A Basis of Accounting :
Financial statements are prepared under the historical cost convention
on accrual basis and in accordance with the generally accepted
accounting principles in India and the provisions of the Companies Act,
B Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on 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 recognised in
the period in which the results are known / materialised.
C Fixed Assets :
i) Tangible Assets :
a) Fixed Assets are stated at cost net of Modvat/Cenvat,Government
subsidy and Vat wherever applicable and less depreciation. Cost
comprises of purchase price and attributable cost (including financing
b) Expenditure (including financing costs) incurred for fixed assets,
the construction/installation/acquisition of which is not completed
upto the year end is included under the capital work-in-progress and on
such completion the same is related/ classified to the respective fixed
ii) Intangible Assets :
Intangible Assets (representing Computer Software and Trade Mark) are
amortised over a period of three years.
iii) Asset Impairment:
The Company reviews the carrying values of tangible and intangible
assets for any possible impairment at each balance sheet date.
Impairment loss, if any, is recognised in the year in which impairment
i) Depreciation on fixed assets (other than leasehold land and except
as stated in (iv) below) is provided for in accordance with Schedule
XIV to the Companies Act, 1956 on the straight-line method.
ii) Depreciation at the rate of hundred percent has been provided on
the assets costing not more than Rs. 5000/- in the year of addition.
iii) Premium on leasehold land is amortized over the residual period of
the lease and proportionate amount of premium written off is being
charged to Profit & Loss account.
iv) Cost of Furniture and Fixtures and Office Equipments of retails
shops operated on lease basis is written off over the period of lease
or within Three years whichever is earlier.
Investments are classified into Current and Long term Investments.
Current Investments are stated at lower of cost and fair value. Long
term Investments are stated at cost. A provision for diminution is made
to recognise a decline, other than temporary, in the value of Long term
F Valuation of Inventories :
Inventories are valued at lower of the cost and net realisable value.
The cost is arrived at moving weighted average method except for
garment division where FIFO method is followed and includes related
overhead and excise duty payable on Finished Goods lying in factory
Sales are inclusive of excise duty wherever paid. Export Incentive
under the DEPB Scheme/ Duty Drawback schemes has been recognised on the
basis of entitlement and included in Sales.
H Modvat / Cenvat:
Modvat / Cenvat benefit is accounted for by reducing the purchase cost
of the materials / fixed assets wherever applicable.
I Excise Duty :
Excise Duty wherever recovered is included in Sales. Excise Duty paid
on goods cleared and provision made in respect of finished goods lying
at factory premises/bonded warehouses is shown separately as an item of
manufacturing and other expenses and included in the valuation of
J Capital Reserve :
Special Capital Incentive in the nature of project capital subsidy is
credited to Capital Reserve.
K Foreign Exchange Transaction :
i) Transactions in foreign currencies are accounted for at prevailing
exchange rates, Gains and losses arising out of subsequent fluctuations
are accounted for on actual payment / realizations in the profit and
loss account. The Current Assets and Current Liabilities related to
foreign currency transactions, other than those covered by forward
contracts, remaining unsettled at the end of the year are adjusted at
the rates prevailing at the year end, except for Pre-Shipment Credits
in Foreign Currencies (PCFCs) which have been stated at the amounts
received on the date of disbursement, since the PCFCs are liquidated
against future export proceeds, at the rate of exchange at which the
loans were disbursed.
ii) Monetary items denominated in foreign currencies at the year end
are restated at year end rates. In case of items which are covered by
forward exchange contracts, the difference between the year end rate
and rate on the date of the contract is recognized as exchange
difference and the premium paid on forward contracts is recognized over
the life of the contract. Any income or expense on account of exchange
difference either on settlement or on translation is recognised in the
profit and loss account.
L Employee Benefits
i) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
ii) Post employment and other long term employee benefits are
recognized as an expense in the profit and loss account for the year in
which the employee has rendered services. The expense is recognized at
the present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the profit and
M Research and Development:
Revenue expenditure on research and development is charged to Profit &
Loss Account as incurred, Capital expenditure on assets acquired for
research and development is added to fixed assets and depreciated at
N Borrowing Costs :
Borrowing costs that are attributable to the acquisition or
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 charged to revenue.
O Deferred Tax:
Deferred tax resulting from timing differences between book and tax
profits is accounted for at the current rate of tax, to the extent that
the timing difference are expected to crystallize.
Lease rentals in respect of assets acquired under operating lease are
charged off to the Profit & Loss Account as incurred. Lease rentals of
assets given under operating lease are credited to the Profit & Loss
Account as accrued.
Q Provision, Contingent Liabilities and Contingent Assets :
A Provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are determined based
on management estimate required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect the current management estimates. Contingent Liabilities are
not recognised but are disclosed in the notes. Contingent Assets are
neither recognised nor disclosed in the financial statements.
The Company uses foreign exchange forward contracts to hedge its
exposure to movements in foreign exchange rates. The use of these
foreign exchange forward contracts reduces the risk or cost to the
company and the company does not use the foreign exchange forward
contracts for trading or speculation purposes. The company records the
gain or loss on effective hedges in the profit and loss account of that