary course of business less estimated cost necessary to make the sale.

j. Foreign currency translation: i. Initial recognition:

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the standard exchange rate determined at the transaction date. ii. Conversion:

Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.

iii. Exchange differences:

The Company accounts for exchange differences arising on translation/ settlement of foreign currency monetary items as below:

1) Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalized and depreciated over the remaining useful life of the asset.

2) All other exchange differences are recognised as income or as expenses in the period in which they arise.

k. Employee benefits:

Defined contribution plans and short term employee benefits such as salary, bonus, provident fund etc. are charged to Profit & Loss account as incurred. The present value of the obligations under defined benefits plan is determined based on an actuarial valuation using the Projected Unit Credit Method. Actuarial gain and losses arising on such valuation are recognised immediately in the Profit & Loss account.

L Taxes on Income:

Current Tax: Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred Tax: Deferred tax is measured on based on the tax rate and tax laws enacted or substantially enacted at the balance date. Deferred tax assets are recognized only if there is reasonable/virtual certainty that they will be realized.

m. Impairment of Assets:

At each Balance Sheet date, an assessment is made of whether there is any indication of impairment. Impairment loss is recognized whenever the carrying amount of assets exceeds its recoverable amount.

n, Provision & Contingencies:

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

o. Earning Per Share:

a) Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as conversion of preference shares in to equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.

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

p. Cash and cash equivalents:

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

Notes to Financial Statement for the year ended March 31, 2018 (All amounts in Indian rupees unless otherwise stated)

2) Snare Capital	March 31,2018 Rs.	March 31,2017 Rs.
AUTHORIZED SHARES 50,00,000/-Equity shares of Rs. 1O/- each	50,000,000	30,000,000
5,00,000/- 9% Convertible Preference shares of Rs.10/- each	-	5.000,000
Total	50,000,000	35.flflfl.000
ISSUED . SUBSCRIBED & FULLY PAID-UP SHARES 29.71,8307- (P.Y. 27,38,500/-)Equity shares of Rs.10/- each	29.71S.300	27,385,000
(P.Y,2,33,330/-) 9% Convertible Preference shares of Rs. 10/- each	-	2,333,300
Total issued, subscribed and fully paid-up share capital	29,718,3OO	29,718300

a) Reconciliation of the share) outstanding at the beginning and at the end of the reporting periud

	March 31, 2018 Rs.		March 31, 2017 Rs.
Equity Shares At the beginning of the period	2,738,500	27,385,000	2.738,500	27,385.000
Add: Issued during the year	233,330	2,333,300	-	-
Outstanding at the end of the period	2,971,830	29,718,300	2,738,500	27385,000
Preference Shares 9% Convertible Preference shares of Rs. 10/- each
At the beginning of the period	233,330	2.333.300	233,330	2,333,300
Less : Converted to equity shares during the year	233.330	2,333,300	-
Outstanding at the end of the period	-	-	133.330	2,333,300

b) Rights, Preferences and Restrictions attached to Shire: Equity Shares

The company tins one class of equity shares having par value of Rs. IOA per share. Each shareholder is eligible for one vote per share. In the event of liquidation of the company, the holders of equity shares wilt be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Preferences Shares

9% Convertible non cummulative preference shares of Rs. 10 each were issued in FY 2011-2012 at a premium of Rs. 140 per shares. As per the terms of the issue one equity share issued against one preference share held to the preference shareholders. Each share is converted into one equity share of par value of Rs. 10 on 8th March, 2018.

c) Details of shareholding more than 5% equity shares in the Compai Equity Shares

Name of the shareholder	March 31, 2018 Rs.	March 31, 2017 Rs.
Mr. Himmatlal Shah	474,500 15.97	474.500 1 7.33
Mr. Jignesh Shah	137,000 4.61	137,000 5.00
Mr. Nitin Shah	467,000 15.71	467,000 17.05
Mr. DixitShah	347,000 11.68	347,000 12.67
Mr. Manekchand Shah	317,000 10.67	317.000 11.58
Mrs. Champaben Shah	225,000 7.57	223,000 8.22
M/s Jakharia Synthetics Private Limited	615,000 20,69	655,000 22.46

