Accounting Policies of Hisar Spinning Mills Ltd. Company

Mar 31, 2024

2. Material Accounting Policies

The material accounting policy information applied by the Company in the preparation of its financial
statements are listed below. Such accounting policies have been applied consistently to all the periods
presented In these financial statements, unless otherwise indicated below:

(a) Basis of preparation of financial statements

These financial statements of the Company have been prepared in accordance with the Indian
Accounting Standards (“Ind AS”) prescribed under Section 133 of the Companies Act, 2013 (“the Act”)
read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant
provisions of the Act.

(b) Basis of measurement of financial statements

The financial statements have been prepared on the historical cost basis, except for the following items:

- Defined benefit liabilities/ (assets) are measured at fair value of plan assets less present value of
defined benefit obligation.

- Certain financial assets and liabilities (including derivative instruments) are measured at fair value.

- Other financial assets and liabilities are measured at amortised cost.

(c) Functional and Presentation Currency

The financial statements are presented in Indian Rupees (''INR''), which is also the Company''s functional
currency. All amounts have been rounded-off to the nearest Lakhs up to 2 decimal points, unless
otherwise indicated.

(d) Use of estimates and judgments

The preparation of the financial statements in conformity with Ind AS requires management to make
estimates, judgments and assumptions. These estimates, judgments and assumptions affect the
application of accounting policies and the reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the period. Accounting estimates could change from period to period.
Actual results could differ from those estimates. Appropriate changes in estimates are made as
management becomes aware of changes in circumstances surrounding the estimates. Changes in
estimates are reflected in the financial statements in the period in which changes are made. Differences
between actual results and estimates are recognised in the period in which the results are known/
materialised.

(e) Current versus non-current classification

All assets and liabilities have been classified as current or non-current as per the Company’s normal
operating cycle and other criteria set out in Division II of Schedule III to the Act. Based on the nature of
products and the time between the acquisition of assets for processing and their realisation in cash or
cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of
current or non-current classification of assets and liabilities.

Assets

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

- It is expected to be realised in, or is intended to be sold or consumed in, the Company’s normal
operating cycle;

- It is held primarily for the purpose of being traded;

- It is expected to be realised within 12 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 12 months after the reporting date.

Current assets include the current portion of non-current financial assets. All other assets are classified
as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following 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 12 months after the reporting date; or

- The Company does not have an unconditional right to defer settlement of the liability for at least 12
months after the reporting date.

Current liabilities include current portion of non-current financial liabilities. All other liabilities are
classified as non-current.

(f) Property, plant and equipment

All Items of Property, Plant and Equipment are stated at cost less accumulated depreciation (other than
freehold land) and accumulated impairment loss, if any. The cost of an item of Property, Plant and
Equipment comprises:

- its purchase price including import duties and non-refundable purchase taxes after deducting trade
discounts and rebates,

- any attributable expenditure on making the asset ready for its intended use, other incidental
expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the
date the asset is ready for its intended use

- the initial estimate of the costs of dismantling and removing the item and restoring the site on
which it is located, the obligation for which an entity incurs either when the item is acquired or as a
consequence of having used the item during a particular period for purposes other than to produce
inventories during that period.

The Company has elected to continue with the carrying value of all its Property, Plant and Equipment
recognised as on 1st April, 2016 measured as per the previous Generally Accepted Accounting
Principles (GAAP) and use that carrying value as its deemed cost as on transition date.

Advances paid towards the acquisition of property, plant and equipment outstanding at end of each
reporting date is classified as ''capital advances'' under the note of “Other non-current assets” and the
cost of assets not put to use before such date are disclosed under “Capital work-in-progress”.

Subsequent expenditure relating to property, plant and equipment is capitalised only when it is probable
that future economic benefits associated with these will flow to the Company and the cost of the item
can be measured reliably. Repairs and maintenance costs are recognised in net profit in the Statement
of Profit and Loss when incurred.

The Company identifies and determines cost of each component / part of property, plant and equipment
separately, if the component/ part has a cost which is significant to the total cost of the property, plant
and equipment and has useful life that is materially different from that of the remaining asset.

