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Notes to Accounts of Lakshmi Mills Company Ltd.

Mar 31, 2018

1 CORPORATE INFORMATION

The Lakshmi Mills Company Limited, âthe Companyâ, is a public company domiciled in India and incorporated under the provisions of The Companies Act, 1956. Its shares are listed with BSE Limited, Mumbai. The Company is engaged in the manufacture of Yarn and trading in cloth and garments. The Company caters to both domestic and international markets.

2 EXEMPTIONS AVAILED AND MANDATORY EXCEPTIONS

These are the Companyâs first financial statements prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015. The adoption of Ind AS was carried out in accordance with Ind AS 101 - ''First-time Adoption of Indian Accounting Standardsâ using transition date as April 1, 2016.

Ind AS 101 requires that all Ind AS be consistently and retrospectively applied for all fiscal years presented. The Company has prepared opening Balance Sheet on the transition date and subsequent financials based on the accounting policies set out in Note-2.

In preparing these financials, the Company has availed following exemptions in the transition from previous GAAP to Ind AS in accordance with Ind AS 101.

(i) Since there is no change in the functional currency, the Company has elected to continue with the carrying value as at 1 April 2016 for all of its property plant & equipment as recognised in its Previous GAAP financial as deemed cost at the transition date.

(ii) Upon an assessment of the estimates made under Indian GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Indian GAAP.

The company has issued only one class of Equity Share having par value of Rs.100 each. Each holder of Equity share is entitled to one vote per share. The Company declares dividends in Indian Rupees. The dividend proposed by the Board of directors is subject to the approval by the shareholders at the Annual General Meeting. Repayment of share capital on liquidation will be in proportion to the number of equity shares held.

Note: Term loans from Central Bank of India, Canara Bank and Indian Overseas Bank are secured by first charge on relevant assets of Kovilpatti and Palladam units purchased under project loan.

Working Capital and Term Loan from Indian Overseas Bank and Canara Bank is secured by pari passu first charge on the fixed assets at Coimbatore. Working Capital and Term Loan from Central Bank of India is secured by first charge on fixed assets at Palldam and Kovilpatti unit.

Working Capital Loans from banks are secured by first charge on book debts and hypothecation of inventories and pari passu second charge on the fixed assets at Coimbatore, Kovilpatti and Palladam units.

Note: (i) There are no dues to enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 which is on the basis of such parties having been identified by the management and relied upon by the auditors. Hence, disclosures relating to amount unpaid as at year end together with interest paid/payable under this Act have not been given.

(ii) The average credit period on purchases is normally 30 days. No interest is charged on the trade payables. The Company has financial risk management policies in place to ensure that payables are paid within the pre-agreed credit terms.

Future cash flows in respect of the above matters are determinable only on receipt of judgements/decisions pending at various forums/authorities. Management is hopeful of successful outcome in the appellate proceedings.

Disputed tax dues are appealled before concerned appellate authorities. The Company is advised that the cases are likely to be disposed off in favour of the Company and hence no provision is considered necessary therefor.

NOTE 3 - EMPLOYEE BENEFIT PLANS

(a) Defined Contribution Plan

The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company has recognised Rs. 129.15 Lakhs (for the year ended March 31, 2017: Rs. 144.06 Lakhs) as contribution to Provident Fund, and Rs. 53.88 Lakhs (for the year ended March 31, 2017 Rs. 53.98 Lakhs) as contribution to Employee State Insurance (ESI) in the Statement of Profit and Loss. These contributions have been made at the rates specified in the rules of the respective schemes and has been recognised in the Statement of Profit and Loss under the head Employee Benefits Expense.

(b) Defined Benefit Plans:

Gratuity

The Company has funded its gratuity obligations. The following table sets out the status of the defined benefit schemes and the amount recognised in the financial statements as per the Actuarial Valuation done by an Independent Actuary:

The current service cost and the net interest expense for the year are included in the ''Employee benefits expenseâ line item in the statement of profit and loss.

The remeasurement of the net defined liability is included in other comprehensive income.

The retirement age of employees of the Company is 58 years.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary. The mortality rates considered are as per the published rates in the Indian Assured Lives Mortality (2006-08) Ult table.

Sensitivity analysis

The key actuarial assumptions to which the defined benefit plans are particularly sensitive to, are discount rate and full salary escalation rate. The sensitivity analysis below, have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The result of Sensitivity analysis is given below:

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

These planâs typically expose the Company to actuarial risks such as: longevity risk and salary risk.

Longevity Risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.

Salary risk: The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the planâs participants will increase the planâs liability.

Notes to the financial statements for the year ended March 31, 2018

Disclosure in respect of material Related Party Transactions during the year:

1. Purchase of goods/assets includes Lakshmi Card Clothing Manufacturing Company P Ltd Rs. 39.54 Lakhs; (Previous year Rs. 28.41 Lakhs).

2. Sale of Goods / assets include Lakshmi Card Clothing Mfg. Co.P.Ltd '' 0.83 Lakhs. (Previous year Rs. 1.01 Lakhs).

3. Receiving of Services include Balakumar Shipping & Clearing Agency P.Ltd Rs. 36.93 Lakhs (Previous year Rs. 33.24 Lakhs); Aloha Tours & Travels (India) Private Ltd Rs. 22.84 Lakhs (Previous year Rs. 27.83 Lakhs); Major Corporate Services (India) Ltd Nil (Previous year Rs. 49.63 Lakhs); Lakshmi Card Clothing Mfg. Co. P Ltd Rs. 6.13 Lakhs (Previous year Rs. 4.69 Lakhs) and Sans Craintes Knitters '' 0.15 Lakhs (Previous year '' 0.15 Lakhs)

4. Rendering of Services include Lakshmi Card Clothing Mfg. Co. P. Ltd Rs. 12.73 Lakhs (Previous year Rs. 11.88 Lakhs); Lakshmi Automatic Loom Works Ltd Rs. 23.23 Lakhs (Previous year Rs. 21.69 Lakhs) and Sans Craintes Knitters Rs. 3.67 Lakhs (Previous year Rs. 3.45 Lakhs).

