These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. For recognition of Income & Expenditures accrual (mercantile) system of accounting is followed except some expenses of minor nature, which are accounted for on cash basis. GAAP comprises mandatory accounting standards as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

1.2 Use of estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that effect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of financial statements and reported amounts of income and expenditures during the period. Examples of such estimates include future obligations under employee retirement benefit plans payments, income taxes.

1.3 Fixed Assets

Fixed Assets are stated at cost, less accumulated depreciation and impairment, if any. The cost of a fixed asset comprises its purchase cost and directly attributable cost of bringing the assets to working conditions for its intended use.

1.4 Depreciation and amortization

Depreciation on fixed assets is provided on written down value (WDV) method on single shift basis at the rates specified in Schedule XIV to the Companies Act, 1956 as amended from time to time. Depreciation on addition/deletion/disposals during the year is provided on pro-rata basis.

1.5 Inventories (as taken, valued and certified by the management)

Inventories consisting of raw material is valued at cost and finished goods are valued at cost or market price whichever is less.

1.6 Provisions and contingent liabilities

A provision is recognized if, as a result of a past event, the company has a legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

1.7 Income Taxes & Deferred Taxes

Income Taxes are accrued in the same period that the related revenue and expenses arise. A provision is made for income tax annually, based on the tax liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to disallowances or other matter is probable. Minimum alternate tax (MAT) paid in accordance with the tax laws and the company offset, on a year on year basis.

The difference that result between the profit considered for income taxes and the profit as per the financial statements are identified, and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originated in one accounting period and reverse in another, based on the tax effect of the aggregate amount of timing difference.

1.8 Revenue recognition

Revenue is primarily derived from export sales net of returns and sale of duty free licenses, FPS license and export incentives. The company presents revenues net of value added taxes in its statement of profit and loss.

1.9 Employee benefits

Employee benefit includes provident fund, payment of gratuity, encashment of earned leave

a. Provident fund

The company and employees both makes monthly contributions to the Employees Provident Fund Scheme equal to a specified percentage of the eligible employee's salary. The company contributes a part of its contribution towards EPF Scheme and also towards FPS Scheme as per regulations of the Employee's Provident Fund Scheme, 1952 administered by Employees Provident Fund Organization.

b. Gratuity and encashment of earned leave

The company is making provisions for payment of gratuity and encashment of earned leave for those employees who are eligible for such benefits under the Payment of Gratuity Act, 1972 and Factories Act, 1948 respectively. The company is making provisions for the gratuity and encashment of earned leave on actual eligibility and undiscounted present value of benefit basis. No actuarial valuation is made for such liabilities as required by AS-15. Any gain or loss on these accounts is accounted for in the financial statements.

1.10 Segment reporting

The company is operating in only one product i.e. leather garments and accessories. Hence there is no need to present financial information's segment wise as required by AS-17.

1.11 Earning per share

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

1.12 Cash & cash equivalents

Cash and cash equivalents comprise cash on hand and balances/deposits with banks. The company considers all investments that are readily convertible to known amounts of cash to be cash equivalents which are subject to insignificant risk of changes in value.

1.13 Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the company are segregated based on the available information.

1.14 Foreign currency transactions

Revenue, expenses and cash flow items denominated in foreign currencies are translated using exchange rate in effect on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.

Foreign currency denominated monetary and non-monetary assets & liabilities are translated at exchange rates in effect on the balance sheet date. The gain / (losses) if any resulting from such translations are included in the statement of profit and loss.