Accounting Policies of Jagjanani Textiles Ltd. Company

Mar 31, 2024

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES:

I BASIS OF PREPARATION OF FINANCIAL STATEMENTS

A. Accounting Conventions:

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and with Companies (Indian Accounting Standards) (Amendment) Rules, 2017 and comply in all material aspects with the relevant provisions of the Companies Act’2013 to the extent applicable to it.

The Financial Statements have been prepared on a historical cost basis except the following assets and liabilities which have been measured at fair values:

• Certain Financial Assets and Liabilities that are measured at Fair Value The accounting policies are applied consistently to all the periods reported in the financial statements unless otherwise stated.

B. Use of Estimates:

The preparation of financial statements requires management to make estimates and assumptions that are believed to be reasonable under the circumstances and such estimates and assumptions may affect the reported amount of assets and liabilities, classification of assets and liabilities into non-current and current and disclosures relating to contingent liabilities as at the date of financial statements and the reported amounts of income and expenses during the reporting period. Although the financial statements have been prepared based on the management’s best knowledge of current events and procedures/actions, the actual results may differ on the final outcome of the matter/transaction to which the estimates relate.

C. Property, Plant and Equipment (PPE):

The company did not hold any Property, Plant and Equipment (PPE) at any time during the year.

The cost of an item of property, plant and equipment is recognized as an asset if, and only if:

(a) It is probable that future economic benefits associated with the item will flow to the entity; and

(b) The cost of the item can be measured reliably.

Property, plant and equipment held for use in the supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation

and accumulated impairment losses.

The Company capitalized its Property, Plant and Equipment at a value net of GST/ Other Tax Credits received/receivable during the year in respect of eligible item of Property, Plant and Equipment. Subsequent costs are included in the carrying amount of respective Property, Plant and Equipment or recognized as separate assets as appropriate, only if such costs increase the future benefits from the existing items beyond their previously assessed standard of performance and cost of such items can be measured reliably.

Depreciation & Amortization:

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives as prescribed under Part C of Schedule II to the Companies Act 2013, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Depreciation for assets purchased/sold during a period is proportionately charged for the period of use.

Derecognition of Property, Plant and Equipment:

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and are recognised net within “other income / other expenses” in the Statement of profit and loss.

D. Inventories:

Inventories are measured at the lower of cost and net realisable value. The cost of inventories includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their present location and condition.

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

The company is in business of trading of Goods so it does not hold any inventory, the inventory reflecting in the financial statement are either goods in transit or the risk and reward of ownership of the goods are not transferred to the buyer of the goods.

E. Revenue Recognition:

Revenue is measured at the fair value of the consideration received or receivable from the customers/parties net of returns, rebates, taxes and discount to the customers and amounts collected on behalf of third parties. The Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be

measured reliably, regardless of when the payment is being made.

Sale of Goods:

The revenue from the sale of goods is recognized at transaction price when the company had transferred the property in Goods to the buyer for a price and all significant risks and rewards of ownership had been transferred to the buyer and no significant uncertainty existed as to the amount of consideration that would be derived from such sale. The recognition event is usually the dispatch of goods to the buyer such that the Company retains no effective control over the goods dispatched.

Interest Income:

Income from investments and deposits, where appropriate, is taken into revenue in full on declaration or accrual on time basis and tax deducted at source thereon is treated as advance tax. The interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company and the amount interest income can be measured reliably.

F. Employee Benefits:

1. Short Term Obligations:

Liabilities for salaries, including other monetary and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

2. Post-Employment and Other Long-Term Employee Benefits:

Post-Employment and Other Long-Term Employee Benefits schemes are not applicable to the company.

G. Borrowing Costs:

There is no present balance outstanding of borrowings hence no borrowing costs incurred during the year.

Borrowing costs include

(i) Interest expense calculated using the effective interest rate method,

(ii) Finance charges in respect of finance leases, and

(iii) Exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest 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.

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 the statement of profit and loss in the period in which they are incurred.

H. Operating Segment:

Since the Company engages in trading operations, which by their very nature are all subject to the same risks and rewards, these activities have been combined into a single segment, the results of which are shown in the financial statements.

So, the disclosure requirements pursuant to Ind AS-108- “Operating Segments” are not applicable.

I. Taxes On Income:

1. Current Tax:

The provision for current tax is made as per the provisions of the Income Tax Act, 1961.

Taxes on income have been determined based on the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. The current tax liabilities and assets are measured at the amounts expected to be paid or to be recovered from the taxation authorities as at the balance sheet date.

The current tax liabilities and assets are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously.