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. Gains or losses arising
from de-recognition of property, plant and equipment are measured as the difference between the net
disposal proceeds and the carrying amount of property, plant and equipment and are recognised in the
statement of profit and loss when the property, plant and equipment is derecognised.

Depreciation on property, plant and equipment is provided on diminishing balance method (written down
value method) in the manner and over the useful life of the assets prescribed under Part ''C'' of Schedule
II to the Act except for certain items of plant and equipment having gross carrying amount of ? 19.60
Lakhs (previous year ? 19.60 Lakhs) and of building having gross carrying amount of ? 4.21 Lakhs
(previous year ? 4.21 Lakhs) where the management estimates the life as 3 and 5 years respectively
based on internal assessment and independent technical evaluation carried out by external valuers.
The management believes that the useful life of 3 and 5 years respectively for the said assets best
represent the period over which the management expects to consume future economic benefits
embodied in these assets through its use. Hence the useful life of these assets is different from the
useful life as prescribed under Part ''C'' of Schedule II to the Act.

On the basis of internal assessment and independent technical evaluation carried out by external
valuers, the residual value of certain items of plant and equipment having gross carrying amount of ?
17.58 lakhs (previous year ? 17.58 lakhs) has been considered as ? 5.27 lakhs (previous year ? 5.27
lakhs) and of building having gross carrying amount of ? 4.21 lakhs (previous year ? 4.21 lakhs) has
been considered as ? 0.63 lakhs (previous year ? 0.63 lakhs).

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

(g) Non-current assets classified as held for sale

The Company classifies non current assets as held for sale if their carrying amounts will be recovered
principally through a sale rather than through continuing use. Current assets classified as held for sale
are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the disposal of an asset, excluding finance costs and income
tax expense.

The criteria for held for sale classification is regarded as met only when the sale is highly probable, and
the asset is available for immediate sale in its present condition. 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 and the sale 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 classification is
regarded met only when the assets is available for immediate sale in its present condition, subject only
to terms that are usual and customary for sales of such assets, its sale is highly probable; and it will
genuinely be sold, not abandoned. The Company treats sale of the asset to be highly probable when:

- The appropriate level of management is committed to a plan to sell the asset,

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

- 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.

(h) Impairment of assets

i. Financial assets (other than those carried at fair value)

The Company recognises loss allowances using the Expected Credit Loss (ECL) model for the
financial assets which are not fair valued through profit or loss.

Loss allowance for trade receivables with no significant financing component is measured at an
amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured
at an amount equal to the 12-months ECL, unless there has been a significant increase in credit
risk from initial recognition in which case those are measured at lifetime ECL. The amount of
expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting
date to the amount that is required to be recognised is recognised as an impairment gain or loss in
Statement of Profit and Loss.

ii. Non-financial assets

The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed
at each reporting date to determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated. For impairment testing, assets
that do not generate independent cash inflows are grouped together into cash-generating units
(CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are
largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its
fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss.
Impairment loss recognised in respect of a CGU is allocated to reduce the carrying amounts of the
assets of the CGU (or group of CGUs) on a pro rata basis.

In respect of assets for which impairment loss has been recognised in prior periods (if any), the
Company reviews at each reporting date whether there is any indication that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. Such a reversal is made only to the extent
that the asset''s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(i) Inventories

Inventories (other than saleable waste) have been valued at lower of cost and net realisable value.
However, raw materials and other supplies held for use in the production of inventories are not written
down below cost if the finished products in which they will be incorporated are expected to be sold at or
above cost.

The cost of inventories comprise all costs of purchase, costs of conversion and other costs incurred in
bringing the inventories to their present location and condition; where the costs of purchase of
inventories comprise the purchase price, import duties and other taxes (other than those subsequently
recoverable by the Company from the taxing authorities), and transport, handling and other costs
directly attributable to the acquisition of finished goods, materials and services. Trade discounts,
rebates and other similar items are deducted in determining the costs of purchase. The cost in respect
of different classifications of inventories is computed as under:

- in case of raw materials, stock-in-trade, stores and spare-parts etc. at first-in-first-out (FIFO) cost
method plus direct expenses.

