Accounting Policies of H P Cotton Textiles Mills Ltd. Company

Mar 31, 2024

2.2 Summary of material accounting policies

i. Property, plant and equipment

An item on property, plant and equipment is recognized as asset, if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less accumulated depreciation and impairment, if any. All costs including borrowing costs related to the acquisition and installation of property, plant and equipment are capitalised.

Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance including assets having cost upto '' 10,000 are charged to the standalone statement of profit and loss during the reporting period in which they are incurred.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the standalone statement of profit and loss.

Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date is classified as capital advances under other noncurrent assets and the cost of assets not put to use before such date are disclosed under ''Capital work-inprogress''.

ii. Intangible assets

I ntangible assets are stated at cost less accumulated amortisation and impairment, if any. Intangible assets are amortised over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, etc. The amortisation method and useful lives are reviewed periodically at each reporting date.

An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the standalone statement of profit and loss.

Useful life considered for calculation of amortisation for various intangible assets are as follows-

The amortisation expense on intangible assets with finite life is recognised in the standalone statement of profit and loss under the head Depreciation and amortization expense.

iii. Depreciation

The Company depreciates its property, plant and equipment (PPE) over the useful life on Straight line basis in the manner prescribed in Schedule II to the

Act. Management believes that useful life of assets are same as those prescribed in Schedule II to the Act. Useful life considered for calculation of depreciation for various assets class are as follows-

Leasehold improvements are depreciated over the period of lease or 3 years, whichever is less.

The residual values are not more than 5% of the original cost of the asset. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Depreciation on additions / deletions is calculated prorata from the month of such addition / deletion, as the case maybe.

iv. Impairment of non-financial asset

The Company tests the assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cashgenerating units). Assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

v. Revenue and other income

The Company derives revenues primarily from sale of manufactured cotton, specialty yarns and cotton sewing threads.

Revenue from sale of goods is recognised when the Company satisfies its performance obligation and substantial risks and rewards of ownership are transferred to the buyer which generally coincides when the goods are dispatched from the factory. Amounts disclosed as revenue are net of returns and allowances, trade discounts and rebates. The Company collects Goods and Service Tax on behalf of the government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from revenue.

Contract balances Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. Where the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.

Trade receivables

A receivable represents the Company’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (x) Investment and other financial assets - initial recognition and subsequent measurement.

Contract liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Where a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.

Financing component

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

Cost to obtain a contract with customer

The Company pays sales commission to selling agents for each contract that they obtain for sales of Company’s products. Such commission are in nature of incremental cost to obtain contract with customer and the Company has elected to apply the optional practical expedient for costs to obtain a contract wherein it immediately expenses off such sales commissions because the amortisation period of the asset that the Company otherwise would have used is one year or less.

Duty drawbacks and other export incentives: Duty drawbacks and other export incentives under various schemes are recognised as revenue in the year of export when no significant uncertainty exists with respect to their recovery.

I nsurance and other claims: Revenue in respect of claims is recognised when no significant uncertainties exist with regard to the amount to be realised and the ultimate collection thereof.

Interest income: Income from interest is accounted for on time proportion basis taking into account the amounts outstanding and the applicable rate of interest.

vi. Inventories

I nventories are valued at cost or net realisable value, whichever is lower.

The cost of raw materials and stores and spares is determined using moving weighted average formula and includes cost of purchase and other cost incurred in bringing the inventory to their present location and condition. Raw materials and stores and spares are not written down below cost if the finished product in which they will be manufactured are expected to be sold at or above cost.

Work-in-progress is valued at raw material cost plus conversion cost incurred on them depending upon the stage of completion based on weighted average formulae.

Cost of finished goods include raw material cost, conversion cost and packing cost incurred to bring the goods to their present location and condition. Inventory of finished goods is measured at cost or net realisable value, whichever is lower.

Goods in transit are stated at cost. Net realisable value of the inventories is measured at estimated selling price of each item of inventory in the ordinary course of business less the estimated cost of completion and estimated costs necessary to make the sale.

vii. Earnings per share Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

• the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

viii. Government grants

Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the standalone statement of profit and loss on a straight -line basis over the expected lives of related assets and presented within other income.

