SIGNIFICANT ACCOUNTING POLICIES A. USE OF ESTIMATES The Preparation of the financial statements in conformity with accounting standard requires the Management to make estimates and assumptions that affect the reported accounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statement and the reported amount of income and expenses during the reporting period, like useful lives of fixed assets, provision for doubtful debts/advances, provision for diminution in value of investments, provision for employee benefits, provision for warranties/ discounts, allowances for certain uncertainties, provision for taxation, provision for contingencies etc. Actual results could differ from those estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the financial statements. B. BASIS FOR brPARATION OF FINANCIAL STATEMENTS The Financial Statements have been brpared on a going concern basis under the historical cost convention, on accrual basis unless specifically stated herein below and in accordance with the applicable Accounting standards (AS) issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 2013. C. REVENUE RECOGNITION Sales are recognized on completion of sale of goods (Export Sales are recognized on the basis of Shipping Bills brpared) and are net of trade discounts, rebates and inclusive of excise duty but excludes taxes on sales. Export incentives are recognized as and when export sale is accounted for. Profit/ Loss on sale of DEPB license is recognized intheyearofsale. D. FIXED ASSETS a) All fixed assets are stated at cost, net of MODVAT/CENVAT less accumulated debrciation. Cost comprises cost of acquisition and all expenses incurred which are directly attributable, including cost of borrowings and exchange fluctuation, for bringing the assets into working condition for its intended use. b) Cost of assets not ready to put to use before year end are shown as 'Capital Work in Progress/Intangible Assets Under Development'. E. DEbrCIATION Debrciation on the Tangible Assets and Computer Software are provided on Straight Line Method as per useful life of the assets and in the manner as brscribed in Schedule II to The Companies Act, 2013. However having regard to materiality of assets upto Rs. 5000/- are fully debrciated in the year of purchase. Leasehold lands are amortised overthe lease period. F. INVESTMENTS a) Investments are carried at cost. However, provision for diminution in value is made to recognize any decline, other than temporary, in the value of investments except investment in unquoted & subsidiary companies. b) Investments that are readily realizable and intended to hold for not more than a year are classified as Current Investments. All other investments are classified as Non Current Investments. G. INVENTORIES Raw Material and Stores & Spares are valued at cost. Cost of raw material is determined by First in First Out (FIFO) method except cotton, which is valued at weighted average cost. Finished and Semi Finished goods produced and purchased, are valued at lower of cost or net realizable value. The identification of Semi Finished goods is done on the basis of location of the goods. H. BORROWING COST Borrowing costs that are directly attributable to the acquisition or construction of fixed assets, which necessarily take a substantial period of time to get ready for their intended use, are capitalized. Other borrowing costs are recognized as expense in the year in which they are incurred. I. RETIREMENT AND OTHER EMPLOYEE BENEFITS The provision for gratuity liability and earned leaves are made in accordance with the actuarial valuation on projected unit credit actuarial method atthe end of the year. The provisions for medical leaves are made on basis of leaves accrued to employees. Employer's Contribution to Employees Provident Fund are charged to Statement of Profit and Loss. J. RESEARCH AND DEVELOPMENT COSTS Research & Development expenses of revenue nature are charged to Statement of Profit and Loss and those of capital nature are capitalized as Tangible/intangible assets. K. DEFERRED REVENUE EXPENDITURE The expenses related to Preliminary and capital issue expenses are fully charged in the year in which these are incurred. L. FOREIGN CURRENCYTRANSACTIONS a) Transactions denominated in foreign currency are recorded at the exchange rate brvailing at the time of the transactions. b) Monetary items denominated in foreign currencies at the year end are restated at the yearend rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of contract is recognized as exchange difference and the brmium paid on forward contracts is recognized over the life of the contract. c) Non monetary foreign currency items are carried at cost. d) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of profit and loss except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets. M. IMPAIRMENT OF ASSETS The carrying amounts of all the assets are reviewed at each balance sheet date. If there is any indication of impairment, based on internal /external factors, an impairment loss is recognized whereverthe carrying amount of an asset exceeds its recoverable amount. N. TAXATION a) Provision for current income tax is made in accordance with the applicable provisions of the Income Tax Act, 1961. b) Liability for deferred tax is provided while deferred tax asset is recognized only if there is virtual certainty of their realization in future in terms of Accounting Standard on "Deferred Tax Accounting" (AS-22) issued by the Institute of Chartered Accountants of India. O. GOVERNMENT GRANTS Capital grants are accounted for and deducted from the respective assets in the year of receipt. Non specific Capital Subsidy in the nature of promoters'contribution is credited to Capital Reserve. The interest subsidy under TUF scheme is considered on accrual basis and deducted from the interest expenditure. P. OPERATING LEASE Lease payments are recognized as an expense in the Statement of Profit and Loss according to the terms and conditions of the respective agreement. 