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Notes to Accounts of Loyal Textiles Mills Ltd.

Mar 31, 2018

1 General Information:

Loyal Textiles Mills Limited ( "the Company" ) is engaged in manufacturing of yarn, woven fabric, knitted fabric and technical clothing. The Company has manufacturing plants at Kovilpatti, Sattur, Cuddalore, Sivagangai in Tamilnadu, Khammam in Telangana, and Nellore in Andra Pradesh. The Company is a public listed company and listed on The Bombay Stock Exchange.

2. FINANCIAL INSTRUMENTS

i) Capital management

The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, internal accruals and both longterm and short-term borrowings.

The Company monitors the capital structure on the basis of total debt to equity and maturity profile of the overall debt portfolio of the company.

ii) Financial Risk Management

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive directly from its operations. The principal financial liabilities of the company, include loans and borrowings, trade and other payables and the main purpose of these financial liabilities is to finance the day to day operations of the company.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s management oversees the management of these risks and that advises on financial risks and the appropriate financial risk governance framework for the Company.

This note explains the risk which the company is exposed to and policies and framework adopted by the company to manage these risks.

(a) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise two types of risk: foreign currency risk, interest rate risk.

(i) Foreign Currency Risk

The company operates internationally and business is transacted in several currencies. The export sales of company comprise around 90% of the total sales of the company, Further the company also imports certain assets and material from outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently the company is exposed to foreign currency risk and the results of the company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than company’s functional currency.

The company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions.

Exchange rate exposures are managed through non derivative forward foreign exchange contracts.

(ii) Interest Rate Risk

The exposure to the risk of changes in market interest rates relates primarily to the debt obligations with floating interest rates. The company borrow funds from banks is only at fixed rates, the rates are reviewed every year by the bank. The company’s fixed rate borrowings are carried at amortised cost. 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. Therefore there is no material interest risk relating to the company''s financial liabilities.

(b) Liquidity Risk

Liquidity Risk is the risk that the company will not be able to meet on its financial obligations as they become due. The objective of the liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as and when required.

The finance management policy of the company includes an appropriate liquidity risk management framework for the management of the short-term, medium-term, and long term funding and cash management requirements. The company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and future cash flows, and by matching the maturity profiles of financial assets and liabilities.

(c) Credit Risk

Credit Risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to financial loss. The Company is exposed to credit risk from its operating activities which is primarily trade receivables.

The carrying amount of financial assets represents maximum credit exposure, being total of the carrying amount of balances with banks, short term deposits with banks, short term investment, trade receivables and other financial assets excluding equity investments.

(d) Trade receivables

Trade receivables of the company are typically unsecured and derived from sale made to a large number of independent customers. Customer credit risk is managed by each business unit subject to established policies, procedures and control relating to customer credit risk management. Before accepting any new customer, the company has appropriate level of control procedures to assess the potential customer credit quality. The credit worthiness of its customers are reviewed based on their financial position, past experience and other facts. The credit period provided by the company to its customers generally ranges from 0-90 days. Outstanding customer receivables are reviewed periodically.

The credit related to the trade receivables is mitigated by taking security deposits/ bank guarantee/letter of credit- as and where considered necessary, setting appropriate credit terms and by setting and monitoring internal limits on exposure to individual customers.

There is no substantial concentration of the credit risk as the revenue / trade receivables pertaining to any of the single customer do not exceed 10% of company revenue.

(b) Define Benefit Plans Gratuity

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the Gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

i) Changes in the present value of the obligation - reconciliation of opening and closing balances:

vii) The estimates of future salary increases, considered in actuarial valuation, taken into account of inflation, seniority, promotion and other relevant factors such as demand and supply in the employment market. The expected rate of return on assets are estimated as per the return on Government of India bonds.

