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Notes to Accounts of Ambika Cotton Mills Ltd.

Mar 31, 2015

Note 1

Corporate Information

Ambika Cotton Mills Limited is engaged in manufacturing and selling speciality cotton yarn catering to the needs of manufacturers of premium branded shirts and t-shirts. Exports constitute significant portion of the operations. The company operates with total installed spindle capacity of 108228 (Previous Year 109872 Spindles ) of compact facility housed in four units. The company has installed 27.4 MW wind power capacity for captive consumption of spinning segment. The Spinning Plants are located at Kanniyapuram, Dindigul and Windmills are located in Tirunelveli, Dharapuram and Theni in the State of Tamilnadu.

Note 2

Nature of Security

Working Capital Loans from Banks are secured jointly by a first charge by way of Hypothecation of all stock of raw materials, process stocks, finished goods, stores and spares and receivables including export receivables, present and future book debts, outstanding moneys, receivables, claims, bills, contracts, engagements securities, and other rights and assets and are further secured jointly by second charge created and / or to be created by way of Mortgage by deposit of title deeds of all immovable properties of the Company, both present and future, and by way of hypothecation of Plant & Machinery of the Company both present and future.

Note 3

Other Additional Information:

i Commitment and Contingent Liabilities:-

a Commitment: In respect of contract remains to be executed on capital account Rs.1175 Lakh (Previous year Rs. 745 Lakh ). (Advance and other expenditure incurred Rs. 65 Lakh) (Previous year Rs. 130 Lakh)

b Contingent Liabilities: Export Bills discounted / lodged with the Bank Rs.2651 Lakh (Previous year Rs. 1363 Lakh)

c In respect of Assessment Year 1998-1999, the claim of the company for deduction of proportionate export profits from book profits was allowed by the Income-tax department while completing the original assessment. The same was revised in the reassessment proceedings and the department has raised a demand of Rs.26.12 Lakh and the order raising the demand has been stayed by Madras High Court pursuant to the writ filed by the Company. In a similar case the Supreme Court has upheld the principles of claim contested by the Company.

d In respect of assessment year 2004-05 the Income-tax department sought to re-open the assessment U/ s 147 of the Income-tax Act 1961 in respect of claim of depreciation @ 80% in respect of the windmills. However, the Company has filed a writ before Hon'ble Madras High Court and the matter is pending. No demand is raised so far. In similar cases, Madras High Court has allowed the appeals in favour of the assessees.

e The Central Excise department has raised a demand towards service tax of Rs.4.80 Lakh in respect of Freight charges paid by the Company, which was earlier held unconstitutional by Hon'ble Apex Court. The matter is contested before CESTAT, Chennai.

f The Central Excise department has raised a demand of Rs.7.06 Lakh on account of interest in respect of an Advance License for annual requirement. The matter is stayed by CESTAT Chennai. However the demand is paid by the Company to redeem the License.

g The Central Excise department has raised a demand of Rs.1.09 Lakh and further a penalty of Rs.1.09

Lakh proposing to levy the same in respect of used spares on de-bonding of 100 % EOU and the matter is presently pending before CEST AT Chennai.

h The Central Excise department has raised a Service Tax demand of Rs.2.12 Lakh, Interest Rs.0.31Lakh and Penalty Rs.0.53 Lakh for payment of commission to Foreign Agents and the matter is presently pending before CEST AT Chennai.

i The Central Excise department has not accepted claim of Modvat credit of Rs.11.33 Lakh made by the Company in respect of its erstwhile 100% EOU unit and the matter is pending before Madras High Court.

j The Central Excise department has not accepted claim of Cenvat Credit of Excise duty of Rs.33.80 Lakh made by the Company in respect of capital goods for the reason that during the impugned period cotton yarn was exempted and the matter is presently pending before CESTAT Chennai. However in a similar matter the Gujarat High Court has allowed the claim of the assessee.

k The Central Excise department has not accepted claim of Cenvat Credit of Service T ax of Rs.28.90 Lakh made by the Company in respect of Windmills for the reason that windmills are situated outside the factory and the matter is pending before Madras High Court. In the Company's own case , for a different year , the claim was allowed by Commissioner Central Excise ( Appeals ), Madurai .

l The Sales Tax Department in respect of Assessment Year 1996-97 has raised a demand of Rs.4.96 Lakh for non filing of certain forms and the matter is contested before Appellate Deputy Commissioner (Commercial Taxes), Madurai. The Company has remitted 25% of the disputed tax Rs.1.24 Lakh and for the balance 75% of the disputed tax demand Rs.3.72 Lakh has furnished a bank guarantee.

m The Central Excise department has raised a demand of Rs.0.65 Lakh towards interest and Rs.4.26 Lakh towards penalty for non- reversal of Cenvat Credit on account of its view that Cotton yarn is an exempted product during the period from November 2008 to December 2010.The matter is presently pending before CEST AT, Chennai.

n The Central Excise department has raised a interest demand of Rs.0.25 Lakh for late reversal of Cenvat credit and further levied a penalty of Rs.0.59 Lakh and the matter is presently pending before CESTAT, Chennai.

o Pursuant to the Appeal filed by the Central excise department, the Commissioner of Central Excise

