Home  »  Company  »  RSWM Ltd.  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of RSWM Ltd.

Mar 31, 2016

1 Foreign Trade Policy 2009-2014 introduced Status Holder incentive Scheme (SHIS), under which an Exporter is entitled for scrips @1% of FOB Value of Exports. These scrips can be used within 18 months of the date of scrip, for payment of import /Excise duties on capital goods and spare parts and are freely transferable.

During the year, Company purchased SHIS scrips of a face value of Rs.456.68 lac at a price of Rs.300.04 lac. Out of available scrips face value of Rs.348.12 Lac (Cost H214.80 lac) were utilized for payment of applicable duty. Scrip face value Rs.5.58 Lacs (cost Rs.1.86 Lacs) could not be used on account of the expiry of validity. Difference of face value of scrips used and its cost of acquisition amounting to Rs.126.91 Lac has been recognized as Other income.

SHIS scrip purchased for the face value of Rs.145.42 lac (Cost Rs.97.54 lac), are in hand as on 31st March, 2016.

2 The Company has adopted Accounting Standard (AS)-30 "Financial instruments: Recognition and Measurement" and the gain on account of change in effective portion of such forward contracts is taken into Hedging Reserve Rs.82.50Lacs as on 31/03/2016, (Previous year Rs.65.03 lac) and Loss of Rs.17.96 Lacs on ineffective portion of hedge is taken into Statement of Profit & Loss (Previous year gain Rs.54.76 lac). (also Refer Note No. 45)

3 A The loans & advances, debtors and other current assets are reviewed annually and their value in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet as assessed by the management. However, balance confirmation from parties is under process.

4 B Response to the letter(s) sent by Company requesting confirmation of balances has been insignificant. Company notes that the Marketing and Accounting team has a system of periodical verification of balances and required adjustments are carried-on that basis regularly. in view of the above, management considered that impact of reconciliation, on receipt of balance confirmation would not be significant on the same.

5 in view of legal opinion and various reliefs available under income Tax Act, 1961 provision for taxation has been considered adequate.

6 The figures for the previous year have been regrouped and/or rearranged wherever found necessary to make these comparable with those of the current year.

7 Accounting Standard (AS)-17, Segment Reporting

The Company''s operations predominantly relate to manufacturing of Yarn and Fabric & Denim. On the basis of assessment of the risk and return differential in terms of Accounting Standard (AS)-17, ''Segment Reports'' the Company has identified Yarn and Fabric & Denim as primary reportable business segments. Further the geographical segments have been considered as secondary segments and divided into India, Europe, Middle East, America and Other Countries.

The accounting policy in respect of Segments is in conformity with the accounting policies of the enterprise as a whole. The inter segment transfers are accounted at the prevailing market prices charged to unaffiliated customers for similar goods. These transfers are eliminated in consolidation.

The revenue and expenditure in relation to the respective segments have been identified and allocated to the extent possible. Other items i.e. extraordinary items, Loss /Profit on sale of investments and foreign currency transactions, corporate office expenses, etc. not allocable to specific segments are being disclosed separately as unallocated and adjusted directly against the Total income of the Company.

8 ACCOUNTING STANDARD (AS) -19 ''LEASES''

There is no disclosure under Accounting Standard (AS) 19, as there are no cancellable lease.

9 IMPAIRMENT OF ASSETS (AS 28)

The Company based on both external & internal source of information, more particularly the market value and economic performance of the assets has recognized in its statement of profit & loss under the line item ''depreciation, impairment & amortization expense'' an impairment loss of Rs.1176.80 lacs in one of its cash generating unit (CGU) being a plant of its ''yarn'' reportable segment as per paragraph 87 - 89 of the Accounting Standard (AS) - 28, impairment of Assets on its goodwill (Rs.28.34 lacs), buildings (Rs.740.76 lacs), plant & machinery (Rs.323.15 lacs) & other assets (Rs.84.55 lacs) as disclosed in note no. 13 of fixed assets and note no. 39 on segment reporting based on the net selling price of the individual assets as per an external valuation report.

10 PROVISIONS & CONTINGENT LIABILITIES AND COMMITMENTS (AS 29) :

D. The Rajasthan Government had imposed surcharge on shortfall in meeting Renewable Energy Obligation on the power produced from Captive Power Plants vide their Notification dated 23rd March, 2007 and amended later on 24th May, 2011, which was stayed by Hon''ble high Court of Rajasthan. in its judgment dated 31st August, 2012, Hon''ble High Court of Rajasthan upheld the validity of the aforesaid Notification and amended Notification issued thereafter.

Supreme Court in May 2015 dismissed appeal filed by HZL, RTMA and others challenging constitutional validity of Notification issued in 2007 and thereafter.

Based on Legal Opinion taken, company is not exposed to Renewal Power Obligation in view of setting-up of Wind Power Unit in 2011-12 & Waste Heat Recovery for use as Steam in our Unit. The management does not foresee any possible liability in this regards.

E. TNEB limited the electricity supply to all their HT consumers based on their previous three years consumption and introduced cross subsidy surcharge for the unutilized portion of "units quota" so fixed, whenever Power was purchased by a consumer from 3rd party or from Energy Exchange. On being legally challenged, Supreme Court by its order dated 20.07.2015 directed that the status quo has to be maintained i.e. no cross subsidy charges to be collected. Therefore, management does not foresee any possible liability in this regards.

F. The Payment of Bonus Act, 1965 was amended with retrospective effect from 01-4-2014 vide notification no. 06/2016 published in the Official Gazette dated 01.01.2016. On the basis of the legal opinion obtained by the Company, such amendment with retrospective operation is illegal, arbitrary and contrary to the Article 14, 19(1)(g) and 300Aof the Constitution of India.

Applicability of the amendment notification retrospectively was challenged in various High Courts including the Rajasthan High Court, which in case of the civil writ petition filed by Employers'' Association of Rajasthan, has granted interim stay against the applicability of the amendment notification retrospectively by giving direction that it would take effect only from the financial year 2015-16. in view of the stay granted and the direction given by the Rajasthan High Court together with the aforementioned legal opinion, the management doesn''t foresee any possible obligation in future for payment of bonus as per amended act for the period 01/04/2014 to 31/03/2015. However pending final judgment of the Court, the Company is contingently liable of Rs.116.94 Lacs for the aforesaid period.

G. There is no other present obligations requiring provisions, in accordance with the guiding principles as enunciated in Accounting Standard (AS) - 29 "Provisions, Contingent Liabilities & Contingent Assets" other than provided in the books of accounts.(Also see note 51 on litigation)

11 ACCOUNTING STANDARD (AS)-32 FINANCIAL INSTRUMENT DISCLOSURES-''HEDGE ACCOUNTING''

(a) The Company hedges its realizations on export sales and import obligation for Capital Assets/Raw Material through Foreign Exchange Derivative & Hedge Contracts in the normal course of business so as to reduce the risk of exchange fluctuations. No Foreign Exchange Derivative & Hedge Contracts are taken /used for trading or speculative purpose.

(b) The Company has following gross derivatives exposure outstanding as at March 31, 2016 which have been designated as cash flow hedge to its exposure to movements in foreign exchange rates:

(c) The periods during which the cash flows from the cash flow hedges outstanding as at March 31, 2016 are expected to occur and affect the statement of P&L are disclosed as under:

(e) During the year there are no forecasted transactions for which hedge accounting had been used in the previous periods, but which is no longer expected to occur.

(f) The foreign currency exposures that are not hedged by derivative instruments or otherwise are as under:

12 The Company has incurred Rs.199.29 Lacs(previous year: Rs.150.41 Lacs) as corporate social responsibility expenditure pursuant to section 135 of the Companies Act, 2013.


Mar 31, 2015

1 The whole Undertaking of Transferor Company Cheslind Textiles Limited (CTL) is merged into RSWM Limited (Transferee Company) with effect from appointed date of 1st April 2013. Upon coming into effect of the Merger Scheme 1 (one) Optionally Convertible Redeemable Preference Share (OCRPS) of the nominal value of Rs.7.50 (Rupees Seven and Fifty paise) at par of Transferee Company and credited as fully paid up for every 1 (One) Equity Share of nominal value of Rs.10 (Rupees Ten) each fully paid up held in Transferor Company. (See Note 30)

2 The major terms and conditions of the OCRPS are as under:

(a) Dividend rate

12% p.a. on the paid up value per share of Rs. 7.50

(b) Accumulation of dividend

Cumulative

(c) Payment of dividend

The preference shares will qualify for preferential payment of dividend at the rate set out above from the allotment date upto the date of redemption or conversion.

(d) Tenure

5 years from the date of allotment

(e) Listing

The preference shares will, subject to the applicable laws and regulations, be listed and/or admitted to trading on the relevant stock exchange(s), where the existing shares of the Company are listed and/or admitted to trading.

(f) Convertibility and conversion price ratio

The said preference shares will carry the right and option to apply for conversion of the said preference shares into the equity shares of the Company in the ratio 1 (one) equity share of Rs.10/- (Rupees Ten) each at par of the Company credited as fully paid up for every 22 (Twenty two) OCRPS of Rs.7.50/- (Rupees Seven and Fifty paise) each to be issued and allotted by the Company. The said right must be exercised by the eligible preference shareholders before the expiry of 6 months from the date of allotment of such preference shares failing which the right shall lapse. No coupons shall be issued by the Company towards any fractional entitlement and all fractional entitlements, if any, shall be ignored.

(g) Redemption Terms

The Company shall have an option to redeem by giving not less than 3 months' notice to all the outstanding preference shares (i.e. such preference shares for which the option to convert into equity shares has not been exercised, as mentioned above) at par any time after the expiry of the conversion option period and before the expiry of 5 years from the allotment date.

3. The number of issued, subscribed and fully paid up shares remained unchanged during the year as there were no buy back or issue of share capital.

4. The Company has only one class of Issued and Subscribed Equity Shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share. There are no restrictions attached to any equity shares. The Company declares and pays dividends, if any, in Indian rupees. During the year ended 31st March 2015, the amount of per share dividend recoginzed as distribution to equity share holders was Rs.10/- (Previous year Rs.12.50/-). The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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 respective shareholders.

5. There are no shares issued for consideration other than cash in the last 5 financial years. However, 1,35,13,607 Equity shares of Rs.10/- each were issued as fully paid up bonus shares by capitalisation of reserves in earlier years. 12,28,689 Equity shares of Rs.10/- each were issued for consideration other than cash,pursuant to the scheme of merger of erstwhile Jaipur Polyspin Limited and Mordi Textiles & Processors Limited as approved by the Hon'ble High Court of Rajasthan.