5. Remuneration to Key Managerial Personnel includes Sri S. Pathy Rs. 86.93 Lakhs (Previous year Rs. 79.55 Lakhs); Sri Aditya Krishna Pathy Rs. 55.41 Lakhs (Previous year Rs. 50.83 Lakhs); Sri N.Singaravel Rs. 12.62 Lakhs (Previous year Rs. 10.63 Lakhs); Sri V.Kannappan Rs. 24.24 Lakhs (Previous year Rs. 21.77 Lakhs)

6. Contribution to Gratuity Fund Rs. 261.90 Lakhs (Previous year Rs. 50.51 Lakhs).

7. Contribution to Superannuation Fund Rs. 17.09 Lakhs (Previous year Rs. 15.67 Lakhs).

8. Amount Receivable from other related parties includes Lakshmi Automatic Loom Works Ltd Rs. 2.00 Lakhs (Previous year Rs. 2.20 Lakhs); Balakumar Shipping & Clearing Agency P Ltd Rs. 46.25 Lakhs (Previous year Rs. 45.09 Lakhs) and Sans Craintes Knitters '' 0.70 Lakhs (Previous year '' 0.22 Lakhs)

9. Amount payable for Post retirement employee benefit plan includes The Lakshmi Mills Co. Ltd. Employees Gratuity Fund Rs. 217.56 Lakhs (Previous year Rs. 433.85 Lakhs)

10. Amount payable to other related parties include Lakshmi Card Clothing Mfg. Co. Pvt Ltd Rs. 145.59 Lakhs (Previous year Rs. 132.77 Lakhs); Aloha Tours & Travels (India) Private Ltd Rs. 7.50 Lakhs (Previous year Rs. 1.90 Lakhs); Major Corporate Services (India) Ltd Nil (Previous year Rs. 1.29 Lakhs).

Note 4 FINANCIAL INSTRUMENTS

4.1 Capital management

The Companyâs capital management objectives are:

- to ensure the Companyâs ability to continue as a going concern

- to create value for shareholders by facilitating the meeting of long term and short term goals of the Company.

The Company determines the amount of capital required on the basis of annual business plan coupled with long term and short term strategic expansion plans. The funding needs are met through equity, cash generated from operations, long term and short term bank borrowings.

The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt portfolio of the Company. Net debt includes interest bearing borrowings less cash and cash equivalents and other bank balances (including non-current earmarked balances)

The table below summarises the capital, net debt and net debt to equity ratio (Gearing ratio) of the Company

4.2 Categories of Financial Instruments

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments. The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, and financial liability are disclosed in Note 2(xvii)

The management assessed that fair values of cash and bank balances, trade receivables, other financial assets, trade payables and other financial liabilities recorded at amortised cost is considered to be a reasonable approximation of fair value.

The following methods and assumptions were used to estimate the fair values:

i) Fair values of the Companyâs interest-bearing borrowings are determined by using EIR method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non- performance risk as at March 31, 2018 was assessed to be insignificant.

ii) The Company enters into derivative financial instruments with various counterparties, principally banks with investment grade credit ratings. As at March 31, 2018, the marked-to-market value of derivative asset positions is net of a credit valuation adjustment attributable to derivative counterparty default risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationship and other financials instruments recognised at fair value.

B. Fair value hierarchy

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Quantitative disclosures fair value measurement hierarchy

The derivative instruments in designated hedge accounting relationships is measured at fair value at level 1, with valuation technique being use of market available inputs such as foreign exchange rates.

4.3 Financial risk management objective

The Companyâs activities expose it to a variety of financial risks. The Companyâs primary focus is to foresee the unpredictability of such risks and seek to minimize potential adverse effects on its financial performance.

The Company has a robust risk management process and framework in place. This process is coordinated by the Board, which meets regularly to review risks as well as the progress against the planned actions. The Board seeks to identify, evaluate business risks and challenges across the Company through such framework. These risks include market risks, credit risk and liquidity risk.

The risk management process aims to:

- improve financial risk awareness and risk transparency

- identify, control and monitor key risks

- identify risk accumulations

- provide management with reliable information on the Companyâs risk situationâ

- improve financial returns

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements:

Market risk - Foreign exchange

The Company undertakes transactions denominated in foreign currencies and thus it is exposed to exchange rate fluctuations. The Company actively manages its currency rate exposures, arising from transactions entered and denominated in foreign currencies, through a centralised treasury division and uses derivative instruments such as foreign currency forward contracts to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by Management.

The Company does not have any derivative financial instruments either for hedging or for speculation purpose.

The details of foreign currency exposures that are not hedged by any derivative instrument or otherwise are:

Foreign currency sensitivity analysis

The following table details the Companyâs sensitivity to a 5% increase and decrease in the '' against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number below indicates an increase in profit where the '' strengthens 5% against the relevant currency will increase the profit and equity by Rs. 34.08 lakhs. For a 5% weakening of the '' against the relevant currency, there would be an equal and opposite impact on profit and equity.

