Modern Threads (India) Ltd. कंपली की लेखा नीति

Mar 31, 2025

NOTE-1 CORPORATE INFORMATION

Modern Threads (India) Limited (the "Company") is a Public limited company domiciled in India and incorporated on 28th August, 1980 under the provisions of Companies Act, 1956 having its registered office at Modern Woollens, Pragati Path, Bhilwara-311001 (Rajasthan) India. The company is listed on Bombay Stock Exchange India Limited and National Stock Exchange Limited. The Company corporate identification No. is L17115RJ1980PLC002075. The company manufactures and sells mainly Worsted Yarn, Wool Tops and Synthetic Yarnand its manufacturing plants are located in Raila and Bhilwara, Rajasthan.

NOTE-2 PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICIES

A) Basis of Preparation of Financial Statements

These financial statements have been prepared in accordance with Indian Accounting Standards ("Ind AS") as prescribed under section 133 of the companies Act, 2013 ("the act") read with Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other relevant provisions of the Act. The presentation of the Financial Statements is based on Ind AS Schedule III of the Companies Act, 2013.

The financial statements are prepared and presented on accrual basis and under the historical cost convention, except for the following material items that have been measured at fair value as required by the relevant Ind AS:

(i) F inancial instruments measured at fair value through Profit and Loss.

(ii) Financial instruments measured at fair value through other comprehensive income.

(iii) Defined benefit plans measured at fair value through other comprehensive income.

B) New and amended standards adopted by the Company

The Ministry of Corporate Affairs vide notification dated 9 September 2024 and 28 September 2024 notified the Companies (Indian Accounting Standards) Second Amendment Rules, 2024 and Companies (Indian Accounting Standards) Third Amendment Rules, 2024, respectively, which amended/ notified certain accounting standards (see below), and are effective for annual reporting periods beginning on or after 1 April 2024:

• Insurance contracts - Ind AS 117; and

• Lease Liability in Sale and Leaseback - Amendments to Ind AS 116

These amendments did not have any material impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

C) Functional and Presentation Currency

The financial statements are prepared in Indian Rupees ("INR") which is the Company''s presentation currency and the functional currency for all its operations. All financial information presented in INR has been rounded to the nearest lakhs with two decimal places unless stated otherwise.

D) Classification of Assets and Liabilities as Current and Non Current

All Assets and Liabilities have been classified as current or noncurrent 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 product & activities of the Company and their realization in cash and cash equivalent, the Company has determined its operating cycle as 12 months for the purpose of current and non-currentclassification of assets and liabilities. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

E) Use of estimates and critical accounting judgements

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.

Critical estimates and judgements

i. Property, plant and equipment and intangible assets: Useful lives of Property, Plant and equipment and intangible assets are based on the life prescribed in Schedule II of the Companies Act, 2013. The Company reviews its estimate of the useful lives of PPE/intangible assets at each reporting date, based on the expected utility of the assets. It may result in change of depreciation and amortisation charges.

ii. Recognition and measurement of defined benefit obligations:

The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation and vested future benefits and life expectancy. Any changes in these assumptions will impact the carrying amount of gratuity obligations.

iii. Provisions and contingent liabilities:

In the normal course of business, contingent liabilities may arise from litigations and other claims against the Company. Where the potential liabilities have a low probability of crystallising or are very difficult to quantify reliably, company treat them as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings, company do not expect them to have a materially adverse impact on financial position or profitability.

F) (i) Property, plant and equipment

Freehold land is carried at historical cost. All other items of Property, plant and equipment are initially recognized at cost including the cost directly attributable for bringing the asset to the location and conditions necessary for it to be capable of operating in the manner intended by the management. After the initial recognition the property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. Any gain or loss on disposal of an item of property, plant and equipment is recognized in the statement of profit and loss. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

The Company has opted for an exemption provided by the Indian Accounting Standard (Ind As)-101. Accordingly the carrying value for all Property, plant and Equipment recognized in the financial statements, as at the date of transition to Ind AS i.e 01.04.2016 measured as per previous GAAP and use that carrying value as deemed cost of Property, plant and Equipment.

Capital work-in-progress includes expenditure during construction period incurred on the projects under implementation treated as pre-operative expenses pending allocation to the assets. These expenses are apportioned to respective property, plant and equipment on completion of con struction/erection.

(ii) Depreciation on property, plant and equipment

Depreciation is Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives of assets in accordance with Schedule II to the Companies Act, 2013 using the straight-line method except in respect of Plant and Equipment where the useful life is considered differently based on an independent technical evaluation as 10 to 15 years.

The assets'' useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. The carrying amount is eliminated from the financial statements, upon sale and disposition of the assets and the resultant gains or losses are recognised in the statement of profit and loss.

G) Intangible Assets

Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Costs comprises purchase price after deducting trade discounts/ rebates, including import duties and non-refundable purchase taxes, borrowing costs and any directly attributable cost of preparing the asset for its intended use. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Cost of items of intangible assets not ready for intended use as on the balance sheet date are disclosed as intangible assets under development.

Amortisation is charged on a straight-line basis over a period of 5 years, which in Management''s estimate represents the period during which the economic benefits will be derived from their use. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, is recognised in profit or loss when the asset is derecognised.

H) Leases

As a lessee

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease

liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any.

The lease liability is initially measured at amortised cost at the present value of the future lease payments. The Lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, company''s incremental borrowing rate. In addition, the carrying amount of lease liabilities and right-of-use assets are re-measured if there is amodification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or achange in the assessment of an option to purchase the underlying asset. Depreciation on Right-of-use Asset has beenprovided using Straight line method over theiruseful lives or lease period, whichever is lower. Interest Expense on Lease Liabilitiesareprovidedusing discount rate used to determine LeaseLiabilities. Depreciation and Interest expenses arerecognised in the Statement of Profit and Loss.

Short-term leases and leases of low-value assets The company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or equal to 12 months with no purchase option and assets with low value leases.The company recognises the lease payments associated with these leases as an expense on a straightline basis over the lease term.

As a lessee

Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term. The respective leased assets are included in the balance sheet based on their nature. However, there are no assets which are given on lease as a lessor.

I) Impairment of Non-Financial Assets

The Property, Plant and Equipment and intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use.

For the purposes of assessing impairment, the assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment loss are reviewed for possible reversal of impairment at the end of each reporting period. An impairment loss is charged to the Statement of Profit and Loss 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.

J) Employee benefits

(i) Defined contribution plans

Provident fund (PF)

Contribution towards PF is determined under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 and charged to the Statement of Profit and Loss during the period of incurrence when the services are rendered by the employees.

(ii) Defined benefit plans

The liability recognised in the balance sheet in respect of defined benefit gratuity plans is thepresent value of the defined benefit obligation at the end of the reporting period less the fair value of planassets. The company does not have any plan assets or made any contributions for defined benefits plan. The defined benefit obligation is determined at the yearend by independent actuary using theprojected unit credit method.

The present value of the defined benefit obligation denominated in Indian Rupees is determined bydiscounting the estimated future cash outflows by reference to market yields at the end of the reportingperiod on government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefitobligation and the fair value of plan assets. This cost is included in employee benefit expense in thestatement of profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptionsare recognised in the period in which they occur, directly in other comprehensive income. They are includedin retained earnings in the statement of changes in equity. Remeasurements are not reclassifiedto profit andloss in the subsequent periods.

Changes in the present value of the defined benefit obligation resulting from plan amendments orcurtailments are recognised immediately in statement of profit and loss as past service cost.

