Accounting Policies of Hindoostan Mills Ltd. Company

Mar 31, 2025

Note 2: Material Accounting Policies Accounting
Judgements, Estimates and Assumptions:

(A) Material Accounting Policies:

2.1 Statement of Compliance

The Ind-AS financial statements of the Company
have been prepared in accordance with the relevant
provisions of the Companies Act, 2013, the Indian
Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules,
2015 as amended and the Guidance Notes and other
authoritative pronouncements issued by the Institute
of Chartered Accountants of India (ICAI).

Accounting policies have been constantly applied
except where a newly issued accounting standard
is initially adopted or a revision to an existing
accounting standard requires a change in accounting
policy hitherto in use.

2.2 Basis of preparation presentation of Ind-AS
Financial Statements:

2.2.1 Historical cost convention

These financial statements of the Company have
been prepared in all material aspects in accordance
with the recognition and measurement principles laid
down in Indian Accounting Standards (hereinafter
referred to as the ‘Ind AS’) as notified under section
133 ofthe Companies Act, 2013 (‘The Act’) read with

Companies (Indian Accounting Standards) Rules,
2015 as amended and other relevant provisions of
the Act and accounting principles generally accepted
in India.

The Ind-AS financial statements have been prepared
on a historical cost basis, except for certain financial
assets and financial liabilities (refer accounting
policy no. 2.9 and under defined benefit plans refer
accounting policy no. 2.16 measured at fair value).
Historical cost is generally based on the fair value of
the consideration given in exchange for goods and
services.

All amounts disclosed in the financial statements and
notes have been rounded off to the nearest Lakhs.

2.2.2 Presentation of Financial Statements

The Balance Sheet and the Statement of Profit
and Loss are prepared and presented in the format
prescribed in the Schedule Ill to the Act, as amended.
The disclosure requirements with respect to items
in the Balance Sheet and Statement of Profit and
Loss, as prescribed in the Schedule Ill to the Act
as amended, are presented by way of notes forming
part of the financial statements along with the other
notes required to be disclosed under the notified
Indian Accounting Standards.

2.2.3 Functional and Presentation Currency

The financial statements are presented in Indian
Rupees (‘INR’ or ‘Rupees’ or ‘Rs.) which is the
functional currency for the Company.

2.2.4 Fair Value Measurement

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 best economic
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 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.

2.2.5 Current and Non-Current Classification of Assets
and Liabilities and Operating Cycle:

All assets and liabilities have been classified as
current or non-current as per the Company’s normal
operating cycle (twelve months) and other criteria
set out in the Schedule Ill to the Act and Ind AS 1
Presentation of financial statements.

Based on the nature of products and the time
between the acquisition of assets for processing
and their realisation, the Company has ascertained
its operating cycle as 12 months for the purpose
of current / non-current classification of assets and
liabilities.

Assets:

An asset is classified as current when it satisfies any
of the criteria:

• it is expected to be realised in, or is intended
for sale or consumption in, the Company’s
normal operating cycle;

• it is held primarily for the purpose of being
traded;

• it is expected to be realised within twelve
months after the reporting date; or

• it is cash or cash equivalent unless it is
restricted from being exchanged or used to
settle a liability for at least twelve months after
the reporting date.

Liabilities:

A liability is classified as current when it satisfies
any of the criteria:

• it is expected to be settled in the Company’s
normal operating cycle;

• it is held primarily for the purpose of being
traded;

• it is due to be settled within twelve months
after the reporting date; or

• the Company does not have an unconditional
right to defer settlement of the liability for at
least twelve months after the reporting date.
Terms of a liability that could, at the option
of the counterparty, result in its settlement by
the issue of equity instruments do not affect its
classification.

All other assets/ liabilities are classified as non¬
current.

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

The Operating Cycle is the time between the
acquisition of assets for business purposes and their
realisation into cash and cash equivalents.

2.3 Property, Plant and Equipment (PPE):

Property, Plant and Equipment are recorded at their
cost of acquisition, net of refundable taxes or levies,
less accumulated depreciation and impairment
losses, if any. Cost includes purchase price,
borrowing costs if capitalisation criteria are met and
any other directly attributable cost of bringing the
asset to its working condition for the intended use.
Such cost includes the cost of replacing part of the
plant and equipment if the recognition criteria are
met.

These are depreciated over the useful economic
life and assessed for impairment whenever there is
an indication that the asset may be impaired. The
depreciation period and the depreciation method
for an asset are reviewed at least at the end of
each reporting period. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the asset
are considered to modify the depreciation period or
method, as appropriate, and are treated as changes in
accounting estimates. The amortisation expense on
assets with finite lives is recognised in the Statement
of Profit and Loss.

When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates these components separately based on
their specific useful lives. Likewise, when a major
inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied.
All other repair and maintenance costs are recognised
in the Statement of Profit or Loss as incurred.

Capital work-in-progress in respect of assets which
are not ready for their intended use are carried at
cost, comprising of direct costs, related incidental
expenses and attributable borrowing costs (refer
accounting policy 2.5), if any.

An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in
the income statement when the asset is derecognised.

The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.

An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated
recoverable amount. Advances given towards
acquisition of property, plant and equipment
outstanding at each balance sheet date are disclosed
as Capital Advance under Other non-current assets.

Machinery Spares which can be used only in
connection with a particular item of Fixed Asset and
the use of which is irregular, are capitalised at cost.
The cost thereof comprises of its purchase price,
including import duties and other non-refundable
taxes or levies and any directly attributable cost for
bringing the asset to its working condition for its
intended use.

2.4 Depreciation:

Depreciation is recognised on the cost of Property,
Plant & Equipments (other than freehold land and
Capital work-in-progress) less their residual values
on Written down value method over the useful lives
as prescribed under Schedule II to the Companies
Act, 2013, or as per technical assessment, except
Plant & Equipments and Leasehold Improvements
in Textile division which is depreciated on straight
line basis. Depreciation methods, useful lives and
residual values are reviewed at the end of each
reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.

2.4.2 The Management believes that these estimated useful
lives are realistic and reflect fair approximation of
the period over which the assets are likely to be used.

2.4.3 Depreciation on additions to Fixed Assets is provided
on pro-rata basis from the date of acquisition or
installation, and in case of new project from the date
of commencement of commercial production.

2.4.4 Depreciation on Assets sold, discarded, demolished
or scrapped, is provided upto the date on which
the said Asset is sold, discarded, demolished or
scrapped.

2.4.5 Refer Note 2.16 on Accounting of leases as per Ind
As 116 for right to use of assets.

2.5 Capital Work in Progress and Capital Advances:

Costs incurred for acquisition of capital assets
outstanding at each balance sheet date are disclosed
under capital work-in-progress. Advances given
towards the acquisition of fixed assets are shown
separately as capital advances under the head Other
Non-Current Assets.

2.6 Impairment of Property Plant and Equipment,
Investment Property and Intangible Assets

At the end of each reporting period, the Company
reviews the carrying amounts of its tangible and
intangible assets to determine whether there is

any indication that those assets have suffered an
impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in
order to determine the extent of the impairment
loss (if any). When it is not possible to estimate
the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they
are allocated to the smallest cash-generating units
for which a reasonable and consistent allocation
basis can be identified.

Recoverable amount is the higher of fair value less
costs of disposal and value in use. In assessing value
in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and the risks specific to the asset for
which the estimates of future cash flows have not
been adjusted.

If the recoverable amount of an asset (or cash¬
generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised
immediately in profit or loss.

When an impairment loss subsequently reverses,
the carrying amount of the asset (or a cash¬
generating unit) is increased to the revised estimate
of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying
amount that would have been determined had no
impairment loss been recognised for the asset (or
cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in the
Statement of Profit or Loss.

.7 Non-current assets held for sale / distribution to
owners and discontinued operations :

The Company classifies non-current assets and
disposal groups as held for sale / distribution if
their carrying amounts will be recovered principally
through a sale / distribution rather than through

continuing use. Actions required to complete the sale
/ distribution should indicate that it is unlikely that
significant changes to the sale will be made or that
the decision to sell will be withdrawn. Management
must be committed to the sale / distribution expected
within one year from the date of classification.

For these purposes, sale transactions include
exchanges of non-current assets for other non¬
current assets when the exchange has commercial
substance. The criteria for held for sale / distribution
classification is regarded to be met only when the
assets or disposal group is available for immediate
sale / distribution in its present condition, subject
only to terms that are usual and customary for sales
/ distribution of such assets (or disposal groups),
its sale / distribution is highly probable; and it will
genuinely be sold, not abandoned. The Company
treats sale / distribution of the asset or disposal group
to be highly probable when:

• The appropriate level of Management is
committed to a plan to sell the asset (or disposal
group),

• An active programme to locate a buyer
and complete the plan has been initiated (if
applicable),

• The asset (or disposal group) is being actively
marketed for sale at a price that is reasonable
in relation to its current fair value,

• The sale is expected to qualify for recognition
as a completed sale within one year from the
date of classification and

• Actions required to complete the plan indicate
that it is unlikely that significant changes to
the plan will be made or that the plan will be
withdrawn.

Non-current assets held for sale / for distribution
to owners and disposal groups are measured at the
lower of their carrying amount and the fair value
less costs to sell / distribute. Assets and liabilities
classified as held for sale / distribution are presented
separately in the balance sheet.

Property, plant and equipment and intangible assets
once classified as held for sale / distribution are not
depreciated or amortised.

A disposal group qualifies as discontinued operation
if it is a component of an entity that either has been
disposed of, or is classified as held for sale, and:

• Represents a separate major line of business or
geographical area of operations,

• Is part of a single co-ordinated plan to
dispose of a separate major line of business or
geographical area of operations.

Discontinued operations are excluded from the
results of continuing operations and are presented
as a single amount as profit or loss after tax from
discontinued operations in the Statement of Profit
and Loss.

Additional disclosures are provided in Note 32
(XVIII). All other notes to the financial statements
mainly include amounts for continuing operations,
unless otherwise mentioned.

2.8 Financial Instruments:

A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from
the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.

2.8.1 Financial Assets:

2.8.1.1 Initial Recognition and Measurement:

All financial assets are recognised initially at fair
value plus, in the case of financial assets not recorded
at fair value through profit or loss, transaction
costs that are attributable to the acquisition of the
financial asset. Purchases or sales of financial assets
that require delivery of assets within a time frame
established by regulation or convention in the market
place (regular way trades) are recognised on the
trade date, i.e., the date that the Company commits
to purchase or sell the asset.

For purposes of subsequent measurement,
financial assets are classified in three categories:

• Financial Assets at amortised cost

• Financial Assets at fair value through other
comprehensive income (FVTOCI)

• Financial Assets including derivatives and
equity instruments at fair value through profit
or loss (FVTPL)

Financial assets are not reclassified subsequent to
their initial recognition, except if and in the period
the Company changes its business model for
managing financial assets.

Financial Assets at amortised cost

A ‘Financial instrument’ is measured at the amortised
cost if both the following conditions are met:

(a) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and

(b) Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on
the principal amount outstanding.

After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation is
included in other income in the profit or loss. The
losses arising from impairment are recognised in
the profit or loss. This category generally applies to
trade and other receivables, loans and other financial
assets.

Financial instrument at FVTOCI

A ‘Financial instrument’ is classified as at the
FVTOCI if both of the criteria are met:

(a) The objective of the business model is achieved
both by collecting contractual cash flows and
selling the financial assets, and

(b) The asset’s contractual cash flows represent

sppi.

Debt instruments included within the FVTOCI
category are measured initially as well as at each
reporting date at fair value. Fair value movements are
recognized in the other comprehensive income (OCI).
However, the Company recognizes interest income,
impairment losses & reversals and foreign exchange
gain or loss in the Statement of Profit & Loss. On
derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from
the equity to the Statement of Profit or Loss. Interest
earned whilst holding FVTOCI debt instrument is
reported as interest income using the EIR method.

Financial instrument at FVTPL:

FVTPL is a residual category for Financial
instruments. Any Financial instrument, which does
not meet the criteria for categorization as at amortized
cost or as FVTOCI, is classified as at FVTPL.

In addition, the Company may elect to classify
a Financial instrument, which otherwise meets
amortized cost or FVTOCI criteria, as at FVTPL.
However, such election is allowed only if doing so
reduces or eliminates a measurement or recognition
inconsistency (referred to as ‘accounting mismatch’).

Financial instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the Statement of Profit & Loss.

Equity investments

All equity investments in scope of Ind-AS 109 are
measured at fair value. Equity instruments which are
held for trading are classified as at FVTPL. For all
other equity instruments, the Company decides to
classify the same either as at FVTOCI or FVTPL.
The Company makes such election on an instrument-
by-instrument basis. The classification is made on
initial recognition and is irrevocable.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value
changes on the instrument, excluding dividends, are
recognized in the OCI. There is no recycling of the
amounts from OCI to Statement of Profit & Loss,
even on sale of investment. However, the Company
may transfer the cumulative gain or loss within
equity, on such sale.

Equity instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the Statement of Profit & Loss.

2.8.1.3 Effective interest method:

The effective interest method is a method
of calculating the amortised cost of a debt
instrument and of allocating interest income
over the relevant period. The effective interest
rate is the rate that exactly discounts estimated
future cash receipts (including all fees and
points paid or received that form an integral
part of the effective interest rate, transaction
costs and other premiums or discounts) through
the expected life of the debt instrument, or,
where appropriate, a shorter period, to the net
carrying amount on initial recognition.

Income is recognised on an effective interest
basis for debt instruments other than those
financial assets classified as at FVTPL. Interest
income is recognised in profit or loss and is
included in the "Other Income" line item.

2.8.1.4 Derecognition:

A financial asset (or, where applicable, a part
of a financial asset or part of a group of similar
financial assets) is primarily derecognised (i.e.
removed from the Company balance sheet)
when:

• The rights to receive cash flows from the
asset have expired, or

• The Company has transferred its rights to
receive cash flows from the asset or has
assumed an obligation to pay the received
cash flows in full without material delay
to a third party under a ‘pass-through’
arrangement; and either (a) the Company
has transferred substantially all the
risks and rewards of the asset, or (b) the
Company has neither transferred nor
retained substantially all the risks and
rewards of the asset, but has transferred
control of the asset

When the Company has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates
if and to what extent it has retained the risks
and rewards of ownership. When it has neither

transferred nor retained substantially all of the
risks and rewards of the asset, nor transferred
control of the asset, the Company continues
to recognise the transferred asset to the extent
of the Company''s continuing involvement.
In that case, the Company also recognises an
associated liability. The transferred asset and
the associated liability are measured on a basis
that reflects the rights and obligations that the
Company has retained.

Continuing involvement that takes the form
of a guarantee over the transferred asset is
measured at the lower of the original carrying
amount of the asset and the maximum amount
of consideration that the Company could be
required to repay.

2.8.1.5 Impairment of financial assets

In accordance with Ind-AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment
loss on the financial assets and credit risk
exposure:

(a) Financial assets that are debt instruments,
and are measured at amortised cost e.g.,
loans, debt securities, deposits, trade
receivables and bank balance

(b) Financial assets that are equity
instruments and are measured as at

fvtoci

(c) Financial guarantee contracts which are
not measured as at FVTPL

(d) Lease receivables under Ind AS 116

(e) Trade receivables or any contractual
right to receive cash or another financial
asset that result from transactions that are
within the scope of Ind AS 115.