The current income tax relating to items recognized outside profit or loss is recognized either in the Other Comprehensive Income or in Other Equity Directly.

2. Deferred Tax:

Deferred tax is provided on temporary differences between the tax bases of assets and liabilities as per the provisions of the Income Tax Act, 1961 and their carrying amounts for financial reporting purposes as at the balance sheet date.

Deferred tax liabilities are recognized for all taxable temporary timing differences. Deferred tax assets are recognized for all deductible taxable temporary timing differences, the carry forward of unused tax losses and unused tax credits to the extent to which future taxable profits are expected to be available against which the deductible temporary differences and the carry forward of unused tax losses and unused tax credits can be utilized/set-off.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been

enacted or substantially enacted by the end of the reporting period.

A deferred tax asset is not recognised for the carry forward of unused tax losses to the extent that it is not probable that future taxable profit will be available against which the unused tax losses will be utilised. In previous years the Company has closed its manufacturing operations and sold/disposed off land, plant & machinery and other fixed assets in earlier years and since then not resumed the manufacturing activities and there is no sound business plan made by the management to revive its business operations. Hence, in view of the management of the company there is no convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised by the entity.

J. Impairment of Non-Financial Assets:

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Impairment loss is recognized when the carrying amount of an asset exceeds recoverable amount

K. Provisions, Contingent Liabilities and Contingent Assets

The Company recognises a provision when it has a present obligation as a result of a past event that probably requires an outflow of the Company''s resources embodying economic benefits at the time of settlement and a reliable estimate can be made of the amount of the obligation. The provisions are measured at the best estimate of the amounts required to settle the present obligation as at the balance sheet date and are not discounted to its present value.

Contingent liabilities is a possible obligation arising from past events, the existence of which will be confirmed only on the occurrence or non-occurrence of one or more future uncertain events not wholly or substantially within the control of the Company or a present obligation that arises from the past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. The company does not recognize a contingent liability but discloses its existence in the financial statements.

When demand notices are issued by the Government Authorities and demand is disputed by the company and it is probable that the company will not be required to settle/pay such

demands then these are classified as disputed obligations.

Contingent Assets, if any, are not recognised in the financial statements. If it becomes certain that inflow of economic benefit will arise then such asset and the relative income are recognised in financial statements.

L. Current/Non-Current Classifications:

The Company presents assets and liabilities in the balance sheet on the basis of their classifications into current and non-current based on the assessment made by the management of the company.

Assets:

An asset is treated 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

• 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.

Liabilities:

A liability is treated as current when it is:

• Expected to be settled in normal operating cycle

• Held primarily for the purpose of trading

• Due to be settled within twelve months after the reporting period

• 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.

M. Financial Instruments, Financial Assets, Financial liabilities and Equity Instruments

The financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the relevant instrument and 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 measured at fair value through profit or loss) are added to or deducted from the fair value on initial recognition of financial assets or financial liabilities.

A. Financial Assets:

Initial Recognition:

Financial Assets include Investments, Cash and Cash Equivalents and eligible current and noncurrent assets. The financial assets are initially recognized at the transaction price when the

Company becomes party to contractual obligations. The transaction price includes transaction costs unless the asset is being value at fair value through the Statement of Profit and Loss. Subsequent Measurement:

The subsequent measurement of financial assets depends upon the initial classification of financial assets. For the purpose of subsequent measurement, financial assets are classified as under:

i. Financial Assets at Amortized Cost where the financial assets are held solely for collection of cash flows and contractual terms of the assets give rise on specified dates to cash flows that are solely payments of principal and interest on principal amount outstanding.

ii. 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.

Security Deposits, Loans and Advances, Cash and Cash Equivalents where reliable data for fair value is not available then such eligible current and non-current assets are classified for measurement at amortized cost.

Impairment:

If the recoverable amount of an asset (or cash-generating unit/Fixed Assets) 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 recognized immediately in profit or loss, unless the relevant asset is carried at a re-valued amount if any, in which case the impairment loss is treated as a revaluation decrease.

Financial assets, other than those at Fair Value through Profit and Loss (FVTPL), are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

The company recognises impairment loss on trade receivables using expected credit loss model.

B. Financial Liabilities:

Financial liabilities, which include trade payables and eligible current and non-current liabilities. The trade payables and other financial liabilities are recognised at the value of the respective contractual obligations. Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry

of the terms.

N. Fair Value Measurement:

The Company measures financial instruments, such as investments at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

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

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

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing 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.

