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Notes to Accounts of Precot Ltd.

Mar 31, 2023

The other investments included in investments are valued at cost approach to arrive at the fair value as there is a wide range of possible fair value measurements and the cost represents estimate of fair value within that range considering the purpose of the investments.

(i) For method of valuation of inventories, refer note no. 1.

(ii) Inventory held at net realizable value amounting to '' 4,428.34 lakhs. (PY '' 88.53 Lakhs).

The amount of write down of inventory recognised as an expense during the current year is '' 309.82 Lakhs (PY '' 13.49 Lakhs).

(iii) There has been no reversal of such write down in current and previous years.

(iv) Inventories have been given as security against certain bank borrowings of the Company - (Refer note nos. 18 & 23)

The credit period on sales of goods ranges from 21 to 60 days without security. No interest is charged on trade receivables upto the end of the credit period.

Trade receivables have been given as collateral towards borrowings (Refer security note no. 18 & 23).

The Company’s exposure to credit and currency risk related to trade receivable are given in note no.44.

Expected credit losses are estimated after taking into account historical credit loss experiences of the Company.

(ii) Terms / rights attached to equity shares :

a. The company has only one class of issued shares referred to as equity shares having a par value of '' 10 each. Each holder of equity shares is entitled to one vote per share.

b. The dividend (except in case of interim dividend) proposed by the Board of Directors, if any, is subject to the approval of shareholders in the ensuing Annual General Meeting.

c. In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the share holders.

a. General reserve:

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations.

Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn.

b. Capital Redemption Reserve:

i) An amount of '' 55 Lacs was transferred to capital redemption reserve consequent to the buy back of 5,50,000 equity shares in July ''2002 as per the statutory requirement and

ii) '' 300 Lacs has been transferred from Meridian Industries Limited in 2006-07 to the Company in the course of business combination and can be utilized in accordance with the provisions of the Companies Act, 2013.

C. Securities Premium:

Security premium has been created consequent to issue of shares at premium. The reserve shall be utilized in accordance with the provisions of the Companies Act,2013.

b. Security details:

Note 1: Second ranking pari-passu charge by way of hypothecation of the company''s entire stock of raw materials, semi finished & finished goods, consumable stores & spares ,book debts, bills receivable, outstanding monies & other receivables of the company, both present & future, ranking pari-passu with other participating banks and Second raking pari-passu charge on entire fixed assets of the company ranking pari-passu with other participating banks.

Note 2: Pari passu second charge on entire movable and immovable fixed assets and pari passu second charge on Current Assets and exclusive charge on Promoter''s Residential property

Note 3: Extension of charges on stocks and receivables and pari-passu second charge on the entire fixed assets of the company.

Note 4: Pari passu second charge on current and fixed Assets of the Company.

Note 5 : Hypothecation of plant & machinery of proposed solar project & first charge over factory land and building at Hindupur and personal guarantee of promoter directors.

Note 6 : Hypothecation of plant & machinery of proposed solar project & first charge over factory land and building at Kanjikode, Kerala and personal guarantee of promoter directors.

Note 7: Pari passu second charge with the existing credit facilities in terms of cash flows (including repayments) and securities

Note 8: Pari passu first charge on the entire Current Assets of the Company and Pari passu second charge on the entire Fixed Assets of the Company.

Note 9: Second Pari passu charge on the entire current Assets of the Company, both present and future and second Pari passu charge on the collateral securities offered for the existing facilities of the Company.

II Hire purchase loans from financial institution of '' 114.67 Lakhs (March 31, 2022 : '' 68.46 Lakhs) carries interest @ 7.63% to 10.65% p.a. The loans are repayable in 60 monthly instalments starting from the respective date of finance. The loan is secured by specific assets financed (Vehicle)

III Debentures represents 11.55% 700 Non-convertible debentures of '' 10,00.000/- each issued for cash at par to ICICI Prudential Corporate Credit Opportunities Fund -1. The interest is payable on quarterly basis.

(a) Terms of Repayment :

The debentures as on 31-03-2023 are redeemable at a premium of 0.50% per annum on the principal amount and are repayable as follows:

- At the end of 12 months from the deemed date of allotment - 7.50% of the principal amount

- At the end of 18 months from the deemed date of allotment - 7.50% of the principal amount

- At the end of 24 months from the deemed date of allotment - 7.50% of the principal amount

- At the end of 30 months from the deemed date of allotment - 7.50% of the principal amount- At the end of 36 months from the deemed date of allotment - 10% of the principal amount

- At the end of 42 months from the deemed date of allotment - 10% of the principal amount

- At the end of 45 months from the deemed date of allotment - 50% of the principal amount.

(b) Security details:

- First charge on Technical Textile Plant and all assets thereof, identified land parcels and on the identified Spinning Unit Plant (Land, Building and Machinery) located at Walayar, Kerala.

40. Employee Benefit Plans

(a) Defined contribution plans - Provident Fund

In accordance with The Employees Provident Funds Act, 1952 employees are entitled to receive benefits under the provident fund. Both the employee and the employer make monthly contributions to the plan at a predetermined rate (12% for fiscal year 2023 and 2022) of an employee’s basic salary. All employees have an option to make additional voluntary contributions. These contributions are made to the fund administered and managed by the Government of India (GOI). The Company has no further obligations under the fund managed by the GOI beyond its monthly contributions which are charged to the statement of profit and loss in the period they are incurred.

The expense recognised during the period towards this defined contribution plan is '' 307.07 Lakhs (March 31,2022 - '' 288.84 Lakhs).

(b) Defined contribution plans - Employee State Insurance

In accordance with Employees'' State Insurance Act, 1948, the eligible employees are entitled to receive benefits under the ESI Scheme. The employer contributes 3.25 percent and employee contributes 0.75 percent, total share 4 percent. This fund is managed by the ESI Corporation (ESIC) according to rules and regulations stipulated there in the ESI Act 1948, which oversees the provision of medical and cash benefits to the employees and their family.

The Company has no further obligations under the fund managed by the GOI beyond its monthly contributions which are charged to the statement of profit and loss in the period they are incurred.

The expense recognised during the period towards this defined contribution plan is '' 70.16 Lakhs (March 31,2022 - '' 70.20 Lakhs).

