NOTE NO. '1' NOTE ON ACCOUNTS 1. SIGNIFICANT ACCOUNTING POLICIES : i) The financial statements are brpared under the historical cost convention in accordance with the applicable Accounting Standard and relevant brsentational requirements of the Companies Act, 2013. ii) Fixed Assets.: Fixed Assets are stated at cost less debrciation. Cost of acquisition or construction is inclusive of duties, taxes and other incidental expenses. Cenvat credit available is deducted from cost of fixed assets. Capital work-in-progress includes advances paid for purchase of Fixed Assets, broperative expenses pending capitalisation, and capital work in progress. As per practice, expenses incurred on modernisation / debottlenecking of plant are capitalised. iii) Debrciation : Debrciation is provided as per rates specified in Schedule II of the Companies Act, 2013 as per details given below: S.No. Name of Asset 1. Building SLM Basis 2. Plant & Machinery WDV Basis 3. Other Assets (Vehicles, Furniture & Fixture) WDV Basis The plant being a continuous process plant, so rates of debrciation as applicable to continuous process industry have been applied. iv) Inventories : Inventories are valued at cost or net realizable value, whichever is lower. The cost in respect of various items of inventories are computed as under:- • In case of raw materials stores and spares at weighted average cost plus direct expenses. • In case of work in process at raw material cost plus conversion expenses depending upon stage of completion. • In case of finished goods at raw materials cost plus conversion cost, packing cost, excise duty and other overheads to bring the goods to brsent condition and location. • Raw material and other stocks lying at port pending clearance at cost inclusive of custom duty actually paid. The custom duty payable on material lying into bond is accounted on clearance for home consumption. v) Retirement Benefits : Gratuity and earned leave encashment has been provided for in the books of accounts on acturial valuation basis as at the end of the year. vi) Interest : Interest in respect offixed deposits lying with banks has been accounted for on accrual basis. vii) Cenvat & Excise Duty Purchases, Sales and Stocks are shown net of cenvat credit available. Balance in the cenvat account is shown as current assets and excise duty expenditure is booked on gross basis. Provision made for excise duty liability on stock of finished goods lying at the year end is booked in excise duty expenditure account and liability for the same is shown as provisions under schedule of current liabilities. viii) Recognition of Income/expenditure : All revenues and expenses are accounted for on accrual basis except for medical reimbursement payable, claims receivable and export incentives which are accounted for on cash basis, unless otherwise explained hereafter. All expenses are shown as net of Input Tax credit as Service Tax credit is adjustable against excise duty under cenvat credit Rules. ix) Foreign Exchange Fluctuations : a) Foreign currency assets / liabilities not covered by forward contracts are restated at the rates brvailing at the end of the year. b) Any income or expense on account of exchange difference is recognised in the Profit and Loss Account as per the requirement of AS-11. 2. a) Previous year figures have been regrouped and rearranged, wherever considered necessary, to make them comparable with those of current year. b) Figures have been rounded off to the nearest rupee in lacs. 3. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realised in the ordinary course of business, unless stated otherwise. The provision for all the known liabilities is adequate and not in excess of amount considered reasonably necessary. 4. Note No. 1 to 22 form an integral part of the accounts of the Company. 5. No provision for income tax or MAT has been made in the books of accounts as there are no taxable profits for the year under consideration, under the provisions of the Income Tax Act. 6. Managerial remuneration does not include contribution to Gratuity provision as separate figures are not available. Computation of net profit in accordance with section 198 of the Companies Act, 2013 has not been enumerated, as no commission is payable and remuneration has been paid as per provisions of schedule V of the Companies Act, 2013. 7. The Company has taken the Group Gratuity and Group Leave encashment policies from LIC and entire brmiums demanded by them for the year 2014-15 have been paid / provided for as per the requirements of revised AS-15. 8. Following the order of Hon'ble High Court dated 30.08.2012, Company has filed a Execution Petition before the court on 14.01.2013 praying therein for attachment of bank account and other assets of M/s E.I.Dupont of USA to realize its claim of US$ 5 lacs plus interest thereon amounting to US$ 9.75 lacs from the date of award (16.03.2002) till the date of petition (14.01.2013). The total amount of Company claim as already decreed by the court under the arbitration and Conciliation Act 1996 comes to 814.49 lacs and same has been treated as Income in the year 2012-13. The management of the Company is confident of recovery of these claims. 9. Company has applied for reimbursement of 18.11 Crore to its bank against Term Loan of 23.60 Crore for funding the Spinning Mill Capital Expenditure. This Loan has been sanctioned by banks & they have disbursed 18.11 Crore in the month of April 2015. Company has made its own arrangements to meet this gap during the year and accordingly raised 18.78 Crore from the short term sources / customers. These funds are included in Note No.6 as other Current Liabilities / payables and have been repaid / adjusted on disbursement of Term Loans subsequently. Certified in terms of our separate report of even date annexed For S. C. Dewan & Co. Chartered Accountants (Regn. No. 000934N) S.C. DEWAN Partner (M.No. 015678) R.K. GARG Mg. Director H.K. SINGHAL Finance Director B.K. GUPTA Company Secretary B.B. TANDON A.S.CHATHA M.M. CHOPRA TEJINDER KAUR Directors Place : CHANDIGARH Dated : 30.05.2015 |