SIGNIFICANT ACCOUNTING POLICIES 1 Basis of brparation : The financial statements are brpared under the historical cost convention, on the accrual basis of accounting and comply with the provisions of Companies Act, 2013, generally accepted accounting principles in India and Companies (Accounting Standards) Rules 2006 as amended from time to time to the extent applicable. 2 Revenue recognition : (a) Sales including export sales and trading sales are recognised when goods are dispatched from the factory and are recorded at net of shortages, claims settled, discounts, rate differences, rebate allowed to customers. (b) Export Sales are booked on the rate brvailing on the date of transaction and the resultant gain or loss on realisation is accounted as "Foreign Exchange Rate Fluctuation" and is dealt in the Statement of Profit and Loss. (c) Export incentives are accounted in the year of export. (d) Any fluctuation, on account of a capital asset/ liability are accounted in that relevant accounting head. 3 A) Fixed assets : (a) During the year ended 31st March, 2015, the company has provided debrciation on fixed assets considering useful lives specified in Schedule II of the Companies Act, 2013 or re-assessed by the Company. Fixed Assets are stated at cost, net of accumulated debrciation and impairment loss, if any. All costs including financing costs till the commencement of commercial production related to the acquisition and installation of the respective assets have been capitalized. This year Fixed Assets value has been recalculated to realign the debrciation and in turn the carrying value as per Schedule II of Companies Act, 2013. Debrciation to the tune of Rs.289.71 lacs has been charged towards recalculations pertaining to brvious years, and Rs. 90.00 has been charged to Deferred Tax Assets. Remaining balance Rs.199.71 lacs has been deducted from Reserve and Surplus. The debrciation and amotisation expenses charged for the year ended 31st March, 2015 would have been lower by Rs. 621.49 lacs had the company contnued with brvious assessment of useful life of such asset. (b) Cost of leasehold land is not amortised over the period of lease, as the same is not applicable as per Accounting Standards 19. (c) Amount incurred towards capital work-in-progress will be suitably apportioned to the respective Fixed Assets on commissioning of assets. (d) Assets, identified and evaluated technically as obsolete and held for disposal have been written off in relevant year and adjusted from profit on sale of Fixed Assets. (e) The 10% Capital Subsidy under TUFS from Ministry of Textiles on specified processing machinery has been deducted from the respective Fixed Assets and is rebrsented at their Net off values. B) Debrciation : Debrciation on fixed assets is charged on Straight Line Method (SLM) on prorata basis, except on the fixed assets purchased during the period 1st April, 1988 to 31st March, 2005 on which debrciation has been charged on Written Down Value Method on prorata basis. Drebrciation on addition to Fixed Assets is provided on proprata basis from the date of acquision or installation and debrciation on assets sold/discarded/ demolished/ scrapped is provided upto the date on which the said asset is sold/discarded/ demolished/scrapped. 4 Inventories : Inventories of Raw Materials, Goods in Process, Stores & Spares and Finished Goods are stated at cost or net realisable value whichever is lower except saleable waste which is valued at contracted selling price. Goods in Transit are stated at cost. Cost comprises of cost of purchases, cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition. Cost formulae used is 'First-in-First-out' (FIFO) or 'Weighted Average Cost', as applicable. 5 Baramati Unit: Under Slump Sale,Baramati Unit has been handed over to To M/s GTN Engineering (India) Ltd at a value of Rs.29.80 crores as against the Book value of Rs. 26.56 crores. In this process, M/s GTN Engineering (India) Ltd. did not take over the liabilities and creditors as as on 09.06.2013 (the day of handover and transfer). 6 Investments : Investments are classified as Long Term Investments and Current Investments. Long term investments are stated at Cost. Provision is made for diminution in the value of Long term Investments to recognise a decline, if any other than temporary in nature. 7 Foreign exchange transaction : (a) Foreign currency transactions are recorded at the exchange rates at the date of transaction. (b) Gains and losses resulting from the settlement of such transactions and from the translation of money receivable and money payable denominated in foreign currencies, are recognised in the Statement of Profit and Loss. (c) Premium in respect of forward contracts is accounted over the period of the contract. (d) Forward Exchange contracts entered for trading purposes are valued and marked to its current market value and the resultant gain or loss is dealt with in Statement of Profit and Loss, as per AS-11. The gross expenses of forward exchange contracts is amortised over the period fo the contract. (e) All foreign currency loans outstanding at the close of the balance period are exbrssed in Indian currency at the exchange rate brvailing on the date of Balance Sheet. (f) Foreign exchange rate variations relating to acquisition of Fixed Assets are transferred to Statement of Profit and Loss as per the revised Accounting Standard 11 "The Effects Of Changes In Foreign Exchange Rates". (g) Current assets & current liabilities in foreign currency, other than those covered by forward exchange contracts, outstanding at the close of the balance sheet date are converted in Indian currency at the appropriate rates of exchange brvailing on the date of Balance Sheet. Resultant gain or loss is accounted as " Foreign Exchange Rate Fluctuation", during the year. 8 Use of estimates : The brparation of financial statement in confirmity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses and disclosure of contingent liabilities on the date of financial statement. The recognition, measurement, classification or disclosure of the information in the financial statement has been made relying on these estimates. