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Notes to Accounts of Lakshmi Machine Works Ltd.

Mar 31, 2017

1 EXCEPTIONAL ITEMS

Exceptional items represents compensation towards Voluntary Retirement Scheme opted by Employees RS,470.14 Lakhs (Previous year RS, 106.80 Lakhs); Investments in Pugoda Textiles Lanka Limited written off RS, Nil Lakhs (Previous year RS,391.57 Lakhs]. In respect of shares of Pugoda Textiles Lanka Ltd vested with the Government of Sri lanka for compensation, the carrying amount of investment net of compensation awarded by the Compensation Tribunal of Sri lanka has been written off and the compensation receivable of RS,92.26 Lakhs is recognized as income receivable. However the company has appealed for higher compensation.

2 RELATED PARTY TRANSACTIONS

Related Party Relationships Key Management Personnel

Sri. Sanjay Jayavarthanavelu, Chairman and Managing Director Sri. C.B.Chandrasekar, Chief Financial Officer Sri. C.R. Shivkumaran, Company Secretary

Wholly Owned Subsidiary :

LMW Textile Machinery (Suzhou) Co. Ltd.

Post employment benefit plans

Lakshmi Machine Works Limited Employees’ Gratuity Fund Other related parties

Dhanuprabha Agro P Ltd; Eshaan Enterprises Limited; Harshini Textiles Limited; Hermes Academy of Training Limited; Lakshmi Card Clothing P Ltd; Lakshmi Cargo Company Limited; LCC Cargo Holdings Limited;Lakshmi Caipo Industries Ltd; Lakshmi Energy & Environmental Designs Ltd; Lakshmi Electrical Drives Limited; Lakshmi Technology & Engg. Industries Ltd; Lakshmi Ring Travellers (CBE) Limited; Lakshmi Electrical Control Systems Limited;Lakshmi Precision Tools Limited; Lakshmi Life Sciences Limited; Mahalakshmi Engineering Holdings Limited; Quattro Engineering India Limited; Rajalakshmi Engineering; Revantha Holdings Limited; Revantha Services Ltd; Revantha Agro FarmsP Ltd; Sowbarnika Enterprises Ltd; Sowbarniha Resorts Private Limited; Sri Kamakoti Kamakshi Textiles P Ltd; Sri Lakshmi Vishnu Plastics; Sudhasruti Agro P Ltd; Super Sales India Limited; Supreme Dairy Products India Ltd; Starline Travels Limited;Titan Paints & Chemicals Limited; The Lakshmi Mills Company Limited; Venkatavaradha Agencies P Limited; Walzer Hotels P Ltd.

1 Purchase of Goods includes LMW Textile Machinery (Suzhou) Co.Ltd C23.85 Lakhs (Previous year Nil) Lakshmi Electrical Control Systems Limited RS,14401.16 Lakhs (Previous Year RS,16897.90 Lakhs), Lakshmi Electrical Drives Limited RS,3209.01 Lakhs (Previous Year RS,3899.07 Lakhs); Quattro Engineering India Limited RS,4319.81 Lakhs ((Previous Year RS,2515.83 Lakhs);Super Sales India Ltd RS,2841.85 Lakhs (Previous Year RS,2543.41 Lakhs) and Other Related Parties- Associates RS,5451.74 Lakhs (Previous Year RS,7198.67 Lakhs)

2 Sale of Goods includes LMW Textile Machinery (Suzhou) Co. Ltd RS,2143.33 Lakhs (Previous Year RS,5158.01 Lakhs), Lakshmi Electrical Control Systems Limited RS,2649.78 Lakhs (Previous Year RS,2561.85 Lakhs) , Quattro Engineering India Limited RS,559.85 Lakhs (Previous Year RS,325.56 Lakhs) Super Sales India Ltd RS,1016.19 Lakhs (Previous Year RS,1236.79 Lakhs) and Other related Parties -Associates RS,174.49 Lakhs (Previous Year RS,321.51 Lakhs)

3 Purchase of Fixed Assets includes Super Sales India Limited RS,37.00 Lakhs (Previous year RS, Nil Lakhs); Lakshmi Energy and Environments Designs Limited RS,27.61 Lakhs (Previous year RS, Nil Lakhs); Quattro Engineering India Limited RS, Nil Lakhs (Previous Year RS,127.12 Lakhs); Other Related Parties- Associates RS, Nil Lakhs (Previous Year RS,9.49 Lakhs)

4 Sale of Fixed Assets includes LMW Textile Machinery (Suzhou) Co. Ltd RS,109.03 Lakhs (Previous Year RS, Nil Lakhs); Quattro Engineering Ltd RS,238.89 Lakhs (Previous year RS,14.71 Lakhs ); Lakshmi Cargo Company Limited RS, Nil Lakhs (Previous Year RS,385.89Lakhs);Super Sales India Limited RS, Nil Lakhs (Previous Year RS,184.90 Lakhs); and Other Related Parties-Associates RS, Nil Lakhs (Previous Year RS,0.03 Lakhs)

5 Rendering of Services includes , LMW Textile Machinery (Suzhou)Co. Ltd RS,185.61 Lakhs (Previous Year RS,423.88 Lakhs), Super Sales India Limited RS,20.35 Lakhs (Previous Year RS,32.33 Lakhs); Lakshmi Technology & Engineering Industries Ltd. RS,69.41 Lakhs (Previous year RS,60.91 Lakhs) Quattro Engineering India Limited RS,14.06 Lakhs (previous Year RS,0.03 Lakhs) and Other Related Parties-Associates RS,14.77 Lakhs (Previous Year RS,19.27 Lakhs)

6 Receiving of Services include Lakshmi Ring Travellers (Cbe) Limited RS,548.00 Lakhs (Previous Year RS,547.23 Lakhs); Lakshmi Cargo Company Limited RS,6168.44 Lakhs (Previous Year RS,6659.06 Lakhs); Revantha Services Ltd RS,3294.85 Lakhs (Previous year RS,2345.63 Lakhs); Super Sales India Limited RS,673.36 Lakhs (Previous Year RS,669.92 Lakhs) and Other Related Parties - Associates RS,963.73 Lakhs (Previous Year RS,1291.15 Lakhs)

7 Agency arrangement includes Super Sales India Limited RS,1208.08 Lakhs (Previous Year RS,1383.76 Lakhs)

8 Investment in shares include Super Sales India Limited RS,926.66 Lakhs(Previous Year RS,564.41 Lakhs)

9 Contribution to gratuity fund includes Lakshmi Machine Works Limited Employees’ Gratuity Fund RS,560.60 Lakhs (Previous Year RS,682.67 Lakhs)

