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Notes to Accounts of Suryavanshi Spinning Mills Ltd.

Mar 31, 2014

(a) The Company has only one class of shares referred to as equity shares having a par value of Rs.10/- each. Each holder of equity shares is entitled to one vote per share.

(b) pursuant to the scheme of arrangement on 01.04.2013 (Appointed Date), 37 shares of Rs. 10/- each for every 100 equity shares held in the company were allotted to the share holders of the company. Accordingly the paid up capital of the company stand reduced from Rs. 132664230 to Rs. 49085760. Further as per the scheme, share holders of the company were allotted 26 and 37 equity shares of Rs. 10/- each fully paid up by Aananda Lakshmi Spinning Mills Ltd (Resulting company-1) and Sheshadri Industries Ltd (Resulting Company- 2) respectively to the share holders of the company holding 100 shares in the company. Accordingly Aananda Lakshmi Spinning Mills Ltd and Sheshadri Industries Ltd have allotted 34,49,270 & 49,08,577 equity shares of Rs. 10/- each fully paid up to the share holders of the company.

NOTES :

1. Term Loans refered at (a) to (c) and buyers credit refered at (f) above are secured by mortgage of fixed assets present and future of the company on first charge pari passu basis and guaranteed by four Directors of the Company.

2. Working capital term loans referred at (d) and (e) above are Secured by way of hypothecation of Raw materials, Stock-in-process, finished goods and stores and spares and book debts of the Company and also secured by way of second charge on fixed assets of the company on pari passu basis and guranteed by four Directors of the Company.

3. Buyers'' credit refered at (g) above is secured by way of exclusive charge on specified plant and machinery and guaranteed by two Directors of the Company

4. Term loans transferred to Aananda Lakshmi Spinning Mills Limted and Sheshadri Industries Limted on 01.04.2013 (Appointed Date) pursuant to the Scheme of Demerger as below.

1. Working Capital Loans refered above (i) to (iv) are Secured by way of hypothecation of Raw materials, Stock-in-process, finished goods and stores and spares and book debts of the Company and also secured by way of second charge on fixed assets of the company on pari passu basis and guranteed by four directors of the company.

2. Short term borrowings transferred to Aananda Lakshmi Spinning Mills Limted and Sheshadri Industries Limted on 01.04.2013 (Appointed Date ) pursuant to the Scheme of Demerger as below.

3. (1) A Scheme of arrangement (referred to as "Scheme of Arrangement" under Section 391-394 of the Companies Act, 1956 was approved by the shareholders of Suryavavanshi Spinning Mills Limited on 24th May 2014 , for demerger of Spinning unit at Bhongir, Nalgonda District, Telangana, into ''Aananda Lakshmi Spinning Mills Ltd''and Spinning unit at Rajna,Pandhurna Taluq, Chindwara District, Madhya Pradesh – and Garment manufacturing Units at Aliabad, Medchal, Rangareddy District, Telangana and at Bhongir, Nalgonda District, Telangana, into ''Sheshadri Industries Ltd''and retaining Spinning unit at Aliabad, Medchal Taluq, Ranga Reddy District, Telangana and Medical Textile Unit at Aliabad, Medchal,Ranga Reddy District, Telangana with ''Suryavanshi Spinning Mills Limited''.

(2) A) In terms of Scheme of Arrangement (the Scheme) under sections 391-394 of the Companies Act 1956, which was sanctioned by the Hon''ble High Court of Andhra Pradesh on 30th July 2014, the Spinning unit at Bhongir, Nalgonda District, Telangana and the Spinning unit at Rajna, Pandhurna Taluq, Chindwara District, Madhya Pradesh and Garment manufacturing Units at Aliabad, Medchal, Rangareddy District, Telanagana and at Bhongir, Nalgonda District, Telangana stand demerged from Suryavanshi Spinning Mills Limited and vested into Aananda lakshimi Spinning Mills Limited and Sheshadri Industries Limited as a going concern basis so as to become as and from the Appointed Date (1st April 2013) the estate, assets, claims, title, interest and authorizes of the respective companies. The Scheme became effective from 21st August, 2014.

