Notes to Accounts of Valson Industries Ltd.

Mar 31, 2015

Note 1 : Corporate Information

Valson Industries Limited was incorporated on 2nd June, 1983 with Registrar of Companies, Maharashtra State. It's processing manufacturing Units are located at Vapi in Gujarat and Silvassa in UT. Dadra Nagar & Haveli. It is engaged in Texturising, Twisting of Polyester yarns and Dyeing of Polyester, Cotton and other fancy Yarns.

Note 2 Long-term loans and advances:

Note 2.1 Additional information to the financial statements :

Particulars As at As at 31 March, 2015 31 March, 2014 Rs. in Lacs Rs. in Lacs

2.2 Contingent Liabilities and Commitments

i) Claims against the Company not acknowledged as debts : 1710.57 1134.99

The disputed demands of VAT & Entry Tax on the Yarn received for Dyeing Job Work by the Vapi Unit for FY 2008-2009, 2009-2010 and 2010-2011 wherein the company is in appeal before the appellate authority and applied for the stay of demand.

The remission order for Entry Tax dated 22nd January 2015 granting theremission for Entry Tax on receipt of yarns in state of Gujarat is w.e.f. 22nd Jan 2015 onwards. For the past liabilities the company has made an application to the appellate authority. The company is hopeful that the levy of Entry Tax for above said liabilities will be reco sidered and liability will be NIL.

Textile Cess claim against the claim not admitted as debts 2.39 2.39

1712.96 1137.38

ii) Commitments :

Estimated amount of contracts remaining to be executed on capital account and not provided for :

(a) Tangible Assets 120.00 90.00

(b) Intangible Assets Nil Nil

(c) Advances given to the suppliers of the Capital goods is shown in Short term loan & advances pending to be capitalized and will be capatilised on completion/

commencement of production 47.64 Nil

Iii) Derivatives Contracts entered into by the Company for hedging and outstanding as on 31/03/2015:

Forward Contracts 77.93 102.20

Note 3 Disclosures under Accounting Standards :

Segment information

As the Company's business activity falls within a single business segment viz. 'Yarns' and the sales substantially being in the domestic market, the financial statements are reflective of the information required by Accounting Standard 17 "Segment Reporting", notified under the Companies (Accounting Standards) Rules, 2006.

Inter divisional transfer

Inter divisional transfer for Sales/ Processing charges for Texturising, Twisting and Dyeing of 2044.81 Lacs (Previous Year Rs.1836.70 Lacs ) are not considered for sales as well as manufacturing expenses as per Accounting Standard (AS-9) 'Revenue Recognition' issued by The Institute of Chartered Accoutants of India.

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Mar 31, 2014

Note 1 Additional information to the financial statements :

Particulars As at As at 31 Mar 2014 31 Mar 2013 Rs.in Lacs Rs.in Lacs

1.1 Contingent Liabilities and Commitments

i) Claims against the Company not acknowledged as debts :

The disputed demands of VAT & Entry Tax on the Yarn received 1,134.99 509.65

for Dyeing Job Work by the Vapi Unit for FY 2008-2009 and 2009-2010 wherein the company is in appeal before the appellate authority and has also obtained for the stay of demand.

The Company has made the representation to the Gujarat Govt. for Remission.

Textile Cess claim against the claim not admitted as debts 2.39 2.39

1,137.38 512.04

Note 2 Disclosures under Accounting Standards :

Segment information

As the Company''s business activity falls within a single business segment viz. ''Yarns'' and the sales substantially being in the domestic market, the financial statements are reflective of the information required by Accounting Standard 17 "Segment Reporting", notified under the Companies (Accounting Standards) Rules, 2006.

Inter divisional transfer

Inter divisional transfer for Sales/ Processing charges for Texturising, Twisting and Dyeing of Rs. 1836.70 Lacs (Previous Year Rs. 1459.30 Lacs ) are not considered for sales as well as manufacturing expenses as per Accounting Standard (AS-9) ''Revenue Recognition'' issued by The Institute of Chartered Accountants of India.