10 Managerial Remuneration includes amount paid to Chairman and Managing Director RS,768.99 Lakhs (Previous Year RS,899.74 Lakhs); Chief Financial Officer RS,47.56 Lakhs (Previous year RS,26.78 Lakhs*); Company Secretary RS, 10.60 Lakhs* (Previous year RS,28.31 Lakhs)

11 Outstanding Payables include Lakshmi Cargo Company Limited RS,544.87 Lakhs (Previous Year RS,450.56 Lakhs); Lakshmi Precision Tools Limited RS,415.72 Lakhs (Previous Year RS,384.44 Lakhs); Lakshmi Electrical Drives Limited RS,430.89 Lakhs (Previous Year RS, Nil Lakhs); Lakshmi Electrical Control Systems Ltd RS,949.01 Lakhs (Previous year RS,1140.17 Lakhs); Super Sales India Limited RS,134.98 Lakhs (Previous Year RS,808.82 Lakhs) Sri. Sanjay Jayavarthanavelu RS,559.05 Lakhs (Previous year RS,687.60 Lakhs) and Other Related Parties -Associates RS,379.38 Lakhs (Previous Year RS,423.10 Lakhs);

12 Outstanding Receivables include LMW Textile Machinery (Suzhou) Co. Ltd RS,2644.93 Lakhs (Previous Year RS,3459.96 Lakhs), Revantha Services Limited RS,85.88 Lakhs ( Preivous Year RS,173.28 Lakhs); Lakshmi Technology and Engineering Industries Limited RS,124.79 Lakhs (Previous Year RS,63.87 Lakhs); Quattro Engg India Ltd RS,101.55 Lakhs (Previous year RS,458.06 Lakhs) and Other Related Parties - Associates RS,41.47 Lakhs (Previous Year RS,117.32 Lakhs)

* For part of the year

The salary escalation considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Gratuity is applicable to all permanent and full time employees of the company.

Gratuity payment is based on last drawn basic salary and dearness allowance at the time of termination or retirement. The Scheme takes into account each completed year of service or part thereof in excess of six months. The entire contribution is borne by the company.

Leave encashment benefits are provided as per the rules of the Company. The liabilities on account of defined benefit obligations are expected to be contributed within the next financial year.

The company expects to make a contribution of RS,300 Lakhs (as at 31st March 2016: RS,700 Lakhs; as at 31st March 2015 RS,800 Lakhs) to the defined benefit plans during the next financial year.

The above sensitivity analysis are based on 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.

J Brief description of the Plans & risks

These plans typically expose the company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk. Investment risk

The present value of the defined benefit plan liability is calculated using a discount which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, other debt instruments and equity shares of listed companies.

Interest risk

A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan’s debt investments, if any.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

13SEGMENT INFORMATION

Products and services from which reportable segments derive their revenues

Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the type of goods or services delivered or provided. The company has chosen to organise the company around differences in products and services. No operating segments have been aggregated in arriving at the reportable segments of the company. Specifically, the Company is organised into three main reportable segments viz.,(1) Textile Machinery Division (2) Machine Tool Division & Foundry Division and (3) Advanced Technology Centre for Aero Space-Parts & Components

Notes:

1) The accounting policies of the reportable segments are the same as the company’s accounting policies. Inter Segment transfers are accounted on cost plus basis vis-a-vis at competitive market price charged to Unaffliated customers for similar goods.

2) Segment profit represents the profit before tax earned by each segment without allocation of unallowable expenses, finance costs and unallocable income. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

3) Segment Revenue ,Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

Information about major customers

There is no single customer contributing 10% or more to the company’s revenue for both 2016-17 and 2015-16. Included in revenues of RS,2,35,587.87 Lakhs, are revenues approximately RS,6,535.55 Lakhs [Previous year RS, 17,771.41 Lakhs] which arose from sale to the company’s largest customer.

14 FINANCIAL RISK MANAGEMENT OBJECTIVES

The company’s activity exposes itself to variety of financial risk which includes market risk, credit risk, liquidity risk, interest rate risk and price risk. The Company monitors and manages the above financial risks relating to the operations of the group through internal risk reports which analyses exposures by degree and magnitude of risks. The primary focus is to identify risks and take steps for mitigation of risk or to minimize the potential adverse effects on the financial performance of the Company. The Company does not enter into any derivative financial instruments to hedge risk exposures.

Foreign Currency Risk

The Company undertakes transactions denominated in foreign currencies and consequently has exposure to exchange rate fluctuations. The company operates internationally and a major portion of the international sales transaction are in USD and balance in EUR, purchases from overseas suppliers are in various foreign currencies. The exposure at the end of the reporting period does not reflect the transaction during the year and there is a natural hedge in the currency for USD and EUR. The exchange rate between INR and other currency does have an impact on the business. The company is a net exporter and export realization combined with a depreciating INR has given the company a net foreign exchange gain.

Interest rate risk - The Company holds interest bearing assets in the form of fixed deposits with banks. The variation in interest risks is managed by distributing deposits among wide base of banks and financial institutions.

The company do not have any debts and therefore any fluctuation in market interest rates may not affect the cash flow/profitability position of the company in terms of debts servicing.

Price risk - Holding marketable financial assets expose the company to risk of price fluctuation. Price escalations will have insignificant impact on carrying amounts of respective financial assets. However, the Company is exposed to equity price risks from equity investments. Certain of the Company’s equity investments are held for startegic rather than trading purposes.

Credit risk - Credit risk arises from the risk of default on its obligation by the counterparty resulting in financial loss, such as cash and cash equivalents, and outstanding receivables.

Credit risk on cash and cash equivalents is considered negligible as the company generally invests in fixed deposits with reputable banks. They are not impaired or past due for each of the reporting dates

Credit risk on outstanding receivables is the exposure to billed receivable and are normally unsecured and derived from revenue earned from customer mostly from India. Credit risk is managed by the company through credit approvals and continuously monitoring the credit worthiness of the customer to which the company grants credit in the normal course of business. The company applied simplified approach of estimated credit loss for trade receivable, which provide for expected credit loss based on life-time expected losses. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. The Company does not have any significant credit risk exposure to any single counterparty.

The concentration of credit risk is limited due to the fact that the customer base is large and unrelated.

Liquidity risk - Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The company’s pricincipal source of liquidity is from cash and cash equivalent and the cash flow from operations. The company does not have any external borrowings from banks or any other financial institution. The company believes that the working capital through internal accruals is sufficient to meet its current requirements and hence the Company does not perceive any such risk.

Capital management - The company’s objective is to safeguard its financial stability, financial independence and its ability to continue as a going concern in order to generate returns for the shareholders and benefits for the other stake holders. The company incentivize the shareholders by paying optimum and regular dividends.