The Company follows ‘simplified approach’
for recognition of impairment loss allowance
on:

• Trade receivables and

• All lease receivables resulting from
transactions within the scope of Ind AS
116

The application of simplified approach does
not require the Company to track changes in
credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.

For recognition of impairment loss on
other financial assets and risk exposure, the
Company determines that whether there has
been a significant increase in the credit risk
since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used
to provide for impairment loss. However, if
credit risk has increased significantly, lifetime
ECL is used. If, in a subsequent period, credit
quality of the instrument improves such that
there is no longer a significant increase in
credit risk since initial recognition, then the
entity reverts to recognising impairment loss
allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument. The
12-month ECL is a portion of the lifetime ECL
which results from default events on a financial
instrument that are possible within 12 months
after the reporting date.

ECL is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the cash
flows that the entity expects to receive (i.e., all
cash shortfalls), discounted at the original EIR.
When estimating the cash flows, an entity is
required to consider:

• All contractual terms of the financial
instrument (including prepayment,
extension, call and similar options)
over the expected life of the financial
instrument. However, in rare cases
when the expected life of the financial
instrument cannot be estimated reliably,
then the entity is required to use the
remaining contractual term of the
financial instrument

• Cash flows from the sale of collateral
held or other credit enhancements that
are integral to the contractual terms

As a practical expedient, the Company
uses a provision matrix to determine
impairment loss allowance on portfolio
of its trade receivables. The provision
matrix is based on its historically
observed default rates over the expected
life of the trade receivables and is
adjusted for forward-looking estimates.
At every reporting date, the historical
observed default rates are updated and
changes in the forward-looking estimates
are analysed.

ECL impairment loss allowance (or
reversal) recognized during the period
is recognized as income/ expense in
the statement of profit and loss (P & L).
This amount is reflected under the head
‘other expenses’ in the P&L. The balance
sheet presentation for various financial
instruments is described below:

• Financial assets measured as at
amortised cost, contract assets and
lease receivables: ECL is presented as
an allowance, i.e. as an integral part of
the measurement of those assets in the
balance sheet. The allowance reduces
the net carrying amount. Until the asset
meets write-off criteria, the Company
does not reduce impairment allowance
from the gross carrying amount.

• Loan commitments and financial

guarantee contracts: ECL is presented as
a provision in the balance sheet, i.e. as a
liability.

• Equity instruments measured at

FVTOCI: Since financial assets are
already reflected at fair value, impairment
allowance is not further reduced from its
value. Rather, ECL amount is presented
as ‘accumulated impairment amount’ in
the OCI.

For assessing increase in credit risk and
impairment loss, the Company combines
financial instruments on the basis of shared
credit risk characteristics with the objective
of facilitating an analysis that is designed to
enable significant increases in credit risk to be
identified on a timely basis.

The Company does not have any purchased
or originated credit-impaired (POCI) financial
assets, i.e., financial assets which are credit
impaired on purchase/ origination.

2.8.2 Financial Liabilities:

2.8.2.1 Initial Recognition and Measurement:

Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through profit or loss, loans and borrowings,
payables, or as derivatives designated as
hedging instruments in an effective hedge, as
appropriate.

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.

The Company''s financial liabilities include
trade and other payables, loans and borrowings
including bank overdrafts, financial guarantee
contracts and derivative financial instruments.

2.8.2.2 Subsequent Measurement:

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

Financial liabilities at fair value through
profit or loss

Financial liabilities at fair value through profit
or loss include financial liabilities held for
trading and financial liabilities designated
upon initial recognition as at fair value through
profit or loss. Financial liabilities are classified
as held for trading if they are incurred for the
purpose of repurchasing in the near term.

Gains or losses on liabilities held for trading
are recognised in the profit or loss.

Financial liabilities designated upon initial
recognition at fair value through profit or loss
are designated 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 recognized in OCI. These
gains/ loss are not subsequently transferred
to Statement of Profit & 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
Statement of Profit or Loss.

Loans and Borrowings:

After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains
and losses are recognised in profit or loss
when the liabilities are derecognised as well as
through the EIR amortisation process.

Amortised cost is calculated by taking
into account any discount or premium on
acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation
is included as finance costs in the Statement of
Profit and Loss.

2.8.2.3 Derecognition:

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 Statement of
Profit or Loss.

The Company determines classification
of financial assets and liabilities on initial
recognition. After initial recognition, no
reclassification is made for financial assets
which are equity instruments and financial
liabilities. For financial assets which are debt
instruments, a reclassification is made only
if there is a change in the business model
for managing those assets. Changes to the
business model are expected to be infrequent.
The Company’s senior management
determines change in the business model as
a result of external or internal changes which
are significant to the Company’s operations.
Such changes are evident to external parties. A
change in the business model occurs when the
Company either begins or ceases to perform
an activity that is significant to its operations.
If the Company reclassifies financial assets,
it applies the reclassification prospectively
from the reclassification date which is the first
day of the immediately next reporting period.
The Company does not restate any previously
recognised gains, losses (including impairment
gains or losses) or interest.

2.8.3 Offsetting of financial instruments

Financial assets and financial liabilities are
offset and the net amount is reported in the
balance sheet if there is a currently enforceable
legal right to offset the recognised amounts
and there is an intention to settle on a net basis,
to realise the assets and settle the liabilities
simultaneously.

2.9 Inventories:

Inventories are valued at the lower of cost and
net realisable value.

Costs incurred in bringing each product to its
present location and condition are accounted
for as follows:

(i) Raw materials and Packing Material :
weighted average cost in case of Textile
and for ECK purchase cost on a first in,
first out basis.

(ii) Finished goods and work in progress:
cost of direct materials and labour and a
proportion of manufacturing overheads
based on the normal operating capacity,
but excluding borrowing costs.

(iii) Traded goods are valued at purchase cost
on First in First out basis.

(iv) Stores and Spares are valued at weighted
average cost.

(v) Waste Material are valued at net
realisable value.

Net realisable value is the estimated selling
price in the ordinary course of business,
less estimated costs of completion and the
estimated costs necessary to make the sale.

The factors that the Company considers in
determining the allowance for slow moving,
obsolete and other non-saleable inventory
include estimated shelf life, planned product
discontinuances, price changes, ageing of
inventory and introduction of competitive new
products, to the extent each of these factors
impact the Company’s business and markets.
The Company considers all these factors and
adjusts the inventory provision to reflect its
actual experience on a periodic basis.

Goods and materials in transit are valued at
actual cost incurred up to the date of balance
sheet. Materials and other items held for use
in production of inventories are not written
down, if the finished products in which they
will be used are expected to be sold at or above
cost.

2.10 Cash and Cash Equivalent:

Cash and Cash Equivalents comprise of cash
on hand and cash at bank including fixed
deposit/highly liquid investments with original
maturity period of three months or less that are
readily convertible to known amounts of cash
and which are subject to an insignificant risk of
changes in value.

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

2.11 Statement of Cash Flow:

The statement of cash flows has been prepared
and presented as per the requirements of
Ind AS 7 “Statement of Cash flows”. Cash
flows are reported using the indirect method,
whereby net profit before tax is adjusted
for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or
future operating cash receipts or payments and
item of income or expenses associated with
investing or financing cash flows. The cash
flow from operating, investing and financing
activities of the Company are segregated.

2.12 Foreign Currency Transactions:

The functional currency of the Company
is determined on the basis of the primary
economic environment in which it operates.
The functional currency of the Company is
Indian National Rupee (INR). All amounts
have been rounded off to the nearest Lakhs,
except share data and as stated otherwise.

The transactions in currencies other than
the Company''s functional currency (foreign
currencies) are recognised at the rates of
exchange prevailing at the dates of the
transactions. At the end of each reporting
period, monetary items denominated in
foreign currencies are retranslated at the rates
prevailing at that date. Differences arising on
settlement or translation of monetary items are
recognised in profit or loss.

Non-monetary items that are measured in terms
of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transactions. Non-monetary items
measured at fair value in a foreign currency are
translated using the exchange rates at the date
when the fair value is determined. The gain
or loss arising on translation of non-monetary
items measured at fair value is treated in line
with the recognition of the gain or loss on the
change in fair value of the item (i.e., translation
differences on items whose fair value gain
or loss is recognised in OCI or profit or loss
are also recognised in OCI or profit or loss,
respectively).

2.13 Revenue Recognition:

Revenue from contracts with customers is
recognised when control of the goods or
services are transferred to the customer at
an amount that reflects the consideration to
which the Company expects to be entitled
in exchange for those goods or services. The
Company has generally concluded that it is the
principal in its revenue arrangements, because
it typically controls the goods or services
before transferring them to the customer.

Further, revenue from sale of goods is
recognized based on a 5-Step Methodology
which is as follows:

• Identify the contract(s) with a customer

• Identify the performance obligation in
contract

• Determine the transaction price

• Allocate the transaction price to the
performance obligations in the contract.

• Recognise revenue when (or as) the
entity satisfies a performance obligation.

Goods and Service Tax (GST) is not received
by the Company in its own account. Rather, it is
tax collected on value added to the commodity
by the seller on behalf of the government.
Accordingly, it is excluded from revenue.

2.13.1 Sale of Goods:

Revenue from sale of goods is recognised
when a promise in a customer contract
(performance obligation) have been satisfied
by transferring control over the promised
goods to the customer. Control of goods is
transferred upon the shipment of the goods to
the customer or when goods is made available
to the customer or as per the terms agreed
with the customers. The amount of revenue
to be recognised is based on the consideration
expected to be received in exchange for
goods, excluding discounts, sales returns and
any taxes or duties collected on behalf of the
government which are levied on sales such as

sales tax, value added tax, goods and services
tax, etc., wherever applicable. Any additional
amounts based on terms of agreement entered
into with customers, is recognised in the period
when the collectability becomes probable and
a reliable measure of the same is available.

The transaction price is documented on the
sales invoice and payment is generally due
as per agreed credit terms with customer.
In determining the transaction price, the
Company considers the effects of variable
consideration, the existence of significant
financing components, noncash consideration,
and consideration payable to the customer
(if any). The Company estimates variable
consideration at contract inception until it
is highly probable that a significant revenue
reversal in the amount of cumulative revenue
recognised will not occur when the associated
uncertainty with the variable consideration is
subsequently resolved.

Discounts

Discounts includes target and growth rebates,
price reductions, incentives to customers or
retailers. To estimate the amount of discount,
the Company applies accumulated experience
using the most likely method. The Company
determines that the estimates of discounts
are not constrained based on its historical
experience, business forecast and the current
economic conditions. The Company then
applies the requirements on constraining
estimates of variable consideration and
recognises a refund liability for the expected
discount. No element of financing is deemed
present as the sales are made with credit terms
largely ranging between 0 days to 90 days.

Contract balances

Contract assets

A contract asset is the right to consideration
in exchange for goods or services transferred
to the customer. If 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

Trade receivables are amounts due from
customers for goods sold or services performed
in the ordinary course of business. If the
receivable is expected to be collected within a
period of 12 months or less from the reporting
date (or in the normal operating cycle of the
business, if longer), they are classified as
current assets otherwise as non-current assets.

Trade receivables are measured at their
transaction price unless it contains a significant
financing component inaccordance with Ind
AS 115 for pricing adjustments embedded in
the contract.

Loss allowance for expected lifetime credit
loss is recognised on initial recognition.

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. If 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.

Refund liabilities

A refund liability is the obligation to refund
some or all of the consideration received (or
receivable) from the customer and is measured
at the amount the Company ultimately expects
it will have to return to the customer. The
Company updates its estimates of refund
liabilities (and the corresponding change in the
transaction price) at the end of each reporting
period.

2.13.2 Income from Services:

Income from services is recognised as they are
rendered based on agreements / arrangements
with the concerned parties, and recognised net
of goods and services tax / applicable taxes.

2.13.3 Export Incentives Income:

Export incentives under various schemes

notified by government are accounted for in
the year of exports based on eligibility and
when there is no uncertainty in receiving the
same.

2.13.4 Rental Income:

Rent income is recognised based on agreements
/ arrangements with the concerned parties, and
recognised net of goods and services tax /
applicable taxes.

2.13.5 Interest Income:

Interest income from a financial asset is
recognised when it is probable that the
economic benefits will flow to the Company
and the amount of income can be measured
reliably. Interest income is accrued on a time
basis, by reference to the principal outstanding
and at the effective interest rate applicable,
which is the rate that exactly discounts
estimated future cash receipts through the
expected life of the financial asset to that asset''s
net carrying amount on initial recognition.

2.13.6 Dividend Income:

Dividend income from investments is
recognised when the shareholder''s right
to receive payment has been established
(provided that it is probable that the economic
benefits will flow to the Company and the
amount of income can be measured reliably).

2.14 Government Grants:

Government grants are recognised where there
is reasonable assurance that the grant will
be received and all attached conditions will
be complied with. When the grant relates to
an expense item, it is recognised as income

on a systematic basis over the periods that
the related costs, for which it is intended to
compensate, are expensed. When the grant
relates to an asset, it is recognised as income in
equal amounts over the expected useful life of
the related asset.

When the Company receives grants of non¬
monetary assets, the asset and the grant are
recorded at fair value amounts and charged
to the Statement of Profit and Loss over the
expected useful life in a pattern of consumption
of the benefit of the underlying asset i.e. by
equal annual instalments.

Government grants such as sales tax incentive,
export benefit schemes are recognized in the
Statement of Profit and Loss as a part of other
operating revenues whereas grants related to
royalty, power incentives and interest subsidies
are netted of from the related expenses.

2.15 Employee Benefits:

2.15.1 Short Term Employee Benefits

All employee benefits payable wholly within
twelve months of rendering the service are
classified as short term employee benefits and
they are recognized in the period in which
the employee renders the related service. The
Company recognizes the undiscounted amount
of short term employee benefits expected to
be paid in exchange for services rendered as a
liability (accrued expense) after deducting any
amount already paid. Benefits such as salaries,
wages, short-term compensated absences,
performance incentives etc., and the expected
cost of bonus, exgratia are recognised during
the period in which the employee renders
related service.

2.15.2 Post-Employment Benefits:

Defined Contribution plans:

Employee benefit in the form of Provident fund,
Employees State Insurance Contribution and
Labour Welfare fund are defined contribution
plans. The Company has no obligation, other
than the contribution payable to the respective

fund. The Company recognizes contribution
payable to the provident fund scheme as
an expense, when an employee renders the
related service. If the contribution payable
to the scheme for service received before the
balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme
is recognized as a liability after deducting the
contribution already paid. If the contribution
already paid exceeds the contribution due for
services received before the balance sheet
date, then excess is recognized as an asset to
the extent that the pre-payment will lead to, for
example, a reduction in future payment or a
cash refund.

Defined Benefit plans:

The Company provides for retirement benefit
in the form of gratuity. The Company’s liability
towards this benefit is determined on the basis
of actuarial valuation using Projected Unit
Credit Method at the date of balance sheet.

The obligation towards defined benefit plans is
measured at the present value of the estimated
future cash flows using a discount rate based
on the market yield on government securities
of a maturity period equivalent to the weighted
average maturity profile of the defined benefit
obligations at the Balance Sheet date.

