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Accounting Policies of Valson Industries Ltd. Company
Mar 31, 2025
(A) Significant accounting policies:
2.1 STATEMENT OF COMPLIANCE
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting
Standards (referred to as "Ind AS'''') notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from
April 1, 2017.
These financials statements have been prepared in accordance with the Companies (Indian Accounting Standards) Rules,
2015 read with the Companies (Indian Accounting Standards) Amendment Rules, 2017 and the Guidance Notes and other
authoritative pronouncements issued by the Institute of Chartered Accountants of India (ICAI).
2.2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The financial statements have been prepared on the historical cost basis, except for certain financial instruments which are
measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is
generally based on the fair value of the consideration given in exchange for goods and services.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in
its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available
to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
2.3 CURRENT/ NON-CURRENT CLASSIFICATION OF ASSETS AND LIABILITIES:
An asset is considered as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle,
⢠Held primarily for the purpose of trading,
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period
o All other assets are classified as non-current.
o A liability is considered as current when:
⢠It is expected to be settled in normal operating cycle,
⢠It is held primarily for the purpose of trading,
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
o All other liabilities are classified as non-current.
o Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Operating Cycle is the time between the acquisition of assets for business purposes and their realisation into cash and
cash equivalents. The Company has considered an operating cycle of 12 months.
2.4 USE OF ESTIMATES:
The presentation of financial statements is in conformity with the recognition and measurement principles of IndAS which
requires the management of the company to make estimates and assumptions that affect the reported balances of assets and
liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of
income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and future periods are affected.
2.5 REVENUE FROM CONTRACTS WITH CUSTOMERS:
The Company derives revenues primarily from sale of manufactured goods and related services.
Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised products or services
to customers in an amount that reflects the consideration the Company expect to receive in exchange for those products or
services.
The Company does not expect to have any contracts where the period between the transfer of the promised goods or services
to the customer and payment by the customer exceeds one year. As a consequence, it does not adjust any of the transaction
prices for the time value of money.
The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
1. The customer simultaneously receives and consumes the benefits provided by the Company''s performance as the
Company performs;
Or
2. The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced;
or
3. The Company''s performance does not create an asset with an alternative use to the Company and an entity has an
enforceable right to payment for performance completed to date.
For performance obligations where one of the above conditions are not met, revenue is recognised at the point in time at which
the performance obligation is satisfied.
Interest Income:
For all financial instruments measured at amortised cost, interest income is measured using the Effective Interest Rate (EIR),
which is the rate that exactly discounts the estimated future cash flows through the contracted or expected life of the financial
instrument, as appropriate, to the net carrying amount of the financial asset.
2.6 PROPERTY, PLANT AND EQUIPMENT:
Property, Plant and Equipment are recorded at their cost of acquisition, net of indirect taxes, less accumulated depreciation and
impairment losses, if any. The cost thereof comprises of its purchase price, including import duties and other non-refundable
taxes or levies and any directly attributable cost for bringing the asset to its working condition for its intended use.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the
Statement of Profit or Loss when the asset is derecognised.
Subsequent Expenditure:
⢠Subsequent costs are included in the asset''s carrying amount, only when it is probable that future economic benefits
associated with the cost incurred will flow to the Company and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognized when replaced.
⢠Major inspection/ repairs/ overhauling expenses are recognised in the carrying amount of the item of property, plant and
equipment as a replacement if the recognition criteria are satisfied.
2.7 CAPITAL WORK IN PROGRESS AND CAPITAL ADVANCES:
Expenses incurred for acquisition of capital assets outstanding at each balance sheet date are disclosed under capital work-
in-progress. Advances given towards the acquisition of fixed assets are shown separately as capital advances under the head
Other Non-Current Assets.
2.8 DEPRECIATION:
Depreciation on Property, Plant and Equipment is provided on Straight Line Method basis in accordance with the provisions
of Schedule II to the Companies Act, 2013. The Management believes that the estimated useful lives as per the provisions of
Schedule II to the Companies Act, 2013, are realistic and reflect fair approximation of the period over which the assets are likely
to be used.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate.
2.9 Intangible Assets and amortisation thereof:
The cost relating to Intangible assets, with finite useful lives, which are capitalised and amortised on a straight line basis over
a period of five years, are based on their estimated useful lives.
An item of Intangible Asset is derecognised upon disposal or when no future economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
The residual values, useful lives and methods of amortisation of Intangible Assets are reviewed at each financial year end and
adjusted prospectively, if appropriate.
2.10 Impairment of Property Plant & Equipment and Intangible Assets:
The carrying amount of assets are reviewed at each balance sheet date to assess,whether there is any indication of impairment
based on internal / external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is greater than the assets net selling price and value in use.
During the year there is no impairment of the assets.
2.11 INVENTORIES:
Inventories are valued at lower of Cost or Net Realizable value after providing obsolescence and damages.
a) In case of raw material and components, cost represents purchase price and other costs incurred for bringing inventories
up to their present location and condition and is determined on weighted average cost basis.
b) In case of finished goods and work-in-process, cost represents the cost of raw materials and other cost incurred for
bringing inventories up to their present location and condition.
c) In case of Stores and Spares, Fuel & Packing Materials cost represents the cost of materials and other cost incurred for
bringing inventories up to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business.
2.12 Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
(i) Financial Assets:
Initial Recognition and Measurement:
All financial assets are recognised initially at fair value. In the case of financial assets not recorded at fair value through
profit or loss, transaction costs that are attributable to the acquisition of the financial asset are included therein.
Subsequent Measurement:
For purposes of subsequent measurement, financial assets are classified in three categories:
⢠Financial assets at amortised cost
⢠Equity instruments measured at fair value through other comprehensive income (FVTOCI)
⢠Investments measured at fair value through Profit & Loss (FVTPL)
Financial Assets at Amortised Cost:
A financial asset is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and
interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest
rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and any
fees or costs that are an integral part of the EIR.
Equity Instruments at FVTOCI:
For equity instruments not held for trading, an irrevocable choice is made on initial recognition to measure it at FVTOCI.
All fair value changes on such investments, excluding dividends, are recognized in the OCI. There is no recycling of the
amounts from OCI to profit or loss, even on sale or disposal of the investment. However, on sale or disposal the company
may transfer the cumulative gain or loss within equity.
Financial Assets at FVTPL
Even if an instrument meets the two requirements to be measured at amortised cost or fair value through other comprehensive
income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a
measurement or recognition inconsistency (sometimes referred to as âaccounting mismatchâ) that would otherwise arise
from measuring assets or liabilities or recognising the gains and losses on them on different bases. All other financial
assets are measured at fair value through profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (i.e. removed from the Company''s statement of financial position) when:
i) The rights to receive cash flows from the asset have expired, or
ii) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a "pass-throughâ arrangement and either;
a. the Company has transferred substantially all the risks and rewards of the asset, or
b. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Impairment of financial assets
The company applies the expected credit loss (ECL) model for measurement and recognition of impairment loss on the
following financial assets and credit risk exposures:
Financial assets at amortised cost.
