Notes to the Financial Statements for the Year Ended March 31, 2015 NOTE 28 I. SIGNIFICANT ACCOUNTING POLICIES A. BASIS 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. Pursuant to Section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014, till the Standards of accounting or any addendum thereto are brscribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently these Financial Statements have been brpared to Comply in all material aspects with the accounting standards notified under Section 211(3C) of the Companies Act ,1956[Companies (Accounting Standards) Rules ,2006,as amended] and other relevant provisions of the Companies Act,2013. > 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 in the Schedule III to the Companies Act, 2013.Based on the nature of Products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current Classification of assets & Liabilities. B. RECOGNITION OF INCOME AND EXPENDITURE > Incomes and Expenditures are recognized on accrual basis except in case of significant uncertainties like, Benefits on Special Import License Premium, all cash incentives and claims payable & receivable, which have been accounted on Acceptance basis. > Export Incentives are accounted for in the year of export. > Dividend Income on Investments is accounted for when the right to receive the payment is established. > Purchases are reported net of Trade discounts, Returns, Value Added Tax (to the extent refundable/ adjustable) & Sales, if any, made during the course of the business. > Sales are reported net of Trade discounts, Quantity Discounts, Returns & Rebates and Excise Duty & Sales Tax. > Sales of Scrap / Unusable Waste are reported net of Excise duty and Sales Tax. C. INVENTORIES > Inventories of Raw Materials, Finished Goods, Semi-Finished Goods, Trading Goods, Raw Material Scrap and Stores, Spares and other components, Packing Materials, Fuel and Oil are valued at cost or net realizable value, whichever is lower. > Goods in transit are valued at cost or net realizable value, whichever is lower. > Cost comprises of all cost of purchases, cost of conversion and other costs incurred in bringing the inventory to their brsent location and conditions. > Cost is arrived at on FIFO basis. Notes to the Financial Statements for the Year Ended March 31, 2015 D. FIXED ASSETS Tangible Fixed Assets are stated at cost of acquisition or construction inclusive of incidental expenses related there to and includes amount added on revaluation less accumulated debrciation & Cenvat credit. E. DEbrCIATION > Debrciation on Tangible Fixed Assets has been provided on the Written Down Value method based on the Useful life of the assets as brscribed in Schedule II to the Companies Act, 2013. > Debrciation on additions to Tangible Fixed Assets or on Sale / Disposal of Tangible Fixed Assets is calculated on prorata basis from the Quarter in which additions or up to the Quarter of such Sale/ Disposal is made as the case may be. > Debrciation on Revalued amount of Fixed Assets has been charged to Statement of Profit & Loss Account. > Leasehold Land is amortized over the period of lease. F. EXPENDITURE DURING CONSTRUCTION PERIOD Expenditure during construction period is included under Capital Work in Progress and the same is allocated to the respective Fixed Assets on the completion of its construction. G. FOREIGN EXCHANGE TRANSACTIONS > Transactions denominated in foreign currency are normally accounted for at the exchange rate brvailing at the time of transaction. > Monetary assets (including loans to subsidiaries) and Liabilities in foreign currency transactions remaining unsettled at the end of the year (other than forward contract transactions) are translated at the year end rates and the corresponding effect is given to the respective account. > Exchange differences' arising on account of fluctuations in the rate of exchange is recognized in the statement of Profit & Loss. > Exchange rate difference arising on account of conversion/translation of liabilities incurred for acquisition of Fixed Assets is recognized in the Statement of Profit & Loss. H. GOVERNMENT GRANTS > Capital subsidy/government grants are accounted for where it is reasonably certain that the same will be received. > Capital subsidy/government grants in the form of Capital/Investment Incentives received from government/Semi-government authorities are credited to capital reserve account. > Capital subsidy/government grants related to specific non debrciable assets are credited to capital reserve account. > Capital subsidy/government grants related to specific Debrciable assets are credited to the Cost of the assets > Other Revenue Grants are credited to statement of Profit & Loss under 'Other Income' or deducted from the related Expenses in accordance with the related scheme and in the period in which these are accrued. I. INVESTMENTS > Long Term Investments are stated at Cost. Provision for diminution is made to recognize a decline, other than temporary, in the value of Long Term Investments. > Current Investments are valued at Cost or Market Value whichever is lower. J. EMPLOYEE BENEFITS > The Company makes regular contribution to the Employees' Provident