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Notes to Accounts of Precot Meridian Ltd.

Mar 31, 2015

1) Terms/rights attached to equity shares :

The company has only one class of issued shares referred to as equity shares having a par value of Rs 10 each. Each holder of equity shares is entitled to one vote per share. The dividend (except in case of interim dividend) proposed by the Board of Directors, if any, is subject to the approval of shareholders in the Annual General Meeting.

ii) The reconciliation of the number of shares outstanding is set out below.

2. a) Term loan from SBI, ICICI Bank, Andhra Bank, Export Import Bank of India and IDBI Bank are secured by way of pari passu first charge on entire movable and immovable assets of the company and pari passu second charge on current assets of the company.

b) Term loan from IDBI Bank, Dubai Branch is secured by way of exclusive first charge on the windmills and related equipments, systems and assets located at Eragampatti and Manurpalayam Village in Tirupur district.

3. In respect of the above, Rupee Term Loans carry interest ranging from 8.5% p.a. to 13.61% p.a. and Foreign Currency Term Loans carry interest @ 3% p.a. plus applicable LIBOR.

4. Term loan from ICICI Bank for Rs.12,000 Lacs is secured by way of exclusive first charge on the assets of the Technical Textile unit at Hassan, Karnataka and second charge on the entire moveable fixed assets of the unit at Hassan, ranking paripassu charge with ICICI bank's derivative limits for the unit at Hassan.

5. The outstanding balance of :

Rupee term loan of Rs 1,312.50 Lacs from Andhra Bank is repayable in 7 equal quarterly installments.

Rupee Tuf loan - IV of Rs 28.50 Lacs from IDBI Bank is repayable in 3 equal quarterly installments.

Rupee Tuf loan - VIII of Rs 60.00 Lacs from IDBI Bank is repayable in 1 quarterly installment.

Rupee Tuf loan - IX of Rs 288.48 Lacs from EXIM Bank is repayable in 7 equal quarterly installments.

Rupee Tuf loan - X of Rs 901.36 Lacs from EXIM Bank is repayable in 9 equal quarterly installments.

Rupee Tuf loan - XI of Rs 1,480.00 Lacs from EXIM Bank is repayable in 20 quarterly installments of varying amounts.

Rupee Tuf loan - XII of Rs 2,250.13 Lacs from SBI is repayable in 10 quarterly installments of varying amounts.

Rupee Tuf loan XIII of Rs 10,752.00 Lacs from ICICI Bank is repayable in 13 half yearly installments of varying amounts commencing from July 2014.

Rupee TufLoan - XIV of Rs 1,500.00 Lacs from EXIM Bank is repayable in 20 equal quarterly installments commencing from September 2015.

Rupee TufLoan - XV of Rs 943.81 Lacs from Andhra Bank is repayable in 20 equal quarterly installments commencing from September 2016.

Rupee Corporate Loan of Rs 2,500.00 Lacs from ICICI Bank is repayable in 20 equal quarterly installments commencing from September 2016.

Foreign Currency loan from IDBI Bank of USD 9.45 Lacs is repayable in 3 equal half yearly installments.

6. Working capital loans from SBI, Andhra Bank, Corporation Bank, IDBI,ICICI,Yes Bank and The South Indian Bank are secured by way of pari passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company.

7. In respect of the above, working capital rupee loans carry interest ranging from 10.45% p.a. to 14.35% p.a. and working capital foreign currency loans carry interest ranging from 1.65% p.a. to 2.70% p.a. plus applicable LIBOR.

8. Unsecured short term loans from ICICI & IDBI Bank carrry interest @ 10.25% p.a.

9. Contingent liabilities in respect of :

Bills discounted 1,939.66 1,449.18

Guarantees 288.00 4,784.28

Letters of credit outstanding - 71.57

As at the Balance Sheet date, the Company's net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs 8,086.51 Lacs (Rs 3,074.41 Lacs as at 31st March 2014).