Trade Receivables
The company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. Under this
approach the company does not track changes in credit risk but recognises impairment loss allowance based on lifetime
ECLs at each reporting date. For this purpose the company uses a provision matrix to determine the impairment loss
allowance on the portfolio of trade receivables. The said matrix is based on historically observed default rates over the
expected life of the trade receivables duly adjusted for forward looking estimates.
For recognition of impairment loss on other financial assets and risk exposures, the company determines whether there
has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly,
12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL
is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant
increase in credit risk since initial recognition, then the company reverts to recognising impairment loss allowance based
on 12-month ECL.
For assessing increase in credit risk and impairment loss, the company combines financial instruments on the basis
of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant
increases in credit risk to be identified on a timely basis.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events on a financial instrument
that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the company in accordance with the contract
and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. The
ECL impairment loss allowance (or reversal) recognized during the period in the Statement of Profit and Loss and the
cumulative loss is reduced from the carrying amount of the asset until it meets the write off criteria, which is generally when
no cash flows are expected to be realised from the asset.
ii) Financial Liabilities:
Initial Recognition and Measurement:
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs. The Company''s financial liabilities include loans and borrowings.
Subsequent Measurement:
This is dependent upon the classification thereof as under:
Loans and Borrowings:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Derecognition:
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the
statement of profit or loss.
(iii) Equity Instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity in accordance with the
substance of the contractual arrangements. These are recognised at the amount of the proceeds received, net of direct
issue costs.
2.13 BORROWING COST:
Borrowing costs comprising of interest and other costs that are incurred in connection with the borrowing of funds that are
attributable to the acquisition or construction of qualifying assets are considered as a part of cost of such assets less interest
earned on the temporary investment. A qualifying asset is one that necessarily takes substantial period of time to get ready for
its intended use. All other borrowing costs are charged to Statement of profit and loss in the year in which they are incurred.
2.14 EMPLOYEE BENEFITS:
Short term employee benefits:
All employee benefits falling due wholly within 12 months of rendering the services are classified as short term employee
benefits and are recognised as an expense in the period in which the employee renders the related services.
Post - Employment benefits:
Defined Contribution Plan
The company''s contribution towards the provident fund and the social securities for certain eligible employees are considered
to be defined contribution plans as the company does not carry any further obligations apart from the contributions made on a
monthly basis.
Defined Benefit Plan
Liabilities towards Defined Benefit Schemes viz. Gratuity benefits are determined using the Projected Unit Credit Method.
Actuarial valuations under the Projected Unit Credit Method are carried out at the Balance Sheet date. Actuarial gains and
losses are recognised immediately in the Balance Sheet with a corresponding effect in the Statement of Other Comprehensive
Income. Past service cost is recognised immediately in the Statement of Profit and Loss.
2.15 LEASES:
The Company has adopted Ind AS 116 effective from 1st April, 2019 using modified retrospective approach. For the purpose
of preparation of Financial Information, management has evaluated the impact of change in accounting policies required due
to adoption of lnd AS 116 for year ended 31st March, 2020. As per the modified retrospective approach, the Company is not
required to restate comparative information, instead, the cumulative effect of initially applying this standard can be recognised
as an adjustment to the opening balance of retained earnings as on 1st April, 2019.
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a define period of time in exchange for consideration. To
assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether:
a) the contact involves the use of an identified asset;
b) the Company has substantially all of the economic benefits from use of the asset through the period of the lease; and
c) the Company has the right to direct the use of the asset.
As a lessee, The Company recognises a right of use asset and a lease liability at the lease commencement date. The right of
use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and
remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives
received.
The right of use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right of use asset or the end of the lease term. The estimated useful lives of right of use assets
are determined on the same basis as those of property and equipment. In addition, the right of use asset is periodically reduced
by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental
borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either
the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprise the fixed payments, including in substance fixed
payments and lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension
option; The lease liability is measured at amortised cost using the effective interest method.
The Company has elected not to recognise right of use assets and lease liabilities for short-term leases that have a lease term
of 12 months or less and leases of low-value assets. The Company has entered into long term leases which are expected to
be surrendered shortly and on account of which the same are also considered as short term lease. The Company recognises
the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
2.16 TAXES ON INCOME:
Current Income Taxes:
Current income tax liabilities are measured at the amount expected to be paid to the taxation authorities.The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised directly in equity is recognised in other comprehensive income / equity and
not in the statement of profit and loss. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred Taxes:
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, when the deferred tax liability arises from an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be
utilised, except, when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition
of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that
future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting
date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against
current tax liabilities.
2.17 TRANSACTIONS IN FOREIGN CURRENCY:
The functional currency of the company is the Indian Rupee.
Transactions in foreign currencies are initially recorded at their respective custom announced rates at the date the transaction
first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the custom announced rates of exchange
at the reporting date.
Differences arising on settlement or translation of monetary items are recognised as income or expenses in the period in which
they arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item
(i.e., translation differences on items whose fair value gain or loss is recognised in OCI or statement of profit and loss are also
recognised in OCI or statement of profit and loss, respectively).
Mar 31, 2024
Note 1:Corporate information:
Valson Industries Limited was incorporated on 2nd June, 1983 with Registrar of Companies, Maharashtra State. It''s processing manufacturing Units are located at Vapi in Gujarat and Silvassa in UT. Dadra Nagar & Haveli and Daman & Diu. It''s shares are listed on Bombay Stock Exchange. The Company is engaged in Texturising, Twisting of Polyester yarns and Dyeing of Polyester, Cotton and other fancy Yarns. The company has it''s registered office and principal place of business at 28,Building no. 6,Mittal Industrial Estate, Sir M. V. Road, Andheri-(East),Mumbai 400 059.
The Company''s financial statements are reported in Indian Rupees, which is also the Company''s functional currency.
Note 2: Significant Accounting Policies Accounting Judgements, Estimates and Assumptions:
(A) Significant accounting policies:
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as "Ind AS'''') notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1,2017.
These financials statements have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 read with the Companies (Indian Accounting Standards) Amendment Rules, 2017 and the Guidance Notes and other authoritative pronouncements issued by the Institute of Chartered Accountants of India (ICAI).
2.2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The financial statements have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
2.3 CURRENT/ NON-CURRENT CLASSIFICATION OF ASSETS AND LIABILITIES:
An asset is considered as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle,
⢠Held primarily for the purpose of trading,
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
o All other assets are classified as non-current. o A liability is considered as current when:
⢠It is expected to be settled in normal operating cycle,
⢠It is held primarily for the purpose of trading,
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. o All other liabilities are classified as non-current.
o Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Operating Cycle is the time between the acquisition of assets for business purposes and their realisation into cash and cash equivalents. The Company has considered an operating cycle of 12 months.
The presentation of financial statements is in conformity with the recognition and measurement principles of IndAS which requires the management of the company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.
2.5 REVENUE FROM CONTRACTS WITH CUSTOMERS:
The Company derives revenues primarily from sale of manufactured goods and related services.
Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expect to receive in exchange for those products or services.
The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, it does not adjust any of the transaction prices for the time value of money.
The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
1. The customer simultaneously receives and consumes the benefits provided by the Company''s performance as the Company performs;
Or
2. The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
3. The Company''s performance does not create an asset with an alternative use to the Company and an entity has an enforceable right to payment for performance completed to date.
For performance obligations where one of the above conditions are not met, revenue is recognised at the point in time at which the performance obligation is satisfied.
For all financial instruments measured at amortised cost, interest income is measured using the Effective Interest Rate (EIR), which is the rate that exactly discounts the estimated future cash flows through the contracted or expected life of the financial instrument, as appropriate, to the net carrying amount of the financial asset.
2.6 PROPERTY, PLANT AND EQUIPMENT:
Property, Plant and Equipment are recorded at their cost of acquisition, net of indirect taxes, less accumulated depreciation and impairment losses, if any. The cost thereof comprises of its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost for bringing the asset to its working condition for its intended use.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit or Loss when the asset is derecognised.
Subsequent Expenditure:
⢠Subsequent costs are included in the asset''s carrying amount, only when it is probable that future economic benefits associated with the cost incurred will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced.
⢠Major inspection/ repairs/ overhauling expenses are recognised in the carrying amount of the item of property, plant and equipment as a replacement if the recognition criteria are satisfied.
2.7 CAPITAL WORK IN PROGRESS AND CAPITAL ADVANCES:
Expenses incurred for acquisition of capital assets outstanding at each balance sheet date are disclosed under capital work-in-progress. Advances given towards the acquisition of fixed assets are shown separately as capital advances under the head Other Non-Current Assets.
Depreciation on Property, Plant and Equipment is provided on Straight Line Method basis in accordance with the provisions of Schedule II to the Companies Act, 2013. The Management believes that the estimated useful lives as per the provisions of Schedule II to the Companies Act, 2013, are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
2.9 Intangible Assets and amortisation thereof:
The cost relating to Intangible assets, with finite useful lives, which are capitalised and amortised on a straight line basis over a period of five years, are based on their estimated useful lives.
An item of Intangible Asset is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
The residual values, useful lives and methods of amortisation of Intangible Assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
2.10 Impairment of Property Plant & Equipment and Intangible Assets:
The carrying amount of assets are reviewed at each balance sheet date to assess,whether there is any indication of impairment based on internal / external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater than the assets net selling price and value in use.
During the year there is no impairment of the assets.
Inventories are valued at lower of Cost or Net Realizable value after providing obsolescence and damages.
a) In case of raw material and components, cost represents purchase price and other costs incurred for bringing inventories up to their present location and condition and is determined on weighted average cost basis.
b) In case of finished goods and work-in-process, cost represents the cost of raw materials and other cost incurred for bringing inventories up to their present location and condition.
c) In case of Stores and Spares, Fuel & Packing Materials cost represents the cost of materials and other cost incurred for bringing inventories up to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Financial Assets:
Initial Recognition and Measurement:
All financial assets are recognised initially at fair value. In the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset are included therein.
Subsequent Measurement:
For purposes of subsequent measurement, financial assets are classified in three categories:
⢠Financial assets at amortised cost
⢠Equity instruments measured at fair value through other comprehensive income (FVTOCI) ⢠Investments measured at fair value through Profit & Loss (FVTPL)
Financial Assets at Amortised Cost:
A financial asset is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.
Equity Instruments at FVTOCI:
For equity instruments not held for trading, an irrevocable choice is made on initial recognition to measure it at FVTOCI. All fair value changes on such investments, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to profit or loss, even on sale or disposal of the investment. However, on sale or disposal the company may transfer the cumulative gain or loss within equity.
Even if an instrument meets the two requirements to be measured at amortised cost or fair value through other comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as âaccounting mismatchâ) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. All other financial assets are measured at fair value through profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s statement of financial position) when:
i) The rights to receive cash flows from the asset have expired, or
ii) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass-throughâ arrangement and either;
a. the Company has transferred substantially all the risks and rewards of the asset, or
b. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
The company applies the expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposures:
Financial assets at amortised cost.Trade Receivables
The company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. Under this approach the company does not track changes in credit risk but recognises impairment loss allowance based on lifetime ECLs at each reporting date. For this purpose the company uses a provision matrix to determine the impairment loss allowance on the portfolio of trade receivables. The said matrix is based on historically observed default rates over the expected life of the trade receivables duly adjusted for forward looking estimates.
For recognition of impairment loss on other financial assets and risk exposures, the company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the company reverts to recognising impairment loss allowance based on 12-month ECL.
For assessing increase in credit risk and impairment loss, the company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events on a financial instrument that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. The ECL impairment loss allowance (or reversal) recognized during the period in the Statement of Profit and Loss and the cumulative loss is reduced from the carrying amount of the asset until it meets the write off criteria, which is generally when no cash flows are expected to be realised from the asset.
ii) Financial Liabilities:
Initial Recognition and Measurement:
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include loans and borrowings.
Subsequent Measurement:
This is dependent upon the classification thereof as under:
Loans and Borrowings:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Derecognition:
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
(iii) Equity Instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity in accordance with the substance of the contractual arrangements. These are recognised at the amount of the proceeds received, net of direct issue costs.
Borrowing costs comprising of interest and other costs that are incurred in connection with the borrowing of funds that are attributable to the acquisition or construction of qualifying assets are considered as a part of cost of such assets less interest earned on the temporary investment. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of profit and loss in the year in which they are incurred.
Short term employee benefits:
All employee benefits falling due wholly within 12 months of rendering the services are classified as short term employee benefits and are recognised as an expense in the period in which the employee renders the related services.
Post - Employment benefits:Defined Contribution Plan
The company''s contribution towards the provident fund and the social securities for certain eligible employees are considered to be defined contribution plans as the company does not carry any further obligations apart from the contributions made on a monthly basis.
Liabilities towards Defined Benefit Schemes viz. Gratuity benefits are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Balance Sheet with a corresponding effect in the Statement of Other Comprehensive Income. Past service cost is recognised immediately in the Statement of Profit and Loss.
The Company has adopted Ind AS 116 effective from 1st April, 2019 using modified retrospective approach. For the purpose of preparation of Financial Information, management has evaluated the impact of change in accounting policies required due to adoption of lnd AS 116 for year ended 31st March, 2020. As per the modified retrospective approach, the Company is not required to restate comparative information, instead, the cumulative effect of initially applying this standard can be recognised as an adjustment to the opening balance of retained earnings as on 1st April, 2019.
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a define period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether:
a) the contact involves the use of an identified asset;
b) the Company has substantially all of the economic benefits from use of the asset through the period of the lease; and
c) the Company has the right to direct the use of the asset.
As a lessee, The Company recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right of use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right of use asset or the end of the lease term. The estimated useful lives of right of use assets are determined on the same basis as those of property and equipment. In addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprise the fixed payments, including in substance fixed payments and lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option; The lease liability is measured at amortised cost using the effective interest method.