(Appeals )Madurai allowed the Appeal of the department which raises a demand of Rs.1.69 Lakh disallowing the CENVAT Credit as wrongly availed and further a penalty of Rs.1.69 Lakh and the matter is presently pending before CEST AT, Chennai

p The Company has de-bonded one of its units ( Unit - II ) from 100 % EOU after completion of initial

period of 5 Years and after fulfillment of export obligation by achieving Positive NFEP (Net Foreign Exchange ) in accordance with EXIM policy. The de-bonding involved payment of duty under EPCG License ( for capital goods ) and Advance License ( For Raw materials imported ) Schemes. The de-bonding was completed after obtaining " No Dues Certificate from the Assistant Commissioner, Central Excise , Dindigul and final exit order from the Deputy Commissioner , MEPZ , Chennai .The Export Obligation , for duty discharge , fixed both under EPCG Scheme and advance License Scheme are also fulfilled and the respective licenses are redeemed from JDGFT , Coimbatore . Subsequent to the above fulfillment, the Central Excise Department has raised a Demand of Rs.410 Lakh towards de- bonding of Unit - II and the same is contested by way of writ before Hon'ble Madurai Bench of Madras High Court and the matter is stayed by the High Court.

q T ANGEDCO (T amilnadu Generation and Distribution Corporation Limited) has raised a demand for self generation tax in respect of electricity generated by windmills amounting to Rs.355 Lakh ( Previous year Rs. 309 Lakh ) and the matter has been stayed by Madras High court and pursuant to the same TANGEDCO kept the demand in abeyance . T ANGEDCO has further raised a demand of Rs. 157 Lakh (Previous Year Rs.139 Lakh) for cross subsidy in respect of power sourced from outside and the same has been set aside by Madras High court and TANGEDCO has preferred an appeal before Division bench of Madras High Court and the matter is pending. The Company has fully provided for these demands.

vi. Depreciation was recomputed on the basis of the life of the Assets which also includes recomputation on account of Schedule II of the Companies Act, 2013 in respect of certain assets. Consequent to this change in accounting estimate the additional depreciation provided in the accounts amounted to Rs.46.53 Lakh. This change in accounting estimate would not amount to change in accounting policy in the matter of calculation of depreciation.

vii. In terms of information available with the company there are 1 party (Previous Year (One) party) who are duly registered under Micro, Small and Medium Enterprises Development Act, 2006 and in respect of whom the amount payable Outstanding as on 31.03.2015 is Rs. 31,50,868/- (Previous year Rs.16,18,363/-) and the same was settled within the agreed dates which is not more than 45 days from the day of acceptance or deemed acceptance of the goods.

viii. Vehicle maintenance includes cost of expenditure exclusively incurred to provide transport to the employees from their place to work spot Rs. 133 Lakh (Previous year Rs.116 Lakh) and staff welfare expenses include quarterly bonus paid amounting to Rs.143 Lakh (Previous year Rs.146 Lakh).

ix. Reversal of Deferred tax liability is on account of timing difference of depreciation amounting to Rs. 36 Lakh (Previous year Rs. 358 Lakh).

xi Employee Benefits:

a. Company's Contribution to Provident Fund: Rs.131.10 Lakh (Previous Year Rs. 117.01Lakh)

b. Statement on Defined Benefit Plan - Gratuity (Covered under LIC Employees Cash Accumulation Scheme) The Following table sets out the funded status of the gratuity plan and the amounts recognized in the Company's financial statements as at 31 March 2015.

xv. Details of CSR Expenditure :

a. Gross amount required to be spent by the Company during the year Rs.88 Lakh.

b. Amount spent during the year on

xvi. The Company does not have any related party transactions or inter corporate loans.

xvii. Previous year figures have been re-grouped and re-classified wherever necessary.

xviii. Figures are rounded to the nearest rupee.


Mar 31, 2014

Note 1

Corporate Information

Ambika Cotton Mills Limited is engaged in manufacturing and selling speciality cotton yarn catering to the needs of manufacturers of premium branded shirts and t-shirts. Exports constitute significant portion of the operations. The company operates with total installed spindle capacity of 109872 Spindles of which 100800 Spindles constitutes compact facility housed in four units. The company has installed 27.4 MW wind power capacity for captive consumption of spinning segment. The Spinning Plants are located at Kanniyapuram, Dindigul and Windmills are located in Tirunelveli, Dharapuram and Theni in the State of Tamilnadu.

Note 2

Notes :

i. The company has only one type of share capital viz.. Equity Share Capital having a face value of Rs.10/- per share.

ii. There are no issue / buyback of shares during the reporting period , hence a reconciliation of the outstanding number of shares at the beginning and at the end does not arise.

iii. The issued Equity Share Capital carries equal voting rights and entitlement to dividends

iv. No shares are held by a holding company or its ultimate holding company or its subsidiary or associates

v. Shareholders holding more than 5% of Share Capital

vi. No shares are reserved for issue under options and contracts / commitments for the sale of shares/disinvestments

vii. For the period of five years immediately preceding the date as at which the Balance sheet is prepared, no shares are (a) alloted as fully paid up pursuant to contract (s) without payment being received in cash, (b) allotted as fully paid up way of bonus shares, (c) bought back.

viii. There are no securities convertible into equity / preference shares

ix. There are no calls unpaid & forfeited shares.

Nature of Security

1. Rupee Term Loans from IDBI Bank Ltd., Bank of Baroda, Corporation Bank, & Axis Bank Ltd, are secured by a first charge by way of joint mortgage by deposit of title deeds of the Company''s immovable properties both present and future and is further secured by a pari passu second charge by way of hypothecation of Company''s all movable properties (save and except book debts) including movable plant and machinery, machinery spares, tools and accessories and other movables both present and future, subject to prior charges created and / or to be created in favour of the Company''s Term Loan Lenders / Bankers on specific assets securing the term loan /working capital extended by them.

2. Rupee Term Loan from Bank of Baroda, relating to Windmills located at Theni is secured by a First Charge over the Assets created out of the Term Loan and further secured by second charge over the fixed assets and current assets of the company. Second charge over the fixed assets created out of the term loan is extended to other banks.