10. The company has opted out of levy of Excise duty from July 2004

11. The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates" for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Statement of Profit & Loss and general reserve in order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

12. The company has been following the guidance given under AS 30 "Financial Instruments; Recognition and Measurement". During the year, ICAI had issued exposure draft on guidance note on "Accounting for Derivative Contracts" and subsequently notified it on 12th May 2015 to be effective from 1st April 2016. An announcement was also issued in this regard wherein ICAI took cognizance of issues raised with respect to accounting treatment of financial instruments owing to global financial crisis and clarified that AS 30 was not expected to be continued in its present form since it is based on International Accounting Standard (IAS) 39, Financial Instruments: Recognition and Measurement, issued by the International Accounting Standards Board (IASB), which was under revision by the IASB. Considering the uncertainty in the matter, the Company has decided to discontinue the accounting policy adopted under AS 30. Accordingly, the company has reversed the hedging reserve and applied the principles of notified Accounting Standards 11. The company will revisit the accounting treatment on effective date of applicability of relevant guidance/accounting standards and appropriate treatment will be made. Had the Company continued with the existing accounting policy, investment would have been higher by Rs 742.98 lacs; the Reserves & Surplus would have been higher by Rs 783.23 lacs, the current assets would have been higher by Rs 20.33 lacs, Non-current assets would have been higher by Rs 1018.99 lacs and the loss for the year would have been higher by Rs 1008.06 lacs.

13. Subsidy receivable from government (net of provisons) represents '2051.07 lacs (previous year Rs1496.23 lacs) of interest subsidy on TUF scheme loans and Rs1145.82 (previous year Rs 1145.82 lacs) of capital subsidy on investments and ' 75 lacs of grant receivable for reimbursement of expenditure from Karnataka Government.

14. During the year the company has received capital & revenue subsidy from Government of Karnataka under the "Suvarna Vastra Neethi" 2008-13 scheme. The Details of the subsidy received are as under:

a) State Investment Subsidy of Rs 700 lacs.

b) Effluent Treatment Plant & Hazardous waste disposal facility -Rs 300 Lacs.

c) Reimbursement of Expenditure in relation to ESI, PF & power -Rs 75 Lacs.

The amount of state investment subsidy received towards reimbursement of promoter's contribution relating to technical textiles project at Hassan has been classified as capital reserve under reserves and surplus. The amount received in respect of specific fixed asset has been shown as a deduction from the respective fixed asset and the amount received towards reimbursement of expenses has been credited to natural head of accounts.In the event of the conditions not being met the above subsidy shall be refundable.

15. Depreciation is provided on straight line method based on the useful life as specified in schedule II of the Companies Act, 2013, except in respect of plant and machinery where the useful life is estimated to be 20 years (10 years on triple shift basis) based on technical assessment.

Consequent to the above, depreciation for the year is lower by Rs 557.34 lacs.

In respect of assets whose remaining useful life is already exhausted as at 1st April 2014, depreciation of Rs 27.88 lacs has been adjusted against the opening balance of surplus in statement of profit and loss as on that date.

16. Benwood Corporation Sdn Bhd, the Malaysian subsidiary of the company had filed an application for Members' Voluntary Winding Up on 28th May 2013 and an order for winding up has been passed on 29th December 2014. The excess of amount realised over the cost of investment has been appropriately considered.

17. Net Deferred tax asset has not been recognised considering prudence.

18. Exceptional items represents profit on sale of long term investments and the impact on account of Discontinuation of AS 30 & 32 as specified in note no. 2.34

19. Related Party Disclosure :

List of related parties with whom transactions have taken place Holding Co : Nil

Subsidiary Cos. : Suprem Textiles Processing Limited, Multiflora Processing Coimbatore Limited, Precot Meridian Energy Limited, Benwood Corporation Sdn Bhd*

Key Management Personnel (KMP) : Mr D Sarath Chandran, Mr Ashwin Chandran and Mr Prashanth Chandran.

Others : Suprem Associates (Partnership firm), Pricol Limited, Pricol Packaging Limited and Mr Vijay Mohan

20. The amount and disclosure included in the financial statements of the previous year have been regrouped and reclassified wherever necessary to conform to the current year's classification.

21. The amount and disclosure included in the financial statements of the previous year have been regrouped and reclassified wherever necessary to conform to the current year’s classification.




Mar 31, 2014

1. Contingent liabilities in respect of :

Bills discounted 1,449.18 2,752.43

Guarantees 4,784.28 213.01

Letters of credit outstanding 71.57 1,225.80

As of the Balance Sheet date, the Company''s net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs. 3,074.41 Lacs (Rs. 5,353.15 Lacs as at March 31,2013).

2. The amounts and disclosures included in the financial statements of the previous year have been reclassified where ever necessary to conform to the current year''s classification.

