1. a) Accounting convention
The accounts are prepared on accrual basis under the historical cost
convention in accordance with the accounting standards referred to in
section 211(3C) of the Companies Act, 1956 and other relevant
provisions of the said Act.
b) Going Concern Convention
The accounts of the company have been prepared on going concern basis.
c) Use of Estimates
The preparation of financial statements, in conformity with the
generally accepted accounting principles, require estimates and
assumptions to be made that affect the reported amount of assets and
liabilities as of the date of the financial statements and the
reported amount of revenues and expenses during the reporting period.
Difference between the actual results and estimates are recognized in
the period in which the results materialise.
2. Revenue Recognition:
Sales comprise sale of goods, services and export incentives net of
excise duty, sales tax/VAT and trade discount. Revenue from sale of
goods is recognized:
i) When all the significant risks and rewards of ownership are
transferred to the buyer and the company retains no effective control
of the goods transferred to a degree usually associated with ownership;
ii) No significant uncertainty exists regarding the amount of the
consideration that will be derived from the sale of goods.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
c) Export Benefits/Incentive:
Revenue in respect of the above Benefit is recognized on post export
d) Insurance and Other Claims:
Revenue in respect of claims is recognized when no significant
uncertainty exists with regard to the amount to be realized.
3. Retirement/ Other Employee Benefits
Provision for gratuity liability to employees is made on the basis of
actuarial valuation as at the close of the year.
(b) Provident Fund
Contribution to Provident Fund is made in accordance with the
provisions of the Employee''s Provident Fund and Miscellaneous
Provisions Act, 1952 and charged to the profit & Loss Account.
(c) Leave with wages
Provision for leave with wages is made on the basis of leave accrued to
the workers during the financial year.
4. Fixed Assets
Fixed assets are stated at the values at which they are acquired, less
accumulated depreciation and cenvat credit if availed. The cost of fi
xed assets included interest on borrowing attributable to acquisition
of fixed assets up to the date of commissioning of the assets and
other incidental expenses incurred up to that date. Machinery spares
whose use is expected to be irregular are capitalized and depreciated
over the useful life of the principal item of asset.
5. Intangible assets
Intangible assets are stated at cost less accumulated amount of
6. Capital Work in Progress
Projects under commissioning and other Capital Work in Progress are
carried at Cost, comprising direct cost, related incidental expenses,
indirect expenditure and attributable interest related to that project.
Inventories are valued at cost or net realizable value, whichever is
lower. The cost in respect of the various items of inventory is
computed as under:
- In case of raw material at actual cost determined on FIFO basis plus
- In case of Stores and spares at weighted average cost.
- In case of Work in process at raw material cost plus appropriate
proportion of direct labour and overheads.
- In case of fi nished goods at raw material cost plus conversion cost
and appropriate proportion of overheads.
8. Impairment of Assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss i.e. the amount by which carrying amount of an asset
exceeds its recoverable amount is provided in the books of accounts.
Depreciation is provided in accordance with and in the manner and at
the rates specifi ed in schedule XIV to the Companies Act, 1956 as
a) on written down value basis for assets acquired prior to 06/03/2006
b) on straight line basis for assets acquired after that date.
10. Foreign Currency Conversion/Translation
Purchase and Sales are accounted at exchange rate prevailing on the
date of transaction. Monetary assets and liabilities in foreign
currency as at Balance Sheet date are translated at rates prevailing at
the year end and the resultant net gains or losses are recognized as
income or expense in the year in which they arise except the net
variation arising on account of such conversion in case of liabilities
incurred for acquisition of fixed assets is adjusted to the cost of
the respective fixed asset.
11. Borrowing Costs
Borrowing cost attributable to construction periods is capitalized.
Other borrowing costs are recognized as an expense in the period in
which they are incurred.
Long term investments are carried at cost, less provision for
diminution, in value of such investments. Current Investments are
carried individually at lower of Cost and fair value.
13. CENVAT Credit
The CENVAT Credit of excise duty if any availed on inputs and capital
goods is accordingly reduced from the purchase cost of related inputs
or capital goods as the case may be.
14. Accounting for Taxes on Income
Provision for tax if any, is based on the assessable profits computed
in accordance with the provisions of Income Tax Act 1961 and the
Accounting Standard 22 issued by the Institute of Chartered Accountants
15. Cash Flow Statement
The company has prepared the Cash Flow Statement using the Indirect
Method in compliance of Accounting Standard issued by The Institute Of
Chartered Accountants of India (AS-3).
16. Segmental Reporting
The company is principally engaged in the business of textiles (mainly
manufacturing of yarn of different kinds and trading of knitted cloth &
acrylic top etc.) and the project of wind mill (for generation of
electricity for re-sale.) The company is also operating in different
geographical segments. The relevant information about these segments
are given as part of Notes on Accounts.
17. Earning per share:
Basic earning per share is computed by dividing the net profit or loss
for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Diluted
earning per share is computed by taking into account the aggregate of
the weighted average number of equity shares outstanding during the
period and the weighted average number of equity shares which would be
issued on conversion of all the dilutive potential equity shares into