(iii) Other employee benefits:

(a) Liabilities for compensatedabsences are determined based on independentactuarial valuation at year end and charge is recognized in the statement of profit and loss

(b) Undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period when the employee renders the related services.

K) Inventories

Raw materials, packing materials, stores& spares, work in progress, traded and finished goods are stated at the lower of cost and netrealisable value, cost is calculated on moving weighted average basis.

Cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories totheir present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale.

L) Provisions, Contingent Liabilities & Contingent Assets Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events and it is probable that the outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made.

A disclosure for contingent liability is made when there is a possible obligation arising out of past event or a present obligation arising out of past event where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

Provisions and contingencies are reviewed at each balance sheet date and adjusted to reflect the current best estimates. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, when appropriate, the risks specific to the liability.

Contingent assets are not recognized till the realization of the income is virtually certain. However, the same are disclosed in the financial statements where an inflow of economic benefit is possible.

M) Taxes on Income

Income tax comprises current tax and deferred tax. Current Tax is recognised in the statement of profit and loss account but deferred tax asset is not recognised in the statement of profit and loss as it is probable that future taxable profits will be available against which the temporary differences can be utilised. Current tax

Current tax comprises the expected tax payable on the taxable income for the year and any adjustment to the tax payable or receivable in respect of previous years.Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items, that are never taxable or tax deductible. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 for therelevant assessment year. Deferred Tax

Deferred income tax is provided in full, using the balance sheet method on temporary differences arising between the tax bases ofassets and liabilities and their carrying amounts in the financial statements.Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting periodand are expected to apply whenthe related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and when the deferred tax balances relate to the same taxation authority.

N) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The specific recognition criteria

described below also be met before revenue is recognised. Revenue from Sale of goods and services

Revenue from contracts with customers is recognized when the Company satisfies performance obligation by transferring promised goods or services to the customeror to his designated agent. Performance obligation is satisfied when the Company transfers significant risks and rewards to the customer and ceases its control over the goods.

Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts, rebates, scheme allowances, price concessions and incentives, if any, as specified in the contracts with the customers. Revenue excludes taxes collected from customers on behalf of the government. Payments from customers for the goods and services rendered are normally received within the credit terms as per the contracts with the customers.

The Company recognizes sales return only when the goods are actually returned by the customer. Therefore, A refund liability which is included in current financial liabilities or is reduced from current financial assets, is recognized for the goods actually returned.

Revenue from sale of goods is recognized at the point of time when the significant risks and rewards are transferred to the customer and the Company ceases to have its control over the goods.

Revenue from job work charges is recognized at a point of time when the control is transferred usually when the material is fully processed and dispatched to customers.

Export Incentives

Income from export incentives and other Government incentives are recognised on accrual basis when no significant uncertainties as to the amount of consideration that would be derived and as to its ultimate collection exist.

Interest income

For all interest bearing financial assets measured at amortised cost, interest income is recorded using the effective interest rate (EIR).

O) Foreign currency transactions and translations

Foreign currency transactions are recorded at exchange rate at the date of transaction. Foreign exchange gains and losses from settlement of these transactions are recognised in the statement of profit and loss. Monetary assets and liabilities in foreign currency are translated into functional currency at the year ended exchange rate. Foreign Exchange gains or losses arising from such transactions are recognised in the statement of profit and loss.

Non-monetary items carried at fair values that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded at the exchange rate prevalent at the date of transaction. The gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item.

P) Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying

asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred.

Q) Segment Reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (''CODM'').

The Company''s Board has identified the CODM who is responsible for financial decision making and assessing performance. The Company has a single operating segment ( textile) as the operating results of the Company are reviewed on an overall basis by the CODM.

R) Financial Instruments

A Financial Instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets other than trade receivables are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or lossare initially recognised at fair value, and transaction costs are expensed in the Statement of Profit and Loss.

Subsequent measurement:

The financial assets, other than equity instruments, are subsequently classified under one of the following three categories according to the purpose for which they are held. The classification is reviewed at the end of each reporting period.

(i) Measured at amortised cost:

A financial asset is measured at amortised cost, if it is held under the hold to collect business model i.e. heldwith an objective of holding the assets to collect contractual cash flows and the contractual cash flows aresolely payments of principal and interest on the principal outstanding. Amortised cost is calculated using the effective interest rate ("EIR") method by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in interest income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, gain or loss, if any, is recognised to Statement of Profit and Loss.

(ii) Measured at fair value through other comprehensive income (FVOCI):

A financial asset is measured at FVOCI, if it is held under the hold to collect and sell business model i.e. held withan objective to collect contractual cash flows and selling such financial asset and the contractual cashflows are solely payments of principal and interest on the principal outstanding. It is subsequently measured at fair value with fair value movements recognised in the OCI, except for interest income which is recognised using EIR method. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in the OCI is reclassified from the equity to Statement of Profit and Loss.

(iii) Measured at fair value through profit or loss (FVTPL): Investment in financial asset other than equity instrument, not measured at either amortised cost or FVOCI is measured at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised in the Statement of Profit and Loss. Equity Instruments measured at FVTOCI or FVTPL:

AAll equity investments are measured at fair values. The Company may irrevocably elect to measure the same either at FVTOCI or FVTPL on initial recognition. The Company makes such election on an instrument-by-instrument basis. The fair value changes on the investment are recognised in OCI. The accumulated gains or losses recognised in OCI are reclassified to retained earnings on sale of such investments. Dividend income on the investments in equity instruments are recognised in the Statement of Profit and Loss.

All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same eitheras at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classifications made on initial recognition and is irrevocable. If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the other comprehensive income (OCI). There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and loss.

Equity instruments measured at Cost:

Equity investments in subsidiaries / joint ventures / associates are accounted at cost.

Derecognition:

A financial asset is derecognised only when:

- the Company has transferred the rights to receive cash flows from the financial asset or

- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

Impairment of financial assets:

In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement andrecognition of impairment loss on the following financial assets and credit risk exposure:

i) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance

ii) Trade receivables - The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. Financial Liabilities

Financial liabilities include long-term and short term loans and borrowings, trade and other payables and other eligible current and non-current liabilities.

Initial Recognition and measurement Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial liabilities are initially recognised at fair value net of transaction costs for all financial liabilities not carried at fair value through profit or loss.

Subsequent measurement

Financial liabilities measured at amortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.

Loans & Borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using EIR method. Gains and losses are recognized in profit & loss when the liabilities are derecognized as well as through EIR amortization process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Derecognition:

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in

the respective carrying amounts is recognised in the statement of profit and loss.

Derivative financial instruments

The Company holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counter party for these contracts is generally a bank.

Financial assets or financial liabilities, at fair value through profit or loss:

Any derivative that is either not designated as hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss. Derivatives not designated as hedges are recognised initially at fair value and attributable transaction costs are recognised in the Statement of Profit and Loss when incurred.Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in other income. Assets/ liabilities in this category are presented as current assets/ current liabilities, if they are either held for trading or are expectedto be realized within 12 months after the Balance Sheet date.

