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Notes to Accounts of AYM Syntex Ltd.

Mar 31, 2015

1. Corporate information

Welspun Syntex Limited is a Company incorporated under the Companies Act, 1956. Welspun Syntex Limited was established in 1983. Since its inception, it has grown manifold and today is amongst the largest manufacturers and exporters of Polyester Texturised Filament Yarn, Nylon Filament Yarn and Bulk Continuous Filament Yarn from India.

2. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. All issued shares rank pari-passu and have same voting rights per share. The Company declares and pays dividend in Indian Rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of the equity shares will be entitled to receive remaining assets of the company, after distribution of preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. During the year, impairment loss aggregating Rs. 114.03 lacs (Rs. 4.19 lacs) has been reversed consequent to the relevant fixed assets being sold.

4. Contingent liabilities not provided for

a) Guarantees given by banks Rs. 698.86 lacs (Rs. 450.93 lacs)

b) Disputed Indirect taxes Rs. 1,343.72 lacs (Rs. 1,318.72 lacs)

c) Disputed direct taxes Rs. 46.86 lacs (Rs. 4.96 lacs)

d) Unexpired letters of credit Rs. 1,604.21 lacs (Rs. 802.66 lacs).

e) Custom duty on pending export obligation for import under advance license Rs. 116.37 lacs (Rs. 144.88 lacs)

f) The accumulated dividend of Rs. Nil (Rs. 340.45 lacs) payable on redeemable cumulative / optionally convertible cumulative preference shares

g) Claims against the Company not acknowledged as debt Rs. 139.85 lacs (Rs. 139.85 lacs)

h) Bills receivable discounted Rs. 1,702.54 lacs (Rs. 1,788.67 lacs)

5. Capital commitment not provided for Rs. 1,764.62 lacs (Rs. 153.33 lacs) net of advances.

29. Freehold Land includes Rs. 7.73 lacs (Rs. 7.73 lacs) and development expenses of Rs. 14.98 lacs (Rs. 14.98 lacs) incurred on such land capitalized in the year 2002-2003 for which the Company holds no title. The Company is in possession of the said land without any interference for more than twelve years and is in the process of executing the documents to transfer the said land in its name.

6. Taxation

a) Provision for current tax for the year has been made under Minimum Alternate Tax (MAT) as per the provisions of Section 115JB of the Income-Tax Act, 1961. In accordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income-Tax Act, 1961 issued by the Institute of Chartered Accountants of India (ICAI), the Company has recognized the MAT credit entitlement of Rs. 906.49 lacs (Rs. 430.27 lacs) as an asset under the Note "Loans and Advances" and has credited the same to the statement of profit and loss under "Provision for Taxation".

b) In accordance with the Accounting Standard - 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax assets and liabilities should be recognized for all timing differences in accordance with the said standard. However, considering the present financial position of the Company and requirement of the Accounting Standard regarding certainty/virtual certainty, deferred tax asset has not been created. The same will be reassessed at a subsequent balance sheet date and will be accounted for in the year of certainty / virtual certainty in accordance with the aforesaid accounting standard.

7. Operating Leases

The Company has taken on lease offices and residential facilities under operating lease agreements that are renewable on periodic basis at the option of both the lessor and the lessee. The initial tenure of lease is generally for six months to thirty six months.

Minimum rental payments are required to be made under the operating leases that have initially or remaining non-cancelable lease term in excess of one year as at 31 March 2015 as per the contracts are as under:

* Not later than one-year Rs. 70.39 lacs (Rs. 70.39 lacs)

* Later than one year but not later than five years Rs. Nil (Rs. 40.84 lacs)

The aggregate rental expenses of all the leases for the year are Rs. 278.64 lacs (Rs. 158.59 lacs).

8. Disclosures pursuant to adoption of Accounting Standard 15 (Revised 2005) Employee Benefits

The Employees Gratuity and Leave Encashment schemes are defined benefit plans. The present value of obligation is based on actuarial valuation using the projected unit credit method.

9. Related party disclosures

As per Accounting Standard - 18, the disclosure of transactions with related parties as defined in the Accounting Standard are given below:

a) Holding company Krishiraj Trading Limited

b) Directors /Key Management Personnel

Non-executive Chairman B. K. Goenka

Executive Director B.A. Kale

Director R.R. Mandawewala

Chief Finance Officer Bhaskar Sen

Company Secretary Kaushik Kapasi

c) Other related parties with whom transactions have taken place during the year or balances outstanding as on the last day of the year.

Welspun India Limited, Welspun Corp Limited, Welspun Steel Limited, Welspun Wintex Limited, Welspun Realty Private Limited, Goodvalue Polyplast Limited, Welspun Fintrade Limited, Mertz Securities Limited, Vipuna Trading Limited, Welspun USA Inc, Welspun Infra Developers Private Limited, Welspun Logistics Limited, Welspun Maxsteel Limited, Welspun Captive Power Generation Limited and Welspun Investments and Commercial Limited.

