Modern Syntex (India) Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2014

1.1 Basis for preparation: The financial statements of the company have been prepared in accordance w ith 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 an accrual basis (unless otherwise stated) and under historical cost convention. The accounting policies are consistent with those used in previous year.

1.2 Use of Estimates: The preparation of financial statements requires the management of the company to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences, if any, between actual amounts and estimates are recognized in the period in which the results are known / materialized.

1.3 Revenue Recognition

i. Revenue from Sale of Products is recognised when the significant risk and rewards of ownership is transferred to the customers, net of returns.

ii. Sales represents invoiced value of goods supplied net of returns and trade discounts, and include applicable excise duty, surcharge and other elements as are allowed to be recovered as part of the price but excludes VAT/Sales Tax.

iii. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

iv. Income and expenditure are recognized and accounted for on accrual basis except premium on redemption of debentures, which are accounted for as and when settled.

v. Exports entitlement under the Duty Entitlement Pass Book (DEPB) scheme is recognized in the Statement of Profit & Loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

1.4 Tangible Fixed Assets

i. Fixed Assets are stated at cost of acquisition or construction net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowings cost if capitalization criteria are met and directly attributable cost of bringing the assets to its working condition for the intended use.

ii. CENVAT credit on capital goods is accounted for by reducing the cost of capital goods.

1.5 Depreciation

i. Depreciation on fixed assets is provided under the straight line method, at rates prescribed under Schedule XIV to the Companies Act, 1956.

ii. Depreciation is charged on plant and machinery treating the same as continuous process plant as per technical opinion except of Texturising Division, where depreciation is provided on shift basis.

iii. Depreciation is charged on addition / deletion on pro-rata monthly basis including the month of addition / deletion.

iv. Assets costing less than Rs. 5,000 acquired prior to 1st April, 1993 are depreciated at old rates whereas such assets acquired thereafter are fully depreciated.

1.6 Investments

Long-term investments are valued at cost. Provision for diminution in value is made to recognize a decline, other than of temporary nature, in the value of such investments.

1.7 Inventories

i. Inventories are stated at cost or net realizable value, whichever is lower.

ii. Cost of raw materials is determined on FIFO basis and the cost of stores and spares is determined on weighted average basis. Cost comprises of expenditure incurred in the normal course of business in bringing inventories to their present location including appropriate overheads apportioned on a reasonable and consistent basis.

iii. The net realizable value of finished goods is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses.

iv. Waste is valued at estimated net realizable value.

v. Obsolete, slow moving, surplus and defective stocks are identified at the time of physical verification of stocks and necessary, provision is made for such stocks.

1.8 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 till the month in which the asset is ready for use. 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.

1.9 Retirement and other Employee Benefits

i. Contributions to defined contribution schemes towards Provident Fund are charged to the Statement of Profit and Loss as and when incurred.

ii. The Company also provides for retirement / post-retirement benefits in the form of gratuity and leave encashment. Such defined benefits are charged to the Statement of Profit and Loss based on valuations made by independent actuaries using the Projected Unit Credit Method, as at the balance sheet.

1.10 Foreign Currency Transactions

i. Transactions in foreign currency are accounted in the reporting currency at the exchange rate prevailing on the date of transaction.

ii. Monetary items denominated in foreign currency are converted at exchange rates prevailing on the date of Balance Sheet.

iii. Foreign Exchange differences arising at the time of translation or settlement are recognized as income or expense in the Statement of Profit & Loss either under foreign exchange fluctuation or interest as the case may be.

1.11 Taxes on Income

i. Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

ii. Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date.

iii. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future. However, in respect of unabsorbed depreciation or carry forward losses, the deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be realized in future.

iv. The carrying amount of deferred tax assets and unrecognized deferred tax assets are reviewed at each balance sheet date.

1.12 Capital Subsidy

Subsidy received under the Central / State capital subsidy scheme is credited to capital reserve and treated as part of shareholders'' funds.

