SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS 1. Significant Accounting Policies a) Accounting Convention The accounts are brpared on accrual basis under the Historical Cost Convention in accordance with the Accounting Standards referred to in sub section (3C) of Section 211 of the Companies Act, 1956 and other relevant brsentational requirements of the Companies Act, 1956. b) Revenue Recognition The revenue in respect of sales is recognized as and when the risk and reward in the goods is transferred to the buyer. c) Borrowing Costs Borrowing costs that are attributable to acquisition or construction of qualifying asset are capitalized as part of cost of such assets. Qualifying assets is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as expenses in the period in which they are incurred. d) Accounting for Taxes on Income Provision for taxation for the year is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income-tax Act, 1961. Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of reversal in one or more subsequent period, In respect of carry forward of losses, deferred tax assets are recognized based on virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. e) Retirement Benefits -Gratuity The company has made provision for gratuity on the basis of actuarial valuation carried out in accordance with Accounting Standard 15 on 'Employee Benefit'. -Provident Fund Contribution to provident fund is made in accordance with the provisions of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 and is treated as revenue expenditure. f) Fixed Assets Fixed assets are stated at cost less accumulated debrciation. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses and interest on loan for the acquisition of assets up to the date of commissioning of assets, Loss or gain on transition of foreign currency liabilities for acquisition of fixed assets from a country outside India are added to or deducted from the cost of assets. g) Debrciation Debrciation on Fixed Assets is provided to the extent of debrciable amount on the Straight Line Method. Debrciation is provided based on useful life of the assets as brscribed in Schedule II to the Companies Act, 2013. h) Inventories i. Inventories of Raw Material, Stores & Spares, Loose Tools, Finished Goods and Goods in Trade are valued at lower of cost or net realizable value. Work in Process is valued at estimated cost and waste at net realizable value. ii. The inventories are taken as certified and valued by the management. i) Impairment of Assets. At each balance sheet date an assessment is made whether any indication exists that an assets has been impaired. If any such indication exists, an impairment loss, i.e. the amount by which the carrying amount of assets exceeds its recoverable amount is provided in the books of account. 7. Deferred Taxation The disclosure requirements as per the Accounting Standards (AS-22) on 'Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India is as under-Net Deferred Tax Liability as on 31st March, 2014 has been recognized by applying the tax rate applicable for the current financial year as under:- 8. As per the rehabilitation scheme sanctioned by the Hon'ble BIFR, the company shall redeem 1,65,00016.5% Redeemable Preference Shares of Rs.100 each at 20% of its face value within period of two years starting from Financial Year 2010-11 towards full and final settlement and accumulated dividend of past years shall not be paid. Out of it 1,50,000 16.5% Redeemable Preference Shareholders has not approached the company for redemption of the same. 9. The company has only one segment "Cotton and Blended Yarn", so the disclosure requirements in accordance with guiding principles enunciated in Accounting Standard-17 "Segment Reporting", are not applicable. 10. Pursuant to the enactment 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 Assets whose lives have expired as at 1st April 2014 have been adjusted net of tax, in the opening balance of Profit and Loss Account amounting to Rs.344.60 Lacs . 11. The summarized position of Post-Employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard (AS15) are as under: a. Gratuity The principal assumptions used in actuarial valuation of gratuity are as below: b. ProvidentFund During the year the company has recognized an expense of Rs. 12,53,334/- (Previous Year Rs. 10,23,925/-) towards provident fund scheme. c. Leave Encashment During the year the company has recognized an expense of Rs. 8,72,951/- (Previous Year Rs. 4,73,247/-) 12. The figures of the brvious year have been rearranged/ regrouped, wherever necessary to facilitate comparison. FOR SUMAT GUPTA & CO. ON BEHALF OF THE BOARD CHARTERED ACCOUNTANTS FIRM REG.NO.010288N -sd/- SUMATGUPTA PARTNER M.NO. 086000 -sd/- AKHIL MALHOTRA (MANAGING DIRECTOR) DIN: 00126240 -sd/- MAYANK MALHOTRA (DIRECTOR) DIN:01395444 May 30, 2015 LUDHIANA -sd/- AMITSHARMA (COMPANY SECRETARY) -sd/- ASHWANI KUMAR (CFO) |