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Notes to Accounts of AYM Syntex Ltd.

Mar 31, 2023

(i) Refer to Note 19 for information on property, plant and equipment hypothecated / pledged as security by the Company.

(ii) Contractual obligations : Refer to Note 42 for disclosure of contractual commitments for acquisition of property, plant and equipment.

(iii) Borrowing costs allocated to fixed assets / capital work in progress is '' 40.83 lakhs (March 31, 2022 : '' 39.12 lakhs) (Refer note 36).

(iv) Capital work-in-progress - Capital work-in-progress mainly comprises of new plant and machinery for spinning and texturising process, being installed/constructed in India. (Refer Note 3a(i))

(v) In accordance with para D13AA of Ind AS 101 First time adoption of Indian Accounting Standards and the option available in the Companies (Accounting Standards) (Second Amendment) Rules, 2011, vide notification dated December 29, 2011 issued by the Ministry of Corporate Affairs, the Company has adjusted the exchange rate difference arising on long term foreign currency monetary items, in so far as they relate to the acquisition of a depreciable capital asset, to the cost of the asset.

Accordingly, the Company has adjusted exchange gain of '' Nil (March 31, 2022: '' 8.95 lakhs) to the cost of property, plant and equipment as the long term monetary items relate to depreciable capital asset.

The total cash outflow for leases for the year ended March 31, 2023 was '' 722.51 lakhs (March 31, 2022: '' 513.8 lakhs).

The majority of extension and termination options held are exercisable only by the Company and not by the respective lessor.

The lease liability is remeasured during the year ended March 31, 2023 due to decrease in scope of lease. Due to this, the carrying amount of the right-of-use assets is decreased to reflect the partial termination of lease resulting in a gain of '' 7.10 lakhs.

Note:

*In assessing the realisability of deferred tax on MAT credit entitlement, the Company considers the extent to which it is probable that the credit will be realised. Entitlement of MAT credit is recognised to the extent there is convincing evidence that the Company will be able to utilise the said credit against normal tax payable during the period of fifteen years succeeding the year of filing of return of Income tax.The Company considers the expected projected future taxable income and tax planning strategies in making this assessment. Based on this, the Company believes that it is probable that it will realise the benefits of this MAT credit entitlement.

Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of ^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.

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.

Nature and purpose of reserves Capital reserve

Capital reserve represents capital surplus and is not available for distribution as dividend.

Securities premium reserve

Securities premium is used to record the premium received on issue of shares. The reserve is utilized in accordance with the provisions of the Companies Act, 2013. Capital redemption reserve (CRR)

CRR is created on redemption of preference shares in accordance with the provisions of the Act.

Debenture redemption reserve (DRR)

DRR was created on issue of debentures in the earlier years. This has been transferred to General reserve as the debentures have been redeemed.

General reserve

General reserve represents appropriation of profits by the Company.

Share options outstanding account

The share options outstanding account is used to recognise the grant date fair value of options issued to employees under AYM Syntex Limited employee stock option plan.

Retained earnings

Retained earnings represent the accumulated undistributed earnings.

The entire amount of the provision of '' 256.17 lakhs (31 March 2022 - '' 385.75 lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to avail the full amount of accrued leave or require payment for such leave within the next 12 months.

Defined Benefit Plan Contribution to Gratuity

The Company provides for every employee who is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the Balance Sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period. Defined benefit liability and employer contributions

The Company considers that the contribution rates set at the last valuation date are sufficient to eliminate the deficit over the agreed period and that regular contributions, which are based on service costs, will not increase significantly.

Note: Total borrowing costs is ^ 3,640.24 (March 31, 2022 : ^ 3633.01 lakhs) out of which, ^ 40.83 lakhs (March 31, 2022 :

^ 39.12 lakhs) allocated to fixed assets / capital work in progress.

NOTE 37: INCOME TAX EXPENSE

a) This note provides an analysis of the Company''s income tax expense, show amounts that are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items. It also explains significant estimates made in relation to the Company''s tax positions.

Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the Ind AS. An explanation for each level is given below.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, exchange traded funds and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing Net Assets Value (NAV), NAV represents the price at which, the issuer will issue further units and will redeem such units of mutual funds to and from the investors.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Instruments in the level 2 category for the Company include foreign exchange forward contracts.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in this level.

The carrying amounts of trade receivables, cash and cash equivalents, fixed deposit having maturity period upto 12 months and its interest accrued, export benefits receivable, current loans, current borrowings, trade payables and other financial liabilities are considered to be approximately same as their value, due to the short -term maturities of these financial assets/liabilities.

During the periods mentioned above, there have been no transfers amongst the levels of hierarchy.

Valuation techniques used to determine fair value:

Specific valuation techniques used to value financial instruments include:

â¢ the use of quoted market prices or dealer quotes for similar instruments.

â¢ the fair value of foreign exchange forward contracts is determined using forward exchange rates at the balance sheet date.

â¢ the fair value of the remaining financial instruments is determined using discounted cash flow analysis

NOTE 39 : CAPITAL MANAGEMENT Risk management

The Company''s objectives when managing capital is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth. The Company''s overall strategy remains unchanged from previous year.

The Company determines the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments.

The funding requirements are met through a mixture of equity, internal fund generation and other long term borrowings. The Company''s policy is to use short-term and long-term borrowings to meet anticipated funding requirements.

For the purpose of the Company''s capital management, equity includes paid up capital, securities premium and other reserves. Net debt are long term and short term interest bearing debt as reduced by cash and cash equivalents, other bank balances (including earmarked balances) and current investments. The Company''s strategy is to maintain a gearing ratio within 2:1.

Loan covenants

Bank loan agreements contain certain debt covenants relang to limitation on indebtedness, debt-equity ratio, debt service coverage ratio and fixed assets coverage ratio.

The lower than mandated debt service coverage ratio has no implications on the cash flows as the Company complies with and satisfies all other conditions in the respective sanction of the banks.

NOTE 40 : FINANCIAL RISK MANAGEMENT

The Company''s activities are exposed to market risk, liquidity risk and credit risk which may adversely impact the fair value of its financial instruments. In order to minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency risk exposures. Derivatives are used exclusively for hedging purpose and not as trading or speculative instruments.

The Company''s risk management is carried out by a central treasury department under policies approved by the Board of Directors. Company''s treasury team identifies, evaluates and hedges financial risks in close cooperation with the Company''s respective department heads. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments, non derivative financial instruments and investment of excess liquidity.