3. The Company has opted out of levy of ExcisedutyfromJuly2004.

4. The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates" for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Statement of Profit & Loss and general reserve .In order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

5. The company, having adopted AS30 with effect from 1st April 2008, continues to comply with its requirements. There is no outstanding amount of forward contracts not recognised in the books of accounts as on the balance sheet date. (Previous year - Rs. 136.70 lacs)

6. The term loans from bank includes loan of Rs. 12,000 lakhs from ICICI Bank to fund its technical textiles project in Hassan, which is a 100% export oriented project. In order to hedge the interest rate and currency risks, the company has entered into a INR-Euro swap with the INR term loan as the underlying asset. The said transaction involves exchange of interest on a monthly basis and exchange of principal on a semi-annual basis and is intended to be held till the maturity date of 30" July, 2021. The Company has adopted the accounting treatment and disclosures in accordance with the principles laid down in AS 30 and AS 32 on foreign currency derivative contracts. These instruments meet the management''s foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting. Accordingly, as on the Balance Sheet date, the fair value of the hedge resulting in a notional loss amounting to Rs. 1671.59 lakhs and the realised gain on the interest swap of the transaction amounting to Rs. 293.91 lakhs have been appropriately reflected in the hedge reserve.

7. Subsidy receivable from Government represents Rs. 1496.23 lacs (previous year Rs. 714.54 lacs) of interest subsidy on TUF scheme loans and Rs. 1145.82 (previous year Rs. 1145.82 lacs) of capital subsidy on investments in its Technical Textiles project at SEZ, Hassan.

8. The technical textile project at Hassan, with a capital expenditure of Rs. 18,157 lakhs, commenced its commercial production on 12th June 2013.

The borrowing cost capitalized during the year is Rs. 164.24 Lacs (previous year-Rs. 937.64 Lacs).

9. Benwood Corporation Sdn Bhd, the Malaysian subsidiary of the company has filed an application for Members'' Voluntary Winding Up on 28th May 2013 and is awaiting the winding up order.

10. The Company has obtained an approval from the share holders under section 293(1 )(a) of the Companies Act, 1956 to dispose off the weaving and processing division. Effect is being given in the financial statements as and when disposal happens. The effect of disposal of the weaving division during the year has been shown underthe extra ordinary items.

11. The company has recognized deferred tax asset ofRs. 1681.19 lacs in line with the requirements of AS 22. The said deferred tax asset has been recognized on the unabsorbed depreciation and carry forward of losses under tax laws to the extent that there is virtual certainty supported by convincing evidence based on the nature of business that sufficient future taxable income will be available against which such deferred tax assets can be realized.

12 Related Party Disclousure:

List of related parties with whom transactions have taken place

Holding Co: Nil, Subsidiary Co: Suprem Textiles Processing Limited, Multiflora Processing (CBE) Limited,

Precot Meridian Energy Limited, Benwood Corporation Sdn Bhd.

Key Management Personnel (KMP): Mr. D Sarath Chandran, Mr. Ashwin Chandran and Mr. Prashanth Chandran.


Mar 31, 2013

1.1 The amounts and disclosures included in the financial statements of the previous year have been reclassified wherever necessary to conform to the current year''s classification.

1.2 The Company has opted out of levy of Excise duty from July 2004.

1.3 The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 " The Effects of Changes in Foreign Exchange Rates” for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Statement of Profit & Loss and general reserve .In order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

1.4 The company, having adopted AS30 with effect from 1st April 2008, continues to comply with its requirements. The outstanding amount of forward contracts not recognised in the books of accounts as on the balance sheet date is Rs. 136.70 lacs.

1.5 During the year the company has entered in to a INR to EURO total currency swap transaction with ICICI Bank Limited, for an amount of Rs. 10,000 lacs under which the company would receive INR notional, interest and inturn would pay equivalent EURO notional interest determined by the EUR/INR spot prevailing at the time of executing the trade. The total currency swap transaction has an effect of transforming the INR denominated liability to a EURO denominated liability. The tenor of the swap repayments is 15 unequal semi annual instalments commencing from 31.7.2014 with the maturity date of 30.07.2021.

1.6 The proceeds from the preferential issue of convertible share warrants to the directors are utilised as below:

1.7 The Company has obtained an approval from the share holders under section 293(1)(a) of the Companies Act 1956 to dispose off the weaving and processing division. Effect is being given in the financial statements as and when disposal happens. The effect of the disposal of some of the assets during the year has been shown under extraordinary items.

