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Notes to Accounts of Supreme Tex Mart Ltd.

Mar 31, 2015

A. Terms/rights attached to equity shares

The company has one class of equity shares having a par value of Rs.5 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend 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 shareholder.

a. Indian rupee term loan amounting to Rs. 8400.00 lacs from State Bank of India carries interest @ 13.10% p.a. net of TUFS subsidy. The loan is repayable in 96 monthly installments, which consists 30 monthly installments of Rs. 42.00 lacs each, next 30 monthy installments of Rs. 98.00 lacs each, next 35 monthly installments of Rs.116.66 lacs each and last one monthly installment of Rs.116.90 lacs along with interest. These installments have been started from 01.12.2010. *

These Installments have been commencing from 01.04.2012 and subsequently got restructured from 01.07.2014 e. Indian rupee term loan amounting to Rs.900.00 lacs from UCO Bank carries interest @ 7.70% p.a. net of TUFS subsidy. The loan is repayable in 96 monthly installments of Rs.9.37 lacs each along with interest commencing from 01.12.2010. *

h. Indian rupee term loan amounting to Rs.4500.00 lacs from Central Bank of India carries interest @ 8.75% p.a. net of TUFS subsidy. The loan is repayable in 96 monthly installment of Rs. 47.00 lacs each along with interest commencing from 01.07.2013*.

I. Indian rupee term loan amounting to Rs.1560.00 lacs from Punjab National Bank carries interest @ 11.50% p.a. raise during 2014-15 on account of Interest on Working Capital Limit with Bank The loan is repayable in 96 monthly installments, which consists 9 monthly installments of Rs. 1.73 lacs each, next 12 monthly installments of Rs.6.50 lacs each, next 12 monthly installments of Rs.11.70 lacs each, next 12 monthly installments of Rs.15.60 lacs each, next 12 monthly installments of Rs.18.20 lacs each, next 12 monthly installment of Rs. 22.75 lacs each, next 24 monthly installment of Rs.23.40 lacs each, next 3 monthly installment of Rs.28.60 lacs each commencing from 01.07.2016 and interest on this term loan of Rs.1560.00 lacs will also be funded till 30.06.2016 by raising another term loan and repayment will commence from 01.07.2016

j. Indian rupee term loan amounting to Rs.1229.00 lacs from Punjab National Bank carries interest @ 11.50% p.a. raise during 2014-15 by funding Interest on Term Loans with Bank of Rs.8850.00 lacs, amount of this term loan of Rs.1229.00 Lacs will further increase by funding interest on existing term loans of Rs.8850.00 lacs till 31.12.2015. Then after repayments will starts from 01.07.2016 as per below repayment schedule :

l. Indian rupee term loan amounting to Rs.210.00 lacs from Punjab & Sind Bank carries interest @ 11.50% p.a. raise during 2014-15 on account of Interest on Working Capital Limit with Bank The loan is repayable in 96 monthly installments, which consists 9 monthly installments of Rs.0.23 lacs each, next 12 monthly installments of Rs.0.88 lacs each, next 12 monthly installments of Rs.1.57 lacs each, next 12 monthly installments of Rs.2.10 lacs each, next 12 monthly installments of Rs.2.45 lacs each, next 12 monthly installment of Rs.3.06 lacs each, next 24 monthly installment of Rs.3.15 lacs each, next 3 monthly installment of Rs.3.85 lacs each commencing from 01.07.2016.

m. Indian rupee term loan amounting to Rs.48.00 lacs from Punjab & Sind Bank carries interest @ 11.50% p.a. raise during 2014-15 on account of Interest on term loan with Bank of Rs.210.00 lacs, amount of this term loan of Rs.48.00 Lacs will further increase by funding interest on term loan of Rs.210.00 lacs till 30.06.2016. Then after repayments will starts from 01.07.2016 as per below repayment schedule :

n. Indian rupee term loan amounting to Rs.1092.00 lacs from IDBI Bank carries interest @ 11.50% p.a. raise during 2014-15 on account of Interest on Working Capital Limit with Bank, amount of this term loan will be raised to Rs.1500.00 lacs in 2015-16. Then loan will be repayable in 96 monthly installments, which consists 9 monthly installments of Rs.1.67 lacs each, next 12 monthly installments of Rs. 6.25 lacs each, next 12 monthly installments of Rs.11.25 lacs each, next 12 monthly installments of Rs.15.00 lacs each, next 12 monthly installments of Rs.17.50 lacs each, next 12 monthly installment of Rs.21.88 lacs each, next 24 monthly installment of Rs.22.50 lacs each, next 3 monthly installment of Rs.27.50 lacs each commencing from 01.07.2016. *

* All the above mentioned term loans are secured by first pari-passu charge over fixed assets and second pari- passu charge over current assets of the company. The loans are also secured by equitable mortgage of residential house of Directors Mr. Ajay Gupta and Mr. Gautam Gupta located at 445 Sant Nagar Ludhiana. Further, the loans have been guaranteed by the personal guarantee of Executive Directors of the company. p. Other loan and advance represents term loan on vehicles. This loan from HDFC Bank is taken during the financial year 2013-14 and carries interest @12.55% p.a. The loan is repayable in 23 monthly installments of Rs.0.15 lacs including interest. Another loan from HDFC Bank is taken during the financial year 2013-14 and carries interest @13.65% p.a. The loan is repayable in 24 monthly installments of Rs.0.34 lacs including interest. This loan from UCO Bank is taken during the financial year 2012-13 and carries interest @10.45% p.a. The loan is repayable in 36 monthly installments of Rs.0.54 lacs including interest. Loan from financial institution is taken during the financial year 2011-12 and carries interest 10.94% p.a. The loan is repayable in 35 monthly installments of Rs.0.32 lacs including interest. This Loan from ICICI bank is taken during 2014-15 and carries interest @10.24% p.a. The loan is repayable in 60 monthly installments of Rs.0.63 lacs including interest These loans are secured by way of hypothecation of respective vehicle. Further the loans have been guaranteed by the personal guarantee of Managing Director of the company.