(c) Defined Benefit Plans - Gratuity

The company has defined benefit gratuity plan for its employees, which requires contributions to be made to a separately administered fund. It is governed by the Payment of Gratuity Act, 1972. The plan provides for a lump-sum payment to vested employees at retirement, death, while in employment or on termination of employment of an amount equivalent to 26 days salary payable for each completed year of service. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member’s length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees is responsible for the administration of the plan assets including investment of the funds in accordance with the norms prescribed by the Government of India.

Each year, the Board of Trustees and the Company review the level of funding in the India gratuity plan. Such a review includes the asset-liability matching strategy and assessment of the investment risk. The Company decides its contribution based on the results of this annual review.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31 March 2023 by Mr. Srinivasan Nagasubramanian, Armstrong International Employee Benefits Solution, Fellow of the Institute of Actuaries of India. Company’s liability towards gratuity (funded) is actuarially determined at each reporting date using the projected unit credit method.

(i) Risk Exposure:

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of the plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

Interest risk A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

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 plan’s liability.

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

The management assessed that the fair value of cash and cash equivalents, trade receivables, loans,other financial assets, trade payables and other financial liabilities approximate the carrying amount largely due to short-term maturity of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Investments in subsidiaries are carried at cost.

Investements in unquoted equity shares are carried at FVTOCI.

Investements through Portfolio Management scheme is carried at FVTPL.

42. FAIR VALUE MEASUREMENT (a) Fair value hierarchy

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

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)

The Company has not disclosed the fair values for short term / current financial instruments (such as short term trade receivables, short term trade payables, Current Loans and Short term borrowings etc.,) because their carrying amounts are a reasonable approximation of Fair value.

(c) Measurement of fair values:

The basis of measurement in respect of each class of financial assets and liabilities are disclosed in significant accounting policies.

43. CAPITAL MANAGEMENT:

The Company’s capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is done through a mix of either equity and/or preference and/or convertible and/or combination of short term /long term debt as may be appropriate.

The Company determines the amount of capital required on the basis of its product, capital expenditure, operations and strategic investment plans. The same is funded through a combination of capital sources be it either equity and/or preference and/or convertible and/or combination of short term/long term debt as may be appropriate.

The Company regularly considers other financing and refinancing opportunities to diversify its debt profile, reduce interest cost and elongate the maturity of its debt portfolio, and closely monitors its judicious allocation amongst competing capital expansion projects and strategic acquisitions, to capture market opportunities at minimum risk.

The Company monitors its capital using gearing ratio, which is net debt divided to total equity. Net debt includes, interest bearing loans and borrowings less cash and cash equivalents, Bank balances other than cash and cash equivalents and current investments.

44. FINANCIAL RISK MANAGEMENT - OBJECTIVES AND POLICIES

The Company''s financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company''s financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company''s business and operational / financial performance. These include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimise potential adverse effects and achieve greater predictability to earnings.

In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks. The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company''s policies as approved by the board of directors.

i) 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 risk comprises three types of risks: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables, loans and derivative financial instruments.

a) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees and US dollars with a mix of fixed and floating rates of interest.

The sensitivity analyses below have been determined based on the exposure to interest rates for floating rate liabilities, assuming the amount of the liability outstanding at the year-end was outstanding for the whole year.

If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Company''s profit/ (loss) for the year ended 31 March 2023 would decrease / increase by '' 378.68 Lakhs (for the year ended 31 March 2022 : decrease / increase by '' 360.00 Lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

b) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts with average maturity of less than 6 month to hedge against its foreign currency exposures relating to the recognised underlying liabilities and firm commitments. The Company''s policy is to hedge its exposures above predefined thresholds from recognised liabilities and firm commitments that fall due in 20-30 days. The Company does not enter into any derivative instruments for trading or speculative purposes.

The below table demonstrates the sensitivity to a 5% increase or decrease in the respective currency against INR, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management''s assessment of reasonably possible change in foreign exchange rate. A positive number below indicates an increase in profit or equity where INR strengthens 5% against the relevant currency. For a 5% weakening of INR against the relevant currency, there would be a comparable impact on profit or equity, and the balances below would be negative.

c) Commodity Price Risk

The Company''s revenue is exposed to the market risk of price fluctuations related to its raw material i.e., Cotton. Market forces generally determine prices for the cotton procured by the Company. These prices may be influenced by factors such as supply and demand, production costs (including the costs of raw material inputs) and global and regional economic conditions and growth. Adverse changes in any of these factors may increase the Cost of Production that the Company incurs for manufacture of Yarn.

The following table details the Company''s sensitivity to a 5% movement in the input price of Cotton. The sensitivity analysis includes only 5% change in commodity prices for quantity consumed during the year, with all other variables held constant. A positive number below indicates an increase in profit where the commodity prices reduces by 5%. For a 5% increase in commodity prices, there would be a comparable impact on profit, and the balances below would be negative.

2) Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, investment in mutual funds, derivative financial instruments, other balances with banks, loans and other receivables. To manage the credit risk, the company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of account receivables. Individual risk limits are set accordingly.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of default occuring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The company considers reasonable and supportive forward-looking information.

The average credit period on sales of products is 21 to 60 days. Credit risk arising from trade receivables is managed in accordance with the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a detailed study of credit worthiness and accordingly individual credit limits are defined/modified. The concentration of credit risk is limited due to the fact that the customer base is large.

3) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

The Group''s treasury department is responsible for maintenance of liquidity (including quasi liquidity), continuity of funding as well as timely settlement of debts. In addition, policies related to mitigation of risks are overseen by senior management. Management monitors the Group''s net liquidity position on the basis of expected cash flows vis a vis debt service fulfillment obligation.

The table below analysis derivative and non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

46. Contingent Liabilities:

As at 31st

As at 31st

Contingent liabilities in respect of :

March 2023

March 2022

Bills discounted

1144.19

2,868.25

Guarantees

261.23

242.81

Letters of credit outstanding Contingent liabilities under litigation :

1423.13

377.45

Disputed Statutory Liabilities not provided for

393.06

412.34

Disputed Other Liabilities not provided for

65.41

65.41

59. Additional disclosure relating to Schedule III Amendment of Companies Act , 2013

(i) Details of Benami property:

No proceedings have been initiated or are pending against the company for holding any Benami property under the Benami Transactions

(ii) Utilisation of borrowed funds and share premium:

A) The company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:

a) Directly or indirectly lend or invest in other persons or entities identified in any manner, whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

B) The company has not received any funds from any person(s) or entity(ies), including foreign entities (Funding party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

(iii) Compliance with number of layers of companies:

The company has complies with the number of layers prescribed under the Companies Act, 2013.