Related party disclosures as per (AS-18)

Details of related parties:

Description of relationship Names of related parties

Key Management Personnel (KMP)

Mr. Suresh Mutreja (Chairman & Managing Director)

Mr. Lalit Mutreja (Executive Director)

Relatives of Key Management Personnel

Mrs. Sheeladevi Mutreja - Mother of CMD

Mrs. Kajal Mutreja - Wife of Executive Director

Mrs. Tina Mutreja - Daughter in law of CMD

Mr. Kunal Mutreja - Son of CMD

Mr. Varun Mutreja - Son of CMD

Mr. Ankit Mutreja - Son of CMD

Note: Related parties have been identified by the Management.

Details of related party transactions during the year ended 31 March, 2014 and balances outstanding as at 31 March, 2014:

Previous year''s figures :

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

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Mar 31, 2013

Note 1 Corporate information

Valson Industries Limited was incorporated on 2nd June, 1983 with Registrar of Companies, Maharashtra State. It''s processing manufacturing Units are located at Vapi in Gujarat and Silvassa in UT. Dadra Nagar & Haveli. It is engaged in Texturising, Twisting of Polyester yarns and Dyeing of Polyester, Cotton and other fancy Yarns.

Note 2 Disclosures under Accounting Standards :

Segment information

As the Company''s business activity falls within a single business segment viz. ''Yarns'' and the sales substantially being in the domestic market, the financial statements are reflective of the information required by Accounting Standard 17 "Segment Reporting", notified under the Companies (Accounting Standards) Rules, 2006.

Inter divisional transfer

Inter divisional transfer for Sales/ Processing charges for Texturising, Twisting and Dyeing of Rs. 14,59,29,733/- (Previous Year Rs. 13,07,40,984/-) are not considered for sales as well as manufacturing expenses as per Accounting Standard (AS-9) ''Revenue Recognition'' issued by The Institute of Chartered Accountants of India.

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Mar 31, 2012

Note 1 : Corporate Information

Valson Industries Limited was incorporated on 2nd June, 1983 with Registrar of Companies, Maharashtra State. It's processing manufacturing Units are located at Vapi in Gujarat and Silvassa in UT. Dadra Nagar & Haveli. It is engaged in Texturising, Twisting of Polyester yarns and Dyeing of Polyester, Cotton and other fancy Yarns.

* Office Premises includes Rs. 250/- being the cost of five shares of Rs. 50/- each of Udit Mittal Industrial Premises.

** Software to be amortised over a period of Five years due to applicability of AS - 26 on Intangible Assets issued by Institute of Chartered Accountants of India.

Particulars As at As at 31 March, 2012 31 March, 2011 Rs. in Lacs Rs. in Lacs

2.1 Contingent Liabilities and Commitments

i) Claims against the Company not acknowledged as debts : 643.48 643.48

The disputed demands of VAT & Entry Tax on the Yarn received for Dyeing Job Work by the Vapi Unit no longer holds good in view of the representation by Vapi Industries Association to the VAT Authorities & Government of Gujarat for explaining that yarn remains yarn at the end of dyeing process & the matching quantity of such Dyed Yarn is returned back to the sender. Therefore it does not constitute "Sale, Consumption or Use" within the state of Gujarat. The Gujarat VAT Authorities have prima-facie under- stood the matter & have assured to do the needful in the matter. Meanwhile, the Deputy Commissioner of Commercial Tax (Appeals), Division -V, Surat, has granted sine-die Stay against the recovery of demands & also has referred the matter to the pre-audit section for clearance after framing the Appellate Orders for remanding the erroneous assessments back to Assessing Officer.

Textile Cess claim against the claim not admitted as debts 2.39 2.39

Excise duty claim against the company not admitted as debts 0.93 0.93

646.80 646.80

Note 3 Disclosures under Accounting Standards :

Segment information

As the Company's business activities falls within a single business segment i.e. Yarns the disclosure requirements of accounting standard (AS 17) "segment reporting" issued by The Institute of Chartered Accounts of India are not applicable.

Inter divisional transfer

Inter divisional transfer for Sales/ Processing charges for Texturising, Twisting and Dyeing of Rs. 13,07,40,984/- (Previous Year Rs. 12,50,82,903/-) are not considered for sales as well as manufacturing expenses as per Accounting Standard (AS-9) 'Revenue Recognition' issued by The Institute of Chartered Accountants of India.

Previous year's figures :

The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

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Mar 31, 2010

1. Contingent Liabilities not provided for:

(A) Excise duty claim against the company not admitted as debts Rs. 0.93 Lacs (Previous year Rs. 65.24 Lacs).