The Company determines the amount of capital required on the basis of annual operating plans and other strategic investment plans. The funding requirements are met through internally generated funds . The Company does not have any borrowings in its capital portfolio.

Notes to reconciliation

1. Under previous GAAP, long terms investments were measured at cost less diminution in value which is other than temporary. Under IND AS, these financial assets have been classified as FVTOCI. On the date of transition to IND AS, these financial assets have been measured at their fair value which is higher than the cost as per previous GAAP, resulting in an increase in the carrying amount by RS,2,312.53 Lakhs as at March 31st, 2016 and by RS,503.52 Lakhs as at April 1st, 2015. There is no deferred tax liability recognized considering that there will be no tax liability in the future. The net effect of these changes is an increase in total equity as at March 31, 2016 of RS,2,816.05 Lakhs (RS,503.52 Lakhs as at April 1, 2015). These changes do not affect profit before tax or total profit for the year ended March 31, 2016 because the investments have been classified as FVTOCI.

2. Under previous GAAP, dividends on equity shares recommended by the Board of Directors after the end of the reporting period but before the financial statements were approved for issue were recognized in the financial statements as a liability. Under IND AS, such dividends are recognized when declared by the members in a General Meeting. The effect of this change is an increase in total equity as at March 31, 2016 of RS,5,424.14 Lakhs (RS,5,085.14 Lakhs as at April 1, 2015), but does not affect profit before tax and total profit for the year ended March 31, 2016.

3. Under previous GAAP, actuarial gains and losses were recognized in profit or loss. Under IND AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability/asset which is recognized in Other comprehensive income. Consequently, the tax effect of the same has also been recognized in Other comprehensive income under IND AS instead of profit or loss. Actuarial losses for the year ended March 31, 2016 were RS,85.01 Lakhs and the tax effect thereon is RS,27.20 Lakhs. The effect of this change is increase in profit by RS,85.01 Lakhs and equity by C57.81Lakhs.

4. Under the previous GAAP, provision for doubtful debts on trade receivables were carried on the basis of an incurred loss model. As per Ind AS, the Company is required to apply expected credit loss model for recognizing the allowance for doubtful debts. As a result there is an increase in the amount of allowance for doubtful debts and corresponding deferred tax has also been recognized. The net effect of this change is a decrease in total equity as at March 31, 2016 of RS,44.14 Lacs (RS,595.67 Lacs as at April 1, 2015) and decrease in total profit for the year ended March 31, 2016 of RS,44.14 Lacs

5. Under the previous GAAP, the company recorded revenue based on the delivery of the finished product. However under IND AS, revenue needs to be recognized on the basis of POCM relating to the job work services done by the company. The effect of this change is an increase in total equity as at March 31, 2016 of RS,92.77 Lacs (RS,112.76 Lacs as at April 1, 2015) 31.15

Previous years’ figures have been restated to comply with IND AS to make them comparable with the current period. Further, previous years’ figures have been regrouped / reclassified, wherever necessary, to conform with the current period presentation.


Mar 31, 2014

(Rs.in Lakhs)

Year ended Year ended

31st March, 2014 31st March, 2013

1 ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS

1.1 Contingent Liabilities and Commitments, to the extent not provided for

Letters of Credit 2,722.62 3,147.41

Bank Guarantee 1,687.05 1,471.69

Central Excise Demand 472.63 443.99

Income Tax Demand 653.26 513.05

Disputed tax dues are appealed before concerned appellate authorities.

The Company is advised that the cases are likely to be disposed off in favour of the Company and hence no provision is considered necessary therefor.

Estimated balance of committed share subscription to wholly owned subsidiary company, Rs.2,343.61 LMW Textile Machinery (Suzhou) Limited [USD Nil million]; (previous year USD 4.50 million)]

Estimated amount of contracts remaining to be executed on capital account not provided 436.60 529.80 for 24.14 Provision for Excise duty amounting T206.03 Lakhs (Previous year T229.66 Lakhs) for the uncleared stock of finished goods has been reckoned in the value of Finished Goods.

1.2 In the opinion of the Board of Directors, assets otherthan fixed assets and non current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

1.3 Related Party Disclosures

1) Related Party Relationships

Key Management Personnel:

Sri. Sanjay Jayavarthanavelu, Chairman and Managing Director Sri. R. Rajendran, Director Finance

Wholly Owned Subsidiary:

LMW Textile Machinery (Suzhou) Co. Ltd

Other related parties-Associates

Dhanuprabha Agro P Ltd

Eshaan Enterprises Limited

Harshini Textiles Limited

Hermes Academy of Training Limited

Lakshmi Cargo Company Limited

LCC Cargo Holdings Limited

Lakshmi Caipo Industries Ltd

Lakshmi Engg & Environment Designs Ltd

Lakshmi Electrical Drives Limited

Lakshmi Technology & Engg. Industries Ltd

Lakshmi Ring Travellers (CBE) Limited

Lakshmi Electrical Control Systems Limited

Lakshmi Precision Tools Limited

Lakshmi Life Sciences Limited

Lakshmi Vignesh Corporate Services Ltd

Mahalakshmi Engineering Holdings Limited

Quattro Engineering India Limited

Revantha Holdings Limited

Revantha Builders Ltd

Revantha Agro Farms P Ltd

Sowbarniha Resorts Private Limited

Sri Kamakoti Kamakshi Textiles P Ltd

Sri Lakshmi Vishnu Plastics

Sudhsruti Agro P Ltd

Super Sales India Limited

Supreme Dairy Products India Ltd

Starline Travels Limited

Titan Paints & Chemicals Limited

Venkatavaradha Agencies Limited

Walzer Hotels Limited

Note : Related party relationships are as identified by the Management

Disclosure in respect of Material Related Party Transaction during the year:

1 Purchase of Goods includes LMW Textile Machinery (Suzhou) Co. Ltd TNil Lakhs (Previous Year Rs.6.64 Lakhs); Lakshmi Electrical Control Systems Limited Rs.14,544.07 Lakhs (Previous Year Rs.2,079.66 Lakhs), Lakshmi Electrical Drives Limited Rs.3,399.10 Lakhs (Previous Year Rs.2,970.74 Lakhs); Super Sales India Limited Rs.2,759.05 Lakhs (Previous year Rs.,046.67 Lakhs) and Other Related Parties- Associates Rs.5,531.43 Lakhs (Previous Year XI, 161 Lakhs)

2 Sale of Goods includes LMW Textile Machinery (Suzhou) Co. Ltd Rs.4,738.24 Lakhs (Previous Year Rs.5,282.01 Lakhs), Lakshmi Electrical Control Systems Limited Rs.7,831.52 Lakhs (Previous Year Rs.6,656.68 Lakhs) and Other related Parties - Associates Rs.1,407.72 Lakhs (Previous Year Rs.501.99 Lakhs)

