Accounting Policies of Kakatiya Textiles Ltd. Company

Mar 31, 2024

2. Material Accounting Policies and Key Accounting Estimates and Judgements

A. Statement of compliance

These financial statements are prepared in accordance with Indian Accounting Standards
"Ind AS" notified under Section 133 of the Companies Act, 2013 "the Act" read together
with the Companies (Indian Accounting Standards) Rules, 2015 (as amended). The financial
statements have also been prepared in accordance with the relevant presentation
requirements of the Act

B. Basis of preparation and presentation

These financial statements have been prepared on historical cost convention and on an
accrual basis except for certain financial instruments that are measured at fair values at
the end of each reporting period, as explained in the accounting policies set out below.
These financial statements are presented in Indian Rupees (?) which is also the Company''s
functional currency.

Historical cost is generally based on the fair value of the consideration given in exchange
for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date, regardless
of whether that price is directly observable or estimated using another valuation technique.

In estimating the fair value of an asset or liability, the Company takes into account the
characteristics of the asset or liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement date.

C. Operating Cycle

All assets have been classified as current or non-current as per the Company''s normal
operating cycle and other criteria set out in the Schedule III to the Act and Ind AS 1 -
Presentation of Financial Statements, based on the nature of the products and the time
between the acquisition of assets for processing and their realization in cash and cash
equivalents.

D. Use of estimates and judgements

The estimates and judgments used in the preparation of the financial statements are
continuously evaluated by the Company and are based on historical experience and various
other assumptions and factors (including expectations of future events) that the Company
believes to be reasonable under the existing circumstances. Differences between actual
results and estimates are recognized in the period in which the results are known/
materialized. The said estimates are based on the facts and events, that existed as at the
reporting date, or that occurred after that date but provide additional evidence about
conditions existing as at the reporting date.

E. Property, Plant and Equipment

Freehold Land is carried at historical cost. All other items of Property Plant and Equipment

are stated at cost of acquisition or construction less accumulated depreciation / amortization
and impairment, if any. Cost includes purchase price, taxes and duties, labour cost and
directly attributable overheads incurred up to the date the asset is ready for its intended
use. However, cost excludes Excise Duty, Value Added Tax and Service Tax, to the extent
credit of the duty or tax is availed of.

Subsequent costs are included in the asset''s carrying amount or recognized as a separate
asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Company and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as separate asset is de-recognized
when replaced. All other repairs and maintenance are charged to Profit or Loss during the
reporting period in which they are incurred.

Gains and losses on disposals are determined by comparing proceeds with carrying amount.
These are included in profit or loss within other gains/ (losses).

Depreciation and amortization

Depreciation on property, plant and equipment has been provided on the Straight Line
method as per the useful life prescribed in Schedule II to the Act.

Assets individually costing Rs. 5,000 and below are fully depreciated in the year of
acquisition.

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 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 net disposal proceeds and the carrying amount
of the asset and is recognised in the Statement of Profit and Loss when the asset is
derecognised.

F. Capital work-in-progress

Projects under commissioning and other Capital work-in-progress are carried at cost
comprising of direct and indirect costs, related incidental expenses and attributable interest.
Depreciation on Capital work-in-progress commences when assets are ready for their
intended use and transferred from Capital work-in-progress Group to Tangible Fixed Assets
Group.

Gl Impairment of assets

Impairment loss, if any, is provided to the extent, the carrying amount of assets or cash
generating units exceed their recoverable amount.

Recoverable amount is higher of an asset''s net selling price and its value in use. Value in
use is the present value of estimated future cash flows expected to arise from the continuing
use of an asset or cash generating unit and from its disposal at the end of its useful life.

Impairment loss recognised in prior years are reversed when there is an indication that the
impairment losses recognised no longer exist or have decreased. Such reversals are
recognised as an increase in carrying amounts of assets to the extent that it does not
exceed the carrying amounts that would have been determined (net of amortization or
depreciation) had no impairment loss been recognised in previous years

H. Foreign currency transactions and translations

In preparing the financial statements of the Company, transactions in currencies other
than the entity''s functional currency (foreign currencies) are recognised at the rate of
exchange prevailing at the dates of the transactions. The date of transaction for the purpose

of determining the exchange rate on initial recognition of the related asset, expense or
income (part of it) is the date on which the entity initially recognises the non-monetary
asset or non-monetary liability arising from payment or receipt of advance consideration.
Monetary assets and liabilities relating to foreign currency transactions remaining unsettled
at the end of each reporting period are translated at the exchange rates prevailing at that
date. Non-monetary items that are measured at historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.