Cash flows hedge that qualify for the hedge accounting Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit & loss, except for the effective portion of cash flow hedge which is recognized in other comprehensive income and presented as separate category of equity which is later reclassified to statement of profit & loss when the hedge item affects profit & loss.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

S) Earnings Per Share

Basic earnings per Share

Basic earnings per share is computed by dividing the profit/ (loss) after tax by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share

Diluted earnings per share is computed by dividing the profit/ (loss) after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

T) Cash Flow Statement

Cash flows are reported using the indirect method, as set out in Ind AS 7 ''Statement of Cash Flows'', whereby profit/(loss) before tax for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

U) Cash and Cash Equivalents

Cash and cash equivalents in Balance Sheet includes cash on hand, cheque on hand, balance with bank on current account and other short-term deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value

V) Government Grants

Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grant will be received. Government grants relating to income/expense are determined and recognised in the statement of profit and loss over the period necessary to match them with the cost that they are intended to compensate and presented within other income.

Government grants relating to the property, plant and equipment are credited to deferred revenue income on account of capital subsidy and recognised in profit and loss on a systematic basis over the expected lives of related assets and presented within other income.

W) Fair Value Measurement

The Company measures financial instruments at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

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Mar 31, 2024

MATERIAL ACCOUNTING POLICIES

NOTE-1 COMPANY OVERVIEW

Modem Threads (India) Limited is a Public limited company incorporated on 28th August, 1980 haring its registered office at Modem Woollens. Pragati Path, Bhilwara-311001 (Rajasthan) India. The Company corporate identification No. is L17115RJ1980PLC002075. The company manufactures and sells mainly Worsted Yam, Wool Tops and Synthetic Yam.

NOTE-2 MATERIAL ACCOUNTING POLICIES

A) Basis of Preparation of Accounts

The financial statements have been prepared in accordance with Indian Accounting Standards (IndAS)asprescnbedunder section 133 of the companies Act, 2013 (the act) read with Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.

The financial statements are prepared and presented on accrual basis and under the historical cost convention, except for tire following material items that have been measured at fair value as required by the relevant Ind AS:

(i) Financial instruments measured at fan value through Profit and Loss.

(ii) Financial instruments measured at fair value through other comprehensive mcorne.

(iii) Defined benefit plans measured at fair value through other comprehensive income.

B) Recent Accounting Development

Lite following Indian Accounting Standards have been modified on miscellaneous issues with effect from April 1, 2023. Such changes include clarification/ guidance on :

a. Ind AS 107 - Financial Instruments Disclosures-Information about the measurement basis for financial instruments shall be disclosed as part of material accounting policy information.

b. Ind AS 1 - Presentation of Financtal Statements - Material accounting policy information (including focus on how an entity applied the requirements ofludAS) shall be disclosed instead of significant accountmg policies as part of financial statements.

c. Ind AS S — Accounting policies, changes in accounting estimate and eirors- Clarification on what constitutes an accounting estimate provided.

d Ind AS 12 - Income Taxes - In case of a transaction which give rise to equal taxable and deductible temporary differences, the initial recognition exemption from deferred tax is no longer applicable and deferred tax liability & defereed tax asset shall be recognized on gross basis for such cases.

None of the above amendments had any matenal effect on tire company’s financial statements, except for disclosure of Material Accounting Policies instead of Significant Accounting Policies in the Financial Statements.

C) Functional and Presentation Currency''

The financial statements are prepared in Indian Rupees (“INR”) w''liich is the Company ’ s pre sentation currency and the functional cuirency for all its operations. All financial infonnationpresented m INR has been rounded to the nearest lakhs with two decimal

places unless stated otherwise.

D) Classification of Assets and Liabilities as Current and Non Current

All Assets and Liabilities have been classified as cuiTent or non-cuiTent as pel'' 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 product & activities of the Company and then realization in cash and cash equivalent, the Company has determined its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabiities.Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

E) Use of estimates and critical accounting judgements

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions that affect the application of accountmg policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.

Critical estimates and judgements

i. Property, plant and equipment and intangible assets Useful lives of Property, Plant andequipment and intangible assets are based on the life presenbed in Schedule II of the Companies Act, 2013 The Company reviews its estimate of the useful lives of tangible;intangible assets at each reporting date, based on the expected utility of the assets.

ii. Recognition and measurement of defined benefit obligations The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation and vested future benefits and life expectancy.

iii. Provisions and contingent liabilities

In the nonnal course of busmess, contingent liabilities may arise from litigations and other claims againstthe Company. Where the potential liabilities have a low probability of crystallising or are v^rery difficult to quantify reliably, company treat them as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for m the financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings, company do not expect them to have a materially adverse impact on financial position or profitability.

F) (i) Property, plant and equipment

Freehold land is carried at historical cost. All other items of Property, plant and equipment are initially recognized at cost including the cost directly attributable for bringing the asset to the location and conditions necessary for it to be capable of operating in the manner intended by the management. After the nutial recognition the property, plant and equipment are carried at cost less accumulated depreciation and impaimient losses, if any Any gain or loss on disposal of an item of property, plant and equipment is recognized in the statement of profit and loss.

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

The Company has opted for an exemption provided by the Indian Accounting Standard (Ind As)-101. Accordingly the carrying value for all Property, plant and Equipment recognized in the financial statements, as at the date of transition to Ind AS i.e 01.04.2016 measured as per previous GAAP and use that cairying value as deemed cost of Property, plant and Equipment Capital woric-in-progress includes cost of property, plant and equipment under installation/ under development as at the balance sheet date and allocated to respective property, plant and equipment on completion of construction/ erection.

(ii) Depreciation on property, plant and equipment

Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties underconstruction) less their residual values over their useful lives of assets in accordance with Schedule n to the Companies Act, 2013 using the straight-line method except in respect of Plant and Equipment where the usefiil life is considered differently based on an independent technical evaluation as 10 to 15 years.

Depreciation methods, usefiil fives and residual values are reviewed at each reporting date and adjusted if appropriate. The carrying amount is eliminated from the financial statements, upon sale and disposition of the assets and the resultant gains or losses are recognised in the statement of profit and loss.

G) Intangible Assets

Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Costs comprises purchase price after deducting trade discounts/ rebates, including import duties and non-re fundable purclia se taxes, borrowing costs and any directly attributable cost of preparing the asset for its intended use. Subsequent costs are included m the asset’s carrymg amount or recognised as a separate asset, as appropriate, only when it is probable that fiiture economic benefits associated with tiie item will flow to the Company and the cost of the item can be measured reliably. Cost of items of intangible assets not ready for intended use as on the balance sheet date are disclosed as intangible assets under development.

Amortisation is charged on a straight-line basis over a period of 5 years, which in Management’s estimate represents the period during which the economic benefits will be derived from their use. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

An intangible assetis derecognised on disposal, or when no fiiture economic benefits are expected from use or disposaL Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, is recognised in profit or loss when tiie asset is derecognised.

H) Leases

The Company has adopted hid AS 116 effective from 1 April

2019 using modified retrospective approach For the purpose of preparation of Financial Information, management has evaluated the impact of change in accounting policies required due to adoption of Ind AS 116.

As a lessee

The Company recognises a right-of-use asset and a lease liability atthe lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any mitial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset orto restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-fine method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impainnent losses, if any.

The lease liability is initially measured at amortised cost at the present value of the fiiture lease payments. The Lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily detennined, company’s incremental borrowing rate. In addition, tiie carrying amount of lease liabilities and right of use assets are re measured if there is a modification, a change in the lease term, a change in the lease payments (e g., changes to futur e payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

Depreciation on Right-of-use Asset has been provided using Straight line method over their useful lives or lease period, whichever is lower. Interest Expense on Lease Liabilities are provided using discount rate usedto determine Lease Liabilities. Depreciation and Interest expenses are recognised in the Statement of Profit and Loss.