1.13 Research and Development Expenses

All revenue expenditure on research and development is charged off in the year it is incurred. Capital expenditure on research and development is included in fixed assets and depreciated as per policy.

1.14 Impairment of Assets

The carrying amounts of tangible assets are tested for impairment at each Balance Sheet date. If there is any indication of impairment, the company estimates the recoverable amount of those assets. If the carrying amount of the assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the net selling price and the value in use determined by the present value of estimated future cash flows.

1.15 Provisions and Contingent Liabilities

i. A provision is recognized when an enterprise has a present obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and determined based on best estimate required to settle the obligation at the balance sheet date.

ii. Contingent Liabilities are not recognized but are disclosed in the Notes. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Corporation.

1.16 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.

1.17 Liability for import duty, if any, on export obligation yet to be completed under EPCG Scheme is accounted for on expiry of obligation period / extension thereof.

1.18 Fund based bank borrowings are being accounted for as debited by banks subject to reconciliation & confirmation. Non-fund based borrowings unless paid / discharged / settled by the Company are not accounted for.

1.19 Excise duty / Custom duty is accounted for on the basis of payments made in respect of goods cleared as also the provision made for goods lying in bonded warehouse.

2.1 Preference shares ofRs. 250 Lacs, Rs. 590 Lacs & Rs. 210 Lacs were redeemable from December 05, March 06 & April 06 respectively in 28 equal quarterly installments without any past & future dividend as per settlement terms with the preference share holders. Preference Shares ofRs. 450 Lacs were to be redeemed at Rs. 45 Lacs as per settlement terms. Final redemption of Preference Shares will be on sanction of rehabilitation scheme by BIFR. Pending fulfillment of various terms & conditions of restructuring/settlement & sanction of rehabilitation scheme by BIFR, Rs. 1,042.41 Lacs paid (Previous YearRs. 1,042.41 Lacs) to Preference Shareholders has been shown as other current assets.

2.5 The company has two class of shares namely equity shares having at par value of 7 10 per share and preference share having at par value ofRs. 100 per share. Each holder of equity share is entitled to one vote per share and each holder of preference share is entitled to ten vote per share. In the event of liquidation of die company, the preference share holders shall get priority on proportionate basis towards payments and the holders of the equity shares will be entitled to receive remaining asset of the company in proportion to the number of equity shares held.

4.1 The company has received amount ofRs. 4,500 Lacs (Previous Year Rs. 4,500 Lacs) towards equity share application pursuant to the restructuring / settlement scheme. Instruments will be issued on sanction of rehabilitation scheme by BIFR. Necessary increase in authorised share capital will be done at appropriate time. The company does not envisage any refund out of share application money.

# Considered under other current liabilities. (Refer Note 9)

5.1 Debentures, Rupee Term Loans (including working capital term loan) and interest accrued and due thereon are secured / to be secured by first charge against all existing and future immovable properties, hypothecation of all movable assets of the Company by way of joint equitable mortgage and hypothecation (save and except book debts) created / to be created in favour of the financial institutions / banks ranking pari passu and personal guarantees of some of the directors subject to prior charge in favour of the company''s bankers on stock of raw materials, semi finished / finished goods, stores and book debts for working capital.

5.2 Foreign Currency Loans from Hypo Vereinsbank including funded interest and interest accrued and due is secured by corporate guarantee from Modem Terry Towels Limited.

5.3 Terms of redemption of Non Convertible Debentures based on restructuring / settlement wherever carried out is as under.

a) Rs. 60 Lacs were reedemed in March'' 2014 (The Payment ofRs. 60 Lacs made towards settlement shown as other current assets).

b) Rs. 60 Lacs were to be redeemable by March'' 2013 (The payment ofRs. 60 Lacs made towards settlement is shown as other current assets).

c) Rs. 120 Lacs were to be redeemable by January'' 2013 (The payment ofRs. 120 Lacs made towards settlement is shown as other current assets).

d) Rs. 45 Lacs were to be redeemable by December'' 2012 (The payment ofRs. 45 Lacs made towards settlement is shown as other current assets).

e) Rs. 75 Lacs redeemable in 28 quarterly installments commencing from 31st December, 2005 (The payment ofRs. 72.72 Lacs made towards settlement is shown as other current assets and the Installments payable in September'' 2012 amounting to Rs. 2.28 Lacs yet to be paid).