I. Government grants

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

Government grants related to revenue are recognised on a systematic basis in the Statement
of Profit and Loss over the periods necessary to match them with the related costs which
they are intended to compensate. Such grants are deducted in reporting the related expense.
When the grant relates to an asset, it is recognised as deferred revenue in the Balance
Sheet and transferred to the Statement of Profit and Loss on a systematic and rational
basis over the useful lives of the related assets.

The benefit of a government loan at a below-market rate of interest is treated as a
government grant, measured as the difference between proceeds received and the fair
value of the loan based on prevailing market interest rates

J. Employee benefits

(i) Defined contribution plans:

The Company''s contributions to Provident Fund (Government administered), Employees''
State Insurance Scheme and Superannuation Fund (under a scheme of Life Insurance
Corporation of India), considered as defined contribution plans are charged as an expense
in the Statement of Profit and Loss when the employees have rendered services entitling
them to the contributions.

(ii) Defined benefit plans:

In accordance with The Payment of Gratuity Act, 1972 The Company provides for gratuity,
a defined benefit retirement plan (''the Gratuity Plan'') covering eligible employees. 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.

Gratuity benefits are managed through the Group Gratuity Scheme of LIC. 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 liability or asset recognized in the balance sheet in respect of defined benefit pension
and gratuity plan is the present value of the defined benefit obligation at the end of the
reporting period less the fair value of plan assets. The defined benefit obligation is calculated
annually by Actuaries using the projected unit credit method.

The present value of the defined benefit obligation denominated in INR is determined by
discounting the estimated future cash outflows by reference to market yields at the end of
the reporting period on the Government Bonds that have terms approximating to the terms
of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the
defined benefit obligation and the fair value of plan assets. This cost is included in employee
benefit expense in the statement of profit and loss.

_Ja

Re-measurement gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognized in the period in which they occur, directly in other
comprehensive income (net-off deferred tax). They are included in retained earnings in the
statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan
amendments or curtailments are recognized immediately in profit or loss as past service
cost.

K. Revenue Recognition :

Sale of goods:

Revenue is recognised net of returns and discounts, when control over the goods is
transferred to the customer which is mainly upon delivery of goods as per the terms of
contracts with customers.

Sale of services:

Revenue from sale of services is recognised based on the contracts with customers and
when the services are rendered by measuring progress towards satisfaction of performance
obligation for such services.

Other Income:

Interest income is recognised using effective interest method. Dividend income is accounted
for in the year when the right to receive such dividend is established and the amount of
dividend can be measured reliably.

L. Financial instruments, Financial assets, Financial liabilities

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

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

The classification of financial instruments depends on the objective of the Company''s
business model for which it is held and on the substance of the contractual terms /
arrangements. Management determines the classification of its financial instruments at
initial recognition.

i) Financial assets

Recognition: Financial assets include Investments, Trade receivables, Security Deposits,
Cash and cash equivalents. Such assets are initially recognised at transaction price when
the Company becomes party to contractual obligations. The transaction price includes
transaction costs unless the asset is being fair valued through the Statement of Profit and
Loss.

Classification: Financial assets are classified as those measured at:

a) amortised cost, where the financial assets are held within a business model solely for
collection of cash flows arising from payments of principal and/ or interest as per
contractual terms. Such assets are subsequently measured at amortised cost using
the effective interest method, less any impairment loss.

b) 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.

c) 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.

ii) Financial liabilities

Borrowings, trade payables and other financial liabilities are initially recognised at the
value of the respective contractual obligations. They are subsequently measured at
amortised cost using the effective interest method.

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 are derecognized when the liability is extinguished, that is, when the
contractual obligation is discharged, cancelled and on expiry. The difference between the
carrying amount of the financial liabilities de-recognised and the consideration paid and
payable is recognised in the Statement of Profit and Loss.

Offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount is included in the Balance
Sheet where there is a legally enforceable right to offset the recognised amounts and
there is an intention to settle on a net basis or realize the asset and settle the liability
simultaneously.

M. Income Taxes

Income tax expense represents the sum of the tax currently payable and deferred tax.
Current and deferred tax are recognised in the Statement of Profit and Loss, except when
they relate to items that are recognised in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also recognised in other comprehensive
income or directly in equity respectively.

