Note - 1: Significant Accounting Policies

a) Basis of brparation and Accounting Assumptions:

These financial statements have been brpared to comply in all material aspects with applicable accounting principles in India, historical cost convention, on the assumption of going concern, the applicable accounting standards brscribed under Section 133 of the Companies Act, 2013 ('Act') read with rule 7 with Companies (Accounts) Rules, 2014, the provision of the Act (to the extent notified) and other accounting principles generally accepted in India, to the extent applicable. These financial statements are brsented in Indian rupees.

b) Revenue Recognition:

Revenues are recognized to the extent that is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenues recognized and expenses accounted are on accrual basis and the amounts determined as payable or receivable during the year except those with significant uncertainties are in accordance with the Generally Accepted Accounting Principles (GAAP) applicable in India and the provisions of the Companies Act, 2013 in India. The sales revenue is recognized net of taxes in the financial statements.

c) Use of Estimates

The brparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses and the disclosure relating to contingent liabilities on the date of the financial statements. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed at each balance sheet date. Any revision to accounting estimates are recognized in the period in which the estimate is revised and future periods affected.

d) Fixed Assets:

All expenses including cost of fixed asset and expenses incurred directly or indirectly for bringing the asset to its brsent location and condition have been capitalized in the books of the company.

e) Debrciation:

Debrciation on Fixed Assets existing as on 31st March 1993 had been provided on the reducing balance method as per the rates and method brscribed under Schedule XIV of Companies Act, 1956.

Debrciation had been provided on the straight-line method for all additions made to the Fixed Assets subsequent to 31st March 1993 as per the rates and method brscribed under Schedule XIV of the Companies Act, 1956.

Debrciation on fixed assets have now been provided based on straight line method on the basis of useful life brscribed as per Schedule-II of the Companies Act, 2013.

f) Foreign Currency Transactions:

Transactions in foreign currency are accounted for at the exchange rates brvailing on the date of transaction. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of transaction. Monetary assets and liabilities denominated in foreign currency as at the balance sheet date are translated at the closing exchange rates on that date. Exchange differences arising on settlement of transactions and translation of monitory items are recognized as Income or Expense in the year in which they arise.

g) Impairment of Assets:

At the end of each year, the company determines whether a provision should be made for impairment loss on Fixed Assets by considering the indications that an impairment loss may have occurred in accordance with AS-28 "Impairment of Assets" issued by the ICAI, where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed Assets is made for the difference.

h) Employee Benefits:

A. Short Term Employee Benefits:

i) The employee benefits payable only within 12 months of rendering services are classified as short-term employee benefits. Benefits such as Salaries, leave travel allowance, short term compensated absences etc. and the expected cost of bonus are recognized in the period in which the employee renders the related services.

ii) The Company has made a provision towards leave encashment and the same has been treated as period cost and charged to Statement of Profit and Loss accordingly.

B. Post Employment Benefits:

i) Defined Contribution plans: The Company's contribution towards Provident fund scheme, Employee State Insurance scheme and Employee pension scheme are recognized during the period in which employee renders the related service.

ii) Provision for Gratuity to employees: The Company has made a provision for the same as per the actuarial valuation done by Life Insurance Corporation and the same has been treated as period cost and charged to Profit and loss account accordingly.

i) Provision for Taxation:

Current income tax expense comprises taxes on income from operations in India. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognized, subject to the consideration of prudence, in respect of deferred tax assets or liabilities, on prudence, in respect of deferred tax assets or liabilities, on timing differences, being the difference between taxable incomes and accounting incomes that originate in one period, and are reversible in one or more subsequent periods.

j) Earnings per Share:

Basic Earning per Share is computed by dividing net profit for the year attributable to the equity holders of the Company by the weighted average number of common stock outstanding during the period.

k) Current / Non-current classification:

The Schedule III of the Companies Act, 2013 requires assets and liabilities to be classified as Current or Non-current.

An asset is classified as current when it satisfies any of the following criteria:

a) It is expected to be realized in, or is intended for sale or consumption in, the entity's normal operating cycle;

b) It is held primarily for the purpose of being traded;

' c) It is expected to be realized within twelve months after the Balance Sheet date; or

d) It is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the balance sheet date.

All other assets are classified as non current.

A liability is classified as current when it satisfies any of the following criteria:

a) It is expected to be settled in, the entity's normal operating cycle;

b) It is held primarily for the purpose of being traded;

c) It is due to be settled within twelve months after the Balance Sheet date; or

d) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

All other liabilities are classified as non-current.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out above which are in accordance with the revised Schedule III of the Companies Act, 2013.

1) Operating cycle:

Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Based on this, the Company has ascertained less than 12 months as its operating cycle and hence 12 months has been considered for the purpose of current - non-current classification of assets and liabilities.

m) Provisions and Contingent liability:

i. Provisions :

Provision is recognized when an enterprise has a brsent obligation as a result of past event and is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on Management estimates required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimate.

ii. Contingent liability:

Contingent liability includes a possible obligation or a brsent obligation which cannot be measured accurately or does not' involve outflow of resources immediately. These are not accounted for as liability in the Financial Statements and disclosed by way of notes.