Remeasurement, comprising actuarial gains
and losses, the effect of the changes to the asset
ceiling (if applicable) and the return on plan
assets (excluding interest), is reflected in the
balance sheet with a charge or credit recognised
in other comprehensive income (OCI) in the
period in which they occur. Remeasurement
recognised in other comprehensive income is
reflected immediately in retained earnings and
will not be reclassified to the statement of profit
and loss. Past service cost is recognised in the
statement of profit and loss in the period of a
plan amendment. Net interest is recognised in
OCI. The Company determines the net interest
expense (income) on the net defined benefit
liability (asset) for the period by applying
the discount rate used to measure the defined

benefit obligation at the beginning of the annual
period to the then-net defined benefit liability
(asset), taking into account any changes in the
net defined benefit liability (asset) during the
period as a result of contributions and benefit
payments. Net interest expense and other
expenses related to defined benefit plans are
recognised in profit or loss.

Defined benefit costs are categorised as
follows:

• service cost (including current service
cost, past service cost, as well as gains and
losses on curtailments and settlements);

• net interest expense or income; and

• remeasurement of net defined benefit
liability.

In case of funded plans, the fair value of the
plan assets is reduced from the gross obligation
under the defined benefit plans to recognise the
obligation on a net basis.

The defined benefit obligation recognised
in the balance sheet represents the actual
deficit or surplus in the Company’s defined
benefit plans. Any surplus resulting from this
calculation is limited to the present value of
any economic benefits available in the form of
refunds from the plans or reductions in future
contributions to the plans.

Other long-term employee benefits :

Accumulated leave, which is expected to be
utilized within the next 12 months, is treated
as short-term employee benefit and this is
shown under current provision in the Balance
Sheet. The Company measures the expected
cost of such absences as the additional amount
that it expects to pay as a result of the unused
entitlement that has accumulated at the
reporting date.

The Company has accumulating and non
accumulating leave. The Company treats
accumulated leave expected to be carried
forward beyond twelve months, as long¬

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Mar 31, 2024

Note 2: Significant Accounting Policies (Contd.)

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 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.

2.2.4 Current and Non-Current Classification of Assets
and Liabilities and Operating Cycle:

All assets and liabilities have been classified as
current or non-current as per the Company’s normal
operating cycle (twelve months) and other criteria
set out in the Schedule III to the Act and Ind AS 1
Presentation of financial statements.

Based on the nature of products and the time between
the acquisition of assets for processing and their
realisation, the Company has ascertained its operating
cycle as 12 months for the purpose of current / non¬
current classification of assets and liabilities.

Assets:

An asset is classified as current when it satisfies any
of the criteria:

• it is expected to be realised in, or is intended
for sale or consumption in, the Company’s
normal operating cycle;

• it is held primarily for the purpose of being
traded;

• it is expected to be realised within twelve
months after the reporting date; or

• it is cash or cash equivalent unless it is
restricted from being exchanged or used to
settle a liability for at least twelve months after
the reporting date.

Liabilities:

A liability is classified as current when it satisfies
any of the criteria:

• it is expected to be settled in the Company’s
normal operating cycle;

• it is held primarily for the purpose of being
traded;

• it is due to be settled within twelve months
after the reporting date; or

• the Company does not have an unconditional
right to defer settlement of the liability for at
least twelve months after the reporting date.
Terms of a liability that could, at the option
of the counterparty, result in its settlement by
the issue of equity instruments do not affect its
classification.

All other assets/ liabilities are classified as non¬
current.

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

The Operating Cycle is the time between the
acquisition of assets for business purposes and their
realisation into cash and cash equivalents.

2.3 Property, Plant and Equipment (PPE):

Property, Plant and Equipment are recorded at their
cost of acquisition, net of refundable taxes or levies,
less accumulated depreciation and impairment
losses, if any. Cost includes purchase price,
borrowing costs if capitalisation criteria are met and
any other directly attributable cost of bringing the
asset to its working condition for the intended use.
Such cost includes the cost of replacing part of the
plant and equipment if the recognition criteria are
met.

These are depreciated over the useful economic
life and assessed for impairment whenever there is
an indication that the asset may be impaired. The
depreciation period and the depreciation method
for an asset are reviewed at least at the end of
each reporting period. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the asset
are considered to modify the depreciation period or
method, as appropriate, and are treated as changes in
accounting estimates. The amortisation expense on
assets with finite lives is recognised in the Statement
of Profit and Loss.

When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates these components separately based on
their specific useful lives. Likewise, when a major
inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied.
All other repair and maintenance costs are recognised
in the Statement of Profit or Loss as incurred.

Capital work-in-progress in respect of assets which
are not ready for their intended use are carried at
cost, comprising of direct costs, related incidental
expenses and attributable borrowing costs (refer
accounting policy 2.6), if any.

An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in
the income statement when the asset is derecognised.

The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.

An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated
recoverable amount. Advances given towards

acquisition of property, plant and equipment
outstanding at each balance sheet date are disclosed
as Capital Advance under Other non-current assets.

Machinery Spares which can be used only in
connection with a particular item of Fixed Asset and
the use of which is irregular, are capitalised at cost.
The cost thereof comprises of its purchase price,
including import duties and other non-refundable
taxes or levies and any directly attributable cost for
bringing the asset to its working condition for its
intended use.

For transition to Ind AS, the Company has elected to
continue with the carrying value of all its Property,
Plant and Equipment recognised as on 1st April,
2016 (date of transition) measured as per previous
GAAP as its deemed cost on the date of transition.

2.4 Investment Property

Investment Property is recorded at its cost of
acquisition, net of refundable taxes or levies, less
accumulated depreciation and impairment loss,
if any. Depreciation on Investment Property is
provided over its useful life using the Straight Line
Method as per Schedule II of the Companies Act,
2013.

For transition to Ind AS, the Company has elected
to continue with the carrying value of Investment
Property recognised as on 1st April, 2016 (date of
transition) measured as per previous GAAP as its
deemed cost on the date of transition.

2.5 Depreciation:

Depreciation is recognised on the cost of Property,
Plant & Equipments (other than freehold land and
Capital work-in-progress) less their residual values
on Written down value method over the useful lives
as prescribed under Schedule II to the Companies
Act, 2013, or as per technical assessment, except
Plant & Equipments and Leasehold Improvements
in Textile division which is depreciated on straight
line basis. Depreciation methods, useful lives and
residual values are reviewed at the end of each
reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.

2.5.2 The Management believes that these estimated useful
lives are realistic and reflect fair approximation of
the period over which the assets are likely to be used.

2.5.3 Depreciation on additions to Fixed Assets is provided
on pro-rata basis from the date of acquisition or
installation, and in case of new project from the date
of commencement of commercial production.

2.5.4 Depreciation on Assets sold, discarded, demolished
or scrapped, is provided upto the date on which
the said Asset is sold, discarded, demolished or
scrapped.

2.5.5 Refer Note 2.18 on Accounting of leases as per Ind
As 116 for right to use of assets.

2.6 Capital Work in Progress and Capital Advances:

Costs incurred for acquisition of capital assets
outstanding at each balance sheet date are disclosed
under capital work-in-progress. Advances given
towards the acquisition of fixed assets are shown
separately as capital advances under the head Other
Non-Current Assets.

2.7 Impairment of Property Plant and Equipment,
Investment Property and Intangible Assets

At the end of each reporting period, the Company
reviews the carrying amounts of its tangible and
intangible assets to determine whether there is

r

any indication that those assets have suffered an
impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in
order to determine the extent of the impairment
loss (if any). When it is not possible to estimate
the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they
are allocated to the smallest cash-generating units
for which a reasonable and consistent allocation
basis can be identified.

Recoverable amount is the higher of fair value less
costs of disposal and value in use. In assessing value
in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and the risks specific to the asset for
which the estimates of future cash flows have not
been adjusted.

If the recoverable amount of an asset (or cash¬
generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised
immediately in profit or loss.

When an impairment loss subsequently reverses,
the carrying amount of the asset (or a cash¬
generating unit) is increased to the revised estimate
of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying
amount that would have been determined had no
impairment loss been recognised for the asset (or
cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in the
Statement of Profit or Loss.

2.8 Non-current assets held for sale / distribution to
owners and discontinued operations :

The Company classifies non-current assets and
disposal groups as held for sale / distribution if
their carrying amounts will be recovered principally
through a sale / distribution rather than through
continuing use. Actions required to complete the sale

/ distribution should indicate that it is unlikely that
significant changes to the sale will be made or that
the decision to sell will be withdrawn. Management
must be committed to the sale / distribution expected
within one year from the date of classification.

For these purposes, sale transactions include
exchanges of non-current assets for other non¬
current assets when the exchange has commercial
substance. The criteria for held for sale / distribution
classification is regarded to be met only when the
assets or disposal group is available for immediate
sale / distribution in its present condition, subject
only to terms that are usual and customary for sales
/ distribution of such assets (or disposal groups),
its sale / distribution is highly probable; and it will
genuinely be sold, not abandoned. The Company
treats sale / distribution of the asset or disposal group
to be highly probable when:

• The appropriate level of Management is
committed to a plan to sell the asset (or disposal
group),

• An active programme to locate a buyer
and complete the plan has been initiated (if
applicable),

• The asset (or disposal group) is being actively
marketed for sale at a price that is reasonable
in relation to its current fair value,

• The sale is expected to qualify for recognition
as a completed sale within one year from the
date of classification and

• Actions required to complete the plan indicate
that it is unlikely that significant changes to
the plan will be made or that the plan will be
withdrawn.

Non-current assets held for sale / for distribution
to owners and disposal groups are measured at
the lower of their carrying amount and the fair
value less costs to sell / distribute. Assets and
liabilities classified as held for sale / distribution
are presented separately in the balance sheet.

Property, plant and equipment and intangible
assets once classified as held for sale /
distribution are not depreciated or amortised.

A disposal group qualifies as discontinued
operation if it is a component of an entity that
either has been disposed of, or is classified as
held for sale, and:

• Represents a separate major line
of business or geographical area of
operations,

• Is part of a single co-ordinated plan
to dispose of a separate major line
of business or geographical area of
operations.

Discontinued operations are excluded from
the results of continuing operations and are
presented as a single amount as profit or loss
after tax from discontinued operations in the
Statement of Profit and Loss.

Additional disclosures are provided in Note
33 (XIX). All other notes to the financial
statements mainly include amounts for
continuing operations, unless otherwise
mentioned.

2.9 Financial Instruments:

A financial instrument is any contract that
gives rise to a financial asset of one entity and
a financial liability or equity instrument of
another entity.

Financial assets and financial liabilities are
initially measured at fair value. Transaction
costs that are directly attributable to the
acquisition or issue of financial assets and
financial liabilities (other than financial assets
and financial liabilities at fair value through
profit or loss) are added to or deducted from
the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.

2.9.1 Financial Assets:

2.9.1.1 Initial Recognition and Measurement:

All financial assets are recognised initially at
fair value plus, in the case of financial assets
not recorded at fair value through profit or
loss, transaction costs that are attributable to
the acquisition of the financial asset. Purchases

or sales of financial assets that require delivery
of assets within a time frame established by
regulation or convention in the market place
(regular way trades) are recognised on the
trade date, i.e., the date that the Company
commits to purchase or sell the asset.

2.9.1.2 Subsequent Measurement:

For purposes of subsequent measurement,
financial assets are classified in three
categories:

• Financial Assets at amortised cost

• Financial Assets at fair value through
other comprehensive income (FVTOCI)

• Financial Assets including derivatives
and equity instruments at fair value
through profit or loss (FVTPL)

Financial assets are not reclassified subsequent
to their initial recognition, except if and in
the period the Company changes its business
model for managing financial assets.

Financial Assets at amortised cost

A ‘Financial instrument’ is measured at the
amortised cost if both the following conditions
are met:

(a) The asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and

(b) Contractual terms of the asset give rise
on specified dates to cash flows that
are solely payments of principal and
interest (SPPI) on the principal amount
outstanding.

After initial measurement, such financial assets
are subsequently measured at amortised cost
using the effective interest rate (EIR) method.
Amortised cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of the
EIR. The EIR amortisation is included in other
income in the profit or loss. The losses arising
from impairment are recognised in the profit or

loss. This category generally applies to trade
and other receivables, loans and other financial
assets.

Financial instrument at FVTOCI

A ‘Financial instrument’ is classified as at the
FVTOCI if both of the criteria are met:

(a) The objective of the business model is
achieved both by collecting contractual
cash flows and selling the financial
assets, and

(b) The asset’s contractual cash flows
represent SPPI.

Debt instruments included within the FVTOCI
category are measured initially as well as at
each reporting date at fair value. Fair value
movements are recognized in the other
comprehensive income (OCI). However,
the Company recognizes interest income,
impairment losses & reversals and foreign
exchange gain or loss in the Statement of
Profit & Loss. On derecognition of the asset,
cumulative gain or loss previously recognised
in OCI is reclassified from the equity to the
Statement of Profit or Loss. Interest earned
whilst holding FVTOCI debt instrument is
reported as interest income using the EIR
method.

Financial instrument at FVTPL:

FVTPL is a residual category for Financial
instruments. Any Financial instrument, which
does not meet the criteria for categorization as
at amortized cost or as FVTOCI, is classified
as at FVTPL.

In addition, the Company may elect to classify
a Financial instrument, which otherwise
meets amortized cost or FVTOCI criteria, as
at FVTPL. However, such election is allowed
only if doing so reduces or eliminates a
measurement or recognition inconsistency
(referred to as ‘accounting mismatch’).

Financial instruments included within the
FVTPL category are measured at fair value

with all changes recognized in the Statement
of Profit & Loss.

Equity investments

All equity investments in scope of Ind-AS 109
are measured at fair value. Equity instruments
which are held for trading are classified as at
FVTPL. For all other equity instruments, the
Company decides to classify the same either as
at FVTOCI or FVTPL. The Company makes
such election on an instrument-by-instrument
basis. The classification is made on initial
recognition and is irrevocable.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair
value changes on the instrument, excluding
dividends, are recognized in the OCI. There
is no recycling of the amounts from OCI to
Statement of Profit & Loss, even on sale of
investment. However, the Company may
transfer the cumulative gain or loss within
equity, on such sale.

Equity instruments included within the FVTPL
category are measured at fair value with all
changes recognized in the Statement of Profit
& Loss.

2.9.1.3 Effective interest method:

The effective interest method is a method
of calculating the amortised cost of a debt
instrument and of allocating interest income
over the relevant period. The effective interest
rate is the rate that exactly discounts estimated
future cash receipts (including all fees and
points paid or received that form an integral
part of the effective interest rate, transaction
costs and other premiums or discounts) through
the expected life of the debt instrument, or,
where appropriate, a shorter period, to the net
carrying amount on initial recognition.

Income is recognised on an effective interest
basis for debt instruments other than those
financial assets classified as at FVTPL. Interest
income is recognised in profit or loss and is
included in the "Other Income" line item.