Fund and Employees' Pension Fund Schemes and these contributions are charged to Statement of Profit and Loss. > The Leave Encashment & Gratuity liability is determined by actuarial valuation, using the Project Unit Credit Method as specified in AS 15 (Revised) "EMPLOYEE BENEFITS" and the liability is fully charged to Statement of Profit & Loss. Actuarial gains and losses arising on such valuation are also recognized immediately in Statement of Profit & Loss. K. BORROWING COST Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalized. Other borrowing costs are charged to the Statement of Profit & Loss in the year in which they are incurred. L. LEASES Lease rentals in respect of the assets acquired on Lease are charged to Statement of Profit and Loss. M. TAXATION Provision for current tax is made on the assessable income at the tax rate applicable to the relevant assessment year. Deferred tax resulting from" timing difference "between book and taxable profit is accounted for using the tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet Date. Deferred tax assets are recognized, only to the extent there is a reasonable certainty of its realization. At each Balance sheet date, the carrying amount of deferred tax assets is reviewed to reassure realization. N. INTANGIBLE ASSETS > Intangible Assets are recognized by the Company only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the same can be measured reliably. > Intangible Assets are amortized on a systematic basis over its useful life on straight line basis and the amortization for each period will be recognized as an expense. O. IMPAIRMENT > Impairment loss is recognized wherever the carrying amount of an asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and carrying amount of the asset is reduced to its recoverable amount. > Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. P. PROVISIONS A Provision is recognized when an enterprise has a brsent obligation as a result of past event and it 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 not discounted to brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Q. CONTINGENT LIABILITY Contingent Liabilities are not accounted for in the Accounts. These are disclosed by way of Notes to the financial Statements to the extent of information available with the Company. 2. NOTES FORMING PART OF THE ACCOUNTS A. The value of Closing Stock of Finished Goods includes Provision of Excise Duty wherever applicable to the products of the company and accordingly Provision of Excise Duty amounting to Rs. 28.42 Lacs has been made in accordance with AS-2 "Inventories". However this has no impact on the Profit for the year. B. The Company is entitled to receive Subsidy refund of Interest as per the Technology up gradation Fund Scheme of the Government of India, Ministry of Textile and accordingly Rs. 63.85 lacs has been reduced from Interest Paid to Bank. C. During the Year, the Company has made Provision of Rs. 94.30 Lacs for Capital Subsidy Receivable against Plant & Machinery Purchased under Technology Upgradation Fund Scheme of Government of India. The Capital Subsidy so receivable has been credited to the Cost of Plant & Machinery. D. Pursuant to the Enactment of Companies Act, 2013 the company has applied the estimated useful life as Specified in Schedule II.The Written Down Value of Fixed Assets (net of Residual Value) whose life has expired as at 1st April 2014 have been adjusted (net of Deferred Tax) against the Opening Surplus balances in the Statement of Profit & Loss under Reserves & Surplus. For other assets the carrying amount as on 1-4-2014 will be debrciated over the remaining useful life of the assets. As a result an amount of Rs. 176.73 Lacs (net of Deferred Tax Asset of Rs. 91.01 lacs) has been charged to the Statement of Profit & Loss. The net Debrciation Charge for the year is higher by Rs. 445.34 Lakhs. E. Additions to the Computer Software have been capitalized as Intangible Assets & the same has been amortized over the Period of 3 years. F. RETIREMENT BENEFITS > In respect of Leave Encashment Benefits as per the Revised Accounting Standard (AS)-15 on ''Retirement Benefits'', the Company has Charged Leave Encashment Expenses of Rs. 94.11 Lacs in the Statement of Profit & Loss. G. Trade Receivables/Advances/Trade Payables/Loans etc. have been taken as per books awaiting respective confirmation and reconciliation. H. Previous Year figures have been regrouped or rearranged where considered necessary to make them Comparable with the Figures of Current Financial Year. I. Figures in Financial Statements are converted into Lacs and any discrepancies in any total and the sum of the amounts listed are due to Rounding-Off. J. Additional information pursuant to Part II of Schedule III of the Companies Act, 2013 are either NIL or N.A. For & on Behalf of Board of Directors As per our Report of Even Date For M. L. Sharma & Co. Firm Reg.No.109963W Chartered Accountants (C. H. Bandi) Partner (M.No.5385) Sharad Kumar Saraf (Chairman & Managing Director) Sudarshan Kumar Saraf (Co-Chairman & Managing Director) Ashish Kumar Saraf (Whole-time Director & CFO) Neeraj Rai (Company Secretary) Place: Mumbai Date : May 27, 2015 |