Preference Shares

Name of the shareholder	March 31, 2018 Rs.	March 31, 2017 Rs.
P. Saji Textiles Limited	-	66,666 28.S7
Victory Sales Private Limited	-	26,666 11.43
Shyam Alcohol & Chemicals Limited	-	36,666 15,7!
Shipra Fabrics Private Limited	.	30,000 21.43
Dolex Commercial Private Limited	.	13,333 5.71
Acute Consultancy Limited	-	13.333 5,71
B K Dyeing &. Printing Mills Private Limited		13,333 5.7I
Lunkad Textiles Private Limited	-	13,333 5.71

3) Reserves & Surplus

	March 31. 2018	March 31, 2017 ks
Securities Premium :
Opening Balance	3:43-66,700	3,43.66,700
Less : Transfer to Capital Redemption Reserve	(2.).33,300	.
Closing Balance	3.20.33,400	3.43.66,700
Capital Redemption reserves''
Opening Balance	-	-
Add . Transfer from Security Premium Account	23.33.300	.
Closing Balance Surplus/ (deficit) In the statement of profll and loss	23.33.300	-
Balance as per last Financial Statement	13,86,58.446	10,33,91.924
Profit for the year	1,33,96,294	3,52,66,522
net-[ surplus in the statement of profit and lost	15,20.54,740	13,86,58,446
Total Reserves and Surplus	18,64,21.440	17,30,25,146

4) Long Term Borrowings

	March 31. 2018	March 31,. 2017.
Secured Term loans from bank	9,18,52,519	8,41.95:653
Loan (From Bank for Vehicles	10,11,417
Liis . Current cnalurilitfa of long term debt (Amount disclosed under the head ''other currenl liabilities'' refer Ticte no 9)	(1,23.70.444)	(1,09,04,390
	8,04,93,492	7,32,91,263

1. Term Loans Taken From Kotak Mahindra Bank:-

Term Loan - II For acquiring plant and machinery payable m not exeding-60 equated monthly Installment carring interest rate MCLR 1.30%

Term Loan-Hi For acquiifing plant and machinery payable in 84 equated monthly installment, carrying inlerest-rate MCLR I.30%.-

The above loan are secured againsi

1. First and exclusive charge on all existingi and future current asset*, including movcablc fixed assets of the company

2. Equitable mortgage of factory and &. buildinglocated at plot no. A/11. Ml DC Tiripur Industrial Area, Village Pamieinbhi, Taluka Palghar, dist Thane (factory of JFPL} owned by M''s Jikharia Fabrics PM Ltd

3. Eiqutiabic. Mortgage of factory band & building .-situated at survey no 1/1 & 25/5 devji Nagar survey''nii. Ir''I & 25:''5. Devji Sagar, Near Shanti ''nagar complex Village Narpoli. Bhiwandi, DLsi Thane-421302 (factory of JSPL1 owned by Mr. Himmatlal Shah and Mr. Jigsicsh Shah

4. Equitable mortage of Flat No. 504. 5th Floor, Tower No I, Gemini building:. Runwal Aulburiuiv.. l.HS Rnitd. Mu!und (W) Mumbni 4UGOM owned by Mr. Dixii Shah and Mr. Manekchand Shah

5. equitable mortagege of no. 1201, 12th floor B Wing,E Apartment nahar sarvoday Heights CSHL, Saryodaya Parihwanslh Kagar, Mulund W, Mumbai 400080 owned hy Jignush H Shah. Himailul Shah & Sejal Shah

6. Equitable iiiort&agje of Flat No. 605. 6th Floor, building No 2. Man Mandir SurahshaCHS, Muiuiid W, Mumbai 40flO«0 owned by Sejal N''ilin Shah

7. Equiablenortgitgeof J-JVl I, MJOC, Tanapur Indl Area. Village''Sarevah, Taluka Palghar. Dist Thane owned by Jakharia Industries.

5. Personal £uarani«or following direciors :-

a. Mi. Hinnnattal P. Shah

b. Mr. Jigntih II Shah c Mr NilinKShah

d. Mr. Ma-ickdiartd P Shah

c Mr. Dixil M Shah