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Notes to Accounts of Loyal Textiles Mills Ltd.

Mar 31, 2023

Notes on property, plant and equipment

** Includes Rs. 155.22 lacs of Land on "right of use basis" which is depreciated over the useful life of lease term # Advance of Rs.200.64 lacs given to STPCL in relation to development of SIPCOT land has been reclassified to Capital Advance.

1. The title deeds of all immovable properties are held in the name of the Company. Where immovable properties are acquired by the Company consequent to acquisition / merger of companies, the title to the immovable properties of the transferror companies shall be deemed to have been mutated in the name of the company as per the scheme of amalgamation approved by National Company Law Tribunal / court

2. Fair value disclosure of investment property as required under Ind AS 40: The fair value of the Investment property as on 31.03.2023 amounting to Rs. 1,942 lacs is management estimate based on the available market information and the same is not valued by a registered valuer.

*The companies mentioned in below table are not operational and the company has also made an application with the AD Banker during the current year for closure of the three foreign join venture companies. Accordingly, the carrying value of these investments has been impaired during the year.

Investments in subsidiary and joint venture which are inoperative:

Note No. 13(b) Rights, preference and restriction attached to equity shares

The Company has one class of equity shares having a par value of Rs. 10/- each. Each holder of equity shares is entitled to one vote per share. The dividend if any proposed by the Board of Directors will be subject to the approval of the shareholders in the ensuing annual general meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

* Note on Insurance Claim Received

A fire accident took place at Shri Visala Textile Mills [SVTM] weaving unit at Naidupeta, Andhra Pradesh on 7th March 2022. Total claim made with insurance company for replacement value of the assets damaged was Rs. 49.76 crores against which an adhoc amount of Rs. 13.75 crores was received in March''23.

Further, Insurance Claim of Rs. 50 lacs has been received against looms affected due to fire accident in LTM Weaving Division in Apr''22 and Rs. 2.82 crores against claim made in relation to damage to windmill due to fire accident.

35) Financial Instruments and Risk Management 35.11 Capital management

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to stakeholders through optimisation of debt and equity balance.

The capital structure of the Company consists of net debt setoff by cash and bank balances and total equity of the Company.

The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, internal accruals and short-term borrowings.

Fair value measurements (Ind AS 113)

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The Company has established the following fair value hierarchy that categorises the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:

Level 1: Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.

Level 2: Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly.

Level 3: Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data.

Sensitivity of Level 3 financial instruments are insignificant.

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

35.3 Financial Risk Management

Company''s principal financial liabilities comprise borrowings, trade payables and Other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include Investments, Trade receivables, loans, cash and bank balances and other financial assets.

Risk Exposures and Responses

The Company is exposed to market risk, credit risk and liquidity risk. The Board of Directors reviews policies for managing each of these risks, which are summarised below

35.3.1 Market Risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowing.

(i) Foreign Currency Risk

The company operates internationally and business is transacted in several currencies. The current year export sales of company comprise around 50% of the total sales of the company. Further the company also imports certain assets and material. The exchange rate between the Indian Rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently the company is exposed to foreign currency risks and the results of the company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than company''s functional currency.

The company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions.

Exchange rate exposures are managed through derivative forward foreign exchange contracts.

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.

Sensitivity analysis:

Sensitivity analysis is carried out for floating rate borrowings as at March 31,2023. For every 1% increase in average interest rates, profit before tax would be impacted by loss of approximately Rs. 662 lakhs (Pr.Yr: Rs. 616 Lakhs). Similarly, for every 1% decrease in average interest rates there would be an equal and opposite impact on the profit before tax. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.

35.3.2 Liquidity Risk

Liquidity Risk is the risk that the company may not be able to meet on its financial obligations as they become due. The objective of the liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as and when required.

The finance management policy of the company includes an appropriate liquidity risk management framework for the management of the short-term, medium-term and long term funding and cash management requirements. The company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast, future cash flows, and by matching the maturity profiles of financial assets and liabilities.

35.3.3 Credit Risk

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and advance for suppliers) and from its financing/ investing activities, including deposits with banks and foreign exchange transactions.

