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Notes to Accounts of Loyal Textiles Mills Ltd.

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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