10. Foreign exchange

a) The Companies (Accounting Standards) Amendment Rules 2011 has amended the provision of AS-11 related to "The effects of changes in Foreign Exchange Rates" vide notification dated 11 May 2011 (as amended on 29 December 2011 and further clarification dated 9 August 2012) issued by the Ministry of Corporate Affairs. Accordingly, the Company has adjusted exchange difference loss amounting to Rs. 206.70 lacs (loss of Rs. 511.64 lacs) and Rs. 86.23 lacs (gain of Rs. 5.75 lacs) to the cost of fixed assets and capital work-in-progress respectively.

11. Segment information

a) The Company operates in a single primary business segment i. e. manufacture of Synthetic Yarn and hence, there are no reportable segments as per Accounting Standard (AS) - 17 "Segment Reporting".

b) Information about Secondary-Geographical segment.

Note: The segment revenue in the geographical segments considered for disclosure is as follows:

* Revenue within India includes sales to customers located within India and earnings in India.

* Revenue outside India includes sales to customers located outside India, earnings outside India.

* Capital expenditure also includes expenditure incurred on capital work in progress and capital advances.

12. a) Balances of certain debtors, creditors and advance are subject to confirmation/reconciliation, if any. The management does not expect any material difference affecting the financial statements on such reconciliation / adjustments except otherwise stated.

c) In the opinion of management, current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet. The provision for expenses and all known liabilities is adequate and not in excess of the amount reasonably stated.

13. Corporate Social Responsibility (CSR)

As per section 135 of the Companies Act, 2013, a CSR Committee has been formed by the Company. The Company is required to spend Rs. 31.38 lacs and has spent Rs. 33.91 lacs on activities specified in Schedule VII of the Companies Act, 2013. The entire amount has been paid during the year.

14. Information required under section 186(4) of the Companies Act, 2013

a) Loans, guarantees and securities given - The Company has not given any loans, guarantees or securities during the year.

b) Investments made - There are no investments other than as disclosed in Note 11 Non-current investments and Note 13 Current investments.

15. Previous year's figures have been regrouped/reclassified/recasted wherever necessary to correspond with the current year's classifications/ disclosures. Figures in brackets pertain to the previous year.


Mar 31, 2014

1. Corporate information

Welspun Syntex Limited is a Company incorporated under the Companies Act, 1956. Welspun Syntex Limited was established in 1983. Since its inception, it has grown manifold and today is amongst the largest manufacturers and exporters of Polyester Texturised Filament Yarn, Nylon Filament Yarn and Bulk Continuous Filament Yarn from India.

2. During the year, impairment loss aggregating Rs. 4.19 lacs (Rs. 4.35 lacs) has been reversed consequent to sale of the relevant fixed assets.

3. Contingent liabilities not provided for

(a) Guarantees given by banks Rs. 450.93 lacs (Rs. 432.52 lacs)

(b) Disputed Indirect taxes Rs. 1318.72 lacs (Rs. 1396.25 lacs)

(c) Disputed direct taxes Rs. 4.96 lacs (Rs. 1086.78 lacs)

(d) Unexpired letters of credit Rs. 7837.87 lacs (Rs. 10827.85 lacs).

(e) Custom duty on pending export obligation for import under advance license Rs. 144.88 lacs (Rs. 136.29 lacs).

(f) The accumulated dividend of Rs. 340.45 lacs (Rs.1560.45 lacs) payable on redeemable cumulative / optionally convertible cumulative preference shares.

(g) Claims against the Company not acknowledged as debt Rs. 139.85 lacs (Rs. 139.85 lacs) (h) Bills receivable discounted Rs. 1788.67 lacs (Rs. 1847.21 lacs)

4. Capital commitment not provided for Rs. 153.33 lacs (Rs. 527.76 lacs) net of advances.

5. Current Liabilities include cheques overdrawn to the tune of Rs. Nil (Rs. 666.43 lacs).

6. Freehold Land includes Rs. 7.73 lacs (Rs. 22.34 lacs) and development expenses of Rs. 14.98 lacs (Rs. 92.12 lacs) incurred on such land capitalized in the year 2002-2003 for which the Company holds no title.

7. Taxation

a) Provision for current tax for the year has been made under Minimum Alternate Tax (MAT) as per the provisions of Section 115JB of the Income-Tax Act, 1961. In accordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income-Tax Act, 1961 issued by the Institute of Chartered Accountants of India (ICAI), the Company has recognized the MAT credit entitlement of Rs. 430.27 lacs (Rs. 318.19 lacs) as an asset under the Note "Loans and Advances" and has credited the same to the statement of Profit and loss under "Provision for Taxation".

b) In accordance with the Accounting Standard - 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax assets and liabilities should be recognized for all timing differences in accordance with the said standard. However, considering the present financial position of the Company and requirement of the Accounting Standard regarding certainty/virtual certainty, deferred tax asset has not been created. The same will be reassessed at a subsequent balance sheet date and will be accounted for in the year of certainty/virtual certainty in accordance with the aforesaid accounting standard.

8. Operating Leases

The Company has taken on lease offices and residential facilities under operating lease agreements that are renewable on periodic basis at the option of both the lessor and the lessee. The initial tenure of lease is generally for eleven months to thirty six months.