#Interest accrued and due includes Rs.199 lacs (Previous Year Nil) which relates to defaults in repayment of interest on bank loans.

'@ Other includes cheques Issued but not yet cleared as on 31st March,2015 amounting to Rs.76541267 (PY Rs. 137843918) out of which cheques of Rs.31693641 has been cleared and remaining cheques has not been presented for payment upto the date of signing of balance sheet i.e. 30th May,2015

2. Contingent Liabilities:

(a) Bank guarantee outstanding - -

(b) Bills discounted with banks against irrevocable letter of credit 64252804 240863002

(c) The Income Tax Assessments of the company have been completed upto the assessment year (A.Y 2012-13) Tor which no demand has been created. However assessment Tor the A.Y 2013-14 and A.Y 2014-15 are still pending.

(d) The Company has Tiled an appeal against the order of AETC, ICC before Joint director cum Deputy Excise and Taxation commissioner (Appeal) against imposition of Penalty of Rs.2.78 lacs. Based on the decision of Appellate authorities and the interpretations of other relevant provision, the company has been legally advised that the penalty raised is likely to be deleted and accordingly no provision is considered necessary.

(e) The Company has Tiled an appeal against the order of Assistant Commissioner Central Excise division before Commissioner (Appeal) against collection of Service tax of Rs.0.88 lacs alongwith interest and penalty of Rs.0.94 lacs. Based on the decision of Appellate authorities and the interpretations of other relevant provision, the company has been legally advised that the penalty raised is likely to be deleted and accordingly no provision is considered necessary.

3. Transfer Pricing

The company has entered into specified domestic transactions with related parties.The management is of the opinion that the company maintains necessary documents as prescribed by the Income Tax Act,1961 to prove that these domestic transactions are at arm's length and believes that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense.

4. The current assets, loans and advances are having the value at which they are stated in the balance sheet, if realized in the ordinary course of business.

5. The company has leased facilities under cancellable and non cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter, The cancellable arrangements can be terminated by either party after giving due notice.The lease rent expenses recognized during the year amounts to Rs.240000. The future minimum lease payments in respect of non- cancellable operating leases as at 31st March,2015 are:

The company has leased facilities under cancellable and non cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter, The cancellable arrangements can be terminated by either party after giving due notice.The lease rent expenses

Note: The remuneration to the key managerial personnel does not include the provision made for gratuity and leave benefits, as they are determined on an actuarial basis for the company as a whole.

C. No amount has been provided as doubtful debts or advances/written off or written back in the year in respect of debts due from or to above said related parties.

D. Related party relationship is as identified by the Management and relied upon by the Auditors'.

E. Transactions with enterprises controlled by KMP has been made against advance payments.Therefore, provisions of Section 185 of Companies Act, 2013 are not applicable to the company.

35. The Company has accrued following export incentives of Rs.72833377 during the year .

(b) Incentive under Focus Market License of Rs.14481199 (Previous year Rs.24932001)

(c) Incentive under Duty Drawback of Rs. 58352178 (Previous year Rs. 90966692)

6. In accordance with the Accounting Standard (AS) - 28 on "Impairment of Assets", the company has assessed as on balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account

7. Trade receivables of Rs.7409.47 lacs,Trade payables of Rs.6962.64 lacs and advances of Rs.4214.23 lacs (Previous year Rs.32889.48) are subject to confirmation & Reconciliation.

8. Vat Refund amounting to Rs.136.94 lacs for the F.Y 2010-11 against which appeal is pending before Deputy Excise and Taxation Commissioner, whether it is to be realised or not depend on the decision of the Assessing Authority.

9. The company has Export Incentives recoverable as at March 31,2015 which is included under other current assets,under :

(a) Incentive under Focus Market License of Rs.25469076 (Previous year Rs.25719557)

(b) Incentive under Duty Drawback of Rs.22051004 (Previous year Rs.40170441)

The company is in the process of negotiation with various parties for sales of licenses mentioned in (a), the management believes that the amount recorded in books is fully recoverable and no adjustments are deemed necessary by the management in the financial statement in this regard.

10. The Company has accumulated losses of Rs.14949.62 lacs as on 31st March,2015. The loan accounts with consortium banks has turned NPA and some of the member banks (Punjab National Bank, Allahabad Bank, Punjab & Sind Bank & IDBI Bank) has restructured its debt whereas union bank of India is in process of restructuring its debt. The Lead Bank (State Bank of India) and other members banks i.e. Central Bank of India and UCO Bank have not restructured their debt upto 31st March 2015. Although these events are conditions indicate material uncertainty that may cast significant doubt about the company's ability to continue on going concern.Based on detailed evaluation of its current situation and plans formulated and active discussions with JLF,the management is confident of raising adequate finance for its revival.