The Company has elected not to recognise right of use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company has entered into long term leases which are expected to be surrendered shortly and on account of which the same are also considered as short term lease. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
2.16 TAXES ON INCOME:Current Income Taxes:
Current income tax liabilities are measured at the amount expected to be paid to the taxation authorities.The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised directly in equity is recognised in other comprehensive income / equity and not in the statement of profit and loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, when the deferred tax liability arises from an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except, when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
2.17 TRANSACTIONS IN FOREIGN CURRENCY:
The functional currency of the company is the Indian Rupee.
Transactions in foreign currencies are initially recorded at their respective custom announced rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the custom announced rates of exchange at the reporting date.
Differences arising on settlement or translation of monetary items are recognised as income or expenses in the period in which they arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or statement of profit and loss are also recognised in OCI or statement of profit and loss, respectively).
2.18 PROVISIONS AND CONTINGENT LIABILITY:
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.
When the Company expects part or entire provision to be reimbursed, the same is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A Contingent Liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of enterprise or a present obligation that arises from past events that may, but probably will not, require an outflow of resources.
Both provisions and contingent liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the Financial Statements.
2.19 GOVERNMENT GRANTS, SUBSIDIES:
Grant from Government under Technology Up-gradation Fund Scheme (TUFS) is recognised at fair value where there is reasonable assurance that the grant will be received and the Company will comply with all attached condition.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Board of Director of the Company has been identified as being the Chief Operating Decision Maker (CODM) by the management of the Company.
As the Company''s business activity falls within a single business segment viz. ''Yarns'' and the sales substantially being in the domestic market, the financial statements are reflective of the information required by Accounting Standard 108 âSegment Reportingâ, notified under the Companies (Indian Accounting Standards) Rules, 2015.
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year are adjusted for events including a bonus issue, bonus element in right issue to existing shareholders, share split, and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
2.22 CASH AND CASH EQUIVALENT:
Cash and cash equivalent for the purpose of Cash Flow Statement comprise cash at bank and in hand and short term highly liquid investments which are subject to insignificant risk of changes in value.
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
Commitments are future liabilities for contractual expenditure. The commitments are classified and disclosed as follows:
(a) The estimated amount of contracts remaining to be executed on capital account and not provided for; and
(b) Other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion of the Management.
2.25 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS:
The preparation of Financial Statements is in conformity with the recognition and measurement principles of Ind AS which requires the management to make judgements for estimates and assumptions that affect the amounts of assets, liabilities and the disclosure of contingent liabilities on the reporting date and the amounts of revenues and expenses during the reporting period and the disclosure of contingent liabilities. Differences between actual results and estimates are recognized in the period in which the results are known/ materialize.
Estimates, Assumptions and Judgments:
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial
statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
In the process of applying the Company''s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:
a) Estimation of current tax expense and deferred tax:
The calculation of the Company''s tax charge necessarily involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these items may give rise to material profits/losses and/or cash flows. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
b) Recognition of deferred tax assets/ liabilities:
The recognition of deferred tax assets/ liabilities is based upon whether it is more likely than not that sufficient and suitable taxable profits will be available in the future against which the reversal of temporary differences can be deducted. To determine the future taxable profits, reference is made to the latest available profit forecasts.
c) Estimation of Provisions & Contingent Liabilities:
The Company exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual liability may be different from the originally estimated as provision
d) Estimated useful life of Property, Plant and Equipment:
Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life, its expected usage pattern and the expected residual value at the end of its life. The useful lives, usage pattern and residual values of Company''s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology etc.
e) Estimation of Provision for Inventory:
The Company writes down inventories to net realisable value based on an estimate of the realisability of inventories. Write downs on inventories are recorded where events or changes in circumstances indicate that the carrying value may not be realised. The identification of write-downs requires the use of estimates of net selling prices of the down-graded inventories. Where the expectation is different from the original estimate, such difference will impact the carrying value of inventories and write-downs of inventories in the periods in which such estimate has been changed.
f) Estimation of Defined Benefit Obligation:
The present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for post-employment plans include the discount rate. Any changes in these assumptions will impact the carrying amount of such obligations.
The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the defined benefit obligations. In determining the appropriate discount rate, the Company considers the interest rates of government bonds of maturity approximating the terms of the related plan liability.
g) Estimated fair value of Financial Instruments.
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Management uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at thess end of each reporting period.
Mar 31, 2015
1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The financial statements have been prepared under the historical cost
convention on accrual basis, in accordance with the generally accepted
accounting principles and materially comply with the Accounting
Standards notified by the Companies(Accounting Standards) Rules, 2006
and relevant provisions of Companies Act 2013.
2.2 USE OF ESTIMATES:
The presentation of financial statements is in conformity with the
generally accepted accounting principles and requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. The
difference between the actual results and estimates are recognised in
the period in which results are known/materialised.
2.3 REVENUE RECOGNITION:
Sales includes sale of waste yarn and excise duty but excludes
discount. Sales are accounted on despatch of goods to customers.
2.4 FIXED ASSETS:
Tangible Assets:
The tangible assets are stated at their original cost less accumulated
depreciation and impairment loss, if any. In the case of tangible
assets acquired for New project, interest cost on borrowings and other
related expenses incurred up to the date of completion of project or
commencement of commercial production are capitalised.
Projects under which assets are not ready for their intended use are
shown as Capital Work-in-Progress.
Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortisation/depletion and impairment loss, if
any. The cost comprises purchase price, borrowing costs, and any cost
directly attributable to bringing the asset to its working condition
for the intended use and net charges on foreign exchange contracts and
adjustments arising from exchange rate variations attributable to the
intangible assets.
2.5 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 impairment loss is recognised wherever the carrying amount
of an assets exceeds its recoverable amount. The recoverable amount is
greater than the assets net selling price and value in use. During the
year there is no impairment of the assets.
2.6 INVESTMENT:
Long Term Investments are stated at cost in accordance with the
Accounting Standard on "Accounting for Investments" (AS - 13) notified
by the Companies (Accounting Standards) Rules 2006.
2.7 INVENTORIES:
i) Raw Materials are valued at cost determined on First in First out
(FIFO) Method.
ii) Finished Goods are valued at cost or net realisable value whichever
is lower.
iii) Stores and Spares, Fuel & Packing Materials are valued at cost.
2.8 DEPRECIATION, AMORTISATION Tangible Assets:
Depreciation on Fixed Assets is provided using Straight Line Method on
basis of useful life as specified in Schedule II of the Companies Act,
2013.
Intangible Assets:
Computer Software is amortised over a period of 5 years as per AS 26
"Intengible Assets".
2.9 BORROWING COST:
Borrowing costs consists of interest and other cost that the company
incurs in connection with the borrowing of funds. Financing Cost
relating to borrowed funds attributable to constructions and
acquisition of fixed assets for the period upto the completion of
construction or acquisition of fixed assets are included in the cost of
the assets to which they relate.