Minimum rental payments are required to be made under the operating leases that have initially or remaining non-cancelable lease term in excess of one year as at 31 March 2014 as per the contracts are as under:

- Not later than one-year Rs. 70.39 lacs (Rs. 88.20 lacs)

- Later than one year but not later than five years Rs. 40.84 lacs (Rs. 352.80 lacs)

- Later than five years Rs.Nil (Rs. 264.60 lacs)

The aggregate rental expenses of all the leases for the year are Rs. 158.59 lacs (Rs.113.24 lacs).

9. Disclosures pursuant to adoption of Accounting Standard 15 (Revised 2005) "Employee benefits"

The employees gratuity and leave encashment schemes are Defined benefit plans. The present value of obligation is based on actuarial valuation using the projected unit credit method.

Note: Provision for post retirement benefits which are based on actuarial valuation done on an overall company basis are excluded from above.

10. Foreign Exchange Differences

a) The Companies (Accounting Standards) Amendment Rules 2011 has amended the provision of AS-11 related to "The effects of changes in Foreign Exchange Rates" vide notifcation dated 11 May 2011 (as amended on 29 December 2011 and further clarifcation dated 9 August 2012) issued by the Ministry of Corporate Affairs. Accordingly, the Company has adjusted exchange difference loss amounting to Rs. 511.64 lacs (loss of Rs. 118.55 lacs) to the cost of fixed assets and gain of Rs. 5.75 lacs (Rs. 69.05 lacs) to capital work-in-progress. Exchange difference loss of Rs. Nil (Rs. 1.86 lacs) is transferred to "Foreign currency monetary item translation difference account" to be amortized over the balance period of such long term liabilities. Out of the "Foreign currency monetary item translation difference account", outstanding exchange loss of Rs. 1.10 lacs (Rs. 0.76 lacs ) has been adjusted in the current year and loss of Rs. Nil (Rs. 1.10 lacs) has been carried over and disclosed under Shareholders'' funds.

b) The Company is exposed to various financial risks, most of which relate to changes in exchange rates, interest rate etc. The Company hedges risks of the aforesaid nature using combination of forward contracts, options and swaps etc. The outstanding foreign currency derivative contracts as at 31 March 2014 are as follows:

11. Segment Reporting

a) The Company operates in a single primary business segment i.e. manufacture of Synthetic yarn and hence, there are no reportable segments as per Accounting Standard (AS) - 17 "Segment Reporting".

12. a) Balances of certain debtors, creditors and advances are subject to confirmation/reconciliation, if any. The management does not expect any material difference affecting the financial statements on such reconciliation / adjustments except otherwise stated.

b) In the opinion of management, current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet. The provision for expenses and all known liabilities is adequate and not in excess of the amount reasonably stated.

13. Previous year''s figures have been regrouped/reclassified/recasted wherever necessary to correspond with the current year''s classifications/disclosures.


Mar 31, 2013

1. Corporate information

Welspun Syntex Limited is a Company incorporated under the Companies Act, 1956. Welspun Syntex Limited was established in 1983. Since its inception, it has grown manifold and today is amongst the largest manufacturers and exporters of Polyester Texturised Filament Yarn, Nylon Filament Yarn from India.

2. During the year, impairment loss aggregating Rs. 4.35 lacs (Rs. 78.87 lacs) has been reversed consequent to the relevant fixed assets being sold.

3. Contingent liabilities not provided for

a) Guarantees given by banks Rs. 432.52 lacs (Rs. 331.26 lacs)

b) Disputed Indirect taxes Rs. 1396.25 lacs (Rs. 1195.19 lacs)

c) Disputed Direct taxes* Rs. 1086.78 lacs (Rs. 4.95 lacs)

* Income tax demands mainly include appeals filed by the Company before appellate authorities against the disallowance of interest paid on borrowed funds. The management is of the opinion that its tax position will be sustained / decided in its favour and hence no provision is considered necessary at this stage.

d) Unexpired Letters of Credit Rs. 10827.85 lacs (Rs. 6936.33 lacs).

e) Custom Duty on pending Export obligation for import under Advance License Rs. 136.29 lacs (Rs. 111.12 lacs).

f) The accumulated dividend of Rs. 1560.45 lacs (Rs. 880.85 lacs) payable on Redeemable Cumulative / Optionally Convertible Cumulative Preference Shares.

g) Claims against the Company not acknowledged as debt Rs. 139.85 lacs (Rs. 139.85 lacs) h) Bills receivable discounted Rs. 1847.21 lacs (Rs. 1239.29 lacs)

4. Capital commitment not provided for Rs. 527.76 lacs (Rs. 2052.36 lacs) net of advances.

5. Current Liabilities include cheques overdrawn to the tune of Rs. 666.43 lacs (Rs. 502.94 lacs).

6. Micro, Small and Medium Enterprises

The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at 31 March 2013. The disclosure pursuant to the said Act is as under:

The above information and that given in Note - 8 "Trade Payables" regarding Micro, Small and Medium Enterprises has been determined to the extent such parties are identified on the basis of the information available with the Company.

7. Freehold Land includes Rs.22.34 lacs (Rs.27.85 lacs) and development expenses of Rs. 92.12 lacs (Rs. 122.87 lacs) incurred on such land capitalized in the year 2002-2003 for which the Company holds no title.