3 Purchase of Fixed Assets includes Quattro Engineering India Limited T68.95 Lakhs (Previous Year Rs.Nil Lakhs)

4 Sale of Fixed Assets includes Super Sales India Ltd Rs.23.81 Lakhs(Previous Year Rs.99.44 Lakhs); Revantha Builders Ltd Rs.Nil Lakhs (Previous yearRs.231.00 Lakhs); Quattro Engineering P Ltd Rs.1,935.00 Lakhs (Previous year Nil); and Other Related Parties-Associates Rs.5.50 Lakhs (Previous Year Rs.22 Lakhs)

5 Rendering of Services includes , LMW Textile Machinery (Suzhou)Co. Ltd Rs.338.35 Lakhs (Previous Year Rs. 71.41 Lakhs), Super Sales India Limited Rs.27.50 Lakhs (Previous Year Rs.23.54 Lakhs); Lakshmi Technology & Engineering Industries Ltd. T30.10 Lakhs (Previous yearRs.32.87 Lakhs); Lakshmi Electrical Control Systems Limited Rs.Nil Lakhs(Previous Year 0.61 Lakhs) and Others - Other Related Parties- Associates Rs.10.95 Lakhs (Previous Year Rs.36.84 Lakhs)

6 Receiving of Services include Lakshmi Ring Travellers (CBE) Limited Rs.624.38 Lakhs (Previous Year Rs.573.51 Lakhs); Lakshmi Cargo Company Limited Rs.5,568.08 Lakhs (Previous Year Rs.4,180.71 Lakhs); Revantha Builders Ltd Rs.635.51 Lakhs (Previous year Rs.898.20 Lakhs) and Other Related Parties - Associates Rs.572.21 Lakhs (Previous Year Rs.982.14 Lakhs)

7 Agency arrangement includes Super Sales India Limited Rs.262.25 Lakhs (Previous Year Rs.270.09 Lakhs)

8 Managerial Remuneration includes amount paid to Sri. Sanjay Jayavarthanavelu Rs.731.15 Lakhs (Previous Year Rs.521.22 Lakhs) Sri.R.Rajendran Rs.99.45 Lakhs (Previous year Rs.95.66 Lakhs)

9 Investment in Shares includes LMW Textile Machinery (Suzhou) Co. Limited Rs.2,563.86 Lakhs (Previous Year Rs.625.20 Lakhs)

10 Loan received back includes Lakshmi Ring Travellers (CBE) Ltd -T200.00 Lakhs ( Previous Year T200.00 Lakhs)

11 Interest receipts include Lakshmi Ring Travellers (CBE) Limited Rs.57.84 Lakhs (Previous year T77.82 Lakhs)

12 Outstanding Payables include Lakshmi Cargo Company Limited Rs.428.44 Lakhs (Previous Year Rs.234.43 Lakhs); Lakshmi Precision Tools Limited Rs. 25.75 Lakhs (Previous Year Rs.35.76 Lakhs); Lakshmi Electrical Drives Ltd Rs.400.75 Lakhs (Previous year Rs.253.35 Lakhs) Super Sales India Limited Rs. ,333.47 Lakhs (Previous Year Rs.318.05 Lakhs) Sri. Sanjay Jayavarthanavelu Rs.506.13 Lakhs (Previous year Rs.320.61 Lakhs) and Other Related Parties -Associates Rs. 59.18 Lakhs (Previous Year Rs. 48.17 Lakhs)

13 Outstanding Receivables include LMW Textile Machinery (Suzhou) Co. Ltd Rs.2,997.75 Lakhs (Previous Year Rs.2.200.58 Lakhs), Lakshmi Electrical Control Systems Limited Rs., 125.30 Lakhs (Previous Year Rs.,021.1 5 Lakhs, Lakshmi Technology and Engineering Industries Limited Rs. 67.30 Lakhs (Previous Year Rs.556.36 Lakhs); Lakshmi Ring Travellers (CBE) Ltd. Rs.546.34 Lakhs (Previous year Rs. ,276.64 Lakhs) and Others - Other Related Parties - Associates T406.95 Lakhs (Previous Year Rs. 73.32 Lakhs)

1.4 (a) The Company gives warranties for its products undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made at the end represents the amount of expected cost of meeting such obligations of rectification/ replacements. The timing of the outflows is expected to be within a period of one year.

1.5 Revenue Expenditure on Research S Development amounting to Rs.1,298.32 Lakhs (Previous Year Rs.1,032.73 Lakhs) has been charged to Statement of Profit and Loss (included in Miscellaneous expenses) and Capital expenditure relating to Research and Development amounting to Rs.350.38 Lakhs (Previous Year Rs.Nil Lakhs) has been included in Fixed Assets

1.6 (a) There are no derivative financial instruments either for hedging or for speculation outstanding as at the Balance Sheet date.

1.7 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2013

NOTE : 1. CORPORATE INFORMATION

Lakshmi Machine Works Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on three stock exchanges in India. The company is engaged in the manufacturing and selling of Textile Spinning Machinery, CNC Machine Tools, Heavy Castings and parts and components for Aero space industry. The company caters to both domestic and international markets.

2.1. As defined under Micro, Small and Medium Enterprises Development Act, 2006, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2013 has been made in the financial statements based on information received and available with the Company.

2.2. Provision for Excise duty amounting Rs. 229.66 Lakhs (Previous year Rs. 174.38 Lakhs) for the uncleared stock of finished goods has been reckoned in the value of Finished Goods.

2.3. In the opinion of the Board of Directors, assets other than fixed assets and non current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

2.4. Related Party Disclosures

1) Related Party Relationships Key Management Personnel

Sri. Sanjay Jayavarthanavelu, Chairman and Managing Sri. R. Rajendran, Director Finance Director

Wholly Owned Subsidiaries:

LMW Textile Machinery (Suzhou) Co. Ltd

Other Related Parties-Associates

Eshaan Enterprises Limited Harshini Textiles Limited Hermes Academy of Training Limited Integrated Electrical Controls Limited Lakshmi Cargo Company Limited LCC Cargo Holdings Limited Lakshmi Electrical Drives Limited Lakshmi Technology & Engg. Industries Ltd Lakshmi Ring Travellers (CBE) Limited Lakshmi Electrical Control Systems Limited Lakshmi Precision Tools Limited Lakshmi Life Sciences Limited

LMW Machinery Limited [from 16.8.2011 to 31.3.2012]

Lakshmi Vignesh Corporate Services Ltd

Mahalakshmi Engineering Holdings Limited

Quattro Engineering India Limited

Revantha Holdings Limited

Revantha Builders P Ltd

Sri Kamakoti Kamakshi Textiles P Ltd

Sri Lakshmi Vishnu Plastics

Super Sales India Limited

Starline Travels Limited

Titan Paints & Chemicals Limited

Venkatavaradha Agencies Limited

Walzer Hotels Limited

Disclosure in respect of Material Related Party Transaction during the year :