2.10 EMPLOYEE BENEFITS:
Short term employee benefits:
All employee benefits falling due wholly within 12 months of rendering
the services are classified as short term employee benefits and are
recognised as an expenses in the period in which the employee renders
the related services.
Post - Employment benefits:
Defined Contribution Plan
The company's contribution towards the provident fund and the social
securities for certain eligible employees are considered to be defined
contribution plans as the company does not carry any further
obligations apart from the contributions made on a monthly basis.
Defined Benefit Plan
The company's liability for gratuity is determined using the Projected
Unit Credit Method with actuarial valuation carried out as at the
balance sheet date. Actuarial gains and losses are recognised
immediately in the statement of profit and loss.
The employees of the company are entitled to be compensated absences
and leave encashment as per the policy of the company, the liability in
respect of which is provided on an accrual basis.
2.11 TAXES ON INCOME:
Provision for taxation has been made in accordance with the applicable
income tax laws prevailing for the relevant assessment year.
Deferred Tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
2.12 EXCISE DUTY:
The Company is following the method of accounting according to which
the excise duty is generally booked as a liability at the time of
removal of manufactured goods i.e. Texturised Yarn, Twisted & Dyed Yarn
and paid accordingly.
The Company has opted for optional excise duty of either to take cenvat
credit on input and payment of excise duty on removal of goods and
accordingly provision for excise duty on closing stock as on 31st
March, 2015 of Rs. 0.06 Lacs (Previous year Rs. NIL ) has been made for
the same.
2.13 CENVAT:
Cenvat Credit on excise duty paid on inputs and capital assets is
accounted for by reducing from the purchase cost of the related inputs
or the capital assets, as the case may be as per the option granted
under the Excise Act.
2.14 TRANSACTIONS IN FOREIGN CURRENCY:
Revenue transactions made in foreign currency are translated at the
applicable prevailing exchange rate. Payments / Receipts made in
foreign currency are translated at the applicable rate prevailing on
the date of remittance. Any exchange gain / loss arising on settlement
of such transactions are accounted for in the statement of profit and
loss. Outstanding balance is translated at the exchange rate
prevailing at the closing date. Any exchange gain or loss arising out
of such restatement is accounted for in the statement of profit and
loss.
Premiums or discounts arising at the inception of the forward foreign
exchange contracts, other than contracts to hedge a firm commitment or
a highly probable forecast transaction, are amortised and recognised in
the Statement of Profit and Loss over the period of the contract.
Exchange differences are recognised in the Statement of Profit and
Loss.
2.15 PROVISIONS, CONTINGENT LIABILITY AND CONTINGENT ASSET:
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.
2.16 GOVERNMENT GRANTS, SUBSIDIES:
Government grants in the nature of TUF's Interest subsidy on the Rupee
Term Loan availed from the Banks under the Technology Upgradation Fund
Scheme @5% on the balance outstanding, is reduced from the finance cost
of the relevant Term Loan. In view of the uncertainty of the final
quantum of subsidy and its receipt the interest subsidy is being
accounted on receipt basis.
2.17 SEGMENT REPORTING:
As the Company's business activity falls within a single business
segment viz. 'Yarns' and the sales substantially being in the domestic
market, the financial statements are reflective of the information
required by Accounting Standard 17 "Segment Reporting", notified
under the Companies (Accounting Standards) Rules, 2006.
2.18 EARNINGS PER SHARE:
Basic earnings per share has been calculated by dividing the profit
after tax by the weighted average number of equity shares outstanding
during the year.
(iii) Aggregate number and class of shares allotted as fully paid up
pursuant to contract(s) without payment being received in cash, bonus
shares and shares bought back for the period of 5 years immediately
preceding the Balance Sheet date:
Bonus (1 : 1) Equity shares allotted on 9th December 2009
Term Loan - Security:
Term Loans other than for Silli - Unit
Secured by First charge on Pari Passu basis with IDBI and 2nd Pari
passu charge basis with BOI of Immovable properties situated at Vapi
unit. The loans are further secured by Hypothecation of Movable assets
of the company both present and future (save and except Book debts)
except for Silli - Unit and subject to prior charge on certain movable
assets created in favour of Bank of India for securing working capital
facilities and personal guarantee of two directors.
Term Loan for Silli - Unit
Secured by Exclusive charge in favour of BOI of Immovable properties
situated at Silli - Unit. The loan is further secured by Hypothecation
of Movable assets of the company both present and future (save and
except Book debts) of Silli - Unit and personal guarantee of two
directors.
Vehicle Loan - Security:
Secured by hypothecation of specific assets
Security:
a) Secured by First charge on Current Assets including Stocks and Book
debts and Personal Guarantee of two directors.
b) Secured by second charge on Pari Passu basis on all fixed Assets of
existing units of company in Vapi except Silli - Unit.
* Office Premises includes Rs. 250/- being the cost of five shares of
Rs. 50/- each of Mittal Industrial Premises.
** Software to be amortised over a period of Five years due to
applicability of AS - 26 on Intangible Assets.
# Based on the transitional provision provided in note 7(b) of schedule
II of Companies Act 2013 an amount of Rs. 36.72 Lacs (Net of Deferred
Tax)has been adjusted against the retained earnings where the useful
life of the assets has become NIL in terms of the said schedule.
Mar 31, 2014
1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The financial statements have been prepared under the historical cost
convention on accrual basis, in accordance with the generally accepted
accounting principles and materially comply with the Accounting
Standards notified by the Companies(Accounting Standards) Rules, 2006.
1.2 USE OF ESTIMATES:
The presentation of financial statements is in conformity with the
generally accepted accounting principles and requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. The
difference between the actual results and estimates are recognised in
the period in which results are known/materialised.
1.3 REVENUE RECOGNITION:
Sales includes sale of waste yarn and excise duty but exclude
discounts. Sales are accounted on despatch of goods to customers.
1.4 FIXED ASSETS:
Tangible Assets:
The tangible assets are stated at their original cost less accumulated
depreciation and impairment loss, if any. In the case of tangible
assets acquired for New project, interest cost on borrowings and other
related expenses incurred up to the date of completion of project or
commencement of commercial production are capitalised.
Projects under which assets are not ready for their intended use are
shown as Capital Work-in-Progress.
Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortisation/depletion and impairment loss, if
any. The cost comprises purchase price, borrowing costs and any cost
directly attributable to bringing the asset to its working condition
for the intended use and net charges on foreign exchange contracts and
adjustments arising from exchange rate variations attributable to the
intangible assets.
1.5 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 impairment loss is recognised wherever the carrying amount
of an assets exceeds its recoverable amount. The recoverable amount is
greater than the assets net selling price and value in use. During the
year there is no impairment of the assets.
1.6 INVESTMENT:
Long Term Investments are stated at cost in accordance with the
Accounting Standard on "Accounting for Investments (AS - 13)"
notified by the Companies (Accounting Standards) Rules 2006.
