(a) Basis of Preparation
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these Financial Statements to
comply in all material aspects with the Accounting Standards notified
under the Companies (Accounting Standards) Rules, 2006 (as amended) and
the relevant provisions of the Companies Act, 1956. The Financial
Statements have been prepared on accrual basis and under the historical
cost convention. The accounting policies have been consistently applied
by the Company and are consistent with those used in the previous year.
(b) Use of Estimates
The preparation of the Financial Statements in conformity with
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reporting balances of
assets and liabilities and disclosures relating to contingent
liabilities as at the date of the financial statements and reporting
amounts of income and expenditure during the year. Contingencies are
recorded when it is probable that a liability will be incurred, and the
amount can be reasonably estimated. Actual results could differ from
such estimates. Any revision to accounting estimates is recognised in
the period the same is determined.
(c) Tangible Fixed Assets
Fixed Assets are stated at cost (or revalued amount as the case may
be), less accumulated depreciation and impairment losses, if any. Cost
comprises the purchase price / cost of acquisition including taxes,
duties, freight and other incidental expenses related to acquisition,
construction and installation to bring the asset to its working
condition for its intended use. Wherever assets are revalued, amount
added on revaluation based on approved valuer''s report is disclosed
separately as required by the Companies Act, 1956. Borrowing costs that
are directly attributable to acquisition, construction or production of
a qualifying asset are capitalized.
(d) Intangible Fixed Assets
Intangible fixed assets are stated at cost less accumulated
amortization and net of impairments, if any. An intangible asset is
recognized if it is probable that the expected future economic benefits
that are attributable to the asset will flow to the Company and its
cost can be measured reliably. Intangible assets having finite useful
lives are amortized on straight line basis over their estimated useful
lives. Computer Software is amortised over a period of thirty six
months is done on the straight line method.
(e) Impairment of Assets
Regular review is done to determine whether there is any indication for
impairment in carrying amount of the Company''s fixed assets. If any
indication exists, an assets recoverable amount is estimated based on
internal / external factors. An impairment loss is recognized if the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value at the weighted average
cost of capital.
Long term investments are stated at cost. Provision for diminution in
value, other than temporary, is made in the accounts. Earnings on
investments are accounted for when the right to receive payment is
Inventories (Finished Goods and Work-in- progress) are valued at lower
of cost or net realisable value, on the basis of physical verification
caried out by the management. Cost is arrived at on FIFO basis and
includes appropriate portion of allocable overheads. Cost of finished
goods includes excise duty. Net realizable value is the estimated
selling price in ordinary course of business, less estimated cost
necessary to make the sale. Raw Materials are valued at cost (FIFO
basis). Goods in transit are valued at cost. Cost of inventories have
been computed to include all costs of purchases, cost of conversion and
other costs incurred in bringing the inventories to their present
location and condition.
Product warranty costs are determined using reasonable estimates based
on costs incurred in the past and are provided for in the year sale is
made. Contractual obligations in respect of warranties includes
estimates made for the products sold by the Company which are covered
under free replacement warranty on manufacturing defects / breakages
etc. in respect of sewing machines and household consumer durables /
small appliances and are accrued at 1% of sales to cover future costs.
(i) Excise Duty
Excise duty is accounted for at the point of manufacture of goods and
accordingly, is considered for valuation of finished goods stock lying
in the factory and branches and as on the Balance Sheet date.
(j) Revenue recognition
i) Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured. Revenue from sale of goods is recognized when all
significant risk and rewards of the ownership are transferred to the
buyer as per the terms of sales which coincides with the despatch of
the goods. Revenue is recorded net of value added tax / sales tax,
returns and gross of excise duty, if any.
ii) Interest income is recognized on time proportionate basis taking
into account the amount outstanding and the rate applicable and is
stated at gross.