Short-term leases and leases of low-value assets The company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or equal to 12 months with no purchase option and assets with low- value leases. The company recognises the lease payments associated with these leases as an expense on a straightline basis over the lease term.

As a lessor

Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term. The respectiv e leased assets are included in the balance sheet based on their nature. However, there are no assets which are gtven on lease as a lessor.

I) Impairment of Non-Financial Assets

The Property, Plant and Equipment and intangible assets are tested for impairment whenever events or changes in circumstances indicate that the cairying amount may not be recoverable. An impainnent loss is recognised for the amount by which the asset’s cairying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use.

For the purposes of assessing impainnent, the assets are grouped

at Hie lowest levels for which there are separately identifiable cash flows which are laigely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment loss are reviewed for possible reversal of impairment at tiie end of each reporting period An impairment loss is charged to the Statement of Profit and Loss in the year m which an asset is identified as impaired The impairment loss recognised in prior accounting period is reversed if there lias been a change in the estimate of recoverable amount.

J) Employee benefits

(i) Defined contribution plans

Defined contribution plans Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.

(ii) Defined benefit plans

The liability recognised in die balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting penod less the fair value of plan assets. The company does not have any plan assets or made any contributions for defined benefits plan The defined benefit obligation is detennined at the year end by independent actuary using the projected unit credit method.

The present value of the defined benefit obligation denominated in Indian Rupees is detennined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the tenns of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included m retained earnings in the statement of changes in equity. Remeasurements are not reclassified to profit and loss in the subsequent periods.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised unmediately in statement of profit and loss as past service cost, (ill) Other employee benefits:

(a) Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the obligation as at the Balance sheet date detennined based on an actuarial valuation.

(b) Undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period when the employee renders the related services.

K) Inventories

Raw materials, packing materials, stores & spares, work in

progress, traded and finished goods are stated at the lower of cost and net realisable value, cost is calculated on moving weighted average basis.

Cost of inventories comprises all costs of purchase, costs of conversion and other costs incutred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price m the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.

L) Provisions, Contingent Liabilities & Contingent Assets Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events and it is probable that the outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. A disclosure for contingent liability is made when there is a possible obligation that may, but probably will not require an outflow'' of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision/ disclosure is made. Provisions and contingencies are reviewed at each balance sheet date and adjusted to reflect the coirect management estimates. Contingent assets are neither recognized nor disclosed in financial statements. However, when the realization of income is virtually certain, then the related asset is not a contingent assets and its recognition is appropriate.

If the effect of the time value of money is matenal, provisions are discounted using a cuirent pre tax rate that reflects, when appropriate, the risks specific to the liability.

M) Taxes on Income Current Tax is recognised in the statement of profit and loss account but defeired tax asset is not recognised in the statement ofprofit andloss as the company is not confident of earning sufficient profits to utilise unabsoibed depreciation in future.

Current tax

Cuirent tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date. Deferred Tax

Defeired tax is the tax expected to be payable or recoverable on differences between the cairying values of assets and liabilities m the financial statements and the coirespondmg tax bases used in the computation of taxable profit. Defeired tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Defeired tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised

or Hie liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and when the deferred tax balances relate to the same taxation authority.

N) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The specific recognition criteria described below also be met before revenue is recognised. Revenue from Sale of goods and sendees Revenue from the sale of goods is recognised, when control of goods being sold is transferred to customer and where there are no longer any unfulfilled obligations. The performance obligations in contracts are considered as fulfilled in accordance with the teims agreed with the respective customers.

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates Sales as disclosed, are exclusive of Goods and Services Tax.

The company considers the terms of the contract and its customary business practices to detennine the transaction price. The transaction price is the amount of consideration to which the company expects to be entitled in exchange for transferring promised goods to a customer, excluding amount collected on behalf of third parties (for example taxes collected on behalf of government). The consideration promised in a contract with a customer may include fixed consideration, variable consideration (if reversal is less likely in future), or both. The transaction price is allocated by the company to each perfoimance obligation in an amount that depicts the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods to the customer.

Revenue from job work charges is recognised at a point of time when the control is transferred usually when the material is fully processed and dispatched to customers.

Export Incentives

Income from export incentives and duty drawbacks is recognised on accrual basis when no significant uncertainties as to the amount of consideration that would be derived and as to its ultimate collection exist.

Interest income

For all interest bearing financial assets measured at amortised cost, interest income is recorded using the effective interest rate CEIR).

O) Foreign currency transactions and translations

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and habilities denominated in foreign currencies at year end exchange rates are generally recognised in profit and loss.

Non-monetary items that are measured at fair value in a foreign

currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. The gain or loss arising on translation of nonmonetary items measured at fail value is treated in line with the recognition of the gain or loss on the change in fair value of the item.

P) Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred.

Q) Segment Reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components, and for which discrete financial information is available. Operating segments are reported in a maimer consistent with the internal reporting provided to the chief operating decision maker (“CODM¹).

The Company’s Board has identified the CODM who is responsible for financial decision making and assessing performance. The Company is engaged into major operating activity of the textile products. The Company has no activity outside India except export of textile products manufactured in India. Thereby, no geographical segment and no segment wise information is reported.

R) Financial Instillments

A Financial Instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets other than trade receivables are initially recognised at fair value plus transaction costs for all financial assets not earned at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Statement of Pr ofit and Loss.

Subsequent measurement:

The financial assets, other than equity instruments, are subsequently classified under one of the following three categories according to the purpose for which they are held. The classification is reviewed at the end of each reporting period.

(i) Measured at amortised cost:

A financial asset is measured at amortised cost, if it is held under the hold to collect business model i.e. held with an objective of holding the assets to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest on the principal outstanding Amortised cost is calculated using the effective mterest rate (“EIR”) method by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in interest income in the Statement of Profit andLoss. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, gain or loss, if any, is recognised to Statement of Profit and Loss.

(ii) Measured at fail'' value through other comprehensive income (FVOCI):

A financial asset is measured at FVOCI, if it is held under the hold to collect and sell business model i.e. held with an objective to collect contractual cash flows and selling such financial asset and the contractual cash flows are solely payments of principal and mterest on the principal outstanding. It is subsequently measured at fair value with fair value movements recognised in the OCI, except for interest income which is recognised using EIR method. The losses arising from impairment are recognised m die Statement ofProfit and Loss. On derecognition, cumulative gain or loss previously recognised in the OCI is reclassified from the equity to Statement ofProfit andLoss.

(in) Measured at fair value through profit or loss (FYTPL): Investment in financial asset other than equity instrument, not measured at either amortised cost or FVOCI is measured at F\TPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dmdeud mcome if any recognised ui the Statement ofProfit and Loss. Equity Insti llments measured at FVTOCI or FVTPL:

All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL For all other equity instruments, the Company decides to classify the same either as at FATOCI or FATPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is iirevocable. If the Company decides to classify an equity instrument as at FATOCI then all tar value changes on the instrument, excluding dividends, are recognized in the other comprehensive income (OCI). There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. Equity instnunents inchided within the FATPL category are measured at fair value with all changes recognized in the Statement ofProfit and loss.

Equity instruments measured at Cost:

Equity investments in subsidiaries / joint ventures / associates are accounted at cost.