8. Taxation

a) Provision for current tax for the year has been made under Minimum Alternate Tax (MAT) as per the provisions of Section 115JB of the Income-Tax Act, 1961. In accordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income-Tax Act, 1961 issued by the Institute of Chartered Accountants of India (ICAI), the Company has recognized the MAT credit entitlement of Rs. 318.19 lacs (Rs. 231.36 lacs) as an asset under the Note "Loans and Advances" and has credited the same to the statement of profit and loss under "Provision for Taxation".

b) In accordance with the Accounting Standard - 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax assets and liabilities should be recognized for all timing differences in accordance with the said standard. However, considering the present financial position of the Company and requirement of the Accounting Standard regarding certainty / virtual certainty, the same has not been provided. The same will be reassessed at a subsequent balance sheet date and will be accounted for in the year of certainty / virtual certainty in accordance with the aforesaid accounting standard.

9. Operating Leases

The Company has taken on lease offices and residential facilities under operating lease agreements that are renewable on periodic basis at the option of both the lessor and the lessee. The initial tenure of lease is generally for eleven months to one hundred eight months.

Minimum rental payments are required to be made under the operating leases that have initially or remaining non-cancelable lease term in excess of one year as at 31 March 2013 as per the contracts are as under:

- Not later than one-year Rs. 88.20 lacs (Rs. 73.50 lacs)

- Later than one year but not later than five years Rs. 352.80 lacs (Rs. 352.80 lacs)

- Later than five years Rs. 264.60 lacs (Rs. 352.80 lacs)

The aggregate rental expenses of all the leases for the year are Rs. 113.24 lacs (Rs. 89.94 lacs).

10. Disclosures pursuant to adoption of Accounting Standard 15 (Revised 2005) Employee Benefits

The Employees Gratuity and Leave Encashment schemes are defined benefit plans. The present value of obligation is based on actuarial valuation using the projected unit credit method.

Defined Benefit Plan

Details of defined benefit plan for contribution to Gratuity (Non-Funded) and contribution to Leave Encashment (Non-Funded) are as follows:

11. Related party disclosures

As per Accounting Standard - 18, the disclosure of transactions with related parties as defined in the Accounting Standard are given below:

Other Related parties with whom transactions have taken place during the year and balances outstanding as on the last day of the year.

Welspun India Limited, Welspun Corp Limited, Welspun Retail Limited, Welspun Steel Limited, Welspun Wintex Limited, Welspun Global Brands Limited, Welspun Zucchi Textiles Private Limited, Krishiraj Trading Limited, Welspun Realty Private Limited, Goodvalue Polyplast Limited, Welspun Fintrade Limited, Welspun Captive Power Generation Limited, Welpsun Investments and Commercial Limited.

12. Foreign Exchange Differences

a) The Companies (Accounting Standards) Amendment Rules 2011 has amended the provision of AS-11 related to "The effects of changes in Foreign Exchange Rates" vide notification dated 11 May 2011 (as amended on 29 December 2011 and further clarification dated 9 August 2012) issued by the Ministry of Corporate Affairs. Accordingly, the Company has adjusted exchange difference loss amounting to Rs. 118.55 lacs (loss of Rs. 84.78 lacs) to the cost of fixed assets and gain of Rs. 69.05 lacs (Rs. Nil) to capital work-in-progress respectively. Exchange difference loss of Rs. 1.86 lacs (Rs. Nil) is transferred to "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the balance period of such long term liabilities. Out of the above, loss of Rs. 0.76 lacs ( Rs. Nil ) has been adjusted in the current year and loss of Rs. 1.10 lacs (Rs. Nil) has been carried over and disclosed in shareholders funds.

b) The Company is exposed to various financial risks, most of which relate to changes in exchange rates, interest rate etc. The Company hedges risks of the aforesaid nature using combination of forward contracts, options and swaps etc. The outstanding foreign currency derivative contracts as at 31 March 2013 are as follows:

13. a) Balances of certain debtors, creditors and advance are subject to confirmation / reconciliation, if any. The management does not expect any material difference affecting the financial statements on such reconciliation / adjustments except otherwise stated.

b) In the opinion of management, current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet. The provision for expenses and all known liabilities is adequate and not in excess of the amount reasonably stated.

14. Prior year Comparatives

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classifications / disclosures. Previous year figures have been regrouped/rearranged/recast wherever considered necessary.


Mar 31, 2012

1. Corporate information

Welspun Syntex Limited is a Company incorporated under the Companies Act, 1956. Welspun Syntex Limited was established in 1983. Since its inception, it has grown manifold and today is amongst the largest manufacturers and exporters of Polyester Texturised Filament Yarn, Nylon Filament Yarn from India.

A. Terms / right attached to equity shares

The company has only one class of equity shares having a par value of Rs. 10 per share. All issued shares rank pari-passu and have same voting rights per share. The company declares and pays dividend in Indian Rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of the equity shares will be entitled to receive remaining assets of the company, after distribution of preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b. Terms of Cumulative Redeemable Preference Shares

a) 32,03,300 (32,03,300) 10% Optionally Convertible Cumulative Preference Shares (OCCPS) of Rs. 10 each fully paid up (option to convert was lapsed on 18.05.2003) are redeemable at par in three equal annual installments commencing from 18 June 2004. Out of the above, 30,00,000 OCCPS were rescheduled in 2005-06 and are redeemable in five equal annual installments.