Market risk - Interest rate

(i) Liabilities:

The Companyâs borrowings are carried at amortised cost and are at fixed rate only. They are, therefore, not subject to interest rate risk since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

(ii) Assets:

The Companyâs financial assets are carried at amortised cost and are at fixed rate only. They are, therefore, not subject to interest rate risk since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Credit Risk

Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or pay amounts due to the Company causing financial loss. It arises from cash and cash equivalents, deposits with banks and financial institutions, security deposits, loans given and principally from credit exposures to customers relating to outstanding receivables. The Companyâs maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at reporting date.

In respect of trade and other receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any company of counterparties having similar characteristics. Credit risk on receivables is limited as the nature of the business is cash and carry except for related parties and other large number of individual customers in various geographical areas. The Company has very limited history of customer default, and considers the credit quality of trade receivables that are not past due or impaired to be good.

Therefore, the Company does not expect any material risk on account of non performance by any of the Companyâs counterparties. The credit risk for cash and cash equivalents, bank deposits, security deposits and loans is considered negligible, since the counterparties are reputable organisations with high quality external credit ratings.

Liquidity risk

The Company requires funds both for short-term operational needs as well as for long-term expansion programmes. The Company remains committed to maintaining a healthy liquidity ratio, deleveraging and strengthening the balance sheet. The Company manages liquidity risk by maintaining adequate support of facilities from its holding company, and by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.

The Companyâs treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management.

The Companyâs financial liability is represented significantly by long term and short term borrowings from banks and trade payables. The maturity profile of the Companyâs short term and long term borrowings and trade payables based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual undiscounted cash obligation of the Company.

5 First-time Ind AS adoption reconciliation

This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the Balance Sheet as at April 1, 2016 and the financial statements as at and for the year ended March 31, 2017.

Note: Under previous GAAP, total comprehensive income was not reported. Therefore, the above reconciliation starts with profit under the previous GAAP.

5.1 Effect of Ind AS adoption on the statement of cash flows for the year ended March 31, 2017

There were no significant reconciliation items between cash flows prepared under Indian GAAP and those prepared under Ind AS.

5.2 Notes

(i) Under previous GAAP, the Company had adjusted government grant received against the cost of the fixed assets. Under Ind AS, government grants received for capital assets are recognised as deferred income and amortized on a systematic basis in line with Ind AS.

(ii) Under previous GAAP, certain long term borrowings (for aquisition of property, plant and equiment) were considered as intergral and were accordingly accounted. Under Ind AS, borrowings are reckoned as seperate financial liabilities and are measured at amortised cost (using effective interest method) and at fair value respectively. The effect of these (carrying values, finance costs, capitalised exchange differences and depreciation thereon) is reflected in total equity and profit or loss. Further, the effect, in case of all other borrowings measured at amortised cost, is reflected similarly in total equity and profit or loss.

(iii) Under previous GAAP, long term quoted equity investments were measured at cost less diminution in value which is other than temporary. Under Ind AS, such non-current investments are measured at fair value through other comprehensive income. Consequently, the differences, as at the transition date and as at the end of year 2016-17, respectively between carrying value as per previous GAAP and fair value, are reflected in total equity and other comprehensive income.

(iv) Under previous GAAP, revenue is recognised when (i) significant risks and rewards of ownership is transferred (ii) no significant uncertainty exist regarding the amount of consideration and (iii) at the time of performance, it is not unreasonable to expect ultimate collection. Revenue from sale of goods is recognised when seller has transferred the property in goods to the buyer for a consideration - which in most cases results or coincides with transfer of significant risks and rewards of ownership. As per Ind AS, entity should recognise revenue to depict the transfer of promised goods or services to the customers for an amount that reflects the considerations to which the entity expects to be entitled in exchange for those goods or services.

(v) Under previous GAAP, the fixed assets of the Company were revalued and a revaluation reserve was created. Under Ind AS, the Company has adopted previous GAAP carrying value as deemed cost for PPE as on transition date and accordingly revaluation reserve has been transferred to retained earnings.

(vi) In accordance with Ind AS 109 âFinancial Instrumentsâ, transaction costs on borrowings from banks and financial institutions are required to be considered at effective finance costs and recognised in the statement of profit and loss using the effective interest rate. Consequently, transaction costs recognised in the statement of profit and loss using a different approach under the Previous GAAP has been reversed and are now recognised through the statement of profit and loss using the effective interest rate.

(vii) Under previous GAAP, Rent advance were recognised at amount paid by lessees. Under Ind AS, Rent advance are carried at amortised cost over the period of deposits.

(viii) Under previous GAAP, lease income was recognised at amount paid by the leaces. Under Ind AS, lease income arising from operating lease is recognized as income over the lease period on a straight line basis except where the periodic increase in lease rentals is in line with expected general inflation.

(ix) Under previous GAAP, proposed dividends were recognised as a provision in the financial statements, even if declared after the balance sheet date. Under Ind AS, dividends are recognised when declared. This resulted in a timing difference and has been reflected in total equity of the relevant financial years.

(x) Under previous GAAP, miminum alternate tax entitlements were classified under other non-current assets. Under Ind AS, it is classified as unused tax credits under deferred tax.

(xi) Under previous GAAP, actuarial gains and losses on employees defined benefit obligations were recognised in profit or loss. Under Ind AS, the actuarial gains and losses on re-measurement of net defined benefit obligations are recognised in other comprehensive income. This resulted in a reclassification between profit or loss and other comprehensive income.

(xii) Under previous GAAP, there was no separate record in the financial statements for Other Comprehensive Income (OCI). Under Ind AS, specified items of income, expense, gains and losses are presented under OCI.