Loans Guaranteed by Directors : Nil

Terms of Repayment : All term loans are repayable in quarterly installments as specified in loan documents

Period and amount of continuing Default : Nil

Nature of Security

Working Capital Loans from Banks are secured jointly by a first charge by way of Hypothecation of all stock of raw materials, process stocks, finished goods, stores and spares and receivables including export receivables, present and future book debts, outstanding moneys, receivables, claims, bills, contracts, engagements securities, and other rights and assets and are further secured jointly by second charge created and / or to be created by way of Mortgage by deposit of title deeds of all immovable properties of the Company, both present and future, and by way of hypothecation of Plant & Machinery of the Company both present and future.

Loans Guaranteed by Directors Nil

Period and amount of continuing Default Nil

Note 26

Other Additional Information:

i Commitment and Contingent Liabilities: -

a. Commitment : In respect of contract remains to be executed on capital account Rs.745 Lakh (Previous year Rs. 1384 Lakh). (Advance and other expenditure incurred Rs. 130 Lakh (Previous year Rs.1.23 Lakh)

b. Contingent Liabilities : Export Bills discounted / lodged with the Bank Rs.1363 Lakh (Previous year Rs.3876 Lakh)

c. In respect of Assessment Year 1998-1999, the claim of the company for deduction of proportionate export profits from book profits was allowed by the Income-tax department while completing the original assessment. The same was revised in the reassessment proceedings and the department has raised a demand of Rs.26.12 Lakh and the order raising the demand has been stayed by Madras High Court pursuant to the writ filed by the company. In a similar case the Supreme Court has upheld the principles of claim contested by the Company.

d. In respect of assessment year 2004-05 the Income tax department sought to re-open the assessment U/ s 147 of the Income Tax Act 1961 in respect of claim of depreciation @ 80% in respect of the windmills. However, the company has filed a writ before Hon''ble Madras High Court and the matter is pending. No demand is raised so far. In similar cases, ITAT, Chennai has allowed the appeals in favour of the assessees.

e. The Central Excise department has raised a demand towards service tax of Rs.4.80 Lakh in respect of Freight charges paid by the Company, which was earlier held unconstitutional by Hon''ble Apex Court. The matter is contested before CESTAT, Chennai.

f. The Central Excise department has raised a demand of Rs.7.06 Lakh on account of interest in respect of an Advance License for annual requirement. The matter is stayed by CESTAT Chennai. However the demand is paid by the company to redeem the License.

g. The Central Excise department has raised a demand of Rs.1.09 Lakh and further a penalty of Rs.1.09 Lakh proposing to levy the same in respect of used spares on de-bonding of 100 % EOU and the matter is presently pending before CESTAT Chennai.

h. The Central Excise department has raised a Service Tax demand of Rs.2.12 Lakh, Interest Rs.0.31Lakh and Penalty Rs.0.53 Lakh for payment of commission to Foreign Agents and the matter is presently pending before CESTAT Chennai.

i. The Central Excise department has not accepted claim of Modvat credit of Rs.11.33 Lakh made by the Company in respect of its erstwhile 100% EOU unit and the matter is pending before Madras High Court.

j. The Central Excise department has not accepted claim of Cenvat Credit of Excise duty of Rs.33.80 Lakh made by the Company in respect of capital goods for the reason that during the impugned period cotton yarn was exempted and the matter is presently pending before CESTAT Chennai. However in a similar matter the Gujarat High Court allowed the claim of the assessee.

k. The Central Excise department has not accepted claim of Cenvat Credit of Service Tax of Rs.28.90 Lakh made by the Company in respect of Windmills for the reason that windmills are situated outside the factory and the matter is pending before Madras High Court. In the company''s own case, for a different year, the claim was allowed by Commissioner Central Excise ( Appeals), Madurai.

l. The Sales Tax Department in respect of Assessment Year 1996-97 has raised a demand of Rs.4.96 Lakh for non filing of certain forms and the matter is contested before Appellate Deputy Commissioner (Commercial Taxes), Madurai. The Company has remitted 25% of the disputed tax Rs.1.24 Lakh and for the balance 75% of the disputed tax demand Rs.3.72 Lakh has furnished a bank guarantee.

* Obligation in USD is computed at 8 times of the Duty saved amount, to be fulfilled within a period of 8 years from the date of authorization. In the case of the company the above closing balance obligation in USD 905209.67 is in respect of authorizations obtained during the current financial year. The Obligation fulfilled Authorizations are pending for redemption.

n. In respect of Advance Authorization for import of Raw Material (Modal) the company has to fulfill an export obligation in USD 63917 and in the event of failure to fulfill the prescribed export obligation the company is liable to pay duty amount of Rs.842137 /- (previous year Rs. Nil) along with applicable rate of interest. In the opinion of the board the present level of exports of the company would be sufficient to fulfill the prescribed export obligation fixed under the authorization.

o. The Company has de-bonded one of its units (Unit - II) from 100 % EOU after completion of initial period of 5 Years and after fulfillment of export obligation by achieving Positive NFEP (Net Foreign Exchange) in accordance with EXIM policy. The de-bonding involved payment of duty under EPCG License (for capital goods) and Advance License (For Raw materials imported) Schemes. The de-bonding was completed after obtaining "No Dues Certificate from the Assistant Commissioner, Central Excise, Dindigul and final exit order from the Deputy Commissioner, MEPZ, Chennai.The Export Obligation, for duty discharge, fixed both under EPCG Scheme and advance License Scheme are also fulfilled and the respective licenses are redeemed from JDGFT, Coimbatore. Subsequent to the above fulfillment, the Central Excise Department has raised a Demand of Rs.410 Lakh towards de- bonding of Unit - II and the same is contested by way of writ before Hon''ble Madurai Bench of Madras High Court and the matter is stayed by the High Court.