1 Purchase of Goods includes Rieter LMW Machinery Limited Rs. Nil lakhs (Previous Year Rs. 5.58 lakhs ), LMW Textile Machinery (Suzhou) Co. Ltd Rs. 16.64 lakhs (Previous Year Rs. Nil lakhs ) LMW Machinery Limited Rs. Nil lakhs (Previous Year Rs. 508.65 lakhs), Lakshmi Electrical Control Systems Limited Rs. 12,079.66 lakhs (Previous Year Rs. 16,123.10 lakhs), Lakshmi Electrical Drives Limited Rs. 2,970.74 lakhs (Previous Year Rs. 4,002.76 lakhs) and Other related parties- Associates Rs. 3,236.52 lakhs (Previous Year Rs. 4,180.02 lakhs).

2 Sale of Goods includes LMW Textile Machinery (Suzhou) Co. Ltd Rs. 5,282.01 lakhs (Previous Year Rs. 7,382.24 lakhs), Rieter LMW Machinery Limited Rs. Nil lakhs (Previous year Rs. 490.55 lakhs) LMW Machinery Limited Rs. Nil lakhs (Previous Year Rs. 2,794.20 lakhs), Lakshmi Electrical Control Systems Limited Rs. 6,656.68 lakhs (Previous Year Rs. 9,351.36 lakhs) and Other related Parties - Associates Rs. 513.15 lakhs (Previous Year Rs. 800.55 lakhs).

3 Purchase of Fixed Assets includes Lakshmi Precision Tools Ltd. Rs. Nil lakhs (Previous year Rs. 193.98 lakhs), Quattro Engineering India Limited Rs. Nil lakhs (Previous Year Rs. 117.60 lakhs), Lakshmi Cargo Company Limited. Rs. Nil lakhs (Previous year Rs. 311.64 lakhs) and Super Sales India Ltd. Rs. Nil lakhs (Previous year Rs. 179.41 lakhs).

4 Sale of Fixed Assets includes LMW Machinery Limited Rs. Nil lakhs (Previous year Rs. 13.46 lakhs) , Super Sales India Ltd Rs. 99.44 lakhs(Previous Year Rs. 0.26 lakhs), Starline Travels Limited Rs. Nil lakhs (Previous year Rs. 7.90 lakhs), Revantha Builders P Ltd Rs. 231.00 lakhs (Previous year Rs. Nil lakhs), Lakshmi Vignesh Corporate Services Ltd Rs. Nil lakhs (Previous year Rs. 150 lakhs), and Other Related Parties-Associates Rs. 1.22 lakhs (Previous Year Rs. Nil lakhs).

5 Rendering of Services includes Rieter LMW Machinery Limited Rs. Nil lakhs (Previous Year Rs. 0.10 lakhs), LMW Textile Machinery (Suzhou)Co. Ltd Rs. 171.41 lakhs (Previous Year Rs. 25.11 lakhs), Super Sales India Limited Rs. 23.54 lakhs (Previous Year Rs. 49.20 lakhs), LMW Machinery Limited Rs. Nil lakhs (Previous Year Rs. 18.76 lakhs) Lakshmi Technology & Engineering Industries Ltd. Rs. 32.87 lakhs (Previous year Rs. 44.64 lakhs), Lakshmi Electrical Control Systems Limited Rs. 0.61 lakhs(Previous Year Rs. Nil lakhs) and Other Related Parties-Associates Rs. 37.70 lakhs (Previous Year Rs. 22.59 lakhs).

6 Receiving of Services include Lakshmi Ring Travellers (CBE) Limited Rs. 573.51 lakhs (Previous Year Rs. 693.05 lakhs), Lakshmi Cargo Company Limited Rs. 4,180.71 lakhs (Previous Year Rs. 5,072.96 lakhs), Revantha Builders P Ltd Rs. 898.20 lakhs (Previous year Rs. 418.58 lakhs) and Other Related Parties - Associates Rs. 1,989.94 lakhs (Previous Year Rs. 1,903.63 lakhs).

7 Agency arrangement includes Super Sales India Limited Rs. 1,270.09 lakhs (Previous Year Rs. 1,389.95 lakhs).

8 Managerial Remuneration includes amount paid to Sri. Sanjay Jayavarthanavelu Rs. 521.22 lakhs (Previous Year Rs. 348.29 lakhs), Sri. R. Rajendran Rs. 95.66 lakhs (Previous year Rs. 88.76 lakhs).

9 Dividends paid to includes Lakshmi Technology and Engineering Industries Limited Rs. 333.55 lakhs (Previous Year Rs. 200.13 lakhs), Lakshmi Cargo Company Limited Rs. 461.86 lakhs (Previous Year Rs. 247.12 lakhs), Other Related Parties - Associates Rs. 276.47 lakhs (Previous Year Rs. 251.87 lakhs), Sri Sanjay Jayavarthanavelu Rs. 71.15 lakhs (Previous Year Rs. 39.70 lakhs) , Dr. D. Jayavarthanavelu Rs. Nil lakhs (Previous Year Rs. 3.00 lakhs), Sri R. Rajendran Rs. 1.22 lakhs (Previous year Rs. 0.74 lakhs).

10 Investment in Shares includes LMW Textile Machinery (Suzhou) Co. Limited Rs. 1,625.20 lakhs (Previous Year Rs. Nil lakhs), LMW Machinery Limited Rs. Nil lakhs (Previous year Rs. 5,400 lakhs).

11 Loan received back includes Lakshmi Ring Travellers (CBE) Ltd - Rs. 200 lakhs (Previous Year Rs. 150 lakhs), Rieter LMW Machinery Limited Rs. Nil lakhs (Previous year Rs. 1,250 lakhs).

12 Loan given : Lakshmi Ring Travellers (CBE) Ltd- Rs. Nil lakhs (Previous Year Rs. 1,000 lakhs).

13 Interest receipts include Rieter LMW Machinery Limited Rs. Nil lakhs (Previous Year Rs. 33.26 lakhs) and Lakshmi Ring Travellers (CBE) Limited Rs. 77.82 lakhs (Previous year Rs. 74.14 lakhs).