Accordingly the financial statements have Deen prepared on the basis that company is going concern and that no adjustments are required to the carrying value of the assets and liabilities.

11. The interest accrued on long term and short term borrowings amount to Rs.1241.78 lacs (Rs.1056.78 accrued to SBI for the period from Nov'14 to March 15, & Rs.185.01accrued to CBI for the period from Jan'15 to March '15 ) has not been provided the statement of profit and loss account as these loans has been categorized as NPA as on 31st March 2015.

12. Previous year's figures have been recast/regrouped whenever necessary to make these comparable with current year's figures.


Mar 31, 2014

Company Overview:

Supreme Tex Mart Ltd (STML) is an integrated textile organization based at Ludhiana. STML manufactures various types of yarns and garments for customers in domestic and international markets.

a. Terms/rights attached to equity shares

The company has one class of equity shares having a par value of Rs. 5 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend 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 entiltled 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 shareholder.

As per records of the company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

1. Share application money pending allotment

During the year, the company has made the allotment of 36,55,272 equity shares against the share application money pending for allotment as on the date of previous balance sheet.

a. Indian rupee term loan amounting to Rs. 575.00 lacs from State Bank of India carries interest @ 9.20% p.a. net of TUF subsidy. The loan is repayable in 31 quarterly installments of Rs. 18.54 lacs each along with interest commencing from 01.10.2007. *

b. Indian rupee term loan amounting to Rs. 8400.00 lacs from State Bank of India carries interest @ 10.00% p.a. net of TUF subsidy. The loan is repayable in 30 monthly installments of Rs. 42.00 lacs each, next 30 monthy instalments of Rs. 98.00 lacs each, next 35 monthly installments of Rs. 116.66 lacs each and last one monthly installment of Rs. 116.90 lacs along with interest. These installments have been started from 01.12.2010. *

c. Indian rupee term loan amounting to Rs. 7500.00 lacs from Punjab National Bank carries interest @ 8.00% p.a. net of TUF subsidy. The loan is repayable in 30 monthly installments of Rs. 37.50 lacs each, next 30 monthy instalments of Rs. 87.50 lacs each, next 35 monthly installments of Rs. 104.16 lacs each and last one monthly installment of Rs. 104.40 lacs along with interest. These installments have been started from 01.12.2010. *

d. Indian rupee term loan amounting to Rs. 1350.00 lacs from Punjab National Bank carries interest @ 8.84% p.a. net of TUF subsidy. The loan is repayable in 96 monthly installments of Rs. 14.06 lacs each along with interest commencing from 01.01.2011. *

e. Indian rupee term loan amounting to Rs. 2319.94 lacs from Punjab National Bank carries interest @ 9.65% p.a. The loan is repayable in 77 monthly installments of Rs. 30.21 lacs each along with interest commencing from 01.04.2012. *

f. Indian rupee term loan amounting to Rs. 900.00 lacs from UCO Bank carries interest @ 7.70% p.a. net of TUF subsidy. The loan is repayable in 96 monthly installments of Rs. 9.37 lacs each along with interest commencing from 01.12.2010. *

g. Indian rupee term loan amounting to Rs. 1295.00 lacs from Allahabad Bank carries interest @ 13.59% p.a. net of TUF subsidy. The loan is repayable in 108 monthly installments of Rs. 12.00 lacs each along with interest commencing from 01.04.2010. *

h. Indian rupee term loan amounting to Rs. 1250.00 lacs from Allahabad Bank carries interest @ 10.09% p.a. net of TUF subsidy. The loan is repayable in 96 monthly installments of Rs. 13.02 lacs each along with interest commencing from 01.01.2011. *

i. Indian rupee term loan amounting to Rs. 4500.00 lacs from Central Bank of India carries interest @ 8.75% p.a. net of TUF subsidy. The loan is repayable in 96 monthly installments of Rs. 47.00 lacs each along with interest commencing from 01.07.2013. *

* All the above mentioned term loans are secured by first pari-passu charge over fixed assets and second pari-passu charge over current assets of the company. The loans are also secured by equitable mortgage of residential house of Director Mr. Ajay Gupta and Promoter Mr. Sanjay Gupta located at 445 Sant Nagar Ludhiana. Further, the loans have been guaranteed by the personal guarantee of Directors Mr. Ajay Gupta , Mr. Gautam Gupta and Promoter Mr. Sanjay Gupta.

j. Other loan and advance represents term loan on vehicles. This loan from HDFC Bank is taken during the financial year 2013-14 and carries interest @12.55% p.a. The loan is repayable in 23 monthly installments of Rs. 0.15 lacs including interest. Another loan from HDFC Bank is taken during the financial year 2013-14 and carries interest @13.65% p.a. The loan is repayable in 24 monthly installments of Rs. 0.34 lacs including interest.This loan from UCO Bank is taken during the financial year 2012-13 and carries interest @10.45% p.a. The loan is repayable in 36 monthly installments of Rs. 0.54 lacs including interest. Loan from financial institution is taken during the financial year 2011-12 and carries interest 10.94% p.a. The loan is repayable in 35 monthly installments of Rs. 0.32 lacs including interest. These loans are secured by way of hypothecation of respective vehicle. Further the loans have been guaranteed by the personal guarantee of Managing Director of the company.