(iv) Undisclosed income:

There is no income surrendered or disclosed as income during the current or previus year in the tax assessments under the Income tax Act,1961, that has not been recorded in the books of account.

(v) Details of crypto currency or virtual currency:

The company has not traded or invested in crypto currency or virtual currency during the current or previous year

(vi) Valuation of Property, Plant and Equipment, intangible asset and investment property:

The company has not revalued its property, plant and equipment (including Right of use Assets) or intangible assets or both during the current of previous year.

(vii) Struck off Companies:

The company does not have any transaction with companies struck off.

(viii) Wilful Defaulter:

The company had not been declared a wilful defaulter by any bank or financial institution or other lender (as

defined under the Companies Act, 2013) or consortium thereof. In accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.

(ix) The Company does not have any charges or satisfaction which is yet to be register the Registrar of Companies (ROC) beyond the statutory period.

60. The amounts and disclosures included in the financial statements of the previous year have been reclassified wherever necessary to conform to the current year classification.

61. All figures are in lakhs unless otherwise stated and rounded off to the nearest two decimals.


Mar 31, 2021

b. Security details:

Note 1 : Exclusive first charge on Machineries acquired out of the loan.

Note 2: Pari passu first charge on entire movable and immovable assets of the company and pari passu second

charge on current assets of the company.

Note 3: First charge on the entire moveable and immovable fixed assets of the company, present and future. Second

Charge on the current assets of the company, both present and future. Promoters shall offer 3.60 million shares in Precot Limited, currently representing 30% of total shareholding in the company to Indusind Bank Limited (IBL) under Non-Disposal Undertaking (NDU) -Power of Attorney (POA) and 2.52 million shares currently representing 21% of total shareholding in the company to IBL under NDU.

Note 4: Paripassu first charge on Current Assets of the Company and Paripassu second charge on Fixed Assets of the

Company.

Note 5: Primary and Collateral - Extension of charges on stocks and receivables

Note 6: First charge on entire movable and immovable fixed assets and pari passu second charge on Current Assets

and exclusive charge on Promoter''s Residential property

II Hire purchase loans from financial institution of '' 9.44 Lakhs (March 31,2020 : '' 15.40 Lakhs) carries interest @ 8.73% to 10.65 % p.a. The loans are repayable in 36 monthly instalments starting from the respective date of finance. The loan is secured by specific assets financed (vehicle).

1 Working capital loan from banks are secured by pari passu first charge on all the current assets of the Company and pari passu second charge on entire immovable assets of the Company and are repayable on demand.

2 In respect of the above, working capital rupee loans carry interest ranging from 8.35 % p.a. to 13.35% p.a. and working capital foreign currency loans carry interest ranging from 2.21 % p.a. to 3.50 % p.a. plus applicable LIBOR.

3 Unsecured loan from banks carries interest @ 9.40% p.a. and is repayable on demand.

4 Loan from related party have been obtained pursuant to stipulations from IndusInd Bank vide letter dated 9th December 2019. It carries an interest rate of 12.50% p.a.

5 Unsecured loan from others represents inter corporate loan and it carries interest @ 14% p.a. and is repayable on demand.

(a) Defined contribution plans - Provident Fund

In accordance with The Employees Provident Funds Act, 1952 employees are entitled to receive benefits under the provident fund. Both the employee and the employer make monthly contributions to the plan at a predetermined rate (12% for fiscal year 2021 and 2020) of an employee’s basic salary. All employees have an option to make additional voluntary contributions. These contributions are made to the fund administered and managed by the Government of India (GOI). The Company has no further obligations under the fund managed by the GOI beyond its monthly contributions which are charged to the statement of profit and loss in the period they are incurred.

The expense recognised during the period towards this defined contribution plan is '' 270.31 Lakhs (March 31,2020 - '' 310.29 Lakhs).

(b) Defined contribution plans - Employee State Insurance

"In accordance with Employees'' State Insurance Act, 1948, the eligible employees are entitled to receive benefits under the ESI Scheme. The employer contributes 3.25 percent and employee contributes 0.75 percent, total share 4 percent. This fund is managed by the ESI Corporation (ESIC) according to rules and regulations stipulated there in the ESI Act 1948, which oversees the provision of medical and cash benefits to the employees and their family. The Company has no further obligations under the fund managed by the GOI beyond its monthly contributions which are charged to the statement of profit and loss in the period they are incurred.The expense recognised during the period towards this defined contribution plan is '' 64.16 Lakhs (March 31, 2020 - '' 90.47 Lakhs)."

The company has defined benefit gratuity plan for its employees, which requires contributions to be made to a separately administered fund. It is governed by the Payment of Gratuity Act, 1972. The plan provides for a lump-sum payment to vested employees at retirement, death, while in employment or on termination of employment of an amount equivalent to 26 days salary payable for each completed year of service. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member’s length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees is responsible for the administration of the plan assets including investment of the funds in accordance with the norms prescribed by the Government of India.

Each year, the Board of Trustees and the Company review the level of funding in the India gratuity plan. Such a review includes the asset-liability matching strategy and assessment of the investment risk. The Company decides its contribution based on the results of this annual review. The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31 March 2021 by Mr. Srinivasan Nagasubramanian, Armstrong International Employee Benefits Solution, Fellow of the Institute of Actuaries of India . Company’s liability towards

gratuity (funded) is actuarially determined at each reporting date using the projected unit credit method.

(i) Risk Exposure:

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

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 plan’s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

The fair value of Mutual funds is determined based on quoted market prices in active markets. The employee benefit plans do not hold any securities issued by the Company.

* In the absence of detailed information regarding plan assets which is funded with Insurance Companies, the composition of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has not been disclosed.

The management assessed that the fair value of cash and cash equivalents, trade receivables, loans,other financial assets, trade payables and other financial liabilities approximate the carrying amount largely due to short-term maturity of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Investments in subsidiaries are carried at cost.

37. FAIR VALUE MEASUREMENT (a) Fair value hierarchy

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

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).

The Company has not disclosed the fair values for short term / current financial instruments (such as short term trade receivables, short term trade payables, Current Loans and Short term borrowings etc.,) because their carrying amounts are a reasonable approximation of Fair value.

(c) Measurement of fair values:

The basis of measurement in respect of each class of financial assets and liabilities are disclosed in significant accounting policies.