A financial asset (or, where applicable, a part
of a financial asset or part of a group of similar
financial assets) is primarily derecognised (i.e.
removed from the Company balance sheet)
when:

• The rights to receive cash flows from the
asset have expired, or

• The Company has transferred its rights to
receive cash flows from the asset or has
assumed an obligation to pay the received
cash flows in full without material delay
to a third party under a ‘pass-through’
arrangement; and either (a) the Company
has transferred substantially all the
risks and rewards of the asset, or (b) the
Company has neither transferred nor
retained substantially all the risks and
rewards of the asset, but has transferred
control of the asset

When the Company has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates
if and to what extent it has retained the risks
and rewards of ownership. When it has neither
transferred nor retained substantially all of the
risks and rewards of the asset, nor transferred
control of the asset, the Company continues
to recognise the transferred asset to the extent
of the Company''s continuing involvement.
In that case, the Company also recognises an
associated liability. The transferred asset and
the associated liability are measured on a basis
that reflects the rights and obligations that the
Company has retained.

Continuing involvement that takes the form
of a guarantee over the transferred asset is
measured at the lower of the original carrying
amount of the asset and the maximum amount
of consideration that the Company could be
required to repay.

In accordance with Ind-AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment
loss on the financial assets and credit risk
exposure:

(a) Financial assets that are debt instruments,
and are measured at amortised cost e.g.,
loans, debt securities, deposits, trade
receivables and bank balance

(b) Financial assets that are equity
instruments and are measured as at
FVTOCI

(c) Financial guarantee contracts which are
not measured as at FVTPL

(d) Lease receivables under Ind AS 116

(e) Trade receivables or any contractual right
to receive cash or another financial asset
that result from transactions that are within
the scope of Ind AS 115.

The Company follows ‘simplified approach’
for recognition of impairment loss allowance
on:

• Trade receivables and

• All lease receivables resulting from
transactions within the scope of Ind AS
116

The application of simplified approach does
not require the Company to track changes in
credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.

For recognition of impairment loss on
other financial assets and risk exposure, the
Company determines that whether there has
been a significant increase in the credit risk
since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used
to provide for impairment loss. However, if
credit risk has increased significantly, lifetime
ECL is used. If, in a subsequent period, credit

quality of the instrument improves such that
there is no longer a significant increase in
credit risk since initial recognition, then the
entity reverts to recognising impairment loss
allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument. The
12-month ECL is a portion of the lifetime ECL
which results from default events on a financial
instrument that are possible within 12 months
after the reporting date.

ECL is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the cash
flows that the entity expects to receive (i.e., all
cash shortfalls), discounted at the original EIR.
When estimating the cash flows, an entity is
required to consider:

• All contractual terms of the financial
instrument (including prepayment,
extension, call and similar options)
over the expected life of the financial
instrument. However, in rare cases
when the expected life of the financial
instrument cannot be estimated reliably,
then the entity is required to use the
remaining contractual term of the
financial instrument

• Cash flows from the sale of collateral
held or other credit enhancements that
are integral to the contractual terms

As a practical expedient, the Company uses a
provision matrix to determine impairment loss
allowance on portfolio of its trade receivables.
The provision matrix is based on its historically
observed default rates over the expected life
of the trade receivables and is adjusted for
forward-looking estimates. At every reporting
date, the historical observed default rates are
updated and changes in the forward-looking
estimates are analysed.

ECL impairment loss allowance (or reversal)
recognized during the period is recognized as
income/ expense in the statement of profit and
loss (P & L). This amount is reflected under
the head ‘other expenses’ in the P&L. The
balance sheet presentation for various financial
instruments is described below:

• Financial assets measured as at

amortised cost, contract assets and
lease receivables: ECL is presented as
an allowance, i.e. as an integral part of
the measurement of those assets in the
balance sheet. The allowance reduces
the net carrying amount. Until the asset
meets write-off criteria, the Company

does not reduce impairment allowance

from the gross carrying amount.

• Loan commitments and financial

guarantee contracts: ECL is presented as
a provision in the balance sheet, i.e. as a
liability.

• Equity instruments measured at
FVTOCI: Since financial assets are
already reflected at fair value, impairment
allowance is not further reduced from its
value. Rather, ECL amount is presented
as ‘accumulated impairment amount’ in
the OCI.

For assessing increase in credit risk and

impairment loss, the Company combines
financial instruments on the basis of shared
credit risk characteristics with the objective
of facilitating an analysis that is designed to
enable significant increases in credit risk to be
identified on a timely basis.

The Company does not have any purchased
or originated credit-impaired (POCI) financial
assets, i.e., financial assets which are credit
impaired on purchase/ origination.

2.9.2 Financial Liabilities:

2.9.2.1 Initial Recognition and Measurement:

Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value

through profit or loss, loans and borrowings,
payables, or as derivatives designated as
hedging instruments in an effective hedge, as
appropriate.

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.

The Company''s financial liabilities include
trade and other payables, loans and borrowings
including bank overdrafts, financial guarantee
contracts and derivative financial instruments.

2.9.2.2 Subsequent Measurement:

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

Financial liabilities at fair value through
profit or loss

Financial liabilities at fair value through profit
or loss include financial liabilities held for
trading and financial liabilities designated
upon initial recognition as at fair value through
profit or loss. Financial liabilities are classified
as held for trading if they are incurred for the
purpose of repurchasing in the near term.

Gains or losses on liabilities held for trading
are recognised in the profit or loss.

Financial liabilities designated upon initial
recognition at fair value through profit or loss
are designated 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 recognized in OCI. These
gains/ loss are not subsequently transferred
to Statement of Profit & 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
Statement of Profit or Loss.

Loans and Borrowings:

After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains
and losses are recognised in profit or loss
when the liabilities are derecognised as well as
through the EIR amortisation process.

Amortised cost is calculated by taking
into account any discount or premium on
acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation
is included as finance costs in the Statement of
Profit and Loss.

2.9.2.3 Derecognition:

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 Statement of
Profit or Loss.

2.9.2.4 Reclassification of financial assets

The Company determines classification
of financial assets and liabilities on initial
recognition. After initial recognition, no
reclassification is made for financial assets
which are equity instruments and financial
liabilities. For financial assets which are debt
instruments, a reclassification is made only
if there is a change in the business model
for managing those assets. Changes to the
business model are expected to be infrequent.
The Company’s senior management
determines change in the business model as
a result of external or internal changes which
are significant to the Company’s operations.
Such changes are evident to external parties. A
change in the business model occurs when the

Company either begins or ceases to perform
an activity that is significant to its operations.
If the Company reclassifies financial assets,
it applies the reclassification prospectively
from the reclassification date which is the first
day of the immediately next reporting period.
The Company does not restate any previously
recognised gains, losses (including impairment
gains or losses) or interest.

2.9.3 Offsetting of financial instruments

Financial assets and financial liabilities are
offset and the net amount is reported in the
balance sheet if there is a currently enforceable
legal right to offset the recognised amounts and
there is an intention to settle on a net basis,
to realise the assets and settle the liabilities
simultaneously.

2.10 Inventories:

Inventories are valued at the lower of cost and
net realisable value.

Costs incurred in bringing each product to its
present location and condition are accounted for
as follows:

(i) Raw materials and Packing Material :
weighted average cost in case of Textile
and for ECK purchase cost on a first in,
first out basis.

(ii) Finished goods and work in progress:
cost of direct materials and labour and a
proportion of manufacturing overheads
based on the normal operating capacity,
but excluding borrowing costs.

(iii) Traded goods are valued at purchase cost
on First in First out basis.

(iv) Stores and Spares are valued at weighted
average cost.

(v) Waste Material are valued at net
realisable value.

Net realisable value is the estimated selling
price in the ordinary course of business, less
estimated costs of completion and the estimated
costs necessary to make the sale.

The factors that the Company considers in
determining the allowance for slow moving,
obsolete and other non-saleable inventory
include estimated shelf life, planned product
discontinuances, price changes, ageing of
inventory and introduction of competitive new
products, to the extent each of these factors
impact the Company’s business and markets.
The Company considers all these factors and

adjusts the inventory provision to reflect its
actual experience on a periodic basis.

Goods and materials in transit are valued at
actual cost incurred up to the date of balance
sheet. Materials and other items held for use in
production of inventories are not written down,
if the finished products in which they will be
used are expected to be sold at or above cost.

2.11 Cash and Cash Equivalent:

Cash and Cash Equivalents comprise of cash on
hand and cash at bank including fixed deposit/
highly liquid investments with original maturity
period of three months or less that are readily
convertible to known amounts of cash and which
are subject to an insignificant risk of changes in
value.

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

2.12 Statement of Cash Flow:

Cash flows are reported using the indirect
method, whereby net profit before tax is adjusted
for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of
income or expenses associated with investing
or financing cash flows. The cash flow from
operating, investing and financing activities of
the Company are segregated.

2.13 Foreign Currency Transactions:

The functional currency of the Company
is determined on the basis of the primary
economic environment in which it operates. The
functional currency of the Company is Indian
National Rupee (INR). All amounts have been
rounded off to the nearest Lakhs, except share
data and as stated otherwise.

The transactions in currencies other than
the Company''s functional currency (foreign
currencies) are recognised at the rates of
exchange prevailing at the dates of the

transactions. At the end of each reporting
period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing
at that date. Differences arising on settlement or
translation of monetary items are recognised in
profit or loss.

Non-monetary items that are measured in terms
of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transactions. Non-monetary items
measured at fair value in a foreign currency are
translated using the exchange rates at the date
when the fair value is determined. The gain
or loss arising on translation of non-monetary
items measured at fair value is treated in line
with the recognition of the gain or loss on the
change in fair value of the item (i.e., translation
differences on items whose fair value gain
or loss is recognised in OCI or profit or loss
are also recognised in OCI or profit or loss,
respectively).

2.14 Revenue Recognition:

Revenue from contracts with customers is
recognised when control of the goods or services
are transferred to the customer at an amount that
reflects the consideration to which the Company
expects to be entitled in exchange for those
goods or services. The Company has generally
concluded that it is the principal in its revenue
arrangements, because it typically controls the
goods or services before transferring them to the
customer.

Further, revenue from sale of goods is recognized
based on a 5-Step Methodology which is as
follows:

• Identify the contract(s) with a customer

• Identify the performance obligation in
contract

• Determine the transaction price

• Allocate the transaction price to the
performance obligations in the contract.

• Recognise revenue when (or as) the
entity satisfies a performance obligation.

Goods and Service Tax (GST) is not received
by the Company in its own account. Rather, it is

tax collected on value added to the commodity
by the seller on behalf of the government.
Accordingly, it is excluded from revenue.

2.14.1 Sale of Goods:

Revenue from sale of goods is recognised when
a promise in a customer contract (performance
obligation) have been satisfied by transferring
control over the promised goods to the
customer. Control of goods is transferred upon
the shipment of the goods to the customer or
when goods is made available to the customer
or as per the terms agreed with the customers.
The amount of revenue to be recognised is based
on the consideration expected to be received in
exchange for goods, excluding discounts, sales
returns and any taxes or duties collected on
behalf of the government which are levied on
sales such as sales tax, value added tax, goods
and services tax, etc., wherever applicable. Any
additional amounts based on terms of agreement
entered into with customers, is recognised in the
period when the collectability becomes probable
and a reliable measure of the same is available.

The transaction price is documented on the sales
invoice and payment is generally due as per
agreed credit terms with customer. In determining
the transaction price, the Company considers the
effects of variable consideration, the existence
of significant financing components, noncash
consideration, and consideration payable to
the customer (if any). The Company estimates
variable consideration at contract inception until
it is highly probable that a significant revenue
reversal in the amount of cumulative revenue
recognised will not occur when the associated
uncertainty with the variable consideration is
subsequently resolved.

Discounts

Discounts includes target and growth rebates,
price reductions, incentives to customers or
retailers. To estimate the amount of discount,
the Company applies accumulated experience
using the most likely method. The Company
determines that the estimates of discounts
are not constrained based on its historical
experience, business forecast and the current

economic conditions. The Company then applies
the requirements on constraining estimates of
variable consideration and recognises a refund
liability for the expected discount. No element
of financing is deemed present as the sales are
made with credit terms largely ranging between
0 days to 90 days.

Contract balances
Contract assets

A contract asset is the right to consideration
in exchange for goods or services transferred
to the customer. If 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

Trade receivables are amounts due from
customers for goods sold or services performed
in the ordinary course of business. If the
receivable is expected to be collected within a
period of 12 months or less from the reporting
date (or in the normal operating cycle of the
business, if longer), they are classified as current
assets otherwise as non-current assets.

Trade receivables are measured at their
transaction price unless it contains a significant
financing component inaccordance with Ind AS
115 for pricing adjustments embedded in the
contract.

Loss allowance for expected lifetime credit loss
is recognised on initial recognition.

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. If 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.

Refund liabilities

A refund liability is the obligation to refund
some or all of the consideration received (or
receivable) from the customer and is measured
at the amount the Company ultimately expects
it will have to return to the customer. The
Company updates its estimates of refund
liabilities (and the corresponding change in the
transaction price) at the end of each reporting
period.

2.14.2 Income from Services:

Income from services is recognised as they are
rendered based on agreements / arrangements
with the concerned parties, and recognised net
of goods and services tax / applicable taxes.

2.14.3 Export Incentives Income:

Export incentives under various schemes
notified by government are accounted for in the
year of exports based on eligibility and when
there is no uncertainty in receiving the same.

2.14.4 Rental Income:

Rent income is recognised based on agreements
/ arrangements with the concerned parties,
and recognised net of goods and services tax /
applicable taxes.

2.14.5 Interest Income:

Interest income from a financial asset is
recognised when it is probable that the
economic benefits will flow to the Company and
the amount of income can be measured reliably.
Interest income is accrued on a time basis, by
reference to the principal outstanding and at
the effective interest rate applicable, which is
the rate that exactly discounts estimated future
cash receipts through the expected life of the
financial asset to that asset''s net carrying amount
on initial recognition.

2.14.6 Dividend Income:

Dividend income from investments is
recognised when the shareholder''s right to
receive payment has been established (provided
that it is probable that the economic benefits will
flow to the Company and the amount of income
can be measured reliably).

2.15 Government Grants:

Government grants are recognised where there
is reasonable assurance that the grant will be
received and all attached conditions will be
complied with. When the grant relates to an
expense item, it is recognised as income on a
systematic basis over the periods that the related
costs, for which it is intended to compensate, are
expensed. When the grant relates to an asset, it
is recognised as income in equal amounts over
the expected useful life of the related asset.

When the Company receives grants of non¬
monetary assets, the asset and the grant are
recorded at fair value amounts and charged
to the Statement of Profit and Loss over the
expected useful life in a pattern of consumption
of the benefit of the underlying asset i.e. by
equal annual instalments.

Government grants such as sales tax incentive,
export benefit schemes are recognized in the
Statement of Profit and Loss as a part of other
operating revenues whereas grants related to
royalty, power incentives and interest subsidies
are netted of from the related expenses.

2.16 Employee Benefits:

2.16.1 Short Term Employee Benefits

All employee benefits payable wholly within
twelve months of rendering the service are
classified as short term employee benefits and
they are recognized in the period in which
the employee renders the related service. The
Company recognizes the undiscounted amount of
short term employee benefits expected to be paid
in exchange for services rendered as a liability
(accrued expense) after deducting any amount
already paid. Benefits such as salaries, wages,
short-term compensated absences, performance
incentives etc., and the expected cost of bonus,
exgratia are recognised during the period in
which the employee renders related service.