- in case of work-in-progress at raw material cost (determined on FIFO cost method) plus
appropriate portion of conversion cost and other overheads incurred depending upon the stage of
completion.

- in case of finished goods at raw material cost (determined on FIFO cost method) plus conversion
cost, packing cost and other overheads incurred to bring the goods up to their present location
and condition.

Saleable waste has been valued at estimated net realisable value.

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

Provision for obsolete/ old inventories is made, wherever required.

0) Trade receivables

Trade receivables are amounts due from customers for goods sold 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 in accordance with Ind AS 115 for pricing adjustments embedded in the contract.

(k) Foreign currency transactions

The foreign currency transactions are recorded, on initial recognition in the functional currency, by
applying to the foreign currency amount the spot exchange rate between the functional currency and
the foreign currency at the date of the transaction.

The foreign currency monetary items are translated using the closing rate at the end of each reporting
period. Non-monetary items that are measured in terms of historical cost in a foreign currency shall be
translated using the exchange rate at the date of the transaction. Exchange differences arising on the
settlement of monetary items or on translating monetary items at rates different from those at which
they were translated on initial recognition during the period or in previous financial statements shall be
recognised in the Statement of Profit and Loss in the period in which they arise.

(l) Employee benefits

i. Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are
expensed as the related service is provided. A liability is recognised for the amount expected to be
paid e.g., bonus, if the Company has a present legal or constructive obligation to pay this amount
as a result of past service provided by the employee, and the amount of obligation can be
estimated reliably.

ii. Defined contribution plans

For certain group of employees, 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 recognises
contribution payable to these funds/ schemes 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 recognised
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
recognised as an asset to the extent that the pre-payment will lead to, for example, a reduction in
future payment or a cash refund.

iii. Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
The Company provides for gratuity, a defined benefit retirement plan (‘the Gratuity Plan’) covering
eligible employees of the Company. The Gratuity Plan provides a lump-sum payment to vested
employees at retirement, death, incapacitation or termination of employment, of an amount based
on the respective employee’s salary and the tenure of employment with the Company.

Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an
independent actuary, at each balance sheet date using the projected unit credit method. The
Company fully contributes all ascertained liabilities with Life Insurance Corporation of India (LIC)
though a trust formed by the Company for the purpose. LIC administrate contributions and
contributions are invested in the schemes as permitted by the laws of India.

The Company recognises the net obligation of a defined benefit plan in its balance sheet as an
asset or liability. Remeasurement, comprising of actuarial gains and losses, the effect of the asset
ceiling, excluding amounts included in net interest on the net defined benefit liability and the return
on plan assets (excluding amounts included in net interest on the net defined benefit liability), are
recognised immediately in the balance sheet with a corresponding debit or credit to retained
earnings through Other Comprehensive Income (OCI) in the period in which they occur.
Remeasurement is not reclassified to profit or loss in subsequent periods.

iv. Compensated absences

Based on the leave rules of the Company, employees are not permitted to accumulate leave. Any
unavailed privileged leave to the extent encashable is paid to the employees and charged to the
Statement of Profit and Loss for the year.

(m) Revenue recognition

The Company recognises revenue when the amount of revenue can be reliably measured, it is probable
that future economic benefits will flow to the entity and specific criteria have been met for each of the
Company''s activities, as described below. The Company bases its estimate of return on historical
results, taking into consideration the type of customer, the type of transaction and the specifics of each
arrangement.

i. Revenue from sale of goods

Revenue is measured at the transaction price of the consideration received or receivable. Revenue
from sale of goods is recognised as and when the Company satisfies performance obligations by
transferring control of the promised goods to its customers as per terms of contract. Amounts
disclosed as revenue are net of returns, trade discounts, goods and services tax and amount
collected on behalf of third parties.

ii. Revenue from other than sale of goods

- Export incentives and subsidies are recognised when there is reasonable assurance that the
Company will comply with the conditions and the incentives/ subsidies will be received.

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

(n) Borrowing costs

Borrowing costs are interest and other costs incurred in connection with borrowing of funds. Borrowing
costs that are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised as part of the cost of the asset. Qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use. All other borrowing costs are recognised as expense in
the period in which they are incurred.