(Xiii) Previous periods figures have been re-grouped / re-classified, wherever necessary to comply with Ind AS accounting.

6.1 Dividend

In respect of the current year, the directors propose that a dividend of Rs. 9 per share be paid subject to approval by shareholders at the Annual General Meeting on 20.09.2018 and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all shareholders on the Register of Members on 13.09.2018. The total estimated equity dividend to be paid is Rs. 62.60 lakhs. The payment of this dividend is estimated to result in payment of dividend tax of Rs. 12.87 lakhs @ 20.56% on the amount of dividends grossed up for the related dividend distribution tax.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

6.2 Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

The Company has not given any loans and advances in the nature of loans given to subsidiaries, associates, firms / companies in which directors are interested.

6.3 Discontinued operations

As part of overall restructuring plans for economising operations, the company had decommissioned one of its plants at Coimbatore in the financial year 2008-09. After relocating the viable and productive machinery to other units the substantial part of machinery rendered surplus have been disposed off. The loss on sale of machinery during the financial year is Nil (Previous year Nil).The land rendered available for development and converted into stock in trade has a carrying amount of Rs. 10,607.93 Lakhs (Previous year Rs. 10,607.93 Lakhs).

7 The financial statements of Lakshmi Mills Company Limited were approved by the Board of Directors and authorised for issue on 18.05.2018.

Mar 31, 2017

b) Details of securities on Long Term and Short Term borrowings from banks

Term loans from Central Bank of India, Canara Bank and Indian Overseas Bank are secured by first charge on relevant assets of Kovilpatti and Palladam units purchased under Project Loan.

Working Capital loans from banks are secured by first charge on book debts and hypothecation of inventories and pari passu second charge on the fixed assets at Coimbatore, Kovilpatti and Palladam.

1 Disclosure as per Schedule III

As defined under Micro, Small and Medium Enterprises Development Act, 2006, the disclosure in respect of the amounts payable to such enterprises as at the end of the year has been made in the financial statements based on information received and available with the Company.

b) In the opinion of the Company, with the proposed profitable alternate use of lands rendered surplus which have been converted into stock in trade, it is virtually certain to result in realization of deferred tax assets on account of unabsorbed depreciation and unabsorbed business losses against future taxable income.

2 Discontinued Operations

As part of overall restructuring plans for economizing operations, the company had decommissioned one of its plants at Coimbatore in the financial year 2008-09. After relocating the viable and productive machinery to other units the substantial part of machinery rendered surplus have been disposed off. The loss on sale of machinery during the financial year is '' Nil (Previous year Rs, 6.80 Lakhs).The land rendered available for development and converted into stock in trade has a carrying amount of '' 10,607.93 Lakhs (Previous year Rs, 10,607.93 Lakhs).

3 Segment Reporting

The present operations of the company are under a single broad segment "Textile Intermediary products". These in the context of Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India are considered as one single primary segment.

4 Disclosure of related parties and related party transactions Related Parties

Key Management Personnel

1. Sri S. Pathy - Chairman & Managing Director

2. Sri Aditya Krishna Pathy - Deputy Managing Director

3. Sri N.Singaravel - Company Secretary

4. Sri V.Kannappan - Chief Financial Officer Post retirement employee benefit plans

1. The Lakshmi Mills Co. Ltd. Employees Gratuity Fund

2. The Lakshmi Mills Superannuation Fund Other Related Parties

1. Lakshmi Card Clothing Manufacturing Company Private Limited

2. Lakshmi Automatic Looms Works Limited

3. Balakumar Shipping & Clearing Agency Private Limited

4. Aloha Tours & Travels (India) Private Limited

5. Sans Craintes Knitters

6. Major Corporate Services (India) Ltd

5 a) The company does not have any derivatives, financial instruments either for hedging or for speculation purpose outstanding as on the Balance Sheet date.

6 Details of Specified Bank Notes (SBN) held and transacted during the period 08.11.2016 to 30.12.2016

7 Previous yearâs figures have been regrouped / reclassified wherever necessary to correspond with the current yearâs classification / disclosure.

Mar 31, 2016

b) Details of securities on Long Term and Short Term borrowings from banks

Term loans from Central Bank of India, Canara Bank and Indian Overseas Bank are secured by first charge on relevant assets of Kovilpatti and Palladam units purchased under Project Loan.

Working Capital and Term Loan from Indian Overseas Bank and Canara Bank are secured by pari passu first charge on the fixed assets at Coimbatore. Working Capital and Term Loan from Central Bank of India are secured by first charge on the fixed assets at Palladam and Kovilpatti units.

Working capital loans from banks are secured by first charge on book debts and hypothecation of inventories and pari passu second charge on the fixed assets at Coimbatore, Kovilpatti and Palladam units.

1. The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of the information available with the Company. There are no over dues to parties on account of principal amount and / or interest and accordingly no additional disclosures have been made.

2. Discontinued Operations

As part of over all restructuring plans for economizing operations, the company had decommissioned one of its plants at Coimbatore in the financial year 2008-09. After relocating the viable and productive machinery to other units the substantial part of machinery rendered surplus have been disposed off. The loss on sale of machinery during the financial year is Rs. 6.80 lakhs (Previous year Rs. Nil lakhs).The land rendered available for development and converted into stock in trade has a carrying amount of Rs. 10607.93 lakhs (Previous year Rs. 10607.93 lakhs).

3. Segment Reporting

The present operations of the company are under a single broad segment âTextile Intermediary productsâ. These in the context of Accounting Standard 17 on âSegment Reportingâ issued by the Institute of Chartered Accountants of India are considered as one single primary segment.