0 Rs. 240 Lacs were to be redeemed on of before 31st March, 2009 (The payment of Rs. 240 Lacs made towards settlement is shown as other current assets).

g) Rs. 20 Lacs were redeemable by 15th November, 2008 (The payment of X 20 Lacs made towards settlement is shown as other current assets).

h) Rs. 4,900 Lacs, out of which Rs. 500 Lacs were redeemable by March'' 2008 and Rs. 4,400 Lacs were redeemable by 30th September, 2008 (The payment ofRs. 4,900 Lacs made towards settlement is shown as other current assets).

i) Rs. 2,355 Lacs were redeemable in 28 staggered quarterly installments from 30th September, 2004 (The payment ofRs. 2,355 Lacs made towards settlement is shown as other current assets).

j) Rs. 97.67 Lacs of suiting division were redeemable by 2010-11 (The payment ofRs. 97.67 Lacs made towards settlement is shown as other current assets).

k) Rs. 50 Lacs were redeemable in August12003 (The payment ofRs. 50 Lacs made towards settlement is shown as other current assets).

5.4 Pending fulfillment of various terms and conditions of restructuring/settlement and/or satisfaction of charge, payment ofRs. 311 Lacs towards Rupee Term Loan (including working capital term loan) is shown as other current assets.

5.5 a) The company has defaulted in repayment of foreign currency loan from Hypo Vereinsbank ofRs. 8,148.42 Lacs since 1997-98 alongwith interest on the same.

b) Exchange Fluctuation on foreign currency loan availed in DM currency to acquire Plant & Machinery has not been provided since 1 st April, 2001 due to conversion of currency from DM to Euro, as there is no currency conversion clause in the agreement. Accordingly, foreign currency loan and interest thereon is stated in books at exchange rates prevailing on 31st March, 2001. In case, the liability is accounted for based on the exchange rate of Euro as on the Balance sheet date, the liability in respect of principal amount and interest would have been higher by Rs. 9,585.08 Lacs and Rs. 4,228.85 Lacs respectively (Previous Year Rs. 6,721.45 Lacs and Rs. 2,662.70 Lacs).

c) Interest on above loan has been provided at fixed rate of 2.74% p.a. rather than a floating interest rate based on 6-months-DM-Libor plus a margin of 0.80% pa., impact of which is not ascertainable.

9.1 Security of Debentures and interest accrued and due thereon are mentioned in para 5.1 of Note 5.

9.2 Unsecured Non Convertible Redeemable Debentures (Retail) initially when issued were secured by way of second charge on fixed assets of Yarn Division of the Company, subsequently assets of Yam Division have been sold, hence the same is considered as unsecured debentures. The said debentures were to be redeemed in installments before 30th November, 2002 as per the resolution passed in the meeting of debenture holders held on 25th October, 1999, which is not paid and shall now be redeemed as per rehabilitation scheme to be sanctioned.

93 In respect of restructured debts, future payment obligation is to be fulfilled as stipulated, failing which the original liability will fall back with interest and panel interest, amount of which is not ascertainable. However, SUUT1 has restored the total liabilities due to default in payment of OTS amount and have intimated the outstanding dues ofRs. 1,638.04 Crores including unsecured debts ofRs. 7 Crores, dues of UTI MF, overdue & penal interest etc. as per their records as on 31 st March, 2014. The company has disputed the entire dues of UTI MF and is in the process of renegotiating the OTS proposal with mem and SUUTI, pending which, unpaid liability oft 13.60 crores as per earlier settelement terms is kept in books of accounts.

