1   SIGNIFICANT ACCOUNTING POLICIES

i) FIXED ASSETS AND DEbrCIATION:

a) Fixed Assets are stated at cost, net of Cenvat. All costs including financing costs fill commencement of commercial production and adjustment arising from exchange rate variations relating to borrowings attributable to the fixed assets are capitalised. Stores and spares received along with the Plant & Machinery are being capitalised with related machine.

b) Cotton Yarn unit and Wartsila Power Plant are stated at cost without availing CENVAT, and thermal power plant is stated without availing service cenvat. All costs including financing costs till commencement of commercial production and adjustment arising from exchange rate variations relating to borrowings attributable to the fixed assets are capitalized.

c) Debrciation on fixed assets is provided on straight line method as per useful life brscribed in Schedule II to the Companies Act, 2013. Debrciation on incremental cost, arising on account of conversion difference of foreign currency liabilities for acquisition of fixed assets and stand by equipments , which are amortised over the residual life of the respective assets.

d) Assets costing Rs.5000/- or less acquired on or after 1.7.1993 are fully debrciated.

e) The company provides for debrciation on following plant & machinery considering the same as continuous process plant.

(i) Filament Yarn Division , Spun Yarn Division and CottonYarn Division

(ii) Power Generation Equipments

f) Free hold lands and leasehold lands are not debrciated.

g) Impairment of Assets - If the carrying amount of fixed assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the highest of the net selling price and the value in use determined by the brsent value of estimated future cash flows.

ii) INVENTORIES:

Inventories are valued at cost or net realisable value whichever is lower. Historical cost has been determined as under:-

A    Raw Materials At Batch cost.

B    Stores, Spares At First In First Out method.

C   Fuel Monthly weighted average

D    Work-in-progress (i) Preparatory Stage - at cost

(ii) Yarn Stage-at cost or net realizable value whichever is lower.

E   Finished goods  at cost or net realizable value whichever is lower.

[Cost formula used in clause (D) & (E): - Conversion cost and other cost in bringing the inventories to their brsent location and condition.]

F    Waste and Scrap at net realisable value.

G  Trading stocks at cost of purchase

iii) INVESTMENTS:

Long term investments are carried at cost including related expenses. In case of diminution in value other than temporary, the carrying amount is reduced to recognize the decline cost.

iv) RAW MATERIAL CONSUMPTION IS NET OF EXPORT BENEFITS.

v) RESEARCH AND DEVELOPMENT:

Research and development costs (other than costs of fixed assets acquired) are charged as an expense in the year in which they are incurred.

vi) EMPLOYEE BENEFITS:

Short-term employee benefits (benefits which are payable within twelve months after the end of the period in which the employees render service ) are measured at cost. Long -term employee benefits ( benefits which are payable after the end of twelve months from the end of the period in which the employees render service ) and post employment benefits ( benefits which are payable after completion of employment ) are measured on a discounted basis by the Projected Unit Credit Method on the basis of annual third party actuarial valuations.

Contributions to Provident Fund , a defined contribution plan are made in accordance with the statute , and are recognized as an expense when employees have rendered service entitling them to the contributions.

The costs of providing leave encashment and gratuity, defined benefit plans, are determined using the Projected Unit Credit Method , on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The leave encashment and gratuity benefit obligation recognized in the Balance Sheet rebrsents the brsent value of the obligations as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Actuarial gains and losses are recognized immediately in the Profit and Loss Account.

vii) brLIMINARY, CAPITAL ISSUES AND DEFERRED REVENUE EXPENSES:

Preliminary, Capital issue expenses are amortised in a period of ten years. Upfront payment made for reduction in rate of interest and for fresh Term Loans and amalgamation expenses(Debited to Deferred Revenue Expenses) are amortised in a period of five years.

viii) REVENUE RECOGNITION:

(a) The accounts of the company are brpared under the historical cost convention and in accordance with the applicable accounting standards.

(b) Income is accounted for on accrual basis in accordance with Accounting Standard (AS) 9-"Revenue Recognition" which provides that where there is no reasonable certainty, the recognition of income be postponed.

(c) Excise Duty is recognized on dispatches to parties except consignment agents.

(d) Claims lodged with insurance companies and others are recognised in accounts to the extent they are measurable with reasonable certainty of acceptance. Excess/Shortfall is adjusted in the year of receipt.

ix) CENVAT:

a. CENVAT claimed on capital goods (Plant and Machinery), except for Plant and Machinery of Cotton Yarn Division and Service tax cenvat on plant & machinery of Wartsila Power Division, is credited to Plant and Machinery cost. Debrciation is not charged on the CENVAT claimed on capital goods in the books of account as well as under the Income Tax Act.

b. CENVAT on purchases of such inputs are deducted from the cost, wherever the excise duty has been paid on finished goods manufactured out of these inputs.

x) FOREIGN CURRENCY TRANSACTION:

a. Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

b. Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognized as exchange difference and the brmium paid on forward contracts is recognized over the life of the contract.

c. Non monetary foreign currency items are carried at cost.

d. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss Account except incase of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

xi) EXPORT BENEFITS:

Export benefits on Export are recognized in accounts to the extent they are measurable with reasonable certainty.

