1. Basis of Preparation of Financial Statements:
These financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies(Accounting
Standards)Rules, 2006,(as amended) and the relevant provisions of the
Companies Act,1956 and guidelines issued by the Securities and Exchange
Board of India (SEBI) .The financial statements have been prepared
under the historical cost convention on an accrual basis. Accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
The Company has prepared its financial statements in accordance with
Schedule-VI as inserted by Notification-S.O. 447(E) dated 28.02.2011
(As amended by notification No.F.No.2/6/2008-CL-V-dated 30.03.2011).The
schedule does not impact recognition and measurement principle followed
for the preparation of financial statements. However, it has necessitated
significant changes in the presentation of and disclosures in financial
statements. The Company has re-classified its previous year figures to
conform to the classification as per the aforesaid Schedule.
2 Use of Estimates:
The preparation of financial statements, in conformity with the
generally accepted accounting principles, require estimates and
assumption to be made that affect the reported amount of assets and
liabilities as of the date of financial statements and the reported
amount of revenues and expenses during the reported period. Differences
between the actual results and estimates are recognized in the period
in which the results materialize.
3 Revenue Recognition :
a) Sales are recognized as and when goods are dispatched from bonded
b) Job charges are recognized as income when processed fabric cleared
from bonded premises.
c) Export Benefits under DEPB / Duty Draw Back Scheme are recognized on
4. Fixed Assets:
Fixed assets are stated at historical cost less accumulated
depreciation. Historical cost comprises direct expenses & any interest
attributable to bring in its intended use.
5 Accounting for Government Grants:
Government grants are recognized when there is a reasonable assurance
as to its receipt and that the conditions attached there to shall be
complied with. Government grants related to capital investments are
reduced from the gross value of fixed assets and such grants relating
to expenses are reduced from the respective expense head.
Depreciation on fixed assets is provided on written down value method
at the rates and in the manner provided in Schedule XIV (as amended) to
the Companies Act, 1956.Plant & Machinery of the Company have been
considered as continuous process plant & depreciation is provided
Raw Material : At cost or realizable value whichever is lower
Store : At cost or realizable value whichever is lower.
Stock in process : At direct cost
Finished Goods : At cost or market value whichever is lower Waste : At
estimated realizable value
The cost is determined on historical basis on relevant lot/ category of
inventory. The cost of inventories comprise all cost of purchase,
conversion cost and other costs incurred in bringing the inventories to
their present condition.
Claims are accounted for on merit basis.
9 Foreign Exchange:
(a) Transactions denominated in Foreign Currency are normally recorded
at the exchange rates Prevailing at the time of transaction.
b) Foreign Exchange Fluctuation on Export / Import is accounted for in
the year in which such fluctuation arose.
10 Retirement Benefits:
Contribution to provident and other funds are accounted for on accrual
basis. Gratuity and Leave Encashment is accounted for in the Accounts
on the basis of Actuarial valuation.
11. Borrowing Costs:
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets. A qualifying
asset is one that necessarily takes substantial period of time to get
ready for intended use. All other borrowing costs are charged to
Income Tax expense comprises current tax and deferred tax charge or
credit. The deferred tax asset and deferred tax liability is calculated
by applying tax rate and tax laws that have been enacted or
substantially enacted by the Balance Sheet date. Deferred tax assets
arising mainly on account of brought forward losses and unabsorbed
depreciation under tax laws are recognized, only if there is a virtual
certainty of its realization, supported by convincing evidence.
Deferred tax assets on account of other timing differences are
recognized only to the extent there is a reasonable certainty of its
date, the realization. At each Balance Sheet date, the carrying amounts
of deferred tax assets are reviewed to reassure realization.
13. Impairment of Assets:
If internal/external indication suggests that an asset of the Company
may be impaired, the recoverable amount of asset/ cash generating asset
is determined on the Balance Sheet date and if it is less than its
carrying amount, the carrying amount of the asset / cash generating
unit is reduced to the said recoverable amount. The recoverable amount
is measured as the higher of Net selling price and value in use o such
assets/cash generating unit, which is determined by the present value
of the estimated future Cash flows.
14. Provisions, Contingent Liabilities & Contingent Assets:
(a) The Company recognize as Provision, the liabilities being Present
obligation arising out of past events, the
settlement of which is expected to result in an outflow of resources
and which can be measured only by using a substantial degree of
(b) Contingent Liabilities is disclosed, unless the possibility of an
outflow of resource is remote.
(c) Contingent Assets are neither recognized nor disclosed.
15. Cash and Cash Equivalents
For the purpose of cash Flow Statement, cash and cash equivalents
includes cash in hand, demand deposits with banks, other short term
highly liquid investments with original maturities of three months or
16. Earnings Per Share (EPS)
The earnings considered in ascertaining the companys EPS comprise the
Net Profit or Loss for the period after tax and extra ordinary items.
The basic EPS is computed on the basis of weighted average number of
equity shares outstanding during the year. The number of shares of
computation of diluted EPS comprises of weighted average number of
equity shares considered for deriving basic EPS and also the weighted
average number of equity shares which could be issued on the conversion
of all dilutive potential equity shares.
As per records of the Company, including Its register of shareholders /
members and other declarations received from shareholders regarding
beneficial interest, the above shareholding represents both legal and
beneficial ownership of shares.