Current Tax

Current tax is measured at the amount expected to be paid to or recovered from the taxation
authorities based on the taxable profit for the year. Taxable profit differs from Profit before

tax as reported in the Statement of Profit and Loss because of items of income or expense
that are taxable or deductible in other years and items that are never taxable or deductible
under the Income Tax Act, 1961. The tax rates and tax laws used to compute the current
tax amount are those that are enacted by the reporting date and applicable for the period.
The Company offsets current tax assets and current tax liabilities, where it has a legally
enforceable right to set off the recognized amounts and where it intends either to settle on
a net basis or to realize the asset and liability simultaneously.

Deferred Tax

Deferred tax is recognised on temporary differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in
the computation of taxable profit. Deferred tax liabilities are generally recognised for all
taxable temporary differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent it is probable that taxable profits will be available against
which those deductible temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference arises from the initial recognition
(other than in a business combination) of assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period
and reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of such deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
in the period in which the liability is settled or the asset realized, based on tax rates (and
tax laws) that have been enacted or substantively enacted by the end of the reporting
date. Deferred tax assets and liabilities are offset when there is a legally enforceable right
to offset the corresponding current tax assets and liabilities and when the deferred tax
balances relate to the same taxation authority

---

Mar 31, 2015

1. Basis of preparation of financial statements

The financial statements are prepared in accordance with Generally Accepted Accounting Principles in India on the accrual basis.

1.1 Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes that require material adjustments to the carrying amount of the effective asset or liability effected in future periods.

1.2 Revenue Recognition

a. The company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties.

b. Sale of goods is accounted, when the risk and reward of ownership are passed on to the customers.

c. Domestic sales are inclusive of excise duty, wherever applicable and exclusive of other taxes, if any, and trade discounts. Income from export entitlements is accounted as and when the certainty of entitlement is determined.

d. Revenue from services rendered is recognized to the extent the performance of service is completed based on agreements / arrangements with the concerned parties.

1.3 Inventories

Inventories of Raw materials, Work-in Progress, Finished Goods, Stores and Spares are stated -"at Cost or Net Realizable Value", whichever is lower, in accordance with Accounting Standard 2 issued by The Institute of Chartered Accountants of India(ICAI). The valuation of inventory is done on FIFO basis. Goods in transit are stated at cost. Cost comprises all costs of purchase, cost of conversion and any other cost incurred in bringing the inventories to their present location and condition. Due allowance is estimated and made for defective and obsolete items, wherever necessary based on the past experience of the company.

1.4 Provisions and Contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes forming part of the financial statements. Contingent assets are neither recognized not disclosed in the financial statements.

1.5 Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation and impairment, if any. Direct cost are capitalized until fixed assets are ready for use. Capital work-in progress comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not yet ready for their intended use at the reporting date. Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated amortization and impairment.

1.6 Depreciation

a) Depreciation on Fixed assets other than those referred to in (b) is provided based on the useful life of the assets in the manner prescribed in Schedule II of the Companies Act, 2013.

b) The company considering useful life of the following assets different from Schedule II of the Companies Act, 2013 with support of technical opinion.

Plant and Machinery – 10 years on three shift basis

1.7 Impairment of Assets

At each Balance Sheet date, the carrying values of the tangible and intangible assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is normally charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed in subsequent accounting period if the realizable value of the asset is more than the impaired value, it shall be restated subject to maximum of the WDV of the asset.

1.8 Deferred Tax

Deferred tax assets and liabilities are recognized for future tax effect attributable to timing difference between taxable income and accounting income, which is capable of reversing in one or more subsequent periods and are measured at relevant tax rates. At each Balance Sheet date, the company reassesses unrealized deferred tax assets to the extent it becomes virtually certain of realization.

1.9 Retirement benefits to employees

a) Gratuity

In accordance with The Payment of Gratuity Act 1972, the company provides for gratuity, a defined benefit retirement plan (the gratuity plan) covering eligible employees. 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 tenure of employment with the Company.

Gratuity benefits are managed through the Group Gratuity Scheme of Life Insurance Corporation of India. The provision for gratuity liability is actuarially determined at each year- end and the liability arising on such valuation is charged to the Statement of Profit and Loss accordingly.

Benefits under the plan are based on pay and years of service and are vested on completion of five years of service, as provided in the Payment of Gratuity Act, 1972. The terms of benefits are common for all the employees of the company.

b) Provident fund and Employees State Insurance contributions are paid as per the rates prescribed by the respective acts and the same is charged to revenue.