(o) Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received
and the Company will comply with all attached conditions.

Government grants that compensate the Company for expenses incurred are recognised in the
Statement of Profit and Loss, as income or deduction from the relevant expense, on a systematic basis
in the periods in which the expense is recognised.

Government grants relating to the purchase of property, plant and equipment are included in liabilities
as deferred income and are credited to Statement of Profit and Loss on a diminishing balance basis
over the expected lives of the related assets to match them with the costs for which they are intended to
compensate and presented within other income. In case of the Government grant received is to
compensate the import cost of assets subject to an export obligation as primary condition, Government
grants are included in liabilities as deferred income and are credited to statement of profit and loss
according to fulfilment of associated export obligation and presented within other operating revenues.

(p) 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 instruments also include derivative contracts
such as foreign currency foreign exchange forward contracts.

Financial assets and liabilities are recognised when the Company becomes a party to the contractual
provisions of the instrument. Financial assets and liabilities are initially measured at fair value, except
for trade receivables which are initially measured at transaction price. 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 measured on initial recognition of financial asset or financial liability. Transaction costs directly
attributable to the acquisition of financial asset or financial liabilities at fair value through profit or loss
are recognized immediately in the Statement of Profit and Loss.

i. Non - Derivatives Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised on a trade
date basis. Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the time frame established by regulation or convention in the marketplace.

All recognised financial assets are subsequently measured in their entirety at either amortised cost
or fair value, depending on the classification of the financial assets.

Classifications

The Company classifies its financial assets as subsequently measured at either amortised cost or
fair value depending on the Company’s business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets.

Business model assessment

The Company makes an assessment of the objective of a business model in which an asset is
held at an instrument level because this best reflects the way the business is managed and
information is provided to management.

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

- it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows.

- the contractual terms of the financial asset represent contractual cash flows that are solely
payments of principal and interest.

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 as finance income in the profit or loss. The losses arising from
impairment are recognised in the profit or loss.

A financial asset is measured at fair value through other comprehensive income (FVTOCI), where
the financial assets are held not only for collection of cash flows arising from payments of principal
and interest but also from the sale of such assets. Such assets are subsequently measured at fair
value, with unrealised gains and losses arising from changes in the fair value being recognised in
other comprehensive income.

A financial asset is measured at fair value through profit or loss (FVTPL), where the assets are
managed in accordance with an approved investment strategy that triggers purchase and sale
decisions based on the fair value of such assets. Such assets are subsequently measured at fair
value, with unrealised gains and losses arising from changes in the fair value being recognised in
the Statement of Profit and Loss in the period in which they arise.

FVTPL is a residual category for financial assets. Any financial asset which does not meet the
criteria for categorization as at amortised cost or as FVTOCI, is classified as FVTPL.

Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from
the financial asset expire, or it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of ownership of the financial asset
are transferred or in which the Company neither transfers nor retains substantially all of the risks
and rewards of ownership and does not retain control of the financial asset.

If the Company enters into transactions whereby it transfers assets recognised on its balance
sheet, but retains either all or substantially all of the risks and rewards of the transferred assets,
the transferred assets are not derecognised.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or
the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the
consideration received (including any new asset obtained less any new liability assumed) and (ii)
any cumulative gain or loss that had been recognised in OCI is recognised in Statement of Profit
and Loss.

ii. Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest
method or at FVTPL.

Financial liabilities measured at amortised cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and losses are recognised in the Statement of Profit
and 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.

The effective interest method is a method of calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash payments through the expected life of the financial
liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities designated upon
initial recognition as at fair value through profit or loss. Financial liabilities at FVTPL are measured
at fair value and net gains and losses, including any interest expense, are recognised in profit or
loss.

Derecognition of financial liabilities

The Company derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expired.

iii. Derivative financial instruments

The Company uses derivative financial instruments, e.g. foreign currency foreign exchange
forward contracts to hedge its foreign currency risks. Derivative financial instruments are initially
recognised at fair value on the date a derivative contract is entered into and are subsequently re¬
measured at their fair value at the end of each period. Any gains or losses arising from changes in
the fair value of derivatives are taken directly to profit or loss.