Government grants related to revenue are recognised on a systematic basis in the standalone statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Government grant receivable as compensation for expenses or losses already incurred with no future related cost are recognised in standalone

statement of profit and loss of the period in which it becomes receivable.

ix. Dividend

Final dividends on shares are recognised as a liability on the date of approval by the shareholders and interim dividends are recognised as a liability on the date of declaration by the Company’s Board of Directors.

x. Investments and other financial assets Classification

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss),

• those to be measured at amortised cost.

The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.

Equity investments in subsidiaries are measured at cost. The investments are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ‘Impairment of Assets’. If any such indication exists, policy for impairment of financial assets is followed.

I nvestments in mutual fund are measured at FVTPL. Profit or loss on fair value of mutual fund is recognised in the standalone statement of profit and loss.

For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at FVTOCI.

The Company reclassifies debt investments when and only when its business model for managing those assets changes.

Initial recognition

Purchases and sales of financial assets are recognised on the trade-date i.e. the date on which the Company commits to purchase or sale the financial asset.

Measurement

At initial recognition, the Company measures trade receivables at their transaction price and measures other financial assets at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:

• Debt instruments at amortised cost

• Debt instruments at fair value through other comprehensive income (FVTOCI)

• Debt instruments and equity instruments at fair value through profit or loss (FVTPL)

Debt instruments at amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/ losses. Impairment losses are presented as separate line item in the standalone statement of profit and loss.

Debt instrument at FVTOCI

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal

and interest, are measured at FVTOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ losses. Interest income from these financial assets is included in other income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/ losses and impairment expenses are presented as separate line item in standalone statement of profit and loss.

Debt instrument at FVTPL

Assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net within other gains/ losses in the period in which it arises. Interest income from these financial assets is included in other income.

Equity instruments

The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments are recognised in profit or loss as other income when the Company’s right to receive payments is established.

Changes in the fair value of financial assets at FVTPL are recognised in other gain/ losses in the standalone statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVTOCI are not reported separately from other changes in fair value.

Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note

40 details how the Company determines whether there has been a significant increase in credit risk.

For trade receivables only, the Company applies the simplified approach required by Ind AS 109, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

De-recognition

A financial asset is derecognised only when

• The Company has transferred or has expired the rights to receive cash flows from the financial asset and

• The Company has transferred substantially all of the risks and rewards of the ownership.

Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if it has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

Income recognition Interest income

Interest income from FVTPL is disclosed as interest income within other income. Interest income on financial assets at amortised cost and financial assets at FVTOCI is calculated using the effective interest method is recognised in the standalone statement of profit and loss as part of other income.

I nterest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).

Dividends

Dividends are received from financial assets at FVTPL and at FVTOCI. Dividends are recognised as other income in profit or loss when the right to receive payment is established. This applies even if they are paid out of pre-acquisition profits, unless the dividend clearly represents a recovery of part of the cost of the investment.

xi. Financial liabilities Initial recognition

The Company recognizes the financial liabilities in its balance sheet when it becomes party to the contractual provisions of the instrument.

The Company’s financial liabilities include trade payables, other payables, short-term and longterm borrowings.

Measurement

All financial liabilities are recognised initially at fair value and in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Subsequent measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the standalone statement of profit and loss.

Financial liabilities designated upon initial recognition at FVTPL are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are

satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognised in OCI. These gains/ losses are not subsequently transferred to profit and loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the standalone statement of profit and loss. The Company has not designated any financial liability as at fair value through profit and loss.

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the initial recognition amount (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the standalone balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other gains/ losses.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the standalone financial statements for issue, not to demand payment as a consequence of the breach.

Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 60-90 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

De-recognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the standalone statement of profit and loss.

xii. Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount is reported in the standalone balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

xiii. Fair value measurement of financial instruments

The Company measures financial instruments at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or

• In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

• Level 2—Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

• Level 3—Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the standalone financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of nature, characteristics and risks of the asset and liability and the level of the fair value hierarchy as explained above.

