Accounting Policies of Winsome Textile Industries Ltd. Company

Mar 31, 2018

1: CORPORATE INFORMATION

Winsome Textile Industries Limited (“the Company”) is a public limited company domiciled and incorporated under the provisions of the Companies Act, 1956 on 18th September, 1980 in India and its shares are publicly traded on the Bombay Stock Exchange (“BSE”), India. The Registered Office of the company is situated at 1 Industrial Area, Baddi, Solan, Himachal Pradesh - 173205 India and the Corporate office is situated at SCO # 191 - 192, Sector # 34-A, Chandigarh, 160022.

The principal business activity of the company is the manufacturing of Cotton Yarn, Cotton Melange, Cotton Blended Dyed Yarn/Fiber, Yarn made of natural and manmade fiber and other fibers, Knitted Fabric and Power generation in Textile Sector.

The financial statements were authorised for issue in accordance with a resolution passed by the Board of Directors on 25th May, 2018.

2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation of financial Statements

The financial statements of the Company have been prepared on accrual basis in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and the provisions of the Companies Act, 2013.

For all periods up to and including the year ended 31st March 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (previous GAAP). These financial statements for the year ended 31st March 2018 are the first the Company has prepared in accordance with Ind AS. Refer to note 3 for an explanation on the manner in which the transition from previous GAAP to Ind AS has effected presentation of company’s financial position, financial performance and cash flows.

The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities which have been measured at fair value (refer accounting policy regarding financial instruments).

The financial statements are presented in Indian Rupees (“INR” or “Rs.”) and all amounts are rounded to the nearest lacs, except as stated otherwise.

2.2 Estimates and Judgments

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions effect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in note 2.23. Accounting estimates could change from period to period. Actual results may differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

2.3 Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.

An asset is treated as current when it is:

- Expected to be realized or intended to be sold or consumed in normal operating cycle

- Held primarily for the purpose of trading

- Expected to be realized within twelve months after the reporting period, or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

- All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle

- It is held primarily for the purpose of trading

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

- All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

2.4 Property, Plant and Equipment

The Company has applied for the one time transition exemption of considering the carrying cost on the transition date i.e. 1st April, 2016 as the deemed cost under IND AS and hence regarded thereafter as historical cost.

Leased hold Land is carried at cost less reduction in proportionate annual Lease Rental.

Freehold land and Capital Work in progress is carried at cost. All other items of Property, plant and equipment are stated at cost, less accumulated depreciation. The Cost of an item of Property, Plant and Equipment comprises:

(a) its purchase price including freight, duties, and non-refundable purchase taxes after deducting trade discounts and rebates.

(b) any attributable expenditure directly attributable for bringing an asset to the location and the working condition for its intended use and

(c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which the company incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

The useful lives have been determined based on technical evaluation done by the management’s experts, which in few cases are different than the lives as specified by Schedule II to the Companies Act, 2013. The residual values are not more than 5% of the original cost of the asset. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets and the cost of assets not put to use before such date are disclosed under ‘Capital work-in-progress’.

Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in net profit in the statement of profit and loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the statement of profit and loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.

2.5 Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment loss.

On transition to Ind AS, the company has elected to continue with the carrying value of all its intangible assets recognized as at 1st April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually.

2.6 Inventories

Inventories are valued at cost or net realizable value, whichever is lower except waste which is valued at net realizable value. The cost in respect of the various items of inventory is computed as under:

Raw Materials - At weighted average cost plus direct expenses. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

Stores and Spares - At weighted average cost plus direct expenses. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

Work-in-Progress - At raw material cost plus conversion costs depending upon the stage of completion and other related overhead costs.

Finished Goods - At raw material cost plus conversion costs, packing cost and other overheads incurred to bring the goods to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

2.7 Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short term deposits with a maturity period of twelve months or less from the balance sheet date, which are subject to an insignificant risk of changes in value and is freely available for the company. Bank overdrafts are shown under borrowings in the balance sheet.

Earmarked bank balances and/or short term deposits which are lien marked against borrowings are shown under the head “Bank balances other than Cash and Cash Equivalent”.

2.8 Financial instruments

A. Financial Instruments - Initial recognition and measurement

Financial assets and financial liabilities are recognized in the company’s statement of financial position when the company becomes a party to the contractual provisions of the instrument. The company determines the classification of its financial assets and liabilities at initial recognition. All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets and liabilities carried at fair value through the Profit and Loss are immediately recognized in the Statement of Profit and Loss.

B.1. Financial assets - Subsequent measurement

The Subsequent measurement of financial assets depends on their classification which is as follows:

a. Financial assets at fair value through profit or loss

Financial assets at fair value through profit and loss include financial assets held for sale in the near term and those designated upon initial recognition at fair value through profit or loss.

b. Financial assets measured at amortized cost

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowance for estimated irrecoverable amounts based on the ageing of the receivables balance and historical experience. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. Individual trade receivables are written off when management deems them not to be collectible.

c. Financial assets at fair value through OCI

All equity investments, except investments in subsidiaries, joint ventures and associates, falling within the scope of Ind AS 109, are measured at fair value through Other Comprehensive Income (OCI). The company makes an irrevocable election on an instrument by instrument basis to present in other comprehensive income subsequent changes in the fair value. The classification is made on initial recognition and is irrevocable.

If the company decides to designate an equity instrument at fair value through OCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI.

B.2. Financial assets - De-recognition

The company derecognises a financial asset when the contractual rights to the cash flows from the assets expire or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset.

Upon de-recognition of equity instruments designated at fair value through OCI, the associated fair value changes of that equity instrument is transferred from OCI to Retained Earnings.

C.1. Financial liabilities - Subsequent measurement

The Subsequent measurement of financial liabilities depends on their classification which is as follows:

a. Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading, if any.

b. Financial liabilities measured at amortized cost

Interest bearing loans and borrowings of the company are subsequently measured at amortized cost using the effective interest rate method (EIR). Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are integral part of the EIR. The EIR amortized is included in finance costs in the statement of profit and loss.

C.2. Financial liabilities - De-recognition

A financial liability is derecognized when the obligation under the liability is discharged or expires.

D. Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position, if and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

E. Derivative financial instruments

The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss. Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in Exchange Rate Variation Gain. Assets/ liabilities in this category are presented as current assets/ current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.

F. Fair value measurement

The company measures certain financial instruments at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on presumption that the transaction to sell the asset or transfer the liability takes place either:

- in the principal market for the assets or liability or

- in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to the company.

The company uses valuation technique that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

2.9 Government Grants

The government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Government grants related to assets are treated as deferred income and are recognized in the statement of profit and loss on a systematic and rational basis over the useful life of the asset.

Government grants related to revenue are recognized on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate.

2.10 Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.

Non-current assets classified as held for sale and their related liabilities are presented separately in the balance sheet. Non-current assets are not depreciated or amortized while they are classified as held for sale.