B) The Scheme also provides for transfer of the assets and liabilities of the Spinning unit at Bhongir, Nalgonda District, Telangana and Spinning unit at Rajna,Pandhurna Taluq, Chindwara District, Madhya Pradesh – and Garment manufacturing Units at Aliabad, Medchal, Rangareddy District, Telanagana and at Bhongir, Nalgonda District, Telangana, the legal proceeding in relation to these units , the employees of these units and employee related benefits and all contracts and agreements in relation to these units, to the respective Companies.

C). In consideration of the Demerger of the Spinning unit at Bhongir and at Rajna,Pandhurna Taluq, Chindwara District, Madhya Pradesh – and Garment manufacturing Units at Aliabad, Medchal, Rangareddy District, Telangana and at Bhongir, Nalgonda District, Telangana, from Suryanvanshi Spinning Mills Limited to Aananda Lakshmi Spinning Mills Limited has allotted 34,49,270 fully paid up equity shares of the Company Rs. 10 each, aggregating to Rs.3,44,92,700 and Sheshadri Industires Limited has alloted 49,08,577 fully paid up equity shares of the company Rs.10 each, aggeregating to Rs.4,90,85,770 to the share holders of Suryavanshi Spinning Mills Limited whose names were recorded in the register of members of Suryavanshi Spinning Mills Limited on 28th August ,2014 ( the record date) , in the ratio of 26 and 37 equiity shares of the company of Rs.10 each credited as fully paid upfor every 100 shares of Rs.10 each respectively fully paid up held by such members in Suryavanshi Spinning Mills Limited in the same proportion in which shares are held by them in Suryavanshi Spinning Mills Limited.

As at As at 31.03.2014 31.03.2013 Rs lakhs Rs lakhs

4. Contingent Liabilities not provided for

a) Against Foreign Bills Discounted 121.74 590.93

b) Against Foreign and Inland Letter of credit 1354.88 3026.79

c) Contracts to be executed on Capital Accounts 123.20 676.99

d) Demand raised by Sales Tax Department for the year 2003-04 on subjecting the - 3.40 turnover of unit at Madhya Pradesh to tax for not furnishing "C" Forms.

The matter is pending in Appeal before the Deputy Commissioner (Appeals) Sales Tax, Bhopal, Madhya Pradesh

e) Demand raised by Sales Tax Department for the year 2004-05 on - 7.26 subjecting the turnover of unit at Madhya Pradesh to tax for not furnishing "C" Forms. The matter is pending in appeal before the Deputy Commissioner (Appeals) Sales Tax, Bhopal, Madhya Pradesh

f) Demand from Sales Tax Department, Andhra Pradesh in connection with levy 24.58 27.99 of purchase tax on polyster stable fibre from Reliance Industries Limited, levy of tax on work contract receipts and withdrawal of deferment availed by the company for the year 2001-02. A P. Sales Tax Appellate Tribunal set aside the order passed by the Sales Tax Authorities. The Department has challenged the said order before the Hon''ble High Court of A P. and the same is pending.

g) Bharat Petroleum Corporation Limited filed a civil suit before Addl.Chief Judge - 40.28 City Civil Court, Secunderabad, against the company for alleged deferential sales tax dues on purchase of HSD and furnace oil made by the company during the financial years 1996-97 & 1997-98.

h) The Department of Central Excise & Customs raised a Demand for - 20.32 payment of Interest on the duty payable on the depreciated value of plant and machinery of Rajna Unit M.P. at the time of debonding from E.O.U. unit to D.T.A unit. The company challanged the demand before the Hon''ble High Court, M.P.

i) The Department of Central Excise & Customs, Bhopal, M.P. raised a Demand - 16.14 for short payment of Central Excise duty on the dispatch of synthetic yarn in to DTA market at connessional rate of Excise duty during the accounting year 2002-03. The company prefered an appeal before the Hon''ble Appellate Tribunal for Customs Excise and Service Tax, New Delhi.