38. CAPITAL MANAGEMENT:

The Company’s capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is done through a mix of either equity and/or preference and/or convertible and/or combination of short term /long term debt as may be appropriate.

The Company determines the amount of capital required on the basis of its product, capital expenditure, operations and strategic investment plans. The same is funded through a combination of capital sources be it either equity and/or preference and/or convertible and/or combination of short term/long term debt as may be appropriate.

The Company regularly considers other financing and refinancing opportunities to diversify its debt profile, reduce interest cost and elongate the maturity of its debt portfolio, and closely monitors its judicious allocation amongst competing capital expansion projects and strategic acquisitions, to capture market opportunities at minimum risk.

The Company monitors its capital using gearing ratio, which is net debt divided to total equity. Net debt includes, interest bearing loans and borrowings less cash and cash equivalents, Bank balances other than cash and cash equivalents and current investments.

39. FINANCIAL RISK MANAGEMENT - OBJECTIVES AND POLICIES

The Company''s financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company''s financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company''s business and operational / financial performance. These include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimise potential adverse effects and achieve greater predictablity to earnings.

In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks. The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company''s policies as approved by the board of directors.

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 risk comprises three types of risks: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables, loans and derivative financial instruments.

a) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees and US dollars with a mix of fixed and floating rates of interest.

The sensitivity analyses below have been determined based on the exposure to interest rates for floating rate liabilities, assuming the amount of the liability outstanding at the year-end was outstanding for the whole year.If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Company''s profit for the year ended 31 March 2021 would decrease / increase by '' 330.06 Lakhs (for the year ended 31 March 2020: decrease / increase by '' 313.74 Lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

b) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts with average maturity of less than 6 month to hedge against its foreign currency exposures relating to the recognised underlying liabilities and firm commitments. The Company''s policy is to hedge its exposures above predefined thresholds from recognised liabilities and firm commitments that fall due in 20-30 days. The Company does not enter into any derivative instruments for trading or speculative purposes.

c) Commodity Price Risk

The Company''s revenue is exposed to the market risk of price fluctuations related to its raw material i.e., Cotton. Market forces generally determine prices for the cotton procured by the Company. These prices may be influenced by factors such as supply and demand, production costs (including the costs of raw material inputs) and global and regional economic conditions and growth. Adverse changes in any of these factors may increase the Cost of Production that the Company incurs for manufacture of Yarn.

The following table details the Company''s sensitivity to a 5% movement in the input price of Cotton. The sensitivity analysis includes only 5% change in commodity prices for quantity consumed during the year, with all other variables held constant. A positive number below indicates an increase in profit where the commodity prices reduces by 5%. For a 5% increase in commodity prices, there would be a comparable impact on profit, and the balances below would be negative.

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, investment in mutual funds, derivative financial instruments, other balances with banks, loans and other receivables. To manage the credit risk, the company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of account receivables. Individual risk limits are set accordingly.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of default occuring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The company considers reasonable and supportive forward-looking information.

The average credit period on sales of products is 21 to 70 days. However, it has been extended to 90 days due to the Global pandemic. Credit risk arising from trade receivables is managed in accordance with the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a detailed study of credit worthiness and accordingly individual credit limits are defined/modified. The concentration of credit risk is limited due to the fact that the customer base is large.

3) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

The Group''s treasury department is responsible for maintenance of liquidity (including quasi liquidity), continuity of funding as well as timely settlement of debts. In addition, policies related to mitigation of risks are overseen by senior management. Management monitors the Group''s net liquidity position on the basis of expected cash flows vis a vis debt service fulfillment obligation.The table below analysis derivative and non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

45. Corporate Social Responsibility:

The average net profit of the immediately proceeding three financial years is negative, accordingly, the company is not mandated to spend any amount towards CSR activitities for the financial year 2020-21.

46. Foreign Exchange gain / (loss) (net) includes foreign exchange gain / (loss) arising out of restatement of foreign currency assets / liabilities / derivatives amounting to ''. 288.77 lakhs (PY - ''. (20.67 lakhs) )

49. Operating Segments

The company is in the business of manufacturing textile products which are regularly reviewed by the Chief Financial Officer for assessment of company''s performance and resource allocation.

The information relating to revenue from Cotton yarn and Technical Textile product sale and location of non current assets of its single reportable segment has been disclosed below:

52. The Code on Social Security 2020 has been notified in the Official Gazette on 29th September 2020. the effective date from which the changes are applicable is yet to be notified and the rules are yet to be framed. Impact, if any, of the change will be assessed and accounted in the period in which the said code becomes effective and the rules framed thereunder are published.

53. The companies operations were adversely impacted with outbreak of Covid-19 pandemic during the first half of the financial year 2020-21. The situation is continuously evolving, the impact assessed may be different from the estimates made as at the date of approval of these financial statements. The management will continue to monitor the material changes arising due to the impact of this pandemic on financial and operational performance of the company and take necessary measures to address the situation.

54. The amounts and disclosures included in the financial statements of the previous year have been reclassified whenever necessary to conform to the current year''s classification.

55. All figures are in lakhs unless otherwise stated and rounded off to the nearest two decimals.


Mar 31, 2018

B) Security details:

Note 1: Term loan from SBI, ICICI, Andhra Bank, SIB and Export Import Bank of India are secured by way of pari passu first charge on entire movable and immovable assets of the company and pari passu second charge on current assets of the company.

Note 1a: Exclusive first charge on Machineries acquired out of the loan.

Note 2: Corporate Loan from Axis Bank is secured by way of subservient charge over the movable fixed assets of the company and exclusive charge on land and building of the corporate office.

Note 3: Term loan from ICICI Bank is secured by way of exclusive first charge on the assets of the Technical Textile unit at Hassan, Karnataka and Second charge on the entire movable fixed asset of the unit at Hassan, ranking pari passu charge with ICICI bank''s derivative limits for the unit at Hassan.

Note 4: First charge on the entire movable and immovable fixed assets of the company, present and future. Second Charge on the current assets of the company, both present and future. Promoters shall offer 3.60 million shares in Precot Meridian Limited, currently representing 30% of total shareholding in the company to Indusind Bank Limited (IBL) under Non-Disposal Undertaking (NDU) -Power of Attorney (POA) and 2.52 million shares currently representing 21% of total shareholding in the company to IBL under NDU.

1. Working capital loans from SBI, Andhra Bank, Corporation Bank, IDBI,ICICI, and SIB are secured by way of pari passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company and are repayable on demand.

