SIGNIFICANT ACCOUNTING POLICIES (In the ardor of applicability of Accounting Standards) AS -1 Disclosure and Basis of Accounting a) The Financial Statements have been brpared under the Historical Cost Convention and is in accordance with the provisions of the Companies Act, 2013 and accounting principles generally accepted in India and comply with the Accounting Standards as brscribed under 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, provisions of the Companies Act 2013 to the extent notified. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change In the accounting policy in use. b) The Company has been consistently following the accrual basis of accounting in respect of its Income and Expenditure. c) The Accounts are brpared on the basis of Going Concern concept only. AS - 2 Valuation of Inventories Inventories are valued at lower of cost and net realizable value, where a) Cost of Raw materials is determined on specific identification method. b) Stock of stores, spares and packing materials is determined on weighted average method. c) Finished goods and work in progress is determined under FIFO method where cost includes conversion and other costs incurred in bringing the inventories to their brsent location and condition, AS- 3 Cash Flow Statement Cash flows are reported using the indirect method, where by the profit before tax is adjusted for the effect of transactions of a non cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. Cash and cash equivalent include cash on hand and balances with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balance that are not available for use by the company. AS - 6 Debrciation Accounting Debrciation on Fixed Assets has been provided as per Schedule II of the Companies Act,2013 adopting the methods as under i) On Assets acquired before 01.04.1990 Written Down Value Method. i) On Assets acquired from 01.04.1990- Straight Line Method The useful life of the fixed assets is adopted as specified in Part C of Schedule II of the Companies Act, 2013. For additions and deletions debrciation is provided on pro-rata basis. AS - 9 Revenue Recognition i) Revenue from sale transactions is recognized as and when the property in the goods sold is transferred to the buyer for a definite consideration. Revenue from service transactions are recognized on the completion of the contract at the contracted rate and when there is no uncertainty regarding the amount of consideration or collectability. H) Other Income except dividend is accounted on accrual basis. J) Sales as reported are exclusive of Sales Tax (VAT), Insurance and Transport charges. AS- 10 Fixed Assets The cost of fixed assets Is shown at historical cost of acquisition including Installation, commissioning less accumulated debrciation. AS- 11 Foreign Currency Transactions Foreign currency transactions are recorded at the brvailing exchange rates at the time of initial recognition. Exchange deferences are recognized as income or expense in the Profit and Loss Account. Outstanding balances of monetary items denominated in foreign currency are restated at closing exchange rates and recognized as income or expenses in the Profit and Loss Account in other cases. The brmium on discount arising at the inception of forward exchange contracts is accounted as income or expense over the life of the contract Any profit or loss arising on cancellation or renewal exchange contract is recognized as income or as expense in the period in which they arise. AS- 13 Accounting for investments Long term investments are stated at cost. A provision for diminution, if any, is made to recognize a decline, other than temporary, in the value of long term investments. A S - 15 Employee Benefits Short term employee benefits (other than termination benefits) which are payable within 12 months after the end of the period in employees render service are accounted on accrual basis. Defined Contribution Plans Company's contributions paid / payable during the year to Provident Fund is recognized in the Profit and Loss Account. Defined Benefit Plans Company's Liabilities towards gratuity is determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits becomes vested. Actuarial gains or losses are recognized immediately in the statement of Profit and Loss Account as income or expense-Obligation is measured at the brsent value of estimated future cash flows using a discounted rate. A S - 16 Borrowing Costs Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as expenses in the period in which they are incurred. A S - 19 Lease Lease, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating lease. Operating lease payments are recognized as an expense in the Profit and Loss Account on a straight-line basis over the lease term. AS - 20 Earnings per Share The Earnings considered in ascertaining the Company's earnings per share comprise of Net Profit after tax. AS - 22 Accounting for taxes on Income [Deferred Tax resulting from timing differences between book and tax profits is accounted under liability method at enacted as substantively enacted rate as on the balance sheet date. Deferred