2.16.2 Post-Employment Benefits:

Defined Contribution plans:

Employee benefit in the form of Provident fund,
Employees State Insurance Contribution and
Labour Welfare fund are defined contribution

plans. The Company has no obligation, other
than the contribution payable to the respective
fund. The Company recognizes contribution
payable to the provident fund scheme as an
expense, when an employee renders the related
service. If the contribution payable to the scheme
for service received before the balance sheet
date exceeds the contribution already paid, the
deficit payable to the scheme is recognized as a
liability after deducting the contribution already
paid. If the contribution already paid exceeds
the contribution due for services received before
the balance sheet date, then excess is recognized
as an asset to the extent that the pre-payment
will lead to, for example, a reduction in future
payment or a cash refund.

Defined Benefit plans:

The Company provides for retirement benefit
in the form of gratuity. The Company’s liability
towards this benefit is determined on the basis of
actuarial valuation using Projected Unit Credit
Method at the date of balance sheet.

The obligation towards defined benefit plans is
measured at the present value of the estimated
future cash flows using a discount rate based
on the market yield on government securities
of a maturity period equivalent to the weighted
average maturity profile of the defined benefit
obligations at the Balance Sheet date.

Remeasurement, comprising actuarial gains
and losses, the effect of the changes to the asset
ceiling (if applicable) and the return on plan
assets (excluding interest), is reflected in the
balance sheet with a charge or credit recognised
in other comprehensive income (OCI) in the
period in which they occur. Remeasurement
recognised in other comprehensive income is
reflected immediately in retained earnings and
will not be reclassified to the statement of profit
and loss. Past service cost is recognised in the
statement of profit and loss in the period of a
plan amendment. Net interest is recognised in
OCI. The Company determines the net interest
expense (income) on the net defined benefit
liability (asset) for the period by applying the
discount rate used to measure the defined benefit
obligation at the beginning of the annual period

to the then-net defined benefit liability (asset),
taking into account any changes in the net
defined benefit liability (asset) during the period
as a result of contributions and benefit payments.
Net interest expense and other expenses related
to defined benefit plans are recognised in profit
or loss.

Defined benefit costs are categorised as follows:

• service cost (including current service
cost, past service cost, as well as gains and
losses on curtailments and settlements);

• net interest expense or income; and

• remeasurement of net defined benefit
liability.

In case of funded plans, the fair value of the
plan assets is reduced from the gross obligation
under the defined benefit plans to recognise the
obligation on a net basis.

The defined benefit obligation recognised in
the balance sheet represents the actual deficit or
surplus in the Company’s defined benefit plans.
Any surplus resulting from this calculation is
limited to the present value of any economic
benefits available in the form of refunds from
the plans or reductions in future contributions to
the plans.

Other long-term employee benefits :

Accumulated leave, which is expected to be
utilized within the next 12 months, is treated
as short-term employee benefit and this is
shown under current provision in the Balance
Sheet. The Company measures the expected
cost of such absences as the additional amount
that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting
date.

The Company has accumulating and non
accumulating leave. The Company treats
accumulated leave expected to be carried
forward beyond twelve months, as long-term
employee benefit for measurement purposes
and this is shown under long term provisions in
the Balance Sheet. Such long-term compensated
absences are provided for based on the actuarial
valuation using the projected unit credit method

at the year-end. Actuarial gains / losses are
immediately taken to the Statement of Profit
and Loss and are not deferred. The Company
presents the leave as a current liability in the
balance sheet, to the extent it does not have
an unconditional right to defer its settlement
for 12 months after the reporting date. Where
the Company has the unconditional legal
and contractual right to defer the settlement
for a period beyond 12 months, the same is
presented as non-current liability. Expense on
non-accumulating compensated absences is
recognized in the period in which the absences
occur.

2.17 Borrowing Costs:

Borrowing costs directly attributable to
the acquisition, construction or production
of qualifying assets, which are assets that
necessarily take a substantial period of time
to get ready for their intended use or sale, are
added to the cost of those assets, until such time
as the assets are substantially ready for their
intended use or sale.

Borrowing costs consist of interest and other
costs that an entity incurs in connection with
the borrowing of funds. Borrowing cost also
includes exchange differences to the extent
regarded as an adjustment to the borrowing
costs.

Interest income earned on the temporary
investment of specific borrowings pending
their expenditure on qualifying assets is
deducted from the borrowing costs eligible for
capitalisation.

All other borrowing costs are recognised in
profit or loss in the period in which they are
incurred.

2.18 Leases:

The Company assesses whether a contract
contains a lease, at inception of a contract. A
contract is, or contains, a lease if the contract
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration. To assess whether a contract
conveys the right to control the use of an
identified asset, the Company assesses whether:

(1) the contract involves the use of an identified
asset (2) the Company has substantially all of
the economic benefits from use of the asset
through the period of the lease and (3) the
Company has the right to direct the use of the
asset. At the date of commencement of the lease,
the Company recognizes a right-of-use asset
(“ROU”) and a corresponding lease liability for
all lease arrangements in which it is a lessee,
except for leases with a term of twelve months
or less (short term leases) and low value leases.
For these short term and low value leases, the
Company recognizes the lease payments as an
operating expense on a straight-line basis over
the term of the lease. Certain lease arrangements
includes the options to extend or terminate the
lease before the end of the lease term. ROU
assets and lease liabilities includes these options
when it is reasonably certain that they will be
exercised.

As a Lessee:

(i) Right-of-use assets

The Company recognises right-of-use
(ROU) assets at the commencement
date of the lease (i.e., the date the
underlying asset is available for use).
Right-of-use assets are measured at cost,
less any accumulated depreciation and
impairment losses, and adjusted for any
remeasurement of lease liabilities. The
cost of right-of-use assets includes the
amount of lease liabilities recognised,
initial direct costs incurred, and
lease payments made at or before the
commencement date less any lease
incentives received. Right-of-use assets
are depreciated on a straight-line basis
over the s

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Mar 31, 2018

Note 1: Significant Accounting Policies Accounting Judgements , Estimates and Assumptions:

Significant Accounting Policies:

1.1 Basis of preparation of Ind-AS Financial Statements:

The Ind-AS financial statements of the Company have been prepared in accordance with the relevant provisions of the Companies Act, 2013, the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 read with the Companies (Indian Accounting Standards) Amendment Rules, 2017 and the Guidance Notes and other authoritative pronouncements issued by the Institute of Chartered Accountants of India (ICAI).

For all periods up to and including the year ended 31^st March 2017, the Company prepared its financial statements in accordance with Indian GAAP, including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended).Thesefinancialstatementsfortheyearended 31^st March 2018 are the first the Company has prepared in accordance with Ind-AS. Refer to Note No.33 (XVII) for information on how the Company adopted Ind AS, including the details of the first time adoption exemptions availed by the company.

The Ind-AS financial statements have been prepared on a historical cost basis, except for certain financial assets and financial liabilities measured at fair value (refer accounting policy no. 2.9 regarding financial instruments). Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

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 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.

1.2 Current and Non-Current Classification of Assets and Liabilities and Operating Cycle:

An asset is considered as current when it is:

- Expected to be realised or intended to be sold or consumed in normal operating cycle,

- Held primarily for the purpose of trading,

- Expected to be realised within twelve months after the reporting period, or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is considered as current when:

- It is expected to be settled in normal operating cycle,

- It is held primarily for the purpose of trading,

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The Operating Cycle is the time between the acquisition of assets for business purposes and their realisation into cash and cash equivalents.

1.3 Property, Plant and Equipment:

Property, Plant and Equipment are recorded at their cost of acquisition, net of refundable taxes or levies, less accumulated depreciation and impairment losses, if any. The cost thereof comprises of its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost for bringing the asset to its working condition for its intended use.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit or Loss when the asset is derecognised.

Machinery Spares which can be used only in connection with a particular item of Fixed Asset and the use of which is irregular, are capitalised at cost. The cost thereof comprises of its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost for bringing the asset to its working condition for its intended use.

For transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as on 1^st April, 2016 (date of transition) measured as per previous GAAP as its deemed cost on the date of transition.

1.4 Investment Property

Investment Property is recorded at its cost of acquisition, net of refundable taxes or levies, less accumulated depreciation and impairment loss, if any. Depreciation on Investment Property is provided over its useful life using the Straight Line Method as per Schedule II of the Companies Act, 2013.

For transition to Ind AS, the Company has elected to continue with the carrying value of investment Property recognised as on 1^st April, 2016 (date of transition) measured as per previous GAAP as its deemed cost on the date of transition.

1.5 Depreciation:

Depreciation on Property, Plant and Equipment and Investment Properties is provided on different class of assets based on the method and on the basis of its useful lives as per Schedule II of the Companies Act, 2013/expected pattern of usage and exploitation, as indicated below:

(a) Textile unit:

Depreciation on Plant and Machinery is provided on Straight Line Method. Depreciation on Assets other than Plant and Machinery is provided on Written down value Method.

Costs of Reeds are amortized over a period of 2 years.

Cost of Imported Heald frames are amortized over a period of 5 years and Domestic Heald frames over a period of 3 years.

(b) Engineering unit:

Depreciation on Fixed Assets is provided on Straight Line Method for Assets acquired upto March 31, 2001. However, due to a change in the expected pattern of exploiting the assets, the depreciation on Fixed Assets acquired on or after April 1, 2001 is provided on Written down value Method.

(c) Composite unit:

i. Depreciation on Plant and Machinery is provided on Straight Line Method.

ii. Depreciation on Fixed Assets other than Plant and Machinery is provided on Written down value Method.

(d) Depreciation on additions to Fixed Assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

(e) Depreciation on Assets sold, discarded, demolished or scrapped, is provided upto the date on which the said Asset is sold, discarded, demolished or scrapped.

(f) Cost of Leasehold Land and Improvement is written off over the period of Lease.

(g) The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

1.6 Capital Work in Progress and Capital Advances:

Costs incurred for acquisition of capital assets outstanding at each balance sheet date are disclosed under capital work-in-progress. Advances given towards the acquisition of fixed assets are shown separately as capital advances under the head Other Non-Current Assets.

1.7 Intangible Assets and amortisation thereof:

The cost relating to Intangible assets, with finite useful lives, which are capitalised and amortised on a straight line basis over a period of ten years, are based on their estimated useful lives.

An item of Intangible Asset is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.

The residual values, useful lives and methods of amortisation of Intangible Assets are reviewed at each financial year end and adjusted prospectively, if appropriate.

For transition to Ind AS, the Company has elected to continue with the carrying value of all its Intangible Assets recognised as on 1^st April, 2016 (date of transition) measured as per previous GAAP as its deemed cost on the date of transition.

1.8 Impairment of Property Plant and Equipment, Investment Property and Intangible Assets Carrying amount of tangible and intangible assets are reviewed at each Balance Sheet date. These are treated as impaired when the carrying cost thereof exceeds its recoverable value. Recoverable value is higher of the asset’s net selling price or value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount receivable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the cost of disposal. An impairment loss is charged for when an asset is identified as impaired.

The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

1.9 Inventories:

Inventories of Raw Materials, Work-in-Progress, Stores and spares, Finished Goods, Stock-in-trade and Property under development are stated ‘at cost or net realisable value, whichever is lower’. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formulae used are ‘First-in-First-out’, ‘Weighted Average cost’ or ‘Specific identification’, as applicable. Due allowance is estimated and made for defective and obsolete items, wherever necessary.

1.10 Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the amount is received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government, discounts and rebates.

i. Sale of Goods:

- Revenue from Domestic sale is recognised on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

- Revenue from Export sale is recognised on transfer of significant risks and rewards of ownership based on terms of the contracts.

ii. Other Operating Revenue:

- Export Incentive under various scheme are accounted in the year of Export.

- Revenue in respect of other income/ claims, etc is recognised only when it is reasonably certain that ultimate collection will be made.

iii. Rental Income:

Rent income is recognised on accrual basis as per substance of the agreement.

iv. Interest Income:

Interest Income from Financial Assets is recognised using the Effective Interest Rate (EIR) on amortised cost basis.

v. Dividend Income:

Dividend income is recognised when the Company’s right to receive the payment is established, which is generally when shareholders approve the dividend.

1.11 Accounting for Government Grants:

Grant from Government under Technology Up-gradation Fund Scheme (TUFS) is recognised and disclosed under Other Operating Income at fair value where there is reasonable assurance that the grant will be received and the Company will comply with all attached condition.

1.12 Financial Instruments:

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(i) Financial Assets:

Initial Recognition and Measurement:

All financial assets are recognised initially at fair value.In the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset are included therein.

Subsequent Measurement:

For purposes of subsequent measurement, financial assets are classified in three categories:

- Financial assets at amortised cost

- Equity instruments measured at fair value through other comprehensive income (FVTOCI)

- Investments measured at fair value through Profit & Loss (FVTPL)

Financial Assets at Amortised Cost:

A financial asset is measured at the amortised cost if both the following conditions are met:

a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

Equity Instruments at FVTOCI:

For equity instruments not held for trading, an irrevocable choice is made on initial recognition to measure it at FVTOCI. All fair value changes on such investments, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to profit or loss, even on sale or disposal of the investment. However, on sale or disposal the company may transfer the cumulative gain or loss within equity.

Financial Assets at FVTPL Even if an instrument meets the two requirements to be measured at amortised cost or fair value through other comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as “accounting mismatch”) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. All other financial assets are measured at fair value through profit or loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company’s statement of

i) The rights to receive cash flows from the asset have expired, or

ii) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘‘pass-through’’ arrangement and either;

a. the Company has transferred substantially all the risks and rewards of the asset,

or

b. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Impairment of financial assets

The Company measures the expected credit loss associated with its assets based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk

ii) Financial Liabilities:

Initial Recognition and 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. The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts.

Subsequent Measurement:

This is dependent upon the classification thereof as under:

Loans and Borrowings:

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

Derecognition:

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 statement of profit or loss.

(iii) Equity Instruments:

An equity instrument is any contract that evidences a residual interest in the assets of an entity in accordance with the substance of the contractual arrangements. These are recognised at the amount of the proceeds received, net of direct issue costs.

1.13 Employee Benefits:

Short term employee benefits are those which are payable wholly within twelve months of rendering service and are recognised as an expense at the undiscounted amount in Statement of Profit and Loss of the year in which the related service is rendered.

Contribution paid/ payable for the year to Defined Contribution Retirement Benefit Plans is charged to Statement of Profit and Loss

Liabilities towards Defined Benefit Schemes viz. Gratuity benefits and other long term benefit viz. compensated absences are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Balance Sheet with a corresponding effect in the Statement of Other Comprehensive Income. Past service cost is recognised immediately in the Statement of Profit and Loss.

1.14 Leases:

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

As a Lessee:

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership is classified as a finance lease.

Finance lease is capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term, unless the payments are structured to increase in line with the expected general inflation to compensate the lessor.

As a lessor:

Lease in which the Company does not transfer substantially all the risks and rewards of ownership of an asset is classified as operating lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Lease is classified as finance lease when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amount due from lessee under finance lease is recorded as receivables at the Company’s net investment in the lease. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.

1.15 Foreign Currency Transactions:

Transactions in foreign currencies are initially recorded at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

Differences arising on settlement or translation of monetary items are recognised as income or expenses in the period in which they arise.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in OCI or statement of profit and loss are also recognised in OCI or statement of profit and loss, respectively).