4. Disclosure of related parties and related party transactions Related Parties Key Management Personnel

5. Sri S. Pathy - Chairman & Managing Director

6. Sri Aditya Krishna Pathy - Deputy Managing Director Associates

7. Lakshmi Card Clothing Manufacturing Company Private Limited

8. Lakshmi Automatic Looms Works Limited

9. Balakumar Shipping & Clearing Agency Private Limited

10. Aloha Tours & Travels (India) Private Limited

11. Sans Craintes Knitters

12. Major Corporate Services (India) Ltd

Disclosure in respect of Material Related Party Transactions during the year:-

13. Purchase of goods/assets includes Lakshmi Card Clothing Mfg. Co. Pvt Ltd Rs.45.98 lakhs; (Previous year Rs.48.98 lakhs).

14. Sale of Goods / assets include Lakshmi Card Clothing Mfg. Co.P.Ltd Rs.1.60 Lakhs. (Previous year Rs. 1.07 Lakhs).

15. Receiving of Services include Balakumar Shipping & Clearing Agency P.Ltd Rs. 20.42 lakhs (Previous year Rs. 42.28 Lakhs); Aloha Tours & Travels (India) Private Ltd Rs. 24.85 lakhs (Previous year Rs. 33.65 lakhs); Major Corporate Services (India) Ltd. Rs. 52.04 lakhs (Previous year Rs. Nil lakhs ) and Lakshmi Card Clothing Manufacturing Company P Ltd Rs. 4.73 lakhs (Previous year Rs. 4.95 lakhs).

16. Rendering of Services include Lakshmi Card Clothing Manufacturing Company P.Ltd Rs. 11.22 lakhs (Previous year Rs. 10.53 Lakhs); Lakshmi Automatic Loom Works Ltd- Rs. 20.34 lakhs (Previous year Rs. 9.80 lakhs) Sans Craintes Knitters Rs. 3.42 lakhs (Previous year Rs. 1.97 lakhs);

17. Managerial Remuneration includes Sri. S. Pathy Rs. 75.39 lakhs (Previous year Rs. 74.35 Lakhs); Sri. Aditya Krishna Pathy Rs. 43.01 lakhs (Previous year Rs. 32.04 Lakhs).

18. Interest includes Sri. Adithya Krishna Pathy Rs. Nil Lakhs (Previous year Rs. 0.28 Lakhs).

19. Amount Receivable includes Lakshmi Automatic Loom Works Ltd - Rs. 2.04 lakhs (Previous year Rs. 2.91 lakhs) and Balakumar Shipping & Clearing Agency P Ltd- Rs. 59.74 lakhs (Previous year Rs. 56.18 lakhs), Sans Craintes Knitters Rs. 0.26 Lakhs (Previous year Rs. Nil lakhs)

20. Amount payable include Lakshmi Card Clothing Manufacturing Company Pvt Ltd -Rs. 131.10 lakhs (Previous year Rs. 103.36 lakhs); Aloha Tours & Travels (India) Private Ltd -Rs. 4.84 Lakhs (Previous year Rs. 3.61 Lakhs); Major Corporate Services (india) Ltd Rs. 0.96 Lakhs (Previous year Rs. Nil Lakhs)

Mar 31, 2015

NOTE 1 : ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS

1.1 Contingent liabilities and commitments (to the extent not provided for)

Contingent liabilities

Letters of Credit 1,333.16 1,323.00

Bills discounted with banks 476.84 599.81

Central Excise / Service tax disputed demands 5.63 8.42

Disputed Electricity charges 49.22 102.58

Sub Total 1,864.85 2,033.81

Commitments

Estimated amount of contracts unexecuted - - on capital account

Sub Total - -

Total 1,864.85 2,033.81

b) Details of securities on Long Term and Short Term borrowings from banks

Term loans from Central Bank of India, Canara Bank and Indian Overseas Bank are secured by first charge on relevant assets of Kovilpatti and Palladam units purchased under Project Loan.

Term Loan from Indian Overseas Bank and Canara Bank is secured by pari passu first charge on the fixed assets at Coimbatore.

Working capital loans from banks are secured by charge on book debts and hypothecation of inventories and pari passu second charge on the fixed assets at Coimbatore, Kovilpatti and Palladam.

1.2 The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of the information available with the Company. There are no overdues to parties on account of principal amount and / or interest and accordingly no additional disclosures have been made.

1.3 a) The net deferred tax assets carried over as at the end of the year comprises of the following :

b) In the opinion of the Company, with the proposed profitable alternate use of lands rendered surplus which have been converted into stock in trade, it is virtually certain to result in realisation of deferred tax assets on account of unabsorbed depreciation and unabsorbed business losses against future taxable income.

1.4 Discontinued Operations

As part of over all restructuring plans for economising operations, the company had decommissioned one of its plants at Coimbatore in the financial year 2008-09. After relocating the viable and productive machinery to other units the substantial part of machinery rendered surplus have been disposed off. The profit on sale of machinery during the financial year is Rs. Nil lakhs (Previous year Rs. 3.82 lakhs).The land rendered available for development and converted into stock in trade has a carrying amount of Rs. 10607.93 lakhs (Previous year Rs. 10607.93 lakhs).

1.5 Segment Reporting

The present operations of the company are under a single broad segment "Textile Intermediary products". These in the context of Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India are considered as one single primary segment.