p. TANGEDCO (Tamilnadu Generation and Distribution Corporation Limited) has raised a demand for self generation tax in respect of electricity generated by windmills amounting to Rs.309 Lakh (Previous year Rs. 90 Lakh) and the matter has been stayed by Madras High court and pursuant to the same TANGEDCO kept the demand in abeyance. TANGEDCO has further raised a demand of Rs. 139 Lakh for cross subsidy in respect of power sourced from outside and the same has been set aside by Madras High court and TANGEDCO has preferred an appeal before Division bench of Madras High Court and the matter is pending. The company has fully provided for these demands.

v. In terms of information available with the company there are 1 (one ) party (Previous Year 3 (three ) parties) who are duly registered under Micro, Small and Medium Enterprises Development Act, 2006 and in respect of whom the amount payable Outstanding as on 31.03.2014 is Rs.16,18,363/ - (Previous year Rs.611023/-) and the same was settled within the agreed dates, which is not more than 45 days from the day of acceptance or deemed acceptance of the goods.

vi. Vehicle maintenance includes cost of expenditure exclusively incurred to provide transport to the employees from their place to work spot Rs.116 Lakh (Previous year Rs.94 Lakh) and staff welfare expenses include quarterly bonus paid amounting to Rs.146 Lakh (Previous year Rs.334 Lakh).

vii. Reversal of Deferred tax liability is on account of timing difference of depreciation amounting to Rs.358 Lakh (Previous year Rs. 287 Lakh ).

ix. Employee Benefits:

a. Company''s Contribution to Provident Fund: Rs.117.01 Lakh (Previous Year Rs. 108.75 Lakh)

b. Statement on Defined Benefit Plan - Gratuity (Covered under LIC Employees Cash Accumulation Scheme). The Following table sets out the funded status of the gratuity plan and the amounts recognized in the Company''s financial statements as at 31st March 2014.


Mar 31, 2013

Notel

Corporate Information

Ambika Cotton Mills Limited is engaged in manufacturing and selling speciality cotton yarn catering to the needs of manufacturers of premium branded shirts and t-shirts. Exports constitute significant portion of the operations. The company operates with total installed spindle capacity of 109872 Spindles of which 100800 Spindles constitutes compact facility housed in four units. The company has installed 27.4 MW wind power capacity of which 25.9 MW is meant for captive consumption of spinning segment. The Spinning Plants are located at Kanniyapuram, Dindigul and Windmills are located in Tirunelveli, Dharapuram and Theni in the State of Tamilnadu.

Note 2

Other Additional Information:

i Commitment and Contingent Liabilities: -

a. Commitment: In respect of contract remains to be executed on capital account Rs.1384 Lakh (Previous year Rs. Nil). (Advance and other expenditure incurred Rs.1.23 Lakh.

Contingent Liabilities:

b. Export Bills discounted / lodged with the Bank Rs.3876/- Lakh (Previous year Rs.3499 Lakh).

c. In respect of Assessment Year 1998-1999, the claim of the company for deduction of proportionate export profits from book profits was allowed by the Income-tax department while completing the original assessment. The same was revised in the reassessment proceedings and the department has raised a demand of Rs.26.12 Lakh and the order raising the demand has been stayed by Madras High Court pursuant to the writ filed by the company. In a similar case the Supreme Court has upheld the principles of claim contested by the Company.

d. In respect of assessment year 2004-05 the department sought to re-open the assessment U/ s 147 of the Act in respect of claim of depreciation @ 80% in respect of the windmills. However, the company has filed the writ before Hon''ble Madras High Court and the matter is pending. No demand is raised so far.

e. The Central Excise department has raised a demand towards service tax of Rs.4.80 Lakh in respect of Freight charges paid by the Company, which was earlier held unconstitutional by Hon''ble Apex Court. The matter is contested before CESTAT, Chennai.

f. The Central Excise department has raised a demand of Rs.7.06 Lakh on account of interest in respect of an Advance License for annual requirement. The matter is stayed by CESTAT Chennai. However the demand is paid by the company to redeem the License.

g. The Central Excise department has raised a demand of Rs.1.09 Lakh and further a penalty of Rs.1.09 Lakh proposing to levy the same in respect of used spares and the matter is presently pending before CESTAT Chennai.

h. The Central Excise department has raised a Service Tax demand of Rs.2.12 Lakh, Interest Rs.0.31 Lakh and Penalty Rs.0.53 Lakh for payment of commission to Foreign Agents and the matter is presently pending before CESTAT Chennai.

i. The Central Excise department has not accepted claim of Modvat credit of Rs.11.33 Lakh made by the Company in respect of its erstwhile 100 % EOU unit and the matter is pending before Madras High Court.

j. The Central Excise department has not accepted claim of Cenvat Credit of Excise duty of Rs.33.80 Lakh made by the Company in respect of capital goods for the reason that during the impugned period cotton yarn was exempted and the matter is presently pending before CESTAT Chennai.

k. The Central Excise department has not accepted claim of Cenvat Credit of Service tax of Rs.28.90 Lakh made by the Company in respect of Windmills for the reason that windmills are situated outside the factory and the matter is pending before Madras High Court.