Derecognition:

A financial asset is derecognised only when -

— the Company has transferred the rights to receive cash flows from the financial asset or

- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where tire entity lias transfeired an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transfeired substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement m the financial asset. Impairment of financial assets:

In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

1) Financial assets that are debt instruments, and are measured at amortised cost e g., loans, debt securities, deposits, and bank balance

ii) Trade receivables - The application of simplified approach does not require the Company to track changes m credit risk Rather, it recognises impairment loss allowance based on lifetime ECLs at each reportmg date, right from its initial recognition. Financial Liabilities

Financial liabilities include long-temi and short teim loans and boirowings, trade and other payables and other eligible cuirent and non-current liabilities.

Initial Recognition and measurement Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instnunents. Financial liabilities are initially recognised at fair value net of transaction costs for all financial liabilities not carried at fair value through profit or loss.

Subsequent measurement

Financial liabilities measuredat amortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement ofProfit and Loss.

Loans & Borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using EIR method. Gains and losses are recognized in profit & loss when the liabilities are derecognized as well as through EIR amortization process. Amortised cost is calculated by taking mto account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Derecognition:

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires When an existing financial liability is replaced by another from the same lender on substantially different terms, orthe terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in die respective carrying amounts is recognised in the statement of profit and loss.

Offsetting financial instruments

Financial assets and liabilities arc offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and mustbe enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty

S) Earnings Per Share Basic earnings per Share

Basic earnings per share is computedby dividingtheprofit/ (loss) after tax by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share

Diluted earnings per share is computed by dividing the profit/ (loss) after tax as adjusted for dividend, interest and other charges to expense or income relatmg to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings pel’ share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

T) Cash Flow Statement

Cash flows are repotted using the indirect method, as set out in LidAS 7 ‘StatementofCashFlows’, whereby pro fit/(loss) before tax for the penod is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or fixture operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows The cash flows from operating, investing and financing activities of the Company are segregated.

U) Cash and Cash Equivalents

For the puipose of presentation m the statement of cash flows, cash and cash equivalents mcludes cash on hand, cheque on hand, balance with bank on current account and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. T¹) Government Giants

Government grants are not recognised until there is reasonable assurance that die Company will comply with the conditions attaching to them and that die gi ant will be received. Government grants relating to xncome/expense are determined and recognised in the statement of profit and loss over the penod necessary to match them with the cost that they are intended to compensate and pie seated within other income.

Government gi ants relating to the property, plant and equipment are credited to defeired revenue income on account of capital subsidy and recognised in profit and loss on a systematic basis over the penod in which entity recognises as expenses the related costs for which the grants are intended to compensate.

W) Fam Value Measurement

The Company measures financial instruments at fair value at each balance sheet date Fair value is the price diat would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date The fail’ value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that maiket participants act m their economic best interest.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) maiket pnees in active markets for identical assets or liabilities

Level 2 - Valuation techniques for which die lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

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Mar 31, 2023

SIGNIFICANT ACCOUNTING POLICIES

NOTE-1 COMPANY OVERVIEW : Modem Threads (India) Limited is
a Public limited company incorporated on 28th August, 1980 having its
registered office at Modem Woollens, Hanurgarh Road, Pragati Path, Near
Transport Nagar, Bhilwara-311001 (Rajasthan) India. The Company
corporate identification No. is L17115RJ1980PLC002075. The company
manufactures and sells mamly Worsted Yam, Wool Tops and Synthetic Yarn
NOTE-2 SIGNIFICANT ACCOUNTING POLICIES

A) Basis of Preparation of Accounts

The financial statements have been prepared in accordance with
Indian Accounting Standards (Ind ASjnotified under section 133 of
the companies Act, 2013 (the act) read with Companies (Indian
Accounting Standards) Rules, 2015 and other relevant provisions of
the Act.

The financial statements are prepared and presented on accrual basis
and under the historical cost convention, except for the following
material items that have been measured at fair value as required by
the relevant Ind AS:

(i) Financial instillments measured at fair value through Profit
and Loss.

(ii) Financial instruments measured at fair value through other
comprehensive income.

(iii) Defined benefit plans measured at fair value through other
comprehensive income.

B) Functional and Presentation Currency

The financial statements are prepared in Indian Rupees (“INR”) which
is the Company’s presentation currency and the functional currency
for all its operations. All financial information presented in INR has
been rounded to the nearest lakhs with two decimal places unless
stated otherwise.

C) Classification of Assets and Liabilities as Current and Non
Current

All Assets and Liabilities have been classified as current or non¬
current as per the Company’s nonnal operating cycle and other criteria
set out in the Schedule IH to the Companies Act, 2013. Based on the
nature of product & activities of the Company and their realization
in cash and cash equivalent, the Company has determined its
operating cycle as 12 months for the purpose of cuirent and non¬
current classification of assets and liabilities.

Deferred tax assets and liabilities are classified as non cuirent assets
and liabilities.

D) U se of estimates and critical accounting judgements

The preparation of the financial statements in conformity with Ind
AS requires management to make estimates, judgments and
assumptions. These estimates, judgments and assumptions affect the
application of accounting policies and the reported amounts of assets
and liabilities, the disclosures of contingent assets and liabilities at
the date of the financial statements and reported amounts of revenues
and expenses during the period. The estimates and the underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised and future periods affected.

Critical estimates and judgements

i. Property , plant and equipment and intangible assets :
Useful lives of Property, Plant and equipment and intangible
assets are based on the life prescribed in Schedule II of the
CompaniesAct, 2013. The Company reviews its estimate of

Hie useful lives of tangible/intangible assets at each repotting
date, based on the expected utility of the assets.

ii. Recognition and measurement of defined benefit
obligations : The obligation arising from defined benefit
plan is detennined on the basis of actuarial assumptions.
Key actuarial assumptions include discount rate, bends in
salary escalation and vested future benefits and life
expectancy.

iii. Provisions and contingent liabilities : In the nonnal course
of business, contingent liabilities may arise from litigations
and other claims against the Company. Where the potential
liabilities have a low probability of crystallising or are very
difficult to quantify reliably, company treat them as
contingent liabilities. Such liabilities are disclosed in the
notes but are not provided for in the financial statements.
Although there can be no assurance regarding the final
outcome of the legal proceedings, company do not expect
themto have a materially adverse impact on financial position
or profitability.

E) (i) Property, plant and equipment : Freehold land is carried

at historical cost. All other items of Property, plant and
equipment are initially recognized at cost including the cost
directly attributable for bringing the asset to the location
and conditions necessary for it to be capable of operating in
Hie manner intended by the management. After the initial
recognition the property, plant and equipment are carried at
cost less accumulated depreciation and impainnent losses,
if any Any gain or loss on disposal of an item of property,
plant and equipment is recognized in the statement of profit
and loss.

Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company.

The Company has opted for an exemption provided by the
Indian Accounting Standard (Ind As)-101. Accordingly the
carrying value for all Property, plant and Equipment
recognized in the financial statements, as at the date of
transition to IndASi.e 01.04.2016 measured as perprevious
GAAP and use that carrying value as deemed cost of
Property, plant and Equipment.

Capital work-in-progress includes cost of property, plant and
equipment under installation/ under development as at the
balance sheet date.

(ii) Depreciation on property, plant and equipment :

Depreciation is recognised so as to write off the cost of assets
(other than freehold land and properties under construction)
less their residual values over their useful lives of assets in
accordance with Schedule II to the Companies Act, 2013
using the straight-line method except in respect of Plant and
Equipment where the useful life is considered differently
based on an independent technical evaluation as 10 to 15
years.

Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
Profit and loss on disposals are detennined by comparing
proceeds with carrying amount. These are included in
statement of profit and loss.

F) Intangible Assets

Intangible assets are carried at cost less accumulated amortisation
and accumulated impainnent losses, if any. Costs comprises purchase
price after deducting trade discounts/ rebates, including import duties
and non-refundable purchase taxes, borrowing costs and any directly

attributable costofprepanngthe asset forits intended use. Subsequent
costs are included in the asset’s carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future
economic benefits associated with die item M ill flow to die Company
and the cost of the item can be measured reliably. Cost of items of
intangible assets not ready for intended use as on tile balance sheet
date are disclosed as intangible assets under development.
Amortisation is charged on a straight-line basis over a period of 5
years, which in Management’s estimate represents the period during
which die economic benefits will be denved from their use. The
estimated useful life and amortisation method are reviewed at the
end of each reporting period, withtiie effectofany changes in estimate
being accounted for on a prospective basis.

An intangible asset is derecognised on disposal or when no future
economic benefits are expected from use or disposaL Gains or losses
arising from derecognition of an intangible asset measured as the
difference between the net disposal proceeds and tile carrying amount
of the asset is recognised in profit or loss when the asset is
derecognised.

G) Leases

The Company has adopted hid AS 116 effective from 1 April 2019
using modified retrospective approach. For the purpose of preparation
of Standalone Financial hifonnation, management has evaluated the
impact of change in accounting policies required due to adoption of
Ind AS 116.

As a lessee

The Company recognises a right-of-use asset and a lease liability at
the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located, less any
lease mcentrves recetved.

The right-of-use asset is subsequently depr eciated using the straight¬
line method from the commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease term. In
addition, the right-of-use asset is periodicallyredueedby impairment
losses, if any.

The lease liability, if any, is initially measured at the present value of
the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, company’s incremental borrowing rate.
The lease liability is measured at amortised cost using the euective
interest method It is remeasured when there is a change in future
lease payments arising from a change in an index or rate, if there is a
change in the company’s estimate of the amount expected to be
payable under a residual value guarantee, or if company changes its
assessment of whether it will exercise a purchase, extension or
termination option.

Short-term leases and leases of low-value assets

The company has elected not to recognise right-of-use assets and
lease liabilities for short term leases that have a lease term of less
than or equal to 12 months with no purchase option and assets with
low value leases.The company recognises the lease payments
associated with these leases as an expense on a straight-line basis
over the lease term.

As a lessor

Lease income from operating leases where the Company is a lessor
is recognised in income on a straight-line basis over the lease term
The respective leased assets are included in the balance sheet based

on their nature. However, there are no assets which are given on
lease as a lessor.

H) Impairment of Non-Financial Assets

The Property, Plant and Equipment and intangible assets are tested
for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An unpairment
loss is recognised for the amount by which the asset’s cairying amount
exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs of disposal and value in use.

For the purposes of assessing impairment, the assets are grouped at
the lowest levels for which there are separately identifiable cash flows
which are largely independent of the cash inflows from other assets
orgroups of assets (cash generating units). Non-financial assets other
than goodwill that suffered an impairment loss are reviewed for
possible reversal of impairment at the end of each reporting period.
An impainnent loss is charged to the Statement of Profit and Loss in
the year in which an asset is identified as impaired. The impainnent
loss recognised in prior accounting period is reversed if there has
been a change in the estimate of recoverable amount.

I) Employee benefits

(i) Defined contribution plans : Defined contribution plans
Payments to defined contribution plans are cliaiged as an
expense as they fall due. Payments made to state managed
retirement benefit schemes are dealt with as payments to
defined contribution schemes where the Company’s
obligations under the schemes are equivalent to those arising
in a defined contribution retirement benefit scheme.

(ii) Defined benefit plans : The liability recognised in the
standalone balance sheet in respect of defined benefit gratuity
plans is the present value of the defined benefit obligation at
the end of the reporting period less the fair value of plan
assets. The defined benefit obligation is determined at the
year end by independent actuary using the projected unit
credit method.

The present value of the defined benefit obligation
denominated in Indian Rupees is determined by discountmg
tiie estimated future cash outflows by reference to market
yields at the end of the reporting period on government bonds
that have teims approximating to the terms of the related
obligation

The net interest cost is calculated by applying the discount
rate to the net balance of the defined benefit obligation and
tiie fair value ofplan assets. This cost is included in employee
benefit expense in the standalone statement of profit and
loss.

Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly in other
comprehensive income. They are included in retained
earnings m the standalone statement of changes in equity.
Remeasurements are not reclassified to profit and loss in the
subsequent periods.

Changes in the presentvalue of tiie defined benefit obligation
resulting from plan amendments or curtailments are
recognised immediately in standalone statement of profit and
loss as past service cost.

(Ilf) Other employee benefits:

(a) Compensated absences which are not expected to
occur within twelve months after the end of the penod
in which the employee renders the related services
are recognised as a liability at tiie present value of

the obligation as at the Balance sheet date determined
based on an actuarial valuation.

(b) Undiscounted amount of short-term employee
benefits expected to be paid in exchange for the
services rendered by employees are recognised during
the penod when the employee renders the related
services.

J) Inventories

Rawmaterials, packing materials and stores, work in progress, traded
and finished goods are stated at the lower of cost and net realisable
value, cost is calculated on moving weighted average basis.

Cost of inventories comprises all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition.

Net realisable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and the
estimated costs necessary to make the sale.

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Mar 31, 2015

A) Basis of Preparation of Financial Statements:

The Financial statements of the company have been prepared in accordance with generally accepted accounting principles in India including accounting standards and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on an accrual basis and under historical cost convention. The accounting policies are consistent with those used in previous year.

B) Fixed Assets :

Fixed Assets are stated at cost net of recoverable taxes less accumulated depreciation. Impairment loss has been deducted from respective assets. Project and pre-operative expenses incurred prior to date of commencement of commercial production are being allocated to Fixed Assets.:

No amount is written off against leasehold land of the company and the same is charged to the Statement of Profit and Loss only in the year in which the respective lease period expires.

C) Depreciation :

Depreciation on fixed assets is provided on straight line method based on useful life of the assets prescribed in Scheduled II of the Companies Act, 2013.

D) Investments :

Current investments are stated at lower of cost & Quoted / Fair value. Long terrti investment (non current) are stated at cost.

E) Inventories :

Raw Material is valued at cost determined on FIFO basis and Stores & Spares are valued at cost on weighted average basis. Finished goods and Work-in-process are valued at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses. Finished goods and process stock includes cost of conversion, applicable overheads and other cost incurred in acquiring the inventory and bringing them to their present location and condition. Waste is valued at estimated net realizable value after providing for obsoletion if any.

F) Excise Duty/Cenvat:

Excise duty is accounted for on the basis of payments made in respect of goods cleared and provision made for goods lying in bonded warehouse for domestic sales wherever applicable. The Cenvat credit in respect of Excise Duty and Service Tax are utilized for payment of Excise Duty on goods dispatched. The unutilized Cenvat credit is carried forward in the books.

G) Revenue Recognition:

Sales is shown inclusive of excise duty and waste sales.

