Notes to Financial Statements for the Year Ended 31st March, 2015 1. ACCOUNTING POLICIES i) Basis of Accounting a) The financial statements are brpared on historical cost basis and on the accounting principles of the going concern. b) Accounting policies not specifically referred to otherwise, are consistent and in consonance with generally accepted accounting principles(GAAP) comprising of mandatory and recommendatory Accounting Standards, Guidance notes, etc. issued by ICAI. ii) Use of Estimates In brparation of the financial statements in confirmatory with Generally Accepted Accounting Principle in India, management is required to make estimates & assumptions that affects the reported amount of assets & liabilities and the disclosures of contingent liabilities as at the financial reporting date. The amount of revenue & expenditure during the reported period and that of actual results could be different from those of estimates. Any revision to such estimates is recognised in the period in which the same is determined. iii) Revenue recognition a) Sales comprise, sale of goods and is inclusive of excise duty and export incentives and after deduction of usual trade discount. b) Income, Expenditure and Export Incentives/Benefits are accounted for on accrual basis. c) Claims lodged with insurance companies are recognised as income on recognition by the Insurance Company. iv) Government Grants Government grants are recognised on the reasonable assurance of receipt. Interest subsidy under TUFS from Ministry of Textiles are recognised on accrual basis and adjusted against the respective expenses. The Capital Subsidy under TUFS from Ministry of Textiles on specified textile machinery is shown as a deduction from the gross value of the assets concerned in arriving at its book value by adopting 'Income approach' as defined in AS-12. v) Inventory Valuation a) Inventories are valued at cost or net realizable value whichever is lower. b) Cost is determined on FIFO / weighted average method as considered to the relevant stage of production. c) Cost of finished goods and process stock include cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition. d) Processed value of goods on job is valued at contract rate. vi) Fixed Assets, Intangible Assets and Capital Work-in progress. a) Fixed assets are valued at cost with subsequent improvements thereto, except fixed assets of processing division existed on 30.09.2006, which are stated at revalued amount. Cost includes taxes (Net of refundable VAT), duties (Net of Cenvat), inward freight and installation expenses. b) Expenditure incurred on intangible assets, on or after 1st April'2003, being the date when AS-26 became mandatory, has been accounted for as intangible assets, at their acquisition cost. c) Preoperative Expenses Trial run costs and other broperative expenses incurred during construction / implementation period, including interest on borrowings (Net of subsidy) to finance qualifying assets as per AS-16, are capitalized upto the date of commissioning of the respective asset. vii) Debrciation and Amortization a) Debrciation for the year on fixed assets has been provided on straight line method as per useful life and in the manner specified in Schedule II of the Companies Act, 2013. b) Useful life of assets used for double shift / triple shift has been reviewed and readjusted on each Balance Sheet date on the basis of shift used / debrciation charged. c) Scrap value of the assets are determined at the rate of 5% of original cost. d) Acquired Intangible assets are amortized over their estimated useful life as determined by the management at following rates on straight-line basis. i) Computer Software : 16.21% Enabling assets : 4.75% viii) Foreign Exchange Transaction/Translation a) (i) Transactions in foreign currency are accounted for at the brvailing conversion rates, on the transaction date. (ii) Monetary items denominated in Foreign Currency (except financial instruments designated as Hedge Instruments) are translated at year end conversion rates, in financial statement. (iii) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit & loss. b) The Company had adopted the AS-30 "Financial Instruments: Recognition and Measurement" for accounting of financial instruments, to the extent that such adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements. The Company uses various financial instruments to hedge its exposure to movements in foreign exchange rates. A financial instrument is designated as an effective hedge after the management objectively evaluates at the inception of each contract as to whether the instrument is effective in offsetting the cash flows attributable to the hedged risk. Hedge effectiveness of financial instruments designated as Hedging instruments is evaluated at the end of each financial reporting period. In the absence of such hedge being identified or being continued to be identified as an effective hedge, the value thereof is taken to statement of Profit & Loss. The effective portion of change in spot component of such forward contracts is taken into hedging reserve and ineffective portion, not designated as hedge is taken into statement of profit & Loss. Amounts from hedging reserve account are transferred to Statement of Profit & Loss when- i) The forecast transaction materializes, ii) The hedging instrument expires or is sold, terminated or exercised (except for the replacement or rollover of a hedging instrument into another hedging instrument where such replacement or rollover is part of the Company's hedging strategy), iii) The hedge no longer meets the criteria for hedge accounting in AS 30, iv) The Company revokes the designation. ix) Research and Development Revenue expenditure on research and development is charged against the profit of the year in which it is incurred. Capital expenditure is shown as addition to fixed assets. x) Employee Benefits a) Defined Contribution Plan : The Company makes defined contribution to Provident fund and Superannuation schemes in the statement of Profit & Loss on accrual basis, based on actual liability. b) Defined Benefit Plan : The Company's Liabilities on account of Gratuity fund and Leave encashment fund for benefit on retirement of employees are determined at the end of each Financial Year on the basis of actuarial valuation certificates obtained from Registered Actuary in accordance with the measurement procedure as per revised AS-15. These liabilities are funded on year-to-year basis by contribution to respective funds. xi) Prior year Adjustments Besides the debit / credit in brvious year adjustment account, amounts related to brvious year, arised / settled during the year have been debited / credited to respective heads of accounts. xii) Replenishment In respect of exports, indigenous raw material had to be used on occasions to be replenished subsequently by quantities allowed to be imported, under Duty Exemption scheme of the Government of India. Therefore, the cost of indigenous raw material consumed for export has been stated at its estimated import/duty free prices. xiii) Impairment of Assets Impairment of assets is being measured on factors giving rise to any indication of impairment, by comparing the recoverable amount, higher of value in use and net selling price of an asset, with carrying amount of an asset as per the Accounting Standard 28 "Impairment of Assets" issued by ICAI. xiv) Taxes on Income a) The Tax payable method is followed for providing current tax liability. The difference between provision and payments, if any, are recognised in the year in which assessment is completed. b) Credit available for Minimum Alternative Tax (MAT) of earlier years are adjusted against Income Tax payable for current year as per provisions of the Income Tax Act, 1961. c) Deferred taxation liabilities are measured in respect of taxable temporary differences, calculated at brvailing enacted or substantially enacted regulations at the Balance Sheet date. Deferred tax assets are recognised subject to prudence only, if there is reasonable certainty that they will be realized. xv) Provisions and Contingent Liabilities/Assets a) Provisions are recognized when the brsent obligation or past event gives rise to a probable outflow embodying economic benefits on settlement and the amount of obligation can be reliably estimated. b) Contingent liabilities are disclosed after a careful evaluation of facts and legal aspects of the matter involved. c) Provisions and contingent liabilities/assets are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. xvi) Earning Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders among the equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. xvii) Cash and Cash Equivalents Cash and cash equivalents comprise cash at bank, cash in hand, cheques in hand and other permissible instruments as per Accounting Standard AS 3. 40. brVIOUS YEAR FIGURES The figures of the brvious year have been regrouped/ recast wherever found necessary. As per our Report of even date For A. L. CHECHANI & CO. Chartered Accountants Firm No.: 05341C (SUNIL SURANA) Partner Membership No. 036093 For and on behalf of the Board ARUN CHURIWAL Chairman & Managing Director DIN: 00001718 NIVEDAN CHURIWAL Joint Managing Director DIN:00001749 AMAR NATH CHOUDHARY Director DIN: 00587814 PRAVEEN JAIN CFO & Company Secretary Place : Gulabpura, Dist. Bhilwara Date : 8th May, 2015 |