6 Pursuant to the (a) order dated 26th March, 2015 of Hon'ble High Court of Rajasthan at Jodhpur in Company petition No.10 of 2014; (b) order dated 31st March, 2015 of Hon'ble High Court of Madras at Chennai in Company petition No.79 of 2015; (c) taken on record by the Registrar of Companies, Rajasthan on 30th April, 2015 and Registrar of Companies, Tamil Nadu on 30th April, 2015, (the last of the date being the 'effective date') in the matter of amalgamation of Cheslind Textiles Limited (CTL) with RSWM Limited in a scheme of amalgamation under section 391 to 394 of the Companies Act, 1956 (the 'Scheme') from the 'appointed date' (1st April, 2013), in accordance with paragraph 8 of the scheme of amalgamation, with effect from the appointed date, the company has accounted for amalgamation of Cheslind Textiles Limited in its books of accounts as per "Purchase Method" as described in Accounting Standard(AS)-14 "Accounting for Amalgamations" issued by the Institute of Chartered Accounts of India. In accordance with Para 12 of Accounting Standard (AS) 14, 'Accounting for Amalgamation', the company has effected said amalgamation recognizing the identifiable assets at fair value. In accordance with Paragraph 37 of aforesaid Accounting Standard-14, the excess of amount of consideration over the value of net assets of Cheslind Textiles Limited, amounting to Rs.63 lac, has been recognized as Goodwill arising on amalgamation, to be written off in 5 years as required by Paragraph 38 of Accounting Standard (AS)- 14.

The current year's figures in these financial statements as at and for the year ended 31st March, 2015 include results of CTL as at and for the year ended on that date as amalgamated with RSWM Limited. The results of CTL from the 'appointed date' (1st April 2013) to 31st March, 2014 have been recognized in the opening balances of these financial statements. The previous year figures in these financial statements are of RSWM Limited only. Hence in these financial statements, the current year figures consisting of RSWN Limited after amalgamation of CTL are not comparable with the previous year's figures that are of RSWM Limited only without effecting the amalgamation of CTL. Had the amalgamation of CTL with RSWM Limited been effected from the 'appointed date', the comparable figures of previous year with that of current year would have been as under:

Disclosures as per AS 14

a) Names and general nature of business of the amalgamating companies; Cheslind Textiles Limited(Transferor Company) and RSWM Limited (Transferee Company) are both engaged in similar business of spinners, doublers, weavers, bleachers, dyers in cotton, wool, jute, linen and all others synthetic fibers.

b) Effective date of amalgamation for accounting purposes; 30th April 2015

c) Method of accounting used to reflect the amalgamation; " Purchase Method" as per Para 12 of Accounting Standard - AS- 14 " Accounting of Amalgamations" in compliance of Para 8 of the Scheme of Amalgamation.

d) Particulars of the scheme sanctioned under a statute: The same are available on company's website www.rswm.in.

e) Consideration for the amalgamation and a description of the consideration paid or contingently payable; Rs.1024.91 lac in the form of 12% Optionally Convertible Redeemable Preference Shares of Rs.7.50 each fully paid up.

The amount of any difference between the consideration and the value of net identifiable assets acquired, and the treatment thereof including the period of amortization of any goodwill arising on amalgamation (Rs.63 lac) to be amortized over a period of 5 years.

7 Jodhpur Bench of Hon'ble Rajasthan High Court, in its interim order on constitutional validity of the levy of Entry Tax, had directed the Company to pay 50% of the assessed entry tax and provide solvent guarantee for the balance assessed and non-assessed tax and interest thereon till the date of payment. In its final order dated 11th December, 2014 the said Court dismissed the petition and discharged the interim order. The said Final Order was challenged in the Hon'ble Supreme Court, which in its interim order dated 30th January, 2015 directed to pay 50% of the arrears of the tax/demand within 6 weeks and provide bank guarantee for the balance amount. Subsequently, the Government of Rajasthan announced an Amnesty Scheme on 18th March, 2015, allowing waiver of interest & penalty if an assessee paid full amount of Entry Tax due and withdrew all legal proceedings from Courts. Company applied for amnesty under the scheme after withdrawing its petition from the Hon'ble Supreme Court and paid a sum of Rs.975.87 lac during the year towards outstanding liability of Entry Tax. Accordingly, provision for outstanding liability of Interest amounting to Rs.367.95 has been written back.

8 Foreign Trade Policy 2009-2014 introduced Status Holder Incentive Scheme (SHIS), under which an Exporter is entitled for scripts @1% of FOB Value of Exports. These scripts can be used within 18 months of the date of script, for payment of Import /Excise duties on capital goods and spare parts and are freely transferable.

Based on opinion obtained from an expert, the full face value of SHIS Scripts receivable aggregated to H1005.95 lac at the end of previous years, upon ascertaining it's probable use in the normal course of business based on projects approved by the Board. Out of aforesaid SHIS scripts for a value of H1005.95 lac, scripts for a value of H981.99 lac were used during the current financial year. script valuing Rs.12.83.lac could not be used on account of expiry of validity and loss on such script is accounted for in the current period.

During the year, Company also purchased SHIS scripts of a face value of Rs.1048.17 lac at a price of Rs.416.33 lac .Out of this purchased SHIS scripts, scripts of the face value of Rs.1022.43 lac (Cost Rs.404.04 lac) were utilized for payment of applicable duty and difference of face value of scripts used and its cost of acquisition amounting to Rs.618.39 lac has been recognized as Other Income.

SHIS script for the face value of Rs.36.87 lac (Cost Rs.12.29 lac) inclusive of own eligibility and purchase, are in hand as on 31st March, 2015 valid for utilisation within next 3 months, Utilisation thereof within the next 3 month has been ascertained.

9 After commissioning of Thermal Power Plant at Banswara in 2007, HFO fuelled Wartsila power generators at various units considered as standby, became redundant. During financial year 2012-2013, company had also invested under Group Captive Scheme in a Special Purpose Vehicle (SPV) viz. LNJ Power Ventures Limited, which on 29th March 2013 commissioned a 20 MW Wind Power Unit in Rajasthan. As per Power Purchase Agreement signed by Company with SPV, 100% power generated by SPV starting 29th March, 2013 is available for use by company for 20 years at a fixed price. Considering very high cost of retention of Wartsila Power generators and uneconomical power generation, Company decided to retire them from active use and sell them at all locations, retaining only one at Denim Unit at Mayur Nagar as back-up for use in case of extreme emergency. Pending disposal of these assets, estimated realizable value of Wartsila Generators Rs.1068.46 lac was transferred to "Assets held for sale" as on 31.03.2013. During financial year 2013-2014, Generators having carrying value of Rs.358.53 had been sold out at a value of Rs.201.69 lac, resulting into a further loss of Rs.156.64 lac. Remaining generators had been accounted for at estimated realizable value of Rs.532.33 lac as on 31st March, 2014.

Out of above estimated realizable value as on 31st March, 2014, during the year Generator with carrying value of H297.37 lac was sold at a value of H264.19 lac resulting into further loss of Rs.33.18 lac. For remaining one generator carrying value of Rs.234.96 lac, there is a confirmed order of sale at the value of Rs.280.00 lac therefore it has been accounted for at estimated realizable value of Rs.280 lac as on 31st March, 2015.

10 The Company has adopted Accounting Standard (AS)-30 'Financial Instruments: Recognition and Measurement' and the gain on account of change in effective portion of such forward contracts is taken into Hedging Reserve Rs.65.03lac as on 31/03/2015, (Previous year H188.92 lac) and gain of H54.76 lac on ineffective portion of hedge is taken into Statement of Profit & Loss (Previous year Loss of H18.31 lac). (Refer Note 45)

11 A The loans & advances, debtors and other current assets are reviewed annually and their value in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet as assessed by the management. However, balance confirmation from parties is under process.

12 B Response to the letter(s) sent by Company requesting confirmation of balances has been insignificant. Company notes that the Marketing and Accounting team has a system of periodical verification of balances and required adjustments are carried-on that basis regularly. In view of the above, management considered that impact of reconciliation, on receipt of balance confirmation would not be significant on the same.

13 In view of legal opinion and various reliefs available under Income Tax Act, 1961 provision for taxation has been considered adequate.

14 The figures for the previous year have been regrouped and/or rearranged wherever found necessary to make these comparable with those of the current year.

15 ACCOUNTING STANDARD (AS)-17, SEGMENT REPORTING

The Company's operations predominantly relates to manufacturing of Yarn and Fabric & Denim. On the basis of assessment of the risk and return differential in terms of Accounting Standard (AS)-17, Segment Reports the Company has identified Yarn and Fabric & Denim as primary reportable business segments. Further the geographical segments have been considered as secondary segments and divided into India, Europe, Middle East, America and Other Countries.

The accounting policy in respect of Segments is in conformity with the accounting policies of the enterprise as a whole. The inter segment transfers are accounted at the prevailing market prices charged to unaffiliated customers for similar goods. These transfers are eliminated in consolidation.

The revenue and expenditure in relation to the respective segments have been identified and allocated to the extent possible. Other items i.e. extraordinary items, Loss /Profit on sale of investments and foreign currency transactions, corporate office expenses, etc. not allocable to specific segments are being disclosed separately as unallocated and adjusted directly against the Total Income of the Company.

16 ACCOUNTING STANDARD (AS) -19, 'LEASES'

There is no disclosure under Accounting Standard (AS) 19, as there are no cancellable lease.

17 ACCOUNTING STANDARD (AS)-29'PROVISIONS & CONTINGENT LIABILITIES AND COMMITMENTS'

S. PARTICULARS Carrying Additional Amt No amount as provisions during at 31.3.14 during the the year year

A. PROVISIONS

B. CONTINGENT LIABILITY NOT PROVIDED FOR :

(a) Claims against the 8.99 - - company not acknowledged as debt

(b) Guarantees

(i) Guarantee in favour of 600.00 - - International Finance Corporation with M/s. HEG Ltd on joint and several basis on behalf of M/s A. D. Hydro power Limited.

(ii) Guarantee by ICICI Bank 1,000.00 - - Ltd to LNJ Power Ventures Ltd

(c ) Other money for which the company is contingently liable.

(i) Excise & Customs Duties, 675.99 - - Sales tax and Other demands disputed by the Company.