Credit risk is the risk that counterparty will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarly trade receivables) and from its financing activities, including deposits with banks, investments in mutual funds, foreign exhange transactions and other financial instruments. The credit risk encompasses both the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks. To manage this, the Company periodically assesses the financial reliability of counter party, taking into account the financial condition, current economic trends, analysing the risk profile of the counter party and the analysis of historical bad debts and ageing of accounts receivable etc. Individual risk limits are set accordingly.The Company determines default by considering the business environment in which the Company operates and other macro-economic factors. The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:

i) Actual or expected significant adverse changes in business;

ii) Actual or expected significant changes in the operating results of the counterparty;

iii) Financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligations;

iv) Significant increase in credit risk on other financial instruments of the same counterparty;

v) Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party guarantees.None of the financial instruments of the Company result in material concentration of credit risk. The carrying value of financial assets represent the maximum credit risk. Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company.

i) Trade receivables

The Company extends credit to customers in normal course of business. The Company considers factors such as credit track record in the market and past dealings for extension of credit to customers. Credit risk is managed through credit approvals, establishing credit limits, payment track record, monitoring financial position of the customer and other relevant factors. Outstanding customer receivables are regularly monitored and reviewed.

The Company evaluates the concentration of risk with respect to trade receivables as limited, as its customers are located in several jurisdictions and industries and operate in largely independent markets. The exposure to customers is diversified and no substantial concentration of risk as no single customer contributes more than 10% of revenue and of the outstanding receivables. Sales made in domestic market predominantly are through agents appointed by the Company, the agents being del credere agents most of the credit risk emanating thereto is borne by agents and the Company''s exposure to risk is limited to sales made to customers directly. In case of direct sale, the Company has a policy of dealing only with credit worthy counter parties. The credit risk related to such sales are mitigated by taking advance, security deposit, letter of credit, settng and monitoring internal limits on exposure to individual customers as and where considered necessary. An impairment analysis which includes assessment for indicators of impairment is performed at each reporting date on an individual basis for all major customers and provision for impairment taken. The allowance reduces the net carrying amount.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics. The expected loss rates for trade receivables has been computed based on reasonable approximation of the loss rates and paste trend of outstanding debtors.

ii) Financial Instruments and Cash Deposits

The Company maintains exposure in Cash and Cash equivalents, term deposits with banks and investments in mutual funds, the same is done after considering factors such as track record, size of the institution, market reputation and service standards. Generally, the balances are maintained with the institutions from whom the Company has also availed borrowings. Individual risk limits are set for each counter party based on financial position, credit rating and past experience. Credit risk and concentration of exposure are actively monitored by the Company. None of the financial instruments of the Company result in material concentration of credit risk.

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations, by delivering cash or other financial assets, on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities - borrowings, trade and other payables, derivative instruments and other financial liabilities.

The Company''s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation. The Company manages liquidity risk by maintaining adequate cash and drawable reserves, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of the financial assets and liabilities.The Company regularly monitors liquidity position through rolling forecast based on estimated free cash flow generated from business. The Company invests its surplus funds in bank fixed deposits and liquid schemes of mutual funds, which carry no/negligible mark to market risks.

The working capital facilities may be drawn at any time and may be terminated by the bank without notice. ii) Maturities of Financial liabiliities

The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for:

- all non derivative financial liabilities, and

- net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity or commodity prices will affect the Company''s income/cash flows or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The sensitivity analysis excludes the impact of movements in market variables on the carrying value of postemployment benefit obligations provisions and on the non-financial assets and liabilities. Financial instruments affected by market risk include receivables, loans and borrowings, advances, deposits, investments and derivative financial instruments. The sensitivity of the relevant profit and loss item is the effect of the assumed changes in respective market risks.

The Company''s activities expose it to risks on account of changes in foreign currency exchange rates and interest rates.

The Company uses derivative financial instruments such as foreign exchange forward contracts of varying maturity depending upon the underlying contract as a risk management strategy to manage its exposures to foreign exchange fluctuations and interest rate.

Foreign currency risk

Currency risk is the risk that the fair value of a financial instrument or future cash flows fluctuate because of changes in market price of the functional currency. The Company is exposed to foreign exchange risk on their receivables, payables and foreign currency loans which are mainly held in the United State Dollar ("USD"), the Euro ("EUR"), British Pound (''GBP''), the Swiss Franc ("CHF") and Japanese Yen ("JPY"). Consequently, the Company is exposed primarily to the risk that the exchange rate of the Indian Rupees ("I") relative to the USD, the EUR, the CHF, and the CNY may change in a manner that has a material effect on the reported values of the Company''s assets and liabilities that are denominated in these foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policy wherein exposure is identified, a benchmark is set and monitored closely for suitable hedges, including minimising cross currency transactions, using natural hedge and the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

Based on the movements in the foreign exchange rates historically and the prevailing market conditions as at the reporting date, management has concluded that the above mentioned rates used for sensitivity are reasonable benchmarks. Appreciation and depreciation of USD with respect to the functional currency would result in increase and decrease in carrying value of property, plant and equipment by approximately '' Nil as at March 31, 2023 (Previous year: '' 9.06 lakhs)

II Interest rate risk

This refers to risk to the fair value or future cash flows of a financial instrument on account of movement in market interest rates.

For the Company, the interest risk arises mainly from debt obligations with floating interest rates. To mitigate interest rate risk, the Company closely monitors market interest and as appropriate makes use of hedged products and optimise borrowing mix / composition.

III Cash flow and fair value interest rate risk

Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like vendor bill discounting, suppliers'' and buyers'' credit. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. As the Company does not have exposure to any floating interest bearing assets, its interest income and related cash flows are not affected by changes in the market interest rates.

The Hon''ble Supreme Court of India, through a ruling in February 2019, provided interpretation on the components of Salary on which the Company and its employees are to contribute towards Provident Fund under the Employee''s Provident Fund Act. Based on the current evaluation, the Company believes it is not probable that certain components of Salary paid by the Company will be subject to contribution towards Provident Fund due to the Supreme Court order. The Company will continue to monitor and evaluate its position based on future events and developments.

Notes:

(a) It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

(b) The Company does not expect any reimbursements in respect of the above contingent liabilities.

Description of contingent liabilities:Excise, Customs and Service Tax Matters

The Company has ongoing disputes with tax authorities mainly relating to availment of input tax credit on certain items and classfication of finished goods.