This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes:

• Disclosure regarding significant estimates and assumptions- Note 2.1

• Quantitative disclosures of fair value measurement hierarchy- Note 2.2, paragraph xiii.

• Financial instruments (including those carried at amortised cost)- Note 2.2, paragraph x.

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Mar 31, 2015

1 Basis of Preparation of Financial Statements

The financial statements have been prepared to comply with Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provision of the Companies Act, 2013.The financial statements are prepared on accrual basis 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.

2 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 actual and estimation are recognised in the period in which the result are known/ materialise.

3 Fixed Assets

All fixed assets are valued at cost less depreciation. All costs including borrowing costs relating to the acquisition and installation of fixed assets are capitalised.

4 Depreciation

Depreciation on Fixed Assets is provided to the extent of depreciable amount on the 'Straight Line Method'. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.

5 Impairment

At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exist the recoverable amount of the asset is estimated to determine the extent of impairment loss and necessary adjustments is made there against Reversal of impairment loss is recognised as income in the profit and loss account.

6 Investment

Current investment are carried at lower of cost and fair value; if any, and Non Current Investments are stated at cost.; if any, Provision for diminution in value on Non Current investments is made only if such a decline is other than temporary.

7 Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as result of past events and it is probable that there will be an outflow of resources, Contingent Liabilities are not recognised but are disclosed in the notes, Contingent Assets are neither recognised nor disclosed in the financial statements.

8 Revenue Recognition

Sales: Sales of goods is recognised at the point of despatch of finished goods to the customers and is reported excluding rebates, discounts, sales tax value added tax. Differences arising due to exchange fluctuation in case of Export Sales are included in sales.

9 Borrowing Cost

Borrowing costs are charged to Profit & Loss Account except borrowing costs directly attributable to the acquisition of fixed assets which are capitalised upto the date of the fixed assets is put to commercial use.

10 Employees Benefits

a) Gratuity: Provision for gratuity liability has been made as per actuarial valuation.

b) Leave Encashment: Provision for accumulated leave encashment liability has been made as per actuarial valuation.

11 Foreign Exchange Transactions

Foreign Currency Transactions outstanding at the close of the year are converted into Indian Rupee on the basis of exchange rate of the currency as on the close of the year.

12 Taxation

a) Provision for current tax is made after taking into consideration benefits admissible under The Income Tax Act,1961.

b) Deferred Tax resulting from "timing difference" between book and taxable profit is accounted for using tax rates and laws that have been enacted or substantively enacted as on the date of the balance sheet. Def- ferried Tax Asset is recognised and carried forward only to the extent that here is reasonable certainty that the assets will be realised in the future.

13 Inventories

Inventories have been valued as under:- - Finished Goods including in transit has been valued at cost or market value whichever is less.

- Loose yarn is valued at cost.

- Stock in Process is valued at Cost.

- Raw Materials are valued at cost.

- Stores & Spare Parts, Colour &Chemicals, Packing Materials and Oil and Fuel are valued at cost.

- Stock of Cotton Waste/Scrap is valued at estimated realisable value.

14 Segment Reporting

The Company has one reportable primary segment of Textiles (Spinning). Hence segment reporting is not applicable.

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Mar 31, 2014

1 Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention and in accordance with applicable Accounting Standards issued by the Institute of Chartered Accountants of India and relevant disclosure requirements of Companies Act, 1956/ 2013 as applicable as adopted consistently by the company. The accounting policies have been consistently applied by the company and are consistant with those used in the previous year.

2 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. Diffrence between actual and estimation are recognised in the period in which the result are known/ materialise.

3 Fixed Assets

All fixed assets are valued at cost less depreciation. All costs including borrowing costs relating to the acquisition and installation of fixed assets are capitalised.

4 Depreciation

Depreciation is provided under the ''Straight Line Method'' as per the rates specified in Schedule XIV to the Companies Act, 1956.