I. The Central Excise department has not accepted claim of Cenvat Credit of Service tax of Rs.1.87 Lakh together with interest which is not quantified and further levied a penalty of Rs.1.87 Lakh in respect of business auxiliary services for windmills as such windmills are situated outside the factory and the matter is pending before CCE (Appeals), Madurai.

m. The Sales Tax Department in respect of Assessment Year 1996-97 has raised a demand of Rs.4.96 Lakh for non filing of certain forms and the matter is contested before Appellate Deputy Commissioner (Commercial Taxes), Madurai. The Company has remitted 25% of the disputed tax Rs.1.24 Lakh and for the balance 75% of the disputed tax demand Rs.3.72 Lakh has furnished a bank guarantee.

n During the year the company had obtained EPCG Licenses and fulfilled Export Obligation of USD 1834770 (duty amount Rs.134 Lakh) for Import of capital goods and spares and same are in the process of redemption. The company has to fulfill Export Obligation in USD 1654624 involving duty amount of Rs. 115 Lakh computed at eight times of the duty saved amount within a period of eight years from the date of License.

o. The Company has de-bonded one of its units (Unit-II) from 100% EOU after completion of initial period of 5 years and after fulfillment of export obligation by achieving positive NFEP (Net Foreign Exchange) in accordance with the EXIM Policy. The de-bonding involved payment of duty under EPCG License (for capital goods) and Advance License (for Raw materials imported) schemes. The de-bonding was completed after obtaining ''No Dues Certificate1 from Assistant Commissioner, Central Excise, Dindigul and final exit order from Deputy Commissioner, MEPZ, Chennai. The Export obligation, for duty discharge, fixed both under EPCG Scheme and Advance License Scheme are also fulfilled and the respective licenses are redeemed from JDGFT, Coimbatore. Subsequent to the above fulfillment, the Central Excise Department has raised a demand of Rs.410 Lakh towards de-bonding of Unit II and the same is contested by way of writ before Hon''ble Madurai Bench of Madras High Court and the matter is stayed by the High Court.

ii. In terms of information available with the company there are 3 (Three) parties (Previous Year 4 (four) parties) who are duly registered under Micro, Small and Medium Enterprises Development Act, 2006 and in respect of whom the amount payable Outstanding as on 31.03.2013 is Rs.611023/- (Previous year Rs.449048/-) and the same are settled within the agreed dates, which is not more than 45 days from the day of acceptance or deemed acceptance of the goods.

iii. Vehicle maintenance includes cost of expenditure exclusively incurred to provide transport to the employees from their place to work spot Rs.94 Lakh (Previous year Rs.74 Lakh) and staff welfare expenses include quarterly bonus paid amounting to Rs.334 Lakh (Previous year Rs.165 Lakh)

iv. Reversal of Deferred tax liability is on account of timing difference of depreciation amounting to Rs.287 Lakh (Previous year Rs. Nil)

v. Previous year figures have been re-grouped and re-classified wherever necessary.

vi. Figures are rounded to the nearest rupee.


Mar 31, 2012

I, Commitment and Contingent Liabilities:-_

a. Commitment : In respect of contract remains to be executed on capital account Rs. Nil (Previous year Rs.142/- Lakh net of advance and other expenditure incurred Rs.58/- Lakh).

Contingent Liabilities :

b. Letter of Credits of Export discounted with the Bank Rs,3499/- Lakh (Previous year Rs.570 Lakh)

c. In respect of Assessment Year 1998-1999, the claim of the company for deduction of proportionate export profits from book profits was allowed by the Income-tax department while completing the original assessment. The same was revised in the reassessment proceedings and the department raised a demand of Rs.26.12 Lakh and the order raising the demand has Peen stayed by Madras High Court pursuant to the writ filed by the company. In a similar case the Supreme Court has upheld the principles of claim contested by the Company.

d. In respect of Import of Raw materials, the customs duty was demanded at 10% at the time of import as against 5% in respect of prior contracts entered into before the notification of raising the rate of duty from 5% to 10% and the difference duty amount arising Rs.30.12 Lakh has been stayed by Madras High Court. However pending disposal of the writ, the company has provided a Bank Guarantee towards the same by depositing a sum of Rs.30.00 Lakh.

e. The Central Excise department has raised a demand towards service tax of Rs.4.80 Lakh in respect of Freight charges paid by the Company, which was earlier held unconstitutional by

Hon'ble Apex Court. The matter is contested before CESTAT, Chennai._

f. The Central Excise department has raised a demand of Rs.7.06 Lakh on account of interest in respect of an Advance License for annual requirement. The matter is stayed by CESTAT Chennai. However the demand is paid by the company to redeem the Licence.

g. The Central Excise department has raised a demand of Rs.l .09 Lakh and further a penalty of Rs.l.09 Lakh proposing to levy the same in respect of used spares and the matter is presently pending before CESTAT Chennai.

h. The Central Excise department has raised a Service Tax demand of Rs.2.12 Lakh, Interest Rs.0.31 Lakh and Penalty Rs.0.53 Lakh for payment of commission to Foreign Agents and the matter is presently pending before CESTAT Chennai.

i. The Central Excise department has not accepted claim of Modvat credit of Rs.11.33 Lakhs made by the Company in respect of its erstwhile 100% EOU unit and the matter is pending before Madras High Court.

j. The Central Excise department has not accepted claim of Cenvat Credit of Excise duty of Rs.31.02 Lakhs made by the Company for the reason during the impugned period cotton yarn was exempted and the matter is presently pending before CESTAT Chennai.

k. The Central Excise department has not accepted claim of Cenvat Credit of Service tax of Rs.28.90 Lakhs made by the Company in respect of Windmills for the reason that windmills are situated outside the factory and the matter is pending before Madras High Court._

l. In respect of the EPCG License obtained and utilized for Import of capital goods, the company has fulfilled its Export Obligation in USD computed at eight times of the duty saved amount within a period of eight years from the date of License and the licenses are in the process of filing with the appropriate authority'for redemption. The duty saved amount, in respect of which Export Obligation remains to be fulfilled as on 31.03.2012 amounts to Rs. Nil. (Previous year Rs. 60 Lakh). The EPCG licenses are to be filed with the appropriate authority for redemption which involves duty saved amount of Rs.l .53 Crores.