The total amount ofRs. 1,93,63,667 (1,93,63,667) due for redemption as at 31 March 2012 is yet to be paid.

b) 1,00,00,000 (1,00,00,000) 8% Redeemable Cumulative Preference Shares ofRs. 10 each fully paid up are redeemable at par in six equal installments commencing from 31 March 2006.

The total amount of Rs. 8,33,33,333 (8,33,33,333) due for redemption as at 31 March 2012 is yet to be paid.

Notes forming part of the Financial Statements

(a) Debentures

i. 9% Secured Non-Convertible Redeemable Debentures (NCD) of Rs. Nil (Rs. 46.80 lacs) were redeemable at par in 28 equal quarterly installments commencing from April 1 2006 and ending on 1 January 2013 have been fully redeemed during the year.

ii. 9% Secured Non-Convertible Redeemable Debentures (NCD) of Rs. Nil (Rs. 38.65 lacs) were redeemable at par in 28 equal quarterly installments commencing from April 1 2006 and ending on 1 January 2013 have been fully redeemed during the year.

iii. The above debentures including interest thereon are secured by way of first charge on movable and immovable assets of the Company, both present and future, ranking pari passu subject to prior charge on specific assets for certain term loans and on current assets as per Note 7(a) below for borrowing from banks for working capital finance.

(b) Term loan from Banks except (f) and (h) below, are secured by way of first charge on immovable and movable assets of the company, both present and future, ranking pari passu and also secured by second charge on current assets subject to prior charge in favour of banks for working capital facilites.

(c) Term loan of Rs. 309.19 lacs (Rs. 427.66 lacs) from Bank of Baroda is earring interest @ 13.75% p.a. and repayable in 7 quarterly installments of Rs. 43.34 lacs and balance in last installment.

(d) Term loan of Rs. 180.67 lacs (Rs. 260.67 lacs) from State Bank of Bikaner and Jaipur is earring interest @ 14.25% p.a.and repayable in 6 quarterly installments of Rs. 26.00 lacs and balance in last installment.

(e) Term loan of Rs. 2138.62 lacs (Rs. 803.02 lacs) from State Bank of Bikaner and Jaipur is earring interest @ 13.75 % p.a.and repayable in 4 quarterly installments of Rs. 5.48 lacs in 2012-13 and thereafter in 24 quarterly installments ranging from 2% to 5.625% of disbursed loan amount.

(f) Term loan of Rs. 2500.00 lacs (Rs. Nil) from State Bank of Bikaner and Jaipur is secured by first charge ranking pari passu by way of hypothecation of company's raw material, stock-in-process, finished goods, semi finished goods, stores, spares, book debts and other current assets and second charge ranking pari passu on fixed assets of the company. It carries interest @ 13.50 % p.a. and repayable in 8 quarterly equal installments of Rs. 312.50 lacs commencing from December 2012.

(g) Term loan of Rs. 310.00 lacs (Rs. 438.00 lacs) from State Bank of India is earring interest @ 14.50 % p.a. and repayable in 4 quarterly installments of Rs. 42.00 lacs in 2012-13, 2 quarterly installments of Rs. 55.00 lacs and balance of Rs. 32.00 lacs being the last installment in 2013-14.

(h) Term Loan of Rs. Nil (Rs. 22.92 lacs) from Industrial Development Bank of India was secured by way of a charge on all machinery purchased out of the equipment finance scheme.

(i) Term Loan ofRs. Nil (Rs. 76.77 lacs) from Industrial Development Bank of India carried interest @ 9.92% p.a. and is repaid during the year.

(j) Term Loan of Rs. Nil (Rs. 20.74 lacs) from Industrial Development Bank of India carried interest @ 12.37% p.a. and is repaid during the year.

(k) Term Loan of Rs. Nil (Rs. 262.50 lacs) from Industrial Development Bank of India carried interest @ 14.00% p.a. and is repaid during the year.

(I) Term loan of Rs. 183.16 lacs (Rs. 477.28 lacs) from State Bank of India is earring interest @ JPY TIBOR 2% and last installment is repayable on 15 June 2012.

(m) Term loan of Rs. 60.31 lacs (Rs. 247.06 lacs) from State Bank of Bikaner and Jaipur is earring interest @ LIBOR 2.75% p.a. and last installment is repayable on 15 April 2012.

(n) Term loan of Rs. 1070.51 lacs (Rs. 1360.81 lacs) from State Bank of Bikaner and Jaipur is earring interest @ LIBOR 2.75% p.a. and repayable in 13 equal quarterly installment of Rs. 105.57 lacs from April 2011 to April 2014.

(o) Out of the total term loans, Rs. 493.16 lacs (Rs. 1,298.21 lacs) have been personally guaranteed by the promoter directors.

(a) Working capital loans from Banks are secured by way of hypothecation of raw materials, finished goods, goods in process, stores and spares and book debts and second charge by way of mortgage on entire fixed assets of the company.