3. Based on the information available with the Company, the principal amount due to Micro Small and Medium Enterprises as on 31.03.18 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

4. In the opinion of the Board, all the 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.

5. There is no amount due and outstanding to be credited to Investors'' Education and Protection Fund.

6. Balances of certain parties are subject to confirmation / reconciliation if any.

7. Previous year figures have been regrouped wherever necessary to conform to the current year''s classification.

8. Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.


Mar 31, 2016

1) No significant restriction is attached on the investments held outside India.

2) The Cash and Cash equivalents in the Cash Flow Statement include foreign currency balances, which does not include any amount, which is of restrictive reliability.

3) Power and fuel cost is net of Rs. 30.91 Crores (PY Rs. 36.57 Crores) being electricity generated through wind mills.

4) Borrowing cost capitalized during the year is Rs.20.83 Lacs. (PY Nil)

5) Deferred tax liability mainly represent timing difference relating to depreciation of Rs. 45.48 Crores (PY Rs. 46.55 Crores) and Deferred asset mainly represent timing difference on account of deferred allowance of Rs. 5.21Crores (PY Rs.5.21 Crores) under Income Tax Act, 1961.

6) Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has no outstanding derivative exposure as on 31st March 2016

b) The net gain earned of Rs.5.50 lakhs by the company on cancellation of Forward Contracts during the year is grouped under Miscellaneous Expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

7) Based on the information available with the Company, the principal amount due to Micro Small and Medium Enterprises as on 31.03.16 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

8) The Company has adopted the Accounting Standard (AS) 15 Post employment benefits :

(a) Provident fund and other funds:

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognized Rs. 457.42 lacs (PY Rs.398.28 lacs) as expense towards contribution towards these plans.

(b) Gratuity:

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

9) Certain knitting machinery at Valli Textile Mills and CTM divisions are given on cancellable operating lease at a monthly lease rent.

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

11) There is no amount due and outstanding to be credited to Investors'' Education and Protection Fund.

12) In the absence of required notification prescribed format, relating to the statement of changes to equity, the same is not furnished

13) Balances of certain parties are subject to confirmation / reconciliation if any.

14) Previous year figures have been regrouped wherever necessary to conform to the current year''s classification.

15) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.


Mar 31, 2015

1) No significant restriction is attached on the investments held outside India.

2) The Cash and Cash equivalents in the Cash Flow Statement include foreign currency balances, which does not include any amount, which is of restrictive reliability.

3) Power and fuel cost is net of Rs. 36.57 Crores (P.Y. Rs. 31.29 Crores) being electricity generated through wind mills.

4) No borrowing cost has been capitalised during the year.

5) Deferred tax liability mainly represent timing difference relating to depreciation of Rs. 46.55 Crores (P.Y. Rs. 57.50 Crores) and Deferred asset mainly represent timing difference on account of deferred allowance of Rs. 5.21 Crores (P.Y.: Rs.4.56 Crores) under Income Tax Act, 1961.

6) Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has no outstanding derivative exposure as on 31st March 2015

b) The net gain incurred of Rs.264 lakhs by the company on cancellation of Forward Contracts during the year is grouped under Miscellaneous Expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

7) Based on the information available with the Company, the principal amount due to Micro Small and Medium Enterprises as on 31.03.15 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

8) The Company has adopted the Accounting Standard (AS) 15. Post employment benefits :

(a) Provident fund and other funds:

Being a defend contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognised Rs. 398.28 lacs (P.Y. Rs.297.47 lacs) as expense towards contribution towards these plans.

(b) Gratuity:

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

9) Fixed assets of Ginning unit at Thallada, Telangana were on cancellable operating lease till Dec 2014 and certain knitting machinery at Valli Textile Mills and SCTM divisions are given on cancellable operating lease at a monthly lease rent.

10) The company has received a letter from the Bombay Stock Exchange requiring the financial statements of Financial Year 2012-13 to be restated giving effect to the qualification in the Auditors' Report relating to the change in rates of depreciation of wind mill. A reply has been sent in this regard with supporting documents, justifying that restatement is not warranted and change in rate of depreciation is appropriate. The company is awaiting the response of BSE.