1.16 Borrowing Costs:

Borrowing costs comprising of interest and other costs that are incurred in connection with the borrowing of funds, that are attributable to the acquisition or construction of qualifying assets are considered as a part of cost of such assets less interest earned on the temporary investment. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of profit and loss in the year in which they are incurred.

1.17 Taxes on Income:

Current Income Taxes:

Current income tax liabilities are measured at the amount expected to be paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognised directly in other comprehensive income / equity is recognised similarly and not in the statement of profit and loss.

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred Taxes:

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, when the deferred tax liability arises from an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except, when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.

MAT:

Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which give rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax after the specified years. Accordingly, MAT is recognised as deferred tax asset in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefits associated with it will flow to the Company.

1.18 Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

When the Company expects part or entire provision to be reimbursed, the same is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. A Contingent Liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of enterprise or a present obligation that arises from past events that may, but probably will not, require an outflow of resources.

Both provisions and contingent liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the Financial Statements.

1.19 Earnings Per Share:

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year are adjusted for events including a bonus issue, bonus element in right issue to existing shareholders, share split, and reverse share split (consolidation of shares).

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

1.20 Cash and Cash Equivalent:

Cash and cash equivalent for the purpose of Cash Flow Statement comprise cash at bank and in hand and short term highly liquid investments which are subject to insignificant risk of changes in value.

1.21 Statement of Cash Flow

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

1.22 Commitments

Commitments are future liabilities for contractual expenditure. The commitments are classified and disclosed as follows:

(a) The estimated amount of contracts remaining to be executed on capital account and not provided for; and

(b) Other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion of the Management.

1.23 Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Board of Directors of the Company has been identified as being the Chief Operating Decision Maker (CODM) by the management of the Company. CODM for management purposes organises the Company into business units based on its products and services and has three reportable segments. Information about reportable segments & principal activities are mentioned in Note No 33 XII.

1.24 Significant Accounting Judgements, Estimates and Assumptions:

The preparation of Financial Statements is in conformity with the recognition and measurement principles of Ind AS which requires the management to makejudgements for estimates and assumptions that affect the amounts of assets, liabilities and the disclosure of contingent liabilities on the reporting date and the amounts of revenues and expenses during the reporting period and the disclosure of contingent liabilities. Differences between actual results and estimates are recognized in the period in which the results are known/ materialize.

Estimates Assumptions and Judgements:

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

a) Estimation of current tax expense and deferred tax:

The calculation of the Company’s tax charge necessarily involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these items may give rise to material profits/losses and/ or cash flows. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.

b) Recognition of deferred tax assets/ liabilities:

The recognition of deferred tax assets/liabilities is based upon whether it is more likely than not that sufficient and suitable taxable profits will be available in the future against which the reversal of temporary differences can be deducted. To determine the future taxable profits, reference is made to the latest available profit forecasts.

c) Estimation of Provisions & Contingent Liabilities: The Company exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual liability may be different from the originally estimated as provision.

d) Estimated useful life of Property, Plant and Equipment:

Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life, its expected usage pattern and the expected residual value at the end of its life. The useful lives, usage pattern and residual values of Company’s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology etc.

e) Estimation of Provision for Inventory:

The Company writes down inventories to net realisable value based on an estimate of the realisability of inventories. Write downs on inventories are recorded where events or changes in circumstances indicate that the carrying value may not be realised. The identification of write-downs requires the use of estimates of net selling prices of the down-graded inventories. Where the expectation is different from the original estimate, such difference will impact the carrying value of inventories and write-downs of inventories in the periods in which such estimate has been changed.

f) Estimation of Defined Benefit Obligation:

The present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for post employment plans include the discount rate. Any changes in these assumptions will impact the carrying amount of such obligations. The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the defined benefit obligations. In determining the appropriate discount rate, the Company considers the interest rates of government bonds of maturity approximating the terms of the related plan liability.

g) Estimated fair value of Financial Instruments.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Management uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.

1.25 Standards issued but not yet effective

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and there is no impact on the company’s financial statements due to the said changes. Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach). The Company is evaluating the impact thereof.

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Mar 31, 2017

I. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with rule 7 of the Companies (Accounts) Rules, 2016, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

II. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of Assets and Liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. The difference between the actual results and estimates are recognized in the year in which the results materialize/ are known.

III. Property, Plant and Equipment (Fixed Assets) and Intangible Assets:

1. Tangible Assets

i. Tangible Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed) and Borrowing Costs, if any.

ii. Machinery Spares which can be used only in connection with a particular item of Fixed Asset and the use of which is irregular, are capitalized at cost (net of Modvat / Cenvat credit availed)

2. Intangible Assets

Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to the Assets will flow to the enterprise and the cost of the assets can be measured reliably. The Intangible Assets are recorded at cost and are carried at cost less amortization and accumulated impairment losses, if any.

3. Assets taken on Lease:

i. Finance Lease

Assets taken on Finance Lease after April 1, 2001 are accounted for as Fixed Assets in accordance with the Accounting Standard -19 “Lease” (AS 19) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.

ii. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

IV. Depreciation/ Amortization:

(Refer Note 27B Point no. VI regarding Fixed Assets and

Depreciation)

A. Tangible Assets

1. Textile Unit:

i. Depreciation on Plant and Machinery is provided on Straight Line Method.

ii. Depreciation on Assets other than Plant and Machinery is provided on Written down value Method.

iii. Costs of Reeds are amortized over a period of 2 years.

iv. Cost of Imported Heald frames are amortized over a period of 5 years and Domestic Heald frame over a period of 3 years.

2. Engineering Unit:

i. Depreciation on Fixed Assets is provided on Straight Line Method for Assets acquired upto March 31, 2001.

ii. Depreciation on Fixed Assets is provided on Written down value Method for Assets acquired on or after April 1, 2001.

3. Composite Unit:

i. Depreciation on Plant and Machinery is provided on Straight Line Method.

ii. Depreciation on Fixed Assets other than Plant and Machinery is provided on Written down value Method.

4. Depreciation on additions to Fixed Assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

5. Depreciation on Assets sold, discarded, demolished or scrapped, is provided upto the date on which the said Asset is sold, discarded, demolished or scrapped.

6. Cost of Leasehold Land and Improvement is written off over the period of Lease.

B. Intangible Assets.

Intangible Assets are amortized in accordance with Accounting Standard 26 “Intangible Assets” (AS-26) issued by the Institute of Chartered Accountants of India and prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016.

V. Investments:

Long term Investments are stated at cost less diminution in the value of Investments, if any. Current Investments are stated at cost or market value whichever is lower.

VI. Inventories:

1. Textile Unit:

i. Raw Materials :

At monthly weighted average cost.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished Goods :

At quarterly weighted average cost or net realizable value whichever is lower.

2. Engineering Unit:

i. Raw Materials :

At cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished goods :

Finished Goods are valued at lower of cost or net realizable value.

3. Composite Unit:

i. Raw Materials :

At cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished Goods :

At cost or net realizable value whichever is lower.

Cost comprises of cost of materials, employee cost, factory overheads and other costs incurred in bringing the inventory to their present location and condition.

VII. Employee Benefits:

1. Defined Contribution Plan:

Employee Benefits in the form of contributions to Provident Fund, Employees State Insurance, Labour Welfare Fund managed by Government Authorities are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year on accrual basis.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

2. Defined Benefit Plan:

The liability for Leave Encashment and Gratuity is determined on actuarial basis as per the Accounting Standard-15 “Employee Benefits” (AS 15) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016.

VIII. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring Fixed Assets are adjusted in the carrying amount of the respective Fixed Assets. Exchange differences arising on settlement of other transactions are recognized in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported Fixed Assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognized in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / Discount arising on such forward exchange contract is amortized as income / expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognized as income or expense.

IX. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

X. Revenue Recognition:

1. Revenue from Domestic sale is recognized on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

2. Revenue from Export sale is recognized on transfer of significant risks and rewards of ownership based on Bill of lading date.

3. Dividend income is recognized when the right to receive dividend is established.

4. Revenue in respect of other income/claims, etc is recognized only when it is reasonably certain that ultimate collection will be made.

XI. Government Grants:

Grants are accounted for when it is reasonably certain that ultimate collection will be made.

XII. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on “Accounting for Taxes on Income” (AS-22) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognized for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

XIII. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

XIV. 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 in accordance with Accounting Standard - 16 on “Borrowing Costs” (AS-16) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

XV. Provision, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Other Notes to Accounts. Contingent assets are neither recognized nor disclosed in the Financial Statement.

XVI. Impairment of Fixed Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on Fixed Assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard - 28 “Impairment of Assets” (AS-28) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2016. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds its recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.

---

Mar 31, 2016

I. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with rule 7 of the Companies (Accounts) Rules , 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

II. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect reported amounts of Assets and Liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. The difference between the actual results and estimates are recognized in the year in which the results materialize/ are known.

III. Fixed Assets:

1. Tangible Fixed Assets

i. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed) and Borrowing Costs, if any.

ii. Machinery Spares which can be used only in connection with a particular item of Fixed Asset and the use of which is irregular, are capitalized at cost (net of Modvat / Cenvat credit availed)

2. Intangible Fixed Assets

Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the Assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less amortization and accumulated impairment losses, if any.

3. Assets taken on Lease:

i. Finance Lease

Assets taken on Finance Lease after April 1, 2001 are accounted for as Fixed Assets in accordance with the Accounting Standard-19 “Lease” (AS 19) issued by the

Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act , 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability. ii. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

IV. Depreciation/ Amortization

(See note no. 2713 VI regarding Fixed Assets and ^the Depreciation)

A. Tangible Fixed Assets

1. Textile Unit:

i. Depreciation on Plant and Machinery is provided on Straight Line Method.

ii. Depreciation on Assets other than Plant and Machinery is provided on Written down value Method.

iii. Costs of Reeds are amortized over a period of 2 years.

iv. Cost of Imported Held frames are amortized over a period of 5 years and Domestic Heal frame over a period of 3 years.

2. Engineering Unit:

i. Depreciation on Fixed Assets is provided on Straight Line Method for Assets acquired up to March 31, 2001.

ii. Depreciation on Fixed Assets is provided on Written down value Method for Assets acquired on or after April 1, 2001.

3. Composite Unit:

i. Depreciation on Plant and Machinery is provided on Straight Line Method.

ii. Depreciation on Fixed Assets other than Plant and Machinery is provided on Written down value Method.

4. Depreciation on additions to Fixed Assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

5. Depreciation on Assets sold, discarded, demolished or scrapped, is provided up to the date on which the said Asset is sold, discarded, demolished or scrapped.

6. Cost of Leasehold Land is written off over the period of Lease.

B. Intangible Assets.

Intangible Assets are amortized in accordance with Accounting Standard 26 “Intangible Assets” (AS-26) issued by the Institute of Chartered Accountants of India and prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014.

V. Investments:

Long term Investments are stated at cost less diminution in the value of Investments, if any. Current Investments are stated at cost or market value whichever is lower.

VI. Inventories:

1. Textile Unit:

i. Raw Materials :

At monthly weighted average cost.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished Goods :

At quarterly weighted average cost or net realizable value whichever is lower.

2. Engineering Unit:

i. Raw Materials :

At cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished goods :

Finished Goods are valued at lower of cost or net realizable value.

3. Composite Unit:

i. Raw Materials :

At cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition.

ii. Stores, Spares and Other Consumable:

Stores, Spares and Other Consumables are valued at cost. Cost comprises of purchase cost and any other cost, incurred in bringing the inventory to their present location and condition. Cost is considered on First in First out Basis.

iii. Process Stock and Finished Goods :

At cost or net realizable value whichever is lower.

Cost comprises of cost of materials, employee cost, factory overheads and other costs incurred in bringing the inventory to their present location and condition.

VII. Employee Benefits:

1. Defined Contribution Plan:

Employee Benefits in the form of contributions to Provident Fund, Employees State Insurance, Labour Welfare Fund managed by Government Authorities are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year on accrual basis.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

2. Defined Benefit Plan:

The liability for Leave Encashment and Gratuity is determined on actuarial basis as per the Accounting Standard -15 “Employee Benefits” (AS-15) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014.

VIII. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are affected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring Fixed Assets are adjusted in thecarrying amount of the respective Fixed Assets. Exchange differences arising on settlement of other transactions are recognized in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported Fixed Assets) denominated in foreign currency and not covered by forward contracts are restated using exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognized in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / Discount arising on such forward exchange contract is amortized as income / expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognized as income or expense.

IX. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

X. Revenue Recognition:

1. Revenue from Domestic sale is recognized on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

2. Revenue from Export sale is recognized on transfer of significant risks and rewards of ownership based on Bill of lading date.

3. Dividend income is recognized when the right t receive dividend is established.

4. Revenue in respect of other income/claims, etc is recognized only when it is reasonably certain that ultimate collection will be made.

XI. Government Grants:

Grants are accounted for when it is reasonably certain that ultimate collection will be made.

XII. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on “Accounting for Taxes on Income” (AS-22) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognized for future tax consequence attributable to timing difference

between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

Xm. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

XIV. 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 in accordance with Accounting Standard - 16 on “Borrowing Costs” (AS-16) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

XV. Provision, Contingent liabilities and Contingent Assets: (AS-29)

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that

, there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Other Notes to Accounts. Contingent assets are neither recognized nor disclosed in the Financial Statement.

XVI. Impairment of Fixed Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on Fixed Assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard-28 “Impairment of Assets”(AS-28) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.

IV. The Board of Directors has recommend dividend of'' 4.50 per share on 16,64,548 Equity Shares of Rs, 10/- each aggregating to Rs, 90.15 lakhs (Inclusive of Dividend Distribution Tax of Rs,15.25 lakhs).

V. The Memorandum of Settlement between Hindoostan Mills Limited and the Karad Taluka Girani Kamagar Sangh, Karad (Sangh) expired on 31^st December, 2015. The Charter of Demands has been submitted by Sangh to the Management. The negotiations between the Management and the Sangh are in progress and accordingly, the Company has made a provision on an estimated basis which will be adjusted in the year in which finality is reached.

VI. FIXED ASSETS AND DEPRECIATION :

Consequent to the enactment of the Companies Act, 2013 (the Act) and its applicability for accounting periods commencing on or after 1^st April, 2014, the Companies has re-worked depreciation with reference to the useful lives of Fixed Assets prescribed by PART ‘C’ of Schedule II to the Act. Where the remaining useful life of an Asset is nil, the carrying amount of the Asset after retaining the residual value, as at 1^st April, 2014 has been adjusted to the General Reserve. In other cases the carrying values have been depreciated over the remaining useful lives of the Assets and recognized in the Statement of Profit and Loss.

Since then, as per the amendment dated 20th August, 2014, the useful life specified in Part C- of Schedule II has been defined to mean that if the cost of a Part of Asset is significant to the total cost of the Assets and useful life of that part is different from the useful life of the remaining Assets, useful life of that significant part shall be determined separately and depreciated accordingly.

In the opinion of the Management, the Company’s Assets are such that there are no significant parts thereof whose life would be different than the useful life of the whole Asset (The management opinion on component accounting being technical in nature the same is relied upon by the Auditors). Consequently, the Company has continued to provide depreciation in respect of all its Assets on the basis as was followed in the financial year 2014-15, i.e. based on useful lives of the respective Assets.