(b) Intercorporate deposits of Rs. 900 lacs (Rs. 900 lacs) is interest free

2. During the year, impairment loss aggregating Rs. 78.87 lacs (Rs. 4 26 lacs) has been reversed consequent to the relevant fixed assets being sold.

3. Contingent liabilities not provided for

a) Guarantees given by banks Rs. 331.26 lacs (Rs. 320.00 lacs)

b) Disputed demands of Excise Duty, Custom Duty, Service Tax, Income Tax and Sales Tax - Rs. 1,200.14 lacs (Rs. 978.09 lacs)

c) Unexpired Letters of Credit Rs. 6936.33 lacs (Rs. 4,848.19 lacs).

d) Custom Duty on pending Export obligation for import under Advance License Rs. 111.12 lacs (Rs. 142.79 lacs).

e) The accumulated dividend of Rs. 880.85 lacs (Rs. 1,385.55 lacs) payable on Redeemable Cumulative / Optionally Convertible Cumulative Preference Shares.

f) Claims against the Company not acknowledged as debt Rs. 139.85 lacs (Rs. 139.85 lacs)

g) Bills receivable discounted Rs. 1,239.29 lacs (Rs. 1,128.67 lacs)

4. Capital commitment not provided for Rs. 2,052.36 lacs (Rs. 1,078.91 lacs) net of advances.

5. Current Liabilities include cheques overdrawn to the tune of Rs. 502.94 lacs (Rs. 281.69 lacs).

6. Micro, Small and Medium Enterprises

The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at 31 March 2012. The disclosure pursuant to the said Act is as under:

The above information and that given in Note - 8 "Trade Payables" regarding Micro, Small and Medium Enterprises has been determined to the extent such parties are identified on the basis of the information available with the Company.

7. Freehold Land includes Rs. 27.85 lacs (Rs. 27.85 lacs) and development expenses ofRs. 122.87 lacs (Rs. 122.87 lacs) incurred on such land capitalized in the year 2002-2003 for which the Company holds no title.

8 Taxation

a) Provision for current tax for the year has been made under Minimum Alternate Tax (MAT) as per the provisions of Section 115JB of the Income-Tax Act, 1961. In accordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income-Tax Act, 1961 issued by the Institute of Chartered Accountants of India (ICAI), the Company has recognized the MAT credit entitlement of Rs. 231.36 lacs (Rs. 241 57 lacs) as an asset under the Note "Loans and Advances" and has credited the same to the statement of profit and loss under "Provision for Taxation".

b) In accordance with the Accounting Standard - 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax assets and liabilities should be recognized for all timing differences in accordance with the said standard. However, considering the present financial position of the Company and requirement of the Accounting Standard regarding certainty / virtual certainty, the same has not been provided. The same will be reassessed at a subsequent balance sheet date and will be accounted for in the year of certainty / virtual certainty in accordance with the aforesaid accounting standard.

9 Operating Leases

The Company has taken on lease offices and residential facilities under operating lease agreements that are renewable on periodic basis at the option of both the lessor and the lessee. The initial tenure of lease is generally for eleven months.

Minimum rental payments are required to be made under the operating leases that have initially or remaining non- cancelable lease term in excess of one year as at 31 March 2012 as per the contracts are as under:

- Not later than one-year Rs. 73.50 lacs (f 4.47 lacs)

- Later than one year but not later than five years Rs. 352.80 lacs (Rs. 2.31 lacs)

- Later than five years Rs. 352.80 (Rs. Nil)

The aggregate rental expenses of all the leases for the year are Rs. 89.94 lacs (Rs. 118.75 lacs).

10 Disclosures pursuant to adoption of Accounting Standard 15 (Revised 2005) Employee Benefits

The Employees Gratuity and Leave Encashment Schemes are defined benefit plans. The present value of obligation is based on actuarial valuation using the projected unit credit method.

Defined Benefit Plan

Details of defined benefit plan for contribution to Gratuity (Non-Funded) and contribution to Leave Encashment (Non- Funded) are as follows:

11 Related party disclosures

As per Accounting Standard - 18, the disclosure of transactions with related parties as defined in the Accounting Standard are given below:

Other Related parties with whom transactions have taken place during the year and balances outstanding as on the last day of the year.

Welspun Corp Limited, Welspun India Limited, Welspun Retail Limited, Welspun Steel Limited, Welspun Wintex Limited, Krishiraj Trading Limited, Mertz Securities Limited, Welspun Global Brands Limited, Welspun Investments and Commercials Limited, Welspun Realty Private Limited, Goodvalue Polyplast Limited.

Note: Provision for post retirement benefits which are based on actuarial valuation done on an overall company basis are excluded from above.

12 Foreign Exchange Differences

a) The exchange difference loss of Rs. 84.78 lacs (loss of Rs. 68.20 lacs), has been adjusted to the carrying cost of fixed assets.

b) The Company is exposed to various financial risks, most of which relate to changes in exchange rates, interest rate etc. The Company hedges risks of the aforesaid nature using combination of forward contracts, options and swaps etc. The outstanding foreign currency derivative contracts as at 31 March 2012 are as follows:

13 Segment Reporting

(I) The Company operates in a single primary business segment i.e. manufacture of Synthetic Yarn and hence, there are no reportable segments as per Accounting Standard (AS) -17 "Segment Reporting".

