SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS

1. CORPORATE INFORMATION:

M/s Rishab Special Yarns Limited was incorporated under Companies Act, 1956 ( No. 1 of 1956} on 17.08.1987 as a public Limited company with its registered office at 2070, Rasta Bara Gangore, Jaipur -302017, to carry on the business of manufacturing, processing, text rising, twisting, doubling, processing, packing, colorouring, dyeing, printing, bleaching,, finishing, crimping, lenitting of polyester filament yarn, and all other types ofyarns and fibres. The company raised capital by public issue in February 1992andtheissue was oversu bscribed by 11 times. The basis of allotment was finalized on 10.04.1992 and company raised a total sum of Rs.290.43 lakhs through this Initial public offer.

Due to incurrence of continuous losses year after year as per decision taken in its Board Meeting held on 29.10.2005 the company discontinued its business operations. Subsequently the company is trying to revive the business and valuating various options to utilize its available assets gainfully.

2. SIGNIFICANT ACCOUNTING POLICIES:

i. Basis of Accounting

The financial statements are brpared under the historical cost convention on accrual basis and are generally in accordance with the requirements of the Companies Act, 1956. The accounting policies not specifically mentioned are consistent with generally accepted accounting principles.

ii. Revenue Recognition

The company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis.

iii. Tangible Assets

Tangible Assets are stated at cost less debrciation. Cost of acquisition, fabrication or construction is inclusive of freight, duties and other incidental expenses during construction period but excludes the modvat credit available on the capital goods.

iv. Impairment of Assets

Impairment loss is provided when carrying amount of assets exceeds recoverable value. Excess of carrying amount over recoverable vaiue is charged to Profit & Loss Account. Recoverable value is the higher of an asset's net selling price or its value in use.

v. Debrciation

Since there are no Manufacturing or Business Operation since a brtty long time the Company has stopped providing debrciation on fixed assets.

vi. Taxes on Income

Current tax is provided after allowing exemptions and deductions under the Income Tax Act, 1961. Deferred Tax is recognized subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and is capable of reversal in one or more subsequent period. Where there is unabsorbed debrciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only if there is reasonable certainty of realization in future

2. Figures of the brvious year have been regrouped and rearranged to correspond to current year's classification.

3. Provision for Current and Deferred Tax

No provision for tax for the year has been made in view of current year's loss and in view of uncertainty of future business deferred tax assets has not been recognized.

4. Due to Micro, Small & Medium Enterprises

To the extent of information available with management, there are no SSI units to whom Company owes money for more than 30 days.

The Company has not received any communication from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid / payable as required under the said Act have not been given.

5. In the opinion of management, loans and advances and other assets are approximately of the value stated, if realized in the ordinary course of business unless and otherwise stated. The provisions of all liabilities are adequate and not in exccss of the amount reasonably necessary.

6. Disclosure as required by "Accounting Standard 2 4; Discontinuing Operations" and "Accounting Standard 2 8:

Lmpairment of Assets"

The company was incurring heavy losses in textile business. Under the circumstances the Board of directors in their meeting held on 29.10.2005 decided to discontinue the business operations of the company and to sell the company's machinery & equipments and surplus land to repay the liabilities of the company. The company has sold entire Tangible Assets except major part of building and some part of land & furniture & fixtures