H) Borrowing Cost:

Borrowing cost which are attributable to acquisition or construction of qualifying assets are capitalised as part of cost of such assets. A qualifying asset is one which necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

I) Retirement Benefits:

The Employee and Company make monthly fixed Contribution to Government of India Employee's Provident Fund equal to a specified percentage of the Covered employee's salary. The company's contribution is recognised as an expenses in the statement of profit & loss. The Liability for Gratuity to employees, which is a defined benefit plan is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain /loss in respect of the same is charged to the statement of profit and loss. Leave encashment benefits to eligible employees has been ascertained on actuarial basis and provided for. Actuarial gain/loss in respect of the same is charged to the statement of profit and loss.

J) Foreign Currency Transactions:

i) Transactions denominated in Foreign Currency are accounted for at equivalent rupee value converted at the rates prevailing at the time of transactions.

ii) Monetary items denominated in foreign currency are converted at exchange rate prevailing on the date of Balance Sheet.

iii) Foreign exchange difference arising at the time of transaction or settlement are recognized as income or expense in the Statement of Profit and Loss.

K) Impairment of Assets:

An asset is treated as impaired when carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an assets is identified as impaired.

L) Provisions, Contingent Liabilities and Contingent Assets: Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes on financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.

---

Mar 31, 2014

A) Basis of Preparation of Financial Statements :

The Financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material aspects with the accounting standards notified under the companies (Accounting Standards) Rules, 2006 (as amended) and the relevent provisions of the companies Act, 1956. The financial statements have been prepared on an accrual basis (unless otherwise stated) and under historical cost convention.The accounting policies are consistent with those used in previous year.

B) Fixed Assets :

Fixed Assets are stated at cost Net of Recoverable Taxes less accumulated depreciation. Impairment loss has been deducted from respective assets.

Project and pre-operative expenses incurred prior to date of commencement of commercial production are being allocated to Fixed Assets.

No amount is written off against leasehold land of the company and the same will be charged to the Statement of Profit and Loss only in the year in which the respective lease period expires.

C) Depreciation :

Depreciation on fixed assets is provided on straight line method at the rates and in the manner specified in schedule XIV of the Companies Act, 1956 as amended vide Notification No. GSR-756 (E) dated 16th December, 1993 issued by the Department of Company Affairs. Assets costing less than 5000/- acquired prior to 01.04.1993 are depreciated at old rates whereas such assets acquired thereafter have been fully depreciated.

D) Investments :

Current investments are stated at lower of cost & Quoted / Fair value. Long term investment are stated at cost.

E) Inventories :

Raw Material is valued at cost and Stores & Spares are valued at cost on weighted average basis. Finished goods and Process stock are valued at the lower of cost or net realizable value. (Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses.) Finished goods and process stock includes cost of conversion, applicable overheads and other costs incurred in acquiring the inventory and bringing them to their present location and condition. Waste is valued at estimated net realizable value after providing for obsoletion if any.

F) Excise Duty/Cenvat :

Excise duty is accounted for on the basis of payments made in respect of goods cleared and provision made for goods lying in bonded warehouse for domestic sales whereever applicable. The Cenvat credit in respect of Excise Duty and Service Tax are utilized for payment of Excise Duty on goods dispatched. The unutilized Cenvat credit is carried forward in the books.

G) Revenue Recognition :

Sales is shown inclusive of excise duty and waste sales.

H) Borrowing Cost :

Borrowing cost which are attributable to acquisition or construction of qualifying assets are capitalised as part of cost of such assets. A qualifying asset is one which necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

I) Retirement Benefits :

The Employee and Company make monthly fixed Contribution to Govemment of India Employee''s Provident Fund equal to a specified percentage of the Covered employee''s salary. Provision for the same is made in the year in which services are rendered by the employee. The Liability for Gratuity to employees, which is a defined benefit plan is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain / loss in respect of the same is charged to the statement of profit and loss

Leave encashment benefits to eligible employees has been ascertained on actuarial basis and provided for. Actuarial gain / loss in respect of the same is charged to the statement of profit and loss.

J) Foreign Currency Transactions :

Transcations denominated in Foreign Currency are accounted for at equivalent rupee value converted at the rates prevailing at the time of transactions.

Monetary items denominated in foreign currency are converted at exchange rate prevailing on the date of Balance Sheet. Foreign exchange difference arising at the time of transaction or settlement are recognized as income or expense in the Statement of Profit and Loss.

K) Liability for import duty, if any towards export obligation is accounted for on crystallisation.

L) Impairment of Assets.

An asset is treated as impaired when carrying net of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an assets is identified as impaired.

M) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes on financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.

---

Mar 31, 2013

A) Basis of Preparation of Financial Statements:

The Financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material aspects with the accounting standards notified under the companies (Accounting Standards) Rules, 2006 (as amended) and the relevent provisions of the companies Act, 1956 .The financial statements have been prepared on an accrual basis (unless otherwise stated) and under historical cost convention.The accounting policies are consistent with those used in previous year.

B) Fixed Assets :

Fixed Assets are stated at cost Net of Recoverable Taxes less accumulated depreciation. Impairment loss has been deducted from respective assets.

Project and pre-operative expenses incurred prior to date of commencement of commercial production are being allocated to Fixed Assets.

No amount is written off against leasehold land of the company and the same will be charged to the Statement of Profit and Loss only in the year in which the respective lease period expires.

C) Depreciation :

Depreciation on fixed assets is provided on straight line method at the rates and in the manner specified in schedule XIV of the Companies Act, 1956 as amended vide Notification No. GSR-756 (E) dated 16th December, 1993 issued by the Department of Company Affairs. Assets costing less than Rs. 5000/- acquired prior to 01.04.1993 are depreciated at old rates whereas such assets acquired thereafter have been fully depreciated.

D) Investments:

Current investments are stated at lower of cost & Quoted / Fair value. Long term investment are stated at cost.

E) Inventories:

Raw Material is valued at cost and Stores & Spares are valued at cost on weighted average basis. Finished goods and Process stock are valued at the lower of cost or net realizable value. (Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses.) ''Finished goods and process stock includes cost of conversion, applicable overheads and other costs incurred in acquiring the inventory and bringing them to their present location and condition. Waste is valued at estimated net realizable value after providing for obsoletion if any.

F) Excise Duty/Cenvat:

Excise duty is accounted for on the basis of payments made in respect of goods cleared and provision made for goods lying in bonded warehouse for domestic sales.

The Cenvat credit in respect of Excise Duty and Service Tax are utilized for payment of Excise Duty on goods dispatched. The unutilized Cenvat credit is carried forward in the books.

G) Revenue Recognition:

Sales is shown inclusive of excise duty and waste sales.

H) Borrowing Cost :

Borrowing cost which are attributable to acquisition or construction of qualifying assets are capitalised as part of cost of such assets. A qualifying asset is one which necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

I) Retirement Benefits:

The Employee and Company make monthly fixed Contribution to Government of India Employee''s Provident Fund equal to a pecified percentage of the Covered employee''s salary. Provision for the same is made in the year in which services are rendered by the employee. The Liability for Gratuity to employees, which is a defined benefit plan is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain / loss in respect of the same is charged to the statement of profit and loss. Leave encashment benefits to eligible employees has been ascertained on actuarial basis and provided for. Actuarial gain / loss in respect of the same is charged to the statement of profit and loss.

J) Foreign Currency Transactions:

i) Transcations denominated in Foreign Currency are accounted for at equivalent rupee value converted at the rates prevailing at the time of transactions.

ii) Monetary items denominated in foreign currency are converted at exchange rate prevailing on the date of Balance Sheet.

iii) Foreign exchange difference arising at the time of transaction or settlement are recognized as income or expense in the Statement of Profit and Loss.