(q) Measurement of fair values

In determining the fair value of its financial instruments, the Company uses a variety of methods and
assumptions that are based on market conditions and risks existing at each reporting date. All methods
of assessing fair value result in general approximation of value, and such value may never actually be
realised.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the
valuation techniques as follows:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).

When measuring the fair value of an asset or a liability, the Company uses observable market data as
far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different
levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the
same level of the fair value hierarchy as the lowest level input that is significant to the entire
measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.

(r) Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand and short-term
deposits with an original maturity of three months or less from the date of acquisition, that are readily
convertible to a known amount of cash and subject to an insignificant risk of changes in value. For the
purposes of the Cash flow statement, cash and cash equivalents is as defined above, net of
outstanding bank overdrafts. In the balance sheet, bank overdrafts are shown within borrowings in
current liabilities.

(s) Earnings per share

Basic earning 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.

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 shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.

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Mar 31, 2014

(a) Basis of preparation

The financial statements have been prepared under the historical cost convention on accrual basis of accounting and in accordance with accounting principles generally accepted in India and comply with the accounting standards notified by the Central Government of India under the Companies (Accounting Standard) Rules, 2006, the provisions of the Companies Act, 2013 (to the extent notified) and the Companies Act. 1956 (to the extent applicable).

All assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash or cash equivalents, the company has ascertained its operating cycle as twelve months for the purpose of current - non current classification of assets and liabilities.

(b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

(c) Revenue recognition

Revenue from sale of manufactured goods and sale of waste is recognised on transfer of all significant risks and rewards of ownership to the buyer which coincides with dispatch of goods to the customers. Revenue from sale of manufactured goods and sale of waste is disclosed net of returns, if any.

(d) Employee benefits

(i) Short-term employee benefits

Short-term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.

(ii) Defined contribution plan - provident fund and pension fund

The contribution to provident fund and pension fund are considered as defined contribution plans and are charged to the statement of profit and loss as they fall due, based on the amount of contribution required to be made.

(iii) Compensated absences

Based on the leave rules of the company, employees are not permitted to accumulate leave. Any unavailed privileged leave to the extent encashable is paid to the employees and charged to the statement of profit and loss for the year.

(iv) Defined benefit plan - gratuity

Liability for gratuity is provided through a policy taken from Life Insurance Corporation of India (LIC) by a trust formed for the purpose. The net present value of obligation towards gratuity to employees is actuarially determined as at the balance sheet date based on the Projected Unit Credit (PUC) Actuarial Method. Actuarial gains and losses are recognised in the statement of profit and loss for the year.

(e) Fixed assets

Fixed assets have been stated at cost less accumulated depreciation. The cost of an asset comprises its purchase price including duties and taxes (other than those subsequently recoverable by the company from the taxing authorities) and any directly attributable costs of bringing the asset to working condition for its intended use. When assets are sold or discarded their cost and accumulated depreciation are removed from the accounts and any gain or loss resulting from their disposal is included in the statement of profit and loss.

Advances paid towards the acquisition of fixed assets outstanding at the balance sheet date are disclosed as ''Capital advances'' under the note of ''Long-term loans and advances'' and the cost of fixed assets not ready for their intended use before such date are disclosed under ''Capital work- in-progress''.

(f) Depreciation

Depreciation on tangible fixed assets has been provided on written down value method at the rates and in the manner specified in Schedule - XIV to the Companies Act, 1956.

(g) Impairment of assets

At each balance sheet date an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i.e., the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

(h) Inventories

Inventories (other than saleable waste) have been valued at lower of cost and net realisable value However, raw materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The cost in respect of various items of inventory is computed as under:

* in case of raw material, stores and spares, diesel and packing material at first-in-first-out (FIFO) cost method plus direct expenses.

* in case of work-in-progress at raw material cost (determined on FIFO cost method) plus appropriate portion of conversion cost and other overheads incurred depending upon the stage of completion.