j) M/s.Suryavanshi Textiles Ltd was amalgamated with our company vide scheme of merger sanctioned by Board for Industrial and Financial Reconstruction (BIFR) under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 with effect from 01-04-2007.The scheme incorporates certain reliefs and concessions for consideration by income tax department including exemption from applicability of MAT u/s.115JB of the Income Tax Act, 1961 for a period of five years from 01-04-2007. The company is pursuing the matter with the authorities concerned for the said reliefs as per the scheme of merger and liability under MAT u/s I 15JB of Income Tax Act 1961 including intereest as per assessment orders is Rs.41 lacs and Rs.443 lacs for the assessment years 2010- 11 and 20 I1-12 respectively. In the event of the liability being chrystalized, the liability shall be shared by Suryavanshi Spinning Mills Limited (Demerged Company), Aananda Lakshmi Spinning Mills Limited (Resulting Company -1) and Sheshadri Industries Limited (Resulting Company - II) equally, since the Company Demerged on 01.04.2013 (Appointed Date) as per the Scheme of Arrangement approved by Hon''ble High Court at Hyderabad. However, the relief sought by the company was heard by BIFR and the proceedings are awaited.

5. EMPLOYEE BENEFITS:

The Company has provided for Gratuity and leave encashment based on actuarial valuation on the basis of projected unit credit method.

6. Segment reporting is not applicable since the Company operates in single segment i.e., Textile product.

7. Since it is the first annual accounts subsequent to Demerger previous year''s figures are not comparable.


Mar 31, 2013

1 Electricity charges include Fuel surcharge Adjustment (FSA) of 193.47 lakhs and 338.06 lakhs relating to Accounting years 2010-11 and 2011-12 respectvely. APCPDCL proposed for levy of 107.89 lakhs Towards Fuel surcharge adjustment (FSA) @ 1.00 per unit for the fourth quarter of 2012-13 the same shall be provided in accounts on apporval by APERC

2 During the year 2005-06, the company recognized an income of 653.06 lakhs being export incentive under the Target Plus Scheme in terms of the then prevailing Foreign Trade Policy. The Govt., of India, Ministry of Commerce vide their Notification No.8 (RE-2006)/ 2004-09 dated 12.06.06 retrospectively reduced the benefit of entitlement from 15% to 5% on the exports effected since 01.04.2005. The company has since received duty free credit entitlement for 217.68 lakhs @ 5% and for the balance 10%, the Company has contested before the Hon''ble High Court at Mumbai for the restrospective reduction of the export incentive by the Government of India. The High Court has granted an interim stay of the notification and the matter is pending for final orde

3 Segment information for the year ended 31.03.2013

The Company has identified two reportable segments I.e.Yarn and Garments. Bussiness Segment Type of Product Spinning Cotton yarn, PV Yarn and combed yarn Garments Readymade garments


Mar 31, 2012

Particulars As at As at 31.03.2012 31.03.2011

01 Contingent Liabilities not provided for

a) Against foreign bills discounted 535.42 2,981.05

b) Against foreign and inland letter of credit 2,299.18 2,998.66

c) Contracts to be executed on capital accounts 615.44 1,052.32

d) Demand raised by Sales Tax Department for the year 2003-04 on subjecting the turnover of unit at Madhya Pradesh to tax for not furnishing "C" Forms. The matter is pending in Appeal efore the Deputy Commissioner (Appeals) Sales Tax, Bhopal, Madhya Pradesh 3.40 3.40

e) Demand raised by Sales Tax Department for the year 2004-05 on subjecting the turnover of unit at Madhya Pradesh to tax for not furnishing "C" Forms. The matter is pending in appeal before the

Deputy Commissioner (Appeals) Sales Tax, Bhopal, Madhya Pradesh 7.26 7.26

f) Demand from Sales Tax Department, Andhra Pradesh in connection with levy of purchase tax on polyster stable fibre from Reliance Industries Limited, levy of tax on work contract receipts and withdrawal of deferment availed by the company for the year 2001-02. A.P Sales Tax Appellate Tribunal set aside the order passed by the Sales Tax Authorities. The Department has challenged the said order before the Hon'ble High Court of A.P and the same is pending. 27.99 27.99

g) Bharat Petroleum Corporation Limited filed a civil suit before Addl.Chief Judge City Civil Court, Secunderabad, against the company for alleged deferential sales tax dues on purchase of HSD and furnace oil made by the company during the financial years 1996-97 & 1997-98. 40.28 40.28