1.6 Disclosure of related parties and related party transactions Related Parties

Associates

1. Lakshmi Card Clothing Manufacturing Company Private Limited

2. Lakshmi Automatic Looms Works Limited

3. Balakumar Shipping & Clearing Agency Private Limited

4. Aloha Tours & Travels (India) Private Limited

5. Sans Craintes Knitters Key Management Personnel

1. Sri S. Pathy - Chairman & Managing Director

2. Sri Aditya Krishna Pathy - Whole Time Director (Rs. in lakhs)

Note: Related party relationships are as identified by the management

Disclosure in respect of Material Related Party Transactions during the year:-

1. Purchase of goods/assets includes Lakshmi Card Clothing Mfg. Co. Pvt Ltd Rs. 48.98 lakhs; (Previous year Rs. 27.59 lakhs).

2. Sale of Goods / assets include Lakshmi Card Clothing Mfg. Co.P.Ltd Rs.1.07 Lakhs. (Previous year Rs. 1.21 Lakhs).

3. Receiving of Services include Balakumar Shipping & Clearing Agency P.Ltd Rs. 42.28 lakhs (Previous year Rs. 21.69 Lakhs); Aloha Tours & Travels (India) Private Ltd Rs. 33.65 lakhs (Previous year Rs. 27.01 lakhs) and Others Rs. 4.95 lakhs (Previous year Rs. 2.34 lakhs).

4. Rendering of Services include Lakshmi Card Clothing Mfg. Co. Pvt Ltd Rs. 10.53 lakhs (Previous year Rs. 7.99 Lakhs); Lakshmi Automatic Loom Works Ltd Rs. 9.80 lakhs (Previous year Rs. Nil lakhs) and Sans Craintes Knitters Rs. 1.97 lakhs (Previous year Rs. Nil lakhs);

5. Managerial Remuneration includes Sri. S. Pathy Rs. 74.35 Lakhs (Previous year Rs. 49.95 Lakhs) and Sri. Aditya Krishna Pathy Rs. 32.04 Lakhs (Previous year Rs. 28.69 Lakhs).

6. Interest includes Sri. Aditya Krishna Pathy Rs. 0.28 Lakhs (Previous year Rs. 0.28 Lakhs).

7. Amount Receivable includes Lakshmi Automatic Loom Works Ltd Rs. 2.91 lakhs (Previous year Rs. 4.98 lakhs) and Balakumar Shipping & Clearing Agency P Ltd Rs. 56.18 lakhs (Previous year Rs. 56.44 lakhs).

8. Amount payable include Lakshmi Card Clothing Mfg. Co. Pvt Ltd Rs. 103.36 lakhs (Previous year Rs. 73.39 lakhs); Aloha Tours & Travels (India) Private Ltd Rs. 3.61 Lakhs (Previous year Rs.1.27 Lakhs) and Sri. Aditya Krishna Pathy Rs. Nil lakhs (Previous year Rs. 0.77 lakhs).

1.7 As per the requirement of the provisions of Schedule II of the Companies Act, 2013, the management has adopted the useful lives as per Part C of Schedule II of the Act, with effect from 1st April 2014 for all its fixed assets. Accordingly, an additional depreciation for the year ending 31st March 2015 of Rs. 151.29 lakhs has been recognised in the Statement of Profit and Loss. Pursuant to such adoption, in accordance with the transistional provisions under Schedule II of the Act, an amount of Rs. 34.56 lakhs (net of deferred tax of Rs. 16.60 lakhs) has been recognised in the opening retained earnings, pertaining to assets whose balance useful life as on 1st April 2014 was NIL.

1.8 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2013

1 CORPORATE INFORMATION

The Lakshmi Mills Company Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The company is engaged in the manufacturing of Yarn and trading in cloth and garments. The company caters to both domestic and international markets.

2.1 The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of the information available with the Company. There are no overdues to parties on account of principal amount and / or interest and accordingly no additional disclosures have been made.

2.2 Discontinuing Operations

As part of over all restructuring plans for economising operations, the company had decommissioned one of its plants at Coimbatore in the financial year 2008-09. After relocating the viable and productive machinery to other units the substantial part of machinery rendered surplus have been disposed off. The profit on sale of machinery during the financial year is Rs. 174.61 lakhs (Previous year Rs.1.30 lakhs). The land rendered available for development and converted into stock in trade has a carrying amount of Rs. 10607.93 lakhs (Previous year Rs. 10607.93 lakhs).

2.3 Segment Reporting

The present operations of the company are under a single broad segment "Textile Intermediary products". These in the context of Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India are considered as one single primary segment.

2.4 Disclosure of related parties and related party transactions: Related Parties Associates

1. Lakshmi Card Clothing Manufacturing Company Private Limited

2. Lakshmi Automatic Looms Works Limited

3. Balakumar Shipping & Clearing Agency Private Limited

4. Aloha Tours & Travels (India) Private Limited Key Management Personnel

1. Sri S. Pathy

2. Sri Aditya Krishna Pathy

2.5 In the opinion of the Board of Directors, assets other than fixed assets and non current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

2.6 Effective from 1.4.2012, the Company has with retrospective effect changed its method of depreciation on Plant / Electrical Equipment from SLM to WDV method of depreciation. The company has recognized an additional depreciation charge of Rs. 1914.94 lakhs relating to period upto 31.3.2012 which has been disclosed as an exceptional item. Had the company continued to use the earlier method of depreciation, the profit after tax for the current year would have been lower by Rs.93.22 lakhs.

2.7 a) The company does not have any derivatives, financial instruments either for hedging or for speculation purpose outstanding as on the Balance Sheet date.

b) Details of foreign currency exposures that are not hedged by any derivative instrument or otherwise are

2.8 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2012

1 CORPORATE INFORMATION

The Lakshmi Mills Company Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The company is engaged in the manufacturing of Yarn and trading in cloth and garments. The company caters to both domestic and international markets.