Income Tax Matters

The Company has ongoing disputes with Income tax authorities relating to tax treatment of certain items. These mainly includes disallowed expenses, claimed by the Company as deductions.

Claims against Company not Acknowledged as Debts

Represent claims disputed by the Company wherein the Company has filed application for dismissal of the matters.

NOTE 47: OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES

There are no financial assets or financial liabilities which are subject to offsettng as at March 31, 2023 and March 31, 2022, since the Company neither has enforceable right or an intent to settle on net basis or to realise the asset and settle the liability simultaneously. Further, the Company has no enforceable master nettng arrangements and other similar arrangements as at March 31, 2023 and March 31, 2022.

Note 49: Segment informationi) Information about Primary Business Segment Identification of Segments:

The Company is engaged in the business of Synthetic Yarn which in the context of Ind AS 108 on Segment Reporting are considered to constitute single primary business segment.

The chief operational decision maker monitors the operating results of its Business segment separately for the purpose of making decision about profit or loss in the financial statements, Operating segment have been identified on the basis of Geographical segment and other quantitative criteria specified in the Ind AS 108.

NOTE 50: EMPLOYEE STOCK OPTION PLAN DISCLOSURE FOR IND AS

The Company has formulated employee share-based payment schemes with objective to attract and retain talent and align the interest of employees with the Company as well as to incentivize and motivate them to contribute to its growth and profitability. At present two share-based payment schemes are in existence.

1) AYM Employee Stock Option (AYMSOP 2018) was approved by shareholders at Extra Ordinary general meeting in 2018.

2) AYM Employee Stock Option Scheme 2021 (AYM ESOP SCHEME 2021) was approved by the shareholders through postal ballot on March 05, 2021.

Details of these employee share-based schemes are given below:

Persons covered under this scheme include all permanent employees working in India or out of India, whole time and other directors.

The schemes however exclude employee outside india who is an employee of a subsidiary, holding or associate of the Company,promoters or person belonging to the Promoter group, promoter director, director holding directly or indirectly more than 10% of the outstanding share of the Company.

Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each option is convertible into one equity share. The exercise price of the options shall not be less than face value of equity share and shall not exceed market price of the equity share of the Company as on the date of grant of Option.

No option expired during the periods covered in the above tables.

The fair value at grant date of options granted was '' 41.20

The fair value at grant date is determined using Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

NOTE 51: (A) ADDITIONAL REGULATORY INFORMATION REQUIRED BY SCHEDULE III

(i) No proceedings have been initiated on or are pending against the company as at March 31, 2023 for holding benami property under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.

(ii) The company has borrowings from banks on the basis of security of current assets. The quarterly returns filed by the Company with banks are in agreement with the books of accounts.

(iii) The company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(iv) The company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

(v) 1. The company has not advanced or loaned or invested funds to any other person(s) or enti''ty(ies), including foreign

entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

2. The company has not received any fund from any person(s) or enti''ty(ies), including foreign entities (Funding Party) with

the understanding (whether recorded in writing or otherwise) that the group shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries

(vi) There is no income surrendered or transaction disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(vii) There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.

(viii) The borrowings obtained by the company from banks have been applied for the purposes for which such loans were was taken.

NOTE 53: EVENTS OCCURRING AFTER THE REPORTING DATE

No adjustments on account of events occurring after the reporting date have been identified to the figures reported.

Mar 31, 2018

General Information

AYM Syntex Limited (herein referred to as âAYMâ or âthe Companyâ) is public limited Company incorporated and domiciled in India. The address of its registered office is Survey No. 394P, Village - Saily, Silvassa, Dadra & Nagar Haveli- 396230, India. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). 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.

The financial statements were authorized for issue by the board of directors on May 21, 2018.

Note 1: Critical Estimates and Judgements

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Companyâs accounting policies. This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements

Critical Estimates and Judgements

2. Estimation of Current Tax Expense and Deferred Income Tax

The calculation of the Companyâs tax charge necessarily involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these items may give rise to material profits/losses and/or cash flows. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions. (Refer Note 35).

The recognition of deferred income tax assets/ liabilities is based upon whether it is more likely than not that sufficient and suitable taxable profits will be available in the future against which the reversal of temporary differences can be deducted. To determine the future taxable profits, reference is made to the latest available profit forecasts.

b. Estimation of Provisions & Contingent Liabilities.

The Company exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual liability may be different from the originally estimated as provision. (Refer Note 39).

c. Estimated useful life of Property, Plant and Equipment

Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Companyâs assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology. For the relative size of the Companyâs property, plant and equipment and intangible assets (Refer Note 3 and 4).

d. Estimation of Provision for Inventory

The Company writes down inventories to net realisable value based on an estimate of the realisability of inventories. Write downs on inventories are recorded where events or changes in circumstances indicate that the balances may not realised. The identification of writedowns requires the use of estimates of net selling prices of the down-graded inventories. Where the expectation is different from the original estimate, such difference will impact the carrying value of inventories and write-downs of inventories in the periods in which such estimate has been changed. Refer Note 9 for details of inventory and provisions.

e. Estimation of Defined Benefit Obligation

The present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions.

The assumptions used in determining the net cost (income) for post employments plans include the discount rate. Any changes in these assumptions will impact the carrying amount of such obligations.

The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the defined benefit obligations. In determining the appropriate discount rate, the Company considers the interest rates of government bonds of maturity approximating the terms of the related plan liability. Refer Note 31 for the details of the assumptions used in estimating the defined benefit obligation.

f. Estimated fair value of Financial Instruments.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Management uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. For details of the key assumptions used and the impact of changes to these assumptions see Note 36.

ii. 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.

iii. Shares Reserved for Issue Under Warrants

43,16,666 warrants of RS. 75 per warrant have been issued and allotted to Mandawewala Enterprises Limited on 8th March 2018. 25% of the face value is paid at the time of allotment and balance 75% is payable on conversion into equity shares at the option of holder of the warrant, within 18 months from the date of allotment.

6,350,000 equity shares of RS. 10 at a premium of RS. 65 per share have been issued and allotted to Mandawewala Enterprises Limited, during the year. Out of this, 6,000,000 equity shares have been issued and allotted by converting corporate loan of RS. 4,500 lakhs given by Mandawewala Enterprises Limited.