m. In respect of Advance License utilized up to 31.03.2012 for Import of Raw Materials, the company has to fulfill an Export Obligation in USD 34083 (Previous year USD 34083) and in the event of failure to fulfill the prescribed Export Obligation the Company is liable to pay duty amount to the extent of Rs. 2.56 Lakh (Previous year 2.56 Lakh) along with applicable rate of interest. In the opinion of the Board the present level of exports of the company would be sufficient to fulfill the prescribed export obligation fixed under the authorizations.

n. The Company has de-bonded one of its units (Unit-ll) from 100% EOU after completion of initial period of 5 years and after fulfillment of export obligation by achieving positive NFEP (Net Foreign Exchange) in accordance with the EXIM Policy. The de-bonding involved payment of duty under EPCG License (for capital goods) and Advance License (for Raw materials imported) schemes. The de-bonding was completed after obtaining 'No Dues Certificate1 from Assistant Commissioner, Central Excise, Dindigul and final exit order from Deputy Commissioner, MEPZ, Chennai. The

Export obligation, for duty discharge, fixed both under EPCG Scheme and Advance License Scheme are also fulfilled and the respective licenses are redeemed from JDGFT, Coimbatore. Subsequent to the above fulfillment, the Central Excise Department has raised a demand of Rs.410 Lakh towards de-bonding of Unit II and the same is contested by way of writ before Hon'ble Madurai Bench of Madras High Court and the matter is stayed by the High Court.

ii. Interest capitalized in respect of the projects completed for the year amounted to Rs.O Lakh (Previous year Rs. 95 Lakh)

iii. Related Party Transactions & Disclosure : Salary to Mrs. Bhavya Chandran Rs. 1.20 Lakh (Previous Year Rs.1 .20 Lakh) included under salaries and wages

iv. In terms of information available with the company there are 4 (Four) parties (Previous Year 2 (two) parties) who are duly registered under Micro, Small and Medium Enterprises Development Act, 2006 and in respect of whom the amount payable Outstanding as on 31.03.2012 is Rs.449048/- (Previous year Rs.1 ,32,425/-) and the same are settled within the agreed dates, which is not more than 45 days from the day of acceptance or deemed acceptance of the goods.

v. Vehicle maintenance includes cost of expenditure exclusively incurred to provide transport to the employees from their place to work spot Rs.74 Lakh (Previous year Rs.68 Lakh) and staff welfare expenses include quarterly production incentive paid amounting to Rs.l65 Lakh (Previous year Rs.322 Lakh)

vi. Deferred tax liability is on account of timing difference of depreciation amounting to Rs.l 1 Lakh (Previous year Rs. 1456 Lakh)

vii. Employee Benefits:

a. Company's Contribution to Provident Fund: Rs.l 13.53 Lakh (Previous Year Rs. 61.48 Lakh)

b. Statement on Definea Benefit Plan - Gratuity (Covered under LIC Employees Cash Accumulation Scheme)

The Following table sets out the funded status of the gratuity plan and the amounts recognized in the Company's financial statements as at 31st March 2012

viii. Previous year figures have been re-grouped and re-classified wherever necessary.

ix. Figures are rounded to the nearest rupee.


Mar 31, 2011

1. Contingent Liability: -

a. Contingent Liability in respect of contract remains to be executed on capital account amounts to Rs. 142/-Lakh (Previous year Rs. 7392/- Lakh) net of advance and other expenditure incurred Rs 58/- Lakh so far as up to 31,03.2011 (Previous year Rs.67/- Lakh)

b. Letter of Credits of Export discounted with the Bank Rs,570/- Lakh (Previous year Rs. 0 Lakh)

c. In respect of Assessment Year 1998-1999, the claim of the company for deduction of proportionate export profits from book profits was allowed by the Income-tax department while completing the original assessment. The same was revised in the reassessment proceedings and the department raised a demand of Rs.26.12 Lakh and the order raising the demand has been stayed by Madras High Court pursuant to the writ filed by the company. In a similar case the Supreme Court has upheld the principles of claim contested by the Company.

d. In respect of Import of Raw materials, the customs duty was demanded at 10% at the time of import as against 5% in respect of prior contracts entered into before the notification of raising the rate of duty from 5% to 10% and the difference duty amount arising Rs.30.12 Lakh has been stayed by Madras High Court. However pending disposal of the writ, the company has provided a Bank Guarantee towards the same by depositing a sum of Rs.30.00 Lakh.

e. The Central Excise department has raised a demand towards service tax of Rs.4.80 Lakh in respect of Freight charges paid by the Company, which was earlier held unconstitutional by Hon'ble Apex Court.

