NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2016 1. Significant Accounting Policies : (a) Method of Accounting i) The accounts are brpared under the historical cost convention using the accrual method of accounting unless otherwise stated hereinafter. ii) Accounting policies not significantly referred to are consistent with generally accepted accounting principles. (b) Use of Estimates The brparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized. (c) Fixed Assets Fixed assets are stated at cost except for land, plant & machinery (other than of electronics division) and buildings which have been shown at revalued amount. Cost is inclusive of inward freight, duties & taxes and incidental expenses related to acquisition. In respect of major projects involving construction, related br-operational, start-up and trial run expenses form part of the value of the assets capitalised. As per practice, expenses incurred on modernisation / debottlenecking / relocation / relining of plant & equipment are capitalised. Fixed assets, other than leasehold land, acquired on lease are not treated as assets of the company and lease rentals are charged off as revenue expenses. Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the company's fixed assets. If any indication exists, an asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value based on an appropriate discount factor. (d) Capital Work-in Progress All expenditure including interest cost incurred during the project construction period are accumulated and disclosed as capital work-in-progress until the assets are ready for commercial use. Assets under construction are not debrciated. Income earned from investment of surplus borrowed funds during construction/trial run period is reduced from capital work-in-progress. Expenditure/ income arising during trial run is added to/ reduced from capital work-in-progress. (e) Investments Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management. Current investments are stated at lower of cost and quoted / fair value. (f) Inventories Inventories are valued at lower of cost or net realizable value except for waste. Cost of raw materials, stores and spares, and dyes and chemicals are determined at weighted average method. Finished goods and stock in process include cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition. Wastage and rejections are valued at estimated realizable value. Obsolete, defective and unserviceable stocks are duly provided for. The closing stock of units partly comprises of such materials lying in finished or semi-finished stage. The mode of valuation referred to 'Weighted Average Cost' rebrsents cost worked out by taking into account the price charged by such units. (g) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. (h) Excise Duty Provision for excise duty is made on waste and finished goods lying in bonded warehouse and meant for sale in domestic tariff area. CENVAT benefit is accounted for by reducing the purchase cost of the material / Fixed assets. (i) Retirement and other employee related benefits i) Short term Employee Benefits All employee benefits payable only within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, etc. and the expected cost of bonus, exgratia, incentives are recognized in the period during which the employee renders the related service. ii) Post employment Benefits a) Defined Contribution Plans State Government Provident Fund Scheme is a defined contribution plan. The contribution paid/ payable under the scheme is recognized in the profit & loss account during the period in which the employee renders the related service. b) Defined Benefit Plans The employee Gratuity Fund Scheme and Leave Encashment Scheme managed by different trusts are defined benefit plans. The brsent value of obligation under such defined benefit plans are determined based on acturial valuation under the projected unit credit method which recognizes each period of service as giving rise to additional unit of employees benefits entitlement and measures each unit separately to build up the final obligation. The obligations are measured at the brsent value of future cash flows. The discount rates used for determining the brsent value having maturity periods approximated to the returns of related obligations. Actuarial gains and losses are recognized immediately in the profit & loss account. In case of funded plans, the fair value of the planned assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on net basis. (j) Research and Development Revenue expenditure on research and development is charged against the profit of the year in which it is incurred. Capital expenditure on research & development is shown as an addition to fixed assets. (k) Debrciation Debrciation is calculated on fixed assets on straight-line method in accordance with Schedule II to the Companies Act 2013. Leasehold assets are debrciated over the lease period. Software system is amortized over a period of five years. Debrciation on amount of additions made to cost of fixed assets on account of foreign exchange fluctuation is provided prospectively over the residual life of the fixed assets. Debrciation on revalued assets is calculated on straight line method over the residual life of the respective assets as estimated by the valuer. The additional charge for debrciation on account of revaluation is withdrawn from the revaluation reserve and credited to the profit & loss account. (l) Foreign Currency Transactions, Derivatives instruments and hedge accounting Transactions in foreign currency other than those covered by forward contracts are accounted for at the brvailing conversion rates at the close of the year and difference arising out of the settlement are dealt with in the Profit & Loss account. Outstanding export documents when covered by foreign exchange forward contracts are translated at contracted rates. Foreign currency loans availed for acquisition of fixed assets are restated at the exchange rate brvailing at year end and exchange rate difference arising on such transactions are adjusted to the cost of fixed assets. Other foreign currency current assets and liabilities outstanding at the close of the year are valued at the year end exchange rates. The fluctuations are reflected under the appropriate revenue head. The company uses foreign currency forward contracts and currency options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The company designates these hedging instruments as cash flow hedges applying the recognition and measurement principles set out in the Accounting Standard 30 'Financial Instruments: Recognition and Measurement' (AS-30). Changes in the fair value of derivatives financial instruments that do not qualify for hedge accountings are recognized in profit & loss account as they arise. Hedging instruments are initially measured at fair value. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss is recognized in profit & loss account for the year. (m) Revenue Recognition Sales are accounted for ex-factory on despatch and do not include excise duty. (n) Claims & Benefits Claims recoverable and export incentives / benefits are accounted on accrual basis to the extent considered recoverable. Export incentives / benefits include brmium on import licence, sales tax, etc. (o) Subsidy Subsidy is recognized when there is reasonable assurance that the subsidy will be received and conditions attached to it are complied with. Government subsidy in the nature of promoter's contribution is credited to capital reserve. Subsidy received against a specific asset is reduced from the cost of the asset. (p) Income from Investment / Deposits Income from investments / deposits is credited to revenue in the year in which it accrues. Income is stated in full with the tax thereon being accounted for under income tax deducted at source. (q) Taxation Provision for current tax is made by applying the applicable tax rates and tax laws. Deferred Taxation is provided using the liability method in respect of the taxation effect arising from all material timing differences between the accounting and tax treatment of income and expenditure which are expected with reasonable probability to crystallize in the foreseeable future. Deferred tax benefits are recognized in the financial statements only when such benefits are reasonably expected to be realizable in the near future. (r) Earnings per share Basic earning per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity share outstanding during the year. Diluted earning per share is calculated by dividing the net profit attributable to equity shareholders by the weighted average number of equity share outstanding during the year adjusted for the effects of dilutive options. (s) Operating Leases Operating lease receipts and payments are recognized as income or expense in the profit & loss account on a Straight - line basis over the lease term. (t) Events occurring after balance sheet date Events occurring after the balance sheet date have been considered in the brparation of the financial statements. (u) Contingent Liabilities Contingent liabilities as defined in Accounting Standard-29 are disclosed by way of notes to accounts. Provision is made if it becomes probable that an outflow of future economic benefit will be required for an item brviously dealt with as a contingent liability. 2. CAPITAL WORK IN PROGRESS Capital work in progress does not include capital advances Rs. 886.75 lac (brvious year Rs. 884.53 lac). Exceptional items rebrsents recompense amount paid in respect of financial restructuring package as approved by Empowered Group of Corporate Debt Restructuring (CDR) on July 1, 2008. The company is out of CDR mechanism. 3. It is managements opinion that since the company is exclusively engaged in the activity of manufacture of textile products which are governed by the same set of risks and returns. The same are considered to constitute a single reportable segment in the context of Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India. 4. EARNING PER SHARE (EPS) 5. Figures for the brvious year have been regrouped / rearranged wherever considered necessary. 6. In the opinion of the management, the current assets, loans and advances are expected to realise at least the amount at which they are stated, if realised in the ordinary course of business and provision for all known liabilities has been adequately made in the accounts. 7. Figures have been rounded off to the nearest Rs. lac. See accompanying notes to the financial statements As per our report of even date annexed For B.K.SHROFF & CO., Chartered Accountants Reg. No. 302166E O. P. Shroff Partner Membership No. 6329 Anil Kumar Jain Chairman & Managing Director DIN 00086106 R. Sundaram Chief Financial Officer R. N. Gupta Joint Managing Director DIN 00865491 Amruta Avasare Company Secretary Mumbai, May 7, 2016 |