14 Outstanding Payables include Lakshmi Cargo Company Limited Rs. 234.43 lakhs (Previous Year Rs. 726.76 lakhs), Lakshmi Precision Tools Limited Rs. 85.76 lakhs (Previous Year Rs. 136.73 lakhs), Lakshmi Electrical Drives Ltd Rs. 253.35 lakhs (Previous year Rs. Nil lakhs) Super Sales India Limited Rs. 918.05 lakhs (Previous Year Rs. 905.15 lakhs) and Other Related Parties -Associates Rs. 148.17 lakhs (Previous Year Rs. 135.89 lakhs), Sri. Sanjay Jayavarthanavelu Rs. 320.61 lakhs (Previous year Rs. 228.41 lakhs).

15 Outstanding Receivables include LMW Machinery Limited Rs. Nil lakhs (Previous Year Rs. 1,205.99 lakhs), LMW Textile Machinery (Suzhou) Co. Ltd Rs. 2,200.58 lakhs (Previous Year Rs. 1,543.52 lakhs), Lakshmi Electrical Control Systems Limited Rs. 1,021.15 lakhs (Previous Year Rs. 428.46 lakhs), Lakshmi Technology and Engineering Industries Limited Rs. 556.36 lakhs (Previous Year Rs. 554.28 lakhs), Lakshmi Electrical Drives Ltd. Rs. Nil lakhs (Previous year Rs. 516.97 lakhs), Lakshmi Ring Travellers (CBE) Ltd. Rs. 1,276.64 lakhs (Previous year Rs. 1,961.37 lakhs) and Others - Other Related Parties - Associates Rs. 173.32 lakhs (Previous Year Rs. 20.55 lakhs).

2.5 (a) The Company gives warranties for its products undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made at the end represents the amount of expected cost of meeting such obligations of rectification/replacements. The timing of the outflows is expected to be within a period of one year.

(b) Disclosures in terms of Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets"

2.6 Revenue Expenditure on Research & Development amounting to Rs. 1032.73 lakhs (Previous Year Rs. 943.07 lakhs) has been charged to Statement of Profit and Loss (included in Miscellaneous expenses) and Capital expenditure relating to Research and Development amounting to Rs. Nil Lakhs (Previous Year Rs. 570.35 Lakhs) has been included in Fixed Assets.

2.7 (a) There are no derivative financial instruments either for hedging or for speculation outstanding as at the Balance Sheet date.

(b) Foreign currency exposures that are not hedged by a derivative instrument or otherwise are as under:

2.8 a) Pursuant to the Scheme of Amalgamation sanctioned by the Hon''ble Madras High Court, LMW Machinery Limited, (LMW ML) a wholly owned subsidiary company, has been amalgamated with the company with effect from 01.04.2012 and the assets and liabilities of the erstwhile LMW ML were transferred to and vested in the company with effect from 01.04.2012 (appointed date). The amalgamating company was engaged in the manufacture of textile spinning machinery.

b) The amalgamation is accounted for under the "Pooling of Interest" method as prescribed by Accounting Standard 14 "Accounting for amalgamations". Accordingly, the assets and liabilities and other reserves of the erstwhile LMW Machinery Limited as on 01.04.2012 have been taken over at their book values subject to adjustments made for the differences in accounting policies between the two companies.

c) As provided in the Scheme of Amalgamation, 2,50,00,000 equity shares held by the company in LMW ML stands cancelled. Since LMW ML was a wholly owned subsidiary, no shares were issued pursuant to the amalgamation.

d) Consequent to the amalgamation, an amount of Rs. 2,933.62 lakhs (inclusive of Rs. 1,371.64 lakhs on account of difference in accounting policies relating to depreciation of LMW ML and the company) is debited to goodwill account which has subsequently been fully adjusted against the General Reserve Account as per Scheme of amalgamation sanctioned by the Madras High Court.

e) Provision for taxation for the year has been reckoned taking into account the effect of amalgamation.

f) In view of the amalgamation with effect from 01.04.2012, the figures for the current year are not comparable with those of the previous year.

g) Current tax expense for the year is reckoned after considering the MAT credit entitlement of Rs. 336.80 lakhs of the amalgamating company.

2.9 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2012

Note: 1. CORPORATE INFORMATION

Lakshmi Machine Works Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on three stock exchanges in India. The Company is engaged in the manufacturing and selling of Textile Spinning Machinery, CNC Machine Tools, Heavy castings and parts and components for Aero space industry. The company caters to both domestic and international markets.

2.1. Contingent Liabilities and Commitments, to the extent not provided for (RS.in Lakhs)

As at As at

March 31, 2011 March 31, 2010

Bills discounted with banks 509.75 -

Letters of Credit 2,180.00 7,070.14

Bank Guarantee 2,030.67 862.40

Central Excise Demand 385.59 440.58

Income Tax Demand 274.51 342.56

Disputed tax dues are appealed before concerned appellate authorities. The Company is advised that the cases are likely to be disposed off in favor of the Company and hence no provision is considered necessary there for.

Estimated balance of committed share subscription to wholly owned subsidiary company, LMW Textile

Machinery (Suzhou) Co., Limited [USD 7.50 million; (previous year USD 7.50 million)] 3,906.02 3,404.84

Estimated amount of contracts remaining to be executed on capital account not provided for 1,282.00 2,009.42

2.2. Provision for Excise duty amounting Rs174.38 Lakhs (Previous year Rs89.15 Lakhs) for the nucleated stock of finished goods has been reckoned in the value of Finished Goods.

2.3. In the opinion of the Board of Directors, assets other than fixed assets and noncurrent investments have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

Gratuity is applicable to all permanent and full time employees of the company.

Gratuity payment is based on last drawn basic salary and dearness allowance at the time of termination or retirement. The Scheme takes into account each completed year of service or part thereof in excess of six months. The entire contribution is borne by the company.

Leave encashment benefits are provided as per the Rules of the Company. The liabilities on account of defined benefit obligations are expected to be contributed within the next financial year.

Notes:

1) The Company is organized into two main Business Segments viz., Textile Machinery Segment comprising of Spinning Preparatory Machinery; Yarn Making machinery; Accessories & Parts and Other Segments comprising of Machine Tools, Foundry Division and Advanced Technology Centre.

2) The Secondary Geographical Segments considered for disclosure are Revenue from Customers located within India (Domestic Segment) and Revenue from customers located outside India (Export Segment).