1.10 Dues to Micro, Small and Medium Enterprises as defined under MSMED Act 2006

The company has obtained information from suppliers who are covered under the "Micro, Small and Medium Enterprises Development Act 2006". Based on the information and evidence available with the company, there are no dues to Micro, Small and Medium Enterprises outstanding as on 31.03.2015.

1.11 Earnings per Share

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

1.12 Cash and Cash Equivalents

Cash and cash equivalents comprise cash and cash deposit with banks. The company considers all highly liquid investments with remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

1.13 Cash Flow Statement

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

---

Mar 31, 2013

1.1 Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes that require material adjustments to the carrying amount of the effective asset or liability effected in future periods.

1.2 Revenue Recognition

a. The company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties.

b. Sale of goods is accounted, when the risk and reward of ownership are passed on to the customers

c. Domestic sales are inclusive of excise duty, wherever applicable and exclusive of other taxes, if any, and trade discounts. Income from Export entitlements is accounted as and when the certainty of entitlement is determined.

d. Revenue from services rendered is recognized to the extent the performance of service is completed based on agreements / arrangements with the concerned parties.

1.3 Inventories

Inventories of Raw Materials, Work-in Progress, Finished Goods, Stores and Spares are stated "at Cost or Net Realizable Value", whichever is lower, in accordance with Accounting Standard 2 issued by The Institute of Chartered Accountants of India(ICAI). The valuation of inventory is done on FIFO basis. Goods in transit are stated at cost. Cost comprises all costs of purchase, cost of conversion and any other cost incurred in bringing the inventories to their present location and condition. Due allowance is estimated and made for defective and obsolete items, wherever necessary based on the past experience of the company.

1.4 Provisions and Contingencies

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

1.5 Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment, if any. Direct costs are capitalized until fixed assets are ready for use. Capital work-in progress comprises outstanding advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended use at the reporting date. Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated amortization and impairment.

1.6 Depreciation

i) The company is providing depreciation on Straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956, on a pro-rata basis corresponding to the date of installation / commissioning / retirement.

ii) Assets costing Rs. 5000 or less are fully depreciated in the year of purchase.

1.7 Impairment of Assets

At each Balance Sheet date, the carrying values of the tangible and intangible assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is normally charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed in subsequent accounting period if the realizable value of the asset is more than the impaired value, it shall be restated subject to the WDV of the asset.

1.8 Deferred Tax

Deferred tax assets and liabilities are recognized for future tax effect attributable to timing difference between taxable income and accounting income, which is capable of reversing in one or more subsequent periods and are measured at relevant tax rates. At each Balance Sheet date, the company reassesses unrealized deferred tax assets to the extent it becomes virtually certain of realization.

1.9 Retirement benefits to employees

a) Gratuity

In accordance with The Payment of Gratuity Act 1972, the company provides for gratuity, a defined benefit retirement plan(the gratuity plan) covering eligible employees. 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 tenure of employment with the company.

Gratuity benefits are managed through the Group Gratuity Scheme of Life Insurance Corporation of India. The provision for gratuity liability is actuarially determined at each year-end and the liability arising on such valuation is charged to the Statement of Profit and Loss accordingly.

Benefits under the plan are based on pay and years of service and are vested on completion of five years of service, as provided in The Payment of Gratuity Act, 1972. The terms of benefits are common for all the employees of the company.

b) Provident fund contribution is paid as per the rates prescribed by the Employees'' Provident Funds Act, 1952 and the same is charged to revenue.

1.10 Dues to Micro, Small and Medium Enterprises as defined under MSMED Act, 2006

The company has obtained information from suppliers who are covered under the "Micro, Small and Medium Enterprises Development Act, 2006". Based on the information and evidence available with the company, there are no dues to Micro, Small and Medium Enterprises, outstanding as on 31.03.2013.

1.11 Earnings per share

Basic earnings per share are 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 period.

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

1.12 Cash and Cash Equivalents

Cash and cash equivalents comprise cash and cash deposit with banks. The company considers all highly liquid investments with remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

1.13 Cash Flow statement

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

---

Mar 31, 2012

1. Corporate information

Kakatiya Textiles limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange in India. The Company is engaged in the manufacturing and selling of cotton yarn.

2. Basis of preparation of financial statements

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

2.1 Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes that require material adjustments to the carrying amount of the asset or liability affected in future periods.