(i) Trade receivables

Trade receivables of the company are typically unsecured and derived from sale made to a large number of independent customers. Customer credit risk is managed by each business unit subject to established policies, procedures and control relating to customer credit risk management. Before accepting any new customer, the company has appropriate level of control procedures to assess the potential customer credit quality. The credit worthiness of its customers are reviewed based on their financial position, past experience and other facts. The credit period provided by the company to its customers generally ranges from 0-90 days. Outstanding customer receivables are reviewed periodically.

The credit related to the trade receivables is mitigated by taking security deposits/ bank guarantee/letter of credit- as and where considered necessary, setting appropriate credit terms and by setting and monitoring internal limits on exposure to individual customers.

There is no substantial concentration of the credit risk as the revenue / trade receivables pertaining to any of the single customer do not exceed 10% of company revenue.

(ii) Cash and Cash Equivalents and Bank Deposits

Credit risk on cash and cash equivalents and balances with Banks is considered to be minimal as the counterparties are all substantial banks and Corporates with high credit ratings. The Directors are unaware of any factors affecting the recoverability of outstanding balances at 31st March 2023

The expenses incurred on account of the above defined contribution plans have been included in Note 28 âEmployee Benefits Expensesâ under the head âContribution to provident and other fundsâ

(b) Defined Benefit Plans - Gratuity

The Company sponsors funded defined benefit plan for qualifying employees. This defined benefit plan of gratuity is administered by a separate trust that is legally separate from the entity. The trustees are required by the law to act in the interest of the trust and all the relevant stakeholders i.e. active employees, inactive employees, retired employees and employers, etc. The trust is responsible for investment policy with regard to the assets of the trust. The Company has a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972 or as per the Company''s plan, whichever is more beneficial

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

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability

Longevity Risk

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

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

43) Additional regulatory Information required under Schedule III of Companies Act 2013

(i) Details of Benami property held

No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

(ii) Borrowing secured against current assets

The Company has borrowings from banks and financial institutions on the basis of security of current assets. Differences between the value of inventory in Quarterly statements filed with the banks and the carrying value in the books of accounts arising on account of GST Receivables and Export Benefit Receivables is provided in the table below:

Revised statements were submitted to respective banks after considering the above reconciliation.

(iii) Wilful defaulter:

The company has not been declared as Wilful defaulter by any bank or financial institution or government or any government authority

(iv) Registration of charges:

The Company do not have any charges or satisfaction of charges relating to the year under audit, which is yet to be registered with ROC beyond the statutory period.

(v) Compliance with number of layers of companies

The Company has complied with the number of layers prescribed under the Companies Act, 2013.

(vi) Compliance with approved scheme(s) of arrangements

The group has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year

(vii) Utilization of borrowed funds and share premium

The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the group (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the group shall 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 provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

(viii) Undisclosed income

There is no income surrendered or disclosed as income during the current or previous financial year in the tax assessments under the Income Tax Act, 1961, and hence requirement to record in the books of accounts does not arise.

(ix) Details of crypto currency or virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(x) Valuation of PP&E, intangible asset and investment property

The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous financial year.

44) Segmental Information

The Company is primarily engaged in the business of manufacturing, purchase and sale of textiles. The Chief Executive Officer (CEO), who has been identified as being the Chief Operating Decision Maker (CODM), evaluates the Company''s performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is only one reportable segment for the Company.

45) Regrouping

Previous year''s figures have regrouped wherever necessary to correspond with the current year''s disclosure.

46) Approval of Financial Statements

The financial statements of Loyal Textile Mills Limited were reviewed by Audit Committee and approved by the Board of Directors at its meeting held on May 29, 2023.

Mar 31, 2018

1 General Information:

Loyal Textiles Mills Limited ( "the Company" ) is engaged in manufacturing of yarn, woven fabric, knitted fabric and technical clothing. The Company has manufacturing plants at Kovilpatti, Sattur, Cuddalore, Sivagangai in Tamilnadu, Khammam in Telangana, and Nellore in Andra Pradesh. The Company is a public listed company and listed on The Bombay Stock Exchange.