Nature and Purpose of Reserves

i. Capital Reserve

Capital reserve represents capital surplus and is not available for distribution as dividend.

ii. Securities Premium Reserve

Securities premium is used to record the premium received on issue of shares. The reserve is utilized in accordance with the provisions of the Companies Act, 2013.

iii. Capital Redemption Reserve (CRR)

CRR is created on redemption of Preference Shares in accordance with the provisions of the Act.

iv. Debenture Redemption Reserve (DRR)

DRR was created on issue of Debentures in the earlier year This has been transferred to General Reserve as the Debentures have been redeemed.

v. General Reserve

General Reserve represents appropriation of profits by the Company.

vi. Retained Earnings

Retained earnings represent the accumulated undistributed earnings.

II. Defined Benefit Plan Contribution to Gratuity

Risk exposure

These defined benefit plans expose the Company to actuarial risk such as longitivity risks, interest rate risks, market (investment) risks.

g. Defined Benefit Liability and Employer Contributions

Expected contribution to post-employment benefit plans for the year ending March 31, 2018 is RS. 150.03 Lakhs.

The weighted average duration of the defined benefit obligation is 11 years (2016 -12 years, 2015 - 12 years). The expected maturity analysis of undiscounted gratuity is as follows:

III. Other Employee Benefit

The liability for compensated absences as at year end is RS. 170.10 Lakhs (March 31, 2017: RS. 152.32 Lakhs, April 1, 2016: RS. 163.11 Lakhs)

Note 3: Income Tax Expense

a. This note provides an analysis of the Companyâs income tax expense, show amounts that are recognised directly in equity and how the tax expense is affected by nonassessable and non-deductible items. It also explains significant estimates made in relation to the Companyâs tax positions.

b. The reconciliation of estimated income tax expense at the Indian statutory income tax rate to the income tax expenses reported in statement of profit and loss is as follows:

Fair Value Hierarchy

The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the Ind AS. An explanation for each level is given below.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed Equity instruments, exchange traded funds and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing Net Assets Value (NAV), NAV represents the price at which, the issuer will issue further units and will redeem such units of mutual funds to and from the investors.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in this level.

There are no internal transfers of financial assets and financial libilities between Level 1, Level 2, Level 3 during the period. The Companyâs policy is to recognise transfers into and transfers out of fair value hierarchy level as at the end of the reporting period.

The fair values of fixed deposits having maturity period of more than 12 months and its interest accrued, non-current security deposits, balances with government authorities and non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs. During the periods mentioned above, there have been no transfers amongst the levels of hierarchy.

Valuation Techniques Used to Determine Fair Value:

Specific valuation techniques used to value financial instruments include:

- The use of quoted market prices or dealer quotes for similar instruments.

- The fair value of foreign exchange forward contracts is determined using forward exchange rates at the balance sheet date.

- The fair value of the remaining financial instruments is determined using discounted cash flow analysis

- All of the resulting fair value estimates are included in level 2 except for unlisted preference shares, where the fair values have been determined based on present values where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.

Note 4: Capital Management Risk Management

The Companyâs objectives when managing capital is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth. The Companyâs overall strategy remains unchanged from previous year.

The Company sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments.

The funding requirements are met through a mixture of equity, internal fund generation and other long term borrowings. The Companyâs policy is to use short-term and long-term borrowings to meet anticipated funding requirements.

For the purpose of the Companyâs capital management, equity includes issued capital, securities premium and other reserves. Net debt includes loans less cash and bank balances. The Company manages capital by monitoring gearing ratio which is net debt divided by equity plus net debt. The Companyâs strategy is to maintain a gearing ratio within 2:1.

The capital composition is as follows:

Loan Covenants

Bank loans contain certain debt covenants relating to limitation on indebtedness, debt-equity ratio, debt to EBITDA ratio, interest service coverage ratio and debt service coverage ratio. The limitation on indebtedness covenant gets suspended once the Company meets certain prescribed criteria. The debt covenant related to limitation on indebtedness remained suspended as of the date of adoption of the financial statements. The Company has also satisfied all other debt covenants prescribed in the respective sanction of bank loan.

Note 5: Financial Risk Management

The Companyâs activities are exposed to market risk liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance of the Company , derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency risk exposures. Derivatives are used exclusively for hedging purpose and not as trading or speculative instruments.

The Companyâs risk management is carried out by a central treasury department under policies approved by the Board of Directors. Companyâs treasury team identifies, evaluates and hedges financial risks in close cooperation with the Companyâs respective department heads. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

A. Credit Risk

The Company determines default by considering the business environment in which the Company operates and other macro-economic factors. The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:

i. Actual or expected significant adverse changes in business;

ii. Actual or expected significant changes in the operating results of the counterparty;

iii. Financial or economic conditions that are expected to cause a significant change to the counterpartyâs ability to meet its obligations;

iv. Significant increase in credit risk on other financial instruments of the same counterparty;

v. Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party guarantees.

Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company.

i. Trade Receivables

The Company extends credit to customers in normal course of business. Credit risk is managed thorugh credit approvals, establishing credit limits, credit track record in the market and continously monitoring the creditworthiness of the customer. Outstanding customer receivables are regularly monitored and followed up.

The Company evaluates the concentration of risk with respect to trade receivables as limited, as its customers are located in several jurisdictions and industries. Sales made in domestic market by the Company are covered by agents appointed by the Company, the agents appointed are Del Credere agents hence most of the credit risk relating to customers is shifted to agents and the comapny is absolved from the same. For sales made to export customers, the risk is limited as most of the sales are covered by ECGC, also the customer can clear the goods from the port only once we receive 100% advance from them, for markets which are risky like Syrian market the goods are dispatched only when we receive 100% advance payment from customers. The Company has also taken advances and security deposits from certain customers, which mitigate the credit risk further.

The Company extends credit to customers in normal course of business. The Company considers factors such as credit track record in the market and past dealings for extension of credit to customers. The Company monitors the payment track record of the customers. Outstanding customer receivables are regularly monitored. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets. The Company has also taken advances and security deposits from certain customers, which mitigate the credit risk to an extent.

ii. Financial Instruments and Cash Deposits

The Company maintains exposure in Cash and Cash equivalents, term deposits with banks and investments in mutual funds the same is done after considering factors such as track record, size of the institution, market reputation and service standards. Generally, the balances are maintained with the institutions from whom the Company has also availed borrowings. Individual risk limits are set for each counter party based on financial position, credit rating and past experience. Credit risk and concentration of exposure are actively monitored by the Company.

The Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which balances and deposits are maintained. Generally, the balances are maintained with the institutions from whom the Company has also availed borrowings.

iii. The ageing analysis of the trade receivables (other than due from related parties) has been considered from the date the invoice falls due.

B. Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities - borrowings, trade payables, derivative instruments and other financial liabilities.

The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation. The Company manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of the financial assets and liabilities.The Company regularly monitors liquidity position through rolling forecast based on estimated free cash flow generated from business.

i. Financing Arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice.

ii. Maturities of Financial Liabiliities

The tables below analyse the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities for:

- All non derivative financial liabilities, and

- net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows:

C Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Companyâs income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The sensitivity analysis excludes the impact of movements in market variables on the carrying value of post-employment benefit obligations provisions and on the non-financial assets and liabilities. The sensitivity of the relevant profit and loss item is the effect of the assumed changes in respective market risks.

The Companyâs activities expose it to risks on account of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange forward contracts of varying maturity depending upon the underlying contract as a risk management strategy to manage its exposures to foreign exchange fluctuations and interest rate.

i Foreign Currency Risk

Currency risk is the risk that the fair value or future cash flows fluctuate because of changes in market prices. The Company is exposed to foreign exchange risk on their receivables, payables and foreign currency loans which are mainly held in the United State Dollar (âUSDâ), the Euro (âEURâ), British Pound (âGBPâ), the Swiss Franc (âCHFâ) and Japanese Yen (âJPYâ). Consequently, the Company is exposed primarily to the risk that the exchange rate of the Indian Rupees (âINRâ) relative to the USD, the EUR, the CHF, and the JPY may change in a manner that has a material effect on the reported values of the Companyâs assets and liabilities that are denominated in these foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies, including minimising cross currency transactions, using natural hedge and the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

Sensitivity to Foreign Currency Risk

The following table demonstrates the sensitivity in the USD, EUR, CHF, CNY and other currencies with all other variables held constant. The below impact on the Companyâs profit before tax is based on changes in the fair value of unhedged foreign currency monetary assets and liabilities at balace sheet date:

II Interest Rate Risk

This refers to risk to Companyâs cash flow and profits on account of movement in market interest rates.

For the Company the interest risk arises mainly from interest bearing borrowings which are at floating interest rates. To mitigate interest rate risk, the Company closely monitors market interest and as appropriate makes use of hedged products and optimise borrowing mix / composition.

III. Cash Flow and Fair Value Interest Rate Risk

The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like non-convertible bonds and short term loans. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

b. Interest Rate Sensitivity

The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rate of 50 basis point increase or decrease. The calculations are based on the variable rate borrowings outstanding at balance sheet date. All other parameters are held constant.

IV Price Risk

a. Exposure

The Company is mainly exposed to the price risk due to its investment in mutual funds and bonds. The price risk arises due to uncertainties about the future market values of these investments. In order to manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio in accordance with the limits set by the risk management policies.

b Sensitivity

The table below summarises the impact of increases/decreases of 0.75% increase in price of Mutual Fund / Bond.

c. As at the Balance Sheet date, net foreign currency payables not hedged by a derivative instrument or otherwise aggregates: RS. 357.42 lakhs. (March 31, 2017 : RS. 3908.19 Lakhs, March 31, 2016 : RS. 5399.47 Lakhs).

Description of Contingent Liabilities

Excise, Customs and Service Tax Matters

The Company has ongoing disputes with tax authorities mainly relating to availment of input tax credit on certain items and classfication of finished goods.

Sales Tax Matters

The Company has ongoing sales tax disputes relating to resale of traded goods which were exempt from tax under BST (Bombay Sales Tax Act, 1959.)

Income Tax Matters

The Company has ongoing disputes with Income tax authorities relating to tax treatment of certain items. These mainly includes disallowed expenses, claimed by the Company as deductions.

*43,16,666 warrants of RS. 75 per warrant have been issued and allotted to Mandawewala Enterprises Limited on 8th March, 2018. Such convertible securities could potentially dilute the basic earnings per share in the future, but are not included in the calculation of diluted earnings per share because they are antidilutive for the period presented. Refer Note 17 (a)(c) for details.

Note 6: Disclosure pursuant to the Regulation 34(3) read with Para A of Schedule V of SEBI listing Regulations, 2015

There are no loans and advances, in the nature of loans to firms/ companies in which directors are interested outstanding during the year ended March 31, 2018, March 31, 2017 and April 1, 2016.

Note 7: Research and Development Expenditure

Details of Research and Development expenses incurred during the year, debited to the Statement of Profit and Loss account are RS. 592.79 Lakhs (March 31, 2017: RS. 621.27 Lakhs) , which includes materials cost, power cost, employee cost and other expenses.

Details of Capital Expenditure incurred during the year for Research and Development is given below:

Note 8: Leases Operating Lease

The Company has taken various residential, office premises, godowns, equipment and vehicles under operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The initial tenure of lease is generally for two months to fifty one months.

The aggregate rental expenses of all the operating leases for the year are RS. 392.26 Lakhs (March 31, 2017: RS. 298.89 Lakhs.)

Note 9: Offsetting Financial Assets and Financial Liabilities

There are no financial assets or financial liabilities which are subject to offsetting as at March 31, 2018, March 31, 2017 and April 1, 2016 since, the Company neither has enforceable right or an intent to settle on net basis or to realise the asset and settle the liability simultaneously. Further, the Company has no enforceable master netting arrangements and other similar arrangements as at March 31, 2018, March 31, 2017 and April 1, 2016.

Note 10: Segment information

Information about Primary Business Segment Identification of Segments:

The Group is engaged in the business of Synthetic Yarn which in the context of Ind AS 108 on Segment Reporting are considered to constitute single primary business segment.

i. Segment Revenue :

The segment revenue is measured in the same way as in the statement of profit or loss.

ii. Segment Assets :

Segment assets are measured in the same way as in the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset.

iii. Segment Liabilities :

Segment liabilities are measured in the same way as in the financial statements. These liabilities are allocated based on the operations of the segment and the physical location of the liability.

Note 11: First Time Adoption of Ind As Transition to Ind AS

These are the Companyâs first separate financial statements prepared in accordance with Ind AS applicable as at March 31, 2018.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet as at April 1, 2016 (the date of transition). In preparing its opening Ind AS balance sheet, the Company has restated the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2014 and other relevant provisions of the Act (previous GAAP or Indian GAAP) so as to comply in all material respects with Ind AS.

