Mar 31, 2011
1. Accounting Concepts:
The Company follows the mercantile system of accounting and recognises
income and expenditure on accrual basis except for insurance claims,
which is accounted for on cash basis. The accounts are prepared on
historical cost basis as a going concern and are consistent with
generally accepted accounting principles. The financial statements have
been prepared to comply in all material respects with the notified
Accounting Standard under Companies Accounting Standard Rules, 2006.
2. Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operation during the reporting
period end. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from estimates.
3. Fixed Assets:
Fixed Assets are stated at cost less depreciation. Cost of fixed assets
is inclusive of incidental expenses incurred upto the date of
commissioning of project, interest on borrowings up to the date of
capitalization. Exchange losses or gains arising on specific foreign
currency loans taken for acquiring the assets and cancellation of
forward exchange contract relating to the acquisition of fixed assets
charged to profit and loss account.
4. Depreciation:
Depreciation is provided on pro-rata basis under straight- line method
in accordance with Schedule XIV of the Companies Act, 1956 Depreciation
on electrical installation and factory equipments is provided at
accelerated rate of 5.28%. Wherever revision in cost has occurred due
to increase or decrease in long term liability on account of exchange
fluctuation, changes in duties or similar factors, the depreciation on
the revised unamortised depreciable amount is provided prospectively
over the remaining useful life of the assets.
5. Impairment Assets:
In accordance with Accounting Standard 28 - Impairment of Assets issued
by ICAI, the carrying amounts of assets are reviewed, if there is any
impairment indicator, at each balance sheet date in order to ascertain
impairment based on internal / external factors. An impairment loss is
recognized wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is greater of the assets net
selling price and value in use.
6. Investment:
Investments are stated at cost less provision for permanent diminution
in value, if any.
7. Segmental Reporting:
As per the requirement of the Accounting Standard 17 - 'Segment
Reporting' issued by ICAI, the segmental reporting has been provided in
Notes on Accounts.
8. Foreign Currency Transactions:
Initial Recognition: Transactions in foreign currency entered during
the year are recorded at the exchange rates prevailing on the date of
the transaction.
Conversions: Monetary assets and liabilities denominated in foreign
currency are translated into rupees at exchange rate prevailing on the
date of Balance sheet.
Exchange Differences: All exchange rate differences relating to
monetary items are dealt with in the profit and loss account.
9. Inventories:
Finished Goods Valued at lower of estimated average
(Manufactured) cost and net realisable value.
Finished Goods Valued at lower of cost and net
(Traded) realisable value.
Raw Materials At Cost (FIFO)
Work-in-progress
and Processed Yarn Valued at estimated average cost.
Consumables At Cost (FIFO)
Import License At net realisable value
Waste Scrap At net realisable value
Cost of Inventories: The cost of inventories comprise all costs of
purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
Net realisable value: Net realisable value is the estimated selling
price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
10. Taxes on Income:
(a) The tax payable method is followed for providing current tax
liability. The difference between provisions and payments, if any, are
recognised in the year in which assessment is completed.
(b) Deferred tax benefit or expenses is recognised on timing difference
between taxable income and accounting income that originate in one
period and are capable reversal in one or more subsequent periods.
Deferred tax assets and liabilities are measured using the tax rates
and tax laws that have been enacted or substantively enacted upto the
balance sheet date.
11. Earning Per Share:
Basic earning per share is computed by dividing net profit or loss
after tax by the weighted average number of equity shares outstanding
for the period.
Diluted earnings per share is computed by dividing net profit or loss
after tax by the weighted average number of equity shares considered
for deriving basic earning per share and also the weighted average
number of equity shares that couid have been issued upon conversion of
all dilutive potential equity shares.
12. Provisions:
A provision is recognised when the Company has a present obligation as
a result of past event, it is probable that outflow of resources will
be required to settle obligation in respect of which a reliable
estimate can be made.
13. Cash and Cash equivalents:
Cash and Cash equivalents in the cash flow statements comprise cash at
bank and in hand and short term investments with an original maturity
of Six months or less and include dividend account balance, which is
not available for Company's use.