3) Inter Segment transfers are accounted at weighted average cost, vis-a-vis at competitive market price charged to Unaffiliated customers for similar goods

4) Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

Disclosure in respect of Material Related Party Transaction during the year:

1 Purchase of Goods includes Rieter LMW Machinery Limited Rs5.58 Lakhs (Previous year Rs Nil) Lakshmi Electrical Control Systems Limited Rs16,123.10 Lakhs (Previous year Rs14,354.71 Lakhs), Lakshmi Electrical Drives Limited Rs4,002.76 Lakhs (Previous year Rs4,089.43 Lakhs), LMW Machinery Limited Rs508.65 Lakhs (Previous year Rs Nil) and Other Related Parties- Associates Rs4,694.25 Lakhs (Previous year Rs3,360.67 Lakhs)

2 Sale of Goods includes LMW Textile Machinery (Suzhou) Co., Ltd Rs7,382.24 Lakhs (Previous year Rs9,147.62 Lakhs); Rieter LMW Machinery Limited Rs490.55 Lakhs (Previous year Rs761.68 Lakhs) LMW Machinery Limited Rs2,794.20 Lakhs (Previous year Rs Nil), Lakshmi Electrical Control Systems Limited Rs9,351.36 Lakhs (Previous year Rs6,199.78 Lakhs) and Other related Parties - Associates Rs796.43 Lakhs (Previous year Rs1,611.37 Lakhs)

3 Purchase of Fixed Assets includes Lakshmi Precision Tools Ltd. Rs193.98 Lakhs (Previous year Rs Nil); Quattro Engineering India Limited Rs117.60 Lakhs (Previous year Rs66.42 Lakhs); Lakshmi Cargo Company Limited Rs311.64 Lakhs (Previous year Rs27.66 Lakhs) and Super Sales (India) Ltd. Rs179.41 Lakhs (previous year Rs Nil).

4 Sale of Fixed Assets includes LMW Machinery Limited T13.46 Lakhs (Previous year Rs Nil Lakhs); Super Sales (India) Ltd T0.26 Lakhs (Previous year Rs921.61 Lakhs); Titan Paints & Chemicals Ltd. T7.90 Lakhs (Previous year Rs Nil) and Other Related Parties-Associates Rs Nil (Previous year Rs42 Lakhs)

5 Rendering of Services includes Rieter LMW Machinery Limited Rs0.10 Lakhs (Previous year Rs 0.72 Lakhs), LMW Textile Machinery (Suzhou) Co., Ltd Rs25.11 Lakhs (Previous year Rs35 .35 Lakhs), Super Sales (India) Limited Rs49.20 Lakhs (Previous year Rs209.44 Lakhs); LMW Machinery Limited Rs1 8.76 Lakhs (Previous year Rs Nil) Lakshmi Technology & Engineering Industries Ltd. Rs44.64 Lakhs (Previous year Rs Nil) and Others - Other Related Parties-Associates Rs22.69 Lakhs (Previous year Rs37.54 Lakhs)

6 Receiving of Services include LMW Textile Machinery (Suzhou) Co., Ltd Rs Nil (Previous year Rs0.10 Lakhs); Lakshmi Ring Travellers (Cbe) Limited Rs693.05 Lakhs (Previous year Rs585.93 Lakhs); Lakshmi Cargo Company Limited Rs5,070.39 Lakhs (Previous year Rs3,890.28 Lakhs) and Other Related Parties - Associates Rs1,289.87 Lakhs (Previous year Rs1,020.97 Lakhs)

7 Agency arrangement includes Super Sales (India) Limited Rs1,389.95 Lakhs (Previous year Rs1,221.60 Lakhs)

8 Managerial Remuneration includes amount paid to Dr. D. Jayavarthanavelu Rs Nil (Previous year Rs117.79 Lakhs), Sri. Sanjay Jayavarthanavelu Rs348.29 Lakhs (Previous year Rs364.76 Lakhs) Sri.R. Rajendran Rs88.76 Lakhs (Previous year Rs13.43 Lakhs for part of the year)

9 Dividends paid to includes Lakshmi Technology and Engineering Industries Limited Rs200.13 Lakhs (Previous year Rs100.06 Lakhs); Lakshmi Cargo Company Limited Rs247.12 Lakhs (Previous year Rs123.56 Lakhs); Other Related Parties - Associates Rs251.88 Lakhs (Previous year Rs102.01 Lakhs), Dr. D. Jayavarthanavelu T3.00 Lakhs (Previous year Rs6.44 Lakhs), Sri Sanjay Jayavarthanavelu T39.70 Lakhs (Previous year Rs14.90 Lakhs)

10 Investment in Shares includes LMW Textile Machinery (Suzhou) Co., Limited Rs Nil (Previous year Rs558.75 Lakhs), LMW Machinery Limited Rs5,400 Lakhs (Previous year Rs Nil)

11 Loan received back includes Lakshmi Ring Travellers (CBE) Ltd - Rs150 Lakhs (Previous year Rs Nil); Rieter LMW Machinery Limited Rs1,250 Lakhs (Previous year Rs Nil)

12 Loan given : Lakshmi Ring Travellers (CBE) Ltd- Rs1,000 Lakhs (Previous year Rs Nil).

13 Interest receipts include Rieter LMW Machinery Limited Rs33.26 Lakhs (Previous year Rs100 Lakhs) and Lakshmi Ring Travellers (CBE) Limited Rs74.14 Lakhs (Previous year Rs Nil)

14 Outstanding Payables include Lakshmi Cargo Company Limited Rs726.76 Lakhs (Previous year Rs443.51 Lakhs); Lakshmi Electrical Drives Limited Rs Nil (Previous year Rs433.74 Lakhs); Lakshmi Precision Tools Limited Rs136.73 Lakhs (Previous year Rs1 57.1 5 Lakhs), Super Sales (India) Limited Rs905.15 Lakhs (Previous year Rs Nil), Lakshmi Ring Travellers (Cbe) Limited Rs Nil (Previous year Rs160.73 Lakhs) and Other Related Parties - Associates Rs135.89 Lakhs (Previous year Rs49.11 Lakhs)

15 Outstanding Receivables include LMW Machinery Limited Rs1,205.99 Lakhs (Previous year Rs Nil), Rieter LMW Machinery Limited Rs Nil (Previous year Rs1,372.47 Lakhs), LMW Textile Machinery (Suzhou) Co., Ltd Rs1,543.52 Lakhs (Previous year Rs2,997.18 Lakhs), Lakshmi Electrical Control Systems Limited Rs428.46 Lakhs (Previous year Rs706.53 Lakhs), Lakshmi Technology and Engineering Industries Limited Rs554.28 Lakhs (Previous year Rs478.85 Lakhs), Super Sales (India) Limited Rs Nil (Previous year Rs495.17 Lakhs), Lakshmi Electrical Drives Ltd. Rs516.97 Lakhs (Previous year Rs Nil); Lakshmi Ring Travelers Ltd. Rs1,961.37 Lakhs (Previous year Rs Nil) and Others - Other Related Parties - Associates Rs20.55 Lakhs (Previous year Rs98.36 Lakhs)

2.3. a) The Company gives warranties for its products undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made at the end represents the amount of expected cost of meeting such obligations of rectification/replacements.

The timing of the outflows is expected to be within a period of one year.