2.11 Provisions, Contingent Liabilities and Contingent Assets

A provision shall be recognized when:

(a) an entity has a present obligation as a result of a past event;

(b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(c) a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

A Contingent liability is not recognized but disclosed in the notes to the accounts, unless the probability of an outflow of resources is remote.

A contingent asset is generally neither recognized nor disclosed.

2.12 Revenue Recognition

Revenue is recognized at the fair value of the consideration received or receivable. The amount disclosed as revenue is inclusive of excise duty and net of returns, trade discounts, volume rebates, Value Added Tax/Goods and Services Tax and amount collected on behalf of third parties. The company recognizes revenue when the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the entity.

(i) Sales of goods

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods are transferred to the buyer and the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.

(ii) Services

Revenue from sale of services is recognized on the basis of the stage of completion. When the contract outcome cannot be measured reliably, revenue is recognized only to the extent that the expenses incurred are eligible to be recovered.

(iii) Export Incentives

Revenue in respect of the export incentives is recognized on accrual basis in the period in which the related exports have been made.

(iv) Power Generation

Sale of power is recognized on the basis of meter reading confirmed by buyers in accordance with the respective agreement.

Renewable Energy Certificate are accounted for on certification of energy sale quantity by the buyer and is valued at minimum sale price fixed by Central Electricity Regulatory Authority after adjusting expected outgo.

(v) Interest

Income from interest is recognized using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.

(vi) Dividend

Dividend income is recognized when the right to receive the payment is established.

(vii) Insurance and other claims are recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

2.13 Employees Benefits

(i) Short term Employee Benefits:

Liabilities for wages, salaries and other employee benefits that are expected to be settled within twelve months of rendering the service by the employees are classified as short term employee benefits. Such short term employee benefits are measured at the amounts expected to be paid when the liabilities are settled. Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the statement of profit and loss of the year in which the related service is rendered.

(ii) Post-Employment Benefits

(a) Defined Contribution Plans:

Provident Fund

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service.

(b) Defined Benefit Plans Gratuity

The Company provides for gratuity, a defined benefit retirement plan (‘the Gratuity Plan’) covering eligible employees of the Company. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment with the Company. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method.

The Company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Re-measurements comprising of actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are recognized in Other Comprehensive Income which are not reclassified to profit or loss in subsequent periods.

(iii) Long-term employee benefits

The liability of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using Projected Unit Credit Method.

2.14 Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

2.15 Foreign Currency Transactions

The foreign currency transactions are recorded, on initial recognition in the functional currency (i.e. Indian Rupee), by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. The foreign currency monetary items are translated using the closing rate at the end of each reporting period. Nonmonetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognized in profit or loss in the period in which they arise.

Foreign exchange differences recorded as an adjustment to borrowing costs are presented in the statement of profit and loss, as a part of finance cost. All other foreign exchange gains and losses are presented in the statement of profit and loss on net basis.

In respect of foreign branch, which is in the nature of integral foreign operations, all transactions are translated using the exchange rate at the date of the transaction. The translation of monetary assets and liabilities is performed using the exchange rate in effect at the balance sheet date. Fixed assets are translated as at the date of transaction. Depreciation is translated at the rates applied for translation of fixed assets.

2.16 Leases

Leases under which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Lease under which the risks and rewards incidental to ownership are not transferred to lessee is classified as operating lease. Lease payments under operating leases are recognized as an expense on a straight line basis in net profit in the statement of profit and loss over the lease term, unless the payments are structured to increase in line with expected general inflation.

2.17 Income Taxes

Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in net profit in the statement of profit and loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in which case it is also recognized in equity or other comprehensive income respectively.

Current Taxes:

Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred Taxes:

Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. Deferred tax assets and liabilities are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.

The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Minimum Alternate Tax credit is recognized as a tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

2.18 Impairment of assets

a) Financial assets

The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in statement of profit or loss.

b) Non-financial assets

Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-inuse) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit to which the asset belongs. If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

2.19 Earnings per Share

The Basic earnings per share (EPS) is calculated by dividing the net profit or loss for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

Diluted earnings per equity share is calculated by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.

2.20 Dividends

Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the company’s Board of Directors.

2.21 Cash flow statement

The cash flow statement is prepared in accordance with the Indian Accounting Standard (Ind AS) - 7 “Statement of Cash flows” using the indirect method for operating activities.

2.22 Exceptional items

Exceptional items refer to items of income or expense within statement of profit and loss from ordinary activities which are non-recurring and are of such size, nature or incidence that their separate disclosure is considered necessary to explain the performance of the company.

2.23 Critical accounting estimates Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of company’s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

Intangible assets

The company tests whether intangible assets have suffered any impairment on an annual basis. The recoverable amount of a cash generating unit is determined based on value in use calculations which require the use of assumptions.

Trade Receivables

As per Ind As 109, the company is required to apply expected credit losses model for recognizing the provision for doubtful debts. The expected credit losses are determined based on past trends and assumptions.

3: FIRST TIME ADOPTION OF IND AS

This financial statements of “the company” for the year ended 31st March, 2018 is the first financial statement that has been prepared in accordance with Ind AS together with the comparative period data as at and for the year ended 31st March 2017, as described in the summary of significant accounting policies. The transition to Ind AS has been carried out in accordance with Ind AS 101-‘First time adoption of Indian Accounting Standards’ with 1st April, 2016 as the transition date.

The transition to Ind AS has resulted in changes in the presentation of the financial statements, disclosures in the notes there to and accounting policies and principles. The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended 31st March, 2018 and the comparative information. An explanation of how the transition from previous GAAP to Ind AS has effected the Company’s Balance Sheet, Statement of Profit and Loss is explained in note 3.2. Exemptions on first time adoption of Ind AS availed in accordance with Ind AS 101 have been set out in note 3.1.

3.1 Exemptions availed on first time adoption

Ind-AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has accordingly applied the following exemptions.

Estimates

Ind AS 101 provides that an entity’s estimates as per Ind AS 8 “ Accounting Policies, Changes in Accounting Estimates and Errors” at the date of transition shall be consistent with the estimates made for same date in accordance with previous GAAP, unless there is objective evidence that those estimates were in error.

Accordingly, the company has made Ind AS estimates as at the transition date i.e. 1st April 2016 which are consistent with estimates made by it under the previous GAAP for the same date. The company made estimates for following items in accordance with Ind AS at the date of transition since these were not required under previous GAAP :

i) Investment in equity instruments designated at Fair Value through OCI ; and

ii) Impairment of financial assets based on expected credit loss model.

3.2 Reconciliations between previous GAAP and Ind AS

The following reconciliations provide the effect of transition to Ind AS from previous GAAP in accordance with Ind AS 101

a) Equity as at 1st April, 2016 and as at 31st March, 2017

b) Net Profit for the year ended 31st March, 2017

a) Reconcilation of Equity as at 1st April, 2016 and as at 31st March, 2017

c) There are no material adjustments to the statements of cash flows as reported under the previous GAAP.

3.3. Notes to first time adoption 1 Fair Valuation of Investment

Under Indian GAAP, investments in equity instruments were classified as long term investments or current investments based on the intended holding period and reliability. Long term investments were carried at cost less provision for other than temporary diminution in the value of investments. Current investments were carried at lower of cost and fair value. Ind AS requires such investments to be measured at fair value.