Note: The Segment revenue in the geographical segments considered for disclosure is as follows:

- Revenue within India includes sales to customers located within India and earnings in India.

- Revenue outside India includes sales to customers located outside India, earnings outside India.

14. a) Balances of certain debtors, creditors and advance are subject to confirmation/reconciliation, if any. The management does not expect any material difference affecting the financial statements on such reconciliation / adjustments except otherwise stated.

b) In the opinion of management, current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet. The provision for expenses and all known liabilities is adequate and not in excess of the amount reasonably stated.

15 Prior year comparatives

Schedule VI to the Companies Act, 1956 is revised and has become effective from 1 April 2011. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classifications / disclosures. Previous year figures have been regrouped/rearranged/recast wherever considered necessary.


Mar 31, 2011

1. Preference Share Capital (Schedule 1)

The terms of redemption of Preference Shares outstanding are as under:

a) 32,03,300 (32,03,300) 10% Optionally Convertible Cumulative Preference Shares (OCCPS) of Rs. 10 each fully paid up (option to convert was lapsed on 18.05.2003) are redeemable at par in three equal annual installments commencing from 18 June 2004. Out of the above, 30,00,000 OCCPS were rescheduled in 2005-06 and are redeemable in five equal annual installments.

The total amount of Rs. 1,93,63,667 (Rs. 1,93,63,667) due for redemption as at 31 March 2011 is yet to be paid.

b) 1,00,00,000 (1,00,00,000) 8% Redeemable Cumulative Preference Shares of Rs. 10 each fully paid up are redeemable at par in six equal installments commencing from 31 March 2006.

The total amount of Rs. 8,33,33,333 (Rs. 6,66,66,667) due for redemption as at 31 March 2011 is yet to be paid.

2. Secured Loans (Schedule 3)

(a) Debentures

i. 9% Secured Non-Convertible Redeemable Debentures (NCD) of Rs. 46.80 lacs (Rs. 73.60 lacs) are redeemable at par in 28 equal quarterly installments commencing from 1 April 2006 and ending on 1 January 2013.

ii. 9% Secured Non-Convertible Redeemable Debentures (NCD) of Rs. 38.65 lacs (Rs. 61.05 lacs) are redeemable at par in 28 equal quarterly installments commencing from 1 April 2006 and ending on 1 January 2013.

iii. The above debentures including interest there on are secured by way of first charge on movable and immovable assets of the Company, both present and future, ranking pari passu subject to prior charge on specific assets for certain term loans and on current assets as per (b) (iii) below for borrowing from banks for working capital loans.

iv. The Company has adequate Debenture Redemption Reserve (DRR) as at 31 March 2011. In view of this, the Company is not required to create additional Debenture Redemption Reserve during the year.

(b) Term Loans / Working Capital Loans

i. Term Loan from Banks except b (ii) below, are secured by way of first charge on immovable and movable assets of the Company, both present and future, ranking pari-passu subject to the prior charge on specific assets for certain term loans and on current assets as per b (iii) below for working capital loans from banks

ii. Term Loan of Rs. 22.92 lacs (Rs. 36.04 lacs) from a bank is secured by way of a charge on all machinery purchased out of the equipment finance scheme.

iii. Working Capital loans from Banks are secured by way of hypothecation of raw materials, finished goods, goods in process, stores and spares and book debts and second charge by way of mortgage on entire fixed assets of the Company.

iv. Out of the total term loans/working capital loans, Rs. 1,298.21 lacs (Rs. 6,553.85 lacs) have been personally guaranteed by the promoter directors.

3. During the year, impairment loss aggregating Rs. 4.26 lacs (Rs. 52.15 lacs) has been reversed consequent to the relevant fixed assets being sold.

4. Contingent liabilities not provided for

a) Guarantees given by banks Rs. 320.00 lacs (Rs. 252.00 lacs)

b) Disputed demands of Excise Duty, Custom Duty, Service Tax and Income Tax- Rs. 978.09 lacs (Rs. 1295.39 lacs)

c) Unexpired Letters of Credit Rs. 4848.19 lacs (Rs. 3094.23 lacs).

d) Custom Duty on pending Export obligation for import under Advance License Rs. 142.79 lacs (Rs. 6.57 lacs).

e) The accumulated dividend of Rs. 1385.55 lacs (Rs. 1299.51 lacs) payable on Redeemable Cumulative / Optionally Convertible Cumulative preference shares.

f) Claims against the Company not acknowledged as debt Rs. 139.85 lacs (Rs. 146.76 lacs)

g) Bills receivable discounted Rs. 1128.67 lacs (Rs. 982.75 lacs)

h) The lenders right to recompense for the concessions granted to the Company pursuant to the scheme of arrangement approved by the High Court of Bombay and financial restructuring approved by lenders, amount unascertained.

5. Capital commitment not provided for Rs. 1078.91 lacs (Rs. 96.25 lacs) net of advances.

6. Segment Reporting

(I) The Company operates in a single primary business segment i.e. manufacture of Synthetic Yarn and hence, there are no reportable segments as per Accounting Standard (AS) - 17 "Segment Reporting".