2. FINANCIAL INSTRUMENTS

i) Capital management

The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The Company monitors the capital structure on the basis of total debt to equity and maturity profile of the overall debt portfolio of the company.

ii) Financial Risk Management

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive directly from its operations. The principal financial liabilities of the company, include loans and borrowings, trade and other payables and the main purpose of these financial liabilities is to finance the day to day operations of the company.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs management oversees the management of these risks and that advises on financial risks and the appropriate financial risk governance framework for the Company.

This note explains the risk which the company is exposed to and policies and framework adopted by the company to manage these risks.

(a) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise two types of risk: foreign currency risk, interest rate risk.

(i) Foreign Currency Risk

The company operates internationally and business is transacted in several currencies. The export sales of company comprise around 90% of the total sales of the company, Further the company also imports certain assets and material from outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently the company is exposed to foreign currency risk and the results of the company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than companyâs functional currency.

The company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions.

Exchange rate exposures are managed through non derivative forward foreign exchange contracts.

(ii) Interest Rate Risk

The exposure to the risk of changes in market interest rates relates primarily to the debt obligations with floating interest rates. The company borrow funds from banks is only at fixed rates, the rates are reviewed every year by the bank. The companyâs fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates. Therefore there is no material interest risk relating to the company''s financial liabilities.

(b) Liquidity Risk

Liquidity Risk is the risk that the company will not be able to meet on its financial obligations as they become due. The objective of the liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as and when required.

The finance management policy of the company includes an appropriate liquidity risk management framework for the management of the short-term, medium-term, and long term funding and cash management requirements. The company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and future cash flows, and by matching the maturity profiles of financial assets and liabilities.

Credit Risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to financial loss. The Company is exposed to credit risk from its operating activities which is primarily trade receivables.

The carrying amount of financial assets represents maximum credit exposure, being total of the carrying amount of balances with banks, short term deposits with banks, short term investment, trade receivables and other financial assets excluding equity investments.

(d) Trade receivables

There is no substantial concentration of the credit risk as the revenue / trade receivables pertaining to any of the single customer do not exceed 10% of company revenue.

(b) Define Benefit Plans Gratuity

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the Gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

i) Changes in the present value of the obligation - reconciliation of opening and closing balances:

vii) The estimates of future salary increases, considered in actuarial valuation, taken into account of inflation, seniority, promotion and other relevant factors such as demand and supply in the employment market. The expected rate of return on assets are estimated as per the return on Government of India bonds.

3. Based on the information available with the Company, the principal amount due to Micro Small and Medium Enterprises as on 31.03.18 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

4. In the opinion of the Board, all the 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.

5. There is no amount due and outstanding to be credited to Investors'' Education and Protection Fund.

6. Balances of certain parties are subject to confirmation / reconciliation if any.

7. Previous year figures have been regrouped wherever necessary to conform to the current year''s classification.

8. Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.

Mar 31, 2016

1) No significant restriction is attached on the investments held outside India.

2) The Cash and Cash equivalents in the Cash Flow Statement include foreign currency balances, which does not include any amount, which is of restrictive reliability.

3) Power and fuel cost is net of Rs. 30.91 Crores (PY Rs. 36.57 Crores) being electricity generated through wind mills.

4) Borrowing cost capitalized during the year is Rs.20.83 Lacs. (PY Nil)

5) Deferred tax liability mainly represent timing difference relating to depreciation of Rs. 45.48 Crores (PY Rs. 46.55 Crores) and Deferred asset mainly represent timing difference on account of deferred allowance of Rs. 5.21Crores (PY Rs.5.21 Crores) under Income Tax Act, 1961.

6) Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has no outstanding derivative exposure as on 31^st March 2016

b) The net gain earned of Rs.5.50 lakhs by the company on cancellation of Forward Contracts during the year is grouped under Miscellaneous Expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

7) Based on the information available with the Company, the principal amount due to Micro Small and Medium Enterprises as on 31.03.16 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

8) The Company has adopted the Accounting Standard (AS) 15 Post employment benefits :

(a) Provident fund and other funds:

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognized Rs. 457.42 lacs (PY Rs.398.28 lacs) as expense towards contribution towards these plans.

(b) Gratuity:

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

9) Certain knitting machinery at Valli Textile Mills and CTM divisions are given on cancellable operating lease at a monthly lease rent.

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

11) There is no amount due and outstanding to be credited to Investors'' Education and Protection Fund.