(ii) Future Export Obligation - - - Against EPCG

C. COMMITMENTS OUTSTANDING :

(i) Estimated Value of 4,210.86 8,058.14 4,222.67 contracts remaining to be executed on capital Accounts and not provided for

(ii) Commitment in 2012-13 to buy Rs.350 lac unit per year at a fixed rate of Rs.5.75 per unit for 20 years

(a) Current Commitment 2,013.00 - - (for next 12 Months)

(b) Non-current commitment 36,225.00 - 2,013.00 (for next 17 years)

Rs. in lac

S. PARTICULARS used Unused & Carrying No reverted during amount as at the year 31.03.15

A. PROVISIONS

B. CONTINGENT LIABILITY NOT PROVIDED FOR :

(a) Claims against the - 8.99 company not acknowledged as debt

(b) Guarantees

(i) Guarantee in favour of - 600.00 International Finance Corporation with M/s. HEG Ltd on joint and several basis on behalf of M/s A. D. Hydro power Limited.

(ii) Guarantee by ICICI Bank - 1,000.00 Ltd to LNJ Power Ventures Ltd

(c ) Other money for which the company is contingently liable.

(i) Excise & Customs Duties, 284.99 391.00 Sales tax and Other demands disputed by the Company.

(ii) Future Export Obligation - - Against EPCG

C. COMMITMENTS OUTSTANDING :

(i) Estimated Value of 3,441.35 4,604.98 contracts remaining to be executed on capital Accounts and not provided for

(ii) Commitment in 2012-13 to buy Rs.350 lac unit per year at a fixed rate of Rs.5.75 per unit for 20 years

(a) Current Commitment - 2,013.00 (for next 12 Months)

(b) Non-current commitment - 34,212.00 (for next 17 years)

18 ACCOUNTING STANDARD (AS)-29'PROVISIONS & CONTINGENT LIABILITIES AND COMMITMENTS' (Contd.)

D. The Rajasthan Government had imposed surcharge on shortfall in meeting Renewable Energy Obligation on the power produced from Captive Power Plants vide their Notification dated 23rd March, 2007 and amended later on 24th May, 2011, which was stayed by Hon'ble High Court of Rajasthan. In its Judgement dated 31st August, 2012, Hon'ble High Court of Rajasthan upheld the validity of the aforesaid Notification and amended Notification issued thereafter The Company has filed a SLP in the Hon'ble Supreme Court through Rajasthan Textile Mills Association (RTMA) against aforesaid Judgment of Hon'ble High Court of Rajasthan which has been accepted.

On the basis of the legal opinion obtained by the Company, the said Notification and amended Notification to date on Renewable Energy Surcharge are violation of the Article 19 (1) (g) of the Constitution so far as these relate to Captive Power Plants. The Management does not foresee any possible liability in future in view of Commissioning of 20 MW Wind Power Unit set-up under the Group Captive Scheme by its Associate Company "LNJ Power Ventures Ltd", power from which will be solely used by the Company; together with the aforementioned legal opinions.

E There is no other present obligations requiring provisions, in accordance with the guiding principles as enunciated in Accounting Standard (AS) - 29 "Provisions, Contingent Liabilities & Contingent Assets" other than provided in the books of accounts.(Also see note 51on litigation)

19 ACCOUNTING STANDARD (AS)-32 FINANCIAL INSTRUMENT DISCLOSURES-'HEDGE ACCOUNTING'

(a) The Company hedges its realizations on export sales and import obligation for Capital Assets/Raw Material through Foreign Exchange Derivative & Hedge Contracts in the normal course of business so as to reduce the risk of exchange fluctuations. No Foreign Exchange Derivative & Hedge Contracts are taken /used for trading or speculative purpose.

(b) The Company has following gross derivatives exposure outstanding as at March 31, 2015 which have been designated as cash flow hedge to its exposure to movements in foreign exchange rates:


Mar 31, 2014

1. Jodhpur Bench of Hon Rajasthan High Court, in its interim order on constitutional validity of the levy of Entry Tax, has directed the company to pay 50% of the assessed Entry Tax and provide solvent guarantee for the balance assessed and non-assessed Tax and interest thereon till the date of payment. Accordingly, the company has paid Rs. 415.32 Lacs against the entry tax payable up to March 31, 2011 being 50% of assessed Entry Tax and provided solvent guarantee to the State Government for the balance amount. As on March 31, 2014 the Company has accounted for provision of Rs. 1,140.11 lacs (Previous Year Rs. 1,022.50 lacs) including interest of Rs. 488.69 lacs (Previous Year Rs. 414.77 lacs).

2. Under the Technology Up-gradation Fund Scheme (TUFS) established by Government of India for Textiles, the Company has incurred an expenditure of Rs. 1,36,442.24 lacs on various projects (Previous Year Rs. 1,31,133.57 Lacs). The interest subsidy accrued for the year under this scheme is Rs. 3,058.19 lacs (Previous Year Rs. 3,529.17 lacs) out of which, Rs. 3,056.67 lacs (Previous Year Rs. 3,327.21 lacs) has been credited to Statement of Profit and Loss Net of interest subsidy capitalised. (Ref. Note 27 for details of Interest cost).

3. The capital subsidy under TUFS is accounted, adopting Deferred Income Approach, and is recognised in Statement of Profit & Loss on a systematic and rational basis over useful life of the assets. A sum of Rs. 452.29 lacs till date of Financial Statements is therefore, considered as deferred income, out of which, a sum of Rs. 48.88 lacs (previous year Rs. 47.83) has been recognised against depreciation during the year (up to year Rs. 132.36 lacs).

4. Foreign Trade Policy 2009-2014 introduced Status Holder Incentive Scheme (SHIS), under which an Exporter is entitled for Scripts @1% of FOB Value of Exports. These Scripts can be used within 18 months of the date of Script, for payment of Import /Excise duties on capital goods and spare parts and are freely transferable .

Based on opinion obtained from an expert, the full value of SHIS Scripts received/receivable aggregating to Rs. 1,908.53 lacs was accounted for as other operating revenue in previous year, upon ascertaining it''s probable use in the normal course of business based on projects approved by the Board. Out of total SHIS Scripts received for a value of Rs. 1,908.53 lacs, Scripts for a value of Rs. 1,006.96 lacs were used during the Financial Year. Scripts valuing Rs. 61.39 lacs were sold at a price of Rs. 18.17 lacs and loss on such Scripts of Rs. 43.22 lacs is accounted for in the current period.

SHIS Scripts for a value of Rs. 901.57 lacs are valid for utilisation within next 12 months, utilisation thereof within the next 12 month has been ascertained by the Management based on investment plans approved by the board on the date of approval of Accounts.

5. After commissioning of Thermal Power Plant at Banswara in 2007, HFO fuelled Wartsila power generators at various units considered as standby, became redundant. During previous year, company has also invested under Group Captive Scheme in a Special Purpose Vehicle (SPV) viz. LNJ Power Ventures Limited, which on 29th March 2013 commissioned a 20 MW Wind Power Unit in Rajasthan. As per Power Purchase Agreement signed by Company with SPV, 100% power generated by SPV starting 29th March, 2013 will be for use by company for 20 years at a fixed price. Considering very high cost of retention of Wartsila Power generators and uneconomical power generation, Company during previous year decided to retire them from active use and sell them at all locations, retaining only one at Denim Unit at Mayur Nagar as back-up for use in case of extreme emergency.

Resultantly Realisable value of Wartsila Generators (Rs. 1,068.46 Lacs) and Spares and Stores (Rs. 20.13 Lacs) had been transferred to "ASSETS HELD FOR SALE" as on 31.03.2013 and shown separately, pending disposal of these assets in Financial Year 2013-14 in terms of the Board''s decision dated 1st May, 2013.

During the year, 3 Generators of a WDV of Rs. 358.53 Lacs had been sold out at a value of Rs. 201.69 lacs, resulting into a further loss of Rs. 156.64 lacs. Remaining generators have been accounted for at estimated realisable value of Rs. 399.34 lacs.

6. Company''s subsidiary Cheslind Textiles Ltd (CTL) had suffered losses eroding its entire net worth and experienced difficulties in repayment of Term Loans, which were partly guaranteed by RSWM Ltd. CDR Cell approved restructuring of its Debts effective from December 1, 2011. In compliance of the Corporate Debts Restructuring (CDR) Scheme approved on April 9, 2012, loans & advances aggregating to Rs. 1640 lacs given to CTL were converted into 1,64,00,000 equity shares of Rs. 10 each and interest free loan of Rs. 60 lacs had been granted to CTL as approved by the Board of Directors in their meeting on 26th October, 2012.

Board of Directors of the Company in its meeting held on 9th April, 2014 decided to merge Cheslind Textiles Limited (CTL) with the Company. Based on Scheme of Amalgamation approved by the Boards of Directors of RSWM Limited and Cheslind Textiles Limited based on the Valuation Report of an Independent Valuer and Fairness Opinion thereon by SEBI approved Merchant Banker, each share holder of Cheslind Textiles Limited is being offered 1 Optionally Convertible Redeemable Preference Shares (OCRPS) of nominal value of Rs. 7.50 fully paid up of the Company for every one equity share of nominal value of Rs. 10.00 fully paid-up held in CTL. Proposed appointed date for merger is 1st April, 2013. OCRPS shall carry dividend rate of 12% on paid-up value of Rs. 7.50, will have a tenure of 5 years from the date of allotment, will be listed and/or admitted to trading on the designated stock exchange(s) and will be optionally convertible in the ratio of 22 OCRPS of Rs. 7.50 paid up for 1 equity share of the Company upon exercise of the option within 6 months of the allotment. OCPRS not converted within specified time can be redeemed before maturity by the Company by giving 3 months notice. The Scheme of Amalgamation is subject to approval of High Courts of Rajasthan and Madras.

During the year 2013-14, Cheslind Textiles Limited have reported a PBDT of Rs. 1,034.74 Lacs (Previous Year Rs. 1,206.89 Lacs). On the basis of detailed examination, expected economies & synergies upon effective merger and on its best estimates, the Management considers the decline in the value of investment in Cheslind Textiles Ltd (CTL) a temporary diminution in such value and hence in line with the valuation under AS -13, no provision for diminution in such value is made as at 31st March, 2014.