11) In the opinion of the board, all the 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.

12) There is no amount due and outstanding to be credited to Investors' Education and Protection Fund.

13) In the absence of required notification in the prescribed format, relating to the statement of changes to equity, the same is not furnished

14) Balances of certain parties are subject to confirmation / reconciliation if any.

15) Previous year figures have been regrouped wherever necessary to conform to the current year's classification.

16) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.


Mar 31, 2014

(Rs. in Lakhs)

1) Contingent Liabilities 31.03.2014 31.03.2013 (To the extent not provided for)

i) Claim against the Company not acknowledged as debts 26.30 26.30

ii) Counter Guarantee given to Banks 134.22 608.18

iii) On Account of Bills discounted 18,988.95 20,352.17

iv) Disputed income tax demand not provided for-Appeals filed before Appellate Authorities/revision petition pending 1,157.58 1,123.45

v) Disputed Sales tax demand not provided for 131.45 91.23

vi) Disputed Service tax, Excise / Customs duty not provided for 125.38 142.49

vii) On account of export obligation covered by letter of undertaking 2,984.58 3,334.35

2) No significant restriction is attached on the investments held outside India.

3) The Cash and Cash equivalents in the Cash flow statement include foreign currency balances, which does not include any amount, which is of restrictive realisability.

4) Power and fuel cost is net Rs.33.24 Crores (P.Y. Rs.45.04 Crores) being electricity generated through wind mills.

5) The amount of borrowing cost captalised during the year "NIL" (PY Rs.0.81 Crores)

6) Due to higher rate of depreciation available under I.T computation, the company is liable to tax only on its book profit under MAT computation. The MAT credit available is Rs.14.64 crores.

7) Deferred tax liability mainly represent timing difference relating to depreciation of Rs.57.50 Crores (P.Y. Rs.55.29 Crores) and Deferred asset mainly represent timing difference on account of deferred allowance of Rs.4.56 Crores (P.Y. : Rs. 7.58 Crores) under Income tax Act 1961.

8) Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has no outstanding derivative exposure as on 31st March 2014

b) The net loss incurred of Rs. 185 lakhs by the company on cancellation of Forward Contracts during the year is grouped under miscellaneous expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

9) Based on the information available with the Company, the principal amount due to Micro, Small and Medium enterprises on 31.03.14 is Rs.NIL. There has been no overdue principal amount and therefore no interest is paid/payable.

10) The Company has adopted the Accounting Standard (AS) 15 Post employment benefits :

(a) Provident fund and other funds

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognised Rs.297.47 lacs (P.Y. Rs.234.00 lacs) as expense towards contribution towards these plans.

(b) Gratuity

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

11) Fixed assets of Ginning unit at Thallada, Andhra Pradesh and certain knitting machinery at Valli Textile Mills and SCTM divisions are given on cancellable operating lease at a monthly lease rent.

12) In the opinion of the board, all the assets other than fixed asset and non-current investments have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

13) There is no amount due and outstanding to be credited to investor,s education and protection fund.

14) Balances of certain parties are subject to confirmation / reconciliation if any.

15) Previous year figures have been regrouped wherever necessary to confirm to the current years classification.

16) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.

Notes : 1. Mr. Manikam Ramaswami, Chairman and Managing Director is the key management personnel of the enterprise and his remuneration particulars are disclosed elsewhere in the notes.

2. Mr. P.Manivannan is employed on a whole time basis and hence his name has been included.

His remuneration particulars are disclosed in the notes.

3. There is no transaction with Loyal Dimco Group A.E.B.E Greece, Uniloyal Expotex Limited, Chennai, and Shri Teyem Processors Ltd., during the year.