1.7 INVENTORIES
i) Raw Materials are valued at cost determined on First in First out
(FIFO) Method.
ii) Finished Goods are valued at cost or net realisable value whichever
is lower.
iii) Stores and Spares, Fuel & Packing Materials are valued at cost.
1.8 DEPRECIATION. AMORTISATION Tangible Assets:
Depreciation is provided on a Straight Line Method at the rates
prescribed in Schedule XIV of the Companies Act, 1956 on pro-rata basis
with reference to the month of addition in respect of assets except for
Texturising machines on which depreciation has been provided as per the
useful life of the machines as estimated by the management which is
higher than the rate prescribed in Schedule XIV of the Companies Act,
1956.
Intangible Assets:
Computer Software is amortised over a period of 5 years.
1.9 BORROWING COST:
Borrowing costs consists of interest and other costs that the company
incurs in connection with the borrowing of funds.
Financing Cost relating to borrowed funds attributable to constructions
and acquisition of fixed assets for the period upto the completion of
construction or acquisition of fixed assets are included in the cost of
the assets to which they relate.
1.10 EMPLOYEE BENEFITS:
Short term employee benefits
All employee benefits falling due wholly within 12 months of rendering
the services are classified as short term employee benefits and are
recognised as an expenses in the period in which the employee renders
the related services.
Post - Employment benefits - Defined Contribution Plan
The company''s contribution towards the provident fund and the social
securities for certain eligible employees are considered to be defined
contribution plans as the company does not carry any further
obligations apart from the contributions made on a monthly basis.
Defined Benefit Plan
The company''s liability for gratuity is determined using the Projected
Unit Credit Method with actuarial valuation carried out as at the
balance sheet date. Actuarial gains and losses are recognised
immediately in the statement of profit and loss.
The employees of the company are entitled to be compensated absences
and leave encashment as per the policy of the company, the liability in
respect of which is provided on an accrual basis.
1.11 TAXES ON INCOME:
Provision for taxation has been made in accordance with the applicable
Income Tax laws prevailing for the relevant assessment year.
Deferred Tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
1.12 EXCISE DUTY:
The Company is following the method of accounting according to which
the excise duty is generally booked as a liability at the time of
removal of manufactured goods i.e. Texturised Yarn, Twisted & Dyed Yarn
and paid accordingly.
The Company has opted for optional excise duty of either to take cenvat
credit on input and payment of excise duty on removal of goods and
accordingly provision for excise duty on closing stock as on 31st
March, 2014 of Rs. Nil (Previous year Rs. 0.46 Lacs) has been made for
the same.
1.13 CENVAT:
Cenvat Credit on excise duty paid on inputs and capital assets is
accounted for by reducing from the purchase cost of the related inputs
or the capital assets, as the case may be as per the option granted
under the Excise Act.
1.14 TRANSACTIONS IN FOREIGN CURRENCY:
Revenue transactions made in foreign currency are translated at the
applicable prevailing exchange rate. Payments / Receipts made in
foreign currency are translated at the applicable rate prevailing on
the date of remittance. Any exchange gain / loss arising on settlement
of such transactions are accounted for in the statement of profit and
loss. Outstanding balance is translated at the exchange rate prevailing
at the closing date. Any exchange gain or loss arising out of such
restatement is accounted for in the statement of profit and loss.
Premiums or discounts arising at the inception of the forward foreign
exchange contracts, other than contracts to hedge a firm commitment or
a highly probable forecast transaction, are amortised and recognised in
the Statement of Profit and Loss over the period of the contract. Such
forward foreign exchange contract outstanding as at the Balance Sheet
date are converted at the exchange rates prevailing on that date.
Exchange differences are recognised in the Statement of Profit and
Loss.
1.15 PROVISIONS, CONTINGENT LIABILITY AND CONTINGENT ASSET:
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.
1.16 GOVERNMENT GRANTS, SUBSIDIES:
Government grants in the nature of TUF''s Interest subsidy on the Rupee
Term Loan availed from the Banks under the Technology Upgradation Fund
Scheme @5% on the balance outstanding, is reduced from the finance cost
of the relevant Term Loan. In view of the uncertainty of the final
quantum of subsidy and its receipt the interest subsidy is being
accounted on receipt basis.
1.17 SEGMENT REPORTING:
As the Company''s business activity falls within a single business
segment viz. ''Yarns'' and the sales substantially being in the domestic
market, the financial statements are reflective of the information
required by Accounting Standard 17 "Segment Reporting", notified
under the Companies (Accounting Standards) Rules, 2006.
1.18 EARNINGS PER SHARE:
Basic earnings per share has been calculated by dividing the profit
after tax by the weighted average number of equity shares outstanding
during the year.
Term Loan - Security: Term Loans other than for Silli - Unit
(Secured by First charge on Pari Passu basis between BOI & IDBI on
Immovable properties situated at various manufacturing locations except
for Silli - Unit. The loans are further secured by Hypothecation of
Movable assets of the company both present and future (save and except
Book debts) except for Silli - Unit and subject to prior charge on
certain movable assets created in favour of Bank of India for securing
working capital facilities and personal guarantee of two directors.)
Term Loan for Silli - Unit
(Secured by First charge in favour of BOI on Immovable properties
situated at Silli - Unit. The loan is further secured by Hypothecation
of Movable assets of the company both present and future (save and
except Book debts) of Silli - Unit and personal guarantee of two
directors.)
Vehicle Loan - Security: (Secured by hypothecation of specific assets)
Security Working Capital Facility
a) Secured by First charge on Current Assets including Stocks and Book
debts and Personal Guarantee of two directors.
b) Secured by second charge on Pari Passu basis on all fixed Assets of
existing units of company in Silvassa and Vapi except Silli - Unit.
* Office Premises includes Rs. 250/- being the cost of five shares of
Rs. 50/- each of Udit Mittal Industrial Premises. ** Software to be
amortised over a period of Five years due to applicability of AS - 26
on Intangible Assets issued by Institute of Chartered Accountants of
India.
Mar 31, 2013
1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The financial statements have been prepared under the historical cost
convention on accrual basis, in accordance with the generally accepted
accounting principles and materially comply with the Accounting
Standards notified by the Companies(Accounting Standards) Rules, 2006.
1.2 USE OF ESTIMATES:
The presentation of financial statements is in conformity with the
generally accepted accounting principles and requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. The
difference between the actual results and estimates are recognised in
the period in which results are known/materialised.
1.3 REVENUE RECOGNITION:
Sales includes sale of waste yam and excise duty but exclude discounts.
Sales are accounted on despatch of goods to customers.
1.4 FIXED ASSETS:
The Fixed Assets are stated at their original cost less accumulated
depreciation. In the case of Fixed Assets acquired for New project,
interest cost on borrowings and other related expenses incurred up to
the date of completion of project or commencement of commercial
production are capitalised.
1.5 INVENTORIES:
i) Raw Materials are valued at cost determined on First in First out
(FIFO) Method. ii) Finished Goods are valued at cost or net realisable
value whichever is lower. iii) Stores and Spares, Fuel & Packing
Materials are valued at cost.