7. The Company has adopted AS 30 "Financial Instruments: Recognition and Measurement" and the gain on account of change in effective portion of such forward contracts is taken into Hedging Reserve Rs. 188.92 Lacs as on 31st March 2014, (Previous year loss 44.94 lacs) and loss of Rs. 18.31 lacs on ineffective portion of hedge is taken into Statement of Profit & Loss (Previous year Rs. 25.01 lacs ). Refer Note No. 47

8. A The loans & advances, debtors and other current assets are reviewed annually and their value in the ordinary course of

business will not be less than the amount at which they are stated in the Balance Sheet as assessed by the Management. However, balance confirmation from parties is under process.

B Response to the letter(s) sent by Company requesting confirmation of balances has been insignificant. Company notes that the Marketing and Accounting team has a system of periodical verification of balances and required adjustments are carried-on that basis regularly. In view of the above, management considered that impact of reconciliation, on receipt of balance confirmation, would not be significant on the same.

9. In view of legal opinion and various reliefs available under Income Tax Act, 1961 provision for taxation has been considered adequate.

10. The figures for the previous year have been regrouped and/or rearranged wherever found necessary to make these comparable with those of the current year.

11. Employee benefits - AS - 15

The company has complied with Accounting Standard 15 (Revised 2005) and the required disclosures are given hereunder:

(a) Defined Benefit Plans (Funded)

The Following table set out the status of the gratuity Plan and Earned Leave Plan as required under AS-15 (Revised 2005)

The Guidance Note on Implementation of AS-15 (Revised),"Employee Benefits" issued by the ICAI states that Provident Fund set up by the employers, which requires interest shortfall to be met by the employer needs to be treated as defined benefits plan. The Company set up Provident Fund does not have existing deficit of interest shortfall. With regard to future obligation arising due to interest shortfall (i.e. Government interest to be paid on the Provident Fund Scheme exceeding rate of interest earned on investment) pending issuance of the Guidance Note from Actuarial Society of India, Company actuary has expressed his inability to reliably measure the Provident Fund liability.

The Companys operations predominantly relates to manufacturing of Yarn and Fabric & Denim. On the basis of assessment of the risk and return differential in terms of AS-17, the Company has identified Yarn and Fabric & Denim as primary reportable business segments. Further the geographical segments have been considered as secondary segments and divided into India, Europe, Middle East, America and Other Countries.

The accounting policy in respect of Segments is in conformity with the accounting policies of the enterprise as a whole. The inter segment transfers are accounted at the prevailing market prices charged to unaffiliated customers for similar goods. These transfers are eliminated in consolidation.

The revenue and expenditure in relation to the respective segments have been identified and allocated to the extent possible. Other items i.e. extraordinary items, Loss /Profit on sale of investments and foreign currency transactions, corporate office expenses, etc. not allocable to specific segments are being disclosed separately as unallocated and adjusted directly against the Total Income of the Company.

D. The Rajasthan Government had imposed surcharge on shortfall in meeting Renewable Energy Obligation on the power produced from Captive Power Plants vide their Notification dated 23rd March, 2007 and amended later on 24th May, 2011, which was stayed by Hon''ble High Court of Rajasthan. In its Judgement dated 31st August, 2012, Hon''ble High Court of Rajasthan upheld the validity of the aforesaid Notification and amended Notification issued thereafter The Company has filed a SLP in the Hon''ble Supreme Court through Rajasthan Textile Mills Association (RTMA) against aforesaid Judgment of Hon''ble High Court of Rajasthan which has been accepted

On the basis of the legal opinion obtained by the Company, the said Notification and amended Notification to date on RE Surcharge are violative of the Article 19 (1) (g) of the Constitution so far as these relate to Captive Power Plants. The Management does not foresee any possible liability on this account and hence provision of liability to date Rs. 3,138.27 lacs (Previous Year Rs. 2,920.83 lacs) as per original Notification but only Rs. 735.79 lacs as per amended Notification has not been made in the books of accounts as no demand has, so far, been raised on account of these dues by Government. The Management does not foresee any liability in future in view of Commissioning of 20 MW Wind Power Unit set-up under the Group Captive Scheme by its Associate Company "LNJ Power Venture Ltd", power from which will be solely used by the Company; together with the aforementioned legal opinions

E. There is no other present obligations requiring provisions, in accordance with the guiding principals as enunciated in Accounting Standard (AS) - 29 "Provisions, Contingent Liabilities & Contingent Assets" other than provided in the books of accounts

I HEDGE ACCOUNTING - AS - 32

(a) The Company hedges its realisations on export sales and import obligation for Capital Assets/Raw Material through Foreign Exchange Derivative & Hedge Contracts in the normal course of business so as to reduce the risk of exchange fluctuations. No Foreign Exchange Derivative & Hedge Contracts are taken /used for trading or speculative purpose.

(b) The Company has following gross derivatives exposure outstanding as at March 31, 2014 which have been designated as cash flow hedge to its exposure to movements in foreign exchange rates:

(e) During the year there are no forecasted transactions for which hedge accounting had been used in the previous periods, but which is no longer expected to occur.


Mar 31, 2013

1 Jodhpur Bench of Hon Rajasthan High Court, which had earlier in its interim order stayed payment of entry tax on the grounds of constitutional validity, has vide order dated January 21, 2011 modified its earlier order following the judgement dated January 12, 2011 of the Hon''ble Supreme Court of india in the case of Binani Cement Ltd''s Special Leave petition and directed the Company to pay 50% of the assessed entry tax and provide solvent guarantee for the balance assessed and non-assessed tax and interest thereon till the date of payment. Accordingly, the Company has paid Rs.380.18 Lacs against the entry tax payable up to 31st March, 2010, being 50% of assessed entry tax and provided solvent guarantee to the State Government for the balance amount. As on 31st March, 2013 the Company has accounted for provision of Rs.1,022.50 Lacs (previous Year Rs.985.54 Lacs) including interest of Rs.414.77 Lacs (previous Year Rs.344.08 Lacs).

2 under the technology up-gradation Fund Scheme (TuFS) established by Government of india for textiles, the Company has incurred an expenditure of Rs.1,31,133.57 Lacs on various projects (previous Year Rs.1,27,296.79 Lacs). the interest subsidy accrued for the year under this scheme is Rs.3,529.17 Lacs (previous Year Rs.3,384.15 Lacs),out of which Rs.3,327.21 Lac (previous Year Rs.3158.41 Lac) has been credited to Statement of profit and Loss net of interest subsidy capitalised. (Ref. note 27 for details of interest cost).

3 the capital subsidy under TuFS is accounted adopting deferred income Approach, and is recognised in Statement of profit and Loss on a systematic and rational basis over useful life of the assets. A sum of Rs.452.29 Lacs till date of Financial Statements is therefore, considered as deferred income, out of which, a sum of Rs.47.83 Lacs (previous year Rs.46.81) has been recognised against depreciation during the year (up to year Rs.181.24 Lacs).

4 Foreign trade policy 2009-2014 introduced Status Holder incentive Scheme (SHiS), under which an exporter is entitled for Scripts @1% of FoB Value of exports. these Scripts can be used within 18 months of the date of Script, for payment of import /excise duties on capital goods and spare parts and are freely transferable .

due to inadequate Government Clarification/notification on eligibility, the application for SHiS was delayed. upon legal opinion received by the Company during the current year, these applications were made on 23rd August, 2012 & 17th September, 2012 for the year 2009-10 & 2010-11 respectively. Scripts for value of Rs.487.41 Lacs for the year 2009-2010 and for Rs.731.61 Lacs for the year 2010-2011 were allotted on 8th october, 2012 and 22nd october, 2012 respectively.

Based on opinion obtained from an expert, the full value of SHiS Scripts received (Rs.487.41 Lacs for the year 2009-10 & Rs.731.61 Lacs for the year 2010-11) and Scripts receivable (Rs.689.51 Lacs for the year 2012-13), aggregating to Rs.1908.53 Lacs have been accounted for as other operating revenue in current Financial Year upon ascertaining it''s probable use in the normal course of business and measurement with virtual certainty during the defined period, based on projects approved by the Board, on the date of approval of Balance Sheet.

The SHIS issued during 2012 are valid for utilisation within next 12 months. Thus, the utilisation of such SHIS has been asserted by the Management to be done within the next 12 months, based on investment plans approved by the Board and Investment Committee on the date of approval of Accounts. Such investments are scheduled to be executed within the next 12 months based on such projects approval by the Board.

5 After commissioning of Thermal Power Plant at Banswara in 2007, HFO fuelled Wartsila power generators at various units were considered as standby. During the year, company also invested under Group Captive Scheme in a Special Purpose Vehicle (SPV) viz. LNJ Power Ventures Limited, which on 29th March, 2013 commissioned a 20 MW Wind Power Unit in Rajasthan. As per Power Purchase Agreement signed by Company with SPV, 100% power generated by SPV starting 29th March, 2013 will be for use by company for 20 years at a fixed price. Considering very high cost of retention of Wartsila Power Generators and uneconomical power generation, Company during the year decided to retire them from active use and sell Wartsila Power Generators at all locations, retaining only one at Denim Unit at Mayur Nagar as back-up for use in case of extreme emergency. Consequently Company also decided to sell spare parts and stores of these Wartsila Generators. Resultantly, Rs.1901.19 Lac being difference of WDV and realisable value of these generators and Rs.93.12 Lacs being difference of Book Value and realisable value of related spare parts and stores, have been charged to Statement of Profit and Loss. Realisable value of Wartsila Generators (Rs.1,068.46 Lac) and Spares and Stores (Rs.20.13 Lacs) has been transferred to "ASSETS HELD FOR SALE" as on 31st March, 2013 and shown separately, pending disposal of these assets in Financial Year 2013-14 in terms of the Boards decision dated 1st May, 2013.

6 Dispute with Bank of Maharashtra over resetting rate of interest on Term Loan was decided by Banking Ombudsman, Rajasthan, RBI vide his award dated 24th February, 2012. The said award was only partially implemented by Bank of Maharashtra against which Company filed an appeal with Appellate Authority, Dy. Governor, RBI. The Appellate Authority remanded back the case to the Banking Ombudsman, Rajasthan, RBI, who in his revised award dated 16th July, 2012 upheld Company''s contention and directed Bank of Maharashtra not to charge interest prospectively at the rate more than 11.75%. Bank of Maharashtra filed appeal against revised award of the Banking Ombudsman, Rajasthan, RBI. Upon submission of our reply to the issues raised by them, Bank of Maharashtra decided to withdraw its appeal and implement awards passed by Banking Ombudsman, Rajasthan, RBI. As a result, Company paid to Bank of Maharashtra outstanding interest amount of Rs.45.82 Lacs (Rs.42.53 Lacs for previous year fully provided for and Rs.3.27 Lacs for current year) and closed loan account with the Bank.