5 Impairment

At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exist the recoverable amount of the asset is estimated to determine the extent of impairment loss and necessary adjustments is made there against Reversal of impairment loss is recognised as income in the profit and loss account.

6 Investment

Long Term Investments are carried at cost less provision; if any, for dimunation in market value which in the opinion of the Board of Directors is not temporary.

7 Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as result of past events and it is probable that there will be an outflow of resources, Contingent Liabilities are not recognised but are disclosed in the notes, Contingent Assets are neither recognised nor disclosed in the financial statements.

8 Revenue Recognition

Sales: Sales of goods is recognised at the point of dispatch of finished goods to the customers and is reported excluding rebates,discounts, sales tax. Differences arising due to exchange fluctuation in case of Export Sales are included in sales.

9. Borrowing Cost

Borrowing costs are charged to Profit & Loss Account except borrowing costs directly attributable to the acquisition of fixed assets which are capitalised upto the date of the fixed assets is put to commercial use.

10. Employees Benefits

a) Gratuity: Provision forgratuity liability has been made as peractuarial valuation.

b) Leave Encashment: Provision for accumulated leave encashment liability has been made as per actuarial valuation.

11 Foreign Exchange Transactions

Foreign Currency Transactions outstanding at the close of the year are converted into Indian Rupee on the basis of exchange rate of the currency as on the close of the year.

12 Taxation

a) Provision for current tax is made after taking into consideration benefits admissible under The Income Tax Act, 1961.

b) Deferred Tax resulting from "timing difference" between book and taxable profit is accounted for using tax rates and laws that have been enacted or substantively enacted as on the date of the balance sheet. Defferred Tax Asset is recognised and carried forward only to the extent that there is reasonable certainty that the assets will be realised in the future.

13. Inventories

Inventories have been valued as under:- Finished Goods including in transit has been valued at cost or market value whichever is less.

* Loose yarn is valued at cost.

* Stockin Process is valued at Cost.

* Raw Materials are valued at cost.

* Stores & Spare Parts, Colour &Chemicals, Packing Materials and Oil and Fuel are valued at cost.

* Stock of Cotton Waste/Scrap is valued at estimated realisable value.

14. Segment Reporting

The Company has one reportable primary segment of Textiles (Spinning). Hence segment reporting is not applicable.

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Mar 31, 2012

1 Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention and in accordance with applicable Accounting Standards issued by the Institute of Chartered Accountants of India and relevant disclosure requirements of Companies Act, 1956 as adopted consistently by the company. The accounting policies have been consistently applied by the company and are consistant with those used in the previous year.

2 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. Diffrence between actual and estimation are recognised in the period in which the result are known/ materialise.

3 Fixed Assets

All fixed assets are valued at cost less depreciation. All costs including borrowing costs relating to the acquisition and installation of fixed assets are capitalised.

4 DepriCiation

Depreciation is provided under the 'Straight Line Method' as per the rates specified in Schedule XIV to the Companies Act, 1956.

5 Impairment

At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exist the recoverable amount of the asset is estimated to determine the extent of impairment loss and necessary adjustments is made there against Reversal of impairment loss is recognised as income in the profit and loss account.

6 Investment

Long Term Investments are carried at cost less provision; if any, for dimunation in market value which in the opinion of the Board of Directors is not temporary.

7 Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as result of past events and it is probable that there will be an outflow of resources, Contingent Liabilities are not recognised but are disclosed in the notes, Contingent Assets are neither recognised nor disclosed in the financial statements.

8 Revenue Recognition

Sales: Sales of goods is recognised at the point of despatch of finished goods to the customers and is reported excluding rebates,discounts, sales tax. Differences arising due to exchange fluctuation in case of Export Sales are included in sales. .

9 Borrowing Cost

Borrowing costs are charged to Profit & Loss Account except borrowing costs directly attributable to the acquisition of fixed assets which are capitalised upto the date of the fixed assets is put to commercial use. .

10 Employees Benefits

a) Gratuity: Provision for gratuity liability has been made as per actuarial valuation.

b) Leave Encashment: Provision for accumulated leave encashment liability has been made as per actuarial valuation.