9.4 Provision for interest amounting to Rs. 245.34 Lacs (including for the year Rs. 17.80 Lacs) on public fixed deposits and Rs. 665.40 Lacs (Including for the year Rs. 69.11 Lacs) on retail non convertible debentures have not been made since 1st October, 2002 as the company expects waiver/relief on sanction of rehabilitation scheme by BIFR. tl.l Plant and Machinery include 24 looms having WDV ofRs. 26.42 Lacs, pertaining to closed suitings division lying in the premises of third party. The company has filed legal suit for recovery of these machineries.

11.2 In pursuant to Accounting Standard 28 issued by The Institute of Chartered Accountants of India on "Impairment of Assets", the company has made necessary provisions during 2005-06 for the impairment loss in respect of its Petrofils division. There are no primary indications thereafter that the recoverable amount of cash generating unit is less than its carrying cost. Accordingly, no further detailed excercise has been done to calculate the amount of impairment loss. 113 Deductions in Plant and Machinaries pertains to items discarded.

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Mar 31, 2013

1.1 Basis for 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 an accrual basis (unless otherwise stated) and under historical cost convention. The accounting policies are consistent with those used in previous year.

1.2 Use of Estimates: The preparation of financial statements requires the management of the company to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences, if any, between actual amounts and estimates are recognized in the period in which the results are known / materialized.

1.3 Revenue Recognition

i. Revenue from Sale of Products is recognized when the significant risk and rewards of ownership is transferred to the customers, net of returns.

ii. Sales represents invoiced value of goods supplied net of returns and trade discounts, and include applicable excise duty, surcharge and other elements as are allowed to be recovered as part of the price but excludes VAT/Sales Tax.

iii. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

i v. Income and expenditure are recognized and accounted for on accrual basis except premium on redemption of debentures, which are accounted for as and when settled, v. Exports entitlement under the Duty Entitlement Pass Book (DEPB) scheme is recognized in the Statement of Profit & Loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

1.4 Tangible Fixed Assets

i. Fixed Assets are stated at cost of acquisition or construction net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowings cost if capitalization criteria are met and directly attributable cost of bringing the assets to its working condition for the intended use.

ii. CENVAT credit on capital goods is accounted for by reducing the cost of capital goods.

1.5 Depreciation

i. Depreciation on fixed assets is provided under the straight line method, at rates prescribed under Schedule XIV to the Companies Act, 1956. i i. Depreciation is charged on plant and machinery treating the same as continuous process plant as per technical opinion except of Text rising Division, where depreciation is provided on shift basis.

iii. Depreciation is charged on addition / deletion on pro-rata monthly basis including the month of addition / deletion.

i v. Assets costing less than X 5000 acquired prior to 1 st April 1993 are depreciated at old rates whereas such assets acquired thereafter are fully depreciated.

1.6 Investments

Long-term investments are valued at cost. Provision for diminution in value is made to recognize a decline, other than of temporary nature, in the value of such investments.

1.7 Inventories

i. Inventories are stated at cost or net realizable value, whichever is lower.

ii. Cost of raw materials is determined on FIFO basis and the cost of stores and spares is determined on weighted average basis. Cost comprises of expenditure incurred in the normal course of business in bringing inventories to their present location including appropriate overheads apportioned on a reasonable and consistent basis.

iii. The net realizable value of finished goods is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses.

iv. Waste is valued at estimated net realizable value.

v. Obsolete, slow moving, surplus and defective stocks are identified at the time of physical verification of stocks and necessary, provision is made for such stocks.

1.8 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 till the month in which the asset is ready for use. 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.

1.9 Retirement and other Employee Benefits

i. Contributions to defined contribution schemes towards Provident Fund are charged to the Statement of Profit and Loss as and when incurred. .

i i. The Company also provides for retirement / post-retirement benefits in the form of gratuity and leave encashment. Such defined benefits are charged to the Statement of Profit and Loss based on valuations made by independent actuaries using the Projected Unit Credit Method, as at the balance sheet.