VII. INVESTMENTS:

The Investment of 42 Shares in Yeshwant Sahakari Sakhar Karkhana Ltd. (Society), are held in the names of two Directors of the Company, being its nominees, as required by the bye-laws of the Society.

VIII. Property under Development reflected as Stock-in-Trade was written down to '' 1 lakh in the earlier year as a measure of prudence. The settlement of account is a matter of dispute between the company (owner) and developer and there are claims and counter claims. The matter has been referred to arbitration in 2002. The impact of Arbitration Award will be recognised in the books of accounts as and when finality in the matter is reached.

Note : Dues to Mcro and Small enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Company and relied upon by the Auditors.

X. During the year, under the New Textile Policy, 2012, as per Government Resolution (GR) dated 19^th January, 2016, the Company is entitled to an Interest Subsidy for the period from May 2014 to June 2015 aggregating to Rs,93.76 Lacs. The Company is of the view that it will receive the Interest Subsidy for the Period from July 2015 to 31^st March, 2016 aggregating to '' 80.76 Lacs as and when the processing is completed by the Ministry of Textiles. Accordingly, the Company has recognized Interest Subsidy on “accrual basis” for the period from May 2014 to 31^st March, 2016 aggregating toRs, 174.52 Lacs as Other Income.

XI. CURRENT TAX :

In view of losses for the year ended 31st March 2016, no provision for Income Tax and Minimum Alternate Tax under Section 115JB of Income Tax Act, 1961 is required to be made.

DEFERRED TAX :

In accordance with Accounting Standard 22 on “Accounting for Taxes on Income” ( AS - 22) as prescribed under Section 133 of Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014, Deferred Tax Assets consist of substantial amounts of carry forward losses and unabsorbed depreciation under the Income Tax Act, 1961. However, since the availability of sufficient future taxable income against which they said benefits can be set off is not possible to be ascertained with virtual certainty, the Deferred Tax Assets have not been recognized as a measure of abundant caution.

---

Mar 31, 2015

I. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, provision of the Act(to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

II. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of Assets and Liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. The difference between the actual results and estimates are recognised in the year in which the results materialize/ are known.

III. Fixed Assets:

1. Tangible Fixed Assets

i. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed) and Borrowing Costs, if any.

ii. Machinery Spares which can be used only in connection with a particular item of fixed asset and the use of which is irregular, are capitalised at cost (net of Modvat / Cenvat credit availed)

iii. Fixed Assets declared surplus are valued as follows:

- Material items of Assets at lower of net realizable value and net book value.

- At net book value if the value is not material.

2. Intangible Fixed Assets

Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to the Assets will flow to the enterprise and the cost of the Assets can be measured reliably. The Intangible Assets are recorded at cost and are carried at cost less depreciation /amortization and accumulated impairment losses, if any.

3. Assets taken on Lease:

i. Finance Lease

Assets taken on finance lease after April 1, 2001 are accounted for as Fixed Assets in accordance with the Accounting Standard -19 "Lease" (AS 19) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014. Accordingly, the Assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.

ii. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

IV. Depreciation/ Amortization

A. Tangible Fixed Assets

1. Textile Unit:

i. Depreciation on all the Plant and Machineries is provided on the Straight Line Method in accordance with Schedule II to the Companies Act, 2013.

ii. Depreciation on Assets other than Plant and Machineries is provided on the Written Down Method in accordance with Schedule II to the Companies Act, 2013.

iii. Costs of Reeds are written off over a period of 2 years.

2. Engineering Unit:

i. Depreciation on Fixed Assets is provided on the Straight Line Method for the Assets acquired upto March 31, 2001 in accordance with Schedule II to the Companies Act, 2013.

ii. Depreciation on Fixed Assets is provided on the Written Down Method for the Assets acquired on or after April 1, 2001 in accordance with Schedule II to the Companies Act, 2013.

3. Composite Unit:

i. Depreciation on all the Plant and Machineries is provided on the Straight Line Method in accordance with Schedule II to the Companies Act, 2013.

ii. Depreciation on all Fixed Assets other than Plant and Machineries is provided on the Written Down Method in accordance with Schedule II to the Companies Act, 2013.

4. Depreciation on additions to Fixed Assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

5. Depreciation on Assets sold, discarded, demolished or scrapped, is provided upto the date on which the said Asset is sold, discarded, demolished or scrapped.

6. Cost of Leasehold Land is written off over the period of Lease.

B. Intangible Assets

1. Tenancy Rights:

Management is of the opinion that the Tenancy Rights need not be amortized.

2. Other Intangible Assets:

Intangible Assets are Amortized in accordance with Accounting Standard 26 "Intangible Assets" (AS-26) issued by the Institute of Chartered Accountants of India and prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014.

V. Investments:

Long term Investments are stated at cost less diminution in the value of Investments, if any. Further, Current Investments are stated at cost or market value whichever is lower.

VI. Inventories:

1. Textile Unit:

1. Raw Materials :

At monthly average cost or net realizable value whichever is lower.

ii. Stores and Spares :

At cost or net realizable value whichever is lower.

iii. Process Stock and Finished Goods :

At quarterly average cost or net realizable value whichever is lower.

2. Engineering Unit:

i. Raw Materials :

At cost or net realizable value whichever is lower.

ii. Process stock :

Cost comprises of Raw Material cost and processing cost.

iii. Stores and Other Consumables :

Stores and Other Consumables are valued at cost. Cost is considered on First in First out Basis.

iv. Finished Goods :

Finished Goods are valued at lower of cost or net realizable value.

3. Composite Unit:

i. Raw Materials :

At cost or net realizable value whichever is lower

ii. Stores and Spares :

At cost or net realizable value whichever is lower

iii. Process Stock and Finished Goods :

At cost or net realizable value whichever is lower

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

VII. Employee Benefits:

1. Defined Contribution Plan:

Employee Benefits in the form of contributions to Provident Fund, Employees State Insurance, Labour Welfare Fund managed by Government Authorities are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year on accrual basis.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

2. Defined Benefit Plan:

The liability for Leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard -15 "Employee Benefits" (AS 15) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014.

VIII. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring Fixed Assets from a country outside India are adjusted in carrying amount of the respective Fixed Assets. Exchange differences arising on settlement of other transactions are recognised in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported Fixed Assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognised in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / Discount arising on such forward exchange contract is amortised as income/expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognised as income or expense.

IX. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

X. Revenue Recognition:

1. Revenue from Domestic sale is recognised on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

2. Revenue from Export sale is recognised on transfer of significant risks and rewards of ownership which is based on Bill of Lading date.

3. Dividend income is recognised when the right to receive dividend is established.

4. Income from Property Development is accounted on pro-rata basis taking into consideration amount receivable for property development, number of flats sold and construction work completed.

5. Revenue in respect of other income/claims, etc is recognised only when it is reasonably certain that ultimate collection will be made.

6. Revenue in respect of Government Grants is recognised on receipt basis.

XI. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on "Accounting for Taxes on Income" (AS-22) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognised for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at

relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

XII. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

XIII. 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 in accordance with Accounting Standard - 16 on "Borrowing Costs" (AS-16) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

XIV. Provision, Contingent Liabilities and Contingent Assets: (AS-29)

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

XV. Impairment of Fixed Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on Fixed Assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard - 28 "Impairment of Assets" (AS-28) issued by the Institute of Chartered Accountants of India and as prescribed under Section 133 of Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognised in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.

---

Mar 31, 2014

I. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

II. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. The difference between the actual results and estimates are recognised in the year in which the results materialize/ are known.

III. Fixed Assets:

1. Tangible Fixed Assets

i. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed)

ii. Machinery Spares which can be used only in connection with a particular item of fixed asset and the use of which is irregular, are capitalised at cost (net of Modvat / Cenvat credit availed)

2. Intangible Fixed Assets

Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less depreciation /amortization and accumulated impairment losses, if any.

3. Assets taken on Lease:

i. Finance Lease

Assets taken on finance lease after April 1, 2001 are accounted for as fixed assets in accordance with the Accounting Standard -19 "Lease" (AS 19) issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.

ii. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

IV. Depreciation/ Amortization:

A. Tangible Fixed Assets

1. Textile Unit:

i. Depreciation on all the Plant & Machineries is provided on the Straight Line Method in accordance with Schedule XIV to the Companies Act, 1956.

ii. Depreciation on assets other than Plant & Machineries is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

iii. Costs of Reeds are written off over a period of 2 years.

2. Roll Manufacturing Unit:

i. Depreciation on Fixed Assets is provided on the Straight Line Method for the assets acquired upto March 31, 2001 in accordance with Schedule XIV to the Companies Act, 1956.

ii. Depreciation on Fixed Assets is provided on the Written Down Method for the assets acquired on or after April 1, 2001 in accordance with Schedule XIV to the Companies Act, 1956.

3. Technical Fabric Unit:

i. Depreciation on all the Plant and Machineries is provided on the Straight Line Method in accordance with Schedule XIV to the Companies Act, 1956.

ii. Depreciation on all Fixed Assets other than Plant and Machineries is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

4. Depreciation on additions to fixed assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

5. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said asset is sold, discarded, demolished or scrapped.

6. Cost of Leasehold Land is written off over the period of Lease.

B. Intangible Assets

Intangible Assets are amortised in accordance with Accounting Standard 26 "Intangible Assets" (AS-26) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006.

V. Investments:

Long term investments are stated at cost less diminution in the value of investments, if any. Further, current investments are stated at cost or market value whichever is lower.

VI. Inventories:

1. Textile Unit:

i. Raw Materials :

At monthly average cost or net realizable value whichever is lower.

ii. Stores and Spares :

At cost or net realizable value whichever is lower.

iii. Process Stock and Finished Goods :

At quarterly average cost or net realizable value whichever is lower.

2. Roll Manufacturing Unit:

i. Raw Materials :

At cost or net realizable value whichever is lower.

ii. Process Stock :

Cost comprises of Raw Material cost and processing cost.

iii. Stores & Other Consumables :

Stores & Other Consumables are valued at cost. Cost is considered on First in First out Basis.

iv. Finished Goods :

Finished Goods are valued at lower of cost or net realizable value.

3. Technical Fabric Unit:

i. Raw Materials :

At cost or net realizable value whichever is lower. ii. Stores and Spares :

At cost or net realizable value whichever is lower. iii. Process Stock and Finished Goods :

At cost or net realizable value whichever is lower.

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

VII. Employee Benefits:

1. Denned Contribution Plan:

Employee Benefits in the form of contributions to Provident Fund, Employees State Insurance, Labour Welfare Fund managed by Government Authorities are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year on accrual basis.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

2. Denned Benefit Plan:

The liability for Leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard -15 "Employee Benefits" (AS 15) issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006.

VIII. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring fixed assets from a country outside India, are adjusted in carrying amount of the respective fixed assets. Exchange differences arising on settlement of other transactions are recognised in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported fixed assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognised in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / discount arising on such forward exchange contract is amortised as income / expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognised as income or expense.

IX. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

X. Revenue Recognition:

1. Revenue from domestic sale is recognised on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

2. Revenue from Export sale is recognised on transfer of significant risks and rewards of ownership which is based on Bill of lading date.

3. Dividend income is recognised when the right to receive dividend is established.

4. Income from Property Development is accounted on pro-rata basis taking into consideration amount receivable for property development, number of flats sold and construction work completed.

5. Revenue in respect of other income/claims, etc is recognised only when it is reasonably certain that ultimate collection will be made.

6. Revenue in respect of Government Grants is recognised on receipt basis.

XI. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on "Accounting for Taxes on Income" (AS-22) issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/ recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognised for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

XII. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

XIII. 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 in accordance with Accounting Standard - 16 on "Borrowing Costs" (AS-16) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules, 2006. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

XIV Provision, Contingent liabilities and Contingent Assets:

(AS-29)

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the Notes. Contingent assets are neither recognised nor disclosed in the Financial Statement.

XV Impairment of Fixed Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard - 28 "Impairment of Assets" (AS- 28) issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognised in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.

I. Basis of Preparation of Financial Statements:

The accounts for the year ended March 31, 2014 are prepared in accordance with the provisions of the Companies Act, 1956 read with of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs.

II. Amalgamation of Hindoostan Technical Fabrics Ltd with the Company.

i. Pursuant to the Scheme of Amalgamation of Hindoostan Technical Fabrics Ltd a wholly owned Subsidiary ("Transferor Company") with the Company, as sanctioned by the Hon''ble High Court of Bombay vide their order dated - October 10, 2014, the Assets and Liabilities of the Transferor Company were transferred to and vested with the Company with effect from the appointed date, April 1, 2013.

ii. The Transferor Company is engaged in the business of manufacturing of composite fabric.

iii. The amalgamation has been accounted for under the ''Pooling of interest'' method as prescribed by Accounting Standard 14 ''Accounting for Amalgamations" notified under the Companies (Accounting Standards) Rules, 2006 (as amended). Accordingly the Assets and Liabilities of the Transferor Company as at April 1, 2013, have been taken over at their book values.

iv Consequent to the Scheme of Amalgamation, the Authorized Equity Share Capital of the Company stands increased from 2,27,67,500 Equity Shares of Rs.10/- each, aggregating to Rs.2,276.75 lakhs to 2,77,67,500 Equity Shares of Rs.10/- each aggregating to Rs.2,776.75 lakhs.

v. As per the Scheme of Amalgamation, the Debit balance in Statement of Profit and Loss of the Transferor Company as on March 31,2013 of Rs.186.68 lakhs has been adjusted in the Surplus in Reserves and Surplus.

vi. Details of Assets and Liabilities taken over in Amalgamation:

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Mar 31, 2013

1. Basis of Preparation of Financial Statements:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

2. Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize/are known.

3. Fixed Assets:

A. Tangible Fixed Assets

a. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed)

b. Machinery Spares which can be used only in connection with a particular item of fixed asset and the use of which is irregular, are capitalised at cost (net of Modvat / Cenvat credit availed)

B. Intangible Fixed Assets

Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less depreciation /amortization and accumulated impairment losses, if any.

C. Assets taken on Lease:

a. Finance Lease

Assets taken on finance lease after April 1,2001 are accounted for as fixed assets in accordance with the Accounting Standard 19 "Lease" (AS 19) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.

b. Operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classified as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

4. Depreciation of Tangible Fixed Assets: I. Textile Unit:

a. Depreciation on all the Plant & Machineries acquired is provided on the Straight Line Method in accordance with Schedule XIV to the Companies Act, 1956.

b. Depreciation on assets other than Plant & Machineries acquired is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

c. Cost of Reeds are written off over the period of 2 years.

II. Roll Manufacturing Unit:

a. Depreciation on Fixed Assets is provided on the Straight Line Method for the assets acquired upto March 31, 2001 in accordance with Schedule XIV to the Companies Act, 1956.

b. Depreciation on Fixed Assets acquired after April 1, 2001 is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

III. Depreciation on additions to fixed assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

IV. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said asset is sold, discarded, demolished or scrapped.

V. Cost of Leasehold Land is written off over the period of Lease.

5. Investments:

Long term investments are stated at cost less diminution in the value of investments'', if any. Further, current investments are stated at cost or market value whichever is lower.