4. The information regarding applicable transactions as given in clause 24 of AS 18 is given above.


Mar 31, 2013

1. Contingent Liabilities (Rs. in Lakhs)

(To the extent not provided for) 31.03.2013 31.03.2012

i) Claim against the Company not acknowledged as debts 26 29

ii) Counter Guarantee given to Banks 6,08 6,87

iii) On Account of Bills discounted 203,52 46,66

iv) Disputed income tax demand not provided for-Appeals filed before Appellate Authorities are pending 11,23 0

v) Disputed Sales tax demand not provided for 91 35

vi) Disputed Service tax not provided for 1,42 1,11

vii) On account of export obligation covered by letter of undertaking 33,34 47,03

2) Change in the method of Depreciation - Windmills were depreciated over 10 years. The number of year over which the windmill are depreciated has been changed to 15 years, against industrial norms of 20 years. The change in the method of depreciation has resulted in an increase of profit / asset by Rs.8.65 Crores.

3) No significant restriction is attached on the investments held outside India.

4) The Cash and Cash equivalents in the Cash flow statement include foreign currency balances, which does not include any amount, which is of restrictive realisability.

5) Power and fuel cost is net Rs.25.61 Crores (P.Y. Rs.24.07 Crores) being electricity generated through wind mills.

6) The amount of borrowing cost captalised during the year Rs.0.81 Crores (PY Rs.1.26 Crores)

7) Due to higher rate of depreciation available under I.T computation, the company is liable to tax only on its book profit under MAT computation. The MAT credit available is Rs.11.84 crores.

8) Deferred tax liability mainly represent timing difference relating to depreciation of Rs.55.29 Crores (P.Y. Rs.51.99 Crores) and Deferred asset mainly represent timing difference on account of carried forward depreciation permissible Rs.7.58 Crores (P.Y. : Rs.12.97 Crores) under Income tax Act 1961.

9) Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has'' no outstanding derivative exposure as on 31st March 2013

b) The net loss incurred by the company on cancellation of Forward Contracts during the year is grouped under miscellaneous expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

10) Based on the information available with the Company, the principal amount due to Micro and small enterprises on 31.03.13 is Rs.NIL. There has been no overdue principal amount and therefore no interest is paid/payable.

11) The Company has adopted the Accounting Standard (AS) 15

Post employment benefits :

(a) Provident fund and other funds

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognised Rs.234.00 lacs (P.Y. Rs.185.86 lacs) as expense towards contribution towards these plans.

(b) Gratuity

The company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

12) In the opinion of the board, all the assets other than fixed asset and non-current investments have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

13) There is no amount due and outstanding to be credited to investor''s education and protection fund

14) Balances of certain parties are subject to confirmation / reconciliation if any.

15) Previous year figures have been regrouped wherever necessary to confirm to the current years classification

16) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes


Mar 31, 2012

1. Contingent Liabilities : (Rs. in Lakhs)

(To the extent not provided for ) 31.03.12 31.03.11

i) Claim against the Company not acknowledged as debts 29 23

ii) Counter Guarantee given to Banks 5,95 5,94

iii) On Account of Bill discounted 46,66 1,42,63

iv) Disputed income tax demand not provided for-Appeals filed before Appellate Authorities are pending - 2,00

v) Disputed Sales tax demand not provided for 35 14

vi) Disputed Service tax not provided for 1,11 9

vii) On account of export obligation covered by

letter of undertaking 47,03 61,00

2. No significant restriction is attached on the investments held outside India

3. The Cash and Cash equivalents in the Cash flow statement include foreign currency balances, which does not include any amount, which is of restrictive reliability.

4. Power and fuel cost is net of Rs. 24.07 Crores (P.Y.Rs 19.44 Crores) being electricity generated through wind mills.

5. The amount of borrowing cost capitalized during the year Rs. 1.26 Crores /- (PY Rs.3.74 Crores)

6. In view of the loss incurred by the Company no income tax is payable.

7. Deferred tax liability mainly represent timing differences relating to depreciation of Rs. 51.99 Crores (P.Y Rs. 44.29 Crores) and Deferred asset mainly represent timing' difference on account of carried forward depreciation permissible Rs. 12.97 Crores(PY: 12.47 Crores) under Income tax Act 1961. The MAT credit available is Rs. 9.64 Crores .