Excess/Shortfall is adjusted in the year of receipt.

xii) PROVISIONS AND CONTINGENT LIABILITIES:

a. Provisions are made when the brsent obligation of a past event gives rise to probable outflow, embodying economic benefit on settlement and the amount of obligation can be reliably estimated.

b. Contingent Liabilities are disclosed after a careful evaluation of facts and legal aspects of the matter involved.

c. Provisions and Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

xiii) TAXATION:

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. Deferred tax on account of timing difference between taxable and accounting income is provided considering the tax rates and tax laws enacted or substantially enacted by the Balance Sheet date in accordance with Accounting Standard 22 as notified by the regulatory authorities.

xiv) EXCISE DUTY:

Excise duty on manufactured goods wherever applicable is accounted for at the point of manufacture of goods and accordingly, is considered for valuation of finished goods stock lying in the factories as on the Balance Sheet date.

Notes on Financial Statements for the Year ended 31st March, 2015

1. Contingent Liabilities And Commitments:

a. Claims not acknowledged as debts by the Company Rs. 88.25 Lacs (Previous Year Rs 215.97 Lacs)

b. Bills discounted with Banks and outstanding Rs. 657.22 lacs (Previous Year Rs.486.37 Lacs)

c. Counter guarantees given by the Company in respect of guarantees and Letter of Credits given by the Bankers on behalf of the Company Rs. 1590.64 Lacs (Previous year Rs. 1358.06 Lacs)

d. Estimated amount of contracts remaining to be executed on capital account and not provided for net of advances Rs. 159.53 lacs (Previous Year Rs. 319.67 lacs).

e. Demands issued by the Excise/Custom Authorities amounting to Rs. 205.43 Lacs ( Previous Year 349.65 Lacs) besides other penalties in law. The company is contesting the issues under legal advice. The company has however deposited Rs.89.93 Lacs (Previous year 92.03 lacs ) under protest.

2. Assessment of Sales Tax For The Assessment Years 2012-13, 2013-14 & 2014-15 Are Pending, Liabilities If Any, Arising Thereon Shall Be Accounted For In The Year of Assessment.

3. A. Assessment of Income Tax Has Been Completed Up To The Assessment Year 2012-13.

B. In View of Carry Forward Losses No Provision Is Required Towards Income Tax.

4. Legal Cases:

a.) The Company has received various demands of ESI aggregating to Rs. 24.44 Lacs. (Previous year Rs.24.44 Lacs). Since the matter is pending in appeal and the Company does not envisage any liability, no provisionhas been made. Amount deposited under Protest Rs 0.93 lacs. (Previous year Rs. 0.93 Lacs).

b.) The Company suffered losses due to breaches/non fulfillment of the terms and conditions of the Contract with M/s. Kirloskar Oil Engines Ltd. in respect of 2 Nos. DG set of 2.5 MW supplied by them. These losses have been partly recovered by the Company by encashment of Bank Guarantee taken under the Contract with the party. For balance recovery of Rs. 234.23   lacs suit against KOEL is filed.

c) (i) The Hon'ble Subrme court in the case of Jindal Stainless Ltd. Has held levy of Entry Tax unconstitutional. It has also directed all the High Courts to look in to the constitutional validity of respective Entry Tax. Consequent to that 5 High Courts namely Allahabad, Punjab, Haryana, Jharkhand and Kerla has held the respective Entry Tax to be constitutionally invalid . The Hon'ble High Court of Rajasthan in the case of Dinesh Pouches has also held the levy of Entry Tax by the Government of Rajasthan as unconstitutional. As per legal opinion obtained amount paid by the company towards Entry Tax pursuant to Rajasthan Entry Tax Act 1999 has become refundable since inception. It filed refund claim of Entry Tax aggregating to Rs.252.32 Lacs , for the year 2001-02 to 2005-06.

(ii) The Company is not liable to pay Entry Tax pursuant to the above said decision of Subrme Court, as such the Company has not provided for Entry Tax for the year 2006-2007 to 2014-15 aggregating to Rs.233.71 Lacs & interest Rs. 80.62 Lacs.

(iii) The aggrieved State Governments including Government of Rajasthan filed appeals with Hon'ble Subrme Court of India.