(k) Depreciation Depreciation is provided on a straight-line basis at
the per annum rates (with the corresponding useful life) specified
Assets costing less than Rs. 5,000/- per unit are depreciated at the
rate of 100%. Depreciation on additions is provided on prorata basis
from the date of such additions. Similarly, depreciation on assets
sold/disposed off during the year is provided up to the date on which
such assets are sold/disposed off. Leasehold improvements represent
renovation in new shops opened.
The difference between depreciation calculated and provided on the
revalued amount of fixed assets and depreciation calculated on the
original cost of fixed assets is recouped from Revaluation Reserve.
(l) Lease Leases where the lessor effectively retains substantially all
the risks and benefits of ownership of the leased assets are classified
as operating leases. Operating lease payments are recognized as an
expense in the Statement of Profit & Loss on a straight-line basis over
the lease term.
(m) Foreign currency transactions
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
Foreign currency monetary items are reported using the closing rate.
Non-monetary items, which are carried in terms of historical cost
denominated in a foreign currency, are reported using the exchange rate
at the date of the transaction.
Exchange differences arising on the settlement of monetary items or on
reporting company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
(n) Employees Benefits
Short Term Employee Benefit is recognized as an expense in the
Statement of Profit and Loss of the year in which related service is
rendered. Post employment and other Long Term Employee Benefits are
provided in the Accounts in the following manner:
i) Gratuity: Maintained as a defined benefit retirement plan and
contribution is made to the Life Insurance Corporation of India, as per
the Company''s Scheme. Provision / write back, if any is made on the
basis of the present value of the liability as at the Balance Sheet
date determined by actuarial valuation following projected Unit Credit
Method and is treated as liability.
ii) Leave Encashment: As per independent actuarial valuation as at the
Balance Sheet date following projected Unit Credit Method in accordance
with the requirements of Accounting Standard AS-15 on ''Employee
Benefit'' is included in provisions.
iii) Provident Fund: Liability on account of Provident Fund (Pension)
for employees is a defined contribution wherever contributions are made
to a fund administered by Government Provident Fund Authority.
For employees, Provident Fund administered by a Recognised Trust, is a
Defined Benefit Plan (DBP) wherein the employee and the Company make
monthly contributions. Pending the issuance of Guidance Note from the
Actuarial Society of India, actuarial valuation is not carried out and
the Company provides for required liability at year end, in respect of
the shortfall, if any, upon confirmation from the Trustees of such
(o) Research and development
Research and development expenses of revenue nature are charged to the
Statement of Profit & Loss in the year in which they are incurred.
(p) Taxes on Income
Income Tax is accounted for in accordance with Accounting Standard on
Accounting for Taxes on Income” notified pursuant to the Companies
(Accounting Standards) Rules, 2006.
Minimum Alternate Tax (MAT) is accounted for in accordance with tax
laws which give rise to future economic benefits in the form of tax
credits against which future income tax liability is adjusted and is
recognized as an asset in the Balance Sheet.
Deferred Tax is provided and recognized on timing differences between
taxable income and accounting income subject to prudential
consideration. Deferred Tax Asset on unabsorbed depreciation and carry
forward of losses are recognized when there is virtual certainty about
availability of future taxable income to realize such assets.
(q) Provisions, Contingent Liabilities & Contingent
Provisions are recognized when there is a present legal or statutory
obligation as a result of past events and where it is probable that
there will be outflow of resources to settle the obligation and when a
reliable estimate of the amount of the obligation can be made.
Contingent Liabilities are recognized only when there is a possible
obligation arising from past events due to occurrence or non-occurrence
of one or more uncertain future events not wholly within the control of
the Company or where any present obligation cannot be measured in terms
of future outflow of resources or where a reliable estimate of the
obligation cannot be made. Obligations are assessed on an ongoing basis
and only those having a largely probable outflow or resources are
Contingent Assets are not recognized in the Financial Statements.
(r) Earnings per share
Earning per share is calculated by dividing the net profit or loss for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year.
(s) Events after the Balance Sheet date
Events occurring after the date of the Balance Sheet which affect the
financial position to a material extent are taken into cognizance.