(II) Information about Secondary-Geographical segment.

Note: The Segment revenue in the geographical segments considered for disclosure is as follows:

- Revenue within India includes sales to customers located within India and earnings in India.

- Revenue outside India includes sales to customers located outside India, earnings outside India. 7. Current Liabilities include cheques overdrawn to the tune of Rs. 281.69 lacs (Rs. 202.66 lacs).

7. Current Liabilities include cheques overdrawn to the tune of Rs. 281.69 lacs (Rs. 202.66 lacs).

8. Freehold Land includes Rs. 27.85 lacs (Rs. 27.85 lacs) and development expenses of Rs. 122.87 lacs (Rs. 122.87 lacs) incurred on such land capitalized in the year 2002-2003 for which the Company holds no title.

9. Taxation

a) Provision for current tax for the year has been made under Minimum Alternate Tax (MAT) as per the provisions of Section 115JB of the Income-Tax Act, 1961. In acordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income-Tax Act, 1961 issued by the Institute of Chartered Accountants of India (ICAI), the Company has recognized the MAT credit entilement of Rs. 241.57 lacs (Rs. 121.13 lacs) as an asset under the head "Loans and advances" and has credited the same to the Profit and loss account under "Provision for taxation".

b) In accordance with the Accounting Standard - 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax assets and liabilities should be recognized for all timing differences in accordance with the said standard. However, considering the present financial position of the Company and requirement of the Accounting Standard regarding certainty / virtual certainty, the same has not been provided. The same will be reassessed at a subsequent balance sheet date and will be accounted for in the year of certainty / virtual certainty in accordance with the aforesaid accounting standard.

10. Operating Leases

The Company has taken on lease offices and residential facilities under operating lease agreements that are renewable on periodic basis at the option of both the lessor and the lessee. The initial tenure of lease is generally for eleven months.

Minimum rental payments are required to be made under the operating leases that have initially or remaining non- cancelable lease term in excess of one year as at 31 March 2011 as per the contracts are as under:

- Not later than one-year Rs. 4.47 lacs (Rs. 45.63 lacs)

- Later than one year but not later than five years Rs. 2.31 lacs (Rs. 151.93 lacs)

- Later than five years Rs. Nil (Rs. 63.00 lacs)

The aggregate rental expenses of all the leases for the year are Rs.118.75 lacs (Rs. 55.05 lacs).

11. Disclosures pursuant to adoption of Accounting Standard 15 (Revised 2005) Employee Benefits

The Employees Gratuity and Leave Encashment schemes are defined benefit plans. The present value of obligation is based on actuarial valuation using the projected unit credit method.

12. Related party disclosures

As per Accounting Standard - 18, the disclosure of transactions with related parties as defined in the Accounting Standard are given below :

Other Related parties with whom transactions have taken place during the year and balances outstanding as on the last day of the year.

Welspun Corp Limited, Welspun India Limited, Welspun Retail Limited, Welspun Steel Limited, Welspun Wintex Limited, Krishiraj Trading Limited, Mertz Securities Limited, Welspun Global Brands Limited, Welspun USA Inc., Welspun Investments and Commercials Limited, Welspun Realty Private Limited, Goodvalue Polyplast Limited.

Directors /Key Management Personnel

Name of the Related Party Nature of Relationship

B. K. Goenka Chairman

R. R. Mandawewala Managing Director *

B.A. Kale Executive Director **

M.L. Mittal Director #

* Resigned from the office of Managing Director w.e.f. 10 October 2010

** Appointed as Executive Director w.e.f. 30 October 2010

# Ceased to be Director w.e.f.14 February 2011

d. Disclosure required by clause 32 of the listing agreement is either Nil or not applicable.

13. Foreign Exchange Differences

a) The foreign exchange loss (net) including on forward contracts of Rs. 170.07 lacs (gain of Rs. 56.59 lacs) is adjusted under respective heads of income or expense in the profit and loss account to which it relates and exchange difference loss of Rs. 68.20 lacs (gain of Rs. 41.11 lacs), has been adjusted to the carrying cost of fixed assets other than (b) below.

b) The Companies (Accounting Standards) Amendment Rules 2009 has amended the provision of AS-11 related to "Effects of the changes in Foreign Exchange Rate" vide notification dated 31 March 2009 (further amended on 11 May 2011) issued by the Ministry of Corporate Affairs. Accordingly, the Company has capitalised exchange difference loss of Rs. Nil (Rs. 0.06 lacs) to the cost of fixed assets.

c) The Company is exposed to various financial risks, most of which relate to changes in exchange rates, interest rate etc. The Company hedges risks of the aforesaid nature using combination of forward contracts, options and swaps etc. The outstanding foreign currency derivative contracts as at 31 March 2011 are as follows:

Forward Contracts

i) For Payments to be paid against imports and other payables.

ii) As at Balance Sheet date, the Company has foreign currency payable (Net) that is not hedged by a derivative instrument or otherwise is amounting to Rs. 1470.84 lacs (Rs. 202.33 lacs)

14. Previous year figures have been regrouped/rearranged/recast wherever considered necessary. Figures in brackets in this schedule are for previous year.



 
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