Notes annexed to and forming part of the Financial Statements Note 1: Significant Accounting Policies: (a) Basis of Preparation of Financial Statements The financial statements are brpared and brsented under the historical cost convention in accordance with the Generally Accepted Accounting Principles (GAAP) and the provisions of The Companies Act, 2013. The Company follows the mercantile system of accounting and recognizes Income and Expenditure on accrual basis. Accounting policies not referred to otherwise are consistent with the generally accepted accounting principles. (b) Use of Estimates The brparation of financial statements in conformity with GAAP requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements, the reported amounts of revenues and expenses during the reported period and the disclosures relating to contingent liabilities as of the date of the financial statements. Difference between actual results and estimates are recognised in the period in which the results are known or materialise. (c) Fixed Assets Fixed Assets are recorded at cost of acquisition or construction, net of CENVAT \ VAT and include amounts added /reduced on revaluation, less accumulated debrciation and impairment loss, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of fixed assets up to the date of commissioning of the assets and other incidental expenses incurred up to that date. Fixed Assets acquired and put to use for project purpose are capitalised Project under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest. (d) Debrciation and Amortisation (i) Consequent to the applicability of the Companies Act, 2013 with effect from 1st April, 2014, during the year ended 31st March, 2015, the debrciation is provided as per the useful life specified in the Act or as re-assessed by the Company. Consequently, the Company has followed useful life specification as per Schedule II to the Companies Act, 2013. (ii) Wherever the assets are impaired or significantly impaired and the written down value of those assets have been brought down to a level based on the provision for impairment of assets made as per Accounting Standards (AS) 28 on "Impairment of Assets" issued by The Institute of Chartered Accountants of India, debrciation has been worked out after reassessing the useful life of the assets from the brought down level and accordingly charged, considering brought down level as a base. (e) Investments Investments are classified into Current and Long-term Investments. Current investments are stated at lower of cost and fair value. 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. (f) Impairment of Assets The carrying amount of assets are reviewed at each balance sheet date in respect of Cash Generating Unit if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount exceeds its recoverable amount. The recoverable amount is the greater of the asset's selling price and value in use. Reversal of an impairment loss for an asset is recognised as income in the statement of profit and loss, which was earlier shown as an expense. (g) Valuation of Inventories Inventories are valued in accordance with the requirements of revised Accounting Standard (AS) 2 on "valuation of inventories" issued by The Institute of Chartered Accountants of India (ICAI). Mode of working of cost is weighted average while any item of inventory is valued at Net Realisable Value if the same is less than cost. Inventories are specifically identified, wherever possible in respect of traded goods. Inventory valuation is determined on the following basis : (i) Raw Materials, Stock in Process, Finished goods, Stock in Trade and Stores Spares & Chemicals are valued at cost or Net realisable value whichever is lower. (ii) Waste is valued at net realisable value. (iii) By product is valued at net realisable value. (iv) Property under Development is valued at revalued cost of land and construction thereon at cost. (v) Property under Development (converted from Fixed Assets), is valued at Book Value. (vi) Land at Vareli is valued at book cost. (h) Revenue Recognition Revenue from operations includes sale value of goods, net of sales returns, discounts, rate difference and Sales Tax/Value Added Tax (VAT). Sales also include, sales of scrap, waste, reject etc. and profits from property held as stock in trade. (i) Accounting for Excise Duty / Service Tax and Sales Tax / Value Added Tax (i) Excise Duty / Service tax has been accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in bonded warehouses and the same has been treated as part of the cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty. However, this has no effect on the Profit for the year. Amount of Excise Duty shown as deduction from Sales is the total Excise Duty for the year except the duty related to difference between Closing Stock & Opening Stock. Excise duty related to the difference between Closing Stock & Opening Stock is recognised separately in the Profit & Loss Account. (ii) The CENVAT benefits attributable to acquisition of fixed assets is netted off against the cost of fixed assets in accordance with the guidance note issued by the Institute of Chartered Accountants of India. (j) Cenvat. (i) The purchase cost of raw materials and other expenses have been considered net of cenvat available on inputs. (ii) The cenvat benefits attributable to acquisition / construction of fixed assets is netted off against the cost of fixed assets in accordance with the guidance note issued by The Institute of Chartered Accountants of India. (k) Expenses All material known liabilities are provided for, on the basis of available information /estimates. (l) Employee Benefits: (i) Short Term Employee Benefits All employee benefits falling due within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, bonus, leave salary ex-gratia are recognised in the period in which employee renders the related services. (ii) For Defined Contribution Plans (PF, FPF and ESI) Contributions to Defined Contribution Plans are recognized as expenses in the Profit and Loss Account as they are incurred. (iii) For Defined Benefit Plans As per requirement defined in Accounting Standard 15 - "Employee Benefits" issued by the Institute of Chartered Accountants of India, the entity has relied on the Acturial valuation undertaken by the certified actury for the prsent value of obligation and the same is unfunded. (m) Borrowing Cost Interest and other borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Other interest and borrowing costs are charged to revenue. (n) Provision for Current and Deferred Tax Provision for current tax is made on the basis of the assessable income at the tax rate which is applicable to the relevant assessment year as per the Income Tax Act, 1961. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed debrciation under tax laws, are recognised, only if there is a virtual certainty of their realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of their realisation. Deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed for reassessment. (o) Foreign Currency Transactions (i) Transactions denominated in foreign currencies are recorded at the rates of exchange brvailing on the dates when the relevant transactions take place. (ii) At each Balance Sheet date, unrealized gains or losses on foreign currency transactions on account of increase or decrease in rupee liability / asset as a result of exchange difference between the Balance sheet date rate and the transaction Date rate to items of assets and liabilities are recognised in the Statement of Profit and Loss and accordingly, related assets or liabilities are adjusted. Note 2 : During the year under review, the Company has discontinued the manufacturing activity at its Synthetic Fibre Spinning (SFS) plant at Village Vareli, Taluka Palsana,Dist. Surat, which had become unviable due to competitive market conditions.The Company earned a br-tax profit of Rs.74.23 Lacs for theyear ended 31st March, 2015, from its discontinued operations. The tax implication on the same amounted Rs.14.84 Lacs. The financial impact of the discontinuance can not estimated by the Company brsently. Note 3 : Previous year's figures have been regrouped / reclassifi disclosure. As per our attached report of even date For NATVARLAL VEPARI & CO. Firm Registration Number: 123626W Chartered Accountants R. N. VEPARI Partner Membership No.6728 Surat, 28th May, 2015 For and on behalf of the Board M. R. MOMAYA Managing Director YOGESH C. PAPAIYA Whole-time Director & CFO HANISHA ARORA Company Secretary Surat, 28th May, 2015 |