1.8 Related Party Disclosure :

List of related parties with whom transactions have taken place

Holding Company : Nil

Subsidiary Company : Suprem Textiles Processing Ltd

Multiflora Processing (CBE) Ltd Precot Meridian Energy Ltd Benwood Corporation Sdn Bhd

Key Management Personnel (KMP) : Mr D Sarath Chandran

Mr. Ashwin Chandran and Mr. Prashanth Chandran

Others : Suprem Associates (Partnership firm)


Mar 31, 2012

1. As notified by Minstry of Corporate Affairs, Revised Schedule VI under the Companies Act 1956 is applicable to the Financial Statements for the financial year commencing on or after 1st April, 2011.

Accordingly the financial statements for the year ended March 31st, 2012 are prepared in accordance with the Revised Schedule VI. The amounts and disclosures included in the financial statements of the previous year have been reclassified to conform to the requirements of revised Schedule VI.

1.1 Share Capital

i) Terms/rights attached to equity shares:

The company has only one class of issued shares referred to as equity shares having a par value of Rs. 10 each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors, if any, is subject to the approval of shareholders in the Annual General Meeting.

1. a) Term loan from SBI, ICICI, Andhra Bank, Export Import Bank of India and IDBI Bank are secured by

way of pari passu first charge on entire movable and immovable assets of the company and pan passu second charge on current assets of the company.

b) Term loan from Yes Bank is secured by way of pari passu first charge on entire movable fixed assets.

c) Term loan from IDBI Bank, Dubai Branch is secured by way of exclusive first charge on the windmills and related equipments, systems and assets located at Eragampatti and Manurpalayam Village in Tirupur district.

2. The loans are repayable in monthly/quarterly/half-yearly installments.

3. In respect of the above, Rupee Term Loans carry interest ranging from 7.5% p.a. to 14% p.a. and Foreign Currency Term Loans carry interest ranging from 1.6% p.a. to 3% p.a. plus applicable LIBOR.

1.2 Short Term Borrowings

1. Working capital loans from SBI, Andhra Bank, Corporation Bank, IDBI, ICICI, Yesbank and The South Indian bank are secured by way of pari passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company.

2. In respect of the above, working capital rupee loans carry interest ranging from 11.25% p.a. to 15.25% p.a. and working capital foreign currency loan and buyer's credit foreign currency loans carry interest ranging from 1.4% p.a. to 3.5% p.a. plus applicable LIBOR.

3. Unsecured short term loan from Axis Bank carries interest at 11% p.a. for which the company has extended a corporate guarantee.

1.3 Contingent liabilities in respect of :

2011-12 2010-11 Rs. Lacs Rs. Lacs

I) Claims against the company not acknowledged as debts:

Disputed Statutory Liabilities not provided for 2,663.59 1,244.82

Disputed Other Liabilities not provided for 285.96 265.14

Guarantees 123.39 122.38

Bills discounted 2,904.13 1,692.92

Letters of credit outstanding 9,389.31 Nil

ii) Commitments

Estimated amount of contracts remaining to be 1,456.55 37.63 executed on capital account and not provided for

1.4 The Company has opted out of levy of Excise duty from July 2004.

1.5 Disclosures regarding Gratuity Plan:

a) Description of the company's defined benefit plan

The company operates a defined benefit plan for payment of post employment benefits in the form of gratuity.

Benefits under the plan are based on pay and years of service and are vested on completion of five years of service, as provided for in the payment of Gratuity Act, 1972. The terms of the benefits are common for all the employees of the company.


Mar 31, 2011

1 Security for Borrowings:

a Term Loans from ICICI bank, Andhra Bank, State Bank of India, Export Import Bank of India and IDBI Bank are secured by way of pari passu first charge on entire movable and immovable fixed assets of the company and pari passu second charge on current assets of the company.

b Term Loan from YES Bank is secured by way of pari passu first charge on entire movable fixed assets.

c Working capital loans / Short Term Loans from State Bank of India, Andhra Bank, Corporation Bank, ICICI Bank, IDBI Bank, YES Bank and The South Indian Bank are secured by way of pari passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company.

d Term loan to an extent of Rs.14.23 crores from IDBI Bank, Dubai branch is secured by way of Exclusive First charge on the Windmills and related equipments, systems and accessories located at Eragampatti and Manurpalayam villages in Tirupur district.

2 a Loans and advances include an amount of Rs.71.62 lacs advanced to Suprem Associates, a partnership firm in which the company is a partner.

b Advances includes an amount of Rs.20.65 lacs due from subsidiaries.

c Other Liabilities include an amount of Rs.85.63 lacs due to subsidiaries.