Accordingly, the Company has designated such investments as investments measured at fair value through Other Comprehensive Income in accordance with Ind AS. The difference between the instrument’s fair value and carrying amount as per Indian GAAP has been recognized in retained earnings. This has resulted in increase in retained earnings by Rs. 1.79 Lakhs as at 31st March 2017 and 1st April 2016 and no change in net profit for the year ended 31st March 2017.

2 Capital Subsidy under TUFF

Under Indian GAAP, Government grant related to Property, plant and equipment was shown under Reserves and Surplus. Under Ind AS, Government grant related to Property, plant and equipment are treated as deferred income and are recognized in the statement of profit and loss on a systematic basis over the useful life of the asset.

This has resulted in decrease in Equity by Rs. 197.59 Lakhs and Rs. 212.10 Lakhs as at 31st March 2017 and 1st April 2016, respectively and the same has been disclosed as Deferred Income for Capital Subsidy under the head Other Non-Current Non-Financial Liabilities. However, the same has no impact on the total comprehensive income for the year ended 31st March, 2017.

3 Provision for Doubtful Debts

Under Ind AS, the company is required to provide for doubtful debts based on a Expected Credit Loss (ECL) model whereas no such requirement was there under previous GAAP.

This has resulted in decrease of retained earnings and consequently equity by Rs. 2.75 Lakhs and Rs. 2 Lakhs as at 31st March 2017 and 1st April 2016, respectively. The total comprehensive income for the year ended 31st March 2017 has decreased by Rs. 0.75 Lakhs.

4.1 Depreciation

Under Ind AS, the company is required to reassess the life and salvage value of property, plant and equipment at each year end and provide depreciation accordingly. Due to such reassessment, the depreciation charge for the year ended has increased by Rs. 613.95 Lakhs resulting in decrease of total comprehensive income for the year ended 31st March 2017 and total equity as at 31st March 2017 by Rs. 613.95 Lakhs.

4.2 Profit on sale of Fixed Assets

Due to the change in depreciation for the year ended 31st March 2017, the corresponding profit on sale of fixed assets and consequently total comprehensive income for the year ended 31st March 2017 increased by Rs. 4.14 Lakhs. The total equity as at 31st March 2017 accordingly increased by Rs. 4.14 Lakhs.

5 Deferred Taxes

Under Indian GAAP, deferred tax was recognized for the temporary timing differences which focus on differences between taxable profits and accounting profits for the period. Ind AS requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Further, the application of Ind AS has resulted in recognition of deferred tax on certain temporary differences which was not required under Indian GAAP.

Accordingly, deferred tax adjustments have been recognized in correlation to the underlying transactions in retained earnings/OCI in accordance with Ind AS. This has resulted in decrease in retained earnings by Rs. 421.58 Lakhs and Rs. 661.67 Lakhs as at 31st March, 2017 and 1st April 2016 respectively. The total comprehensive income for the year ended 31st March 2017 has increased by Rs. 240.09 Lakhs with a corresponding adjustment in ‘Deferred tax liability’.

6 Defined benefit obligation

Under Ind AS, measurements i.e. actuarial gains and losses are to be recognized in ‘Other comprehensive income’ and are not to be reclassified to profit and loss in a subsequent period. Under the Indian GAAP, these measurements were forming part of the profit or loss.

Therefore, actuarial gain/loss amounting to Rs. 23.09 Lakhs for the financial year 2016-17 has been recognized in OCI (net of tax Rs. 15.10 Lakhs) which was earlier recognized as Employee benefits expense. However, the same has no impact on the total equity as at 31st March, 2017.

7 Bill discounted against debtors

Under Indian GAAP, bills discounted against debtors were shown as contingent liability. However, the same falls under the category of ‘Financial instruments’ under Ind AS. Therefore, the bills discounted amounting to Rs. 3,636.56 Lakhs and Rs. 3,143.21 Lakhs as on 31st March, 2017 and 1st April, 2016 respectively have been shown under ‘Short term borrowings’ with a corresponding adjustment in ‘Trade receivables’. However, the same has no impact on the total equity as at 31st March, 2017 and 1st April, 2016.

(iii) Term /Rights attached to Equity Shares

The company has one class of equity shares having a par value of Rs. 10/- each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting. During the year ended March 31, 2018 the amount of dividend recognized as distributions to equity shareholders is Nil (Previous Year Nil). In the event of winding up, the equity shareholders will be entitled to receive the remaining balance of assets, if any, in proportionate to their individual shareholding in the paid up equity capital of the company.

Nature of Reserves

a) Capital Reserve

Capital Reserve represents capital receipts, being capital subsidy, received in earlier years.

b) Securities Premium

Security Premium reserve is used to record the premium on issue of shares. The reserve is utilized in accordance with the provisions of the Companies Act, 2013.

c) General Reserve

The General reserve is used from time to time for transfer of profits from surplus in statement of Profit and Loss for appropriation purposes.

d) Equity Investment Reserve

This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net off amounts reclassified to retained earnings when those assets have been disposed off.

Management estimations and assumptions

a) The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

b) The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

(i) The fair values of the unquoted equity shares have been determined based on certifications from values who have used Net Asset Value approach for determining the fair values.

(ii) The fair values of the derivative financial instruments have been determined based on the exchange rates prevailing as at year end.

120

12.2 Fair Value Measurement

(i) Fair Value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The company''s policy is to recognize transfers into and the transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between level 1 and level 2 during the end of the reported periods.

12.3 Financial Risk Management

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive directly from its operations. The principal financial liabilities of the company, include loans and borrowings, trade and other payables and the main purpose of these financial liabilities is to finance the day to day operations of the company.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks and that advises on financial risks and the appropriate financial risk governance framework for the Company.

This note explains the risks which the company is exposed to and policies and framework adopted by the company to manage these risks:

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprise three types of risk: foreign currency risk, interest rate risk, investment risk.

(i) Foreign currency risk

The company operates internationally and business is transacted in several currencies.

The export sales of company included in the total sales of the company, Further the company also imports certain assets and material from outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently the company is exposed to foreign currency risk and the results of the company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than company’s functional currency.

The company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions. The Company uses a combination of derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

(a) The following table summarizes the company’s exposure to foreign currency risk from financial instruments at the end of each reporting period:

(b) Forward Contracts of Rs. 6378.52 Lacs-US $ 99.05 Lacs (Previous Year Rs 4472.16 Lacs -US$ 65.95 Lacs and Rs 36.78 Lacs-Euro 0.51 Lacs ) taken for the purpose of hedging against outstanding of future orders as on 31.03.18.

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates.

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates, which are included in interest bearing loans and borrowings in these financial statements. The company’s fixed rate borrowings are carried at amortized cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

At the reporting date the interest rate profile of the Company’s interest bearing financial instrument is at its fair value:

(iii) Credit Risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables which are typically unsecured. Credit risk on cash and bank balances is limited as the company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. The Company’s credit risk in case of all other financial instruments is negligible.