2. In respect of the above, working capital rupee loans carry interest ranging from 8.55 % p.a. to 13.35% p.a. and working capital foreign currency loans carry interest ranging from 1.60% p.a. to 5% p.a. plus applicable LIBOR.

3. Unsecured short term loans from ICICI & IDBI Bank carrry interest at 8.40% and 8.35% p.a. respectively.

1. Working capital loans from SBI, Andhra Bank, Corporation Bank, IDBI,ICICI, and SIB are secured by way of pari passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company and are repayable on demand.

2. In respect of the above, working capital rupee loans carry interest ranging from 8.55 % p.a. to 13.35% p.a. and working capital foreign currency loans carry interest ranging from 1.60% p.a. to 5% p.a. plus applicable LIBOR.

3. Unsecured short term loans from ICICI & IDBI Bank carrry interest at 8.40% and 8.35% p.a. respectively.

1. FIRST-TIME ADOPTION OF IND AS

These are the Company’s first financial statements prepared in accordance with Ind AS. The accounting policies set out in note 1 have been applied constantly in preparing the financial statements for the year ended March 31, 2018 and the comparative period information.

The Company has prepared the opening Standalone Balance Sheet as per Ind AS as of April 01, 2016 (the transition date) by,

a. recognising all assets and liabilities whose recognition is required by Ind AS,

b. not recognising items of assets or liabilities which are not permitted by Ind AS,

c. by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and

d. applying Ind AS in measurement of recognised assets and liabilities.

Exemptions availed and mandatory exception

Ind AS 101 First-time Adoption of Indian Accounting Standards allows first-time adopters certain exemptions from retrospective application of certain requirements under Ind AS. Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A) Ind AS optional exemptions

i) Deemed cost for Property, Plant and Equipment, Capital Work in Progress and Intangible Assets

Ind AS 101 permits and entity to elect to measure an item of property, plant and equipment at the date of transition to Ind AS at:

a. Retrospective application of Cost Model;

b. Previous GAAP carrying amount as deemed cost; (and)

c. Fair value as deemed cost.

Accordingly, the company has elected to measure items of PPE and intangible assets at its previous GAAP carrying value at the date of the transition except for certain class of assets which are measured at fair value as deemed cost.

ii) Designation of previously recognised financial instruments

The Company has designated financial liabilities and financial assets at fair value through profit or loss and investments in equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

iii) Long Term Foreign Currency Monetary Items

The Company has elected the option under Ind AS 101 ‘First-time Adoption of Indian Accounting Standards’ and has continued the policy adopted for accounting of exchange differences arising from translation of long term foreign currency monetary items recognised in the financial statements upto March 31, 2016. Accordingly, exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which they were initially recorded, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the assets.

iv) Investments in subsidiaries, associates and joint ventures

Carrying value for all of its investment in subsidiaries as at the date of transition to IND AS, measured as per previous GAAP are treated as their deemed costs as at the date of transition

v) Past Business Combination:

The Company has elected not to apply Ind AS 103- Business Combinations, retrospectively to past business combinations that occurred before 1st April, 2016. Pursuant to which Goodwill / Capital Reserve arising from business combination has been stated at the carrying amount prior to the date of transition under IGAAP.

vi) Investment Property

Carrying value for its investment property as at the date of transition to IND AS, measured as per previous GAAP are treated as their deemed costs as at the date of transition.

B Ind AS mandatory exemptions

i) Accounting estimates

An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.

ii) De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

iii) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets bases on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

(e) Notes to reconciliation

(i) To comply with the Companies (Accounting Standard) Rules, 2006, certain account balances have been regrouped as per the format prescribed under Division II of Schedule III to the Companies Act, 2013.

(ii) Fair Value as deemed Cost - Freehold Land

Ind AS 101 permits an entity to elect and measure an item of PPE at the transition date at its fair value and use the fair value as its deemed cost. Accordingly, the company has elected to use the fair value of certain items of PPE on the date of transition and designate the same as deemed cost.

(iii) Government grant relating to acquisition of Property, plant and equipment:

Under previous GAAP, Grant received from the Government relating to the purchase of fixed asset was deducted from the carrying amount of corresponding fixed asset. As per IND AS 20 - grants related to depreciable assets are usually recognised in profit or loss over the periods and in the proportions in which depreciation expense on those assets is recognised. The adjustments related to the government grants should be recognised retrospectively as deferred government grant account (liability) with corresponding adjustments in the Property, Plant & Equipment on the date of transition.

(iv) Government grant in the nature of Promoter''s Contribution

This has been recognised as deferred government grant with corresponding adjustments with PPE as on the transition date and would be released to the statement of profit and loss over the period in which depreciation is recognised.

(v) Other comprehensive income:

Under IND AS, all items of income and expense recognized in the period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss and “other comprehensive income” includes remeasurements of defined benefit plans and fair value gain or losses on FVTOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.

(vi) Lease Rentals on Lands:

Under Previous GAAP, Lease Agreements to use a Land was outside the purview of AS 19, Leases. Hence, the upfront fees paid to use the land was capitalised under PPE. Under IND AS, these have been treated as operating lease and charged to Statement of Profit and Loss on a straight line basis over the term of the Lease.

(vii) Useful life of Buildings:

Under the previous GAAP, improvements to lease hold buildings were depreciated over the useful lives as determined by the management. Under IndAS these are depreciated over the lease period and the impact upto the date of transition has been adjusted with reserves, being the earliest of the period.

(viii) Financial Assets and Liabilities:

Under the Previous GAAP, Financial Assets and Liabilities were carried at book value. Under IND AS 109, all financial assets and financial liabilities are required to be initially carried at Fair Value. The Fair Value changes are taken to Statement of Profit and Loss Account. In respect of Financial Assets and Liabilities, carried at amortised cost.

(ix) Borrowing Cost:

Under the Previous GAAP, the Transaction Costs in respect of Borrowings were charged off to the Statement of Profit and Loss as and when incurred. Under IND AS, these transaction costs incurred are deducted from the carrying amount of the Borrowings on Initial Recognition. These costs are recognised in the statement of Profit and Loss over the tenor of the borrowings as part of Interest Expense by applying the Effective Interest Rate method.

(x) Defined benefit liabilities:

Under IND AS, Remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined liability, are recognized in other comprehensive income instead of profit or loss in previous GAAP.