A. Exemptions and Exceptions Availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A.1 Ind AS Optional Exemptions

a. Deemed cost for Property, Plant and Equipment (PPE) and Intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for decommissioning liabilities. This exemption is also applicable for intangible assets covered by Ind AS 38.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

b. Long-term Foreign Currency Monetary Items

A first-time adopter may continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP.

Accordingly, the Company has elected to continue the current accounting policy adopted for accounting of exchange differences arising from translation of longterm foreign currency monetary items recognised in the financial statements prior to date of transition (April 1, 2016).

The exemption in D13AA relates to accounting for foreign exchange differences on long term foreign currency monetary items recognised in the financial statement only, and it does not relate to the accounting for long term forward exchange contracts (as these contracts are not within scope of Ind AS 21 and are treated in accordance with Ind AS 109). Therefore, the Company cannot continue to apply the provisions of paragraph 46/46A of AS 11 to long-term forward exchange contracts by virtue of availing exemption given in paragraph D13AA of Ind AS 101.

A.2 Mandatory Exceptions Applied

a. Estimates

An entityâs estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Upon an assessment of the estimates made under Previous GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Previous GAAP.

b. De-recognition of Financial Assets and Liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the derecognition requirements in Ind AS 109 retrospectively from a date of the entityâs choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

c. Classification and Measurement of Financial Assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

Ind AS 101 requires reconciliations of its equity reported in accordance with previous GAAP to its equity in accordance with Ind AS and a reconciliation to its total comprehensive income in accordance with Ind AS for the latest period in the entityâs most recent Annual Financial statment.

AYM Syntex limited has chosen to provide reconciliation of amount reported in accordance with previous GAAP to amount reported under Ind AS for each line item of Balance Sheet and Statement of Profit and Loss as an additional disclosure.

Notes to First-Time Adoption:

Revenue From Operations

B.1 Excise Duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the Statement of Profit and Loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended March 31, 2017 by RS. 4,867.66 lakhs. There is no impact on the total equity and profit.

B.2 Transaction Cost Incurred for Loan Taken

Under the previous GAAP, loan processing expenses and other transaction costs are accounted as expense under the profit and loss account or are capitalised (if loan is taken for borrowings) in the year in which it is incurred. Under Ind AS, for financial liabilities (borrowings) measured at amortised cost, transaction cost are included in the calculation of effective interest rate (EIR) - in effect, they are amortised through profit or loss/ capitalised over the term of the instrument. As a result of this change, the profit for the year ended March 31, 2017 decreased by RS. 5.47 lakhs. The total equity as at March 31, 2017 increased by net of Rs 14.65 lakhs (April 1, 2016: RS. 20.08 lakhs) on this account.

B.3 Fair Valuation of Forward Contracts

Under the previous GAAP, the premium or discount arising at the inception of foreign exchange forward contracts (except on contracts related to long term monetary item) entered into to hedge an existing asset / liability, were amortised as expense or income over the life of the contract. Exchange differences on such contracts were recognized in the Statement of Profit and Loss in the reporting period in which the exchange rate changes. Exchange difference on forward contracts against long term borrowings for capital assets were capitalised under Para 46/46A of AS 11.

Under the IND AS 109, foreign exchange forward contracts are carried at fair value and the resultant gains /(losses) are recorded in the Statement of Profit and Loss only and are not capitalised, even if incurred on forward contracts against long term borrowings. As a result of this change, the profit for the year ended March 31, 2017 decreased by RS. 22.52 lakhs. Fair valuation resulted in net decrease of equity by RS. 24.13 lakhs as at March 31, 2017 (April 1, 2016: RS. 1.44 lakhs).

B.4 Fair Valuation of Investments

Under the previous GAAP, investments were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value at initial and subsequent recognition at fair value through profit and loss (FVTPL). The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended March 31, 2017. As a result of this change, the profit for the year ended March 31, 2017 increased by Rs. 7.50 lakhs. This increased the retained earnings by Rs. 22.26 lakhs as at March 31, 2017 ( increased in April 1, 2016: Rs. 14.63 lakhs).

B.5 Remeasurements of Defined Benefit Plans

Under the previous GAAP, remeasurements i.e. actuarial gains and losses on the net defined benefit liability were recognised in the Statement of Profit and Loss. Under Ind AS, these remeasurements are recognised in other comprehensive income instead of the Statement of Profit and Loss. As a result of this change, the profit for the year ended March 31, 2017 increased by Rs. 53.41 lakhs (net of deferred tax of Rs. 28.27 lakhs). There is no impact on the total equity as at March 31, 2017.

B.6 Other Comprehensive Income (OCI)

Under previous GAAP, the Company was not required to present other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or loss as per Ind-AS. Further, Ind-AS profit or loss is reconciled to total comprehensive income as per Ind-AS.

B.7 Variable Consideration

Under previous GAAP, claims, discounts and rebates paid to customers were recorded as part of expenses in the Statement of Profit and Loss. However, under IND AS, these expenses are netted off against revenue. This change has resulted in decrease in total revenue and total expenses for the year ended March 31, 2017 by Rs. 747.98 lakhs. There is no impact on the total equity and profit.

B.8 Retained Earnings

Retained earnings as at April 1, 2016 have been adjusted consequent to the above Ind AS transition adjustments, net impact of which, as on March 31, 2017 is RS. 8.36 lakhs (April 1, 2016: RS. 21.76 lakhs).

B.9 Tax Adjustments

Tax adjustments include deferred tax impact on account of differences between previous GAAP and Ind AS. As a result of this change, the profit for the year ended March 31, 2017 decreased by RS. 21.17 lakhs. The net deferred tax liability increased by RS. 4.43 lakhs as on March 31, 2017 (increased by RS. 11.51 lakhs as at April 1, 2016).

Note 12: Events Occurring After the Reporting Date

No adjustments on account of events occuring after the reporting date have been identified to the figures reported.

Mar 31, 2016

(b) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of'' 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.

(a) Term loans from banks except (f) and (j) 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.

(b) Term loan of Rs. 1,140.03 lacs (Rs.1,282.56 lacs) from Central Bank of India carries interest @ 11.45% p.a.and is repayable in 20 stepped-up quarterly instalments by 2020-21.