14. Recognition of Revenue:
Revenue from sale of goods is recognised on dispatch. Sales are net of
rebates and price concession. Export sales are recognised on the basis
of bill of lading. Income, Expenditure and Export Incentives / Benefits
are accounted for on accrual basis.
15. Repairs & Replacements:
Repairs and Replacement expenses are charged to profit and loss account
as and when incurred.
16. Prior Year Adjustments:
Besides the debit / credit in previous year adjustment account, amounts
related to previous year, raised / settled during the year have been
debited / credited to respective heads of accounts.
17. Miscellaneous Expenditure:
a) Preliminary Expenses are being written off over a period of 10
years.
b) Public Issue Expenses are amortised and being written off over a
period of 10 years.
c) Market Development expenses are amortised and being written off over
a period of 10 years.
d) Share Capital Increase expenses are amortised and being written off
over a period of 5 years.
18. Employee Benefit:
a) Provident Fund: All the employees of the Company are entitled to
receive benefits of the provident fund, a defined contribution plan
managed by or recognized fund management Company in which both
employees and the Company contributed at a stipulated monthly rate. The
Company has no liability for future provident fund benefits other than
its annual contribution as an expenses in the year it is incurred.
b) Gratuity: The Company provides for the gratuity, a defined benefit
retirement plan covering all employees. The plan managed by or
recognized fund management Company provides for lump sum payments to
employees at retirement, death while in employment or termination of
employment. The Company account for liability of future gratuity
benefits based on an actuarial valuation on projected unit credit
method carried out annually for assessing liability at the balance
sheet date as per revised AS-15.
c) Leave Encashment: Short term compensated absences are provided based
on estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per revised
AS-15. Actuarial gain / losses are immediately taken to profit and loss
account.
19. Research and Development:
Expenses related to the sample developments, improvement in the quality
of the current products and innovation of new products and cost of
processes related thereto are included in Research and Development
including human resources and cost of in-house developed fabrics
reduced by the amount received of samples, if any.
20. General:
Accounting policies, which are not specifically referred to, are
consistent with generally accepted accounting practices.
Mar 31, 2010
1. Accounting Concepts :
The Company follows the mercantile system of accounting and recognises
income and expenditure on accrual basis except for insurance claims,
which is accounted for on cash basis. The accounts are prepared on
historical cost basis as a going concern and are consistent with
generally accepted accounting principles. The financial statements have
been prepared to comply in all material respects with the notified
Accounting Standard under Companies Accounting Standard Rules, 2006.
2. Use of Estimates :
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operation during the reporting
period end. Although these estimates are based upon managementÃs best
knowledge of current events and actions, actual results could differ
from estimates.
3. Fixed Assets :
Fixed Assets are stated at cost less depreciation. Cost of fixed assets
is inclusive of incidental expenses incurred upto the date of
commissioning of project, interest on borrowings up to the date of
capitalization. Exchange losses or gains arising on specific foreign
currency loans taken for acquiring the assets and cancellation of
forward exchange contract relating to the acquisition of fixed assets
charged to profit and loss account.
4. Depreciation :
Depreciation is provided on pro-rata basis under straight-line method
in accordance with Schedule XIV of the Companies Act, 1956 Depreciation
on electrical installation and factory equipments is provided at
accelerated rate of 5.28%. Wherever revision in cost has occurred due
to increase or decrease in long term liability on account of exchange
fluctuation, changes in duties or similar factors, the depreciation on
the revised unamortised depreciable amount is provided prospectively
over the remaining useful life of the assets.
5. Impairment Assets :
In accordance with Accounting Standard 28 Ã Impairment of Assets issued
by ICAI, the carrying amounts of assets are reviewed, if there is any
impairment indicator, at each balance sheet date in order to ascertain
impairment based on internal / external factors. An impairment loss is
recognized wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is greater of the assets
net selling price and value in use.
6. Investment :
Investments are stated at cost less provision for permanent diminution
in value, if any.
7. Segmental Reporting :
As per the requirement of the Accounting Standard 17 - ÃSegment
Reportingà issued by ICAI, the segmental reporting has been provided in
Notes on Accounts.
8. Foreign Currency Transactions :
Initial Recognition : Transactions in foreign currency entered during
the year are recorded at the exchange rates prevailing on the date of
the transaction.