(xi) Fair valuation of investments in equity instrument

Under previous GAAP, long term investments were measured at cost less diminution in value which is other than temporary. Under Ind AS, non-current investments (other than investments in equity instruments of subsidiaries) are measured at fair value through other comprehensive income. Any subsequent measurement including on account of disposal are also through FVOCI.

(xii) Unused tax Losses and Tax credits:

As on the date of Ind AS Transition, the company assessed the following criteria in assessing the probability that taxable profit will be available against which the unused tax losses or unused tax credits can be utilised and has accordingly adjusted the same with the retained earnings as at the transition date

(xiii) Reclassification under IndAS:

Assets and Liabilities have been regrouped / reclassified wherever required to confirm to the requirement of IndAS.

2. Merger of Subsidiary Companies with the Company

The Company and Multiform Processing (Coimbatore) Limited, Supreme Textiles Processing Limited and Precot Meridian Energy Limited (Subsidiary Companies), had initially announced a scheme of merger between the companies on 4th November 2016 (“Scheme”). As per the terms of the Scheme, the subsidiary companies were to merge into Precot Meridian Limited and upon the merger becoming effective:

As the Company held 100% of the issued, subscribed and paid-up capital of the Subsidiary Companies, the entire share capital of the Transferor Companies held by the Transferee Company and / or its nominees shall stand cancelled without any further application, act or deed and without allotment of any new shares by the Transferee Company.

The authorised share capital of the Company was increased to '' 2,130 Lakhs divided into 213 Lakhs Equity Shares of '' 10 each.

All substantive approvals for effecting the merger of the Subsidiary Companies with the company were received by September 19, 2017 with the appointed date of the amalgamation as April 01, 2016 and therefore the same has been accounted for in the current financial year ending March 31, 2018.

Since the amalgamating entities were 100% subsidiaries of the Company, the transaction has been accounted for in accordance with the Appendix C to Ind AS 103 “Common Control Business Combination”, which requires retroactive accounting of the merger from the date common control was established. Accordingly, financial information as on April 1, 2016, being the earliest period presented in the annual standalone financial statements of the Company, and all periods thereafter, have been restated to give effect of the merger.

The accounting effects arising out of merger are explained below:

The carrying value of the assets, liabilities and reserves of the subsidiary companies as appearing in the books of accounts of transferee company have been recognised in the standalone financial statements of the company as adjusted in other equity, now current investments and financial assets loans.

3. Employee Benefit Plans

(a) Defined contribution plans - Provident Fund

In accordance with The Employees Provident Funds Act, 1952 employees are entitled to receive benefits under the provident fund. Both the employee and the employer make monthly contributions to the plan at a predetermined rate (12% for fiscal year 2018 and 2017) of an employee’s basic salary. All employees have an option to make additional voluntary contributions. These contributions are made to the fund administered and managed by the Government of India (GOI). The Company has no further obligations under the fund managed by the GOI beyond its monthly contributions which are charged to the statement of profit and loss in the period they are incurred. The expense recognised during the period towards this defined contribution plan is '' 367.48 Lakhs (March 31, 2017 -'' 382.27 Lakhs).

(b) Defined contribution plans - Employee State Insurance In accordance with Employees’ State Insurance Act, 1948, the eligible employees are entitled to receive benefits under the ESI Scheme. The employer contributes 4.75 percent and employee contributes 1.75 percent, total share 6.5 percent. This fund is managed by the ESI Corporation (ESIC) according to rules and regulations stipulated there in the ESI Act 1948, which oversees the provision of medical and cash benefits to the employees and their family. The Company has no further obligations under the fund managed by the GOI beyond its monthly contributions which are charged to the statement of profit and loss in the period they are incurred.The expense recognised during the period towards this defined contribution plan is Rs, 148.09 Lakhs (March 31, 2017 - Rs, 127.52 Lakhs).

(c) Defined Benefit Plans - Gratuity

The company has defined benefit gratuity plan for its employees, which requires contributions to be made to a separately administered fund. It is governed by the Payment of Gratuity Act, 1972. The plan provides for a lump-sum payment to vested employees at retirement, death, while in employment or on termination of employment of an amount equivalent to 26 days salary payable for each completed year of service. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member’s length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees is responsible for the administration of the plan assets including investment of the funds in accordance with the norms prescribed by the Government of India.Each year, the Board of Trustees and the Company review the level of funding in the India gratuity plan. Such a review includes the asset-liability matching strategy and assessment of the investment risk. The Company decides its contribution based on the results of this annual review.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31stMarch 2018 by Mr. Srinivasan Nagasubramanian, Armstrong International Employee Benefits Solution, Fellow of the Institute of Actuaries of India. Company’s liability towards gratuity (funded) is actuarially determined at each reporting date using the projected unit credit method.

(i) Risk Exposure:

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government bond yields; if the return on plan asset is below this rate, it will create a plan deficit.

Interest risk A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

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 plan’s liability.

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

The fair value Mutual funds is determined based on quoted market prices in active markets. The employee benefit plans do not hold any securities issued by the Company.

* In the absence of detailed information regarding plan assets which is funded with Insurance Companies, the composition of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has not been disclosed.

(iv) Sensitivity analysis

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

4. FAIR VALUE MEASUREMENT (a) Fair value hierarchy

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels: 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)

There have been no transfers between Level 1 and Level 2 during the period.

(c) Financial Instrument measured at Amortised Cost:

The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.

5. CAPITAL MANAGEMENT:

The Company’s capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is done through a mix of either equity and/or preference and/or convertible and/or combination of short term /long term debt as may be appropriate.

The Company determines the amount of capital required on the basis of its product, capital expenditure, operations and strategic investment plans. The same is funded through a combination of capital sources be it either equity and/or preference and/or convertible and/or combination of short term/long term debt as may be appropriate.

The Company regularly considers other financing and refinancing opportunities to diversify its debt profile, reduce interest cost and elongate the maturity of its debt portfolio, and closely monitors its judicious allocation amongst competing capital expansion projects and strategic acquisitions, to capture market opportunities at minimum risk.

6. FINANCIAL RISK MANAGEMENT - OBJECTIVES AND POLICIES

The Company''s financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company''s financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company''s business and operational / financial performance. These include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimise potential adverse effects and achieve greater predictability to earnings.

In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company''s policies as approved by the board of directors.