1.10 Foreign Currency Transactions

i. Transactions in foreign currency are accounted in the reporting currency at the exchange rate prevailing on the date of transaction.

ii. Monetary items denominated in foreign currency are converted at exchange rates prevailing on the date of Balance Sheet.

iii. Foreign Exchange differences arising at the time of translation or settlement are recognized as income or expense in the Statement of Profit & Loss either under foreign exchange fluctuation or interest as the case may be.

1.11 Taxes on Income

i. Provision for content tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

ii. Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date.

iii. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future. However, in respect of unabsorbed depreciation or carry forward losses, the deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be realized in future.

iv. The carry in amount of deferred tax assets and unrecognized deferred tax assets are reviewed at each balance sheet date. _

1.12 Capital Subsidy

Subsidy received under the Central / State capital subsidy scheme is credited to capital reserve and treated as part of shareholders'' funds.

1.13 Research and Development Expenses

All revenue expenditure oh research and development is charged off in the year it is incurred. Capital expenditure on research and development is included in fixed assets and depreciated as per policy.

1.14 Impairment of Assets

The carrying amounts of tangible assets are tested for impairment at each Balance Sheet date. If there is any indication of impairment, the company estimates the recoverable amount of those assets. If the carrying amount of the assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the net selling price and the value in use determined by the present value of estimated future cash flows. -

1.15 Provisions and Contingent Liabilities

i. A provision is recognized when an enterprise has a present obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and determined based on best estimate required to settle the obligation at the balance sheet date.

ii. Contingent Liabilities are not recognized but are disclosed in the Notes. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Corporation.

1.16 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity share holders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.

1.17 Liability for import duty, if any, on export obligation yet to be completed under EPCG Scheme is accounted for on expiry of obligation period / extension thereof.

1.18 Fund based bank borrowings are being accounted for as debited by banks subject to reconciliation & confirmation. Non-fund based borrowings unless paid / discharged / settled by the Company are not accounted for.

1.19 Exciseduty/ Custom duty is accounted for on the basis of payments made in respect of goods cleared as also the provision made for goods lying in bonded warehouse.

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Mar 31, 2012

1.1 Basis for 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 an accrual basis (unless otherwise stated) and under historical cost convention. The accounting policies are consistent with those used in previous year.

1.2 Use of Estimates: The preparation of financial statements requires the management of the company to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences, if any, between actual amounts and estimates are recognized in the period in which the results are known/materialized.

1.3 Revenue Recognition

i. Revenue from Sale of Products is recognised when the significant risk and rewards of ownership is transferred to the customers, net of returns.

ii. Sales represents invoiced value of goods supplied net of returns and trade discounts, and include applicable excise duty, surcharge and other elements as are allowed to be recovered as part of the price but excludes VAT/Sales Tax.

iii. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

iv. Income and expenditure are recognized and accounted for on accrual basis except premium on redemption of debentures, which are accounted for as and when settled.

v. Exports entitlement under the Duty Entitlement Pass Book (DEPB) scheme is recognized in the Statement of Profit & Loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

1.4 Tangible Fixed Assets

i. Fixed Assets are stated at cost of acquisition or construction net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowings cost if capitalization criteria are met and directly attributable cost of bringing the assets to its working condition for the intended use.

ii. CENVAT credit on capital goods is accounted for by reducing the cost of capital goods.

1.5 Depreciation

i. Depreciation on fixed assets is provided under the straight line method, at rates prescribed under Schedule XIV to the Companies Act, 1956.

ii. Depreciation is charged on plant and machinery treating the same as continuous process plant as per technical opinion except of Texturising Division, where depreciation is provided on shift basis.

iii. Depreciation is charged on addition/deletion on pro-rata monthly basis including the month of addition/deletion.

iv. Assets costing less than Rs. 5000 acquired prior to 1st April 1993 are depreciated at old rates whereas such assets acquired thereafter are fully depreciated.