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

For the purpose of fair value disclosures, the Company has determined classes of assets and

liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

O. Cash and Cash Equivalents-For the Purpose of Cash Flow Statements:

Cash and cash equivalent in the balance sheet comprise cash at banks and in hand and shortterm deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

P. Operating Cycle:

Based on the activities of the company and normal time between incurring of liabilities and their settlement in cash or cash equivalents and acquisition/right to assets and their realization in cash or cash equivalents, the company has considered its operating cycle as 12 months for the purpose of classification of its liabilities and assets as current and non-current.

Q. Earnings Per Share:

The Company presents basic and diluted earnings per share details for its ordinary shares. Basic earning per share is calculated by dividing the total comprehensive income after tax for the year attributable to the ordinary shareholders of the company by weighted number of ordinary shares outstanding for applicable period during the year.

Diluted earning per share is calculated considering the effect of dilution if any to ordinary share during the year.

R. Borrowing Costs:

There is no present balance outstanding of borrowings hence no borrowing costs incurred during the year.

Borrowing costs include

(i) Interest expense calculated using the effective interest rate method,

(ii) Finance charges in respect of finance leases, and

(iii) Exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest 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.

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 the statement of profit and loss in the period in which they are incurred.

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Mar 31, 2014

(1) Basis of Accounting

Financial statements are prepared under the historical cost convention, in accordance with generally accepted Accounting Standards applicable in India and the provisions of Companies Act, 1956. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except in case of significant uncertainties relating to income.

(2) Revenue Recognition

Sales are recognized on completion of sale of goods and recorded gross of tax but net of trade discounts & rebates.

(3) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation. The Company capitalizes all costs relating to the acquisitions and installations of fixed assets. Direct financing cost, if any, incurred during construction period in respect of major projects is also capitalized.

(4) Depreciation

Depreciation is provided on Straight Line Method on all Fixed Assets at the rates prescribed in Schedule XIV of the Companies Act,1956. In respect of assets acquired during the financial year, depreciation is provided on Pro-rata basis with reference to the period each assets was put to use during financial year. During the year Depreciation has been charged on the basis of single shift in view of the plant operations.

(5) Investments Investments are valued at cost.

(6) Inventories

a) All inventories are valued at cost or market value whichever is lower

b) For arriving cost of Finished Goods and stock in process all production expenses and depreciation except financing cost and marketing cost are considered.

c) In respect of raw materials, stores and spares cost is computed on weighted average basis.

d) Fixed overhead are allocated for inclusion in the cost of conversion on the basis of normal level of production capacity. Conversion cost is apportioned to the finished goods in process on the basis of estimated values and proportions arrived at by the cost sheet of the last month of financial period in which production had taken place.

(7) Foreign Currency Transactions

There were no foreign currency transactions during the year.

(8) Retirement Benefits

a) Liabilities in respect of gratuity and leave encashment are provided on the basis of actual calculation.

b) Contribution to Employees Provident Fund Scheme are paid to the Regional Commissioner of Provident Fund

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Mar 31, 2013

(1) Basis of Accounting

Financial statements are prepared under the historical cost convention, in accordance with generally accepted Accounting Standards applicable in India and the provisions of Companies Act, 1956.

The Company follows the mercantile system of accounting and recognize income and expenditure on accrual basis except in case of significant uncertainties relating to income.

(2) Revenue Recognition

(i) Sales are recognized on completion of sale of goods and recorded gross of excise but net of trade discounts & rebates.

(ii) Export entitlement under the duty entitlement pass book (DEPB) Scheme are recognized in the Profit & Loss Account on the basis of dispatch.

(3) Fixed Assets

Fixed Assets are stated at cost les accumulated depreciation. The Company capitalizes all costs relating to the acquisitions and installations of fixed assets. Direct financing cost, if any, incurred during construction period in respect of major projects is also capitalize.

(4) Depreciation

Depreciation is provided on Straight Line Method on all Fixed Assets at the rates prescribed in Schedule XrV of the Companies Act, 1956. In respect of assets acquired during the financial year, depreciation is provided on Pro-rata basis with reference to the period each asset was put to use during financial year.

(5) Investments Investments are valued at cost.

(6) Inventories

(i) All inventories are valued at cost or market value whichever is lower.

(ii) For arriving cost of Finished Goods and stock in process all production expenses and depreciation except financing cost and marketing cost are considered.

(iii) In respect of raw materials, stores and spares cost is computed on weighted average basis.

(iv) Fixed overhead are allocated for inclusion in the cost of conversion on the basis of normal level of production capacity. Conversion cost is apportioned to the finished goods in process on the basis of estimated values and proportions arrived at by the cost sheet of the last month of financial period in which production had taken place.