7 Company''s subsidiary Cheslind Textiles Ltd (CTL) engaged in manufacturing Cotton Yarn had suffered losses eroding its entire net worth. Experiencing difficulties in repayment of Term Loans, which were partly guaranteed by RSWM Ltd; CTL approached its lenders for restructuring of its Debts effective from 1st December, 2011. The scheme of certain debts restructuring specifying sacrifices by the lenders and promoters requiring to infuse fresh capital, conversion of existing loans into equity shares and extension of guarantees and additional comfort letters got approved under Corporate Debts Restructuring (CDR) Mechanism on March 30, 2012. As per the approval of Board of Directors, loan of Rs.1,200 Lacs and advance of Rs.200 Lacs (given on 23.04.12) and Rs.240 Lacs (given on 7th May, 2012) respectively (aggregating to Rs.1,640 Lacs) have been converted into 1,64,00,000 Equity Shares of Rs.10 each in compliance of the aforementioned approved CDR Scheme. Further, interest free loan of Rs.60 Lacs has been granted to Cheslind Textile Ltd. in September, 2012, as approved by the Board of Directors in their meeting on 26th October, 2012.

During the year 2012-13, Cheslind Textiles Ltd. has reported a PBDT of Rs.1,206.89 Lacs. On the basis of detailed examination and on its best estimates, the Management considers the decline in the value of investment in Cheslind Textiles Ltd (CTL) a temporary diminution in such value and hence in line with the valuation under AS-13, no provision for diminution in such value is made as at 31st March, 2013.

8 The Company has incurred expenditure on implementation of Spinning projects at Kharigram and denim unit at Mordi, Banswara, which have been considered as pre-operative Expenses and capitalised to the respective projects on completion. The details of these expenses are as under:-

9 The Company has adopted Accounting Standard AS-30 "Financial instruments: Recognition and Measurement" and the loss on account of change in effective portion of such forward contracts is taken into Hedging Reserve Rs.44.93 Lacs (Loss) as on 31st March, 2013 (previous year Rs.163.09 lac (Loss) and loss Rs.96.97 lac on ineffective portion of hedge is taken into Statement of profit & Loss (Rs.121.98 Lacs previous Year) , Refer Note No. 49.

10 The loans & advances, debtors and other current assets are reviewed annually and their value in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet as assessed by the Management. However, balance confirmation from parties is under process.

11 Response to the letter(s) sent by Company requesting confirmation of balances has been insignificant. Company notes that the Marketing and Accounting team has a system of periodical verification of balances and required adjustments are carried-on that basis regularly. in view of the above, Management considered that impact of reconciliation, on receipt of balance confirmation, would not be significant on the same.

12 in view of legal opinion and various reliefs available under income Tax Act, 1961 provision for taxation has been considered adequate.

13 The figures for the previous year have been regrouped and/or rearranged wherever found necessary to make these comparable with those of the current year.

14 SEGMENT REPORTING - AS - 17

the Company''s operations predominantly relates to manufacturing of Yarn and Fabric & denim. on the basis of assessment of the risk and return differential in terms of AS-17, the Company has identified Yarn and Fabric & denim as primary reportable business segments. Further the geographical segments have been considered as secondary segments and bifurcated into india, europe, Middle east, America and other Countries.

the accounting policy in respect of Segments is in conformity with the accounting policies of the enterprise as a whole. the inter segment transfers are accounted at the prevailing market prices charged to unaffiliated customers for similar goods. these transfers are eliminated in consolidation.

the revenue and expenditure in relation to the respective segments have been identified and allocated to the extent possible. other items i.e. extraordinary items, Loss /profit on sale of investments and foreign currency transactions, corporate office expenses, etc. not allocable to specific segments are being disclosed separately as unallocated and adjusted directly against the total income of the Company.

15. HEDGE ACCOUNTING - AS - 32

(a) The Company hedges its realisations on export sales and import obligation for Capital Assets/Raw Material through Foreign Exchange Derivative & Hedge Contracts in the normal course of business so as to reduce the risk of exchange fluctuations. No Foreign Exchange Derivative & Hedge Contracts are taken /used for trading or speculative purpose.


Mar 31, 2012

1. There are no shares issued for consideration other than cash in the last 5 financial years. However, 1,35,13,607 Equity Shares of Rs. 10/- each were issued as fully paid up bonus shares by capitalisation of reserves in earlier years. 12,28,689 Equity Shares of Rs. 10/- each were issued for consideration other than cash, pursuant to the scheme of merger of erstwhile Jaipur Polyspin Limited and Mordi Textiles and Processors Limited as approved by the Hon'ble High Court of Rajasthan.

2. The number of issued, subscribed and fully paid up shares remained unchanged during the year as there were no buy back or issue of share capital.

3. The Company has only one class of Equity Shares having a par value of Rs. 10/-. Each holder of Equity Shares is entitled to one vote per share. There are no restrictions attached to any Equity Shares. The Company declares and pays dividends, if any, in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive 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 respective shareholders.

1. Secured loans repayable on demand include working capital loans (except from Axis Bank of Rs. 3,454.10 Lacs which are secured by pledge and possessive lien on stocks of Rs. 4,605.46 Lacs) secured by hypothecation of remaining raw materials, stock in process, finished goods, semi finished goods, stores, spares, book debts and other current assets as well as second charge on Fixed Assets of the Company on pari-passu basis.

2. All loans repayable on demand carry floating interest rate of 10.60% to 13.75%.

Note: 4.

Jodhpur Bench of the Hon'ble Rajasthan High Court, which had earlier in its interim order stayed payment of Entry Tax on the grounds of constitutional validity, has vide order dated January 21, 2011 modified its earlier order following the judgement dated January 12, 2011 of The Hon'ble Supreme Court of India in the case of Binani Cement Ltd's Special Leave Petition and directed the Company to pay 50% of the assessed Entry Tax and provide solvent guarantee for the balance assessed and non-assessed tax and interest thereon till the date of payment. Accordingly the Company has paid Rs. 265.27 Lacs against the entry tax payable up to March 31, 2009 being 50% of assessed Entry Tax and provided solvent guarantee to the State Government for the balance amount as on March 31, 2012 of Rs. 985.54 Lacs (Previous Year Rs. 957.75 Lacs) including interest of Rs. 344.08 Lacs.

Note: 5.

Under the Technology Up-gradation Fund Scheme (TUFS) established by Government of India for Textiles, the Company has incurred an expenditure of Rs. 1,27,296.79 Lacs on various projects (Previous Year Rs. 95,218.02 Lacs). The interest subsidy accrued for the year under this scheme is Rs. 3,094.09 Lacs (Previous Year Rs. 3,453.83 Lacs) which has been credited to Statement of Profit and Loss.

Note: 6.

The Capital Subsidy under TUFS is accounted adopting Deferred Income Approach and is recognized in Statement of Profit and Loss on a systematic and rational basis over useful life of the assets. A sum of Rs. 432.67 Lacs up to date is therefore considered as deferred income, out of which, a sum of Rs. 46.81 Lacs (Previous Year Rs. 86.48 Lacs) has been recognized against depreciation during the year (up to this year Rs. 209.91 Lacs).

Note: 7.

Company's subsidiary Cheslind Textiles Ltd (CTL) engaged in manufacturing Cotton Yarn has suffered losses eroding its entire net worth. Experiencing difficulties in repayment of Term Loans, which are partly guaranteed by RSWM Ltd; CTL approached its lenders for restructuring of its Debts effective from December 1, 2011. The scheme of certain debts restructuring specifying sacrifices by the lenders and promoters requiring to infuse fresh capital, conversion of existing loans into Equity Shares and extension of guarantees and additional comfort letters got approved under Corporate Debts Restructuring (CDR) Mechanism on April 9, 2012. Implementation of the same is in progress.

On the basis of detailed examination and on its best estimates, the Management considers the decline in the value of investment in Cheslind Textiles Ltd (CTL) a temporary diminution in such value and hence in line with the valuation under AS 13, no provision for diminution in such value is made as at March 31, 2012.

Note: 8.

Interest on Term Loan taken from Bank of Maharashtra in December, 2006 @ 9% was due for resetting in December, 2009 which was inordinately delayed by the Bank until March 24, 2011 when it communicated to the Company to pay interest @11.75% with retrospective effect. Aggrieved by Bank's action, Company approached Ombudsman, RBI, Rajasthan who vide his order dated February 24, 2012 directed bank to charge interest only prospectively from the date of communication to borrower. Bank vide its letter dated April 3, 2012 waived off excess interest charged to account up to March 24, 2011 but demanded interest @ 16.70% for period thereafter. Without prejudice to Company's legal position, it has offered to settle the issue by paying interest @11.75% w.e.f. March 24, 2011. The difference of interest payable @ 11.75% up to March 31, 2012 amounting to Rs.42.53 Lacs is fully provided for.

Note: 9.

The Company has been hitherto, following the guidelines issued by the Institute of Chartered Accountants of India on "Accounting for Derivatives" dated March 29, 2008, wherein the variations at the reporting dates on mark to market basis on Foreign Exchange Derivatives/ Hedge were acknowledged through the Statement of Profit and Loss.

During the year, Company has early adopted AS-30 "Financial Instruments: Recognition and Measurement" and the gain / loss on account of change in effective portion of such forward contracts is taken into Hedging Reserve (Rs. 163.09 Lacs as on March 31, 2012, Previous Year Nil) and gain on ineffective portion of Hedge is taken into Statement of Profit and Loss (Rs. 121.98 Lacs, Previous Year Nil). As a result thereof the loss for the period is understated by Rs. 163.09 Lacs.

Note: 10.

The loans and advances, debtors and other current assets are reviewed annually and their value in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet as assessed by the Management. However, balance confirmation from parties is under process.

Note: 11.

Response to the letter(s) sent by Company requesting confirmation of balances has been insignificant. Company notes that the Marketing and Accounting team has a system of periodical verification of balances and required adjustments are carried on that basis regularly. In view of the above, Management considered that impact of reconciliation, on receipt of balance confirmation, would not be significant on the same.

Note: 12.

In view of legal opinion and various reliefs available under Income Tax Act, 1961 provision for taxation has been considered adequate. Note: 40.