(B) Textile Cess claim against the claim not admitted as debts Rs. 2.39 Lacs (Previous year Rs. 2.39 Lacs)

(C) Income Tax claim against the claim not admitted as debts Rs. 0.77 Lacs (Previous year Rs. 0.77 Lacs)

During the year, VAT authorities have raised demands amounting Rs. 532.35 lacs for Entry Tax and Rs. 111.13 lacs for Work Contract Tax. The demands raised have been contested by the company before Deputy Commissioner of Commercial Tax, Division 5 - Surat and as per the written opinion of a renowned legal counsel; the demands are not tenable in law. The company is confident of decision coming its favour.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) Rs. 10.00 Lacs. (Previous year Rs. 61.28 Lacs). Rs. 42.26 Lacs (Previous year Rs. 42.20 Lacs)is given as an advance to suppliers for capital goods shown in advances.

3. Excise Duty :

The Company is following the method of accounting according to which the excise duty is generally booked as a liability at the time of removal of manufactured goods i.e. Texturised Yarn, Twisted & Dyed Yarn and paid accordingly.

The Company has opted for optional excise duty of either to take cenvat credit on input and payment of excise duty on removal of goods and accordingly provision for excise duty on closing stock as on 31st March,2010 Rs. NIL (Previous year Rs.Nil ) has been made for the same

4. The Employee Benfit Schemes are as under :

i. Provident Fund

Eligible employees of the Company receive benfits under the Provident Fund Act which is a defined contribution plan wherein both the employee and the Company make monthly contributions equal to specifeid percentage of the covered employees salary. These contributions are made to the Funds administered and manged by the Govt. of India.The Companys monthly contributions are charged to revenue in the period they are incurred.

ii. Gratuity

In accordance with the payment of Gratuity Act,1972 of India, the Company provided for gratuity, a defined retirement benfit plan (the Gratuity Plan) covering eligible employees. Liabilites with regards to such Gratuity Plan are determined by actuarial valuation and are charged to revenue in the period determined.

The actuarial assumptions is arriving at the Provision of gratuity liability for the year amounting to Rs. 5,60,931/- are as follow :

a) Discount Rate (Per Annum) (%) 7.00

b) Salary Excalation (Rate) (%) 6.00

C) Retirement Age (In Years) 60

iii. Provision for Unutilised Leave

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at period-end and charged to revenue in the period determined.

The above information regarding Small Scale Industrial undertaking has been determined to the extent such parties have provided information with the company. This has been relied upon by the auditors.

Under the Micro,Small & Medium Enterprises Development Act, 2006, which came into force on 2nd October 2006, certain disclosures are required to be made relating to Micro,Small & Medium Enterprises.

The company is in the process of compiling relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readly available no disclosures have been made in the accounts.

5. Inter divisional transfer for Sales/ Processing charges for Texturising, Twisting and Dyeing of Rs. 12,07,00,420/- (Previous Year Rs. 10,92,62,961/-) are not considerd for sales as well as manufacturing expenses as per Accounting Standard (AS-9) ‘Revenue Recognition issued by Institute of Chartered Accountants of India.

6. Borrowing costs that are attributable to the acquisition or construction of Qualifiying Assets are capitalised as part of the cost of such assets.

A qualifying asset is one that necessarily takes substantial period of time to get ready for internal use. As no assets are falling within the definition of qualifying assets all the borrowing costs are charged to revenue.

7. As the Companys business activities falls within a single primary business segment viz. Dyed and Texturised Yarn, the Disclosure requirement of Accounting Standard (AS-17) Segment Reporting issued by the Institute of Chartered Accountants of India are not applicable.

8. The Company has been following Accounting Standard (AS - 22) Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India. During the year ended 31/03/2010 the Net Deferred Tax of Rs.9.61 lacs is credited to the Profit & Loss Account.

9. Basic and Diluted Earning Per Share has been calculated by dividing the net profit after tax and Preference Share Dividend and tax on dividend for the year as per account which is distributed to Equity Shareholders by 7660800 being weighted average number of equity shares outstanding during the year (Previous year 3830400)

10. a. Figures in bracket in notes to accounts relates to the previous year.

b. Previous years figures have been regrouped to confirm this years classification.