* in case of finished goods at raw material cost (determined on FIFO cost method) plus conversion cost, packing cost and other overheads incurred to bring the goods up to their present condition and location.

Saleable waste has been valued at estimated net realisable value.

(i) Effects of change in foreign exchange rates

Foreign currency transactions are initially recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and foreign currency at the date of the transaction. At each balance sheet date foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

(j) Government grants

Government grants related to revenue have been deducted from related expense which they are intended to compensate. Government grants of the nature of promoters'' contribution have been credited to Capital Reserve.

(k) Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets, A qualifying asset is one that takes necessarily substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the statement of profit and loss

(l) Tax expense

Tax expense comprises current and deferred tax. Provision for current tax is made in accordance with the provisions of Income-tax Act, 1961. Deferred tax resulting from timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. However, deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specific period.

(m) Segment reporting

The company operates only in one business segment viz., ''yarn'' which is the reportable segment in accordance with the requirements of Accounting Standard (AS) -17 ''Segment Reporting'' notified under the Companies (Accounting Standard) Rules, 2006.

(n) Provisions, contingent liabilities and contingent assets

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 statements.

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Mar 31, 2013

(a) Basis of preparation

The financial statements have been prepared under the historical cost convention on accrual basis of accounting and in accordance with accounting principles generally accepted in India and comply with the accounting standards notified by the Central Government of India under the Companies (Accounting Standard) Rules, 2006 and relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the company''s normal. operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash or cash equivalents, the company has ascertained its operating cycle as twelve months for the purpose of current - non current classification of assets and liabilities.

(b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements'' and the results of operations during the reporting year end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

(c) Revenue recognition

Revenue from sale of manufactured goods and sale of waste is recognised on transfer of all significant risks and rewards of ownership to the buyer which coincides with dispatch of goods to the customers. Revenue from sale of manufactured goods and sale of waste is disclosed net of returns, if any.

(d) Employee benefits

(i) Short-term employee benefits

Short-term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.

(ii) Defined contribution plan - provident fund and pension fund

The contribution to provident fund and pension fund are considered as defined contribution plans and are charged to the statement of profit and loss as they fall due, based on the amount of contribution required to be made.

(iii) Compensated absences

Based on the leave rules of the company, employees are not permitted to accumulate leave. Any unavailed privileged leave to the extent encashable is paid to the employees and charged to the statement of profit and loss for the year.

(iv) Defined benefit plan - gratuity

Liability for gratuity is provided through a policy taken from Life Insurance Corporation of India (LIC) by a trust formed for the purpose. The net present value of obligation towards gratuity to employees is actuarially determined as at the balance sheet date based on the Projected Unit Credit (PUC) Actuarial Method. Actuarial gains and losses are recognised in the statement of profit and loss for the year.

(e) Fixed assets

Fixed assets have been stated at cost less accumulated depreciation. The cost of an asset comprises its purchase price including duties and taxes (other than those subsequently recoverable by the company from the taxing authorities) and any directly attributable costs of bringing the asset to working condition for its intended use. When assets are sold or discarded their cost and accumulated depreciation are removed from the accounts and any gain or loss resulting from their disposal is included in the statement of profit and loss.

Advances paid towards the acquisition of fixed assets outstanding at the balance sheet date are disclosed as ''Capital advances'' under the note of ''Long-term loans and advances'' and the cost of fixed assets not ready for their intended use before such date are disclosed under ''Capital work-in-progress''.

(f) Depreciation

Depreciation on tangible fixed assets has been provided on written down value method at the rates and in the manner specified in Schedule - XTV to the Companies Act, 1956.

(g) Impairment of assets

At each balance sheet date an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i.e., the amount by which the carrying'' amount of an asset exceeds its recoverable amount is provided in the books of account. (h) Inventories

Inventories (other than saleable waste) have been valued at lower of cost and net realisable value. However, raw materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The cost in respect of various items of inventory is computed as under :

- in case of raw material, stores and spares, diesel and packing material at first-in-first-out (FIFO) cost method plus direct expenses. v

- in case of work-in-progress at raw material cost (determined on FIFO cost method) plus appropriate portion of conversion cost and other overheads incurred depending upcn the stage of completion.

