1. SIGNIFICANT ACCOUNTING POLICIES

a) Accounting Convention:

The financial statements, other than the cash flow statement, are brpared on accrual basis under the historical cost convention treating the entity as a going concern and in accordance with the applicable Accounting Standards under Section 133 of the Companies Act, 2013.

b) Fixed Assets:

Fixed assets are stated at cost of acquisition or construction less accumulated debrciation and impairment loss, if any. The cost comprises purchase price/construction cost, including non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use. The borrowing costs in respect of qualifying assets incurred till the asset is ready for its intended use and adjustments arising out of exchange rate variations attributable to fixed assets are capitalized.

c) Debrciation:

1. Debrciation on fixed assets is charged on the written down value method, except in case of Arham Spinning Mills, Lalru. In case of new projects and major expansion of the existing units undertaken by the Company after 01.04.2005 till 31.03.2012, debrciation is charged on the straight line method, on the basis of useful life of such assets specified in Schedule -II of the Companies Act, 2013.

2. The cost of computer software capitalized is amortised over a period of 4 years.

d) Impairment of Assets:

At each balance sheet date, an assessment is made whether any indication exists that an asset has been impaired in terms of Accounting Standard 28 issued by Institute of Chartered Accountants of India (ICAI). If any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account and charged to the Statement of Profit & Loss. The impairment loss recognized in prior accounting periods is reversed if there is a change in the estimate of recoverable amount of an asset.

e) Revenue Recognition:

• Revenue from sale of goods is recognized at the point of passing of title of the goods to the customer which generally coincides with delivery.

• Sale value is inclusive of excise duty paid at the time of clearance of goods but exclusive of sales tax.

• Export sales are accounted for on the basis of date of bill of lading.

• Revenue in respect of export incentives is recognized when such incentives accrue upon export of goods.

f) Inventories:

Inventories are valued at cost or net realizable value, whichever is lower after providing for obsolescence, if any. The cost in respect of various items of inventory is determined as under :-

• In case of raw materials and stores & spares, at weighted average cost .

• In case of work- in - progress, at the raw material cost plus conversion cost depending upon the stage of completion of goods.

• In case of finished goods, at the raw material cost, conversion cost and other overheads incurred to bring the goods to their brsent location and condition plus excise duty, wherever applicable.

g) Investments:

Long-term investments are carried at cost less provisions, if any, for permanent diminution in value. Current investments are carried at lower of cost or fair value.

h) Foreign Exchange Transactions:

Transactions in foreign currency are recorded at the exchange rates brvalent at the time of transaction. Foreign currency assets and liabilities are stated at the exchange rates brvailing at the date of Balance Sheet or at forward contract rates, wherever so covered. Realized gains or losses on foreign exchange transactions, other than those relating to fixed assets, are recognized in the Statement of Profit and Loss. The difference in foreign exchange rates in the case of fixed assets is adjusted to the cost of fixed assets.

i) Accounting for taxes on Income:

Provision for current tax is made on the basis of aggregate amount of income tax actually payable for the year on the estimated taxable incomecomputed in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax resulting from the timing differences between book profit and tax profit is accounted for at the enacted rate of tax to the extent that the timing differences are expected to reverse in future. Deferred Tax Assets are recognized only to the extent there is virtual certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. j) Employee benefits:

1. Short-term employee benefits:

Short-term employee benefits are recognized as an expense in the Statement of Profit & Loss in the year in which the related services are rendered by the employees.

2. Retirement benefits: Defined contribution plans:

Contributions to the employees' provident fund are made in accordance with the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. Such contributions are charged to the Statement of Profit & Loss of the year in which the related services are rendered by the employees.

Defined benefit plans:

Gratuity:

Liability in respect of gratuity is accounted for on the basis of an independent actuarial valuation. The brsent value of defined benefit obligation as at the end of the year is determined using the Projected Unit Credit method i.e. each period of service rendered by the employee is considered to give rise to an additional unit of benefit entitlement, gradually building up the final obligation.

The company funds its gratuity liability through a qualifying group gratuity policy taken from the Life Insurance Corporation of India by an approved gratuity trust formed for the purpose. The difference between the brsent value of the obligation and the fair value of plan assets as at the end of the year is recognized in the financial statements.

k) Contingent Liabilities:

No provision is made for liabilities that are contingent in nature, unless it is probable that future events will confirm that an asset has been impaired or a liability incurred as at the balance sheet date and a reasonable estimate of the resulting loss can be made. However, all known, material contingent liabilities are disclosed by way of separate notes. l) Miscellaneous Expenditure to the extent not written off: Issue expenses are written off over a period of ten years.

2) The brvious year figures have been reclassified to confirm to this year's classification.

As per our separate report of even date attached

For and on behalf of the Board

For RAJ GUPTA & CO.,

Chartered Accountants FRN : 000203N

R.K.Gupta

Partner

M.No. : 017039

Mukesh Sood

Company Secretary

Bharat Bhushan Gupta

Chief Financial Officer

Dinesh Gogna

Director

Kamal Oswal

Vice Chairman-cum-Managing Director

Place : Ludhiana

Dated :30th May, 2015