6. Inventories:

a. Textile Unit:

i. Raw Materials

At monthly average cost or net realizable value whichever is lower.

ii. Process Stock and Finished Goods

At quarterly average cost or net realizable value whichever is lower.

iii. Stores and Spares

At cost or net realizable value whichever is lower.

b. Roll Manufacturing Unit:

Stock of Raw Materials, Stores & Other Consumables and Semi Finished Goods are valued at lower of cost or net realisable value and for this purpose cost is determined on following basis:

i. Raw Materials

At cost or net realizable value whichever is lower.

ii. Process stock

Cost comprises of Raw Material cost and processing cost.

iii. Stores & Other Consumables

Stores & Other Consumables are valued at cost. Cost is considered on First in First out Basis.

iv. Finished goods

Finished Goods are valued at lower of cost or net realizable value.

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

7. Employee Benefits:

Defined Contribution Plan:

Employee Benefit in the form of contribution to Provident Fund managed by Government Authorities, Employees State Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and the same is charged to the Statement of Profit and Loss for the year when the contributions to the respective funds are due.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defined Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

Defined Benefit Plan:

The liability for Leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard 15 "Employee Benefits" (AS-15) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006.

8. Foreign Currency Transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring fixed assets from a country outside India, are adjusted in carrying amount of the respective fixed assets. Exchange differences arising on settlement of other transactions are recognized in the Statement of Profit and Loss.

Monetary items (other than those related to acquisition of imported fixed assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recogn ized in the Statement of Profit and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / discount arising on such forward exchange contract is amortised as income / expense over the life of the contract. Any profit / loss arising on cancellation of such forward exchange contract are recognized as income or expense.

9. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

10. Revenue Recognition:

a. Revenue from domestic sale is recognized on transfer of significant risks and rewards of ownership which is based on the dispatch of goods.

b. Revenue from Export sale is recognized on transfer of significant risks and rewards of ownership which is based on Bill of lading date.

c. Dividend income is recognized when the right to receive dividend is established.

d. Income from property development is accounted on pro-rata basis taking into consideration amount receivable for property development, number of flats sold and construction work completed.

e. Revenue in respect of other income/claims, etc is only when it is reasonably certain that ultimate collection will be made.

11. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on "Accounting for Taxes on Income" (AS-22) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognized for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

12. Accounting of Value Added Tax (VAT):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

13. Borrowing Costs:

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

14. Provision, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Notes. Contingent assets are neither recognized nor disclosed in the Financial Statement.

15. Impairment of Fixed Assets:

At the end of the each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with the Accounting Standard 28 "Impairment of Assets" (AS 28) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules, 2006. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.

---

Mar 31, 2012

1. Basis of Preparation of Financial statements:

These fnancial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India and as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

2. Use of estimates:

The preparation of fnancial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of fnancial statements and reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize/are known.

3. Fixed assets:

a. tangible Fixed assets

a. Tangible Fixed Assets are recorded at their original cost of acquisition/installation (net of Modvat / Cenvat credit availed)

b. Machinery Spares which can be used only in connection with a particular item of fxed asset and the use of which is irregular, are capitalised at cost (net of Modvat / Cenvat credit availed)

B. Intangible Fixed assets

Intangible assets are recognized only if it is probable that the future economic benefts that are attributable to the assets will fow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less depreciation /amortization and accumulated impairment losses, if any.

C. assets taken on Lease:

a. Finance Lease

Assets taken on fnance lease after April 1, 2001 are accounted for as fxed assets in accordance with the Accounting Standard 19 ''Lease'' (AS 19) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006. Accordingly, the assets have been accounted at fair value. Lease payments are apportioned between fnance charge and reduction of outstanding liability.

b. operating Lease

Assets taken on lease under which all the risks and rewards of ownership effectively retained by the Lessor are classifed as operating lease. Lease payments under operating lease are recognized as expenses on accrual basis in accordance with the respective lease agreements.

4. Depreciation of tangible Fixed assets: I. textile Unit:

a. Depreciation on all the Plant & Machineries acquired is provided on the Straight Line Method in accordance with Schedule XIV to the Companies Act, 1956.

b. Depreciation on assets other than Plant & Machineries acquired is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

c. Cost of Reeds are written off over the period of 2 years.

II. Roll Manufacturing Unit:

a. Depreciation on Fixed Assets is provided on the Straight Line Method for the assets acquired upto March 31, 2001 in accordance with Schedule XIV to the Companies Act, 1956.

b. Depreciation on Fixed Assets acquired after April 1, 2001 is provided on the Written Down Method in accordance with Schedule XIV to the Companies Act, 1956.

III. Depreciation on additions to fxed assets is provided on pro-rata basis from the date of acquisition or installation, and in case of new project from the date of commencement of commercial production.

I V. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said asset is sold, discarded, demolished or scrapped.

V. Cost of Leasehold Land is written off over the period of Lease.

5. Investments:

Long term investments are stated at cost less diminution in the value of investments, if any. Further, current investments are stated at cost or market value whichever is lower.

6. Inventories:

a. textile Unit:

i. Raw Materials

At monthly average cost or net realizable value whichever is lower.

ii. Process Stock and Finished Goods

At quarterly average cost or net realizable value whichever is lower.

iii. Stores and Spares

At cost or net realizable value whichever is lower.

b. Roll Manufacturing Unit:

Stock of Raw Materials, Stores & Other Consumables and Semi Finished Goods are valued at lower of cost or net realisable value and for this purpose cost is determined on following basis:

i. Raw Materials

At cost or net realizable value whichever is lower.

ii. Process stock

Cost comprises of Raw Material cost and processing cost.

iii. Stores & Other Consumables

Stores & Other Consumables are valued at cost. Cost is considered on First in First out Basis.

iv. Finished goods

Finished Goods are valued at lower of cost or net realizable value.

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

7. Employee Benefts:

Defned Contribution Plan:

Employee Beneft in the form of contribution to Provident Fund managed by Government Authorities, Employees State Insurance Corporation and Labour Welfare Fund are considered as defned contribution plan and the same is charged to the Statement of Proft and Loss for the year when the contributions to the respective funds are due.

Certain employees of Hindoostan Mills Ltd. are participants in the LIC Group Superannuation Scheme which is a Defned Contribution Plan. The Company has no obligations to the Plan beyond its yearly contributions.

Defned Beneft Plan:

The liability for Leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard 15 ''Employee Benefts'' (AS-15) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006.

8. Foreign Currency transactions:

Transactions in Foreign Currency are recorded at the original rate of exchange in force at the time the transactions are effected. Exchange differences arising on repayment / restatement of foreign currency liabilities incurred for the purpose of acquiring fxed assets from a country outside India, are adjusted in carrying amount of the respective fxed assets. Exchange differences arising on settlement of other transactions are recognized in the Statement of Proft and Loss.

Monetary items (other than those related to acquisition of imported fxed assets) denominated in foreign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recogn ized in the Statement of Proft and Loss.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium / discount arising on such forward exchange contract is amortised as income / expense over the life of the contract. Any proft / loss arising on cancellation of such forward exchange contract are recognized as income or expense.

9. Research and Development:

Research and Development expenses are charged to revenue under the respective heads of accounts during the year in which they are incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets.

10. Revenue Recognition:

a. Revenue from domestic sale is recognized on transfer of signifcant risks and rewards of ownership which is based on the dispatch of goods.

b. Revenue from Export sale is recognized on transfer of signifcant risks and rewards of ownership which is based on Bill of lading date.

c. Dividend income is recognized when the right to receive dividend is established.

d. Income from property development is accounted on pro-rata basis taking into consideration amount receivable for property development, number of fats sold and construction work completed.

e. Revenue in respect of other income/claims, etc is only when it is reasonably certain that ultimate collection will be made.

11. taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard – 22 on ''Accounting for Taxes on Income'' (AS-22) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules,2006. Tax expenses comprise both Current Tax and Deferred Tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred Tax Assets and Liabilities are recognized for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

12. accounting of Value added tax (Vat):

VAT input credit is accounted on accrual basis on purchase of materials, which is utilized for payment of VAT on sale of taxable goods and balance is processed for claiming refund.

13. Borrowing Costs:

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

14. Provision, Contingent Liabilities and Contingent assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outfow of resources. Contingent liabilities are not recognized but are disclosed in the Notes. Contingent assets are neither recognized nor disclosed in the Financial Statement.

15. Impairment of Fixed assets:

At the end of the each year, the Company determines whether a provision should be made for impairment loss on fxed assets by considering the indications that an impairment loss may have occurred in accordance with the Accounting Standard 28 ''Impairment of Assets'' (AS 28) issued by the Institute of Chartered Accountants of India and prescribed by the Companies (Accounting Standards) Rules, 2006. An impairment loss is charged to the Statement of Proft and Loss in the year in which an asset is identifed as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.

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Mar 31, 2011

A. Basis of accounting:

The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis. Financial statements are based on historical cost.

Use of Estimates:

The preparation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize/ are known.

1. Fixed assets and Depreciation:

Fixed Assets are recorded at cost of acquisition or construction.

Depreciation for the year is provided on the written down value except on Plant and Machinery at Ambernath Plant acquired before 2001 and Plant and Machinery at Karad Plant which is provided on straight line method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

2. Investments:

Long term investments are stated at cost less diminution in the investments if any. Further current investments are stated at cost or market value whichever is lower.

Investment made through Portfolio Management Services account is reflected by way of opening and closing stock and no transaction wise details have been shown.

3. Inventories:

A) Ambernath Unit:

Stock of raw materials, packing materials and semi finished goods are valued at lower of cost or net realisable value and for this purpose cost is determined on following basis:

1. Raw Materials

At cost or net realisable value whichever is lower. Cost includes incidental expenses like freight transport, custom duty etc.

2. Process stock

Cost comprises of Raw Material cost and processing cost.

3. Packing Materials

Packing materials are valued at cost. Cost is considered on First In First Out Basis

4. Finished goods

Finished Goods are valued at lower of cost or net realisable value and for this purpose the cost is determined on job costing basis.

B) Karad Unit:

1) Stores and Spares

At weighted average cost or net realizable value whichever is lower.

2) Raw Materials

At monthly average cost or net realizable value whichever is lower.Cost includes incidental expenses like freight, transport etc.

3) Process Stock and Finished Goods

At monthly average cost or net realizable value whichever is lower.

Cost comprises of cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

4. Employee Benefits:

Contributions payable to the Company's Superannuation Scheme of L.l.C and Provident Fund are charged to revenue. The provision for leave encashment and Gratuity is determined on actuarial basis as per the Accounting Standard (AS- 15) as per Companies (Accounting Standards) Rules, 2006.

5. Foreign currency transactions:

Transactions in foreign currency are recorded at prevailing rates i.e. in the original rate of exchange in force at the time the transactions are effected. Monetary items in the nature of current assets and liabilities denominated in foreign currencies, to the extent not covered by foreign exchange contracts, are accounted at the exchange rates prevailing on the Balance Sheet date. Gains/losses arising out of fluctuations in exchange rates are accounted for in the profit and loss account except where they relate to the acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets as required under schedule VI of the Companies Act, 1956

6. Taxes on income:

Income Taxes are accounted for in accordance with Accounting Standard - 22 on " Accounting for Taxes on Income" (AS-22) issued by the Institute of Chartered Accountants of India. Tax expenses comprises both current tax and deferred tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognized for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.

7. Revenue Recognition:

a) Revenue from domestic sale is recognized on transfer of significant risks and rewards of ownership.

b) Revenue from export sale (including duty drawback) is recognized on transfer of significant risks and rewards of ownership.

c) Dividend income is recognized when the right to receive dividend is established.

d) Revenue in respect of insurance/other claims, interest etc. is recognized only when it is reasonably certain that ultimate collection will be made.

8. Accounting of value added tax :

VAT input credit is accounted on accrual basis on purchase of materials / goods.

9. Provision, Contingent liabilities and Contingent Assets:

Provision involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Notes. Contingents assets are neither recognized nor disclosed in the Financial Statement.

10. Impairment of Fixed Assets:

At the end of the each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with the Accounting Standard (AS 28) "Impairment of Assets" issued by the Institute of Chartered Accountants of India. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired, when the carrying value of the asset exceeds it recoverable value. The impairment loss recognized in prior accounting period is reversed, if there has been a change in the estimate of recoverable amounts.

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Mar 31, 2010

(a) Basis of accounting:

The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis. Financial statements are based on historical cost.

(b) Fixed assets and depreciation:

i) All fixed assets are stated at cost of acquisition less accumulated depreciation.

ii) Depreciation for the year is provided on the written down value and straight line method at the rates prescribed in Schedule XIV to the Companies Act, 1956 as under:

a) Fixed assets of erstwhile Eck Haubold and Laxmi Limited acquired after April 1985 on the straight line method.

b) All other assets on the written down value method.

(c) Investments:

Long term investments are stated at cost as there is no diminution in the value of investments. Further short term investments are stated at cost or market value whichever is lower.

(d) Inventories:

1) Stock of raw materials, packing materials and semi finished goods are valued at lower of cost or net realisable value and for this purpose cost is determined on following basis:

a) Raw materials and semi finished goods

- First-in-first-out method except Cotton, Brown Papers & Steel (Kgs)

- Cotton hard waste, Brown Papers & Steel (Kgs) — weighted average basis

b) Packing Materials - First-in-first-out method

However, the aforesaid items are not valued below cost as the finished goods in which they are to be incorporated are expected to be sold at or above cost.

2) Raw materials, stores, packing materials, tools etc., are accounted on net basis.

3) Finished goods are valued at lower of cost or net realisable value and for this purpose the cost is determined on job costing basis.

(e) Lease rent:

Annual contractual lease rent received/accrued is credited to the profit and loss account

(f) Employee Benefits:

(i) Snort Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits and they are recognised in the period in which the employee render service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expenses) after deducting any amount already paid.

(ii) Post Employment Benefits:

(a) Defined Benefits Plan Defined Benefit Gratuity Plan. The Company operates defined benefits Gratuity Plans for employees, which is unfunded.

The cost of providing defined benefits is determined using the Projected Unit Credit Method with actuarial valuation being carried out at each balance sheet date. Past service cost is recognised immediately to the extent that the benefits are already vested, else is amortised on a straight- line over the average period until the amended benefits become vested.

The defined benefit obligation recognised in the balance sheet represent the present value of the defined obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost.

The estimates of rate of escalation in salary considered in actuarial valuation, taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

Other Long Term Employee Benefits;

Entitlements to annual leaves are recognised when they accrue to employees. Annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulation of leaves. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit Method with actuarial valuations being carried out at each balance sheet date.

g) Foreign currency transactions:

Transactions in foreign currency are recorded at prevailing rates. Monetary items in the nature of current assets and liabilities denominated in foreign currencies, to the extent not covered by foreign exchange contracts, are transacted at the exchange rates prevailing on the Balance Sheet date. Gains/losses arising out of fluctuations in exchange rates are accounted for in the profit and loss account except where they relate to the acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets as required under schedule VI of the Companies Act, 1956.

h) Taxes on income:

Income-tax expenses comprises of current tax and deferred tax. The deferred tax charge or credit is recognised using current tax rates.