- in case of finished goods at raw material cost (determined on FIFO cost method) plus conversion cost, packing cost and other overheads incurred to bring the goods up to their present condition and location.

Saleable waste has been valued at estimated net realisable value.

(i) Effects of change in foreign exchange rates

Foreign currency transactions are initially recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and foreign currency at the date of the transaction. At each balance sheet date foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

(j) Government grants

Government grants related to revenue have been deducted from related expense which they are intended to compensate. Government grants of the nature of promoters'' contribution have been credited to Capital Reserve.

(k) Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that takes necessarily substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the statement of profit and loss.

(I) Tax expense

Tax expense comprises current and deferred tax. Provision for current tax is made in accordance with the provisions of Income-tax Act, 1961. Deferred tax resulting from timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. However, deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued'' by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specific period.

(m) Segment reporting

The company operates only in one business segment viz., ''yarn'' which is the reportable segment in accordance with the requirements of Accounting Standard (AS) - 17 ''Segment Reporting'' notified under the Companies (Accounting Standard) Rules, 2006.

(n) Provisions, contingent liabilities and contingent assets

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 statements.

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Mar 31, 2011

A) Basis of preparation and presentation of financial statements The accounts are prepared on accrual basis under the historical cost convention in accordance with generally accepted accounting principles and the accounting standards referred to in section 211(3C) of the Companies Act, 1956 and other relevant provisions of the said Act.

b) Inventories Inventories have been valued at lower of cost and net realisable value. The cost in respect of various items of inventory is computed as under:

- in case of raw material, stores, spares, diesel and packing material at first in first out (FIFO) cost method plus direct expenses.

- in case of work in process at raw material cost plus conversion cost depending upon the stage of completion.

- in case of finished goods at raw material cost plus conversion cost, packing cost and other overheads incurred to bring the goods up to their present condition and location.

c) Revenue Recognition Sales of goods is recognised at the point of dispatch of goods to the customers and is disclosed net of returns, if any.

d) Fixed Assets

The Fixed assets have been stated at original cost including inward freight, other incidental costs relating to acquisition and installation thereof and duties and taxes less modvat/cenvat credit and value added tax credit, if any, and less depreciation up to date.

e) Depreciation

Depreciation on fixed assets has been provided on written down value method at the rates and in the manner specified in Schedule - XIV to the Companies Act, 1956.

f) Effects of changes in foreign exchange rates Transactions in foreign currency are recorded on initial recognition in the reporting currency amount based on the exchange rate between the reporting currency and foreign currency at the date of transaction. At each balance sheet date foreign currency monetary items are reported at closing rates. Exchange differences arising on restatement of monetary items at closing rates have been provided during the year under consideration.

g) Government Grants Government grants related to revenue have been deducted from related expense which they are intended to compensate. Government grants of the nature of promoters' contribution have been credited to Capital Reserve.

h) Employee Benefits

(i) Provident Fund and Pension Fund

All eligible employees receive benefits from a provident fund, which is a defined contribution plan. Both the employee and the company make monthly contributions to the fund, which is equal to a specified percentage of the covered employee's basic salary and the contribution made by the company to such fund is charged to the profit and loss account. The company has no further obligations under this plan beyond its monthly contributions.

(ii) Leave with Wages

Provision for leaves, if any, is made on the basis of leaves accrued to the employees during the year.

(iii) Gratuity

Liability for gratuity is provided through a policy taken from Life Insurance Corporation of India (LIC) by a trust formed for the purpose. The liability is provided on the basis of actuarial valuation made by LIC as at the close of the year to cover the year's liability and such liability is charged to the profit and loss account.

i) Borrowing Costs

Borrowing costs that are directly attributable to qualifying asset are capitalised as part of the cost of the asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

j) Accounting for Taxes on Income

Provision for current income tax is made in accordance with the provisions of Income-tax Act, 1961. In accordance with Accounting Standard (AS) - 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax resulting from timing differences between book and tax profit is accounted for at the tax rates substantively enacted by the Balance Sheet date to the extent that the timing differences are expected to crystalise. Deferred tax assets are recognised only when there is virtual certainty of sufficient future profits available to realise such assets.

k) Impairment of Assets

The Company has considered all the external sources of information and internal sources of information indicating whether an individual asset or a cash-generating unit of the company has impaired. On the basis of those sources of information, no indication of a potential impairment loss is present, as such no formal estimate of recoverable amount has been made at the balance sheet date.

l) Provisions and Contingent Liabilities

Provisions are recognised for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount can not be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of resources embodying economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events are also disclosed as contingent liabilities unless the probability of outflow of resources embodying economic benefits is remote.