h) The Department of Central Excise & Customs raised a Demand for payment of Interest on the duty payable on the depreciated value of plant and machinery of Rajna Unit M.P at the time of debonding from E.O.U. unit to D.T.A. unit. The company challanged the demand before the Hon'ble High Court, M.P 20.32 20.32

i) M/s.Suryavanshi Textiles Ltd was amalgamated with our company vide scheme of merger sanctioned by Board for Industrial and Financial Reconstruction (BIFR) under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 with effect from 01-04-2007.The scheme incorporates certain reliefs and concessions for consideration by income tax department including exemption from applicability of MAT u/s.115JB of the Income Tax Act, 1961 for a period of five years from 01-04-2007.The company is persuing the matter with the authorities concerned for the said relifes as per the scheme of merger and liability in case of disallowance of MAT u/s 1 15JB of Income Tax Act 1961 would be Rs.0.30 lacs and Rs.321 lacs for the accounting years 2009-10 and 2010-1 1 respectively.

2 Employee benefits

The Company has provided for Gratuity and leave encashment based on actuarial valuation on the basis of projected unit credit method.

The following table summarise the components of the net benefit recognized in the statement of profit and loss and amounts recognized in the balance sheet for Gratuity.

3 During the year 2005-06, the company recognized an income of Rs.653.06 lakhs being export incentive under the Target Plus Scheme in terms of the then prevailing Foreign Trade Policy. The Govt., of India, Ministry of Commerce vide their Notification No.8 (RE-2006)/ 2004-09 dated 12.06.06 retrospectively reduced the benefit of entitlement from 15% to 5% on the exports effected since 01.04.2005. The company has since received duty free credit entitlement for Rs.217.68 lakhs @ 5% and for the balance 10%, the Company has contested before the Hon'ble High Court at Mumbai for the restrospective reduction of the export incentive by the Government of India. The High Court has granted an interim stay of the notification and the matter is pending for final orders.

4 Segment information for the year ended 31.03.2012

The Company has identified two reportable segments I.e.Yarn and Garments.

5 Consequent to the Notification under the Companies Act, 1956, the financial statements for the year ended 31st March,2012 are prepared under Revised Schedule VI. Accordingly, the Previous year's figures have been reclassified to conform to this year's classification.


Mar 31, 2011

As at As at 31.03.2011 31.03.2010 Rs. Rs.

1. Contingent Liabilities not provided for a) Against Foreign Bills Discounted 29,81,05,068 4,46,09,128

b) Against Foreign and Inland 29,98,66,057 - Letter of credit

c) Against Bank Guarantees - 71,91,922

d) Contracts to be executed on 10,52,32,356 - Capital Accounts

e) Demand raised by Sales Tax Department for the year 2003-04 on subjecting the turnover of unit at Madhya Pradesh to tax for not furnishing "C" Forms. The matter is pending in Appeal before the Assist. Commissioner (Appeals) Sales Tax, Chindwara, Madhya Pradesh 3,39,773 3,39,773

f) Demand raised by Sales Tax Department for the year 2004-05 on subjecting the turnover of unit at Madhya Pradesh to tax for not furnishing "C" Forms. The matter is pending in Appeal before the Assist. Commissioner (Appeals) Sales Tax, Chindwara, Madhya Pradesh 7,25,736 7,25,736

g) Demand from Sales Tax Department, Andhra Pradesh in connection with levy of Purchase Tax on Polyster Stable Fibre from Reliance Industries Limited, levy of tax on work contract receipts and withdrawal of deferment availed by the company for the year 2001 -02. A.R Sales Tax Appellate Tribunal set aside the order passed by the Sales Tax Authorities. The Department has challenged the said order before the Honble High Court of A.R and the same is pending. 27,98,569 27,98,569

h) Bharat Petroleum Corporation Limited filed a civil suit before Addl.Chief Judge City Civil Court, Secunderabad, against the company for alleged deferential sales tax dues on purchase of HSD and furnace oil made by the company during the financial years 1996-97 & 1997-98. 40,27,678 40,27,678

i) The Department of Central Excise & Customs raised a Demand for payment of Interest on the duty payable on the depreciated value of plant and machinery of Rajna Unit M.R at the time of debonding from E.O.U. unit to D.T.A. unit. The company challanged the demand before the Honble High Court, M.R 20,32,054 20,32,054

