NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2015

1. SIGNIFICANT ACCOUNTING POLICIES:

a) Basis of Accounting

The financial statements have been brpared under the historical cost convention in accordance with the generally accepted accounting principles and in accordance with Accounting Standards applicable in India and the provisions of the Companies Act, 1956 as adopted consistently by the Company

b) Fixed Assets All fixed assets are stated at cost less accumulated debrciation. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses.

c) Inventories The inventories have been determined on the basis of FIFO method and basis of determining cost for various categories of inventories are Raw Material at cost price, Finished Goods at market price, Work-in-process at estimated cost and Stores & Spares at cost o r realizable value whichever is lower.

d) Revenue Recognition The sales are recognized on mercantile basis. Job work was recognized at the time of raising the invoice in favour of Customer.

Income/Loss against Commodity dealing/Future trading of Shares is recognized at the closing point of the contract.

Profit/loss on dealing in shares at the time of delivery of shares or square up of the deal.

Vat tax liabilities are accounted for on the basis of Vat tax returns filed by the Company with the department. Additional liability, if any, arises at the time of assessment, will be accounted for in the year of finalization of the assessment.

Dividends from investments in shares are recognized in the statement of profit and loss at the time of receipt. Losses arising from retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss.

e) Debrciation Consequent to the enactment of Companies Act, 2013(the act), the company has computed debrciation with reference to the estimated economic lives of the fixed assets brscribed by the schedule II to the act. Previously, debrciation was calculated on Straight Line Method as per Companies Act, 1956 at the rates of debrciation brvalent at the time of acquisition of assets.

f) Retirement Benefits Gratuity liability has been accounted for on an accrual basis. Contribution to Provident Fund, Family Pension Scheme, ESI and Leave with Wages are accounted for on an accrual basis and charged to Profit & Loss Account accordingly.

g) Investments Investments that are readily realizable are classified as current investments. All other investments are classified as long-term investments. Long-term investments and Current Investments are carried at cost plus incidental expenses, if any. Any reductions in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss Profit or loss on sale of investments is determined on the basis of actual carrying amount of investment disposed of.

h) Accounting of Taxes on Income

No Provision for Income tax has been made keeping in view the losses during the year and according to the provisions of Income tax Act, 1961. Consequent to the issuance of Accounting Standard 22(AS-22) "Accounting for Taxes on Income" by the Institute of Chartered Accountants of India which is mandatory in nature, the company has reviewed Deferred Taxes which result from the timing difference between the Book Profits and Tax Profits.

In consideration of prudence as set out in paragraph 15 to 18 of AS-22, considering the accumulated losses, sufficient future taxable income cannot be estimated with virtual or reasonable certainty. The company therefore has not recognized Net Deferred Tax Assets in the Financial Statement for the current. Further in accordance with paragraph 19 of AS-22 the Net Deferred Tax Asset, if any, shall be reassessed at the end of each Balance Sheet date hereafter and accordingly due recognition shall be given in the Financial Statements.

i) Provisions, Contingent Liabilities and Contingent Assets:

(i) Provisions involving a substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of a past event and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the Financial Assets.

(ii) Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date in accordance with the Accounting Standard AS-29 on "Provisions, Contingent Liabilities and Contingent Assets'" notified under the Companies (Accounting Standards) Rules, 2006.

j) Borrowing Costs:

Borrowing costs, attributable to the acquisition/ construction of qualifying assets are capitalized. Other borrowing costs are charged to the statement of Profit and loss Account.

2. Debit and credit balances are subject to confirmation and reconciliation, if any.

3. As the Company's business activities fall within a single primary business segment, the disclosure requirements of Accounting Standards (AS)-17 on "Segment Reporting", issued by The Institute of Chartered Accountants of India are not applicable. However the Company has made sales of Rs.160.87 Lacs (Previous Year Rs.107.56 Lacs) of Knitwear Division which is shown under Other Operating Income.

4. There was a search by the Central Excise and Taxation Department on 26.09.2002 at the brmises of the Company and the books of accounts and other related documents (including excise records) have been seized. The excise department has issued a show cause notice dated 29.03.2005 to the company for the raising of demand of Rs.6,62,19,886/- . The company has filed the appeal with the Customs, Excise & Service Tax Appellate Tribunal, New Delhi, who had stayed the recovery proceeding till the disposal of appeals. So, no provision has been made in the books since the demand raised, as the management is of opinion that the same will be accounted for in the year of payment.

5. In the opinion of the Board, all the Current Assets, Loans & Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated except as exbrssly stated otherwise.

6. Legal & Professional Charges include payment to Auditor's as under :

7.The Company is taking the inventories as on 31.03.2015 & 31.03.2014 of its knitwear division on the basis of physical stock taking, as the knitwear division of the company is not maintaining the proper stock registers.

8. Expenditure in Foreign Currency on Traveling – NIL (Previous Year-Rs. 168840/-)

9. Consequent to the enactment of the Companies Act, 2013 (the act) and its applicability for the accounting periods after April 1st, 2014, the company has computed debrciation with reference to the estimated economic lives of the fixed assets brscribed by the schedule II to the Act. For assets whose life is over, the carrying value, net of residual value, aggregating to Rs. 2.30 lacs as at April 1st, 2014 has been adjusted through the retained earnings and in other assets the carrying value as at April 1st, 2014 has been debrciated over the remaining of the revised useful life of the assets and recognized in the above financial results. As a result charge of debrciation is lower Rs. 5.58 Lacs for the year ended March 31st, 2015 and the net profit from activities before tax is higher by the same amount.

10. Corresponding figures of the brvious year have been regrouped/ rearranged wherever deemed necessary.

As per our Report of even date attached

For Ashok Shashi & Co.

 (FR No.013258N)

Chartered Accountants

sd/- (Budh Kumar)

Partner M.No.098415

For and on behalf of the Board

sd/- (Rajiv Arora) Chairman cum DIN: 00079838 Mg. Director

sd/- (Ritesh Arora) Executive Director DIN: 00080156

Place: Ludhiana

Date : 30.05.2015