Modern Denim Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2025

A. MATERIAL ACCOUNTING POLICIES

(a) Statement of compliance

These financial statements are prepared and presented in accordance
with the Indian Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules, 2015 and
subsequent amendments thereto notified under section 133 of the
Companies Act, 2013 (to the extent applicable).

(b) Basis of preparation

(i) The Financial Statements are prepared on accrual basis under
the historical cost convention except certain financial assets and
liabilities (including derivatives instruments) that are measured
at fair value. The methods used to measure fair values are
discussed in notes to financial statements.

(ii) The preparation of financial statements requires judgments,
estimates and assumptions that affect the reported amount of
assets and liabilities, disclosure of contingent 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 recognized in the
period in which the results are known/ materialized. Major
estimates are discussed in Note No. 1A.

(c) Functional and presentation currency

These financial statements are presented in Indian Rupees, which is
the functional currency of the company and the currency of the
primary economic environment in which the Company operates.

(d) Classification of assets and liabilities into current/non-current
The Company has ascertained its operating cycle as twelve months
for the purpose of Current / Non-Current classification of its Assets
and Liabilities.

For the purpose of Balance Sheet, an asset is classified as current if:

(i) It is expected to be realised, or intended to be sold or consumed,
in the normal operating cycle;

(ii) It is held primarily for the purpose of trading; or

(iii) It is expected to realise the asset within twelve months after the
reporting period; or

(iv) The asset is a cash or cash equivalent unless it is restricted from
being exchanged or used to settle a liability for at least twelve
months after the reporting period.

All other assets are classified as non-current.

Similarly, a liability is classified as current if:

(i) It is expected to be settled in the normal operating cycle; or

(ii) It is held primarily for the purpose of trading; or

(iii) It is due to be settled within twelve months after the reporting
period; or

(iv) The Company does not have an unconditional right to defer the
settlement of the liability for at least twelve months after the
reporting period.

All other liabilities are classified as non-current.

Deferred tax assets/liabilities are classified as non-current assets/
liabilities.

(e) Property, Plant & Equipment (PPE)

Property, plant and equipment are stated at acquisition or
construction cost less accumulated depreciation and impairment loss.
Cost comprises the purchase price and any attributable cost of

bringing the asset to its location and working condition for its
intended use, including relevant borrowing costs and any expected
costs of decommissioning.

If significant parts of an item of PPE have different useful lives,
then they are accounted for as separate items (major components)
of PPE.

The cost of an item of PPE is recognised as an asset if, and only if,
it is probable that the economic benefits associated with the item
will flow to the Company in future periods and the cost of the item
can be measured reliably. Expenditure incurred after the PPE have
been put into operations, such as repairs and maintenance expenses
are charged to the Statement of Profit and Loss during the period in
which they are incurred.

Items such as spare parts, standby equipment and servicing
equipment are recognised as PPE when it is held for use in the
production or supply of goods or services, or for administrative
purpose, and are expected to be used for more than one year,
otherwise such items are classified as inventory.

An item of PPE is de-recognised upon disposal or when no future
economic benefits are expected to arise from the continued use of
the assets. Any gain or loss arising on the disposal or retirement of
an item of PPE, is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in
the Statement of Profit and Loss.

On transition to Ind AS, the company has elected to continue with
the carrying value of all of its property, plant and equipment
recognised as at 1 April 2016 measured as per the previous GAAP
and use that carrying value as the deemed cost of the property, plant
and equipment.

(f) Depreciation

Depreciation is the systematic allocation of the depreciable amount
of PPE over its useful life and is provided on a straight-line basis
over the useful lives as prescribed in Schedule II to the Act or as per
technical assessment.

Depreciable amount for PPE is the cost of PPE less its estimated
residual value. The useful life of PPE is the period over which PPE
is expected to be available for use by the Company or the number of
production or similar units expected to be obtained from the asset
by the Company. Details of assets with useful life is as under:

Depreciation on additions is provided on a pro-rata basis from the
month of installation or acquisition and in case of Projects from the
date of commencement of commercial production.

Depreciation on deductions/disposals is provided on a pro-rata basis
up to the month of deduction/disposal.

(g) Inventories

Inventories are valued at the lower of cost and net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and selling
expenses. Cost in respect of raw material and store & spares parts
are computed on FIFO basis. Cost in respect of stock of Finished
goods and Work in progress are computed on weighted average basis
method. Stock of Finished goods and Work in progress includes
cost of conversion and other costs incurred in acquiring the inventory

and bringing them to their present location and condition.

Waste is valued at estimated net realizable value.

(h) Cash and cash equivalent

Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of
three months or less from the date of acquisition), which are subject
to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits, as defined above,
net of outstanding bank overdrafts as they are considered an integral
part of the company''s cash management.

(i) Statement of Cash flows:

Cash flows are reported using the indirect method, whereby profit /
(loss) before tax is adjusted for the effects of transactions of non¬
cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from operating, investing and
financing activities of the Company are segregated based on the
available information.