Note: Due to the change in the method of depreciation from the single shift allowance to the triple shift allowance, deferred tax liability has been lower by Rs. 2,71,19,024/- (Rs. 8,77,63,833/- * 30.90%) Working Capital Loans from banks are secured by first pari-passu charge over current assets and second pari-passu charge over fixed assets of the company. The loans are also secured by equitable mortgage of residential house of Director Mr. Ajay Gupta and Promoter Mr. Sanjay Gupta located at 445 Sant Nagar Ludhiana. Further, the loans have been guaranteed by the personal guarantee of Directors Mr. Ajay Gupta , Mr. Gautam Gupta and Promoter Mr. Sanjay Gupta.

a. Building includes those constructed on leasehold land:

Gross block Rs. 157929936 (Previous Year Rs. 157929936) Depreciation charge for the year Rs. 5250492 (Previous Year Rs. 5276263) Accumulated depreciation Rs. 33076856 (Previous Year Rs. 27826364) Net book value Rs. 124853080 (Previous Year Rs. 130103572)

b. The company has provided depreciation on computer equipment used for ERP @20% on straight line basis, as useful life of such equipment has been estimated to be not more than five years.

c. The company has changed its method of charging depriciation for the fixed assets installed at Spinning Unit-2, Apparels & Knits Unit, Hand Knitting Unit, Fabric Processing Unit & Knitting Unit from the Single Shift Allowance to Triple Shift Allowance with effect from 01-10-2013, Accordingly, company has calculated depreciation on Triple Shift Allowance basis w.e.f 01-10-2013 in accordance with the Schedule XIV of Companies Act, 1956 amounting to Rs. 8,77,63,833/-. Consequent to this change, profits are lower by the like amount.

Intangible assets which comprises of software have been amortized @20% on straight line basis, as useful life of the such software has been estimated to be not more than five years.

These intangible assets are not initially generated.

The company has paid the above mentioned amount to Punjab State Electricity Board for expenditure on power lines. As future economic benefits associated with the installation of such power lines will flow to the company, the same have been reflected in this note. The comapny has amortised these lines @20% on straight line basis as the useful life is estimated to be five years.

''Classification of Mat credit entitlement into non-current and cuurent assets has been done on the basis of estimates made by management.

Margin money deposits given as security

Margin money deposits with a carrying amount of Rs. 54085158 (Previous Year Rs. 85638725) are subject to first charge to secure the company''s inland letter of credit limits with banks.

''Difference in exchange rate relating to turnover is included in ''Revenue from operations''. Other exchange differences have been disclosed separately under the note 27 relating to ''Other expenses''.

2. Contingent Liabilities: (Amount in Rs.)

As at March 31,

2014 2013

(a) Bank guarantee outstanding - -

(b) Bills discounted with banks against irrevocable letter of credit 240863002 377282842

3. The current assets, loans and advances are having the value at which they are stated in the balance sheet, if realized in the ordinary course of business.

4. a) The Company has identified Micro, Small and Medium Enterprises on the basis of information made available. There are no dues to Micro and Small Enterprises, that are reportable under the Micro, Small and Medium Enterprises Development Act 2006.

b) The detail of amount outstanding to Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), based on the available information with the company are as under:

c) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in employment market.

d) The financial assumption considered for the calculations are as under:

Discount Rate: The discount rate has been chosen by reference to market yield on government bonds as on date of valuation.

Expected Rate of Return: In case of gratuity, the actual return has been taken Salary increase: On the basis of past data provided by the company The provision for leave with wages during the year has been made on the basis of closing liability as per the actuarial valuation report of LIC. This provision is overprovided to the tune of Rs. 1379699 as against the provision required to be made as per actuarial valuation report given by LIC in respect of leave with wages. However, the closing liability of leave with wages is as per the acturial valuation report.

A. No amount has been provided as doubtful debts or advances/written off or written back in the year in respect of debts due from or to above said related parties.

B. Related party relationship is as identified by the Management and relied upon by the Auditors''.

Note: The remuneration to the key managerial personnel does not include the provision made for gratuity and leave benefits, as they are determined on an actuarial basis for the company as a whole.

5. In accordance with the Accounting Standard (AS) - 28 on "Impairment of Assets", the company has assessed as on balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

6. Previous year''s figures have been recast/regrouped whenever necessary to make these comparable with current year''s figures.


Mar 31, 2013

Company Overview:

Supreme Tex Mart Ltd ("STML") is an integrated textile organization based at Ludhiana. STML manufactures various type of yarns and garments for customers in domestic and international markets.

1. The current assets, loans and advances are having the value at which they are stated in the balance sheet, if realized in the ordinary course of business.