12) In the absence of required notification prescribed format, relating to the statement of changes to equity, the same is not furnished

13) Balances of certain parties are subject to confirmation / reconciliation if any.

14) Previous year figures have been regrouped wherever necessary to conform to the current year''s classification.

15) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.

Mar 31, 2015

1) No significant restriction is attached on the investments held outside India.

2) The Cash and Cash equivalents in the Cash Flow Statement include foreign currency balances, which does not include any amount, which is of restrictive reliability.

3) Power and fuel cost is net of Rs. 36.57 Crores (P.Y. Rs. 31.29 Crores) being electricity generated through wind mills.

4) No borrowing cost has been capitalised during the year.

5) Deferred tax liability mainly represent timing difference relating to depreciation of Rs. 46.55 Crores (P.Y. Rs. 57.50 Crores) and Deferred asset mainly represent timing difference on account of deferred allowance of Rs. 5.21 Crores (P.Y.: Rs.4.56 Crores) under Income Tax Act, 1961.

6) Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has no outstanding derivative exposure as on 31st March 2015

b) The net gain incurred of Rs.264 lakhs by the company on cancellation of Forward Contracts during the year is grouped under Miscellaneous Expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

7) Based on the information available with the Company, the principal amount due to Micro Small and Medium Enterprises as on 31.03.15 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

8) The Company has adopted the Accounting Standard (AS) 15. Post employment benefits :

(a) Provident fund and other funds:

Being a defend contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognised Rs. 398.28 lacs (P.Y. Rs.297.47 lacs) as expense towards contribution towards these plans.

(b) Gratuity:

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

9) Fixed assets of Ginning unit at Thallada, Telangana were on cancellable operating lease till Dec 2014 and certain knitting machinery at Valli Textile Mills and SCTM divisions are given on cancellable operating lease at a monthly lease rent.

10) The company has received a letter from the Bombay Stock Exchange requiring the financial statements of Financial Year 2012-13 to be restated giving effect to the qualification in the Auditors' Report relating to the change in rates of depreciation of wind mill. A reply has been sent in this regard with supporting documents, justifying that restatement is not warranted and change in rate of depreciation is appropriate. The company is awaiting the response of BSE.

11) In the opinion of the board, all the 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.

12) There is no amount due and outstanding to be credited to Investors' Education and Protection Fund.

13) In the absence of required notification in the prescribed format, relating to the statement of changes to equity, the same is not furnished

14) Balances of certain parties are subject to confirmation / reconciliation if any.

15) Previous year figures have been regrouped wherever necessary to conform to the current year's classification.

16) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.

Mar 31, 2014

(Rs. in Lakhs)

1) Contingent Liabilities 31.03.2014 31.03.2013 (To the extent not provided for)

i) Claim against the Company not acknowledged as debts 26.30 26.30

ii) Counter Guarantee given to Banks 134.22 608.18

iii) On Account of Bills discounted 18,988.95 20,352.17

iv) Disputed income tax demand not provided for-Appeals filed before Appellate Authorities/revision petition pending 1,157.58 1,123.45

v) Disputed Sales tax demand not provided for 131.45 91.23

vi) Disputed Service tax, Excise / Customs duty not provided for 125.38 142.49

vii) On account of export obligation covered by letter of undertaking 2,984.58 3,334.35

2) No significant restriction is attached on the investments held outside India.

3) The Cash and Cash equivalents in the Cash flow statement include foreign currency balances, which does not include any amount, which is of restrictive realisability.

4) Power and fuel cost is net Rs.33.24 Crores (P.Y. Rs.45.04 Crores) being electricity generated through wind mills.

5) The amount of borrowing cost captalised during the year "NIL" (PY Rs.0.81 Crores)

6) Due to higher rate of depreciation available under I.T computation, the company is liable to tax only on its book profit under MAT computation. The MAT credit available is Rs.14.64 crores.

7) Deferred tax liability mainly represent timing difference relating to depreciation of Rs.57.50 Crores (P.Y. Rs.55.29 Crores) and Deferred asset mainly represent timing difference on account of deferred allowance of Rs.4.56 Crores (P.Y. : Rs. 7.58 Crores) under Income tax Act 1961.

8) Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has no outstanding derivative exposure as on 31st March 2014

b) The net loss incurred of Rs. 185 lakhs by the company on cancellation of Forward Contracts during the year is grouped under miscellaneous expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

9) Based on the information available with the Company, the principal amount due to Micro, Small and Medium enterprises on 31.03.14 is Rs.NIL. There has been no overdue principal amount and therefore no interest is paid/payable.

10) The Company has adopted the Accounting Standard (AS) 15 Post employment benefits :

(a) Provident fund and other funds

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognised Rs.297.47 lacs (P.Y. Rs.234.00 lacs) as expense towards contribution towards these plans.

(b) Gratuity

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

11) Fixed assets of Ginning unit at Thallada, Andhra Pradesh and certain knitting machinery at Valli Textile Mills and SCTM divisions are given on cancellable operating lease at a monthly lease rent.

12) In the opinion of the board, all the assets other than fixed asset and non-current investments have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

13) There is no amount due and outstanding to be credited to investor,s education and protection fund.

14) Balances of certain parties are subject to confirmation / reconciliation if any.

15) Previous year figures have been regrouped wherever necessary to confirm to the current years classification.

16) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.

Notes : 1. Mr. Manikam Ramaswami, Chairman and Managing Director is the key management personnel of the enterprise and his remuneration particulars are disclosed elsewhere in the notes.

2. Mr. P.Manivannan is employed on a whole time basis and hence his name has been included.

His remuneration particulars are disclosed in the notes.

3. There is no transaction with Loyal Dimco Group A.E.B.E Greece, Uniloyal Expotex Limited, Chennai, and Shri Teyem Processors Ltd., during the year.

4. The information regarding applicable transactions as given in clause 24 of AS 18 is given above.

Mar 31, 2013

1. Contingent Liabilities (Rs. in Lakhs)

(To the extent not provided for) 31.03.2013 31.03.2012

i) Claim against the Company not acknowledged as debts 26 29

ii) Counter Guarantee given to Banks 6,08 6,87

iii) On Account of Bills discounted 203,52 46,66

iv) Disputed income tax demand not provided for-Appeals filed before Appellate Authorities are pending 11,23 0

v) Disputed Sales tax demand not provided for 91 35

vi) Disputed Service tax not provided for 1,42 1,11

vii) On account of export obligation covered by letter of undertaking 33,34 47,03

2) Change in the method of Depreciation - Windmills were depreciated over 10 years. The number of year over which the windmill are depreciated has been changed to 15 years, against industrial norms of 20 years. The change in the method of depreciation has resulted in an increase of profit / asset by Rs.8.65 Crores.

3) No significant restriction is attached on the investments held outside India.

4) The Cash and Cash equivalents in the Cash flow statement include foreign currency balances, which does not include any amount, which is of restrictive realisability.

5) Power and fuel cost is net Rs.25.61 Crores (P.Y. Rs.24.07 Crores) being electricity generated through wind mills.

6) The amount of borrowing cost captalised during the year Rs.0.81 Crores (PY Rs.1.26 Crores)

7) Due to higher rate of depreciation available under I.T computation, the company is liable to tax only on its book profit under MAT computation. The MAT credit available is Rs.11.84 crores.

8) Deferred tax liability mainly represent timing difference relating to depreciation of Rs.55.29 Crores (P.Y. Rs.51.99 Crores) and Deferred asset mainly represent timing difference on account of carried forward depreciation permissible Rs.7.58 Crores (P.Y. : Rs.12.97 Crores) under Income tax Act 1961.

9) Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has'' no outstanding derivative exposure as on 31st March 2013

b) The net loss incurred by the company on cancellation of Forward Contracts during the year is grouped under miscellaneous expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

10) Based on the information available with the Company, the principal amount due to Micro and small enterprises on 31.03.13 is Rs.NIL. There has been no overdue principal amount and therefore no interest is paid/payable.

11) The Company has adopted the Accounting Standard (AS) 15

Post employment benefits :

(a) Provident fund and other funds

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognised Rs.234.00 lacs (P.Y. Rs.185.86 lacs) as expense towards contribution towards these plans.