1.6 Investments

Long-term investments are valued at cost. Provision for diminution in value is made to recognize a decline, other than of temporary nature, in the value of such investments.

1.7 Inventories

i. Inventories are stated at cost or net realizable value, whichever is lower.

ii. Cost of raw materials is determined on FIFO basis and the cost of stores and spares is determined on weighted average basis. Cost comprises of expenditure incurred in the normal course of business in bringing inventories to their present location including appropriate overheads apportioned on a reasonable and consistent basis.

iii. The net realizable value of finished goods is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses.

iv. Waste is valued at estimated net realizable value.

v. Obsolete, slow moving, surplus and defective stocks are identified at the time of physical verification of stocks and necessary, provision is made for such stocks.

1.8 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 till the month in which the asset is ready for use. 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.

1.9 Retirement and other Employee Benefits

i. Contributions to defined contribution schemes towards Provident Fund are charged to the Statement of Profit and Loss as and when incurred.

ii. The Company also provides for retirement/post-retirement benefits in the form of gratuity and leave encashment. Such defined benefits are charged to the Statement of Profit and Loss based on valuations made by independent actuaries using the Projected Unit Credit Method, as at the balance sheet.

1.10 Foreign Currency Transactions

i. Transactions in foreign currency are accounted in the reporting currency at the exchange rate prevailing on the date of transaction.

ii. Monetary items denominated in foreign currency are converted at exchange rates prevailing on the date of Balance Sheet.

iii. Foreign Exchange differences arising at the time of translation or settlement are recognized as income or expense in the Statement of Profit & Loss either under foreign exchange fluctuation or interest as the case may be.

1.11 Taxes on Income

i. Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

ii. Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date.

iii. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future. However, in respect of unabsorbed depreciation or carry forward losses, the deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be realized in future.

iv. The carrying amount of deferred tax assets and unrecognized deferred tax assets are reviewed at each balance sheet date.

1.12 Capital Subsidy

Subsidy received under the Central/State capital subsidy scheme is credited to capital reserve and treated as part of shareholders' funds.

1.13 Research and Development Expenses

All revenue expenditure on research and development is charged off in the year it is incurred. Capital expenditure on research and development is included in fixed assets and depreciated as per policy.

1.14 Impairment of Assets

The carrying amounts of tangible assets are tested for impairment at each Balance Sheet date. If there is any indication of impairment, the company estimates the recoverable amount of those assets. If the carrying amount of the assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the net selling price and the value in use determined by the present value of estimated future cash flows.

1.15 Provisions and Contingent Liabilities

i. A provision is recognized when an enterprise has a present obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and determined based on best estimate required to settle the obligation at the balance sheet date.

ii. Contingent Liabilities are not recognized but are disclosed in the Notes. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Corporation.

1.16 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity share holders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.

1.17 Liability for import duty, if any, on export obligation yet to be completed under EPCG Scheme is accounted for on expiry of obligation period/extension there of.

1.18 Fund based bank borrowings are being accounted for as debited by banks subject to reconciliation & confirmation. Non-fund based borrowings unless paid/discharged/settled by the Company are not accounted for.

1.19 Excise duty/Custom duty is accounted for on the basis of payments made in respect of goods cleared as also the provision made for goods lying in bonded warehouse.

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Mar 31, 2011

1. Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention (except for revaluation of fixed assets) and in accordance with generally accepted accounting principles in India and the provisions of the Companies Act, 1956 and in compliance with the mandatory Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006.

2. Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles require estimates and assumptions to be made that affect the reported amounts of assets, liabilities, disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Difference between the actual results and estimates wherever made are recognized in the period in which the results are known / materialized.

3. Revenue Recognition:

3.1 Income and expenditure are recognized and accounted for on accrual basis except premium on redemption of debentures, which are accounted for as and when settled.