2.2 Revenue recognition

The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis except those with significant uncertainties

- Sale of Goods is accounted when the risk and reward of ownership are passed on to the Customers.

- Domestic Sales are inclusive of excise duty, wherever applicable and exclusive of other taxes, if any, and trade discounts. Income from Export entitlements is accounted as and when the certainty of entitlement is determined.

Revenue from Services rendered is recognised to the extent the performance of service is completed based on agreements / arrangements with the concerned parties

2.3 Inventories

Inventories of Raw Materials, Work in Process, Finished Goods, Stores and Spares are stated "at Cost or Net Realisable Value", whichever is lower, in accordance with Accounting Standard 2 issued by The Institute of Chartered Accountants of India (ICAI). The valuation of inventory is done on FIFO basis. Goods in Transit are stated at cost. Cost comprises all costs of purchase, cost of conversion and any other cost incurred in bringing the inventories to their present location and condition. Due allowance is estimated and made for defective and obsolete items, wherever necessary based on the past experience of the Company.

2.4 Provisions and Contingencies

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 recognized but are disclosed in the Notes. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

Contingent liabilities: Dividend on 5,00,000 9% cumulative redeemable preference shares of Rs.100 each is in arrears from 01.04.2005. For current year Rs. 45 lakhs and previous years Rs. 270 lakhs. <

2.5 Fixed Assets

Fixed Assets are stated at cost, less accumulated depreciation and impairment, if any. Direct costs are capitalized until fixed assets are ready for use. Capital work-in-progress comprises outstanding advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended use at the reporting date. Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated amortization and impairment.

2.6 Depreciation

i) Depreciation on Fixed Assets: The Company is providing depreciation on Straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956, on a pro- rata basis corresponding to the date of Installation / Commissioning / retirement.

ii) Assets Costing Rs. 5000 or less are fully depreciated in the year of purchase.

2.7 Impairment of assets

At each Balance Sheet date, the carrying values of the tangible and intangible assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is normally charged to the Profit & Loss Account in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed in current accounting periods if there has been a change in the estimate of the recoverable amount

2.8 Deferred Tax

Deferred tax assets and liabilities are recognised for future tax effect attributable to timing difference between Taxable Income and Accounting Income, which is capable of reversing in one or more subsequent periods and are measured at relevant tax rates. At each Balance Sheet date, the Company reassesses unrealised deferred tax assets to the extent it becomes virtually certain of realisation.

2.9 Retirement benefits to employees

a) Gratuity

In accordance with the Payment of Gratuity Act, 1972, the Company provides for gratuity, a defined benefit retirement plan (the gratuity plan) covering eligible employees. 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 tenure of employment with the Company.

Gratuity benefits are managed through the group gratuity scheme of Life Insurance Corporation of India. The provision for gratuity liability is actuarially determined at the year-end and the liability arising on such valuation is charged to the Profit and Loss Account accordingly.

Benefits under the plan are based on pay and years of service and are vested on completion of five years of service, as provided in the Payment of Gratuity Act, 1972. The terms of benefits are common for all the employees of the Company.

b) Provident fund

Provident Fund Contribution is as per the rates prescribed by the Employees' Provident Funds Act, 1952 and the same is charged to revenue.

2.10 Dues to Micro, Small and Medium Enterprises as defined under MSMED Act, 2006

The Company has obtained information from suppliers who are covered under the "Micro, Small and Medium Enterprises Development Act, 2006". Based on the information and evidence available with the company, there are no dues to Micro, Small and Medium Enterprises, outstanding as on 31.03.2012.

2.11 Earning per share

Basic earnings per share are 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 period.

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

2.12 Cash and cash equivalents

Cash and cash equivalents comprise cash and cash on deposit with banks. The Company considers all highly liquid investments with remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

2.13 Cash flow statement

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

2.14 Related Party Disclosure

1. Related party disclosure as required by Accounting Standard 18

1. Names of related parties and description of relationship

a) Key Managerial Personnel : Sri.Sumanth Ramamurthi

No remuneration is paid to Mr. Sumanth Ramamurthi

b) Other related parties

---

Mar 31, 2011

(a) Accounting convention: Subject to the notes on accounts, the Financial Statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles in India, the applicable Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(b) Inventory accounting: Inventories of Raw Materials, Work in Process, Finished Goods, Stores and Spares are stated "at cost or net realisable value", whichever is lower, in accordance with Accounting Standard 2 issued by The Institute of Chartered Accountants of India (ICAI). The valuation of inventory is done on FIFO basis. Goods in Transit are stated at cost. Cost comprises all cost of purchase, cost of conversion and any other costs incurred in bringing the inventories to their present location and condition. Due allowance is estimated and made for defective and obsolete items, wherever necessary based on the past experience of the Company.