(b) Gratuity

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

12) In the opinion of the board, all the assets other than fixed asset and non-current investments have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

13) There is no amount due and outstanding to be credited to investor''s education and protection fund

14) Balances of certain parties are subject to confirmation / reconciliation if any.

15) Previous year figures have been regrouped wherever necessary to confirm to the current years classification

16) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes

Mar 31, 2012

1. Contingent Liabilities : (Rs. in Lakhs)

(To the extent not provided for ) 31.03.12 31.03.11

i) Claim against the Company not acknowledged as debts 29 23

ii) Counter Guarantee given to Banks 5,95 5,94

iii) On Account of Bill discounted 46,66 1,42,63

iv) Disputed income tax demand not provided for-Appeals filed before Appellate Authorities are pending - 2,00

v) Disputed Sales tax demand not provided for 35 14

vi) Disputed Service tax not provided for 1,11 9

vii) On account of export obligation covered by

letter of undertaking 47,03 61,00

2. No significant restriction is attached on the investments held outside India

3. The Cash and Cash equivalents in the Cash flow statement include foreign currency balances, which does not include any amount, which is of restrictive reliability.

4. Power and fuel cost is net of Rs. 24.07 Crores (P.Y.Rs 19.44 Crores) being electricity generated through wind mills.

5. The amount of borrowing cost capitalized during the year Rs. 1.26 Crores /- (PY Rs.3.74 Crores)

6. In view of the loss incurred by the Company no income tax is payable.

7. Deferred tax liability mainly represent timing differences relating to depreciation of Rs. 51.99 Crores (P.Y Rs. 44.29 Crores) and Deferred asset mainly represent timing' difference on account of carried forward depreciation permissible Rs. 12.97 Crores(PY: 12.47 Crores) under Income tax Act 1961. The MAT credit available is Rs. 9.64 Crores .

8. Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has' no outstanding derivative exposure as on 31st March 2012

b) The net loss incurred by the company on cancellation of Forward Contracts during the year is grouped under miscellaneous expenditure. As the company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

9. Based on the information available with the Company, the principal amount due to Micro and small enterprises on 31.03.2012 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

10. The Company has adopted the Accounting Standard (AS) 15 (Revised) from the year 2008.

(a) Post employment benefits

(b) Provident fund and other funds

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognized Rs.190.81(PY.160.84) lacs as expense towards contribution towards these plans.

(c) Gratuity

The Company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

11) In the opinion of the board, all the assets other than fixed asset and non-current investments have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

12) There is no amount due and outstanding to be credited to investor's education and protection fund.

13) Confirmation of balances have not been received from parties.

14) Previous year figures have been regrouped wherever necessary to conform to the current years classification.

15) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.

Notes : 1. Mr. Manikam Ramaswami, Chairman and Managing Director is the key management personnel of the enterprise and his remuneration particulars are disclosed in the notes on accounts .

2. Mr. P. Manivannan is employed on a whole time basis and hence his name has been included. His remuneration particulars are disclosed in the notes on accounts. Sri Shridhar Subrahmanyam, Director is paid professional charges as given in the notes.

3. There is no transaction with Loyal Dimco Group, A.E.B.E. Greece. Uniloyal Expotex Limited, Chennai, and Shri Teyem Processors Ltd., during the year.

4. The information regarding applicable transactions as given in clause 24 of AS 18 is given above.

Mar 31, 2011

1. Contingent Liabilities :

i) On Account of Bills discounted 1,426,323 442,594

ii) Counter Guarantee given to Banks 61,546 2,103

iii) Guarantee to a third party - -

i v) Claim against the Company not acknowledged as debts 2,273 5,718

2. The Company has already preferred a petition before the High Court of Mumbai through the Indian Exporters Grievances Forum challenging the validity of the retrospective amendment of the provisions of section 80HHC of the Income Tax Act. The amount of liability estimated at Rs. 4.67 crores if any arise, relates to earlier years and and could be met out of the opening reserves of the Company. The reopened Assessment relating to the Assessment year 2002-03 and 2003-04 consequent to the amendment of the incometax act 1961, are pending before the Assessing Officer / Commissioner of Income Tax (Appeals).