2. The company has leased facilities under cancellable and non cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter, The cancellable arrangements can be terminated by either party after giving due notice.The lease rent expenses recognized during the year amounts to'' 1224608. The future minimum lease payments in respect of non-cancellable operating leases as at 31stMarch,2013are:

3. a) The Company has identified Micro, Small and Medium Enterprises on the basis of information made available. There are no dues to Micro and Small Enterprises, that are reportable under the Micro, Small and Medium Enterprises Development Act 2006.

b) The detail of amount outstanding to Micro, Small and Medium Enterprises under the Micro, Small and Medium

4. Related Party Disclosure

Related party disclosure is in accordance with the Accounting Standards (AS) 18 on "Related Party Disclosure" notified by the Companies (Accounting Standards) Rules, 2006:-

A. Name of related parties and description of relationship:

a) Key Management Personnel Sh.Sanjay Gupta Whole time Director

Sh.Ajay Gupta Managing Director

Sh. Gautam Gupta Joint Managing Director

b) Enterprises controlled by Key Management Personnel:

-Venus Tex Spin Ltd -Gautam Terry Tech Ltd. -Gttl

-Goldleaf International Pvt. Ltd.* -Cimero Industrial Enterprises Ltd.* -Ganeshgee Textile Trading Ltd.* * No transaction has taken place during the year

5. In accordance with the Accounting Standard (AS) - 28 on "Impairment of Assets", the company has assessed as on balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has beer provided in the books of account.

6. Previous year''s figures have been recast/regrouped whenever necessary to make these comparable with current year''s figures.


Mar 31, 2012

A. Terms/rights attached to equity shares

The company has one class of equity shares having a par value of r 5 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend 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 entiltled 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 shareholder.

1. Share application money pending allotment

During the year, new Equity Shares were issued in lieu of the Share Application money received by the company on preferential basis as per provisions of SEBI ICDR Regulations, 2009. These Equity Shares rank pari passu with the existing shares of the company in all rights including dividend. Further the company had sufficient authorized capital to issue the shares.

a. Indian rupee term loan amounting to Rs. 575.00 lacs from State Bank of India carries interest @ 10.25% p.a. net of TUF subsidy. The loan is repayable in 18 quarterly installments of Rs. 18.54 lacs each along with interest commencing from 01.10.2007.

b. Indian rupee term loan amounting to Rs. 8400.00 lacs from State Bank of India carries interest @ 9.75% p.a. net of TUF subsidy. The loan is repayable in 30 monthly installments of Rs.42.00 lacs each, next 30 monthy instalments of Rs. 98.00 lacs each, next 35 monthly installments of Rs.116.66 lacs each and last one monthly installment of Rs.116.90 lacs along with interest. These installments have been started from 01.12.2010.

c. Indian rupee term loan amounting to Rs. 7500.00 lacs from Punjab National Bank carries interest @ 9.25% p.a. net of TUF subsidy. The loan is repayable in 30 monthly installments of Rs. 37.50 lacs each, next 30 monthy instalments of Rs. 87.50 lacs each, next 35 monthly installments of Rs. 104.16 lacs each and last one monthly installment of Rs. 104.40 lacs along with interest. These installments have been started from 01.12.2010.

d. Indian rupee term loan amounting to Rs. 1350.00 lacs from Punjab National Bank carries interest @ 9.25% p.a. net of TUF subsidy. The loan is repayable in 96 monthly installments of Rs. 14.06 lacs each along with interest commencing from 01.01.2011.

e. Indian rupee term loan amounting to Rs. 2316.22 lacs from Punjab National Bank carries interest @ 9.25% p.a. net of TUF subsidy. The loan is repayable in 77 monthly installments of Rs. 30.28 lacs each along with interest commencing from 01.04.2012.

f. Indian rupee term loan amounting to Rs. 900.00 lacs from UCO Bank carries interest @ 8.25% p.a. net of TUF subsidy. The loan is repayable in 96 monthly installments of Rs. 9.37 lacs each along with interest commencing from 01.12.2010.

g. Indian rupee term loan amounting to Rs. 1295.00 lacs from Allahabad Bank carries interest @ 14.09% p.a. net of TUF subsidy. The loan is repayable in 108 monthly installments of Rs. 12.00 lacs each along with interest commencing from 01.04.2010.

h. Indian rupee term loan amounting to Rs. 1250.00 lacs from Allahabad Bank carries interest @ 10.59% p.a. net of TUF subsidy. The loan is repayable in 96 monthly installments of Rs. 13.02 lacs each along with interest commencing from 01.01.2011.

* All the above mentioned term loans are secured by first pari-passu charge over fixed assets and second pari- passu charge over current assets of the company. The loans are also secured by equitable mortgage of residential house of Directors Mr. Ajay Gupta and Mr. Sanjay Gupta located at 445 Sant Nagar Ludhiana. Further, the loans have been guaranteed by the personal guarantee of Executive Directors of the company.

i. Other loan and advance represents term loan on vehicles. This loan from financial institution is taken during the financial year 2011-12 and carries interest 10.94% p.a. The loan is repayable in 35 monthly installments of Rs. 0.32 lacs including interest. The loan is secured by way of hypothecation of respective vehicle. Further the loan has been guaranteed by the personal guarantee of Managing Director of the company.

Working Capital Loans from banks are secured by first pari-passu charge over current assets and second pari- passu charge over fixed assets of the company. The loan is also secured by equitable mortgage of residential house of Directors Mr. Ajay Gupta and Mr. Sanjay Gupta located at 445 Sant Nagar Ludhiana. Further, the loans have been guaranteed by the personal guarantee of Executive Directors of the company.

a. Building includes those constructed on leasehold land :

Gross Block Rs. 157773774 (Previous Year Rs.157773774)

Depreciation charge for the Year Rs.5258771 (Previous Year Rs.5258771)

Accumulated depreciation Rs. 22550101 (Previous Year Rs. 17291330)

Net book value Rs.135223673 (Previous Year Rs.140482444)

b) The company has provided depreciation on computer equipment used for ERP @20% on straight line basis, as useful life of such equipment has been estimated to be not more than five years.