3 Income Tax assessments have been completed upto Assessment Year 2008-2009.

4 Previous year's figures have been regrouped whereever necessary to conform to current year's classification.

5 The Company has opted out of levy of Excise duty from July 2004.

6 Voluntary retirement compensation paid amounting to Rs.17.97 Lacs has been written off during the year.

7 The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 " The Effects of Changes in Foreign Exchange Rates" for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Profit & Loss account and general reserve. In order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

8 The company having adopted AS 30 "Financial Instruments - Recognition and Measurment" with effect from 1st April 2008, continues to comply with its requirements. The outstanding amount of forward contracts not recognised in the books of accounts as on the balance sheet date is Rs. 1724.88 Lacs.

9 The company has initiated the process of obtaining confirmation from suppliers who have registered themselves under the "Micro, Small and Medium Enterprises Development Act, 2006". Based on the information and evidence available with the company, there are no dues to micro,small and medium enterprises, outstanding as on 31st March 2011.

10 Disclosures regarding Gratuity Plan:

a) Description of the company's defined benefit plan

The company operates a defined benefit plan for payment of post employment benefits in the form of gratuity.

Benefits under the plan are based on pay and years of service and are vested on completion of five years of service, as provided for in the payment of Gratuity Act,1972. The terms of the benefits are common for all the employees of the company.

11 Related Party Disclousure :

List of related parties with whom transactions have taken place Holding Company: Nil

Subsidiary Company: 1. Suprem Textiles Processing Limited, 2. Multiflora Processing (CBE) Limited, 3. Precot Meridian Energy Limited, 4. Benwood Corporation Sdn Bhd Key Management Personnel: 1. Mr D Sarath Chandran, 2. Mr Ashwin Chandran and 3. Mr Prashanth Chandran. Others : Suprem Associates.


Mar 31, 2010

1 Security for Borrowings:

a Term Loans from ICICI bank, Andhra Bank.State Bank of India,Export Import Bank of India and IDBI Bank banks are secured by way of paripassu first charge on the entire movable and immovable fixed assets of the company and parri passu second charge on the current assets of the company.

b Term Loan from YES bank is secured by way of parri passu first charge on the entire movable fixed assets only.

c Working capital loans / Short term Loans from State bank of India, Andhra Bank .Corporation bank, ICICI Bank, IDBI and YES Bank are secured by way of parripassu first charge on the current assets of the company and paripassu second charge on the entire immovable assets of the company.

2 a Loans and advances also include an amount of Rs.71.62 lacs advanced to Suprem Associates, a partnership firm in which the company is a partner.

b Advances includes an amount of Rs.210.61 lacs due from subsidiaries

c Other Liabilities includes an amount of Rs.285.98 lacs due to subsidia -ries

3 a Income Tax assessments have been completed upto Assessment Year 2007-2008.

b Based on recent judicial pronouncements relating to claim of certain expenses as revenue expenditure, the company, as a prudent measure, has provided a sum of Rs 1000 lacs towards Income tax provision for earlier years.

4 Previous years figures have been regrouped whereever necessary to confirm to current years classification.

5 The Company has opted out of levy of Excise duty from July 2004.

6 Voluntary retirement compensation paid amounting to Rs.123.54 Lacs has been written off during the year.

7 The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 " The Effects of Changes in Foreign Exchange Rates" for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Profit & Loss account and general reserve. In order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

8 Pursuant to The Institute of Chartered Accountants of Indias (ICAI) Announcement "Accounting for Derivatives", the Company had early adopted AS 30 "Financial Instruments: Recognition and Measurement", with effect from 1stApril, 2008. The outstanding amount of forward contracts not recognised in the books of accounts as on the balance sheet date is Rs.2398.76 Lacs.

9 The company has initiated the process of obtaining confirmation from suppliers who have registered themselves under the "Micro, Small and Medium Enterprises Development Act, 2006". Based on the information and evidence available with the company, there are no dues to micro, small and medium enterprises, outstanding as on 31.03.2010.

10 Disclosures regarding Gratuity Plan:

a) Description of the companys defined benefit plan

The company operates a defined benefit plan for payment of post employment benefits in the form of gratuity.

Benefits under the plan are based on pay and years of service and are vested on completion of five years of service, as provided for in the payment of Gratuity Act, 1972. The terms of the benefits are common for all the employees of the company.

11 Related Party Disclousure :

List of related parties with whom transactions have taken place Holding Company : Nil

Subsidiary Company :

1. Suprem Textiles Processing Limited

2. Multiflora Processing (CBE) Limited

3. Precot Meridian - Energy Limited and

4. Benwood Corporation Sdn Bhd

 
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