The figures for the previous year have been regrouped and / or rearranged wherever found necessary to make these comparable with those of the current year.

relevant factors, such as supply and demand in the employment market. The above information is certified by the actuary. The estimate of contribution for the next year as per actuarial valuation is as under:

a) Gratuity - Rs. 396.28 Lacs

b) Earned leave - Rs. 34.01 Lacs

viii)The overall expected return on assets is assumed based on the market prices prevailing on that date over the accounting period. The Company is having approved Gratuity Trust and Leave Encashment Scheme, which is having Insurer Managed Fund. The description of Insurance Policies are "ICICI Pru Group Gratuity Platinum Policy and Employees Leave Encashment-cum-life Assurance of Life Insurance Corporation of India".

The Guidance Note on Implementation of AS-1 5 (Revised),"Employee Benefits" issued by the ICAI states that Provident Fund set up by the employers, which requires interest shortfall to be met by the employer needs to be treated as defined benefits plan. The Company set up Provident Fund does not have existing deficit of interest shortfall. With regard to future obligation arising due to interest shortfall (i.e. Government interest to be paid on the Provident Fund Scheme exceeding rate of interest earned on investment) pending issuance of the Guidance Note from Actuarial Society of India. Company Actuary has expressed his inability to reliably measure the Provident Fund liability.

Note: 13. SEGMENT REPORTING - AS - 17

The Company's operations predominantly relates to manufacturing of Yarn and Fabric and Denim. On the basis of assessment of the risk and return differential in terms of AS-17, the Company has identified Yarn and Fabric and Denim as primary reportable business segments. Further the geographical segments have been considered as secondary segments and bifurcated into India, Europe, Middle East, America and Other Countries.

The Accounting Policy in respect of Segments is in conformity with the Accounting Policies of the enterprise as a whole. The inter segment transfers are accounted at the prevailing market prices charged to unaffiliated customers for similar goods. These transfers are eliminated in consolidation.

The revenue and expenditure in relation to the respective segments have been identified and allocated to the extent possible. Other items

Note: 14. CONTINGENT LIABILITIES AND COMMITMENTS (AS-29): (Rs. Lacs)

SI. Year ended Year ended No. Particulars March 31, 2011 March 31,2011

A. Contingent liability not provided for :

a) Claims against the Company not acknowledged as debt 44.93 69.38

b) Guarantees

i) Default deferred payment guarantee to Exim Bank, ICICI, IDBI, Canara Bank, SBI and SBOM for securing loan given to Cheslind Textile Ltd.

Outstanding Loan {Maximum amount for which Company may be liable during next 12 Months - Rs. 289.66 Lacs} 816.31 1,047.73

ii) The Company has provided Guarantee in favour of International Finance Corporation with M/s. HEG Ltd on joint and several basis on behalf of

M/s. AD Hydro Power Limited 600.00 600.00

c) Other money for which the Company is contingently liable.

i) Excise and Customs Duties, Sales tax and Other demands disputed by the Company 273.85 230.75

ii) Future Export Obligation Against EPCG 10,997.00 231.16

B. Commitments outstanding :

i) Estimated Value of contracts remaining to be executed on Capital Accounts and not provided for 9,797.46 24,582.23

ii) Bills Discounted with Banks 9,151.68 11,737.16

C. The Rajasthan Government had imposed surcharge on shortfall in meeting Renewable Energy Obligation on the power produced from Captive Power plants vide their Notification dated March 23, 2007 on which stay has been granted by the Hon'ble High Court. The same has been challenged in the Hon'ble High Court of Rajasthan through Rajasthan Textiles Mills Association. On the basis of opinion

Note: 15. CONTINGENT LIABILITIES AND COMMITMENTS (AS 29): (Contd...)

of the consultant that the said notification and amended notifications to date on RE Surcharge are violative of the Article 19(1) (g) of the Constitution so far as these relate to Captive Power Plants, the Management does not foresee any possible liability on this account and hence no provision of liability to date Rs. 2,920.83 Lacs (Previous Year Rs. 2,402.48 Lacs) has been made in the book of accounts.

D. There is no other present obligations requiring provisions in accordance with the guiding principals as enunciated in Accounting Standard (AS) - 29 "Provisions, Contingent Liabilities and Contingent Assets".

Note: 16. HEDGE ACCOUNTING - AS - 32

a) The Company Hedges its realizations on export sales and import obligation for Capital Assets/ Raw Material through Foreign Exchange Derivative and Hedge Contracts in the normal course of business so as to reduce the risk of exchange fluctuations. No Foreign Exchange Derivative and Hedge Contracts are taken / used for trading or speculative purpose.

b) The Company has following gross derivatives exposure outstanding as on Balance Sheet date which have been designated as cash flow hedge to its exposure to movements in foreign exchange rates:


Mar 31, 2011

1 Contingent liabilities

( Rs. in Lacs)

As at 31st March, 2011 As at 31st March, 2010

A. Contingent liabilities not provided for :

i) Excise & Custom Duties, Sales Tax and Other demands disputed by the Company. 230.75 230.30

ii) Claims not acknowledged by the Company 69.38 53.45

iii) Default Deferred Payment Guarantee provided to :-

Exim Bank for securing the loans given by them to RSWM International B. V. Netherlands.

- Outstanding Loan (Refer note No.6) NIL 1,620.89

iv) Default Deferred Payment Guarantee for securing the loan taken by CTL Exim Bank, ICICI, IDBI, Canara Bank, SBI and SBOM

- Outstanding Loan 1047.73 2182.94

{Maximum amount for which Company may be liable during next 12 Months – Rs 289.96 lac}

v) Un-expired Letters of Credit, for which counter guarantee given by the Company 4185.72 413.79

vi) Counter guarantees given by the Company in respect of Guarantees given by the Company's Bankers. 942.26 964.78

vii) The Company has provided Guarantee in favour of International Finance Corporation with M/s. HEG Limited on Joint and several basis on behalf of M/s. AD Hydro Power Limited. 600.00 600.00

B. Obligations and commitments outstanding :

i) Estimated value of contracts remaining to be executed on Capital Account and not provided for 24582.23 832.14

ii) Bills Discounted with Banks 11737.16 7,935.50

C. The export obligations against EPCG licenses have been timely fulfilled by the Company. The future additional export obligations against EPCG licences are of Rs.231.16 lac (Previous Year Rs.11,490 lac) and are to be fulfilled within the specified period.

D. The Rajasthan Government had imposed surcharge on shortfall in meeting Renewable Energy Obligation on the power produced from Captive Power plants vide their Notification dated 23.3.2007 on which stay has been granted by the Hon'ble High Court. The same has been challenged in the Hon'ble High Court of Rajasthan through Rajasthan Textiles Mills Association. On the basis of opinion of the consultant that the said notification and amended notifications to date on RE Surcharge are violative of the Article 19 (1) (g) of the Constitution so far as these relate to Captive Power Plants, the Management does not foresee any possible liability on this account and hence no provision of liability to date Rs.2402.48 lac (Previous Year Rs.1,634.95 lac) has been made in the Book of Accounts.

2. Jodhpur Bench of Hon Rajasthan High Court, which had earlier in its interim order stayed payment of Entry Tax on the grounds of constitutional validity, has vide order dated 21/01/2011 modified its earlier order following the judgement dated 12/01/2011 of The Hon'ble Supreme Court of India in the case of Binani Cement Ltd's Special Leave Petition and directed the Company to pay 50% of the assessed Entry Tax and provide solvent guarantee for the balance assessed and non-assessed Tax and interest thereon till the date of payment. Accordingly the Company has paid Rs.192.16 Lac on 01/03/2011 being 50% of assessed Entry Tax and provided solvent guarantee to the State Government for the balance amount as on 31.03.2011 of Rs.957.75 Lacs (Previous Year 808.33) including interest of Rs.270.64 lac.

3. The Company hedges its export realisations through Foreign Exchange Derivative & Hedge Contracts in the normal course of business so as to reduce the risk of exchange fluctuations. No Foreign Exchange Derivative & Hedge Contracts are taken /used for trading or speculative purpose. Pursuant to the announcement on "Accounting for Derivatives" issued by the Institute of Chartered Accountants of India on 29th March, 2008 and as per Companies Accounting Policy, the Company has accounted for gains aggregating Rs.16.74 lac (Previous year Rs.37.78 lac loss) during the current year, computed on mark to market basis on the Foreign Exchange Derivative & Hedge Contracts outstanding as on 31st March, 2011.

4. Under the Technology Up-gradation Fund Scheme (TUFS) established by Government of India for Textiles, the Company has incurred an expenditure of Rs.95218.02 lac on various projects. The interest subsidy accrued for the year under this scheme is Rs.3453.83 lac (Previous Year Rs.3740.45 lac) which has been credited to Profit & Loss Account.

5. The capital subsidy under TUFS is accounted adopting Deferred Income Approach and is recognised in Profit & Loss Statement on a systematic and rational basis over useful life of the assets. A sum of Rs.432.67 lac up to date is therefore considered as deferred income, out of which, a sum of Rs.86.51 lac (including Rs.39.69 lac of prior period to match with the revised useful life of the Denim Plant) has been recognised against depreciation during the year (up to year Rs.175.99 lac).

6. The Company had a wholly owned overseas subsidiary viz RSWM International BV, incorporated as a Special Purpose Vehicle (SPV) in the year 2007 with an investment in the equity of Rs.277.30 lac. Further, loans of Rs.779.96 lac were advanced by the Company up to 30.09.2010 in normal course of business. As authorised by Company's Memorandum of Association, the Company had also given a Perpetual & Irrevocable Default Payment Guarantee to SPV's lendor viz Exim Bank of India, against a term loan of USD3.80 million granted to RSWM International BV. The said SPV, RSWM International BV had made a strategic investment in the 50% equity of RSWM SISA, Spain with whom the Company had entered into the JV Agreement on 13th April, 2007.

Business with JV RSWM SISA was discontinued due to continued losses on 09.06.2009. Company's SPV RSWM International BV exited out of JV by selling its share to JV Partner in RSWM SISA on 23.11.2009. Consequently RSWM International BV was left with no Business activity and it applied for liquidation of Company.

Exim Bank devolved bank guarantee given by the Company for the balance amount of loan outstanding as on 28.10.2010 amounting to Rs.1,442,05 lac, which as a normal business activity, was honoured by the Company on 29.10.2010. The same being a trading loss incidental to Company's business has been charged off during the year.