2. Contingent Liabilities: (Amount in Rs ) As at March 31, 2012 2011

(a) Bank guarantee outstanding 200000 700000

(b) Bills discounted with banks against irrevocable letter of credit 119097076 209112000

(c) Income Tax demand - 602789

3. The current assets, loans and advances are having the value at which they are stated in the balance sheet, if realized in the ordinary course of business.

4. The company has leased facilities under cancellable and non cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter, The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs. 2108630. The future minimum lease payments in respect of non-cancellable operating leases as at 31st March ,2012 are:

5. a) The Company has identified Micro, Small and Medium Enterprises on the basis of information made available. There are no dues to Micro and Small Enterprises, that are reportable under the Micro, Small and Medium Enterprises Development Act 2006.

b) The detail of amount outstanding to Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), based on the available information with the company are as under:

f) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in employment market.

g) The financial assumption considered for the calculations are as under:

Discount Rate: The discount rate has been chosen by reference to market yield on government bonds as on date of valuation.

Expected Rate of Return: In case of gratuity, the actual return has been taken Salary increase: On the basis of past data provided by the company

6. Segment information as required by the Accounting Standard (AS) 17 on "Segment Reporting" notified by the Companies (Accounting Standards) Rules 2006 is disclosed beloved

a) The company has identified two segments yarn segment and garment segment. The yarn segment comprises production of various types of yarn (from cotton, man made fibers and blend thereof) and yarn processing activities.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist of cash and bank balances, debtors, inventories and fixed assets. Segment liabilities include all operating liabilities and consist of creditors and other liabilities.

c) Segment revenue and expenses

Segment revenue comprises of sales to external customers and inter segment sales. Segment expenses comprise expenses that are directly attributable to the segment.

C. No amount has been provided as doubtful debts or advances/written off or written back in the year in respect of debts due from or to above said related parties.

D. Related party relationship is as identified by the Management and relied upon by the Auditors'.

E. Transactions with enterprises controlled by KMP has been made against advance payments. Therefore, provisions of Section 295 of Companies Act, 1956 are not applicable to the Company.

* The Company hedges its foreign currency fluctuation exposure by way of foreign currency derivative options. The Company has taken one USD/INR put and call option from a bank and having a maturity period upto Dec.2012. This derivative option is proprietary product of bank which do not have a ready market and such are marked to a model, which is usually bank specific instead of being marked to market. Based on marked to a model concept the loss on valuation amounts to current year Rs. 404.66 lacs (Previous year Rs. 505.12 lacs). However in the view of significant uncertainty associated with the above derivative options whose ultimate outcome depends on future events, the loss if any, on such open derivative options cannot be determined at this stage.

7. In accordance with the Accounting Standard (AS) - 28 on "Impairment of Assets", the company has assessed as on balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

8. Previous year's figures have been recast/regrouped whenever necessary to make these comparable with current year's figures.


Mar 31, 2011

1. Contingent liabilities not provided for:

No outflow is expected in view of the past history relating to these items.

a) Bank guarantee outstanding Rs.7.00 lacs. '.(Previous year- 2.00 Lacs,)

b) Bills discounted with banks against irrevocable letter of credit Rs.2091.12 lacs(Previous year-961.11 lacs)

c) Disputed liability not acknowledged as debt in respect of derivative contracts amounting to Rs.Nil (Previous year 1525 lacs).

2. The company has issued share capital during the year as under

a) 50,62,690 equity shares of Rs. 5/-each at premium of Rs. 20/-each.

b) 70,00,000 equity shares of Rs. 5/- each at premium of Rs. 11.50/- each

The proceed received from issue of equity as stated above has been utilzed for the purpose it was raised.

3. Estimated amount of contract to be executed on Capital account (Net of advances) Rs.2400.00 lacs (Previous year Rs. 1050.00 lacs).

4. The Company has contested the additional demand in respect of income tax amounting to Rs. 602789/- (Previous Year Rs. 602789/-). Pending appeal with appellate authorized, no provision has been made in the books of account as the company is hopeful to get the desired relief in appeal.

5. The company has executes bonds for an aggregate amount of Rs. 1,00,00,000 (Previous Year Rs. 1,00,00,000) in favour of the President of India under Section 59(2) and 67 of the Customs Act, 1962 and Central Excise Act, 1944, forfulfillment of the obligation underthe said Acts.

7. The difference in exchange rate relating to turnover amounting to Rs. 135.44 lacs (Previous year Rs. 61.97 lacs) is included under head 'turnover'. Other exchange difference has been disclosed separately underthe schedule of'Administrative and other charges'.

8. The current assets, loans and advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

9. The company has paid Rs. Nil (Previous Year Rs. 2.47 Lacs) to Punjab State Electricity Board for expenditure on power lines. As future economic benefits associated with the installation of such power lines will flow to the company, the same have been reflected in the schedule of Fixed Assets. The company has amortised these lines @20% on straight line basis as the useful life is estimated to be five years.

12. Fixed Deposits shown under the head Bank Balances are under lien against letter of credit and guarantees issued by Banks.

13. Intangible assets which comprises of softwares have been amortized @ 20% on straight line basis, as useful life of the software has been estimated to be not more than five years.