2. During the year 2005-06, the company recognized an income of Rs.653.06 lakhs being export incentive under the Target Plus Scheme in terms of the then prevailing Foreign Trade Policy. The Govt., of India, Ministry of Commerce vide their Notification No.8 (RE-2006)/ 2004-09 dated 12.06.06 retrospectively reduced the benefit of entitlement from 15% to 5% on the exports effected since 01.04.2005. The company has since received duty free credit entitlement for Rs.217.68 lakhs @ 5% and for the balance 10%, the Company has contested before the Honble High Court at Mumbai for the restrospective reduction of the export incentive by the Government of India. The High Court has granted an interim stay of the notification and the matter is pending for final orders.

3. Balances of Debtors, Creditors, Advances and Loans etc are subject to confirmations and reconciliations.

4. In the opinion of the Board, the Current Assets and Loans and Advances have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

5. The Company has not provided expenses on Tax for Minimum Alternate Tax (MAT) as per the Scheme of Amalgamation of Suryavanshi Textiles Limited with the Company as approved and sanctioned by Honble Board for Industrial and Finance Reconstruction order dated 19-06-2007.

6. Interest paid, payable or accrued and due to Micro and small enterprises Rs. NIL (Previous Year Rs. NIL)

7. Segment information for the year ended 31.03.2011

The Company has identified two reportable segments I.e. Yarn and Garments.

8. Related party disclosure

Related party disclosure as required by AS-18 issued by the Institute of Chartered Accountants of India are given below:

A: Associates

1. Suryavanshi Industries Limited

2. Suryalakshmi Cotton Mills Limited

B: Key Managerial Personnel:

1. Sri B.N.Agarwal Chairman and Managing Director

2. Sri R.K.Agarwal Joint Managing Director

3. Sri J.K.Agarwal Executive Director

4. Sri D.K.Agarwal Whole time Director

C: Relatives of Key Managerial Personnel:

1. Mrs.Narbada Bai Agarwal

2. Mrs. Yamuna Devi Agarwal

3. Mrs. Meenal Agarwal

4. Mr. Rishikesh Agarwal

9. Employee Benefits:

The Company has provided for Gratuity based on actuarial valuation on the basis of projected unit credit method.

10. Previous years figures have been regrouped wherever necessary. Paise have been rounded off to nearest rupee.


Mar 31, 2010

1. Notes Forming part of the Balance sheet as at 31st March,2010 and Profit & Loss Account for the year ended on that date

As at As at

31.03.2010 31.03.2009

Rs. Rs.

Contingent liabilities not provided for on account of:

a) Foreign Bills Discounted 4,46,09,128 71,04,335 b) Letters of Credit - Inland - 4,14,01,216

- Foregin - 5,40,29,771

c) Bank Guarantees 71,91,922 71,91,922



2. During the year 2005-06, the company recognized an income of Rs.653.06 Lakhs being export incentive under the Target Plus Scheme in terms of the then prevailing Foreign Trade Policy. The Govt., of India, Ministry of Commerce vide their Notification No.8(RE-2006)/ 2004-09 dated 12.06.06 retrospectively reduced the benefit of entitlement from 15% to 5% on the exports effected since 01.04.2005. The company has since received duty free credit entitlement for Rs.217.68 Lakhs @ 5% and for the balance 10%, the Company has contested before the Honble High Court at Mumbai for the restrospective reduction of the export incentive by the Government of India. The High Court has granted an interim stay of the notification and the matter is pending for final orders.

3. Balances of Debtors, Creditors, Advances and Loans etc are subject to confirmations and reconciliations.

4. During the year Company has issued the 19,50,000 shares of Rs.10/- at a Premium of Rs.5/- per Share through private placement for augmenting long term resources of the Company and the funds have been utilised for the same purpose.

5. In the opinion of the Board, the Current Assets and Loans and Advances have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

6. Interest paid, payable or accrued and due to Micro and small enterprises Rs. NIL (Previous Year Rs. NIL)

7. Segment information for the year ended 31.03.2010

The Company has identified two reportable segments I.e.Yarn & Garments. The accounting policies adopted for segment reporting are in line with the accounting policy of the company

8. Previous years figures have been regrouped wherever necessary. Paise have been rounded off to nearest rupee.