1. Basis of Accounting and Preparation of Financial Statements
The financial statements of the Company have been prepared in accordance with the Generally
Accepted Accounting Principles in India (Indian GAAP] to comply with the Accounting
Standards specified under Section 133 of the Companies Act, 2013, r.w. Rule 7 of the Companies
(Accounts] Rules, 2014 and the relevant provisions of the Companies Act, 2013 (“the 2013
Act”] / Companies Act, 1956 (“the 1956 Act”], as applicable.
2. Use of Estimates
The preparation of the financial statements in conformity with Indian GAAP requires the
Management to make estimates and assumptions considered in the reported amounts of assets
and liabilities (including contingent liabilities] and the reported income and expenses during
the year. The Management believes that the estimates used in preparation of the financial
statements are prudent and reasonable. Future results could differ due to these estimates and
the differences between the actual results and the estimates are recognized in the periods in
which the results are known/materialize.
3. Cash Flow Statements
Cash flows are reported using the indirect method as set out in accounting standard -3 on cash
flow statement issued by the institute of chartered accountants of India.
4. Depreciation and Amortization
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less
its estimated residual value. Depreciation on tangible fixed assets has been provided on the
WDV method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
5. Revenue Recognition
Income from sales of goods is recognized upon passage of risks and rewards of ownership to
the goods, which generally coincide with the dispatch.
6. Fixed Assets
Fixed assets are carried at cost less accumulated depreciation/amortization and impairment
losses, if any. The cost of fixed assets comprises its acquisition price and relevant costs to bring
it in position for intended use. Subsequent expenditure on fixed assets after its
purchase/completion is capitalized only if such expenditure results in an increase in the future
benefits from such asset beyond its previously assessed standard of performance.
7. Earnings per Share
Basic earnings per share is computed by dividing the profit/(loss] after tax (including the post
tax effect of extraordinary items, if any] by the weighted average number of equity shares
outstanding during the year.
8. Taxes on Income
Current Tax
Current tax is calculated and the provision for the same is made in the books of accounts.
Deffered Tax
Deferred tax is recognized on timing differences, being the differences between the taxable
income and the accounting income that originate in one period and are capable of reversal in
one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized
for all timing differences. Deferred tax assets are recognized for timing differences of items
other than unabsorbed depreciation and carry forward losses only to the extent that reasonable
certainty exists that sufficient future taxable income will be available against which these can
be realized. However, if there are unabsorbed depreciation and carry forward of losses and
items relating to capital losses, deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that there will be sufficient future taxable income
available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to
taxes on income levied by the same governing tax laws and the Company has a legally
enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date
for their reliability.
MAT Tax
Tax under MAT is not applicable to the company as it has opted taxation under section 115BAA.
9. Stock In Trade
Stock of Raw Material is valued at average purchase price during the year and finished good is
valued at cost or net realizable value whichever is lower as certified by the management and
the value of the same is 4,21,82,456.93/- and 2,30,28,150.93/- respectively.
10. Subsidy Income
Under the Textile Policy of Government of Gujarat the Company has not received any Subsidy
or Grant during the current financial year.
11. Clause-44 in tax audit report requires us to verify the details of all inward supplies of the
assessee with respect to whether the same was with GST registered person or unregistered
person. Further with respect to registered person it requires to verify the bifurcation of the said
inward supply in the supply from Composition dealer, Inward supplies exempt under GST and
others. Based on the details provided by the assessee and verification of the same on test check
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