tax asset, other than those arising on account of unabsorbed debrciation or earned forward of losses under tax loss, are recognised and carried forward subject to consideration of prudence only to the extent that there Is reasonable certainty that sufficient future taxable Income will be available against which such deferred tax asset can be realized. Deferred tax asset arising on account of unabsorbed debrciation or carried forward of losses under tax lose, are recognised and carried forward subject to consideration of prudence only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. Current tax is determined at the amount of tax payable in respect of estimated taxable income for the year. AS - 28 Impairment of Assets An asset is impaired when the carrying amount of the assets exceeds its recoverable amount. An Impairment loss is charged to the Profit and Loss account in the year In which an asset is identified as impaired. An impairment toss recognized in prior accounting period is reversed if there has been a change In the estimate of the recoverable amount, A S - 29 Provisions, Contingent liability and Contingent Assets a) Provisions involving degree of estimation in measurement are recognized when there Is a brsent obligation as a result of past event and It Is probable that there will be an outflow of resources. b) Contingent liabilities s are disclosed by way of notes to accounts. Provision is made if it becomes probable that an outflow of future economic benefits will be required for an Item brviously dealt with as a contingent liability. c) Contingent liability under various fiscal laws includes those in respect of which the Company/Department is in appeal. Others Use of Estimates The brparation of financial statements In conformity with generally accepted accounting principles requires management to make Estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to the estimates is recognized prospectively. VAT a) The value of VAT benefits is being reduced from the value of purchase of materials. b) The value of benefits eligible In respect of Capital items is reduced from the cost and debrciation is calculated accordingly. 2. Additional Information to Financial Statements 1. Interest in respect of party paid shares is not brsently ascertainable for the current year and hence not included under IDBI partly paid shares. 2 Interest on Bank Loans is net of interest subsidy (TUF) amounting to Rs. 5,63,299/- (brvious year Rs. 13,47,837/-) 3. Income Tax assessment upto A.Y. 2012-2013 has been completed. 4. The information required to disclosed under the Micro, small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been indentified on the basis of the information available with the company. There are no over dues to parties on accounts of principal amount and / or interest and accordingly no additional disclosures have been made. 5 In the opinion of the Board of Directors assets other than fixed assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated. 6 Balance of certain sundry debtors advances and sundry creditors are subject to confirmation/ reconciliation as the company has received replies only from few parties for the confirmation statements sent by the company. The adjustments thereof , if any having an impact of revenue nature will be made in the year in which the same are finalized and settled. 7. Segment Report(AS-17) As the company operates under single segment related to Textiles segment reporting is not applicable to the company for the year under review. 8. Disclosure as required under listing agreement Statement of loans and advances to associates : ( As required under Clause 32 of listing agreement with the stock Exchange) To associates: Rs. Nil 9. Consequent to the enactment of the companies Act, 2013 and its applicability for accounting periods commencing from 1st April 2014 the company has reassessed the remaining useful life of fixed assets in accordance with the provisions brscribed under schedule II to the companies Act 2013. In case of assets which have completed their useful life the carrying value(net of residual life) as at 1st April 2014 was Rs. 24526074/- out of which Rs. 16947517/- was transferred to retained Earnings after considering Rs. 7578557/- under deferred tax In case of other assets the carrying value( net of residual value) is being debrciated under Straight line method and WDV method as applicable to the respective assets over the revised remaining useful life. The debrciation and amortization expense charge for the year would have been lower by Rs. 3840527/- had the company continued with the brvious method of debrciation. Previous year’s figures have been regrouped and reclassified wherever necessary to correspond with the current year’s classification/ disclosure. In terms of our report of even date FOR M.S JAGANNATHAN & VISVANATHAN Chartered Accountants FRN 001209S M.V. JEGANATHAN Partner M.No. 214178 P. PALANIAPPAN Chairman cum Managing Director Din: 01577805 P UMAYAL Joint Managing Director Din 00110280 A SUBRAMANIAN Chief financial officer CYNTHIA S Company secretary Salam 27th August 2015 |