SIGNIFICANT ACCOUNTING POLICIES 11 Foreign Exchange Transactions

Foreign Currency Transactions outstanding at the close of the year are converted into Indian Rupee on the basis of exchange rate of the currency as on the close of the year.

12 Taxation

a) Provision for current tax is made after taking into consideration benefits admissible under The In- come Tax Act,1961.

b) Deferred Tax resulting from "timing difference" between book and taxable profit is accounted for using tax rates and laws that have been enacted as on the date of the balance sheet. Deferred Tax Asset is recognised and carried forward only to the extent that there is reasonable certainty that the assets will be realised in the future.

13 Inventories ,

Inventories have been valued as under:-

-Finished Goods including in transit has been valued at cost or market value whichever is less. -Loose yarn is valued at cost.

-Stock in Process is valued at Cost.

-Raw Materials are valued at cost.

-Stores & Spare Parts, Colour &Chemicals, Packing Materials and Oil and Fuel are valued at cost. -Stock of Cotton Waste/Scrap is valued at estimated realisable value.

14 Segment Reporting

The Company has one reportable primary segment of Textiles (Spinning). Hence segment reporting is not applicable.

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Mar 31, 2010

The financial statements have been prepared under the historical cost conversion and in accordance with applicable Accounting Standards issued by the Institute of Chartered Accountants of India and relevant disclosure requirements of Companies Act, 1956 as adopted consistently by the Company. The accounting policies have been consistently applied by the Company and are consistant with those used in the previous year.

a. All revenues, costs, assets and liabilities are accounted for on accrual basis.

b. FIXED ASSETS : All fixed assets are valued at cost less depreciation. All costs relating to the acquisition and installation of fixed assets are capitalised.

c. DEPRECIATION : Depreciation is provided under the Straight Line Method1 as per the rates specified in Schedule XIV to the Companies Act, 1956.

d. IMPAIRMENT - At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is any indication that these assets suffered an impairment loss. If any such indication exist the recoverable amount of the asset is estimated to determine the extent of impairment loss and necessary adjustment is made there against. Reversal of impairment loss is recognised as income in the profit and loss account.

e. Investment: Long Term Investments are carried at cost less provision, if any for permanent dimunation in value.

f. INVENTORIES : Inventories have been valued as under:-

- Finished Goods including in transit has been valued at cost or market value whichever is less.

- Loose yarn is valued at cost proportionate to the respective stage of production.

- Stock in Process is valued at Raw Material Cost.

- Raw Materials are valued at cost.

- Stores & Spare Parts, Colour &Chemicals, Packing Materials and Oil and Fuel are valued at cost.

- Stock of Cotton Waste/Scrap is valued at estimated realisable value.

g. SALES : Sales of goods is recognised at the point of despatch of finished goods to the customers and is reported excluding rebates,discounts, sales tax. Differences arising due to exchange fluctuation in case of Export Sales are included in sales.

h. GRATUITY : Provision for gratuity liability has been made as per actuarial valuation.

i. LEAVE ENCASHMENT : Provision for accumulated leave encashment liability has been made as per actuarial valuation.

j. Borrowing costs are charged to Profit & Loss Account except borrowing costs directly attributable to the acquisition of fixed assets which are capitalised upto the date of the fixed assets is put to commercial use.

k. FOREIGN CURRENCY TRANSACTIONS : Foreign Currency Transactions outstanding at the close of the year are converted into Indian Rupee on the basis of exchange rate of the currency as on the close of the year.

l. Taxes on income : Provision for current tax is made after taking into consideration benefits admissible under The Income Tax Act,1961.

Deferred Tax resulting from "timing difference" between book and taxable profit is accounted for using taxrates and laws that have been enacted as on the date of the balance sheet. Defferred Tax Asset is recognised and carried forward only to the the extent that there is reasonable certainty that the assets will be realised in the future.

m. Segment Reporting: The Company has one reportable primary segment of Textiles (Spinning). Hence segment reporting is not applicable.