The matter is contested before Commissioner Central Excise (Appeals), Madurai,

f. The Central Excise department has raised a demand of Rs.7.06 Lakh on account of interest in respect of an Advance License for annual requirement. The matter is stayed by CESTAT Chennai. However the demand is paid by the company to redeem the Licence.

g. The Central Excise department has raised a demand of Rs.1.09 Lakh and further a penalty of Rs.1.09 Lakh proposing to levy the same in respect of used spares and the matter is presently pending before CESTAT Chennai.

h. The Central Excise department has raised a Service Tax demand of Rs.2.12 Lakh, Interest Rs.0.31 Lakh and Penalty Rs.0.53 Lakh for payment of commission to Foreign Agents and the matter is presently pending before CESTAT Chennai

i. The Central Excise department has raised a Service Tax demand of Rs.0.31 Lakh and Penalty Rs.0.36 Lakh for payment of Licence Fee and the matter is presently pending before Commissioner of Central Excise (Appeals) Madurai.

j. In respect of the EPCG License obtained and utilized for Import of capital goods, the company has to fulfill Export Obligation in USD computed at eight times of the duty saved amount within a period of eight years from the date of License and in the event of failure to fulfill the prescribed Export Obligation the Company is liable to pay duty amount along with applicable rate of interest. The duty saved amount, in respect of which Export Obligation remains to be fulfilled as on 31.03.2011 amounts to Rs. 60 Lakh. (Previous year Rs. 1246 Lakh). In the opinion of the Board the present level of exports of the company would be sufficient to fulfill the prescribed export obligation fixed under the authorizations.

k. In respect of Advance License utilised up to 31.03.2011 for Import of Raw Materials, the company has to fulfill an Export Obligation in USD 0.33 Lakh (Previous year USD 75,84,646) and in the event of failure to fulfill the prescribed Export Obligation the Company is liable to pay duty amount to the extent of Rs. 2.56 Lakh (Previous year 452 Lakh) along with applicable rate of interest. In the opinion of the Board the present level of exports of the company would be sufficient to fulfill the prescribed export obligation fixed under the authorizations.

l. The Company has de-bonded one of its units (Unit-ll ) from 100% EOU after completion of initial period of 5 years and after fulfillment of export obligation by achieving positive NFEP (Net Foreign Exchange) in accordance with the EXIM Policy. The de-bonding involved payment of duty under EPCG License (for capital goods) and Advance License (for Raw materials imported) schemes. The de-bonding was completed after obtaining 'No Dues Certificate1 from Assistant Commissioner, Central Excise, Dindigul and final exit order from Deputy Commissioner, MEPZ, Chennai. The Export obligation, for duty discharge, fixed both under EPCG Scheme and Advance License Scheme are also fulfilled and the respective licenses are redeemed from JDGFT, Coimbatore. Subsequent to the above fulfillment, the Central Excise Department has raised a demand of Rs.410 Lakh towards de-bonding of Unit II and the same is contested by way of writ before Hon'ble Madurai Bench of Madras High Court and the matter is stayed by the High Court.

m. The Regional Provident Fund Commissioner, Madurai has raised a demand of Rs. 40.26 Lakh in respect of apprentices appointed under standing orders duly certified by the prescribed authority and such apprentices are not required to be enrolled as members of Employees' Provident Fund & Miscellaneous Provision Act, 1952. However this is not acceptable to the Provident Fund department and the above demand was raised. The company has contested the matter before EPF Appellate Tribunal, New Delhi and the matter stands stayed by the Tribunal.

2. Interest capitalized in respect of the projects completed for the year amounted to Rs.95 Lakh (Previous year Rs. 0 Lakh)

3. Related Party Transactions & Disclosure : Salary to Ms. Bhayya Chandran Rs. 1.20 Lakh (Previous Year Rs.l .20 Lakh) included under salaries and wages

4. Total quantity of Cotton traded 3.26 Lakh Kgs. (Previous year 0 Lakh Kgs.)

5 In terms of information available with the company there are 2 (two) parties (Previous Year 2 (two) parties) who are duly registered under Micro, Small and Medium enterprises development Act, 2006 and in respect of whom the amount payable Outstanding as on 31.03.2011 is Rs. 1,32,425/- (Previous year Rs. 78,901/-) and the same are settled within the agreed dates, which is not more than 45 days from the day of acceptance or deemed acceptance of the goods.

6 Vehicle maintenance includes cost of expenditure incurred to provide transport to the employees from their place to work spot Rs. 68 Lakh (Previous year Rs. 56 Lakh) and staff welfare expenses include quarterly production incentive paid amounting to Rs. 322 Lakh (Previous year Rs. 63 Lakh).

7 Deferred tax liability is on account of timing difference of depreciation amounting to Rs.l 456 Lakh (previous year Rs. 113 Lakh)

8. Employee Benefits:

a. Company's Contribution to Provident Fund: Rs. 61.48 Lakh (Previous Year Rs.36.76 Lakh)

P. Statement on Defined Benefit Plan - Gratuity (Covered under LIC Employees Cash Accumulation Scheme)

The Following taPle sets out the funded status of the gratuity plan and the amounts recognized in the Company's financial statements as at 31st March 2011

9. Previous year figures have been re-grouped, re-classified and re-calculated wherever necessary.

10. Figures are rounded to the nearest rupee.


Mar 31, 2010

1. Contingent Liability: -

a. Contingent Liability in respect of contract remains to be executed on capital account amounts to Rs.7392/-Lakh (Previous year Rs. 0/- Lakh) net of advance and other expenditure incurred Rs 67/- Lakh so far as up to 31.03.2010 (Previous year Rs.O/- Lakh)

b. Letter of Credits of Export discounted with the Bank Rs.O Lakh (Previous year Rs. 1110 Lakh)

c. In respect of Assessment Year 1998-1999, the claim of the company for deduction of proportionate export profits from book profits was allowed by the Income-tax department while completing the original assessment, The same was revised in the reassessment proceedings and the department has raised a demand of Rs.26.12 Lakh and the order raising the demand has been stayed by Madras High Court pursuant to the writ filed by the company,

d. In respect of Import of Raw materials, the customs duty was demanded at 10% at the time of import as against 5% in respect of prior contracts entered into before the notification of raising the rate of duty from 5% to 10% and the difference duty amount arising Rs.30,12 Lakh has been stayed by Madras High Court. However pending disposal of the writ, the company has provided a Bank Guarantee towards the same by depositing a sum of Rs.30.00 Lakh,