8. Disclosure regarding Derivative Instruments:

a) The Company enters into forward contracts either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the Company has' no outstanding derivative exposure as on 31st March 2012

b) The net loss incurred by the company on cancellation of Forward Contracts during the year is grouped under miscellaneous expenditure. As the company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

9. Based on the information available with the Company, the principal amount due to Micro and small enterprises on 31.03.2012 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

10. The Company has adopted the Accounting Standard (AS) 15 (Revised) from the year 2008.

(a) Post employment benefits

(b) Provident fund and other funds

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognized Rs.190.81(PY.160.84) lacs as expense towards contribution towards these plans.

(c) Gratuity

The Company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

11) In the opinion of the board, all the assets other than fixed asset and non-current investments have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

12) There is no amount due and outstanding to be credited to investor's education and protection fund.

13) Confirmation of balances have not been received from parties.

14) Previous year figures have been regrouped wherever necessary to conform to the current years classification.

15) Figures have been rounded off to the nearest lakh in the financial statement and in the accompanying notes.

Notes : 1. Mr. Manikam Ramaswami, Chairman and Managing Director is the key management personnel of the enterprise and his remuneration particulars are disclosed in the notes on accounts .

2. Mr. P. Manivannan is employed on a whole time basis and hence his name has been included. His remuneration particulars are disclosed in the notes on accounts. Sri Shridhar Subrahmanyam, Director is paid professional charges as given in the notes.

3. There is no transaction with Loyal Dimco Group, A.E.B.E. Greece. Uniloyal Expotex Limited, Chennai, and Shri Teyem Processors Ltd., during the year.

4. The information regarding applicable transactions as given in clause 24 of AS 18 is given above.


Mar 31, 2011

1. Contingent Liabilities :

i) On Account of Bills discounted 1,426,323 442,594

ii) Counter Guarantee given to Banks 61,546 2,103

iii) Guarantee to a third party - -

i v) Claim against the Company not acknowledged as debts 2,273 5,718

2. The Company has already preferred a petition before the High Court of Mumbai through the Indian Exporters Grievances Forum challenging the validity of the retrospective amendment of the provisions of section 80HHC of the Income Tax Act. The amount of liability estimated at Rs. 4.67 crores if any arise, relates to earlier years and and could be met out of the opening reserves of the Company. The reopened Assessment relating to the Assessment year 2002-03 and 2003-04 consequent to the amendment of the incometax act 1961, are pending before the Assessing Officer / Commissioner of Income Tax (Appeals).

3. a) The Amount of capital commitments / contingencies incurred in respect of jointly controlled entities NIL

b) No significant restriction is attached on the investments held outside India.

c) The Cash and Cash equivalents in the cash flow statement include foreign currency balances, which does not include any amount, which is of restrictive realisability.

d) Power and fuel cost is net of Rs. 19.44 Crores (P.Y. Rs. 20.42 Crores) being electricity generated through wind mills.

e) The amount of forwarding cost capitalised during the yar Rs. 3.74 crores /- (P.Y. -Nil-)

f) Other income include Rs. 5.67 crores (P.Y. - Nil) being the provisions for expensions made inearlier years. Relating to advance license fees, sales tax, now written back, represent prior period items.

4. In view of the adjustment of carried forward losses as per the provisions to Income Tax Act 1961 no tax is payable under the normal computation of tax, provision for tax is made on book profits.

5. Deferred tax liability mainly represent timing difference relating to depreciation of Rs. -44.29 Crore (P.Y. Rs. -17.52 Crore) and Deferred asset mainly represent timing difference on account of carried forward depreciation permissible Rs. 12.47 crores (P.Y. Nil) under Income Tax Act 1961 . The MAT credit available is Rs. 8.76 Crore.