1) 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 risk comprises three types of risks: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables, loans and derivative financial instruments.

a) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees and US dollars with a mix of fixed and floating rates of interest.

The sensitivity analyses below have been determined based on the exposure to interest rates for floating rate liabilities, assuming the amount of the liability outstanding at the year-end was outstanding for the whole year.

If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Company''s profit for the year ended 31st March 2018 would decrease / increase by '' 40.79 Lakhs (for the year ended 31st March 2017: decrease / increase by '' 40.73 Lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

b) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts with average maturity of less than 6 month to hedge against its foreign currency exposures relating to the recognised underlying liabilities and firm commitments. The Company''s policy is to hedge its exposures above predefined thresholds from recognised liabilities and firm commitments that fall due in 20-30 days. The Company does not enter into any derivative instruments for trading or speculative purposes. At the time of borrowing decisions, appropriate sensitivity analysis is carried out for domestic borrowings vis-a-vis overseas borrowings.

The below table demonstrates the sensitivity to a 5% increase or decrease in the respective currency against INR, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management''s assessment of reasonably possible change in foreign exchange rate. A positive number below indicates an increase in profit or equity where INR strengthens 5% against the relevant currency. For a 5% weakening of INR against the relevant currency, there would be a comparable impact on profit or equity, and the balances below would be negative.

c) Commodity Price Risk

The Company''s revenue is exposed to the market risk of price fluctuations related to its raw material i.e., Cotton. Market forces generally determine prices for the cotton procured by the Company. These prices may be influenced by factors such as supply and demand, production costs (including the costs of raw material inputs) and global and regional economic conditions and growth. Adverse changes in any of these factors may increase the Cost of Production that the Company incurs for manufacture of Yarn.

The following table details the Company''s sensitivity to a 5% movement in the input price of Cotton. The sensitivity analysis includes only 5% change in commodity prices for quantity consumed during the year, with all other variables held constant. A positive number below indicates an increase in profit where the commodity prices reduces by 5%. For a 5% increase in commodity prices, there would be a comparable impact on profit, and the balances below would be negative.

2) Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, investment in mutual funds, derivative financial instruments, other balances with banks, loans and other receivables. To manage the credit risk, the company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of account receivables. Individual risk limits are set accordingly.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an on-going basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The company considers reasonable and supportive forward-looking information.

The average credit period on sales of products is less than 30 days. Credit risk arising from trade receivables is managed in accordance with the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a detailed study of credit worthiness and accordingly individual credit limits are defined/modified. The concentration of credit risk is limited due to the fact that the customer base is large. There is no customer representing more than 5% of the total balance of trade receivables.

3) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

The Group''s treasury department is responsible for maintenance of liquidity (including quasi liquidity), continuity of funding as well as timely settlement of debts. In addition, policies related to mitigation of risks are overseen by senior management. Management monitors the Group''s net liquidity position on the basis of expected cash flows vis a vis debt service fulfilment obligation.

The table below analysis derivative and non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

7. The amounts and disclosures included in the financial statements of the previous year have been reclassified wherever necessary to conform to the current year’s classification.

8. All figures are in lakhs unless otherwise stated and rounded off to the nearest two decimals.


Mar 31, 2016

1. Term loan from SBI, ICICI, Andhra Bank and Export Import Bank of India are secured by way of pari passu first charge on entire movable and immovable assets of the company and pari passu second charge on current assets of the company.

2. Term loan from ICICI Bank is secured by way of exclusive first charge on the assets of the Technical Textile unit at Hassan, Karnataka and Second charge on the entire moveable fixed asset of the unit at Hassan, ranking paripassu charge with ICICI bank''s derivative limits for the unit at Hassan.

3. Corporate Loan from Axis Bank is secured by way of subservient charge over the movable fixed assets of the company and exclusive charge on land and building of the corporate office and pledge of shares of Pricol Limited shares held by the company.

4. In respect of the above, Rupee Term Loans carry interest ranging from 8.85% p.a. to 13.35% p.a.

5. The outstanding balance of :

Rupee term loan of Rs. 562.50 Lacs from Andhra Bank is repayable in 3 equal quarterly installments.

Rupee Tuf loan - IX of Rs. 123.64 Lacs from EXIM Bank is repayable in 3 equal quarterly installments.

Rupee Tuf loan - X of Rs. 500.76 Lacs from EXIM Bank is repayable in 5 equal quarterly installments.

Rupee Tuf loan - XI of Rs. 901.63 Lacs from EXIM Bank is repayable in 12 quarterly installments of varying amounts.

Rupee Tuf loan - XII of Rs. 1567.63 Lacs from SBI is repayable in 7 quarterly installments of varying amounts.

Rupee Tuf loan XIII of Rs. 9504.00 Lacs from ICICI Bank is repayable in 11 half yearly installments of varying amounts.

Rupee Tuf Loan - XIV of Rs. 1275.00 Lacs from EXIM Bank is repayable in 17 equal quarterly installments.

Rupee Tuf Loan - XV of Rs. 1680.00 Lacs from Andhra Bank is repayable in 20 equal quarterly installments commencing from October ''16.

Rupee Corporate Loan of Rs. 2500.00 Lacs from ICICI Bank is repayable in 20 equal quarterly installments commencing from September ''16.

Rupee Corporate Loan of Rs. 2000.00 Lacs from Axis Bank is repayable in 20 equal quarterly installments commencing from December ''17.

6. Working capital loans from SBI, Andhra Bank, Corporation Bank, IDBI,ICICI, and The South Indian Bank are secured by way of pari-passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company.

7. In respect of the above, working capital rupee loans carry interest ranging from 10.45% p.a. to 12.50% p.a. and working capital foreign currency loans carry interest ranging from 1.50% p.a. to 2.75% p.a. plus applicable LIBOR.

8. Unsecured short term loans from ICICI & IDBI Bank carrry interest at 9.60% and 9.75% p.a. respectively.

9. Trade Payables

There are no interest amounts paid / payable to Micro and Small Enterprises. The information in relation to dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information available with the company, which has been relied upon by the auditors.

10. Power and utilities is net of wind power of Rs. 348.72 lacs (previous year Rs. 478.66 lacs) representing power supplied to the grid against which equivalent consumption was made in house.

11. The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 “The Effects of Changes in Foreign Exchange Rates” for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Statement of Profit & Loss and general reserve in order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

12. Subsidy receivable from government (net of provisions) represents Rs. 145.04 lacs (previous year Rs. 2051.08 lacs) of interest subsidy on TUF scheme loans and Rs. 75 lacs (previous year Rs. 75 lacs) of grant receivable for reimbursement of expenditure from Karnataka Government.