e. The Central Excise department has raised a demand towards service tax of Rs.4.80 Lakh in respect of Freight charges paid by the Company, which was held unconstitutional by Honble Apex Court. As the company has not collected any service tax from the providers of transport services and accordingly not liable to make any payment towards the same. The Honble High Court Madras has stayed the matter,

f. The Central Excise department has raised a demand of Rs.7,06 Lakh on account of interest in respect of an Advance License for annual requirement. The matter is stayed by CESTAT Chennai,

g. In respect of the EPCG License obtained and utilized for Import of capital goods, the company has to fulfill Export Obligation in USD computed at eight times of the duty saved amount within a period of eight years from the date of License and in the event of failure to fulfill the prescribed Export Obligation the Company is liable to pay duty amount along with applicable rate of interest. The duty saved amount, in respect of which Export Obligation remains to be fulfilled as on 31.03,2010 amounts to Rs.l 246 Lakh. (Previous year Rs. 2323 Lakh). In the opinion of the Board the present level of exports of the company would be sufficient to fulfill the prescribed export obligation fixed under the authorizations.

h. In respect of Advance License utilised up to 31,03.2010 for Import of Raw Materials, the company has to fulfill an Export Obligation in USD 7584646 (Previous year USD 9623068) and in the event of failure to fulfill the prescribed Export Obligation the Company is liable to pay duty amount to the extent of Rs, 452 Lakh (Previous year 575 Lakh) along with applicable rate of interest, In the opinion of the Board the present level of exports of the company would be sufficient to fulfill the prescribed export obligation fixed under the authorizations,

i. The Company has de-bonded one of its units (Unit-ll) from 100% EOU after completion of initial period of 5 years and after fulfillment of export obligation by achieving positive NFEP (Net Foreign Exchange;) in accordance with the EXIM Policy. The de-bonding involved payment of duty under EPCG License (for capital goods) and Advance License (for Raw materials imported) schemes. The de-bonding was completed after obtaining No Dues Certificate from Assistant Commissioner, Central Excise, Dindigul and final exit order from Deputy Commissioner, MEPZ, Chennai. The Export obligation, for duty discharge, fixed both under EPCG Scheme and Advance License Scheme are also fulfilled and the respective licenses are redeemed from JDGFT, Coimbatore. Subsequent to the above fulfillment, the Central Excise Department has raised a demand of Rs.410 Lakh towards de-bonding of Unit II and the same is contested by way of writ before Honble Madurai Bench of Madras High Court and the matter is stayed by the High Court.

j. The Regional Provident Fund Commissioner, Madurai has raised a demand of Rs. 40 Lakh in respect of apprentices appointed under standing orders duly certified by the prescribed authority and such apprentices are not required to be enrolled as members of Employees Provident Fund & Miscellaneous Provision Act, 1952. However this is not acceptable to the Provident Fund department and the above demand was raised. The company has contested the matter before EPF Appellate Tribunal, New Delhi and the matter stands stayed by the tribunal.

2, Interest capitalized in respect of the projects completed for the year amounted to Rs.O Lakh (Previous year Rs. 65 Lakh)

3. Related Party Transactions & Disclosure : Salary to Ms. Bhavya Chondran Rs. 1.20 Lakh (Previous Year Rs.l .20 Lakh) included under salaries and wages

4, (i). Depreciation in respect of Wind Mills was recomputed considering the life of the assets as 13.33 years instead of 20 years. Consequent to this change in accounting estimate the additional depreciation provided in the accounts amounted to Rs,258 Lakh. This change in accounting estimate would not amount to Change in accounting policy in the matter of calculation of depreciation.

(ii). The Company is entitled to CDM Benefits in respect of Wind Mills, the receipt of which was uncertain in the earlier year. Accordingly this receipt was recognized by the company on the basis "if and when received", Consequent to cessation of uncertainty of receipt, the amount, for the period from 01.07.2009 to 31.03.2010, is quantified and recognized in respect of the said period amounting to Rs.54 Lakh, This recognition of CDM benefits receivable also would not fall within the realm of change in accounting policy as the said receipt per-se is not covered under Accounting Standard 9(AS9) relating to revenue recognition,

(iii) The prior period expenses represents excess provision reversed relating to TUFS interest subsidy amounting to Rs.73,47,402/- and Wind Energy Operation and Maintenance expenses relating to earlier year amounting to Rs.l 6,43,070/-

5. In terms of information available with the company there are 2 (two) parties (Previous Year 3 (three) parties) who are duly registered under Micro, Small and Medium enterprises development Act 2006 and in respect of whom the amount payable Outstanding as on 31,03,2010 is Rs,78901/- (Previous year Rs,81217/-) and the same are settled within the agreed dates, which is not more than 45 days from the day of acceptance or deemed acceptance of the goods.

6 Vehicle maintenance includes cost of expenditure exclusively incurred to provide transport to the workers from their place to work spot Rs 56 Lakh ( Previous year Rs, 31 Lakh )

7 Deferred tax liability is on account of timing difference of depreciation amounting to Rs.ll 3 Lakh ( previous year Rs.373 Lakh)

8. Employee Benefits:

a. Companys Contribution to Provident Fund: Rs. 36,76 Lakh (Previous Year Rs.l 7.34 Lakh)

b. Statement on Defined Benefit Plan - Gratuity (Covered under LIC Employees Cash Accumulation Scheme)

9. Previous year figures have been re-grouped and re-classified wherever necessary.

10. Figures are rounded to the nearest rupee.

 
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