Further, in line with scheme of arrangement by RSWM International BV with its creditors, RSWM International BV remitted Euro 230,000 equivalent to Rs.139.79 lac to the Company in full and final settlement of loans due and balance amount of Rs.640.17 lac being irrecoverable has been written off as normal trading loss.

On approval of Liquidation of RSWM International BV by appropriate authority on 04.02.2011, the Company received Euro 3,419.19 equivalent to Rs.2.13 lac against equity share capital held by it. Consequently, investment loss on liquidation of RSWM International, amounting to Rs.275.17 lac also has been written off this year as normal business practice.

Consequently provision of Rs.571.82 lac for doubtful loans and advances and Rs.277.30 lac for diminution in the value of investment made in previous year have been written back as no longer required.

7. The loans & advances, debtors and other current assets are reviewed annually and their value in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet as assessed by the Management, However, balance confirmation from parties are under process.

8. In view of legal opinion and various reliefs available under Income Tax Act, 1961, provision for taxation has been considered adequate.

9. Adjustment relating to previous year includes Expenses Rs.4.38 lac and Income Rs.NIL lac (Previous Year Expenses Rs.10.16 lac and Income Rs.0.40 lac).

10. The figures for the previous year have been regrouped and / or rearranged wherever found necessary to make these comparable with those of the current year.

C. DISCLOSURES

1. Segment reporting

The Company's operations predominantly relates to manufacturing of Yarn and Fabric & on the basis of assessment of the risk and return differential in terms of AS-17, the Company has identified Yarn and Fabric & Denim as primary reportable business segments. Further the geographical segments have been considered as secondary segments and bifurcated into India, Europe, Middle East, America and Other Countries.

The accounting policy in respect of Segments is in conformity with the accounting policies of the enterprise as a whole. The inter segment transfers are accounted at the prevailing market prices charged to unaffiliated customers for similar goods. These transfers are eliminated in consolidation.

The revenue and expenditure in relation to the respective segments have been identified and allocated to the extent possible. Other items i.e. extraordinary items, Loss /Profit on sale of investments and foreign currency transactions, corporate office expenses, etc. not allocable to specific segments are being disclosed separately as unallocated and adjusted directly against the Total Income of the Company.

4. Related party

a) Enterprises that directly or indirectly through one or more intermediaries, control or were controlled by or are under common control with the reporting enterprise (this includes holding companies, subsidiaries and fellow subsidiaries).

I) Cheslind Textiles Limited.

II) RSWM International B.V. (Since liquidated on 04/02/2011)

b) Associate None

c) Individuals owning directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of any such individual.

None

d) Key Management Personnel and their relatives

1) Shri L.N. Jhunjhunwala

2) Shri Ravi Jhunjhunwala

3) Shri Shekhar Agarwal

4) Shri Arun Churiwal

5) Shri J. C. Laddha

e) Enterprises over which any person described in (c) or (d) is able to exercise significant influence.

S. No Company's Name

01. A.D. Hydro Power Ltd

02. Agarwal Finestate Pvt. Ltd

03. Bagrodia Investment & Finlease Pvt. Ltd.

04. Bhilwara Energy Ltd

05. Bhilwara Scribe Pvt. Ltd

06. Bhilwara Software Pvt. Ltd

07 Bhilwara Technical Textiles Ltd.

08. BMD Private Ltd

09 BSL Ltd

10. Deepak Knits Private Ltd

11. Diplomat Leasing Pvt. Ltd.

12. Essay Marketing Co. Ltd

13. Expert Fabric & Textiles Pvt. Ltd.

14. Ganga Yamuna Auto Pvt. Ltd.

15. Giltedged India Securities Ltd

16. HEG Limited

17. Indo Canadian Consultancy Services Ltd

18. Investors India Ltd

19. Jagur Finvest Pvt. Ltd.

20 Jyoti Knits Pvt. Ltd.

21. Kalati Holding Private Ltd.

22. LNJ Financial Services Ltd.

23. Malana Power Company Ltd

24. Maral Overseas Ltd

25. Mayur Knits Pvt. Ltd

26. Raghav Commercial Ltd

27. Raghav Knits & Textiles Private Ltd.

28. Ramkant Sales & Services Pvt. Ltd

29. Shashi Commercial Co. Ltd.

30. Shree Vardhman Stock Holding Pvt. Ltd

31. Sudiva Spinners Pvt. Ltd

32. USS Investment & Finlease Pvt. Ltd

5. Jointly controlled assets

The Company jointly owns 50% share in a building 'Bhilwara Bhawan' at New Delhi with M/s. HEG Limited. The aggregate amount of the Assets, Liabilities, Income and Expenditure has been recognised in the respective heads of the financial statements.

vi) There is no amount included in the fair value of plan assets for Company's own financial instruments and property occupied by or other assets used by the Company.

The estimates of future salary increase considered in actuarial valuation, take account of: inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market. The above information is certified by the Actuary. The estimate of contribution for next year as per actuarial valuation is as under:-

a) Gratuity - Rs.424.85 lac

b) Earned Leave - Rs.65.25 lac

viii)The overall expected rate of return on assets is assumed based on the market prices prevailing on that date over the accounting period. The Company is having approved Gratuity Trust and Leave Encashment Scheme, which is having Insurer Managed Fund. The description of the Insurance Policies are "ICICI Pru Group Gratuity Platinum Policy and Employees Group Leave Encashment- cum-Life Assurance of Life Insurance Corporation of India".

The Guidance Note on Implementation of AS-15 (Revised), "Employee Benefits" issued by the ICAI states that Provident Fund set up the employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefits plan. The Company set up Provident Fund does not have existing deficit of interest shortfall. With regards to future obligation arising due to interest shortfall (i.e. government interest to be paid on the Provident Fund Scheme exceeding rate of interest earned on investment) pending issuance of the Guidance Note from Actuarial Society of India, the Company's actuary has expressed his inability to reliably measure the Provident Fund liability.


Mar 31, 2010

1. Contingent Liabilities:

(Rs.in Lac)

This Year Previous Year

A. Contingent liabilities not provided for :

i) Excise & Custom Duties, Sales Tax and Other

demands disputed by the Company. 230.30 106.53

ii) Claims not acknowledged by the Company 53.45 2.80

iii) Default Deferred Payment Guarantee provided to :-

(a) Exim Bank for securing the loans given by them to RSWM International B.V., Netherlands. Outstanding Loan 1,620.89 1,927.36

{Maximum amount for which Company may be liable during next 12 Months - Rs.341.24 lac}

This Year Previous Year

(b) Exim Bank, ICICI, IDBI, Canara Bank, SBI and SBOM for securing loan given by them to Cheslind Textiles Ltd.

Outstanding Loan 2,182.94 - {Maximum amount for which Company may be liable during next 12 Months - Rs.898.93 lac}

iv) Un-expired Letters of Credit, for which counter guarantee given by the Company. 413.79 276.44

v) Counter guarantees given by the Company in respect of Guarantees given by the Companys Bankers. 964.78 822.10

vi) The Company has provided Guarantee in favour of International Finance Corporation with M/s. HEG Limited on Joint and several basis on behalf M/s. AD Hydro Power Limited. 600.00 350.00

B. Obligations and commitments outstanding :

i) Estimated value of contracts remaining to be executed on Capital Account and not provided for 832.14 1,048.55

II) Bills Discounted with Banks 7,935.50 5,799.41

C. The export obligations against EPCG licenses have been timely fulfilled by the Company. The future additional export obligations against EPCG licences are of Rs.11,490 lac (Previous Year Rs.11,639 lac) and are to be fulfilled within the specified period.

D. The Rajasthan Government has imposed surcharge on shortfall in meeting Renewable Energy Obligation on the power produced from Captive Power plants vide their Notification dated 23.3.2007. The same has been challenged in the Honble High Court of Rajasthan through Rajasthan Textiles Mills Association. The Management does not foresee any possible liability on this account and hence no provision of liability to date Rs.1,634.95 lac (Previous Year Rs.1,041.11 lac) has been made in the Book of Accounts.

2. The Jodhpur Divisional Bench of Honble High Court of Rajasthan had declared the applicability of Entry Tax in Rajasthan as ultra virus, vide order dated 21st of August, 2007 on writ filed by M/s.Dinesh Pouches Limited. Writ petition has also been filed in our matter in the same bench, which was admitted and stay granted in our favour. Subsequently in the matter of M/s. Godfrey Philips (India) Ltd, Jaipur Bench of Honble High Court of Rajasthan had declared the levy entry tax as valid and now the aforesaid issue is pending in Honble Supreme Court for final decision. On the basis of evaluation assessment and degree of probability and exercise of best judgment, the Company has made provision of demand of entry tax Rs.808.33 lac up to 31st March, 2010 (Previous Year Rs.188.09 lac).

3. The Company hedges its export realizations through Foreign Exchange Derivative & Hedge Contracts in the normal course of business so as to reduce the risk of exchange fluctuations. No Foreign Exchange Derivative & Hedge Contracts are taken /used for trading or speculative purpose. Pursuant to the announcement on "Accounting for Derivatives" issued by the Institute of Chartered Accountants of India on 29th March, 2008 and following the Principles of Prudence, the Company has accounted for losses aggregating Rs.28.91 lac (Previous year Rs.45.34 lac) during the current year, computed on mark to market basis on the Foreign Exchange Derivative & Hedge Contracts, outstanding as on 31st March, 2010, those are without underlying export order/product.

4. The Company has incurred Rs.95,218.02 lac to date on the projects under the Technology Up- gradation Fund Scheme (TUFS) for Textiles established by Government of India for modernizations, expansions and up-gradations. The Interest Subsidy accrued under this scheme for the year Rs.3,740.45 lac (Previous year Rs.3,792.99 lac), out of which Rs.3,740.45 lac has been credited against Term Loan Interest in Profit & Loss Account and Rs. NIL (Previous year Rs.31.34 lac) has been credited against Pre-operative Expenses.

5. The capital subsidy under TUFS is accounted adopting Deferred Income Approach. A sum of Rs.432.67 lac up to date is therefore considered as deferred income. Out of which a sum of Rs.31.57 lac (previous year Rs.30.82 lac) has been recognized against depreciation (up to year Rs.89.48 lac).