1.6 DEPRECIATION:
Depreciation is provided on a Straight Line Method at the rates
prescribed in Schedule XIV of the Companies Act, 1956 on pro-rata basis
with reference to the month of addition in respect of assets.
The company is providing incremental depreciation on Texturising
machines due to shortening of its useful life on account of
technological changes.
1.7 BORROWING COST:
The borrowing cost has been treated in accordance with the Accounting
Standard on Borrowing Cost (AS - 16) issued by ICAI.
1.8 RETIREMENT BENEFITS:
Liability for gratuity is determined on the basis of actuarial
valuation as at the end of accounting year. Leave encashment is
determined on accrual basis and the liability for the unutilised leave
is provided for as at the end of the accounting year.
1.9 TAXES ON INCOME:*
Provision for taxation has been made in accordance with the applicable
income tax laws prevailing for the relevant assessment year.
Deferred Tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
1.10 EXCISE DUTY:
The Company is following the method of accounting according to which
the excise duty is generally booked as a liability at the time of
removal of manufactured goods i.e. Texturised Yarn, Twisted & Dyed
Yarn and paid accordingly.
The Company has opted for optional excise duty of either to take cenvat
credit on input and payment of excise duty on removal of goods and
accordingly provision for excise duty on closing stock as on 31st
March, 2013 Rs. 0.46 Lacs (Previous year Rs. 0.39 Lacs) has been made
for the same.
1.11 CENVAT:
Cenvat Credit on excise duty paid on inputs and capital assets is
accounted for by reducing from the purchase cost of the related inputs
or the capital assets, as the case may be as per the option granted
under the Excise Act.
1.12 TRANSACTIONS IN FOREIGN CURRENCY:
Revenue transactions made in foreign currency are translated at the
applicable prevailing exchange rate. Payments / Recipts made in foreign
currency are translated at the applicable rate prevailing on the date
of remittance. Outstanding balance is translated at the exchange rate
prevailing at the closing date. Any exchange gain or losses arising out
of the subsequent fluctuation are accounted for in the profit & loss
account.
Premiums or discounts arising at the inception of the forward foreign
exchange contracts, other than contracts to hedge a firm commitment or
a highly probable forecast transaction, are amortised and recognised in
the Statement of Profit and Loss over the period of the contract. Such
forward foreign exchange contract outstanding as at the Balance Sheet
date are converted at the exchange rates revailing on that date.
Exchange differences are recognised in the Statement of Profit and
Loss.
1.13 PROVISIONS, CONTINGENT LIABILITY AND CONTINGENT ASSET:
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 dis closed in the
notes. Contingent assets are neither recognised nor disclosed in the
financial statements.
1.14 IMPAIRMENT OF ASSETS:
The Company have assessed that on the Balance Sheet date there are no
assets which requires provision for impairment.
1.15 INVESTMENT:
Long Term Investments are stated at cost in accordance with the
Accounting Standard on " Accounting for investments (AS - 13) notified
by the Companies (Accounting Standards) Rules 2006.
1.16 GOVERNMENT GRANTS, SUBSIDIES:
Government grants in the nature of TUF''s Interest subsidy on the Rupee
Term Loan availed from the Banks under the Technology Upgradation Fund
Scheme @5% on the balance outstanding, is reduced from the finance cost
of the relevant Term Loan.
1.17 EMPLOYEE BENEFITS:
i. Provident Fund:
Eligible employees of the Company receive benefits under the Provident
Fund which is a defined contribution plan wherein both the employee,
and the Company make monthly contributions equal to specified
percentage of the covered employees'' salary. These contributions are
made to the Funds administered and managed by the Govt, of India. The
Company''s monthly contributions are charged to revenue in the period
they are incurred.
ii. Gratuity:
In accordance with the payment of ''Gratuity Act, 1972'' of India, the
Company provided for gratuity, a defined retirement benefit plan (the
Gratuity Plan'') covering eligible employees. Liabilities with regards
to such Gratuity Plan are determined by actuarial valuation and are
charged to revenue in the period determined.
"The actual assumptions is arriving at the provision of gratuity
liabilities which are as follows:
a) Mortality Rate LIC (1994-96)
b) Discounting Rate 8.25%
c) Salary Escalation 6.0%
d) Retirement Age 60
iii. Provision for Unutilized Leave
The accrual for unutilised leave is determined for the entire available
leave balance standing to the credit of the employees at period-end and
charged to revenue in the period determined.
1.18 SEGMENT REPORTING:
As the Company''s business activity falls within a single business
segment viz. ''Yarns'' and the sales substantially being in the domestic
market, the financial statements are reflective of the information
required by Accounting Standard 17 "Segment Reporting", notified under
the Companies (Accounting Standards) Rules, 2006.
1.19 EARNINGS PER SHARE:
Basic earnings per share has been calculated by dividing the profit
after tax by the weighted average number of equity shares outstanding
during the year.
Mar 31, 2012
1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The financial statements have been prepared under the historical cost
convention on accrual basis, in accordance with the generally accepted
accounting principles and materially comply with the Accounting
Standards notified by the Companies(Accounting Standards) Rules, 2006.
1.2 USE OF ESTIMATES:
The presentation of financial statements is in conformity with the
generally accepted accounting principles and requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which results are known materialised.
1.3 REVENUE RECOGNITION:
Sales includes sale of waste yam and excise duty but exclude discounts.
Sales are accounted on despatch of goods to customers.
1.4 FIXED ASSETS:
The Fixed Assets are stated at their original cost less accumulated
depreciation. In the case of Fixed Assets acquired for New project,
interest cost on borrowings and other related expenses incurred up to
the date of completion of project or commencement of commercial
production are capitalised.
1.5 INVENTORIES:
i) Raw Materials are valued at cost determined on First in First out
(FIFO) Method.
ii) Finished Goods are valued at cost or net realisable value whichever
is lower.
iii) Stores and Spares, Fuel & Packing Materials are valued at cost.
1.6 DEPRECIATION:
Depreciation is provided on a Straight Line Method at the rates
prescribed in Schedule XIV of the Companies Act, 1956 on pro-rata basis
with reference to the month of addition in respect of assets.
The company is providing incremental depreciation on Texturising
machines due to shortening of its useful life on account of
technological changes.
The borrowing cost has been treated in accordance with the Accounting
Standard on Borrowing Cost (AS - 16) issued by ICAI. During the year,
there were no borrowings attributable to qualifying assets and hence,
no borrowing cost has been capitalized.
1.7 RETIREMENT BENEFITS:
Liability for gratuity is determined on the basis of actuarial
valuation as at the end of accounting year. Leave encashment is
determined on accrual basis and the liability for the unutilised leave
is provided for as at the end of the accounting year.
1.8 TAXES ON INCOME:
Provision for taxation has been made in accordance with the applicable
income tax laws prevailing for the relevant assessment year.
Deferred Tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
1.9 EXCISE DUTY:
The Company is following the method of accounting according to which
the excise duty is generally booked as a liability at the time of
removal of manufactured goods i.e. Texturised Yarn, Twisted & Dyed Yarn
and paid accordingly.