14. The Company has provided depreciation on Computer equipment used for ERP @20% on straight line basis, as useful life of such equipment has been estimated to be not more than five years.

15.a) The Company has identified Micro, Small and Medium Enterprises on the basis of information made available. There are no dues to Micro and Small Enterprises, that are reportable under the Micro, Small and Medium Enterprises Development Act 2006.

f) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in employment market.

g) The financial assumption considered for the calculations are as under:-

Discount Rate: The discount rate has been chosen by reference to market yield on government

bonds as on date of valuation.

Expected Rate of Return: In case of gratuity, the actual return has been taken.

Salary increase: On the basis of past data provided by the company h) Short term employee's benefits;

Shortterm leave encashment liability as on 31.03.2011 Rs. 20.22 lacs

(i) Contribution to Provident Fund Rs. 85.24 lacs (Previous Year Rs. 62.49 lacs)

19. RELATED PARTY DISCLOSURE

Related party disclosure is in accordance with the Accounting Standards (AS) 18 on "Related Party Disclosure" notified by the Companies (Accounting Standards) Rules, 2006.: A. Name of related parties and description of relationship:

a) Key Management Personnel Sh.Sanjay Gupta Managing Director

Sh.Ajay Gupta Joint Managing Dirctor

Sh. Gautam Gupta Executive Dirctor

Sh. Ram Lai Gupta Executive Dirctor

(upto21Jan2010)

b) Enterprises controlled by Key Management Personnel:

-Venus Tex Spin Ltd.

- Gautam Enterprises

- Goldleaf International Pvt. Ltd.*

* No transaction has taken place during the year.

C. No amount has been provided as doubtful debts or advances/written off or written back in the year in respect of debts due from or to above said related parties.

D. Related party relationship is as identified by the Management and relied upon by the Auditors'.

E. Transactions with enterprises controlled by KMP has been made against advance payments. Therefore, provisions of Section 295 of Companies Act, 1956 are not applicable to the company.

20. SEGMENT REPORTING

Segment information as required by the Accounting Standard (AS) 17 on "Segment Reporting" notified by the Companies (Accounting Standards) Rules 2006 is disclosed below.

a) The company has identified two segment yarn segment and garments segment. The yarn segment comprises production of various types of yarn (from cotton, man made fibers and blend thereof) and yarn processing activities.

Garment segment comprises of production of grey and dyed fabric and garment.

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist of cash and bank balances, debtors, inventories and fixed assets. Segment liabilities include all operating liabilities and consist of creditors and other liabilities.

c) Segment revenue and expenses

Segment revenue comprises of sales to external customers and inter segment sales. Segment expenses comprise expenses that are directly attributable to the segment.

21. Borrowing cost capitalized (including capital work in progress) during the year amounting to Rs.Nil (Previous Year 68.34 lacs)

23. The Company hedges its foreign currency fluctuation exposure by way of foreign currency derivative options. The Company has taken one USD/INR put and call option from a bank and having a maturity period upto Dec.2012. This derivative option is proprietary product of bank which do not have a ready market and such are marked to a model, which is usually bank specific instead of being marked to market. Based on marked to a model concept the loss on valuation amounts to Current Year 505.12 lacs .(Previous Year Rs.769.98 lacs). However in the view of significant uncertainty associated with the above derivative options whose ultimate outcome depends on future events, the loss if any, on such open derivative options cannot be determined at this stage.

24. In accordance with the Accounting Standard (AS) - 28 on "Impairment of Assets", the company has assessed as on balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

25. The Income tax department had carried out a search and seizure operation on 12th May, 2010 at business premises of the company. Although no discrepancies were found in stocks, sales, purchases and investments etc. made by the company. But to buy peace of mind and in the spirit of settlement and to end litigation, the company offered Rs. 500 lacs as income. No entries have been passed in books of account in this regard.The said amount has been considered as income in the computation of taxable income for the Asst. year 2010-2011 and 2011-2012. Accordingly provision for taxation is made after considering such income.

26. Previous year's figures have been recast/regrouped whenever necessary to make these comparable with current year's figures.

27. The Schedules 1 to 17 form an integral part of the Balance Sheet and Profit and Loss Account and authenticated as such.


Mar 31, 2010

1. Contingent liabilities not provided for:

No outflow is expected in view of the past history relating to these items. a) Bank guarantee outstanding Rs. 2 lacs. (Previous year- Nil)

b) Letter of credit outstanding Rs.2570.37 lacs (Previous year-2169.06 lacs).

c) Bills discounted with banks against irrevocable letter of credit Rs.961.11 lacs (Previous year-278.71 lacs)

d) Disputed liability not acknowledged as debt in respect of derivative contracts amounting to Rs. 1525 lacs (Previous year 1525 lacs) (Also Refer Note No. 14)

2. The company has issued 4807143 equity shares of Rs. 5/- each at a premium of Rs.37 per share to M/s Sino Champ Corporation Limited on preferential basis. The company had utilized the proceed received from the said issue for the purpose those were issued.

3. Estimated amount of contract to be executed on Capital account (Net of advances) Rs. 1050.00 lacs (Previous year Rs.3240.36 lacs)

4. The difference in exchange rate relating to turnover amounting to Rs. 61.97 lacs (Previous year Rs. 45.71 lacs) is included under head turnover. Other exchange difference has been disclosed separately under the schedule ofAdministrative and other charges.