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Mar 31, 2012

I) Basis of Preparation of Financial Statements

The financial statements are prepared on a historical cost convention on the accrual basis and materially comply with the accounting standard notified by Companies (Accounting Standards) Rules, 2008 and relevant provisions of the Companies Act, 1956.

ii) Fixed Assets

Fixed assets are stated at cost of acquisition less accumulated depreciation. All costs including financial costs till commencement of commercial production are capitalized. In case of net charges arising from exchange rate variations relating to borrowings attributable to the fixed assets were capitalized till 31.03.2005 and on revision of Accounting standard 11 "The Effects of Changes in Foreign Exchange Rates (Revised 2003)" the same are being charged to Statement of Profit & Loss.

iii) Depreciation

Depreciation on fixed assets (excluding intangible assets) of the Company is provided on straight-line method at the rates and in the manner specified in schedule XIV of the Companies Act, 1956, so as to write-off 95% of the original cost of the assets, except depreciation on incremental cost arising on account of translation of foreign currency liabilities for fixed assets capitalized upto 31.03.2005, which is being amortized over the residual life of the assets. The company has, on the basis of technical opinion, treated the Plant & Machinery as continuous process plant and charged the depreciation accordingly. Depreciation on intangible assets is provided on straight-line method, equivalent to cost of assets over a period of 10 years.

iv) Inventories

a) Inventories are valued at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses. Cost in respect of raw material and store & spares parts are computed on FIFO basis. Cost in respect of process and finished goods are computed on weighted average basis method. Finished goods and process stock includes cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

b) Waste is valued at estimated net realizable value.

v) Excise Duty

In view of the excise duty exemption route adopted by the Company from 13.07.2004 vide notification no. 30/2004 - dated 09.07.2004 of Central Excise Act, 1944 "Exemption to specified goods of public interest", the Company does not have obligation for payment of excise duty from that date.

vi) Revenue Recognition

a) Sales are shown inclusive of export benefits, job receipts and are net of returns, discount, rebates and claims.

b) Export benefits are recognized in the Profit & Loss account when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

vii) Borrowing Cost

Borrowing costs, which are attributable to acquisition or construction of qualifying assets, are capitalized as part of cost of such assets till such assets are ready for its intended use. A qualifying asset is one, which necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

viii) Retirement Benefits

a) The Employee and Company make monthly fixed contribution to Government of India employee's provident fund equal to a specified percentage of the covered employee's salary, provision for the same is made in the year in which services are rendered by the employee.

b) The Liability of gratuity to employees, which is a defined benefit plan, is determined on the basis of actuarial valuation based on projected unit credit method. Actuarial gain/loss in respect of the same is charged to the profit and loss account.

c) Leave encashment benefits to eligible employees has been ascertained on actuarial basis and provided for. Actuarial gain/loss in respect of the same is charged to the profit and loss account.

ix) Foreign Currency Transactions/Exchange Fluctuation

a) Monetary transactions related to foreign currency are accounted for at the equivalent rupee converted at the rates prevailing at the time of respective transactions and outstanding in respect thereof are translated at year end rates except for the debts which are doubtful of recovery.

b) Non-monetary foreign currency items are carried at cost.

x) Provisions, Contingent Liabilities and Contingent Assets.

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 on financial statement. Contingent assets are neither recognized nor disclosed in the financial statement.

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Mar 31, 2011

I) Basis of preparation of financial statements'.

The financial statements are prepared on accrual basis in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

ii) Fixed Assets:

Fixed assets are stated at cost of acquisition less accumulated depreciation. All costs including financial costs till commencement of commercial production are capitalized.

iii) Depreciation:

Depreciation on fixed assets (excluding intangible assets) of the Company is provided on straight-line method at the rates. and in the manner specified in schedule XrV of the Companies Act, 1956,soastowrite-off95%oftheoriginaI cost of the assets, except depreciation on incremental cost arising on account of translation of foreign currency liabilities for fixed assets capitalized upto 31-03-2004, which is being amortized over the residual life of the assets. Depreciation on intangible assets is provided on straight-line method, equivalent to cost of assets over a period of 10 years.

iv) Inventories:

a) Inventories are valued at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses. Cost in respect of raw material and store & spares parts are computed on FIFO basis. Cost in respect of process and finished goods are computed on weighted average basis method. Finished goods and process stock includes cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

b) Waste is valued at estimated net realizable value. v) Excise duty:

In view of the excise duty exemption route adopted by the Company from. 13-7-2004 vide notification no. 30/2004 - dated 9/7/2004 of Central Excise Act, 1944 "Exemption to specified goods of public interest", the Company does not have obligation for payment of excise duty from that date.

v) Revenue recognition:

a) Sales is shown inclusive of export benefits, job receipts and is net of returns, discount, rebates and claims.

b) Export benefits are recognized in the Profit & Loss account when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

vi) Borrowing cost,

Borrowing costs, which are attributable to acquisition or construction of qualifying assets, are capitalized as part of cost of such assets till such assets ' are ready for its intended use. A qualifying asset is one, which necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

vii) Retirement benefits:

a) The Employee and Company make monthly fixed contribution to Government of India employee's provident fund equal to a specified percentage of the covered employee's salary, provision for the same is made in the year in which services are rendered by the employee.

b) The Liability of gratuity to employees, which is a defined benefit plan, is determined on the basis of actuarial valuation based on projected unit credit method. Actuarial gain/loss in respect of the same is charged to the profit and loss account

c) Leave encashment benefits to eligible employees has been ascertained on actuarial basis and provided for. Actuarial gain/loss in respect of the same is charged to the profit and loss account.

viii) Foreign currency transactions / Exchange fluctuation:

a) Monetary transactions related to foreign currency are accounted for at the equivalent rupee converted at the rates prevailing at the time of respective transactions and outstanding in respect thereof are translated at year end rates except for the debts which are doubtful of recovery.

b) Non-monetary foreign currency items are carried at cost

ix) Provisions, contingent liabilities and contingent assets:

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 mere will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to accounts. Contingent assets are neither recognized nor disclosed in the financial statement.