2.4. Revenue Expenditure on Research & Development amounting to Rs943.07 Lakhs (Previous year Rs1,195.05 Lakhs) has been charged to Statement of Profit and Loss (included in Miscellaneous expenses) and Capital Expenditure relating to Research and Development amounting to Rs570.35 Lakhs (Previous year 81.80 Lakhs) has been included in Fixed Assets.

2.5. The revised Schedule VI has become effective from 1 st April 2011 for the preparation of financial statements. 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 classification / disclosure.


Mar 31, 2011

1. As defined under Micro, Small and Medium Enterprises Development Act, 2006, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2011 has been made in the financial statements based on information received and available with the Company.

2. Provision for Excise duty amounting Rs.8,914,590/-(Previous year Rs.8,581,085/-) for the uncleared stock of finished goods has been reckoned in the value of Finished Goods.

3. In the opinion of the Board of Directors, the Current Assets, Loans and Advances have atleast the value as stated in the Balance Sheet and will be realised in the ordinary course of business.

4. Contingent Liabilities: (Amount in Rs.)

2010-11 2009-10

Letters of Credit 707,013,989 171,823,467

Bank Guarantee 86,239,859 95,746,731

Central Excise Demand 44,057,958 58,496,042

Income Tax Demand 34,255,650 -

Disputed tax dues are appealed before concerned appellate authorities. The Company is advised that the cases are likely to be disposed off in favour of the Company and hence no provision is considered necessary therefor.

5. Estimated amount of Contracts remaining to be executed on Capital account and not provided for net of advances is Rs.200,942,474/-.(Previous Year Rs.487,330,735/-)

6. a) The Company gives warranties for its products undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made at the end represents the amount of expected cost of meeting such obligations of rectification/replacements. The timing of the outflows is expected to be within a period of one year.

7. Revenue Expenditure on Research & Development amounting to Rs. 119,505,728/- (Previous Year Rs. 124,903,253/-) has been charged to Profit and Loss Account and Capital expenditure relating to Research and Development amounting to Rs. 18,180,108/- (Previous Year Rs.25,217,506/-) has been included in Fixed Asset

8 .The previous year's figures have been reworked, regrouped, rearranged and reclassified wherever necessary.

Related Party Disclosures

1) Related Party Relationships

Key Management Personnel:

Dr. D. Jayavarthanavelu, Chairman and Managing Director (Upto 10.06.2010)

Sri. R. Venkatrangappan, Chairman (Since 10.09.2010)

Sri. Sanjay Jayavarthanavelu, Managing Director (Since 10.09.2010)

Joint Ventures:

Rieter LMW Machinery Limited

Wholly Owned Subsidiary:

LMW Textile Machinery (Suzhou) Co. Ltd

Other related parties-Associates:

Annur Satya Textile Limited

Eshaan Enterprises Limited

Harshini Textiles Limited

Hermes Academy of Training Limited

Integrated Electrical Controls Limited

Lakshmi Cargo Company Limited

LCC Cargo Holdings Limited

Lakshmi Electrical Drives Limited

Lakshmi Technology & Engg. Industries Ltd

Lakshmi Ring Travellers (Cbe) Limited

Lakshmi Electrical Control Systems Limited

Lakshmi Precision Tools Limited

Lakshmi Life Sciences Limited

Mahalakshmi Engineering Holdings Limited

Quattro Engineering India Limited

Sri Kamakoti Kamakshi Textiles P Ltd

Super Sales India Limited

Starline Travels Limited

The Kuppuswamy Naidu Charity Trust for Education and Medical Relief

Titan Paints & Chemicals Limited

Venkatavaradha Agencies Limited

Walzer Hotels Limited


Mar 31, 2010

1. Provisions, contingent liabilities and contingent assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to financial statements. Contingent assets are neither recognized nor disclosed in the financial statements. Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

2. Cash Flow Statements

Cash Flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. Cash and cash equivalents include cash on hand and balances with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the Company.

3. Segment Reporting

Segment accounting policies are in line with the accounting policies of the Company, except that segment revenue includes sales and other income directly identifiable or allocable to the segment including inter-segment revenue.

Business segments are identified on the basis of the nature of products / services, the risk-return profile of individual businesses, the organizational structure and the internal reporting system of the Company.

Segment revenue, segment expenses, segment assets and liabilities include those directly identifiable with the respective segments. Income, expenses, assets and liabilities which are not identifiable with or allocable to a separate segment on a reasonable basis but are related to the Company as a whole are shown as unallocated items.

Inter-segment transfers are accounted for on weighted average cost basis.

4. Impairment of assets

An asset is treated as impaired when the carrying amount of the asset exceeds its estimated recoverable value. Carrying amounts of fixed assets are reviewed at each balance sheet date to determine indications of impairment, if any, of those assets. If any such indication exists, the recoverable amount of the asset is estimated and an impairment loss equal to the excess of the carrying amount over its recoverable value is recognized as an impairment loss. The impairment loss, if any, recognized in prior accounting period is reversed if there is a change in estimate of recoverable amount.

5. Leases

Assets given on leases where substantial risks and rewards incident to ownership of the asset are not transferred to the lessee are classified as operating leases. Lease income from such operating leases is recognized on straight line basis over the lease term. Depreciation on such leased assets is charged as per the normal depreciation policy of the Company for similar assets. Initial direct costs incurred specifically in relation to such operating leases is recognized as expense in the period in which they are incurred.

6. As defined under Micro, Small and Medium Enterprises Development Act, 2006, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2010 has been made in the financial statements based on information received and available with the Company.

7. (a) There are no derivative financial instruments either for hedging or for speculation outstanding as at the Balance Sheet date. (b) Foreign currency exposures that are not hedged by a derivative instrument or otherwise are as under:

Disputed tax dues are appealed before concerned appellate authorities. The Company is advised that the cases are likely to be disposed off in favour of the Company and hence no provision is considered necessary therefor.

8. Estimated amount of Contracts remaining to be executed on Capital account and not provided for net of advances is Rs.487,330,735/-.(Previous Year Rs.34,171,753/-)

9. (a) The Company gives warranties for its products undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provisions made at the end represents the amount of expected cost of meeting such obligations of rectification/replacements. The timing of the outflows is expected to be within a period of one year.

(b) Disclosures in terms of Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets"

10. Revenue Expenditure on Research & Development amounting to Rs. 12.49 crores (Previous Year Rs.9.47 Crores) has been charged to Profit and Loss Account and Capital expenditure relating to Research and Development amounting to Rs.2.52 Crores (Previous Year Rs.5.35 Crores) has been included in Fixed Assets

11. Amounts due from Subsidiary Company: Rs.56,918,287/-(Previous Year: Nil)

12. The previous years figures have been regrouped, rearranged and reclassified wherever necessary.

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