K. Provisions. Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognised when there is a
present obligation as a result so past event and it is probable that there will be outflow of resources.
Contingent liability, which are considered significant and material by the company, are disclosed in the
Notes to Accounts. Contingent Assets are neither recognised nor disclosed in financial statements.
L. Investments
There is Long term investment in shares of Harappa Textile Mills Private Limited (499800 shares of Rs.
51.10 each on book value) amounted to Rs. 25539780.00 and there is no current investments .
M. Borrowing Cost
Borrowing cost that are directly attributable to acquisition or construction of qualifying assets or treated as
part of cost of capital assets. Other borrowing cost or treated as expenses for the period in which they are
incurred.
N. Earning Per Share
Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period.
O. Cash and Cash Equivalent
In the cash flow statement, cash and cash equivalent includes cash in hand, demand deposits with banks,
other short-term highly liquid investments with original maturities of three or less.
P. Lease
a) No Exemption is Available to the Company with regards to this Accounting Standard.
b) The Company has entered into following Financial and Operating Lease during the Year under Review.
Q. Intangible Assets
Intangible assets are stated at acquisition cost, net accumulated amortization and accumulated impairment
losses, if any. Intangible assets are amortized on a straight-line basis over their estimated useful lives. A
rebuttable presumption that the useful life of an intangible assets will not exceed ten years from the date
when the asset is available for use is considered by the management. The amortization period and the
amortization method are reviewed at least at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates, the amortisation period is changed accordingly.
R. Use of Estimates
The preparation of financial statements requires the management to make estimates and assumptions
that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities
as at the date of the financial statements and reported amounts of income and expenses during the year.
Example of such estimates include provision for doubtful debts, employee benefits, provision for income
tax, the useful lives of depreciable fixed assets and provision for impairment.
S. Contingent Liabilities
The company has given Bank Guarantee worth Rs. 3536100/- to custom department for EPGC License.
3 In the opinion of the Board of Directors, the current assets, loans and advances have a value on realisation
in the ordinary course of business at least equal to the amount at which they are stated except as expressly
stated otherwise.
4 Confirmation of balances, whether in debit or credit from parties are subject to confirmation as provided by
board of directors. However no proof regarding the same has been obtained at the year end. Company do
have a system of periodic balance confirmations from parties.
9. Segment Reporting:
The company operates only in one business segment viz. woven cloth and hence no separate information
for segment wise disclosure is required.
10. The Micro, Small and Medium Enterprises Development Act, 2006 has come into force with effect from
October 2, 2006. As per the act, the company is required to identify the Micro and Small Vendors/Service
providers and pay interest to them on overdue beyond the specified period irrespective of the terms agree
upon. The company has not received any confirmations from its Vendors/Service Providers regarding
their status of registration under the said Act, which has been relied upon by the auditors, hence prescribed
disclosures under Section 22 of the said act has been provided.
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