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Mar 31, 2010

A) Basis of preparation and presentation of financial statements

The accounts are prepared on accrual basis under the historical cost convention in accordance with generally accepted accounting principles and the accounting standards referred to in section 211(3C) of the Companies Act, 1956 and other relevant provisions of the said Act.

b) Inventories

Inventories have been valued at lower of cost and net realisable value. The cost in respect of various items of inventory is computed as under:

- in case of raw material, stores, spares, diesel and packing material at first in first out (FIFO) cost method plus direct expenses.

- in case of work in process at raw material cost plus conversion cost depending upon the stage of completion.

- in case of finished goods at raw material cost plus conversion cost, packing cost and other overheads incurred to bring the goods up to their present condition and location.

c) Revenue Recognition

Sales of goods is recognised at the point of dispatch of goods to the customers and is disclosed net of returns, if any.

d) Fixed Assets

The Fixed assets have been stated at original cost including inward freight, other incidental costs relating to acquisition and installation thereof and duties and taxes less modvat/cenvat credit and value added tax credit, if any, and less depreciation up to date.

e) Depreciation

Depreciation on fixed assets has been provided on written down value method at the rates and in the manner specified in Schedule - XIV to the Companies Act, 1956.

f) Effects of changes in foreign exchange rates

Transactions in foreign currency are recorded on initial recognition in the reporting currency amount based on the exchange rate between the reporting currency and foreign currency at the date of transaction. At each balance sheet date foreign currency monetary items are reported at closing rates. Exchange differences arising on restatement of monetary items at closing rates have been provided during the year under consideration.

g) Government Grants

Government grants related to revenue have been deducted from related expense which they are intended to compensate. Government grants of the nature of promoters contribution have been credited to Capital Reserve.

h) Employee Benefits

(i) Provident Fund and Pension Fund

All eligible employees receive benefits from a provident fund, which is a defined contribution plan. Both the employee and the company make monthly contributions to the fund, which is equal to a specified percentage of the covered employees basic salary and the contribution made by the company to such fund is charged to the profit and loss account. The company has no further obligations under this plan beyond its monthly contributions.

(ii) Leave with Wages

Provision for leaves, if any, is made on the basis of leaves accrued to the employees during the year.

(iii) Gratuity

Liability for gratuity is provided through a policy taken from Life Insurance Corporation of India (LIC) by a trust formed for the purpose. The liability is provided on the basis of actuarial valuation made by LIC as at the close of the year to cover the years liability and such liability is charged to the profit and loss account.

i) Borrowing Costs

Borrowing costs that are directly attributable to qualifying asset are capitalised as part of the cost of the asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

j) Accounting for Taxes on Income

Provision for current income tax is made in accordance with the provisions of Income-tax Act, 1961. In accordance with Accounting Standard (AS) - 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax resulting from timing differences between book and tax profit is accounted for at the tax rates substantively enacted by the Balance Sheet date to the extent that the timing differences are expected to crystalise. Deferred tax assets are recognised only when there is virtual certainty of sufficient future profits available to realise such assets.

k) Impairment of Assets

The Company has considered all the external sources of information and internal sources of information indicating whether an individual asset or a cash-generating unit of the company has impaired. On the basis of those sources of information, no indication of a potential impairment loss is present, as such no formal estimate of recoverable amount has been made at the balance sheet date.

l) Provisions and Contingent Liabilities

Provisions are recognised for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount can not be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of resources embodying economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events are also disclosed as contingent liabilities unless the probability of outflow of resources embodying economic benefits is remote.