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.
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.
Long Term Investments are stated at cost. Current Investments are
carried at lower of Cost or Net realisable Value.
I) Depreciation on fixed assets has been charged on straight line
method (SLM) at the rates specified in Schedule XIV of the Companies
II) Depreciation on addition has been provided from the date of putting
the assets into use.
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 &
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.