K) Liability for import duty, if any towards export obligation is accounted for on crystallisation.

L) Impairment of Assets.

An asset is treated as impaired when carrying net of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an assets is identified as impaired.

M) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes on financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.

---

Mar 31, 2012

A) Basis of Preparation of Financial Statements:

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material aspects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis (unless otherwise stated) and under historical cost convention. The accounting policies are consistent with those used in previous year.

B) Fixed Assets:

Fixed Assets are stated at cost Net of Recoverable Taxes less accumulated depreciation. Impairment loss has been deducted from respective assets.

Project and pre-operative expenses incurred prior to date of commencement of commercial production are being allocated to Fixed Assets. No amount is written off against leasehold land of the company and the same will be charged to the statement of profit and loss account only in the year in which the respective lease period expires.

C) Depreciation:

Depreciation on fixed assets is provided on straight line method at the rates and in the manner specified in schedule XIV of the Companies Act, 1956 as amended vide Notification No. GSR-756 (E) dated I6th December, 1993 issued by the Department of Company Affairs. Depreciation on impaired assets related to Threads division is charged after reducing its residual value from revised carrying amounts over the remaining useful life Assets costing less than Rs. 5000/- acquired prior to 01.04.1993 are depreciated at old rates whereas such assets acquired thereafter have been fully depreciated.

D) Investments:

Current investments are stated at lower of cost & Quoted/Fair value. Long term investment are stated at cost.

E) Inventories:

Raw Material is valued at cost and Stores & Spares are valued on weighted average basis. Finished goods and Process stock are valued at the lower of cost or net realizable value. (Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses.) 'Finished goods and process stock includes cost of conversion, applicable overheads and other costs incurred in acquiring the inventory and bringing them to their present location and condition. Waste is valued at estimated net realizable value after providing for absolution if any.

F) Excise Duty/Cenvat:

Excise duty is accounted for on the basis of payments made in respect of goods cleared and provision made for goods lying in bonded warehouse for domestic sales.

The Cenvat credit in respect of Excise Duty and Service Tax are utilized for payment of Excise Duty on goods dispatched. The unutilized Cenvat credit is carried forward in the books.

G) Revenue Recognition:

Sales is shown inclusive of waste sales.

H) Borrowing Cost:

Borrowing cost which are attributable to acquisition or construction of qualifying assets are capitalised as part of cost of such assets. A qualifying asset is one which necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue

I) Retirement Benefits:

The Employee and Company make monthly fixed Contribution to Government of India Employee's Provident Fund equal to a specified percentage of the Covered employee's salary. Provision for the same is made in the year in which services are rendered by the employee. The Liability for Gratuity to employees, which is a defined benefit plan is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain/loss in respect of the same is charged to the Statement of profit and loss.

Leave encashment benefits to eligible employees has been ascertained on actuarial basis and provided for. Actuarial gain/loss in respect of the same is charged to the Statement of profit and loss.

J) Foreign Currency Transactions:

Purchases and Sales in Foreign Currency are accounted for at equivalent rupee value converted at the rates prevailing at the time of transactions. However, where payments/realisation of purchases/sales is pending other than litigation, the rates prevailing at the year end are considered and accordingly accounted for.

Foreign Currency Loan availed if any, to acquire plant and machinery/Technology & Basic engineering is accounted in Indian Rupee at the exchange rates prevailing on the date of disbursement. The difference due to exchange rate fluctuations at the time of repayment of Foreign Currency Loan/Instalments and translation of such Foreign currency liabilities at the year end are accounted as income/expenditure as per Accounting Standard 11 issued by The Institute of Chartered Accountants of India.

Liability for import duty, if any towards export obligation is accounted for on crystallisation.

K) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes on financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2010

(I) Basis of Preparation of Financial Statements:

The Financial statements are prepared on accrual basis in accordance with the applicable accounting standards and the provisions of the Companies Act, 1956.

(II) Fixed Assets :

(a) Fixed Assets are stated at cost less accumulated depreciation. Impairment loss has been deducted from respective assets.

(b) Project and pre-operative expenses incurred prior to date of commencement of commercial production are being allocated to Fixed

- Assets.

(c) No amount is written off against leasehold land of the company and the same will be charged to the profit and loss account only in the year in which the respective lease period expires.

(d) Cenvat credit on capital goods is accounted for by reducing the cost of capital goods.

(III) Depreciation :

(a) Depreciation on fixed assets is provided on straight line method at the rates and in the manner specified in schedule XIV of the Companies Act, 1956 as amended vide Notification No. GSR-756 (E) dated 16th December, 1993 issued by the Department of Company Affairs. Depreciation on impaired assets related to Threads division is charged after reducing its residual value from revised carrying amounts over the remaining useful life.

(b)Assets costing less than Rs.5000/- acquired prior to 01.04.1993 are depreciated at old rates whereas such assets acquired thereafter have been fully depreciated.

(IV) Investments: Investments, are stated at cost.

(V) Inventories;

a) Inventories are valued at the lower of cost or. net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses. Finished goods and process stock includes cost of conversion, applicable overheads and other costs incurred in acquiring the inventory and bringing them to their present location and condition. Raw Material is valued at cost and Stores & Spares are valued on weighted average basis.

b) Obsolete, defective, unserviceable and slow / non-moving stock are provided for.

c) Waste is valued at estimated net realisable value.

(VI) Excise Duty/Cenvat:

(a) Excise duty is accounted for on the basis of payments made in respect of goods cleared and provision made for goods lying in bonded warehouse for domestic sales.

(b) The Cenvat credit in respect of Excise Duty and Service Tax are utilized for payment of Excise Duty on goods dispatched. The unutilized Cenvat credit is carried forward in the books.

(VII) Revenue Recognition:

Sales is shown inclusive of excise duty, job charges, export benefits and waste

sales.

Viii) Borrowing Cost:

Borrowing cost which are attributable to acquisition or construction of qualifying assets are capitalised as part of cost of such assets. A qualifying asset is one which necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

(IX) Retirement Benefits :

a) The Employee and Company make monthly fixed Contribution to Government of India Employees Provident Fund equal to a specified percentage of the Covered employees salary. Provision for the same is made in the year in which services are rendered by the employee.

b) The Liability for Gratuity to employees, which is a defined benefit plan is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain / loss in respect of the same is charged to the profit and loss account.

c) Leave encashment benefits to eligible employees has been ascertained on actuarial basis and provided for. Actuarial gain / loss in respect of the same is charged to the profit and loss account.

(X) Foreign Currency Transactions :

(a) Purchases and Sales in Foreign Currency are accounted for at equivalent rupee value converted at the rates prevailing at the time of transactions. However, where payments / realisation of purchases/sales is pending other than litigation, the rates prevailing at the year end are considered and accordingly accounted for.

(b) Foreign Currency Loan availed if any, to acquire plant and machinery / Technology & Basic engineering is accounted in Indian Rupee at the exchange rates prevailing on the date of disbursement. The difference due to exchange rate fluctuations at the time of repayment of Foreign Currency Loan / Installments and translation of such Foreign currency liabilities at the year end are accounted as income / expenditure as per Accounting Standard 11 issued by The Institute of Chartered Accountants of India.

(XI) Liability for import duty, if any towards export obligation is accounted for on crystallisation.

(XII) Provisions, Contingent Liabilities and Contingent Assets : Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to the accounts. Contingent Assets are neither recognized nor disclosed in the financial statement.