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the period in which these results are known/ materialised. 9 Impairment of assets : Consideration is given at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amounts of the Company's Assets. If any indication exists, an Asset's recoverable amount is estimated. An impairment loss is recognized wherever the carrying amount of an assets exceeds its recoverable amount or when there is permanent diminution in its value or functionality. The recoverable amount is the greater of the net selling price and value in use. 10 Employee benefits : (a) Short term employee benefits are recognized as an expense at undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered. (b) Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognized at the brsent value of the amounts payable determined using actuarial valuation techniques. Actuarial gain / loss in respect of post employment and other long term benefits are charged to Statement of Profit and Loss. 11 Research and development expenses : Research and development expenditure of revenue nature is recognised as an expense in the year in which it is incurred and the expenditure of capital nature are debrciated over the useful lives of the assets. 12 Treatment of contingent liabilities : Contingent Liabilities not provided for are disclosed by way of Notes on Accounts. 13 Taxation : Tax expense comprises current and deferred tax. Current tax is measured at the amount estimated/calculated to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Deferred tax reflects the tax effect of the timing differences between accounting income and taxable income originating and reversing during the year. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2015 1 The Company had been sanctioned a Restructuring Package by Corporate Debt Restructuring (CDR) Cell under the CDR Mechanism of RBI vide Letter of Approval (LOA) No. BY.CDR/AG No. 1110/2008-2009 dated 26th February, 2009 for restructuring the Company's existing financial assistance outstanding as on 30th September, 2008, availed from the Institutional Lenders and Working Capital from Banks, and sanctioning additional financial assistance extended/to be extended to the Company in the manner and to the extent set out in the LOA. The salient features of the scheme were injection of fresh working capital and concession in the bank charges, reduction in margins, fresh term loan for completion of pending capital projects, funding of interest, reduction in interest rate, moratorium and deferment of principal amount repayments. The company was under the CDR package, however, as the company had continuing default greater than 6 months, the company's accounts were classified as NPA by its bankers. On account of this, the company's CDR package stood as withdrawn as per letter dated 20.03.2015 from CDR. Their current status has been kept on as is basis until further agreements and conditions are laid down by the bankers. Two of the lending banks, being IDBI Bank Ltd. and EXIM Bank, have raised demand of payment of loan & interest amounts , hence these amounts has been classified accordingly, however in absence of any communication or demand notice from other lending banks, the company has stated the amount and terms of repayment as it is basis of CDR Package. 2 As the Company's business activity falls within a single primary and geographical segment viz. 'Textile', the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", issued under Companies (Accounting Standards) Rules, 2006 is not applicable. 3 Company has entered into a Registered Development Agreement on 20th November,2012, with Shayona Land Corporation for development of Part Leasehold Land owned by Company, by putting up construction of commercial units on the said land situated at Rakhial (sim), Taluka City, in the Registration District , Ahmedabad and Sub District, Ahmedabad No. 7 (Odhav), bearing final Plot No.80, admeasuring about 10648 square yards equivalent to 8903 square meters of town planning scheme No.10 (Rakhial). 4 As reported in the brvious years that the Company had signed the Business Transfer Agreement (BTA) on 1st April, 2013, with Messrs GTN Engineering (India) Ltd., a Public Limited Company situated in Hyderabad in the State of Andhra Pradesh, for sale of its cotton spinning Unit at Baramati in Pune in the state of Maharashtra, at a lump-sum consideration of Rs.29.80 Crore. During the brviious year the Company has handed over the physical possessions of its Baramati Unit to M/s. GTN Engineering (India) Ltd. on 9th June 2013, the closing date, as per the terms of Business Transfer Agreement (BTA) upon obtaining all the required permissions/approvals from the concerned Authorities/Departments. 5 Previous year figures have been reclassified to conform to this year's classification As per our report of even date For PIPARA & COMPANY CHARTERED ACCOUNTANTS (Firm Reg. No. 107929W) GYAN PIPARA PARTNER Membership No. : 034289 For and on behalf of the Board S. K. SOMANY Chairman A. K. SOMANY Managing Director M. B. PARAKH Chief Financial Officer R. S. SHARMA Company Secretary Place : Ahmedabad Date : 30th May, 2015 |