Particulars 31.3.2012 31.3.2011

(Rs. in lakhs)

NOTE 2 : ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS

2.1 Contingent liabilities and commitments (to the extent not provided for)

Contingent liabilities

Letters of Credit 361.56 77.72

Bills discounted with banks 50.03 -

Central Excise / Service tax disputed demands 8.71 7.71

Income tax disputed demand - 70.01

Sub Total 420.30 155.44

Commitments

Estimated amount of contracts unexecuted on capital account - 146.40

Sub Total - 146.40

Total 420.30 301.84

b) Details of securities on Long Term and Short Term borrowings from banks

Term loans from Central Bank of India and Canara Bank are secured by first charge on fixed assets of Kovilpatti and Palladam units.

Term Loan from Indian Overseas Bank and Canara Bank is secured by pari passu first charge on the land at Coimbatore.

Working capital loans from banks are secured by charge on book debts and hypothecation of inventories and pari passu second charge on the fixed assets at Coimbatore, Kovilpatti and Palladam.

Demand loan from banks are secured by fixed deposits with bank.

2.2 The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of the information available with the Company. There are no overdues to parties on account of principal amount and / or interest and accordingly no additional disclosures have been made.

b) In the opinion of the Company, with the proposed profitable alternate use of lands rendered surplus which have been converted into stock in trade, it is virtually certain to result in realisation of deferred tax assets on account of unabsorbed depreciation and unabsorbed business losses against future taxable income.

2.3 Discontinuing Operations

As part of over all restructuring plans for economising operations, the company had decommissioned one of its plants at Coimbatore in the financial year 2008-09. After relocating the viable and productive machinery to other units the substantial part of machinery rendered surplus have been disposed off. The profit on sale of machinery during the financial year is Rs. 1.30 lakhs (Previous year Rs. 155.56 lakhs). The land rendered available for development and converted into stock in trade has a carrying amount of Rs. 10607.93 lakhs (Previous year Rs. 10607.93 lakhs).

2.4 Segment Reporting

The present operations of the company are under a single broad segment "Textile Intermediary Products". These in the context of Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India are considered as one single primary segment.

2.5 Disclosure of related parties and related party transactions: Related parties Associates

1. Lakshmi Card Clothing Manufacturing Company Private Limited

2. Lakshmi Automatic Loom Works Limited

3. Balakumar Shipping & Clearing Agency Private Limited

4. Aloha Tours & Travels (India) Private Limited

Key Management Personnel

1. Sri S. Pathy

2. Sri Aditya Krishna Pathy

Note: Related party relationships are as identified by the management

Disclosure in respect of Material Related Party Transactions during the year:-

1. Purchase of goods/assets includes Lakshmi Card Clothing Manufacturing Company P Ltd Rs. 30.63 lakhs; (Previous year Rs. 46.93 lakhs).

2. Sale of Goods / assets include Lakshmi Automatic Loom Works Ltd Rs. 0.46 lakh (Previous year Rs. 4.58 lakhs); Others Rs. 0.67 lakh (Previous year NIL).

3. Receiving of Services include Balakumar Shipping & Clearing Agency P Ltd Rs. 21.79 lakhs (Previous year Rs. 14.29 lakhs); Aloha Tours & Travels (India) Private Ltd Rs. 12.84 lakhs (Previous year Rs. 10.22 lakhs) and Others Rs.1.74 Lakhs (Previous year Rs. 0.72 lakh).

4. Rendering of Services include Lakshmi Card Clothing Manufacturing Company P Ltd Rs. 0.18 lakhs (Previous year Rs. 8.85 lakhs); Lakshmi Automatic Looms Works Limited Rs. NIL (Previous year Rs. 3.52 lakhs).

5. Managerial Remuneration includes S. Pathy Rs.40.70 lakhs (Previous year Rs.41.10 lakhs); Adithya Krishna Pathy Rs.22.20 Lakhs (Previous year Rs. 13.90 lakhs).

6.1. Interest includes Adithya Krishna Pathy Rs. 0.28 lakh (Previous year Rs. 0.28 lakhs).

6.2. Dividend includes S. Pathy Rs.9.35 lakhs (Previous year Rs.9.20 lakhs); Adithya Krishna Pathy Rs.4.82 lakhs (Previous year Rs.4.54 lakhs); Lakshmi Card Clothing Manufacturing Company P Ltd Rs.3.75 lakhs (Previous year Rs.3.75 lakhs).

7. Amount Receivable includes Lakshmi Automatic Loom Works Ltd Rs. 33.55 lakhs (Previous year Rs. 81.87 lakhs) and Others Rs.2.93 lakhs (Previous year Rs.2.95 lakhs).

8. Amount payable include Lakshmi Card clothing Manufacturing Company Pvt Ltd Rs. 261.24 lakhs (Previous year Rs. 44.17 lakhs); Aloha Tours & Travels (India) Private Ltd Rs. 1.49 lakhs (Previous year Rs. 1.13 lakhs).

2.6 In the opinion of the Board of Directors, assets other than fixed assets and non current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

2.7 The revised Schedule VI has become effective from 1st April 2011 for the preparation of financial statements. This has impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

Mar 31, 2011

1 Contingent Liability

a) Excise duty/Service tax on appeals Rs.7.71 lakhs (Previous Year Rs. 13.63 Lakhs)

b) Income tax disputed dues Rs.70.01 lakhs (Previous Year Rs.70.01 Lakhs)

2 The information required to be disclosed under the Micro, Small and Medium enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of the information available with the Company. There are no overdues to parties on account of principal amount and / or interest and accordingly no additional disclosures have been made.

b) In the opinion of the Company, the restructured operations coupled with profitable alternate use of lands rendered surplus which have been converted into stock in trade, is virtually certain to result in realisation of deferred tax assets on account of unabsorbed depreciation and unabsorbed business losses against future taxable income.