6. On annual review of the CENVAT Credit receivable on the Balance Sheet date, a sum of Rs.944.53 lac, out of the unutilisable amount of Rs.1,701.16 lac has been considered as likely to be utilized within reasonable foreseeable future in the normal course of business and has been de-capitalised on the respective fixed assets. The balance amount of CENVAT Receivable of Rs.756.63 lac (Previous year Rs.1,701.16 lac) continues to be capitalized on respective fixed assets being not likely to be utilized within reasonable foreseeable future in the normal course of trade, though the debit entries in the excise records have not been passed. Consequently, the depreciation on the de-capitalised amount Rs.298.42 lac (Previous year Rs.73.95 lac) has been written back.

7. To fall in line with the Guidance Note No: GN (A) 8 (Issued 1994) in respect to the Amendment to Schedule XIV of the Companies Act, 1956 issued by The Institute of Chartered Accountants of India, the Company has changed the method of providing depreciation of its Denim unit, which hitherto was provided at the rates applicable for Continuous Process Plant to the rates applicable for Tripple Shift Operation as prescribed by Schedule XIV of the Companies Act,1956. As a result whereof the charge for depreciation for the year is higher by Rs.1,757.90 lac including Rs.1,114.81 lac of the previous years and the profit for the year is lower by this value.

8. During the year, the Company had terminated the Sales Contract dated 21st March, 2008 for sale of land ad-measuring 1,26,207 Sq.ft. at Bhilwara on the request of Vendee. The land was sold for a consideration of Rs.1500 lac and Company had received Rs.100 lac from Vendee after giving possession of the land, the balance was to be received by 30th September, 2009. At the time of sale, the Company booked profit of Rs.904.58 lac in Profit & Loss Account of FY 2007-08.

Consequent upon termination of the sale agreement, the Company has taken back the possession of the land during the year and forfeited Rs.100 lac received from the Vendee, by reinstating the original fixed assets in the Companys books of accounts. The loss of Rs.804.58 lac after netting back of Rs.100 lac of the amount forfeited has been charged to Profit & Loss Account.

9. The Company has a wholly owned overseas subsidiary incorporated as a Special Purpose Vehicle in the year 2007 with an investment in the equity of Rs.277.30 lac. Further, a loan of Rs.571.82 lac is outstanding as on 31st March, 2010 from the wholly owned overseas subsidiary. The Company has also given a Perpetual & Irrevocable Default Payment Guarantee to the lendor Export Import Bank of India, against a term loan of US$ 3.8 million granted to RSWM International BV. The outstanding amount of US$ 3.61 million as on 31st March 2010 is shown as a contingent liability as no devolvement has occurred until 31st March, 2010.

RSWM International BV had made a strategic investment in the 50% equity of RSWM SISA, Spain with whom the Company had entered into the JV Agreement on 13th April, 2007.

During the year, JV agreement between the Company and RSWM SISA, Spain was terminated by mutual consent on 9th June, 2009 owing to continued losses. The erstwhile JV i.e. RSWM SISA, Spain filed a Insolvency Petition before the designated authority in Spain during the year.

Consequent upon the termination of the JV and filing of Insolvency Petition and failure of wholly owned overseas subsidiary to fulfill its financial obligation towards the lender and the parent company following provisions have been made:

a) Provision for doubtful loan and advance of Rs.571.82 lac has been made on the basis of evaluation of degree of probability and exercise of the prudent judgment of the Management.

b) A provision for diminution in the value of investment in the wholly owned subsidiary of Rs.277.30 lac has been made in terms of Para 32 of Accounting Standard 13, after determination based on expert opinion obtained by the Company that the diminution is "other than temporary".

10. Two cases of fraud involving employees of the Company have been detected during the year involving aggregate amount of Rs.61.45 lac, which have been booked as Fraud & Embezzlement Loss in the Profit & Loss Account of current year. The frauds related to misappropriated funds through series of Bank transactions and unauthorized collection of cash from customers. The Company has got the frauds investigated and has taken strict follow-up action including legal action and review and revision of internal control system.

11. To augment long term resources, the Company, on 1st December, 2007 had issued and allotted 35,00,000 warrants of Rs.87/- each aggregating to Rs.3,045 lac and received Rs.304.50 lac (being 10% of the total amount) to the promoters and employees of the Company with the option of conversion of each warrant into 1 Equity of share Rs.10/- each, within a period of 18 months from the date of allotment on payment of balance amount of Rs.2740.50 lac. Consequent upon failure to exercise the conversion right and make the payment of balance amount, the Company has forfeited the allotment money of Rs.304.50 lac and credited to Capital Reserve Account after cancellation of 35,00,000 warrants.

12. The particulars of payments to Auditors are as under: -

13. The Company incurred expenditure on feasibility, acquisition, implementation of Spinning, Weaving, Denim Fabric, Power, and New Projects, which have been considered as Pre-operative Expenses and capitalized to the respective projects on completion or charged to revenue on abandonment. The details of these expenses are as under:-

* Abandoned

14. Based on the information so far obtained by the Company, payment to enterprises covered under the Micro, Small and Medium enterprises Development Act, 2006. (MSMED ACT) has been made with in 45 days and disclosure in accordance with Section 22 of MSMED ACT is as under:-

* None of the unpaid amount is overdue.

15. The loans & advances, debtors and other current assets are reviewed annually and their value in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet as assessed by the Management, However, balance confirmation from parties are under process.

16. In view of legal opinion and various reliefs available under Income Tax Act, 1961, provision for taxation has been considered adequate.

17. Adjustment relating to previous year includes Expenses Rs.10.16 lac and Income Rs. 0.40 lac (Previous Year Expenses Rs.0.12lac and Income Rs. NIL).

18. The figures for the previous year have been regrouped and / or rearranged wherever found necessary to make these comparable with those of the current year.

C. DISCLOSURES

1. SEGMENT REPORTING

The Companys operations predominantly relates to manufacturing of Yarn and Fabric and on the basis of assessment of the risk and return differential in terms of AS-17, the Company has identified Yarn and Fabric as primary reportable business segments. Further, the geographical segments have been considered as secondary segments and bifurcated into India, Europe, Middle East, Americas and Other Countries.

The accounting policy in respect of Segments is in conformity with the accounting policies of the enterprise as a whole. The inter-segment transfers are accounted at the prevailing market prices charged to unaffiliated customers for similar goods. These transfers are eliminated in consolidation.

The revenue and expenditure in relation to the respective segments have been identified and allocated to the extent possible. Other items i.e. extraordinary items, Loss /Profit on sale of investments and foreign currency transactions, corporate office expenses, etc. not allocable to specific segments are being disclosed separately as unallocated and adjusted directly against the Total Income of the Company.

* Includes captive & standby Power 2. TAXES ON INCOME

The Break-up of Deferred Tax Liability and Assets into major components are as under:-

3. EARNINGS PER SHARE

The basic and diluted Earnings Per Share (EPS) have been calculated by dividing Net Profit for the year attributable to equity shareholders by the weighted average number of Equity Shares as per AS 20 are as under: -

4. RELATED PARTY

(a) Enterprises that directly or indirectly through one or more intermediaries, control or are controlled by or are under common control with the reporting enterprise (this includes holding companies, subsidiaries and fellow subsidiaries).

I) Cheslind Textiles Limited

II) RSWM International B.V.

(b) Associate

None

(c) Individuals owning directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of any such individual.

None

(d) Key Management Personnel and their relatives

1) Mr. L. N. Jhunjhunwala

2) Mr. Ravi Jhunjhunwala

3) Mr. Shekhar Agarwal

4) Mr. Arun Churiwal

5) Mr. J. C. Laddha

6) Mr. Riju Jhunjhunwala

7) Mr. Rishabh Jhunjhunwala

8) Mr. Nivedan Churiwal

9) Mr. Varun Laddha

(e) Enterprises over which any person described in (c) or (d) is able to exercise significant influence.

S. Companys Name No. No.

1. AD Hydro Power Ltd.

2. Agarwal Finestate Pvt. Ltd.

3. Bagrodia Investment & Finlease Pvt. Ltd.

4. Bhilwara Energy Ltd.

5. Bhilwara Scribe Pvt. Ltd.

6. Bhilwara Software Pvt. Ltd.

7. Bhilwara Spinners Ltd.

8. Bhilwara Technical Textiles Ltd.

9. BMD Private Ltd.

10. BSL Ltd.

11. Deepak Knits Private Ltd.

12. Diplomat Leasing Pvt. Ltd.

13. Essay Marketing Co. Ltd.

14. Expert Fabric & Textiles Pvt. Ltd.

15. Ganga Yamuna Auto Pvt. Ltd.

16. Giltedged Industrial Securities Ltd.

17. HEG Limited

18. Indo Canadian Consultancy Services Ltd.

19. Investors India Ltd.

20. Jagur Finvest Pvt.Ltd.

21. Jyoti Knits Pvt. Ltd.

22. Kalati Holding Private Ltd.

23. LNJ Financial Services Ltd.

24. Malana Power Company Ltd.

25. Maral Overseas Ltd.

26. Mayur Knits Pvt. Ltd.

27. Raghav Commercial Ltd.

28. Raghav Knits & Textiles Private Ltd.

29. Ramkant Sales & Services Pvt. Ltd.

30. RSWM SISA S.A. Spain

31. Shashi Commercial Co. Ltd.

32. Shree Vardhman Stock Holding Pvt. Ltd.

33. Sudhiva Spinners Private Ltd.

34. USS Investment & Finlease Pvt. Ltd.

f) Transaction with Related Parties

The following transactions were carried out with the related parties in the ordinary course of business:

5. JOINTLY CONTROLLED ASSETS

The Company jointly owns 50% share in a building Bhilwara Bhawan at New Delhi with M/s. HEG Limited. The aggregate amount of the Assets, Liabilities, Income and Expenditure has been recognized in the respective heads of the financial statements.

6. EMPLOYEE BENEFITS

The Company has complied with Accounting Standard 15 (Revised 2005) and the required disclosure are given hereunder:-

The Guidance Note on Implementation of AS-15 (Revised), "Employee Benefits" issued by the ICAI states that Provident Fund set up the employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefits plan. The Company set up Provident Fund does not have existing deficit of interest shortfall. With regards to future obligation arising due to interest shortfall (i.e. government interest to be paid on the Provident Fund Scheme exceeding rate of interest earned on investment) pending issuance of the Guidance Note from Actuarial Society of India, the Companys actuary has expressed his inability to reliably measure the Provident Fund liability.

7. OPERATING LEASES

The Company has taken cars on operating lease, which are non-cancelable for tenure of four years. The minimum rental payables under Operating Leases are as under: -

Find IFSC