The company assesses the credit risk based on external credit ratings assigned by credit rating agencies. The company also assesses the creditworthiness of the customers internally to whom goods are sold on credit terms in the normal course of business. The credit limit of each customer is defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to overseas customers are generally covered by letters of credit.

The impairment analysis is performed on client to client basis for the debtors that are past due at the end of each reporting date. The company has not considered an allowance for doubtful debts in case of trade receivables that are past due but there has not been a significant change in the credit quality and the amounts are still considered recoverable.

Write off policy

The financials assets are written off in case there is no reasonable expectation of recovering from the financial asset.

13 EARNINGS PER SHARE

(a) The calculation of Earnings Per Share (EPS) as disclosed in the statement of profit and loss has been made in accordance with Indian Accounting Standard (Ind AS)-33 on “Earning Per Share”

(iv) Custom duty saved of Rs. 1006.87 Lacs (Previous year Rs. 685.37 Lacs ) for import of capital good made under EPCG scheme against which export obligations amounting to Rs. 6041.22 Lacs (Previous year Rs. 4112.20 Lacs) pending.

(v) Interest on contested demand of entry tax, amount whereof is not ascertainable.

(vi) In respect of certain disallowances and additions made by Income Tax Authorities, appeals are pending before the Appellate authorities and adjustment if any, will be made after the same are finally determined.

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Mar 31, 2016

1.1 GENERAL

(i) The financial statements have been prepared under historical cost convention on accrual basis in compliance with applicable Accounting Standards as prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 2013.

1.2 REVENUE RECOGNITION

(i) Revenue represents the net invoice value of goods and services provided to third parties after deducting discounts, volume rebates, outgoing sales taxes and duties, and are recognized usually when all significant risks and rewards of ownership of the assets (goods) sold are transferred to the customer and the commodity has been delivered materially to the shipping agent.

(ii) Revenue from sale of by-products (goods) is included in revenue from operations.

1.3 VALUATION OF INVENTORIES

(i) Inventories are valued at lower of Cost and Net Realizable Value except for scrap and by products which are valued at net realizable value.

(ii) Cost of inventories of finished goods and work-in-process includes material cost, cost of conversion and other related overhead costs.

(iii) Cost of inventories of raw material, work-in-process and stores & spares is generally determined on weighted average cost method.

1.4 INVESTMENTS

Long Term Investments are stated at cost. Provision for diminution in long term investments is made only if such decline is other than temporary. Current investments are carried at lower of cost or market price.

1.5 FIXED ASSETS

Fixed assets are stated at cost of acquisition (net of cenvat credit) & are inclusive of freight, duties, taxes and installation expenses less accumulated depreciation and impairment loss, if any.

1.6 DEPRECIATION/ AMORTISATION/ IMPAIREMENT LOSS

(a) Depreciation on fixed assets has been provided using Straight Line Method over their useful lives and in the manner prescribed under Schedule II of the Companies Act, 2013 (except leasehold land which is amortized over the period of lease).

(b) Continuous process plants as defined in Schedule II have been considered on the basis of technical evaluation and depreciated over the lives as prescribed under Schedule II

(c) Depreciation on addition/sale is provided on Pro-rata basis with reference to the month of addition / sale.

(d) In case, the recoverable amount of the fixed assets is lower than its carrying amount a provision for the impairment loss, depreciation on impaired assets is provided based on the reassessed balance life of the assets.

(e) Capital Expenditure on assets not owned are written off over the duration of contract or ten years, whichever is lower.

1.7 BORROWING COST

Interest and other costs in connection with the borrowing of the funds to the extent related / attributed for acquisition/ construction of qualifying fixed assets are capitalized till the date of intended commercial use of the assets. Other borrowing costs are charged to the Statement of Profit & Loss.

1.8 GOVERNMENT GRANTS

(i) Grants other than capital subsidy under TUFS relating to fixed assets are shown as deduction from the gross value of fixed assets and those of the nature of project subsidy are credited to Capital Reserves.

(ii) Other Government Grants including incentive are credited to statement of Profit & Loss or deducted from the related expenses.

(iii) Capital Subsidy under TUFS from the Ministry of Textiles on specified processing machinery is treated as deferred income which is recognized on systematic and rational basis in proportion of the applicable depreciation over the useful lives of the respective assets and is adjusted against the depreciation / credited to the Statement of Profit and Loss.

1.9 FOREIGN CURRENCY TRANSACTIONS

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currencies and outstanding at the year-end are translated at year-end rates. Exchange difference arising on settlement of monetary items at rates different from those at which they were initially recorded are recognized as income or as expenses in the year in which they arise. In case of forward contracts, the exchange differences are dealt within the Statement of Profit & Loss over the period of the contracts.

1.10 EXPENDITURE DURING CONSTRUCTION PERIOD

Pre-operative project expenditure (net of income accrued) incurred upto the date of commercial production are capitalized and the same are allocated to the respective fixed assets on the completion of the construction period.

1.11 EMPLOYEE BENEFITS:

(I) Defined Contribution Plan

Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due.

(II) Defined Benefit Plan

Employee benefit in the form of Gratuity is funded every year under group policy of Life Insurance Corporation of India. Long Term compensated leaves are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

(III) Other short term absences are provided based on past experience of leave availed. Actuarial gain/losses, if any, are immediately recognized in the Statement of Profit and Loss.

1.12 TAXES ON INCOME

Provision for Income Tax for the period comprises of Current Tax and Deferred Tax. Provision for current tax has been made on the basis of estimated taxable income in accordance with the provisions of Income tax Act, 1961. Deferred Tax is recognized, subject to consideration of prudence, at the prevailing tax rates on timing differences between taxable and accounting income/ expenditure that originate in one period and are capable of reversal in one or more subsequent periods.

1.13 CONTINGENT LIABILITIES, CONTINGENT ASSETS & PROVISIONS

Contingent liabilities if material, are disclosed by way of notes, contingent assets are neither recognized nor disclosed in the financial statements. Provision is recognized when the company has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.

1.14 RESEARCH AND DEVELOPMENT EXPENSES

Revenue Expenditure on Research and Development is charged to the Statement of Profit & Loss and Capital Expenditure is added to Fixed Assets.

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Mar 31, 2015

1.1 GENERAL

(i) The financial statements have been prepared under historical cost convention on accrual basis in compliance with applicable Accounting Standards as prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 2013.

1.2 REVENUE RECOGNITION

(i) Revenue represents the net invoice value of goods and services provided to third parties after deducting discounts, volume rebates, outgoing sales taxes and duties, and are recognized usually when all significant risks and rewards of ownership of the assets (goods) sold are transferred to the customer and the commodity has been delivered materially to the shipping agent.

(ii) Revenue from sale of by-products (goods) is included in revenue from operations.