The Company has opted for optional excise duty of either to take cenvat
credit on input and payment of excise duty on removal of goods and
accordingly provision for excise duty on closing stock as on 31st
March,2012 Rs. 0.39 Lacs (Previous year Rs.Nil) has been made for the
same.
1.10 CENVAT;
Cenvat Credit on excise duty paid on inputs and capital assets is
accounted for by reducing from the purchase cost of the related inputs
or the capital assets, as the case may be as per the option granted
under the Excise Act.
1.11 TRANSACTIONS IN FOREIGN CURRENCY:
Revenue transactions made in foreign currency are translated at the
applicable prevailing exchange rate. Gain/Loss arising out of
fluctuation in exchange rate is accounted for on realisation.
Payments made in foreign currency are translated at the applicable rate
prevailing on the date of remittance. Outstanding liability is
translated at the exchange rate prevailing at the closing date.
Any exchange gain or losses arising out of the subsequent fluctuation
are accounted for in the profit & loss account
1.12 PROVISIONS. CONTINGENT LIABILITY AND CONTINGENT ASSET:
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
1.13 IMPAIRMENT OF ASSETS:
The Company have assessed that on the Balance Sheet date there are no
assets which requires provision for impairment.
1.14 INVESTMENT:
Long Term Investments are stated at cost in accordance with the
Accounting Standard on " Accounting for Investments (AS - 13) issued
by ICAI.
1.15 GOVERNMENT GRANTS. SUBSIDIES:
Government grants in the nature of TUF's Interest subsidy on the
Rupee Term Loan availed from the Banks under the Technology Upgradation
Fund Scheme @5% on the balance outstanding, which is reduced from the
finance cost of the relevant Term Loan.
1.16 EMPLOYEE BENEFITS:
i. Provident Fund:
Eligible employees of the Company receive benefits under the Provident
Fund which is a defined contribution plan wherein both the employee,
and the Company make monthly contributions equal to specified
percentage of the covered employees' salary. These contributions are
made to the Funds administered and managed by the Govt, of India. The
Company's monthly contributions are charged to revenue in the period
they are incurred.
ii. Gratuity:
In accordance with the payment of 'Gratuity Act, 1972' of India, the
Company provided for gratuity, a defined retirement benefit plan (the
Gratuity Plan') covering eligible employees. Liabilities with regards
to such Gratuity Plan are determined by actuarial valuation and are
charged to revenue in the period determined.
The actual assumptions is arriving at the provision of gratuity
liabilities which are as follows:
a) Mortality Rate LIC (1994-96)
b) Discounting Rate 8.5%
c) Salary Escalation 6.0%
d) Retirement Age 60
iii. Provision for Unutilized Leave
The accrual for unutilised leave is determined for the entire available
leave balance standing to the credit of the employees at period-end and
charged to revenue in the period determined.
1.17 SEGMENT REPORTING:
As the Company's business activities falls within a single primary
business segment viz. Dyed and Texturised Yam, the Disclosure
requirement of Accounting Standard (AS-17) 'Segment Reporting'
issued by the Institute of Chartered Accountants of India are not
applicable.
1.18 EARNINGS PER SHARE:
Basic earnings per share has been calculated by dividing the profit
after tax by the weighted average number of equity shares outstanding
during the year.
Mar 31, 2010
(i) BASIS OF PREPARATION OF FINANCIAL STATEMENTS :
The financial statements have been prepared under the historical cost
convention on accrual basis, in accordance with the generally accepted
accounting principles and materially comply with the Accounting
Standards notified by the Companies(Accounting Standarda) Rules, 2006.
(ii) USE OF ESTIMATES :
The presentation of financial statements is in conformity with the
generally accepted accounting principles and requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual result and estimates are recognised in the period in
which results are known/materialised.
(iii) REVENUE RECOGNITION:
Sales include sale of waste yarn and excise duty but excludes
discounts. Sales are accounted on despatch of goods to customer.
(iv) FIXED ASSETS:
The Fixed Assets are stated at their original cost less accumulated
depreciation. In the case of Fixed Assets acquired for New project
interest cost on borrowings and other related expenses incurred up to
the date of completion of project or commencement of commercial
production are capitalised.
(v) INVENTORIES :
i) Raw Materials are valued at cost determined on First in First out
(FIFO) Method. ii) Finished Goods are valued at cost or net realisable
value whichever is lower. iii) Stores and Spares, Fuel & Packing
Materials are valued at cost.
(vi) DEPRECIATION :
Depreciation is provided on a Straight Line Method at the rates
prescribed in Schedule XIV of the Companies Act, 1956 on pro-rata basis
with reference to the month of addition in respect of asset.
During the year the company has provided incremental depreciation on
Texturising machines due to shortening of its useful life on account of
technological changes.
(vii) BORROWING COST :
The borrowing cost has been treated in accordance with the Accounting
Standard on Borrowing Cost (AS - 16) issued by ICAI. During the year,
there were no borrowings attributable to qualifying assets and hence,
no borrowing cost has been capitalized.
(viii) RETIREMENT BENEFITS :
Liability for gratuity is determined on the basis of actuarial
valuation as at the end of accounting year. Leave encashment is
determined on accrual basis and the liability for the unutilised leave
is provided for as at the end of the accounting year.
(ix) TAXATION :
Provision for taxation has been made in accordance with the applicable
income tax laws prevailing for the relevant assessment year.
Deferred Tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
(x) EXCISE DUTY :
The Excise Duty on manufactured goods i.e. Texturised, Twisted Yarn &
Dyed Yarn was accounted on removable of goods for Sale or Job Work as
applicable and paid accordingly
The Company has opted for optional excise duty of either to take cenvat
credit on input and payment of excise duty on removal of goods or not
to take cenvat credit and removal of goods without payment of duty.
(xi) CENVAT :
Cenvat Credit on excise duty paid on inputs and capital assets is
accounted for by reducing from the purchase cost of the related inputs
or the capital assets, as the case may be as per the option granted
under the Excise Act.
(xii) TRANSACTIONS IN FOREIGN CURRENCY :
Revenue transactions made in foreign currency are translated at the
applicable prevailing exchange rate. Gain/Loss arising out of
fluctuation in exchange rate is accounted for on realisation.
Payments made in foreign currency are translated at the applicable rate
prevailing on the date of remittance.
Outstanding liability is translated at the exchange rate prevailing at
the closing date.
Any exchange gain or losses arising out of the subsequent fluctuation
are accounted for in the profit & loss account
(xiii) PROVISIONS, CONTINGENT LIABILITY AND CONTINGENT ASSET :
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.
(xiv) IMPAIRMENT OF ASSETS :
The Company have assessed that on the Balance Sheet date there are no
assets which requires provision for impairment.
(xiv) INVESTMENT :
Long Term Investments are started at cost in accordance with the
Accounting Standard on ÃAccounting for Investments (AS-13) issued by
ICAI.
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