A.  BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
 
 The finacial statements have been prepared under the Historical Cost
 Convention in accordance with the generally accepted accounting
 principles in India and the provisions of the Companies Act, 1956.
 
 B.  INVENTORIES
 
 Closing stocks are valued at lower of cost or estimated realisable
 value. Cost of inventories comprise Cost of Purchase, Cost of
 Conversion and other costs incurred in bringing them to their
 respective present location and condition.
 
 C. INVESTMENTS
 
 Long Term Investments are stated at cost. Current Investments are
 carried at lower of Cost or Net realisable Value.
 
 D.  DEPRECIATION
 
 I) Depreciation on fixed assets has been charged on straight line
 method (SLM) at the rates specified in Schedule XIV of the Companies
 Act, 1956.
 
 II) Depreciation on addition has been provided from the date of putting
 the assets into use.
 
 E.EMPOLYEE BENEFITS
 
 All the Short Term Employee Benefits are accounted for on the basis of
 services rendered by the employees of the company. Contribution to
 Provident Fund are charged to Profit & Loss Account as and when the
 contribution is made. No provision has been made for Long Term Employee
 Benefits and Defined Benefit Plans as in opinion of the management no
 such liabilities has accrued as at the end of the accounting year.
 
 F.  FIXED ASSETS
 
 Fixed Assets are stated at Cost, Less Accumulated Depreciation. All
 Costs, including Financing Cost are included in Total cost and
 accordingly capitalised in Fixed Assets. Capital Work In Progress
 includes Capital Items not installed or Building construction not
 completed and Advances given to Creditors for Fixed Assets.
 
 G. CAPITAL ISSUE EXPENDITURE/PRELIMINARY EXPENSES
 
 a) Expenditure incurred in connection with issue of capital has been
 capitalised and is amortised over a period of 5 years.
 
 b) Preliminary expenses are amortised over a period of 5 years.
 
 H. VALUE ADDED TAX (VAT):-
 
 VAT credit received on purchases is reduced from respective item of
 purchases. VAT on Sales is credited to Vat Credit Account and
 differential amount is paid. Thus, the company has followed exclusive
 method of accounting whereby purchases, sales and stock is shown
 exclusive of VAT tpand accounted for in separate VAT Account.
 
 I.  FOREIGN CURRENCY TRANSACTION
 
 The Foreign Currency Transaction of the company includes Purchases of
 Fixed Assets and Sales of Texturized Yarn which are valued at the Rate
 prevailing at the time of the transaction. Thegain/loss between foreign
 currency at time of transaction and at time of payment/receipts is
 charged to P&L account. Also, the amount outstanding of monetary items
 in Foreign Currencyhas been converted in INR at Closing Rate on
 31-03-2011 and any gain/loss on same has also been charged to Profit &
 Loss Account.
 
 J. DEFERRED TAX LIABILITY
 
 Deferred Tax Liability
 
 Deferred tax resulting from ''timing difference between book and
 taxable profit is accounted for using the tax rates and laws that have
 been enacted as on the balance sheet date. The deferred tax asset is
 recognised and carried forward only to the extent that there is a
 reasonable certainty that the assets will be realised in future.