1.3 VALUATION OF INVENTORIES

(i) Inventories are valued at lower of Cost and Net Realizable Value except for scrap and by products which are valued at net realizable value. (ii) Cost of inventories of finished goods and work-in-process includes material cost, cost of conversion and other related overhead costs. (iii) Cost of inventories of raw material, work-in-process and stores & spares is generally determined on weighted average cost method.

1.4 INVESTMENTS

Long Term Investments are stated at cost. Provision for diminution in long term investments is made only if such decline is other than temporary. Current investments are carried at lower of cost or market price.

1.5 FIXED ASSETS

Fixed assets are stated at cost of acquisition (net of cenvat credit) & are inclusive of freight, duties, taxes and installation expenses less accumulated depreciation and impairment loss, if any.

1.6 DEPRECIATION/ AMORTISATION/ IMPAIREMENT LOSS

(a) Depreciation on fixed assets has been provided using Straight Line Method over their useful lives and in the manner prescribed under Schedule II of the Companies Act, 2013 (except leasehold land which is amortized over the period of lease).

(b) Continuous process plants as defined in Schedule II have been considered on the basis of technical evaluation and depreciated over the lives as prescribed under Schedule II

(c) Depreciation on addition/sale is provided on Pro-rata basis with reference to the month of addition / sale.

(d) In case, the recoverable amount of the fixed assets is lower than its carrying amount a provision for the impairment loss, depreciation on impaired assets is provided based on the reassessed balance life of the assets.

(e) Capital Expenditure on assets not owned are written off over the duration of contract or ten years, whichever is lower.

1.7 BORROWING COST

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed for acquisition/ construction of qualifying fixed assets are capitalized till the date of intended commercial use of the assets. Other borrowing costs are charged to the Statement of Profit & Loss.

1.8 GOVERNMENT GRANTS

(i) Grants other than capital subsidy under TUFS relating to fixed assets are shown as deduction from the gross value of fixed assets and those of the nature of project subsidy are credited to Capital Reserves. (ii) Other Government Grants including incentive are credited to statement of Profit & Loss or deducted from the related expenses.

(iii) Capital Subsidy under TUFS from the Ministry of Textiles on specified processing machinery is treated as deferred income which is recognized on systematic and rational basis in proportion of the applicable depreciation over the useful lives of the respective assets and is adjusted against the depreciation / credited to the Statement of Profit and Loss.

1.9 FOREIGN CURRENCY TRANSACTIONS

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currencies and outstanding at the year-end are translated at year-end rates. Exchange difference arising on settlement of monetary items at rates different from those at which they were initially recorded are recognized as income or as expenses in the year in which they arise. In case of forward contracts, the exchange differences are dealt within the Statement of Profit & Loss over the period of the contracts.

1.10 EXPENDITURE DURING CONSTRUCTION PERIOD

Pre-operative project expenditure (net of income accrued) incurred upto the date of commercial production are capitalized and the same are allocated to the respective fixed assets on the completion of the construction period.

1.11 EMPLOYEE BENEFITS:-

(I) Defined Contribution Plan

Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due.

(II) Defined Benefit Plan

Employee benefit in the form of Gratuity is funded every year under group policy of Life Insurance Corporation of India. Long Term compensated leaves are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

(III) Other short term absences are provided based on past experience of leave availed. Actuarial gain/losses, if any, are immediately recognised in the Statement of Profit and Loss.

1.12 TAXES ON INCOME

Provision for Income Tax for the period comprises of Current Tax and Deferred Tax. Provision for current tax has been made on the basis of estimated taxable income in accordance with the provisions of Income tax Act, 1961. Deferred Tax is recognised, subject to consideration of prudence, at the prevailing tax rates on timing differences between taxable and accounting income/ expenditure that originate in one period and are capable of reversal in one or more subsequent periods.

1.13 CONTINGENT LIABILITIES, CONTINGENT ASSETS & PROVISIONS

Contingent liabilities if material, are disclosed by way of notes, contingent assets are neither recognised nor disclosed in the financial statements. Provision is recognised when the Company has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.

1.14 RESEARCH AND DEVELOPMENT EXPENSES

Revenue Expenditure on Research and Development is charged to the Statement of Profit & Loss and Capital Expenditure is added to Fixed Assets.

Considering the past experience, management is of the view that there will not be any material impact on accounts on settlement/finalization of tax assessment.

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Mar 31, 2014

1.1 GENERAL

(i) These accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

(ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles and mandatory Accounting Standards as per Company (Accounting Standard) Rules, 2006.

1.2 REVENUE RECOGNITION

(i) Revenue represents the net invoice value of goods and services provided to third parties after deducting discounts, volume rebates, outgoing sales taxes and duties, and are recognized usually when all significant risks and rewards of ownership of the assets (goods) sold are transferred to the customer and the commodity has been delivered to the shipping agent.

(ii) Revenue from sale by-products (goods) is included in revenue from operations.

1.3 VALUATION OF INVENTORIES

(i) Inventories are valued at lower of Cost and Net Realizable Value except for scrap and by-products which are valued at net realizable value.

(ii) Cost of inventories of finished goods and work-in-process includes material cost, cost of conversion and other related overhead costs.

(iii) Cost of inventories of raw material, work-in-process and stores & spares is generally determined on weighted average cost method.

1.4 INVESTMENTS

Long Term Investments are stated at cost. Provision for diminution in long term investments is made only if such decline is other than temporary. Current investments are carried at lower of cost or market price.

1.5 FIXED ASSETS

Fixed assets are stated at cost of acquisition (net of cenvat credit) & are inclusive of freight, duties, taxes and installation expenses less accumulated depreciation and impairment loss, if any.

1.5 DEPRECIATION/ AMORTISATION/ IMPAIREMENT LOSS

(a) Depreciation on fixed assets is provided on Straight Line Method by applying rates given in Schedule XIV of the Companies Act, 1956. (except leasehold land which is amortized over the period of lease).

(b) Depreciation on certain plant & machinery is provided as per the rates applicable to the continuous process plant on the basis of technical evaluation.

(c) Depreciation on addition/sale is provided Pro-rata with reference to the month of addition/sale.

(d) In case, the recoverable amount of the fixed assets is lower than its carrying amount a provision for the impairment loss, depreciation on impaired assets is provided based on the reassessed balance life of the assets.

(e) Capital Expenditure on assets not owned are written off over the duration of contract or ten years, whichever is lower.

(f) Fixed assets costing Rs.5000 or less has been depreciated fully in the year of purchase.

1.6 BORROWING COST

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed for acquisition/ construction of qualifying fixed assets are capitalized till the date of intended commercial use of the assets and other borrowing costs are charged to the Statement of Profit & Loss.

1.7 GOVERNMENT GRANTS

(i) Grants other than capital subsidy under TUFS relating to fixed assets are shown as deduction from the gross value of fixed assets and those of the nature of project subsidy are credited to Capital Reserves.

(ii) Other Government Grants including incentive are credited to statement of Profit & Loss or deducted from the related expenses.

(iii) Capital Subsidy under TUFS from the Ministry of Textiles on specified processing machinery is treated as deferred income which is recognized on systematic and rational basis in proportion of the applicable depreciation over the useful life of the respective assets and is adjusted against the depreciation / credited to the Statement of Profit and Loss.

