NOTE "1": SIGNIFICANT ACCOUNTING POLICIES

1. SYSTEM OF ACCOUNTING

These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis.

2. USE OF ESTIMATES

The brparation of financial statements requires judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual reserves and estimates are recognised in the period in which the results are known/materialised.

3. FIXED ASSETS:

Fixed assets are stated at cost of acquisition or construction inclusive of freight, duties and taxes and incidental expenses, less accumulated debrciation, amortisation and impairment loss, if any.

4. INVESTMENT:

Investments are classified into Non Current and Current investments.

a) Non Current investments are being valued at cost of acquisition. Provision is made to recognise a decline other than temporary, in the carrying amount of long term investments.

b) Current investments are being valued at cost or market value whichever is lower.

5. DEbrCIATION:

a) Premium on leasehold land is amortised over the period of the lease term.

b) Debrciation on fixed assets is provided under the "straight line method" based on the useful lives of assets as brscribed under Part C of Schedule II to the Act.

c) Debrciation in respect of addition to fixed assets is provided on pro-rata basis from the month in that such assets are acquired/installed/started commercial production put to use.

d) Debrciation on fixed assets sold, discarded or demolished during the year is being provided at their respective rates up to the month in which such assets are sold, discarded or demolished.

6. VALUATION OF INVENTORIES:

a) Valuation of inventories is inclusive of taxes or duties incurred and on FIFO basis except otherwise stated.

b) Raw materials and Work in progress are being valued at cost or net realisable value whichever is lower.

c) Stores, Spares and Tools are being valued at weighted average cost.

d) Goods in Transit, if any, are stated at actual cost up to the date of the Balance Sheet.

e) Finished Stocks are being valued at direct cost or net realisable values whichever is lower.

7. REVENUE RECOGNISATION:

a) Sale of Goods is recognized on transfer of significant risks and rewards of ownership which is on the dispatch of goods.

b) Sales are stated net of discount, claims, and shortage. Commission, brokerage and incentives on sales, wherever applicable, have been separately recognized as an expense.

c) Incomes from job charges are recognized as and when the services are rendered.

d) Interest income is accounted on accrual basis.

8. RETIREMENT AND OTHER BENEFITS TO EMPLOYEES:

a) Employees' benefit under defined contribution plan such as contribution to provident fund and employees' benefits under defined benefit plan for leave encashment are charged off at the undiscounted amount in the year in which the related service provided.

b) Post employment benefits under defined benefit plan such as gratuity are charged off in the year in which the employee has rendered services at the brsent value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and/or losses in respect of post employment benefits are charged to profit and loss account or capitalised in case of new projects are taken up by the company.

9. CAPITAL WORK IN PROGRESS:

The cost incurred for fixed assets, the construction of which is not completed, are included under "capital work-in-progress" and the same are classified and added to the respective assets on the completion.

10. PRIOR PERIOD EXPENSES / INCOME:

The company follows the practice of making adjustments, as a result of errors and omissions, through "prior period items" in respect of all material transaction pertaining to the period prior to current financial year.

11. INCOME FROM INVESTMENTS:

Income from investments, where appropriate, is taken into revenue in full on declaration or receipt and tax deducted at source thereon is treated as advance tax.

12. TREATMENT OF CONTINGENT LIABILITIES:

Contingent liabilities are not recognised but are disclosed by way of notes to accounts. Disputed demands in respect of central excise, customs, income tax and other proceedings etc. are disclosed as contingent liabilities. Payments in respect of such demands, if any, are shown as advances till the final disposal of the matter.

13. EXCISE DUTY & CENVAT CREDIT

CENVAT credit available as per the provisions of the Excise Rules on raw material, packing material, etc purchased, is accounted for by reducing the cost of the respective items.

Excise duty payable on finished goods lying at the factory brmises at the close of the year is provided in the books as per the Excise Rules.

CENVAT credit available as per the provisions of the Excise Rules on capital goods is accounted for by reducing the cost of capital goods.

14. TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized, on timing differences, being the difference between taxable incomes and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

15. IMPAIRMENT LOSS

Impairment loss is provided to the extent the carrying amount(s) of assets exceed their recoverable amounts(s). Recoverable amount is the higher of an assets net selling price and its value in use.

Value in use is the brsent value of estimated future cash flow expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm length transaction between knowledgeable, willing parties, less the cost of disposal.

16. SEGMENT REPORTING

Segments have been identified in line with the Accounting Standard-17, taking into account the organisational structure as well as the differing risks and returns. The business segment is disclosed as primary segment.

17. BORROWING COSTS

The company capitalises interest and other costs incurred by it in connection with funds borrowed for the acquisition of fixed assets. Where specific borrowings are identified to a fixed asset or a new unit, the company uses the interest rates applicable to that specific borrowing as the capitalisation rate.

Capitalisation of borrowing costs ceases when all the activities necessary to brpare the fixed assets for their intended use are substantially complete. Other borrowing costs are charged to Profit & Loss Account.

18. TRANSACTION IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded by applying the exchange rates brvailing at the date of the transactions.

b) Monetary items denominated in foreign currencies remaining unsettled at the end of the year, are restated using the closing rates. The exchange difference arising as a result of the above is recognised in the profit and loss account.

c) In case the monetary items are covered by the forward exchange contracts, the difference between the year end exchange rate and the exchange rate at the date of the inception of the forward exchange contract is recognised as exchange difference.

d) In respect of hedging transactions, the brmium/discount rebrsented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract is amortised as expense or income over the life of the contract.

e) Exchange differences on such contracts are recognised in the statement of profit and loss

account in the year in which the exchange rate changes.

f) Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

g) Non-monetary foreign currency items such as investments are carried at cost.

Note 1 : The company operates in a single segment i.e. textile having the same risk and return. Hence reporting as per Accounting Standard 17 'Segment Reporting' is not applicable

Note 2 : The management is of view that as per Accounting Standard-28, no impairment loss is required to be recognised, as the brsent values of assets are higher than the carrying amount of such assets.

Note 3: During the year , a Memorandum of Understanding (MOU)was entered between the company and its two directors. As per the terms of MOU , the company will use the power supplied by the meters standing in the name of such directors and makes payment of electricity bills directly to the power supply company. Note 36 : Effective 1 April 2014, the Company has reassessed useful lives of fixed assets pursuant to the provisions of Schedule II to the Act and the same has been given effect to in these financial statements. Also debrciation ' 360607/- and deferred tax thereon ' 111428/- in this regard has been adjusted against opening balance of statement of profit and loss in line with the transitional provisions brscribed under the Act.

Note 4: Leases: The company has taken industrial gala under operating lease or on leave and license basis. These is generally not non-cancellable and for a period ranging between 12 months and above and is renewable at mutual consent on mutually agreeable terms. The company has given refundable interest free security deposit in accordance with the agreed terms. The rent paid in accordance with these agreement is debited to the statement of profit and loss for the year.

Note 5: The Company has reclassified brvious year figures to conform to this year's classification.

As set out in our attached report of even date

For R. S. AGRAWAL & ASSOCIATES

Chartered Accountants

(Firm Registration no. 100156W)

Alka Somani

Partner

Membership no. 147269

On behalf of the board

Narendra Kumar Sureka

Chairman and Managing Director

Pradeep Kumar Sureka

Whole Time Director

Mumbai, 29th May 2015