(c) Revenue recognition: The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis except those with significant uncertainties Sale of Goods is accounted when the risk and reward of ownership are passed on to the Customers. Domestic Sales are inclusive of excise duty, wherever applicable and exclusive of other taxes, if any, and trade discounts. Income from Export entitlements is accounted as and when the certainty of entitlement is determined. o Revenue from Services rendered is recognised to the extent the performance of service is completed based on agreements / arrangements with the concerned parties.

(d) Fixed Assets are stated at historical cost of acquisition net of CENVAT Credits if any, including installation, direct attributable costs, interest and commissioning less accumulated depreciation / amortization and cumulative impairment, if any.

i) Depreciation on Fixed Assets : The company is providing depreciation on Straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956, on a pro-rata basis corresponding to the month of Installation / Commissioning / retirement.

ii) Assets Costing Rs. 5000 or less are fully depreciated in the year of purchases.

(e) Deferred Tax assets and liabilities are recognised for future tax effect attributable to timing difference between Taxable Income and Accounting Income, which is capable of reversing in onel or more subsequent periods and are measured at relevant tax rates. At each Balance Sheet date, the Company reassesses unrealised deferred tax assets to the extent it becomes virtually certain of realisation as the case may be.

(f) Impairment of assets: The carrying amount of assets are reviewed at each Balance Sheet date, if there is any indication of Impairment based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is normally charged to the Profit & Loss Account in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed in current accounting periods if there has been a change in the estimate of the recoverable amount.

(g) Contingencies and Provisions: 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 recognized but are disclosed in the Notes. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

(h) Earnings per Share: Basic Earnings per Share is calculated by dividing the Net profit/loss attributable to the Equity Shareholders by the weighted average number of Equity Shares outstanding during the year.

---

Mar 31, 2010

(a) Accounting convention: Subject to the notes on accounts, the Financial Statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles in India, the applicable Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(b) Inventory accounting: Inventories of Raw Materials, Work in Process, Finished Goods, Stores and Spares are stated "at cost or net realisable value", whichever is lower, in accordance with Accounting Standard 2 issued by The Institute of Chartered Accountants of India (ICAI). The valuation of inventory is done on FIFO basis. Goods in Transit are stated at cost . Cost comprises all cost of purchase, cost of conversion and any other costs incurred in bringing the inventories to their present location and condition. Due allowance is estimated and made for defective and obsolete items, wherever necessary based on the past experience of the Company.

(c) Revenue recognition: The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis except those with significant uncertainties

Sale of Goods is accounted when the risk and reward of ownership are passed on to the

Customers.

Domestic Sales are inclusive of excise duty, wherever applicable and exclusive of other

taxes, if any, and trade discounts. Income from Export entitlements is accounted as and when the certainty of entitlement is determined.

Revenue from Services rendered is recognised to the extent the performance of service is completed based on agreements / arrangements with the concerned parties.

(d) Fixed Assets are stated at historical cost of acquisition net of CENVAT Credits if any, including installation, direct attributable costs, interest and commissioning less accumulated depreciation / amortization and cumulative impairment, if any.

i) Depreciation on Fixed Assets: The company is providing depreciation on Straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956, on a pro- rata basis corresponding to the month of Installation / Commissioning / retirement.

ii) Assets Costing Rs. 5000 or less are fully depreciated in the year of purchases.

(e) Deferred Tax assets and liabilities are recognised for future tax effect attributable to timing difference between Taxable Income and Accounting Income, which is capable of reversing in one or more subsequent periods and are measured at relevant tax rates. At each Balance Sheet date, the Company reassesses unrealised deferred tax assets to the extent it becomes virtually certain of realisation as the case may be.

(f) Impairment of assets: The carrying amount of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is normally charged to the Profit & Loss Account in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed in current accounting periods if there has been a change in the estimate of the recoverable amount.

(g) Contingencies and Provisions: 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.

(h) Earnings per Share: Basic Earnings per Share is calculated by dividing the Net profit/loss attributable to the Equity Shareholders by the weighted average number of Equity Shares outstanding during the year.