1.8 FOREIGN CURRENCY TRANSACTIONS

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currencies and outstanding at the year-end are translated at year-end rates. Exchange difference arising on settlement of monetary items at rates different from those at which they were initially recorded are recognized as income or as expenses in the year in which they arise. In case of forward contracts, the exchange difference are dealt within the Statement of Profit & Loss account over the period of the contracts.

1.9 EXPENDITURE DURING CONSTRUCTION PERIOD

Pre-operative project expenditure (net of income accrued) incurred upto the date of commercial production are capitalized and the same are allocated to the respective fixed assets on the completion of the construction period.

1.10 EMPLOYEE BENEFITS:- (I) Defined Contribution Plan

Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions are charged to the Statement of Profit and Loss Account of the year when the contributions to the respective funds are due.

(II) Defined Benefit Plan

A retirement benefit in the form of Gratuity is funded every year under group policy of Life Insurance Corporation of India. Long Term compensated leaves are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

(III) Other short term absences are provided based on past experience of leave availed.

Actuarial gain/losses, if any, are immediately recognised in the Statement of Profit and Loss Account.

1.11 TAXES ON INCOME

Provision for Income Tax for the period comprises of Current Tax and Deferred Tax. Provision for current tax has been made on the basis of estimated taxable income in accordance with the provisions of Income tax Act, 1961. Deferred Tax is recognised, subject to consideration of prudence, at the prevailing tax rates on timing differences between taxable and accounting income/ expenditure that originate in one period and are capable of reversal in one or more subsequent periods.

1.12 CONTINGENT LIABILITIES, CONTINGENT ASSETS & PROVISIONS

Contingent liabilities if material, are disclosed by way of notes, contingent assets are not recognised or disclosed in the financial statements. Provision is recognised when an enterprise has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.

2.1 Rights & Restrictions of Shareholders:

2.1.1 The Company has only one class of Equity Shares having face value of Rs. 10/- each (Previous Year Re. 10/- each) in its issued, subscribed and paid up Equity share capital. Each shareholder is entitled to one vote per share (except GDR shareholding mentioned at point no. 2.1.2 below). Each shareholder have the right in profit/surplus in proportion to amount paid up with respect to share holder. This is to be read with note no. 27.3.

2.1.2 The GDR shareholding (12,90,000 nos. of GDRs. Representing Equity shares of Rs. 10 each are 64,50,000) which is standing in the name of Bank of New York Mellon, as Depositary, has right to dividend, do not have any right to vote.

2.1.3 In the event of winding up, the equity shareholders will be entitled to receive the remaining balance of assets, if any, in proportionate to their individual shareholding in the paid up equity capital of the Company.

1. Working Capital Demand loans from bank includes Cash Credit, Packing Credit and short term loans are secured by First Charge by Hypothecation of Raw Material, Stock In Process, Finished Goods, Consumable Store and Spares, Goods in Transit, Book Debts and by Second Charge on entire Fixed Assets of the Company on Pari-passu basis with Working Capital lenders.

2. The aforesaid credit facilities mentioned above is also guaranteed by Chairman & Whole Time Director and Managing Director.

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Mar 31, 2013

1.1 GENERAL

(i) These accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

(ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles and mandatory Accounting Standards as per Company (Accounting Standard) Rules, 2006.

1.2 REVENUE RECOGNITION

(i) Revenue represents the net invoice value of goods and services provided to third parties after deducting discounts, volume rebates, outgoing sales taxes and duties, and are recognized usually when all significant risks and rewards of ownership of the assets (goods) sold are transferred to the customer and the commodity has been delivered to the shipping agent.

(ii) Revenue from sale by-products (goods) is included in revenue from operations.

1.3 VALUATION OF INVENTORIES

(i) Inventories are valued at lower of Cost and Net Realizable Value except for scrap and by-products which are valued at net realizable value.

(ii) Cost of inventories of finished goods and work-in-process includes material cost, cost of conversion and other related overhead costs.

(iii) Cost of inventories of raw material, work-in-process and stores & spares is generally determined on weighted average cost method.

1.4 INVESTMENTS

Long Term Investments are stated at cost. Provision for diminution in long term investments is made only if such decline is other than temporary. Current investments are carried at lower of cost or market price.

1.5 FIXED ASSETS

Fixed assets are stated at cost of acquisition (net of cenvat credit) & are inclusive of freight, duties, taxes and installation expenses less accumulated depreciation and impairment loss, if any.

1.5 DEPRECIATION/ AMORTISATION/ IMPAIREMENT LOSS

(a) Depreciation on fixed assets is provided on Straight Line Method by applying rates given in Schedule XIV of the Companies Act, 1956. (except leasehold land which is amortized over the period of lease).

(b) Depreciation on certain plant & machinery is provided as per the rates applicable to the continuous process plant on the basis of technical evaluation.

(c) Depreciation on addition/sale is provided Pro-rata with reference to the month of addition/sale.

(d) In case, the recoverable amount of the fixed assets is lower than its carrying amount a provision for the impairment loss, depreciation on impaired assets is provided based on the reassessed balance life of the assets.

(e) Capital Expenditure on assets not owned are written off over the duration of contract or ten years, whichever is lower.

(f) Fixed assets costing Rs.5000 or less has been depreciated fully in the year of purchase.

1.6 BORROWING COST

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed for acquisition/ construction of qualifying fixed assets are capitalized till the date of intended commercial use of the assets and other borrowing costs are charged to the Statement of Profit & Loss.

1.7 GOVERNMENT GRANTS

(i) Grants other than capital subsidy under TUFS relating to fixed assets are shown as deduction from the gross value of fixed assets and those of the nature of project subsidy are credited to Capital Reserves.

(ii) Other Government Grants including incentive are credited to statement of Profit & Loss or deducted from the related expenses.

(iii) Capital Subsidy under TUFS from the Ministry of Textiles on specified processing machinery has been treated as deferred income which is recognized on systematic and rational basis in proportion of the applicable depreciation over the useful life of the respective assets and is adjusted against the depreciation / credited to the Statement of Profit and Loss.

1.8 FOREIGN CURRENCY TRANSACTIONS

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currencies and outstanding at the year-end are translated at year-end rates Exchange difference arising on settlement of monetary items at rates different from those at which they were initially recorded are recognized as income or as expenses in the year in which they arise. In case of forward contracts, the exchange difference are dealt within the Profit & Loss account over the period of the contracts.

1.9 EXPENDITURE DURING CONSTRUCTION PERIOD

All pre-operative project expenditure (net of income accrued) incurred upto the date of commercial production is capitalized and the same are allocated to the respective fixed assets on the completion of the construction period.

1.10 EMPLOYEE BENEFITS:-

(I) Defined Contribution Plan

Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due.

(II) Defined Benefit Plan

A retirement benefit in the form of Gratuity is funded every year under group policy of Life Insurance Corporation of India. Long Term compensated leaves are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

(III) Other short term absences are provided based on past experience of leave availed.