5. The current assets, loans and advances are having the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

6. The company has paid Rs. 2.47 Lacs (Previous Year Rs. 18.05 Lacs) to Punjab State Electricity Board for expenditure on power lines. As future economic benefits associated with the installation of such power lines will flow to the company, the same have been reflected in the schedule of Fixed Assets. The company has amortised these lines @20% on straight line basis as the useful life is estimated to be five years.

7. The Company is entitled to benefit under DEPB Scheme on export sale made during the year. This benefit can be availed as input duty credit or can be transferred in open market. The Company has realized a sum of Rs.Nil /- (Previous year Rs.Nil/-) in respect of DEPB license sold during the year and the said amount has been included under the head other income. A sum of Rs.2721987/- being the value of entitlement held as at the close of the year and yet to be sold has also been accounted as part of other income as there exists no uncertainty regarding the amount of consideration realizable or its ultimate collection. The company is also entitled to benefit under Duty Drawback Scheme. A sum of Rs. 7743995/- being the value of Duty Drawback Receivable as at the close of the year is accounted as part of other income. This treatment is in accordance with the opinion of the Expert Advisory Committee of ICAI as published in January 2001 issue of its Journal.

8. Fixed Deposits shown under the head Bank Balances are under lien against letter of credit and guarantees issued by Banks.

9. Intangible assets have been amortized @ 20% on straight line basis, as useful life of the software has been estimated to be not more than five years.

10. The Company has filed a suit against ICICI Bank Ltd in the court of Ludhiana with which the company had entered Foreign exchange derivative contract transactions. The company is seeking a deceleration and permanent injunction against such Foreign exchange derivative contract transactions. The company has claimed that these contracts were void ab-initio being illegal, violative of FEMA notification and against the declared policy of RBI, therefore are unenforceable. The Company also claimed that it was induced in to entering such contracts.

ICICI Bank has also filed an application with the Debts Recovery Tribunal at Mumbai against the company to recover debt due on the basis of the aforesaid Foreign exchange derivative contract. The transaction as entered in to with the aforesaid bank are thus in dispute.

As an abundant caution, the company had worked out the net loss of Rs. 1525 Lacs on mark to market basis after taking into consideration all transactions.

In view of the above dispute and in the Companys opinion there is no present obligation arising as a result of past events in respect of the said loss on the Company. Accordingly, the aforesaid loss amounting to Rs. 1525 Lacs has been reflected as a part of contingent liabilities not provided for.

11. RELATED PARTY DISCLOSURE

Related party disclosure is in accordance with the Accounting Standards (AS) 18 on "Related Party Disclosure" notified by the Companies (Accounting Standards) Rules, 2006.:

A. Name of related parties and description of relationship:

a) Key Management Personnel Sh.Sanjay Gupta -Managing Director

Sh.Ajay Gupta -Jt. Managing Director

Sh.Ram Lai Gupta -Executive Director (upto 21 Jan 2010)

b) Enterprises controlled by Key Management Personnel:

- Venus Tex Spin Ltd.

- Gautam Enterprises

- Goldleaf International Pvt. Ltd.* * No transaction has taken place during the year.

C. No amount has been provided as doubtful debts or advances/written off or written back in the year in respect of debts due from or to above said related parties.

D. Related party relationship is as identified by the Management and relied upon by the Auditors.

12. SEGMENT REPORTING

Segment information as required by the Accounting Standard (AS) 17 on "Segment Reporting" notified by the Companies (Accounting Standards) Rules 2006 is disclosed below.

a) The company has identified two segment yarn segment and garments segment. The yarn segment comprises production of various types of yarn (from cotton, man made fibres and blend thereof) and yarn processing activities.

Garment segment comprises of production of grey & dyed fabric and garment,

b) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist of cash and bank balances, debtors, inventories and fixed assets. Segment liabilities include all operating liabilities and consist of creditors and other liabilities.

13. Borrowing cost capitalized (including capital work in progress) during the year amounting to Rs. 68.34 lacs (Previous Year 162.46 lacs)

14. The Company hedges its foreign currency fluctuation exposure by way of foreign currency derivative options. The Company has taken one USD/INR put and call option from a bank and having a maturity period upto Dec.2012. This derivative option is proprietary product of bank which do not have a ready market and such are marked to a model, which is usually bank specific instead of being marked to market. Based on marked to a model concept the loss on valuation amounts to Current Year 769.98 lacs .(Previous Year Rs.2047.66 lacs). However in the view of significant uncertainty associated with the above derivative options whose ultimate outcome depends on future events, the loss if any, on such open derivative options cannot be determined at this stage.

15 In accordance with the Accounting Standard (AS) - 28 on "Impairment of Assets", the company has assessed as on balance sheet date, whether there are any indications (listed in paragraphs-8 to 10 of the Standard) with regard to impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

16. The Company has identified Micro, Small and Medium Enterprises on the basis of information made available. There are no dues to Micro and Small Enterprises, that are reportable under the Micro, Small and Medium Enterprises Development Act 2006.

17. Previous years figures have been recast/regrouped whenever necessary to make these comparable with current years figures.

18. The Schedules 1 to 26 form an integral part of the Balance Sheet and Profit and Loss Account and authenticated as such.

19. The information required by para 3 & 4 of Part II of Schedule VI to the Companies Act, 1956:-

 
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