1. In view of consent of secured creditors consisting more than 83% of the secured debts of the company to the Draft Rehabilitation Scheme pending under consideration of the Hon'ble BIFR, which inter alia envisages complete waiver of interest outstanding towards secured and unsecured loans from Banks/ARC/ Financial institutions and subsidiary companies, provision for interest for the Financial Year 2014-15 amounting to Rs.12291.33 Lac payable to these lenders is not considered necessary. 2. Pursuant to the enactment of Companies Act, 2013 (the Act), and applicability of Schedule II from the current financial year, the company has reviewed and revised the estimated useful lives of its fixed assets in accordance to the Schedule II of the Act. However in case of assets which have been capitalized along with its main assets but now required to be debrciated differently under the Act has been segregated from its main block of assets from the estimated date and amount of its capitalization and debrciation has been charged accordingly. 3. Certain assets lying at the erstwhile units at Kashipur and Jaspur of company have not been reviewed w.r.t. its impairment at the end of the year for want of assess since these are under the possession of lessor, SIDCUL. With regard to Impairment of other units Assets, on assessment it is ascertained that no potential loss is brsent. Accordingly no impairment loss has been provided in the books of account. 4. Deferred Tax adjustments resulting from items of timing differences have been measured using the rates and tax laws enacted or substantially enacted as on 31.03.15 and the same results into the Deferred Tax Assets (net), which has not been recognized due to uncertainty of sufficient taxable income in future within reasonable period. 5. The unclaimed dividend amounting to Rs. 6.03 Lac for the Financial Year 2006-07 (Rs. 2.50 Lac for the Financial Year 2005-06) has been transferred to the Investor Education and Protection Fund, as per the provisions of Section 124(5) of the Companies Act, 2013. 6. The balances of Trade Receivable, loans and advances and Trade payable are subjectto confirmation, reconciliation and consequential adjustment, if any, which in the opinion of the management will not be material. Further the company is in the process of identifying the solw/non moving or damaged inventory and the financial impact, if any, will be given in the books of accounts on the completion of the same. 7. Pending sanction of the Draft Rehabilitation Scheme (DRS) by the Hon'ble BIFR, the amount paid to secured lenders in terms of repayment proposed in the DRS, have been accounted as 'Advance Against Settlement' and shown as Current Assets. The same will be set off against their due repayment as per DRS upon sanction of the Scheme by the Hon'ble BIFR. 8. Sales are net of Rebate & Discounts amounting to Rs. 702.26 Lac (Previous Year Rs. 774.10 Lac). 9. The company had filed a Reference with Hon'ble Board of Industrial & Financial Restructuring (BIFR) under Section 15 of the SICA. The BIFR has registered the company vide letter no. 3 (A-4)/BC/2010 dated 29th June 2010 and vide Order dated 06.12.2010, declared the company as Sick Industrial Company under Section 3 (1) (o) of the SICA. The Draft Rehabilitation Scheme (DRS) of the company as consented by the secured creditors constituting more than 83% of the total secured debts of the company filed in terms of the directions of the Hon'ble BIFR, is pending consideration before the Hon'ble BIFR. Based on same, the company believes it would be able to meet its financial obligations. Accordingly the Financial Statements have been brpared on going concern basis. 10. The Company has received communication from State Bank of India, State Bank of Mysore, Exim Bank, State Bank of Hyderabad, State Bank of Patiala, State Bank of Bikaner and Jaipur, UCO Bank and HSBC Bank stating that they have assigned their dues recoverable from company (except an amount of Rs.100 Lac retained by State Bank of India) to M/s Edelweiss Assets Reconstruction Company Ltd. and from IDBI Bank stating that it has assigned its dues recoverable from company to M/s Assets Reconstruction Company India Ltd. The same however does not have any effect on the Balance Sheet or Profit and Loss account of the company for the year as the same requires only substitution of the name of the ARCs for the transferor banks. As per our report of even date attached For P. Jain & Co. Chartered Accountants (Firm Registration No. : 000711C) Munish Kr. Jain Partner Membership No. : 070335 For and on behalf of the Board A.K. Singhal President Corp. (F&A) Ajay Gupta Company Secretary Sandeep Agarwal Managing Director DIN-00139439 P.K. Rajput Executive Director DIN-00597342 Place : Ghaziabad Date : May 30, 2015 |