3. a) The Amount of capital commitments / contingencies incurred in respect of jointly controlled entities NIL

b) No significant restriction is attached on the investments held outside India.

c) The Cash and Cash equivalents in the cash flow statement include foreign currency balances, which does not include any amount, which is of restrictive realisability.

d) Power and fuel cost is net of Rs. 19.44 Crores (P.Y. Rs. 20.42 Crores) being electricity generated through wind mills.

e) The amount of forwarding cost capitalised during the yar Rs. 3.74 crores /- (P.Y. -Nil-)

f) Other income include Rs. 5.67 crores (P.Y. - Nil) being the provisions for expensions made inearlier years. Relating to advance license fees, sales tax, now written back, represent prior period items.

4. In view of the adjustment of carried forward losses as per the provisions to Income Tax Act 1961 no tax is payable under the normal computation of tax, provision for tax is made on book profits.

5. Deferred tax liability mainly represent timing difference relating to depreciation of Rs. -44.29 Crore (P.Y. Rs. -17.52 Crore) and Deferred asset mainly represent timing difference on account of carried forward depreciation permissible Rs. 12.47 crores (P.Y. Nil) under Income Tax Act 1961 . The MAT credit available is Rs. 8.76 Crore.

6. Disclosure regarding Derivative Instruments :

a) The Company enters into forward contracts and either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the company has no outstanding derivative exposure as on 31st March 2011.

b) The net loss incurred by the Company on cancellation of Forward Contracts during the year is grouped under miscellaneous expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

7. Based on the information available with the Company, the principai amount due to Micro and small enterprises on 31.03.2011 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

8. Amalgamation of Shri. Chintamani Textile Mills Limited (SCTML)

1. Pursuant to this scheme of amalgamation ("the Scheme") santioned by the HON'ble high court of judicature, madras, as per its order dated 11th April 2011, undersection 391-394 of the companies 1956, Shri. Chintamani Textile Mills Limited engaged in the business of manufacturing of spinning weaving, knitting and making garments, has been amalgamated with the compoany with effect from April 1 2010. The amalgamation has been accounted as per the scheme wich is in accordance with the "Pooling of interests" method as prescribed by accounting standard (AS - 14), "Accounting for amalgamation"

2. The amalgamation SCTML with the company is primarly designed to make the operations economical, efficient, to improve the quality of production and to simply by the administration

3. The appointed date of the amalgamation (amalgamation appointed date) under the scheme was April 1 2010, while the effected date is May 3rd, 2011.

4. In accordance with the scheme all the assets and liabilites of SCTML have been transfered to the company at value appearing in the books of SCTML as aon the amalgamation appointed date on going conscern basis, including all contingent liablities, guarantees, duties, other obligation and employees.

5. As a result, the amount of equity share Capital of the Company has increased has to Rs. 4,81,64,416 as at 31st March 2011.

6. In consideration, the company issued and adopted 1,12,500 Equity Shares of the Rs. 10 each of the company as fully paid to the shareholder of SCTML at theratio of 1 equity share of the Company for 4 equity shares of the amalgamating Company. The Scheme does not provide for the right of SCTML to receive any dividend declared by the Transferee Company (LTML) after the Amalgamation Appointed Date but prior to amalgamation effective date.

7. The amount of difference between the consideration and the value of net identifiable assests transfered, of Rs.33,75,000 is considered as capital reserve

8. Pursuant to amalgamation of SCTML with the Company on the effective date of 1st April 2010, as stated in notes in schedule No.21 gross value of fixed Assets, as on 1 -4-2010 include, carrying cost of fixed assets of Rs. 45.65 Crores relating to the amalgamated Company.

9. In view of the Scheme of Amalgamation referred to above, the current year figures are not comparable with those of the previous year. The figures for the year in the cashflow statement are after adjustments as per scheme of amalgamation.

10.The Company has adopted the Accounting Standard (AS) 15 (Revised) from the year 2008.

(a) Post employment benefits

(b) Provident fund and other funds

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognised Rs. 160.34(PY.150.24) lacs as expense towards contribution towards these plans.

(c) Gratuity

The Company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

(k) The estimates of future salary increases, considered in actuarial valuation, taken into account inflation, seniority, promotion and other relevant factors such as demand and supply in the employment market. The expected rate of return on assets are estimated as per the return on government of India bonds.

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