Note-24: Other Notes to Accounts

a) Revenue Recognition:

The Company derives its revenue primarily from manufacture of cotton yarn.

Revenue is recognized at the time of delivery of goods net of Trade Discounts to customers and sales Tax / Value added taxes recovered from customers.

Sales are recognized based on raising of invoice upon satisfactory delivery of goods to trie customers.

b) Taxes on Income and Deferred Taxes :

The Company has made a provision for Income Tax for Rs.1,76,33,217/- during the year based on the taxable income of the company for the year as per the provisions of Income Tax Act, 1961.

The Tax Savings of Rs. 10,91,479 /- has been credited to the Profit and Loss Account and correspondingly Deferred Tax Liability amounting to Rs.2,39,22,986/- has been disclosed in the Balance Sheet as at 31-03-2015. The disclosure of the same is as follows:

c) Cash Flow Statement:

The cash flow statement is brpared under "Indirect Method" and the same is annexed.

d) Events occurring after the date of Balance Sheet:

There are no Events occurring after the date of the Balance Sheet, which has a material effect on the accounts.

e) Disclosure With Regard To Micro enterprises and Small Scale Undertaking:

In view of insufficient information received from suppliers concerning their status as "Micro Enterprise", "Small Enterprise" as defined under clause (h) & (m) of Section 2 of the Micro, Small and Medium Enterprises Development Act, 2006, disclosure of particulars regarding unpaid amounts to such suppliers could not be made in the accounts.

In view of insufficient information received from suppliers concerning their status as Small Scale undertaking as defined under clause (j) of section 3 of the Industries (Development & Regulations) Act 1951, disclosure of particulars regarding unpaid amounts to such suppliers could not be made in the accounts.

f) Inventories

• Cost Comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity.

• Inventories are stated at cost and as certified by the management and are valued as follows:

i. Raw Cotton - At Cost

ii. Stock in Process - At Cost

iii. Yarn Stock - At Cost

iv. Waste Cotton - At Cost or at Net Realisable Value whichever is lower

g) Debtors/Advances and Creditors/Retentions:

Confirmations of balance of certain Debtors and Creditors as well as advances given to and received from parties have not been received by as on the date of this report and hence the said balances are subject to such confirmations and reconciliations.

i) Related party disclosure:

The disclosure required to be made as per Accounting Standard - 18 "Related Party Disclosure" has been furnished separately as an Annexure-II to this report.

k) Segment Reporting:

The Company operates two Units at Hunsur, Karnataka and Kulithalai Road, Manapparai, Trichy, Tamil Nadu. However, as the products manufactured by both the units are same and as the risks and rewards attached to the operations of both the units are not significantly different treating each unit as separate segment for purpose of applicability of Accounting Standard - 17 does not arise.

1) Dividend:

The Company has proposed to declared dividend at 10 % on the paid-up capital. The Company has provided for the dividend distribution tax amounting to Rs. 16,05,500/-

m) Contingent Liability:

a. An amount of Rs.16,21,062/- has been raised by The Superintending Engineer, Tamil Nadu Electricity Board Trichy (Metro) Circle dated 23.02.2010 towards Excess Demand and Energy charges for the month of November & December'09. Against the above Demand the company has obtained a stay in the Madurai

MARIS

Bench of Madras High court by depositing an amount of Rs.4,05,266/- being 25% of the demanded amount and the company is confident of obtaining complete relief in the matter and hence no provision has been made in the books of account.

b. An amount of Rs.8,02,455/- has been raised by The Superintending Engineer, Tamil Nadu Electricity Board Trichy (Metro) Circle dated 13.05.2010 towards Excess Demand and Energy charges for exceeding the demand quota and energy quota during the period November & December'08 to July 2009. The company has disputed the same before the Appellate Tribunal for Electricity (APTEL) New Delhi and the same has been decided in favour of the Company and the Electricity Department has gone on an appeal to the Subrme Court and the matter is pending and the company is confident of obtaining complete relief in the matter and hence no provision has been made in the books of account.

c. An amount of Rs.42,395/- towards difference in Stamp Duty for 14.78 acres Land purchased at Manapparai during 1995 has been claimed by The Special Deputy Collector (Stamps), which is still in dispute. The Management is confident that the differential stamp Duty is not payable and hence no provision has been made for the same.

d. The Company has been served with a notice of demand by the Assistant Commissioner, Woraiyur Assessment Circle, Trichy, for a sum of Rs.4,00,032/- under the Tamil Nadu VAT Act, 2006, pursuant to the orders passed in this regard, holding that the Company was not eligible to claim input tax credit in respect of interstate sales to the extent mentioned in the said order. The Company had filed an appeal against the said orders and is confident of getting substantial/complete relief against the said demand and consequently no provision has been made in the books of accounts.

n) Previous Year Figures

Previous year's figures have been regrouped and reclassified wherever necessary in order to make them comparable with the current year figures.

For and on behalf of the Board

Subject to our report of even date

Chartered Accountants

(Firm Registration No.: 007335S)

(N.C.SUNDARA RAGHAVAN)

Partner

(Membership No. 5952)

For N.C.S.RAGHAVAN & CO.,

ANANDKUMAR RENGASWAMY Managing Director

M.RENGASWAMY Director

Place : Chennai

Date : 30.05.2015