3 The landed properties of a decommissioned unit of the company have been converted into stock in trade of the property development division during the previous accounting year at net book value.

4 Discontinuing Operations: As part of over all restructuring plans for economising operations, the company had decommissioned one of its plants at Coimbatore in the financial year 2008-09. After relocating the viable and productive machinery to other units the substantial part of machinery rendered surplus have been disposed off. The profit on sale of such machinery during the financial year is Rs. 155.56 lakhs (Previous year Rs. 125.87 lakhs) The land rendered available for development and converted into stock in trade has a carrying amount of Rs.10607.93 lakhs (Previous year Rs.10607.93 lakhs).

5 Segment Reporting

The operations of the company are under a single broad segment "Textile Intermediary products". These in the context of Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India are considered as one single primary segment.

6 Disclosure of related parties and related party transactions:

Related parties Associates :-

1. Lakshmi Card Clothing Manufacturing Company Private Limited

2. Lakshmi Automatic Loom Works Limited

3. Balakumar Shipping & Clearing Agency Private Limited

4. Aloha Tours & Travels (India) Private Limited

Key Management Personnel

1. Sri S. Pathy

2. Sri Aditya Krishna Pathy

Disclosure in respect of Material Related Party Transactions during the year:-

1. Purchase of goods/assets includes Lakshmi Card Clothing Manufacturing Company Private Limited Rs.46.93 Lakhs (Previous year Rs. 91.42 Lakhs).

2. Sale of goods/assets includes Lakshmi Automatic Looms Works Limited Rs. 4.58 Lakhs (Previous year Rs. 0.29 Lakhs).

3. Receiving of services includes Balakumar Shipping & Clearing Agency Private Limited Rs. 14.29 Lakhs (Previous year Rs. 31.63 Lakhs), Aloha Tours & Travels (India) Private Limited Rs. 10.22 Lakhs (Previous year Rs.10.97 Lakhs).

4. Rendering of services includes Lakshmi Card Clothing Manufacturing Company Private Limited Rs. 8.85 Lakhs (Previous year Rs.7.69 Lakhs), Lakshmi Automatic Looms Works Limited Rs.3.52 Lakhs (Previous year Rs.Nil)

5. Amount receivable includes Lakshmi Automatic Looms Works Limited Rs. 81.87 Lakhs (Previous year Rs.59.98 Lakhs).

6. Amount payable includes Lakshmi Card Clothing Manufacturing Company Private Limited Rs. 44.17 Lakhs (Previous year Rs.34.31 Lakhs).

7 In opinion of the Board of directors, all current assets, Loans & advances have a realisation in the ordinary course of a sum of atleast equal to the amount at which they are realised.

8 a) The company does not have any derivatives financial instrument either for hedging or for speculation purpose outstanding as on the Balance Sheet date.

9 As in the Balance Sheet the figures in the Profit & Loss Account have been expressed in terms of rupees in lakhs.

10 Comparative figures for previous year have been re-classified and re-grouped wherever necessary to conform to this year's classifications.

Mar 31, 2010

1 Contingent Liability

a) Excise duty/Service tax on appeals Rs. 13.63 lakhs (Previous Year Rs.24.47 Lakhs)

b) Income tax disputed dues Rs.70.01 lakhs (Previous Year Rs. 100.74 Lakhs)

b) Consequent to completion of substantial modernisation in one of its units and discontinuation of manufacturing operations in a unit, in the opinion of the management, the restructured operations coupled with profitable alternate use of lands rendered surplus is virtually certain to result in realisation of deferred tax assets on account of unabsorbed depreciation and unabsorbed business losses against future taxable income.

2 The company is examining various options available in regard to development of landed properties of the decommissioned Coimbatore unit and has in the meantime decided to convert these assets in to Stock in Trade, at net book value, of the Property Development division aggregating to Rs.9098.03 Lakhs and to capitalise and carry forward the VRS compensation paid for making such land available for development and other expenditure incidental to development of these assets amounting to Rs. 1509.90 Lakhs (Including reversal of Rs.480.31 Lakhs of such VRS compensation written off in earlier years). Accordingly an amount aggregating to Rs. 10607.93 Lakhs consisting of net book value of these assets and the aforesaid expenditure capitalised and carried forward have been shown under " Stock in trade of Land under development" in the inventory schedule-7.

3 Discontinuing Operations: As part of overall restructuring plans for economising operations, the company had decommissioned one of its plants at Coimbatore during the previous year. The viable and productive machinery were relocated at other units. Substantial part of machinery rendered surplus in this process have been disposed

4 Segment Reporting

The operations of the company are under a single broad segment "Textile Intermediary products".

These in the context of Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India are considered as one single primary segment.

5 Disclosure of related parties and related party transactions: Related parties

Associates :-

1. Lakshmi Card Clothing Manufacturing Company Private Limited

2. Lakshmi Automatic Loom Works Limited

3. Balakumar Shipping & Clearing Agency Private Limited

4. Aloha Tours & Travels (India) Pvt. Ltd Key Management Personnel

1. Sri. K. Sundaram

2. Sri. S. Pathy

Note: The salary escalation considered in acturial valuation takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The details of experience adjustment arising on account of plan assets and liabilities as required by paragraph 120(n)(ii) of AS-15 (Revised) on Employee Benefits are not readily available in the valuation report and hence are not furnished.

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