3.2 Sales are inclusive of excise duty, export benefits and waste sales, and are net of returns and quantity discount.

3.3 Exports entitlement under the Duty Entitlement Pass Book (DEPB) scheme is 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.

4. Fixed Assets:

4.1 Fixed Assets are stated at cost of acquisition or construction (net of recoverable taxes and duties) or revalued amount less accumulated depreciation / amortization.

4.2 Direct expenses as well as clearly identifiable indirect expenses incurred on project during the period of construction are being capitalized to the respective assets.

4.3 CEN VAT credit on capital goods is accounted for by reducing the cost of capital' goods.

5. Depreciation:

5.1 Depreciation on fixed assets is provided on straight-line method in the manner specified in Schedule XIV to the Companies Act, 1956. Depreciation is charged on plant and machinery treating the same as continuous process plant as per technical opinion except of Texturising Division, where depreciation is provided on shift basis.

5.2 Assets costing less than Rs.5000 acquired prior to 1 st April 1993 are depreciated at old rates whereas such assets acquired thereafter are fully depreciated.

6. Investments:

Long-term investments are stated at cost. Provision is made to recognize a decline other than temporary, in the value of investments.

7. Inventories:

7.1 Inventories are valued at the lower of cost or net realizable value. With regard to finished goods, net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses. The cost of raw materials are considered on FIFO basis. The cost of stores & spares are considered on weighted average basis. Finished goods and process stock includes cost of conversion, applicable overheads 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. - 7.2 Obsolete, defective, unserviceable and slow / non-moving stocks are provided for.

8. Borrowing cost:

Borrowing costs, which are attributable to acquisition or construction of qualifying assets, are capitalized as part of cost of such assets. 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 in the year in which they are incurred.

9. Retirement Benefits:

9.1 The Employees and the Company makes equal monthly Fixed Contribution to Government of India Employee's Provident Fund. Provision for the same is made in the year in which services are rendered by the employees.

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

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

10. Foreign Currency Transactions:

Transactions in foreign currency are recorded on me basis of exchange rates prevailing on the date of their occurrence. Foreign currency assets and liabilities are converted into rupee equivalent at the exchange rates prevailing on the Balance Sheet date and exchange difference arising mere from is charged to the revenue.

11. Income Tax:

Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws mat have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future. Deferred tax assets arising from timing differences on account of carry forward losses and unabsorbed depreciation are recognized to the extent there is virtual certainty that these would be realized in future.

12. Capital Subsidy:

Subsidy received under the Central / State capital subsidy scheme is credited to capital . reserve and treated as part of shareholders' funds.

13. Research & Development:

Research and development cost (other than cost of fixed assets acquired) are charged as expenses in the year in which they are incurred.

14. Liability for import duty, if any, on export obligation yet to be completed under EPCG Scheme is accounted for on expiry of obligation period / extension thereof.

15. Fund based bank borrowings are being accounted for as debited by banks subject to reconciliation & confirmation. Non-fund based borrowings unless paid / discharged / settled by the Company are not accounted for.

16. Excise duty / Custom duty is accounted for on the basis of payments made in respect of goods cleared as also the provision made for goods lying in bonded warehouse.

17. Impairment of Assets:

Impairment losses, on fixed assets (including revalued assets) are recognised in accordance with the Accounting Standard 28 "Impairment of Assets" issued in this regard by the Institute of Chartered Accountants of India.

18. Provision & Contingent Liabilities:

Provisions are made in accounts unless no reliable estimate can be made of the amount of obligation or possibility of future cash flow is remote. Contingent liabilities are not recognized but are disclosed in the notes to the accounts.

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Mar 31, 2010

1. Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention except for revaluation of fixed assets and in accordance with generally accepted accounting principles in India and the provisions of the Companies Act, 1956 and in compliance with the mandatory Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006.

2. Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles require estimates and assumptions to be made that affect the reported amounts of assets, liabilities, disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Difference between the actual results and estimates wherever made are recognized in the period in which the results are known / materialized.

