SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS (annexed to and forming part of financial statement for the year ended 31st March 2015) CORPORATE INFORMATION Gini Silk Mills Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange Limited, Mumbai. The company is engaged in the manufacturing and selling of shirting and suiting with reputed brand name "GINI". 1 SIGNIFICANT ACCOUNTING POLICIES 1 ACCOUNTING CONVENTION The financial statements are brpared under the historical cost convention, on an accrual basis of accounting. The statement complies with the Accounting Standard brscribed by the ICAI and also complies with the Section 133 of the Companies Act, 2013. The accounts are brpared as a going concern. 2 USE OF ESTIMATES The brparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and laibilites 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 recognised in the period in which the results are known/ materialised 3 CASH AND CASH EQUIVALENTS Cash and cash equivalents for the purpose of cash flow statement comprise cash and bank and in hand and short -term investments with an original maturity of three months or less. 4 FIXED ASSETS Tangible Assets Tangible Assets are stated at acquisition cost, net of accumulated debrciation & accumulated impairment losses. Subsequent expenditure related to an item of fixed assets are added to its book value only if they increase the future benefit from the existing asset beyond its brviously assessed standard of performance. Items of Fixed Assets that have been retired from active use and are held for disposal are stated at the lower of their net book value & net realisable value & are shown separately in the financial statement. Any expected loss is recognised immidiately in the statement of Profit & Loss. Losses arising from the retirement of & gain or losses arising from disposal of fixed assets which are carried at cost are recognised in Statement of Profit & Loss. Intangible Assets Intangible Assets are stated at acquisition cost, net of accumulated debrciation & accumulated impairment losses, if any. Intangible Assets are amortised on a straight line basis over their estimated useful life. Gain or Losses arising from the retirement or disposal proceeds recognised as Income or expense in Statement of Profit & Loss. 5 METHOD OF DEbrCIATION AND AMORTIZATION Debrciation for the year in respect of assets relating to undertaking at Tarapur has been provided on straight line method. In respect of assets relating to undertakings at Kandivali debrciation has been provided on written down value method, over the estimated useful life of assets. Effective 1st April 2014, the Company debrciates its Fixed Assets over the useful life in the manner brscribed in Schedule II of the Companies Act, 2013 as against the earlier practice of debrciating at the rates brscribed in Schedule XIV of Companies act, 1956. Lease Hold land has been amortized over the period of the lease on straight line basis Debrciation on the Fixed Assets added during the year has been provided on pro -rata basis with reference to the month of addition. 6 IMPAIRMENT OF ASSETS An assets treated impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. 7 LEASED ASSETS Operating Lease: Rentals are expensed with reference to lease terms and other considerations. 8 FOREIGN CURRENCY TRANSACTIONS Transactions denominated to foreign currencies are recorded at the exchange rate brvailing on the date of the transaction or that approximates the actual rate at the date of the transaction. Monetary items denominated in foreign currencies at the year end are restated at year end rules. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the brmium paid on forward contracts is recognised over the life of the contract. Non monetary foreign currency items are carried at cost Any Income or Expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets. 9 INVESTMENTS Current Investments are carried at lower of cost or quoted/fair value, computed category wise. The long-term investments are stated at cost. Provision for permanent diminution in value is made only if such a decline is other than temporary in nature. 10 INVENTORIES Inventories of Raw Materials, Stores and Spares, Finished goods and Work in progress are valued at lower of cost or net realizable value after providing for obsolescence, if any. Cost comprises of all cost of purchases, cost of conversion and other cost incurred in bringing the inventory to their brsent location and conditions. Cost is determined under Weighted Average method for Raw Material, stores & spares & Work in Progess and for fabrics on First-in-First-Out (FIFO) basis. 11 REVENUE RECOGNITION Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations include sale of goods, process income and job work receipts which are exclusive of sales tax but net off after adjusting claims, incentives, rebates and discounts. Dividend income is recognised when right to receive is established. Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable. 12 EMPLOYEES BENEFITS Short-term employee benefits are recognized as an expense at the undiscounted amount in the Profit and Loss account for the year in which the related service is rendered Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the brsent value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Profit and Loss account. The Company has taken Group/Master Insurance Policy with Life Insurance Corporation of India for the future payments of retiring employee's gratuities. The brmium thereon has been so adjusted as to cover the liability under scheme in respect of eligible employees at the end of their future anticipated service with the company. 13 BORROWING COST Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of the assets, up to the date the asset is ready for its intended use. All other borrowing costs are recognized as expense and charged to the Profit and Loss Account in the year in which they are incurred. 14 TAXES ON INCOME Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax for the year is recognized, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized and carried forward only if there is a reasonable/virtual certainty of its realization. 15 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS The Company recognizes provisions when there is brsent obligation as a result of past event and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of the obligation. A disclosure for Contingent Liabilities is made in the notes on accounts when there is a possible obligation or brsent obligations that may, but probably will not, require an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statement. 16 SEGMENT REPORTING Segments have been identified in line with the accounting standard on Segment reporting (AS-17) taking into account the organisation structure as well as the differential risk in returns of segments. 17 GOVERNMENT GRANTS Grants received against specific fixed assets are adjusted to the cost of the assets & those in the nature of promoter's contribution are credited to Capital Reserve. Revenue Grants are recognised in the Profit & Loss account in accordance with related scheme and in the period in which these are accrued. 3 Income Tax assessment is completed up to the Assessment Year 2012- 2013. 4 The Company is in process of appointing the Company Secretary, however during the year under audit the company unable to appoint the same. 5 The Company's operation fall under single segment namely "Textile" therefore, separate business segment is not disclosed. 6 Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/ disclosure. As per our Report of even date For Vatsaraj & Co Chartered Accountants FRN : 111327W CA Nitesh K Dedhia Partner Membership No, 114893 For and on behalf of the Board Vishwanath Harlalka Chairman Deepak Harlalka Managing Director Ramprasad Poddar Director Place : Mumbai Date : May 28, 2015 |