1.1 DISCLOSURE AND BASIS OF ACCOUNTING
 
 a) The financial statements have been prepared under the historical
 cost convention which is in accordance with the generally accepted
 accounting principles and provisions of the Companies Act, 1956. The
 Company has complied with the Accounting Standards prescribed by the
 Institute of Chartered Accountants of India and as referred u/s 211
 (3C) of the Companies Act, 1956.
 
 b) The Company has been consistently following the accrual basis of
 accounting in respect of its Income and Expenditure.
 
 c) The Accounts are prepared on the basis of going concern concept.
 
 d) The presentation of financial statements require estimates and
 assumptions to be made which affect the reported amount of assets and
 liabilities on the date of the financial statement and the reported
 amount of revenue and expenditure during the reporting period.
 
 1.2 VALUATION OF INVENTORIES
 
 Inventories are valued at the lower of cost and net realizable value.
 Waste stock is valued at net realizable value. The cost formula used 
 for different inventories are as follows.
 
 i) Cotton - On specific identification basis
 
 ii) Grey Fabrics, Chemicals, Stores & Spares - At weighted average
 cost.
 
 iii) Yarn, Finished Goods & Process Stock - At average cost.
 
 1.3 CASH FLOW STATEMENT
 
 The Cash Flow Statement is prepared under indirect method as per the
 Institute of Chartered Accountants of India guidelines.
 
 1.4 CONTINGENT LIABILITY
 
 a) Provisions involving substantial degree of estimation in measurement
 are recognized when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent Liabilities are not recognized but are disclosed in the
 notes. Contingent Assets are neither recognized nor disclosed in the
 financial statements.
 
 b) Contingent liability in respect of show cause notice received are
 considered only when they are converted into demand.
 
 1.5 NET PROFIT FOR THE PERIOD AND PRIOR PERIOD ITEMS
 
 a) All items of income and expenses pertaining to the year are included
 in arriving at the net profit for the period unless specifically
 mentioned elsewhere in the financial statement or as required by
 Accounting Standards.
 
 b) Prior period items are disclosed separately in the Statement of
 Profit 6 Loss .
 
 1.6 DEPRECIATION ACCOUNTING
 
 Depreciation on fixed assets has been provided under straight line
 method at the rates prescribed in Schedule XIV of the Companies
 Act,1956. The Company uses both continuous process machines and general
 plant & machinery and other assets for which the respective applicable
 rates of depreciation as prescribed under Schedule XIV have been
 adopted.
 
 1.7 RESEARCH AND DEVELOPMENT
 
 Revenue expenditure, including overheads on Research and Development is
 charged out as an expense through the natural heads of account in the
 year in which incurred.
 
 1.8 REVENUE RECOGNITION
 
 a) Revenue from sale transactions is recognized as and when the
 property in the goods sold is transferred to the buyer for a definite
 consideration and there is no uncertainty regarding the amount of
 consideration or collectability.
 
 b) Sales are reported at net of Sales Tax and Cess.
 
 c) Export sales are accounted inclusive of export benefits.
 
 d) Export incentives under DEPB license are accounted on accrual basis.
 
 e) Other incomes are also accounted on accrual basis.
 
 1.9 ACCOUNTING FOR FIXED ASSETS
 
 Fixed Assets are stated at cost of acquisition and / or construction.
 All costs relating to acquisition and installation of fixed assets are
 capitalized.
 
 1.10 FOREIGN CURRENCY / CONVERSION / TRANSACTIONS
 
 The export sales are converted at rates prevailing on the date of
 transaction, on the date of negotiation of export bills which
 approximates the actual rate prevailing on the date of the transaction
 and/or at forward contract rate, as the case may be Foreign Currency
 liabilities are converted at the exchange rate prevailing on the last
 working day of the accounting year and/or on the forward Contractual
 rate, if so applicable. The net variation arising on account of such
 conversion in case of liabilities incurred for acquisition of fixed
 assets and other variations are charged to the statement of profit and
 loss. Monetary assets are converted at the exchange rate prevailing on
 the last day of the accounting year.
 
 1.11 ACCOUNTING FOR INVESTMENTS
 
 Long term investments are shown at cost. Permanent diminution in value,
 if any, will be written off in the year of diminution.
 
 1.12 ACCOUNTING FOR EMPLOYEE RETIREMENT BENEFITS
 
 a) Contribution to Provident Fund has been made to the respective
 authorities.
 
 b) Short term employee benefits (other than termination benefits) which
 are payable within 12 months after the end of the period in which the
 employees render service are accounted on accrual basis. Company''s
 contributions paid / payable during the year to Provident Fund and ESIC
 are recognized in the statement of profit and loss. All leave
 encashment dues for the year are settled within the same year.
 
 c) Gratuity liability as per the Actuarial Valuation has been provided
 in the accounts as at the year end.
 
 1.13 BORROWING COSTS
 
 Borrowing costs that are attributable to the acquisition of
 construction 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 recognized as an expense in the period in which
 they are incurred.
 
 1.14 RELATED PARTY DISCLOSURES
 
 The related party transactions are disclosed in the notes on accounts
 as per the Institute of Chartered Accountants of India guidelines.
 
 1.15 EARNING PER SHARE
 
 The Earnings considered in ascertaining the Company''s earnings per
 share comprises of Net Profit after tax and includes post tax
 adjustments, prior period and extra-ordinary items.
 
 1.16 ACCOUNTING FOR TAXES ON INCOME
 
 Deferred tax arising out of timing differences between book and tax
 profits is accounted under liability method at current rate of tax to
 the extent the timing difference is to be crystallized.
 
 1.17 RECOGNITION OF IMPAIRMENT OF ASSETS
 
 The company recognizes impairment losses in the year in which the
 assets are identified as impaired: Impairment losses are measured as
 the excess of carrying amount of an asset over its recoverable amount.
 The recoverable amount of an asset is the higher of an asset''s net
 selling price and its value in use.