6. Disclosure regarding Derivative Instruments :

a) The Company enters into forward contracts and either to hedge its foreign exchange exposure or to reduce costs and not for any speculative purposes. The Company has not entered into any derivative deals during the year and the company has no outstanding derivative exposure as on 31st March 2011.

b) The net loss incurred by the Company on cancellation of Forward Contracts during the year is grouped under miscellaneous expenditure. As the Company has taken forward cover only for hedging purposes, the Company is not required to mark to market the forward contracts as on the Balance Sheet date.

7. Based on the information available with the Company, the principai amount due to Micro and small enterprises on 31.03.2011 is Rs. NIL. There has been no overdue principal amount and therefore no interest is paid / payable.

8. Amalgamation of Shri. Chintamani Textile Mills Limited (SCTML)

1. Pursuant to this scheme of amalgamation ("the Scheme") santioned by the HON'ble high court of judicature, madras, as per its order dated 11th April 2011, undersection 391-394 of the companies 1956, Shri. Chintamani Textile Mills Limited engaged in the business of manufacturing of spinning weaving, knitting and making garments, has been amalgamated with the compoany with effect from April 1 2010. The amalgamation has been accounted as per the scheme wich is in accordance with the "Pooling of interests" method as prescribed by accounting standard (AS - 14), "Accounting for amalgamation"

2. The amalgamation SCTML with the company is primarly designed to make the operations economical, efficient, to improve the quality of production and to simply by the administration

3. The appointed date of the amalgamation (amalgamation appointed date) under the scheme was April 1 2010, while the effected date is May 3rd, 2011.

4. In accordance with the scheme all the assets and liabilites of SCTML have been transfered to the company at value appearing in the books of SCTML as aon the amalgamation appointed date on going conscern basis, including all contingent liablities, guarantees, duties, other obligation and employees.

5. As a result, the amount of equity share Capital of the Company has increased has to Rs. 4,81,64,416 as at 31st March 2011.

6. In consideration, the company issued and adopted 1,12,500 Equity Shares of the Rs. 10 each of the company as fully paid to the shareholder of SCTML at theratio of 1 equity share of the Company for 4 equity shares of the amalgamating Company. The Scheme does not provide for the right of SCTML to receive any dividend declared by the Transferee Company (LTML) after the Amalgamation Appointed Date but prior to amalgamation effective date.

7. The amount of difference between the consideration and the value of net identifiable assests transfered, of Rs.33,75,000 is considered as capital reserve

8. Pursuant to amalgamation of SCTML with the Company on the effective date of 1st April 2010, as stated in notes in schedule No.21 gross value of fixed Assets, as on 1 -4-2010 include, carrying cost of fixed assets of Rs. 45.65 Crores relating to the amalgamated Company.

9. In view of the Scheme of Amalgamation referred to above, the current year figures are not comparable with those of the previous year. The figures for the year in the cashflow statement are after adjustments as per scheme of amalgamation.

10.The Company has adopted the Accounting Standard (AS) 15 (Revised) from the year 2008.

(a) Post employment benefits

(b) Provident fund and other funds

Being a defined contribution plan, the company makes fixed monthly contributions, in respect of covered employees, to the Government managed funds and the company has no legal obligation to pay any further sum beyond the contribution made towards the claims settled. The company has during the year recognised Rs. 160.34(PY.150.24) lacs as expense towards contribution towards these plans.

(c) Gratuity

The Company provides for gratuity, a defined benefit plan, covering eligible employees. The provision for the accrued liability as at the balance sheet date is made as per actuarial valuation, using the Projected unit credit method. Based on the valuation the incremental liability is contributed to the gratuity trust. Trustees administer the contributions made, by investing the funds in approved securities. The company has an obligation to make good the short fall, if any, between the contributions and the settlements.

(k) The estimates of future salary increases, considered in actuarial valuation, taken into account inflation, seniority, promotion and other relevant factors such as demand and supply in the employment market. The expected rate of return on assets are estimated as per the return on government of India bonds.

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