( c) Term loan of Rs. 3,886.95 lacs (Rs. 4,030.14 lacs) from Industrial Development Bank of India carries interest @ 12.00 % p.a.and is repayable in 20 stepped-up quarterly installments by 2020-21.

(d) Term loan of Rs. Nil (Rs. 262.92 lacs) from State Bank of Bikaner and Jaipur has been fully repaid during the year.

(e) Term loan of Rs. 1,500 lacs (Rs. 76.20 lacs ) from Karur Vyasya Bank carries interest @ 11.90% p.a.and is repayable in 28 quarterly stepped up instalments by 2024-25.

(f) Term loan of Rs. 250.00 lacs (Rs. 1,250.00 lacs) from State Bank of Bikaner and Jaipur is secured by first charge, ranking pari passu, by way of hypothecation of Company''s raw materials, goods-in-process, finished goods, stores, spares and book debts and second charge, ranking pari passu, on fixed assets (immovable) of the Company. It carries interest @ 12.70 % p.a. and is repayable in 1 quarterly installment of Rs. 250 lacs ending in 2016-17.

(g) Term loan of Rs. 1999.56 lacs (Rs. Nil) from Industrial Development Bank of India carries interest @ 11.75 % p.a.and is repayable in 28 stepped-up quarterly instalments by 2023-24.

(h) Term loan of Rs. 1129.02 lacs (Rs. Nil) from Central Bank of India carries interest @ 11.45% p.a. and is repayable in 28 stepped-up quarterly installments by 2023-24.

(l) Term loan of Rs. 1,436.75 lacs (Rs. Nil) from Karur Vyasya Bank carries interest @ 11.90% p.a.and is repayable in 28 quarterly stepped up installments by 2023-24.

(j) Term loan of Rs. 2,500.00 lacs ('' Nil) from State Bank of Bikaner and Jaipur carries interest @ 12.00% p.a.and primary security of first charge on the entire current asset of the Company, on pari-passu basis and collateral security by first charge on fixed assets of the Company, on pari-pasu basis is repayable in 3 years in stepped up installments by 2018-19.

(k) Term loan of Rs. 378.19 lacs (Rs. Nil) from Central Bank of India carries interest @ 11.45% p.a. and is repayable in 28 stepped-up quarterly installments by 2024-25.

(l) Foreign currency term loan of Rs. 1,190.74 lacs (Rs. 1,426.46 lacs) from State Bank of Bikaner and Jaipur carries interest @ libor 3.00% p.a.and is repayable in 12 quarterly installments by 2018-19.

(m) Foreign currency term loan of Rs. 4,175.39 lacs (Rs. 4,431.25 lacs) from Bank of Baroda, Dubai carries interest @ libor 4.25% p.a. and is repayable in 20 quarterly installments ranging from 2.5% to 4.75% of disbursed loan amount by 2020-21.

1. During the year, impairment loss aggregating Rs. 36.02 lacs (Rs. 114.03lacs) has been reversed consequent to the relevant fixed assets being sold.

2. Capital commitment not provided for Rs. 1,766.36 lacs (Rs. 1,764.62 lacs) net of advances.

3. Freehold land includes Rs. 8.25lacs (Rs. 7.73lacs) and development expenses of Rs. 14.98lacs (Rs. 14.98lacs) 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. Further in respect of certain residential flats aggregating to Rs. 10.65 lacs (written down value as at 31 March 2016), documents of title deeds are not available with the company.

4. Taxation

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. 1,340.00 lacs (Rs. 906.49 lacs) as an asset under the note "Loans and Advancesâ and has credited the same to the statement of profit and loss under "Tax expenseâ.

5. Operating Leases

The Company has taken on lease office and residential premises 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 cancelable / non-cancelable lease term in excess of one year as at 31 March 2016 as per the contracts are as under:

- Not later than one-year Rs. 11.95 lacs (Rs. 70.39 lacs)

- Later than one year but not later than five years ''34.85lacs (Nil) The aggregate rental expenses of all the leases for the year are Rs. 337.67 lacs (Rs. 278.64 lacs).

6. 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 (No funded) are as follows:

Note:

a) Amount recognized as an expense and included in Note 23-Employee benefits expense is gratuity Rs. 113.99lacs (Rs. 98.37lacs) and leave encashment expense of Rs. 50.25lacs (Rs. 36.08 lacs)

b) Contribution to provident and other fundsâ is recognized as an expense in note 23 of the statement of profit and loss.

c) The estimate of future salary increases considered in the actuarial valuation, is after taking into account the rate of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

7. 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

Mandawewala Enterprises Limited [Formerly Welspun Marine Logistic (Raigad) Limited] (w.e.f. 4^th September 2015). Krishiraj Trading Limited (upto 3^rd September 2015)

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, Mertz Securities Limited, Welspun Infra Developers Private Limited, Welspun Logistics Limited, Welspun Maxsteel Limited, Welspun Investments and Commercial Limited, Welspun USA Inc, Vipuna Trading Limited and Welspun Global Brands Limited

8. 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 Reportingâ.

b) Information about Secondary-Geographical segment.

9. 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. 350.71 lacs (loss of Rs. 206.70 lacs) and gain of Rs.5.93 lacs (loss of Rs.86.23 lacs) to the cost of fixed assets and capital work-in-progress respectively.

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 forward contracts. The outstanding foreign currency forward contracts as at 31 March 2016 are as follows:

ii. As at balance sheet date, the Company has foreign currency liabilities payable (net) that is not hedged by a derivative instrument or otherwise amounting to Rs. 5,399.47 lacs (Rs. 7,661.04 lacs)

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.

10. 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.

11. Research and Development Expenditure

The Company has received recognition for in-house Research and Development (R&D) units at Rakholi and Palghar from the Department of Scientific and Industrial Research (DSIR) on 24 March 2015. During the year, the Company has incurred expenditure, on research and development activities, of Rs. 1998.41 lacs (Rs. 290.36 lacs) including capital expenditure of Rs.1461.64 lacs (Rs.290.36 lacs). The revenue expenditure includes employee cost, material cost, power cost, travelling & conveyance and other expenses. The Company has considered weighted tax deduction on eligible research and development expenditure of Rs. 1998.41 lacs (Rs. 290.36 lacs) under Section 35 (2AB) of the Income Tax Act 1961.

12. Corporate Social Responsibility (CSR)

As per section 135 of the Companies Act, 2013, a CSR Committee had been formed by the Company. The Company is required to spend Rs. 52.08 lacs for the current financial year and has spent Rs. 52.12 lacs on activities specified in Schedule VII of the Companies Act, 2013. The entire amount has been paid during the year.

