| a) Historical conventions and revenue recognition
i) Financial statements are drawn using the historical cost convention
and adopting accrual basis save & except realization on account of
samples which are accounted for on settlement/receipt basis in view of
uncertainty of realization.
ii) Export sales have been booked on FOB basis on the date of shipment.
iii) Sale of import/export entitlements received by way of SIL/QUOTA
licenses has been booked as on the date of sale, thereof. However, Duty
Draw Back and DEPB Entitlement are accounted for on accrual basis on
eligible amount of exports made and entitlement of Target-Plus Scheme
has been accounted on utilization basis as per the scheme. Focus
Product Credit is booked on the basis of licenses received.
b) Fixed assets and capital expenditure :
i) Fixed assets are stated at cost which includes installation & other
expenditures. Such expenditure comprises purchase price, import duties,
levies and any directly attributable cost of bringing the assets to
their working conditions.
ii) Capitalisation of Construction Period Expenses:
Direct expenses as well as clearly identifiable indirect expenses
incurred during construction period have been capitalised directly with
respective assets. Finance cost and other allocable expenses incurred
during the construction period of the project have been capitalised,
proportionately.
c) Depreciation:
Depreciation is provided on Written Down Value Method as per Schedule
II of the Companies Act, 2013, save and except for units J.J.Spectrum
Silk and J.J. Exporter Limited- DTA Unit where depreciation has been
provided on Straight Line Method as per Schedule II of the Companies
Act, 2013. Leasehold land is being depreciated over the period of
lease, wherever applicable. Increase/decrease in value of assets
arising out of exchange rates fluctuation is charged over the remaining
useful life of the assets upto the year 31st March, 2007 and later on,
it has been charged to the Statement of Profit and Loss in accordance
with the Accounting Standard 11, "The Effects of Changes in Foreign
Exchange Rates".
d) Valuation of Inventory:
i) Stock of finished/semi-finished goods has been valued at weighted
average cost representing costs which has been incurred in bringing the
inventory to their present conditions or net realisable value whichever
is lower except for damaged and rejected goods which has been valued at
estimated realisable value as per continuous practice followed by the
company.
ii) Raw Materials & Stores have been valued at weighted average cost or
net realisable value whichever is lower.
e) Investments:
Non-current investments are stated at cost. Provisions are being made
for diminution in value other than temporary in nature. Current
investments category wise are valued at cost or market price, whichever
is lower.
f) Foreign Currency transactions:
i) All foreign currency income and expenses are generally recorded at
the exchange rate prevailing on the date of transactions/ negotiations
with the company's banker, save & except where forward contract has
been booked which is being recorded at relevant rate. Premium on
forward contract is being accounted for during the life of contract.
ii) Foreign currency retained out of export proceeds in Exchange
Earner's Foreign Currency Account with banker has been converted at
bank advice rate applied for the relevant export bills except in case
of collection bills wherein the same has been converted at spot rate
prevailing on the date of realization of the bills.
iii) Commission to foreign agents is converted at exchange rates
prevailing at the time of accounting such liability in company's books.
iv) The company has approved policy of hedging. Accordingly, derivative
contracts are entered into to hedge highly probable sales transactions
or firm commitments. As per accounting policies adopted by the company,
the gain or loss on settlement of the hedge contract is adjusted in
sale/purchase as the case may be in the period in which transaction is
accounted for.
v) Current Assets and Liabilities in foreign currencies are converted
at exchange rates prevailing at the year end, except in case of Forward
contract booked by the company against these Assets/ Liabilities, which
have been converted at the contracted rates.
g) Employee benefits:
i) Short-term employee benefits including Leave Encashment are
recognised as an expense at the undiscounted amount in the Statement of
Profit & Loss of the year in which the related service is rendered.
ii) Post-Employment Benefits and other Long Term Employee Benefits
include:
Defined Contribution Plans:
Company's contribution to Provident Fund and Employee State Insurance
Fund are determined under the relevant Schemes and/or Statute and
charged to the Statement of Profit & Loss.
Defined Benefit Plans:
Company's liability towards gratuity is actuarially determined at each
Balance Sheet date using the Projected Unit Credit Method. Actuarial
gains and losses are recognised in Statement of Profit & Loss. The
contribution towards Gratuity is funded with LIC.
h) Taxation :
Income Tax expense comprises current tax and deferred tax charge or
credit. Deferred Tax Asset or Liability is recognised using
substantively enacted tax rates. Deferred Tax Assets/ Liabilities are
reviewed as at each Balance Sheet date based on developments during the
year and to reassess realization/liabilities.
i) Impairment of assets :
Impairment of assets are assessed at balance sheet date and if any
indicator of impairment exist, the same is assessed and provided for.
j) Provisions for contingent liabilities & contingent assets :
Provisions are recognised in respect of present obligations arising out
of past events where there are reliable estimate of probable outflows
of resources. Contingent liabilities are the possible obligation of the
past events, the existence of which will be confirmed only by the
occurrence or non-occurrence of a future event. These are not provided
for and are disclosed by way of notes to the accounts. Contingent
assets are neither provided for nor disclosed.
k) Government Grants :
State Capital Investment Subsidy has been credited to Capital Reserve
Account on receipt basis.
l) Borrowing Costs :
Borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying assets are capitalised as
part of cost until the asset is ready for its intended use. A
qualifying asset is an asset that necessarily require substantial
period of time to get ready for its intended use or sale. After that,
the borrowing costs are recognised as an expense in the period in which
they are incurred and it includes exchange difference arising from
foreign currency borrowings to the extent that they are regarded as an
adjustment to borrowing costs.
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