Actuarial gain/losses, if any, are immediately recognised in the Profit and Loss Account.

1.11 TAXES ON INCOME

Provision for Income Tax for the period comprises of Current Tax and Deferred Tax. Provision for current tax has been made on the basis of estimated taxable income in accordance with the provisions of Income tax Act, 1961. Deferred Tax is recognised, subject to consideration of prudence, at the prevailing tax rates on timing differences between taxable and accounting income/ expenditure that originate in one period and are capable of reversal in one or more subsequent periods.

1.12 CONTINGENT LIABILITIES, CONTINGENT ASSETS & PROVISIONS

Contingent liabilities if material, are disclosed by way of notes, contingent assets are not recognised or disclosed in the financial statements. Provision is recognised when an enterprise has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.

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Mar 31, 2012

1.1 GENERAL

(i) These accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

(ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles and mandatory Accounting Standards as per Company (Accounting Standard) Rules, 2006.

1.2 REVENUE RECOGNITION

(i) Revenue represents the net invoice value of goods and services provided to third parties after deducting discounts, volume rebates, outgoing sales taxes and duties, and are recognized usually when all significant risks and rewards of ownership of the asset sold are transferred to the customer and the commodity has been delivered to the shipping agent.

(ii) Revenues from sale of material by-products are included in revenue.

(iii) Interest income is recognized on an accrual basis in the income statement.

1.3 VALUATION OF INVENTORIES

(i) Inventories are valued at lower of Cost and Net Realizable Value except for scrap and by-products which are valued at net realizable value.

(ii) Cost of inventories of finished goods and work-in-process includes material cost, cost of conversion and other related overhead costs.

(iii) Cost of inventories of raw material, work-in-process and stores & spares is determined on weighted average cost method.

1.4 INVESTMENTS

Long Term Investments are stated at cost. Provision for diminution in long term investments is made only if such decline is other than temporary. Current investments are carried at lower of cost or market price.

1.5 FIXED ASSETS

Fixed assets are stated at cost of acquisition (net of canvas credit) & are inclusive of freight, duties, taxes and installation expenses less accumulated depreciation and impairment loss, if any.

1.5 DEPRECIATION/ AMORTISATION/ IMPAIREMENT LOSS

(a) Depreciation on fixed assets is provided on Straight Line Method by applying rates given in Schedule XIV of the Companies Act, 1956. (except leasehold land which is amortization over the period of lease).

(b) Depreciation on certain plant & machinery is provided as per the rates applicable to the continuous process plant on the basis of technical evaluation.

(c) Depreciation on addition/sale is provided Pro-rata with reference to the month of addition/sale.

(d) In case, the recoverable amount of the fixed assets is lower than its carrying amount a provision for the impairment loss, depreciation on impaired assets is provided based on the reassessed life of the assets.

(e) Capital Expenditure on assets not owned are written off over the duration of contract or ten years, whichever is lower.

(f) Fixed assets costing Rs.5000 or less has been depreciated fully in the year of purchase.

1.6 BORROWING COST

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed for acquisition/ construction of qualifying fixed assets are capitalized till the date of intended commercial use of the assets and other borrowing costs are charged to the Profit & Loss Account.

1.7 GOVERNMENT GRANTS

(i) Grants other than capital subsidy under TUFS relating to fixed assets are shown as deduction from the gross value of fixed assets and those of the nature of project subsidy are credited to Capital Reserves.

(ii) Other Government Grants including incentive are credited to Profit & Loss Account or deducted from the related expenses.

(iii) Capital Subsidy under TUFS from the Ministry of Textiles on specified processing machinery has been treated as deferred income which is recognized on systematic and rational basis in proportion of the applicable depreciation over the useful life of the respective assets and is adjusted against the depreciation / credited to the Profit and Loss account.

1.8 FOREIGN CURRENCY TRANSACTIONS

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currencies and outstanding at the year-end are translated at year-end rates. Exchange difference arising on settlement of monetary items at rates different from those at which they were initially recorded are recognized as income or as expenses in the year in which they arise. In case of forward contracts, the exchange difference are dealt within the Profit & Loss account over the period of the contracts.

1.9 EXPENDITURE DURING CONSTRUCTION PERIOD

All pre-operative project expenditure (net of income accrued) incurred upto the date of commercial production is capitalized and the same are allocated to the respective fixed assets on the completion of the construction period.

1.10 EMPLOYEE BENEFITS:-

(I) Defined Contribution Plan

Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due.

(II) Defined Benefit Plan

A retirement benefit in the form of Gratuity is funded every year under group policy of Life Insurance Corporation of India. Long Term compensated leaves are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

(III) Other short term absences are provided based on past experience of leave availed.

Actuarial gain/losses, if any, are immediately recognised in the Profit and Loss Account.

1.11 TAXES ON INCOME

Provision for In come Tax for the period comprises of Current Tax and Deferred Tax. Provision for current tax has been made on the basis of estimated taxable income in accordance with the provisions of Income tax Act, 1961. Deferred Tax is recognized, subject to consideration of prudence, at the prevailing tax rates on timing differences between taxable and accounting income/ expenditure that originate in one period and are capable of reversal in one or more subsequent periods.

1.12 CONTINGENT LIABILITIES, CONTINGENT ASSETS & PROVISIONS

Contingent liabilities if material, are disclosed by way of notes, contingent assets are not recognized or disclosed in the financial statements. Provision is recognized when an enterprise has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.

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Mar 31, 2011

1. GENERAL

(i) These accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

(ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles and mandatory Accounting Standards as per Company (Accounting Standard) rules 2011.

2. REVENUE RECOGNITION

(i) Revenue represents the net invoice value of goods and services provided to third parties after deducting discounts, volume rebates, outgoing sales taxes and duties, and are recognized usually when all significant risks and rewards of ownership of the asset sold are transferred to the customer and the commodity has been delivered to the shipping agent.

(ii) Revenues from sale of material by-products are included in revenue.

(iii) Interest income is recognized on an accrual basis in the income statement.

3. VALUATION OF INVENTORIES

(i) Inventories are valued at lower of Cost and Net Realisable Value except for scrap and by-products which are valued at net realizable value.

(ii) Cost of inventories of finished goods and work-in-process includes material cost, cost of conversion and other related overhead costs.

(iii) Cost of inventories of raw material, work-in-process and stores & spares is determined on weighted average cost method.

4. INVESTMENTS

Long Term Investments are stated at cost. Provision for diminution in long term investments is made only if such decline is other than temporary. Current investments are carried at lower of cost or market price.

5. FIXED ASSETS

Fixed assets are stated at cost of acquisition (net of cenvat credit) & is inclusive of freight, duties, taxes and installation expenses less accumulated depreciation and impairment loss, if any.

6. DEPRECIATION/ AMORTISATION/ IMPAIREMENT LOSS

(a) Depreciation on fixed assets is provided on Straight Line Method by applying rates given in Schedule XIV of the companies Act, 1956. (except leasehold land which is amortization over the period of lease).