3. Revenue Recognition:

3.1 Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Income and expenditure are recognized and accounted for on accrual basis except premium on redemption of debentures, which are accounted for as and when settled.

3.2 Sales are inclusive of excise duty, export benefits and waste sales, and are net of returns and quantity discount.

3.3 Exports entitlement under the Duty Entitlement Pass Book (DEPB) scheme is 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,

4. Fixed Assets:

4.1 Fixed Assets are stated at cost of acquisition or construction (net of recoverable taxes and duties) or revalued amount less accumulated depreciation / amortization.

4.2 Direct expenses as well as clearly identifiable indirect expenses incurred on project during the period of construction are being capitalized to the respective assets.

4.3 Leasehold land is not amortized except of Yarn Division. The same is charged to revenue in the year in which respective lease period expires/transferred.

4.4 CENVAT credit on capital goods is accounted for by reducing the cost of capital goods.

5. Depreciation:

5.1 Depreciation on fixed assets is provided on straight-line method in the manner specified in Schedule XIV to the Companies Act, 1956. Depreciation is charged on plant and machinery treating the same as continuous process plant as per technical opinion except of Texturising Division, where depreciation is provided on shift basis.

5.2 Assets costing less than Rs.5000 acquired prior to 1st April 1993 are depreciated at old rates whereas such assets acquired thereafter are fully depreciated.

6. Investments:

Long-term investments are stated at cost. Provision is made to recognize a decline other than temporary, in the value of investments.

7. Inventories:

7.1 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. The cost of raw materials are considered on FIFO basis. The cost of stores & spares are considered on weighted average basis. Finished goods and process stock includes cost of conversion, applicable overheads and other costs incurred in acquiring the inventory and bringing them to their present location and condition. Cost for the same is computed on weighted average basis method.

7.2 Obsolete, defective, unserviceable and slow / non-moving stocks are provided for.

7.3 Waste is valued at estimated net realizable value.

8. Borrowing cost:

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

9. Retirement Benefits:

9.1 The Employees and the Company makes equal monthly Fixed Contribution to Government of India Employees Provident Fund. Provision for the same is made in the year in which services are rendered by the employees.

9.2 The Liability for 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 are charged to profit and loss account.

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

10. Foreign Currency Transactions:

Transactions in foreign currency are recorded on the basis of exchange rates prevailing on the date of their occurrence. Monetary foreign currency assets and liabilities are converted into rupee equivalent at the exchange rates prevailing on the Balance Sheet date and exchange difference arising there from is charged to the revenue.

11. Income Tax:

Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1 % 1. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future. Deferred tax assets arising from timing differences on account of carry forward losses and unabsorbed depreciation are recognized to the extent there is virtual certainty that these would be realized in future.

12. Capital Subsidy:

Subsidy received under the Central / State capital subsidy scheme is credited to capital reserve and treated as part of shareholders funds.

13. Research & Development:

Research and development cost (other than cost of fixed assets acquired) are charged as expenses in the year in which they are incurred.

14. Liability for import duty, if any, on export obligation yet to be completed under EPCG Scheme is accounted for on expiry of obligation period / extension thereof.

15. Fund based bank borrowings are being accounted for as debited by banks subject to reconciliation & confirmation. Non-fund based borrowings unless paid / discharged / settled by the Company are not accounted for.

16. Excise duty / Custom duty is accounted for on the basis of payments made in respect of goods cleared as also the provision made for goods lying in bonded warehouse.

17. Impairment of Assets:

Impairment losses on fixed assets (including revalued assets) are recognised in accordance with the Accounting Standard 28 "Impairment of Assets" issued in this regard by the Institute of Chartered Accountants of India.

18. Provision & Contingent Liabilities:

Provisions are made in accounts unless no reliable estimate can be made of the amount of obligation or possibility of future cash flow is remote. Contingent liabilities are not recognized but are disclosed in the notes to the accounts.