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

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

b) Investments made - There are no investments other than as disclosed in Note 12 "Non-current investmentsâ of notes forming part of financial statements.

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

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.

Mar 31, 2010

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

a) 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 fve equal annual installments.

The amount of Rs. 19,363,667 due for redemption as at 31 March 2010 is yet to be paid.

b) 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 amount of Rs. 6,66,66,667 due for redemption as at 31 March 2010 is yet to be paid.

2. Secured Loans (Schedule 3)

(a) Debentures

i. 9% Secured Non-Convertible Redeemable Debentures (NCD) of Rs. 73.60 lacs (Rs. 107.10 lacs) are redeemable at par in 28 equal quarterly installments commencing from April 1 2006 and ending on January 1 2013.

ii. 9% Secured Non-Convertible Redeemable Debentures (NCD) of Rs. 61.05 lacs (Rs. 89.05 lacs) are redeemable at par in 28 equal quarterly installments commencing from April 1 2006 and ending on January 1 2013.

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

iv. The Company has adequate Debenture Redemption Reserve (DRR) as at 31 March 2010. 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 frst charge on immovable and movable assets of the Company, both present and future, ranking pari-passu subject to the prior charge on specifc assets for certain term loans and on current assets as per b (iv) below for working capital fnance from banks.

ii. Term Loan of Rs. 36.04 lacs (Rs. 52.44 lacs) from a bank is secured by way of a charge on all machinery purchased out of the equipment fnance scheme.

iii. Vehicle Loan is secured by way of hypothecation of Vehicle.

iv. Working Capital fnance from Banks are secured by way of hypothecation of raw materials, fnished and semi fnished goods, stores and book debts and second charge by way of mortgage on entire fxed assets of the Company.

v. All the above facilities are personally guaranteed by the promoter directors.

3. During the year, impairment loss aggregating Rs. 52.15 lacs (Rs. 3.44 lacs) has been reversed consequent to the relevant fxed assets being sold.

4. Contingent liabilities not provided for

a) Guarantees given by banks Rs. 252.00 lacs (Rs. 250.00 lacs)

b) Disputed demands of Excise Duty, Custom Duty, Service Tax and Income Tax- Rs. 1295.39 lacs (Rs.1317.17 lacs)

c) Unexpired Letters of Credit Rs. 3094.23 lacs (Rs. 3193.82 lacs).

d) Custom Duty on pending Export obligation for import under Advance License Rs. 6.57 lacs (Rs. 60.11 lacs).

e) The accumulated dividend of Rs. 1299.51 lacs (Rs. 1213.50 lacs) payable on Redeemable Cumulative / Optionally Convertible Cumulative preference shares.

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

g) Bills receivable discounted Rs. 982.75 lacs (Rs. 466.68 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 fnancial restructuring approved by lenders, amount unascertained.

5. Current Liabilities include cheques overdrawn to the tune of Rs. 202.66 lacs (Rs. 1240.48 lacs).

6. a) In the opinion of the Board of Directors, Current Assets, Loans and Advances have the value at which they are stated in the Balance Sheet, if realised in the ordinary course of business, except otherwise stated and adequate provisions have been made in the books of account for all the known liabilities. b) Debit and credit balances are subject to confrmation and reconciliation.

7. Capital commitment not provided for Rs. 96.25 Lacs (Rs. Nil) net of advances.

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 taxation is made as per section 115JB of the Income Tax Act, 1961.

b) In accordance with the Accounting Standard - 22 on ÃAccounting for Taxes on IncomeÃ 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 fnancial 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 offces 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 31.03.2010 as per the contracts are as under:

- Not later than one-year Rs. 45.63 lacs (Rs. 42.36 lacs)

- Later than one year but not later than fve years. Rs. 151.93 lacs (Rs. 2.90 lacs)

- Later than fve years Rs. 63.00 Lacs (Rs. Nil)

The aggregate rental expenses of all the leases for the year are Rs.55.05 lacs (Rs. 53.69 lacs).

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

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

12. Foreign Exchange Differences

a) The foreign exchange gain (net) including on forward contracts of Rs. 56.59 lacs (Loss of Rs. 142.09 lacs) is adjusted under respective heads of income or expense in the proft and loss account to which it relates and exchange difference gain of Rs.41.11 lacs, other than (b) below (Loss of Rs. 276.55 lacs) has been adjusted to the carrying cost of fxed assets.

b) The Companies (Accounting Standards) Amendment Rules 2009 has amended the provision of AS-11 related to ÃEffects of the changes in Foreign Exchange RateÃ vide notifcation dated 31 March 2009 issued by the Ministry of Corporate Affairs. Accordingly, the Company has capitalised exchange difference loss amounting to Rs. 0.06 lacs to the cost of fxed assets.

c) The Company is exposed to various fnancial 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 2010 are as follows:

13. Segment Reporting

The entire operations of the Company relate to only one segment viz. Synthetic yarn. Also, the Company does not consider any signifcant difference as regards the risks and returns of the product with reference to export and domestic sale. Therefore segment information as required by Accounting Standard 17 on ÃSegment ReportingÃ issued by the Institute of Chartered Accountants of India is not applicable as legally advised by the expert.

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

15. Additional information pursuant to part II of Schedule VI of the Companies Act, 1956.

(i) Licensed Capacity Not applicable

(ii) Installed Capacity (as certifed by the management)

Polyester Yarns a) POY/FDY 31400 (31400) M.T.

and Dyed) and POY b) Dyeing Plant 9000 (8400) M.T.

c) Texturising Machines 26 (26) Nos.

d) Air Tex 4 (4) Nos.

e) Draw Twisting Machine 1 (1) Nos.

f) TFO Twisting Machine 26 (23) Nos.

(vii) Value of Import on CIF basis

Raw Material Rs. 3062.02 lacs (Rs. 2474.06 lacs)

Stores and Spares Rs. 468.20 lacs (Rs. 427.58 lacs)

(viii) FOB value exports Rs. 6671.84 lacs (Rs. 4368.32 lacs)

(Excluding deemed export)

(ix) Expenditure in Foreign Currency Rs. 154.62 lacs (Rs. 215.84 lacs)

(Including Travelling, Commission on Sales, Testing Fees, Quality Claim, Membership & Suscription, and Interest etc.)

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