Conversions : Monetary assets and liabilities denominated in foreign
currency are translated into rupees at exchange rate prevailing on the
date of Balance sheet.
Exchange Differences : All exchange rate differences relating to
monetary items are dealt with in the profit and loss account.
9. Inventories :
Finished Goods : Valued at lower of estimated
(Manufactured) average cost and net realisable value.
Finished Goods : Valued at lower of cost and net
(Traded) realisable value.
Raw Materials : At Cost (FIFO)
Work-in-progress
and Processed Yarn : Valued at estimated average cost.
Consumables : At Cost (FIFO)
Import License : At net realizable value
Waste Scrap : At net realisable value
Cost of Inventories : The cost of inventories comprise all costs of
purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
Net realizable value : Net realizable value is the estimated selling
price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
10. Taxes on Income :
a) The tax payable method is followed for providing current tax
liability. The difference between provisions and payments, if any, are
recognized in the year in which assessment is completed.
b) Deferred tax benefit or expenses is recognized on timing difference
between taxable income and accounting income that originate in one
period and are capable reversal in one or more subsequent periods.
Deferred tax assets and liabilities are measured using the tax rates
and tax laws that have been enacted or substantively enacted upto the
balance sheet date.
11. Earning Per Share :
Basic earning per share is computed by dividing net profit or loss
after tax by the weighted average number of equity shares outstanding
for the period.
Diluted earnings per share is computed by dividing net profit or loss
after tax by the weighted average number of equity shares considered
for deriving basic earning per share and also the weighted average
number of equity shares that could have been issued upon conversion of
all dilutive potential equity shares.
12. Provisions :
A provision is recognized when the Company has a present obligation as
a result of past event, it is probable that outflow of resources will
be required to settle obligation in respect of which a reliable
estimate can be made.
13. Cash and Cash equivalents :
Cash and Cash equivalents in the cash flow statements comprise cash at
bank and in hand and short term investments with an original maturity
of three months or less and include dividend account balance, which is
not available for CompanyÃs use.
14. Recognition of Revenue :
Revenue from sale of goods is recognized on dispatch. Sales are net of
rebates and price concession. Export sales are recognized on the basis
of bill of lading. Income, Expenditure and Export Incentives / Benefits
are accounted for on accrual basis.
15. Repairs & Replacements :
Repairs and Replacement expenses are charged to profit and loss account
as and when incurred.
16. Prior Year Adjustments :
Besides the debit / credit in previous year adjustment account, amounts
related to previous year, raised / settled during the year have been
debited / credited to respective heads of accounts.
17. Miscellaneous Expenditure :
a) Preliminary Expenses are being written off over a period of 10
years.
b) Public Issue Expenses are amortised and being written off over a
period of 10 years.
c) Market Development expenses are amortised and being written off over
a period of 10 years.
d) Share Capital Increase expenses are amortized and being written off
over a period of 5 years.
18. Employee Benefit :
a) Provident Fund : All the employees of the Company are entitled to
receive benefits of the provident fund, a defined contribution plan
managed by or recognized fund management Company in which both
employees and the Company contributed at a stipulated monthly rate. The
Company has no liability for future provident fund benefits other than
its annual contribution as an expenses in the year it is incurred.
b) Gratuity : The Company provides for the gratuity, a defined benefit
retirement plan covering all employees. The plan managed by or
recognized fund management Company provides for lump sum payments to
employees at retirement, death while in employment or termination of
employment. The Company account for liability of future gratuity
benefits based on an actuarial valuation on projected unit credit
method carried out annually for assessing liability at the balance
sheet date as per revised AS-15.
c) Leave Encashment : Short term compensated absences are provided
based on estimates. Long term compensated absences are provided for
based on actuarial valuation. The actuarial valuation is done as per
revised AS-15. Actuarial gain / losses are immediately taken to profit
and loss account.
19. Research and Development :
Expenses related to the sample developments, improvement in the quality
of the current products and innovation of new products and cost of
processes related thereto are included in Research and Development
including human resources and cost of in-house developed fabrics
reduced by the amount received of samples, if any.
20. General :
Accounting policies, which are not specifically referred to, are
consistent with generally accepted accounting practices.