Note no. 1 : Significant Accounting Policies

(A) (i) Basis of Accounting:

The Financial Statements have been prepared on the accrual basis of accounting, in Accordance with generally accepted accounting principles including the Accounting Standards notified under the Sec.133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014.

The financial statements have been prepared on a historical cost basis.

The financial statements are presented in Indian Rupees (INR) and all values are rounded to nearest lakhs ('00,000), except where otherwise indicated.

The financial statements are approved for issue by the Company’s Board of Directors on May 29, 2024.

(ii) Consistency:

Accounting Polices not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles.

(iii) Current v. Non-Current classification:

The Company presents assets and liabilities in the balance sheet based on current/non- current classification.

(a) An asset is treated as current when it is:

- Expected to be realized or intended to be sold or consumed in normal operating cycle,

- Held primarily for purpose of trading, or

- Expected to be realized within twelve months after the reporting period.

All other assets are classified as non-current.

(b) A liability is current when:

- It is expected to be settled in normal operating cycle,

- It is held primarily for purpose of trading,

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

(iv) Use of Estimates, Assumptions and Judgments: The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements and the results of operations during the year. Differences between actual results and estimates are recognized in the year in which the results are known or materialize. Estimates and underlying assumptions are reviewed on an ongoing basis.

(B) Inventories: Inventories consist of raw materials, packing materials, work-in-progress and finished goods. Inventories are valued at lower of cost and net realizable value. Cost is determined on First-In-First-Out basis.

(i) Cost of raw materials and packing materials includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

(ii) Valuation of Closing Stock of Finished Goods & Work-in-progress:

The inventory at the year-end is valued at Cost or Net Realizable Value whichever is lower.

Cost of work-in-progress and finished goods include direct materials, labour and proportion of manufacturing overheads based on the normal operating capacity, wherever applicable.

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

The inventories have been physically taken by the management periodically during the year.

(C) Cash Flow:

Cash Flow Statement has been prepared on the basis of ‘Indirect Method’ as prescribed under AS -3.

(D) Provisions, Contingent Liabilities and Commitments:

(i) Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The company has provided for a Provision for doubtful debt of Rs.20,35,512.

(ii) The expenses relating to a provision is presented in the Statement of Profit and Loss net of reimbursements, if any.

(iii) If the effect of the time value of money is material, provisions are to be discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is proposed to be used, the increase in provision due to the passage of time is recognized as a finance cost.

(iv) Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability.

(v) Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.

(vi) The company has the following disputed liabilities/demand raised by statutory authorities as on 31/03/2024.

(v) A petition U/s 241, 242 and 244 of the Companies Act 2013 has been filed before the National Company Law Tribunal. Allahabad Bench on 26.07.2022 by a speculative shareholder not connected with the management of the Company against the Company. The Company does not expect any adverse impact on this development on its financial position as on 31.03.2024.

(E) Prior Period Items:

An expense relating to prior period has been charged to current year profit and loss statement and a separate disclosure for the same has been made.

(F) Revenue Recognition:

Sales are recognized at the time when the risks and rewards as regards those good are transferred to the buyer, and include Excise duty, Education cess duty, Secondary higher education cess, Sales Tax and Goods & Service tax, wherever applicable.

(G) Property, Plant & Equipment AS - 10:

i. Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.

ii. The initial cost of an asset comprises its purchase price, any costs directly attributable to bringing the asset into its present location and condition, necessary for it to get ready for its intended use.

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

iv. Spare parts, which meet the definition of Property, plant and equipment, are capitalized as Property, plant and equipment. In other cases, the spare parts are inventorised on procurement and charged to Statement of Profit and Loss at the time of consumption.

v. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. The useful lives for various categories of property, plant and equipment are as given below:

vi. Depreciation on property, plant and equipment is provided on pro-rata basis on straight line method using the useful lives of the assets estimated by the company and in the manner prescribed in Schedule II of the Companies Act 2013.

vii. Capital Work in Progress:

As on the balance sheet date, the company has incurred a capital work in progress amounting to Rs 25,40,000 for a property that is not currently registered in the name of the company. The company has entered into a lease agreement for the said property, which is yet to be registered.

According to the terms of the lease agreement, the company will be liable to pay rent once the property is ready for use.

(H) Foreign currency transaction during the current year:

The company has exported goods to I.KAPETANIOS A.E.B.E. amounting to Rs 61,83,361 for which the payment have been received in dollars.

(I) Employee Benefit Expenses:

Short term employee benefits

All employee benefits payable/available within twelve months of rendering the services are classified as short-term employee benefits. Benefits such as salaries, wages and bonus, etc., are recognized in the Statement of Profit and Loss in the period in which the employee renders the related service.

Provident fund

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Both the employees and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employees’ salary. The Company contributes a part of the contributions to the Government administered Provident/Pension Fund. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable through the provident fund scheme as and expense, when an employee renders related services.

Other long term employee benefits

The company does not have any structured Employee’s Gratuity Fund Scheme. However the company provides for its gratuity liability as a defined benefit plan. The liabilities with respect to Gratuity Plan are determined on the basis of calculation specified under Payment of Gratuity Act, 1972. The company has taken a actuary valuation report in this respect. Details of the same are as follows:

(J) Borrowing Cost:

The company has not incurred any borrowing cost, in terms of AS-16 for the purpose of acquiring land, construction of building or acquiring other Fixed Assets for the pre installation period.

(K) Segment Reporting:

The Company’s main business is manufacturing of apparels. There is no separate segment within Company as defined by ‘AS - 17 Segment Reporting’ issued by the Institute of Chartered Accountants of India.

(L) Related Party Disclosures:

(a) Key Management Personnel

Anil Kumar Narula, Ankur Narula, Balram Kumar Narula, Rakesh Kumar Narula

(b) Enterprises over which Directors and their relatives are able to exercise Significant influence:

Anil Kumar Narula HUF, Ankur Kumar Narula HUF, Balram Narula HUF, Bhushan Narula HUF, Gaurav Narula HUF, Rakesh Kumar Narula HUF, Rohit Narula HUF, Satish Narula HUF, Frontline Exports Pvt. Ltd., Jet Knit Indclus Pvt. Ltd., Venus Knitwears Co. Pvt. Ltd.

(c) Relatives of Key Managerial Personnel:

Gaurav Narula (V.T. Trading Corporation), Jyoti Narula, Kanchan Narula, Madhu Sabbharwal, Meena Narula, Namrata Narula, Prashant Narula, Radhika Narula, Rohit Narula, Ruchi Narula, Sandhya Narula, Shashi Sabbharwal (SMS Traders), Saurabh Narula, Usha Narula, Vaibhav Narula, Harsh Vardhan Narula, Richa Narula.

(M) Earnings per Share:

Basic earnings per share are 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. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share consolidation, without a corresponding change in resources, if any.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all potentially dilutive equity shares, if any.

The company has not issued any potentially dilutive equity shares.

(N) Tax Expense:

Tax expense for the year comprises of current tax and deferred tax.

a) Current Tax: Current income tax, assets and liabilities are measured at the amount expected to be paid to or recovered from the taxation authorities in accordance with the Income Tax Act, 1961 and the Income Computation and Disclosure Standards (ICDS) enacted in India by using tax rates and the tax laws that are enacted at the reporting date.

b) Deferred Tax: Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets and liabilities are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

(O) Several debit and credit balances are subject to confirmation by parties.

(P) Previous Year’s figures have been regrouped/rearranged wherever necessary to conform to the figures for the current year.