(b) Depreciation on certain plant & machinery is provided as per the rates applicable to the continuous process plant on the basis of technical evaluation.

(c) Depreciation on addition/sale is provided Pro-rata with reference to the month of addition/sale.

(d) In case, the recoverable amount of the fixed assets is lower than its carrying amount a provision for the impairment loss, depreciation on impaired assets is provided based on the reassessed life of the assets.

(e) Capital Expenditure on assets not owned are written off over the duration of contract or ten years, whichever is lower.

(f) Fixed assets costing Rs.5000 or less has been depreciated fully in the year of purchase.

7. BORROWING COST

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed for acquisition/ construc- tion of qualifying fixed assets are capitalized till the date of intended commercial use of the assets and other borrowing costs are charged to the Profit & Loss Account.

8. GOVERNMENT GRANTS

(i) Grants other than capital subsidy under TUFS relating to fixed assets are shown as deduction from the gross value of fixed assets and those of the nature of project subsidy are credited to Capital Reserves.

(ii) Other Government Grants including incentive are credited to Profit & Loss Account or deducted from the related expenses.

(iii) Capital Subsidy under TUFS from the Ministry of Textiles on specified processing machinery has been treated as deferred income which is recognised on systematic and rational basis in proportion of the applicable depreciation over the useful life of the respective assets and is adjusted against the depreciation / credited to the Profit and Loss account.

9. FOREIGN CURRENCY TRANSACTIONS

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currencies and outstanding at the year-end are translated at year-end rates. Exchange difference arising on settlement of monetary items at rates different from those at which they were initially recorded are recognized as income or as expenses in the year in which they arise. In case of forward contracts, the exchange difference are dealt within the Profit & Loss account over the period of the contracts.

10. EXPENDITURE DURING CONSTRUCTION PERIOD

All pre-operative project expenditure (net of income accrued) incurred upto the date of commercial production is capitalized and the same are allocated to the respective fixed assets on the completion of the construction period.

11. EMPLOYEE BENEFITS:-

(I) Defined Contribution Plan : Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due.

(II) Defined Benefit Plan

A retirement benefit in the form of Gratuity is funded every year under group policy of Life Insurance Corporation of India. Long Term compensated leaves are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

(III) Other short term absences are provided based on past experience of leave availed. Actuarial gain/losses, if any, are immediately recognised in the Profit and Loss Account.

12. TAXES ON INCOME

Provision for Income Tax for the period comprises of Current Tax and Deferred Tax. Provision for current tax has been made on the basis of estimated taxable income in accordance with the provisions of Income tax Act, 1961. Deferred Tax is recognised, subject to consideration of prudence, at the prevailing tax rates on timing differences between taxable and accounting income/ expenditure that originate in one period and are capable of reversal in one or more subsequent periods.

13. CONTINGENT LIABILITIES, CONTINGENT ASSETS & PROVISIONS

Contingent liabilities if material, are disclosed by way of notes, contingent assets are not recognised or disclosed in the financial statements. Provision is recognised when an enterprise has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.

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Mar 31, 2010

1. General

i) These accounts are prepared on the historical cost basis and on the accounting principles of a going concern. ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles and mandatory Accounting Standards.

2. Revenue Recognition

Expenses and income considered payable and receivable respectively are accounted for on accural basis.

3. Valuation of Inventories

Inventories are valued at lower of Cost and Net Realisable Value except stock of waste, which is valued at Net Realisable Value. The cost for the purpose of valuation is computed as under:

(i) Raw Materials - Actual Cost of purchase including freight & taxes.

(ii) Stores and Spare Parts - Weighted Average Method.

(iii) Finished Goods and Stock in Process is determined by taking material, labour and other related overheads.

4. Investments

Long Term Investments are stated at cost. Where there is a decline other than temporary in their value, the carrying amount is reduced on individual investment basis and is charged to Profit and Loss Account.

5. Fixed Assets

Fixed assets are stated at cost of acquisition (net of cenvat credit) & is inclusive of freight, duties, taxes and installation expenses.

6. Depreciation / Amortisation / Impairement Loss

(a) Depreciation on fixed assets is provided on Straight Line Methods by applying rates given in Schedule XIV of the companies Act, 1956. (except leasehold land which is amortised over the period of lease).

(b) Depreciation on addition/sale is provided Pro-rata with reference to the month of addition/sale.

(c) In case, the recoverable amount of the fixed assets is lower than its carrying amount a provision for the impairment loss, depreciation on impaired assets is provided based on the reassessed life of the assets.

(d) Capital Expenditure on assets not owned are written off over the duration of contract or ten years, whichever is lower.

(e) Fixed assets costing Rs.5000 or less has been depreciated fully in the year of purchases.

7. Borrowing Cost

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed for acquisition/construction of qualifying fixed assets are capitalised till the date of intended commercial use of the assets and other borrowing costs are charged to the Profit & Loss Account.

8. Government Grants

(i) Grants other than capital subsidy under TUFS relating to fixed assets are shown as deduction from the gross value of fixed assets and those of the nature of project subsidy are credited to Capital Reserves.

(ii) Other Government Grants including incentive are credited to Profit & Loss Account or deducted from the related expenses.

(iii) Capital subsidy under TUFS from the Ministry of Textiles on specified processing machinery has been treated as deferred income which is recognised on systematic and rational basis in proportion of the applicable depreciation over the useful life of the respective assets and is adjusted against the depreciation/credited to the profit and loss account.

9. Foreign Currency Transactions

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currencies and outstanding at the year end are translated at year end rates. Exchange difference arising on settlement of monetary items at rates different from those at which they were initially recorded are recognised as income or as expenses in the year in which they arise. In case of forward contracts, the exchange difference are dealt within the Profit & Loss account over the period of the contracts.

10. Expenditure during Construction Period

Expenditure during construction period are included under capital work in progress and the same are allocated to the respective fixed assets on the completion of the construction period.

11. Employees Benefits

(I) Defined Contribution Plan : Employee benefits in the form of Provident Fund are considered as defined contribution plan and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due.

(II) Defined Benefit Plan : Retirement benefits in the form of Gratuity is funded every year under Group Policy of life Insurance Corporation of India. Long Term compensated leaves are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

(III) Other short term absences are provided based on past experience of leave availed. Actuarial gain/losses, if any, are immediately recognised in the Profit and Loss Account.

12. Taxes on Income

Provision for Income Tax for the period comprises of Current Tax and Deferred Tax. Provision for current tax has been made on the basis of estimated taxable income in accordance with the provisions of Income Tax Act, 1961. Deferred Tax is recognised, subject to consideration of prudence, at the prevailing tax rates on timing differences between taxable and accounting income/expenditure that originate in one period and are capable of reversal in one or more subsequent periods.

13. Contingent Liabilities, Contingent Assets & Provisions

Contingent liabilities, if material, are disclosed by way of notes, contingent assets are not recognised or disclosed in the financial statements. Provision is recognised when an enterprise has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation (s), in respect of which a reliable estimate can be made for the amount of obligation.