(7) Foreign Currency Transactions

Foreign Currency Transactions are accounted at exchange rates prevailing on the date of transaction. Any exchange variation realized in subsequent Financial Year is shown separately on realization.

(8) Retirement Benefits

(i) Liabilities in respect of gratuity and leave encashment are provided on the basis of actual calculation.

(ii) Contribution to Employees Provident Fund Scheme are payable to the Regional Commissioner of Provident Fund.

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Mar 31, 2012

(1) Basis of Accounting

Financial statements are prepared under the historical cost convention, in accordance with generally accepted Accounting Standards applicable in India and the provisions of Companies Act, 1956.

The Company follows the mercantile system of accounting and recognize income and expenditure on accrual basis except in case of significant uncertainties relating to income.

(2) Revenue Recognisation

(i) Sales are recognized on completion of sale of goods and recorded gross of excise but net of trade discounts & rebates.

(ii) Export entitlement under the duty entitlement pass book(DEPB) Scheme are recognized in the Profit & Loss Account on the basis of dispatch.

(3) Fixed Assets

Fixed Assets are stated at cost les accumulated depreciation. The Company capitalizes all costs relating to the acquisitions and installations of fixed assets. Direct financing cost, if any, incurred during construction period in respect ofmajor projects is also capitalize.

(4) Depreciation

Depreciation Is provided on Straight Line Method on all Fixed Assets at the rates prescribed in Schedule XIV of the Companies Act,1956. In respect of assets acquired during the financial year, depreciation is provided on Pro-rata basis with reference to the period each assets was put to use during financial year.

(5) Investments

Investments are valued at cost.

(6) Inventories

(I) All inventories are valued at cost or market value whichever is lower

(II) For arriving cost of Finished Goods and stock in process all production expenses and depreciation except financing cost and marketing cost are considered.

(III) In respect of raw materials, stores and spares cost is computed on weighted average basis.

(IV) Fixed overhead are allocated for inclusion in the cost of conversion on the basis of normal level of production capacity. Conversion cost is apportioned to the finished goods in process on the basis of estimated values and proportions arrived at by the cost sheet of the last month of financial period in which production had taken place.

(7) Foreign Currency Transactions

Foreign Currency Transactions are accounted at exchange rates prevailing on the date of transaction. Any exchange variation realized in subsequent Financial Year is shown separately on realization.

(8) Retirement Benefits

(i) Liabilities in respect of gratuity and leave encashment are provided on the basis of actual calculation.

(ii) Contribution to Employees Provident Fund Scheme are payable to the Regional Commissioner of Provident Fund.

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Mar 31, 2010

(1) Basis of Accounting

Financial statements are prepared under the historical cost convention, in accordance with generally accepted Accounting Standards applicable in India and the provisions of Companies Act, 1956 The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except in case of significant uncertainties relating to income.

(2) Revenue Recognition

(i) Sales are recognized on completion of sale of goods and are recorded gross of excise but net of trade discounts & rebates.

(ii) Export entitlements under the duty entitlement pass book (DEPB) Scheme are recognized in the Profit & Loss Account on the basis of despatch.

(3) Fixed Assets

Fixed Assets are recorded at cost. The Company capitalizes all costs relating to acquisitions and installations of fixed assets. Direct financing cost, if any, incurred during construction period in respect of major projects is also capitalized.

(4) Depreciation

Depreciation is provided on straight line method on all Fixed Assets at the rates prescribed in Schedule XIV of the Companies Act, 1956. In respect of assets acquired during the financial year, depreciation is provided on Pro-rata basis with reference to the period each assets was put to use during the financial year.

(5) Investments

Investments are valued at cost.

(6) Inventories

(i) All inventories are valued at cost or market value whichever is lower.

(ii) For arriving cost of Finished Goods and stock in process all production expenses and depreciation except financing and marketing cost are considered. (iii) In respect of raw materials, stores and spares cost is computed on weighted average basis. (iv) Fixed over -heads are allocated for inclusion in the cost of conversion on the basis of normal levels of production capacity. Conversion cost is apportioned to finished goods in process on the basis of estimated values and proportions arrived at by the cost sheet of the last month of financial period in which production had taken place.

(7) Foreign Currency Transactions

Foreign currency transactions are accounted at exchange rates prevailing on the date of the transaction. Any exchange variation realized in subsequent Financial Year is shown separately on realization.

(8) Retirement Benefits

(i) Liabilities in respect of gratuity and leave encashment are provided on the basis of actual calculations.

(ii) Contributions to Employees Provident Fund Scheme are paid to Regional Commissioner of Provident Fund.