(iv) During the year various Hon'ble High Courts, including the Hon'ble High Court of Rajasthan rejected all the cases relating to Entry Tax. Aggrieved by the judgement of Hon'ble High Court of Rajasthan, the "Trade" had filed SLP with Hon'ble Subrme Court of India with Stay Application, While disposing off stay petition Hon'ble Subrme Court has given Interim Order for deposit of 50% of demand and for balance 50% Bank Guarantee to be submitted to Govt through assessing authorities. The company has deposited Rs. 121.31 Lacs against demand of Rs 303.40 Lacs.upto 2012-13 and has given bank guarantee of balance 50% Rs. 98.34  Lacs. From February 2015 the company is regularly paying Entry Tax.

d.) The company has filed writ petitions with hon'ble high court of Rajasthan against disallowances of benefits receivable by it under Rajasthan Investment Promotion Scheme 2003 (RIPS) for expansion and modernization towards interest subsidy and wage and employment subsidy aggregating to Rs.261.05 Lacs for the assessment year 2007-08 to 2011-12 inclusive of interest Rs. 63.64 Lacs. As per legal opinion obtained by the company, it is accounting these benefits in its books of account it has also filed appeal before appellate authority and deposited under protest Rs. 60.85 Lacs (Previous year Rs.60.85Lacs).

e.) As per legal opinion Urban Cess and Water Cess levied by State of Rajasthan is not leviable on the company being established at RIICO Industrial land. The entire amount Rs.245.95 lacs paid upto 31.03.2012 has become recoverable. The company has charged Rs.245.95 lacs paid upto 31.03.2012 to Profit & Loss Account. However Rs.479.68 lacs paid during 2012-13, 2013-14 & 2014-15 stands recoverable under the head Urban Cess / Water Cess deposited under Protest recoverable Account. The company has filed SLP in Subrme Court for the recovery of entire amount.

f. ) The company has paid Rs. 18,69,956/- to M/s TUSCON ENGINEERS LTD. as per arbitration award given against the company. The company has filed an appeal with Hon'ble High Court of Rajasthan against the arbitration award.

5. Since the company is upgrading its main Plant & Machinery under Technology Up gradation Fund scheme regularly, it is not carrying any asset of which carrying cost is more than its recoverable amount / value in use on the Balance Sheet date. Hence there is no impairment loss.

6. Balances appearing under the head Creditors, Debtors, Advances and Deposits are subject to confirmations yet to be received by the company.

7. All the investments of the company have been considered by its management to be of long term nature. No provision for decline in the carrying amount ofinvestment is made in this year's accounts as in the management's considered opinion, such decline is not of a permanent nature.

8. The company has fulfilled its export obligation under all EPCG Licenses. Hence no obligation is pending.

9. Primary Segment Information : As per Accounting Standard 17 , the requirement of Segment reporting is not applicable to the Company both in respect of Geographical Segment and Product Segment , The Company is engaged in Production of Textile products, Revenue from other segment is less than 10°% of total revenue.

10. Debrciation

(i) Pursuant to the enactmant of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II. Accordingly the unamortised carrying value is being debrciated /amortised over the revised remaining useful lives. The written down value of Fixed asstes whole lives have expired as at 1st April2014 have been adjusted, in the opening balance of Profit and Loss Account amounting to Rs. 136.25 Lacs.

(ii) The company has provided debrciation as per Schedule 11 to the companies Act 2013 based on useful life of the Assets on straight line basis as under:-

(a) Where the useful life as per this schedule remains, it has been debrciated over the remaining useful life.

(b) Where the useful life is NIL, and there remains a balance after retaining the residual value, it is recognised in the opening balance of retained earnings.

(iii) The company continue to provide 100% debrciation on assets below Rs. 5000.

11. Change Valuation Method Of Inventory Of Stores &Spares.

Observing the difficulties in Computer programming the company has changed method of valuation of Inventories of Stores Spares etc. from moving weighted average cost to FIFO. This change in the basis of valuation does not have material impact on inventory cost & profit/loss of the year.

12. Figures have been rounded off to the nearest rupees in Lacs.

13. Figures for brvious year have been regrouped /reclassified, wherever necessary to confirm to this year's classification.

Signed in terms of our report of even date annexed hereto.

For and on behalf of

M/s. M.C. BHANDARI & CO.

Chartered Accountants

Firm Reg. No.303002E

CA V. CHATURVEDI

Membership. No.13296 Partner

Sd/-V.K. LADIA CHAIRMAN & MANAGING DIRECTOR (DIN : 00168257)

Sd/-N. N. AGRAWALA  DIRECTOR (DIN : 00168211)

Sd/-N.K. SONI CHIEF FINANCIAL OFFICER

Sd/-BHANUPRIYA MEHTA JAIN COMPANY SECRETARY

Date : May 22, 2015

Place : UDAIPUR