13. Net Deferred tax asset has not been recognized considering prudence.

14. Exceptional item represents :

a) Provision for TUF Interest receivable - Rs. 1945.18 lacs (previous year Nil)

b) Profit on sale of long term investment - Nil (Previous year Rs. 1014.06 lacs)

c) Impact on account of discontinuation of AS 30 & 32 - Nil (Previous year - Rs. 458.57 lacs)

14. Foreign Exchange loss (net) includes foreign exchange loss arising out of restatement of foreign currency assets / liabilities / derivatives amounting to Rs. 992.53 lacs (previous year - Rs. 150.68 lacs)

16. Related Party Disclosure :

List of related parties with whom transactions have taken place

Holding Co : Nil, Subsidiaries : Suprem Textiles Processing Limited, Multiflora Processing (CBE) Limited, Precot Meridian Energy Limited, Suprem Associates (Partnership firm)

Key Management Personnel (KMP) : Mr. D Sarath Chandran, Mr. Ashwin Chandran and Mr. Prashanth Chandran

Others: Pricol Limited, Pricol Packaging Limited, Premier Spinning & Weaving Mills Pvt Ltd and Mr. Vijay Mohan .

17. Disclosure as required under section 186(4) of the Companies Act, 2013 :

Loans given and Guarantees given by the company : Nil (Previous year : Nil)

Investments made are given under the respective head.

18. The amounts and disclosures included in the financial statements of the previous year have been reclassified where ever necessary to conform to the current year''s classification.


Mar 31, 2015

1) Terms/rights attached to equity shares :

The company has only one class of issued shares referred to as equity shares having a par value of Rs 10 each. Each holder of equity shares is entitled to one vote per share. The dividend (except in case of interim dividend) proposed by the Board of Directors, if any, is subject to the approval of shareholders in the Annual General Meeting.

ii) The reconciliation of the number of shares outstanding is set out below.

2. a) Term loan from SBI, ICICI Bank, Andhra Bank, Export Import Bank of India and IDBI Bank are secured by way of pari passu first charge on entire movable and immovable assets of the company and pari passu second charge on current assets of the company.

b) Term loan from IDBI Bank, Dubai Branch is secured by way of exclusive first charge on the windmills and related equipments, systems and assets located at Eragampatti and Manurpalayam Village in Tirupur district.

3. In respect of the above, Rupee Term Loans carry interest ranging from 8.5% p.a. to 13.61% p.a. and Foreign Currency Term Loans carry interest @ 3% p.a. plus applicable LIBOR.

4. Term loan from ICICI Bank for Rs.12,000 Lacs is secured by way of exclusive first charge on the assets of the Technical Textile unit at Hassan, Karnataka and second charge on the entire moveable fixed assets of the unit at Hassan, ranking paripassu charge with ICICI bank's derivative limits for the unit at Hassan.

5. The outstanding balance of :

Rupee term loan of Rs 1,312.50 Lacs from Andhra Bank is repayable in 7 equal quarterly installments.

Rupee Tuf loan - IV of Rs 28.50 Lacs from IDBI Bank is repayable in 3 equal quarterly installments.

Rupee Tuf loan - VIII of Rs 60.00 Lacs from IDBI Bank is repayable in 1 quarterly installment.

Rupee Tuf loan - IX of Rs 288.48 Lacs from EXIM Bank is repayable in 7 equal quarterly installments.

Rupee Tuf loan - X of Rs 901.36 Lacs from EXIM Bank is repayable in 9 equal quarterly installments.

Rupee Tuf loan - XI of Rs 1,480.00 Lacs from EXIM Bank is repayable in 20 quarterly installments of varying amounts.

Rupee Tuf loan - XII of Rs 2,250.13 Lacs from SBI is repayable in 10 quarterly installments of varying amounts.

Rupee Tuf loan XIII of Rs 10,752.00 Lacs from ICICI Bank is repayable in 13 half yearly installments of varying amounts commencing from July 2014.

Rupee TufLoan - XIV of Rs 1,500.00 Lacs from EXIM Bank is repayable in 20 equal quarterly installments commencing from September 2015.

Rupee TufLoan - XV of Rs 943.81 Lacs from Andhra Bank is repayable in 20 equal quarterly installments commencing from September 2016.

Rupee Corporate Loan of Rs 2,500.00 Lacs from ICICI Bank is repayable in 20 equal quarterly installments commencing from September 2016.

Foreign Currency loan from IDBI Bank of USD 9.45 Lacs is repayable in 3 equal half yearly installments.

6. Working capital loans from SBI, Andhra Bank, Corporation Bank, IDBI,ICICI,Yes Bank and The South Indian Bank are secured by way of pari passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company.

7. In respect of the above, working capital rupee loans carry interest ranging from 10.45% p.a. to 14.35% p.a. and working capital foreign currency loans carry interest ranging from 1.65% p.a. to 2.70% p.a. plus applicable LIBOR.

8. Unsecured short term loans from ICICI & IDBI Bank carrry interest @ 10.25% p.a.

9. Contingent liabilities in respect of :

Bills discounted 1,939.66 1,449.18

Guarantees 288.00 4,784.28

Letters of credit outstanding - 71.57

As at the Balance Sheet date, the Company's net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs 8,086.51 Lacs (Rs 3,074.41 Lacs as at 31st March 2014).

10. The company has opted out of levy of Excise duty from July 2004

11. The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates" for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Statement of Profit & Loss and general reserve in order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

12. The company has been following the guidance given under AS 30 "Financial Instruments; Recognition and Measurement". During the year, ICAI had issued exposure draft on guidance note on "Accounting for Derivative Contracts" and subsequently notified it on 12th May 2015 to be effective from 1st April 2016. An announcement was also issued in this regard wherein ICAI took cognizance of issues raised with respect to accounting treatment of financial instruments owing to global financial crisis and clarified that AS 30 was not expected to be continued in its present form since it is based on International Accounting Standard (IAS) 39, Financial Instruments: Recognition and Measurement, issued by the International Accounting Standards Board (IASB), which was under revision by the IASB. Considering the uncertainty in the matter, the Company has decided to discontinue the accounting policy adopted under AS 30. Accordingly, the company has reversed the hedging reserve and applied the principles of notified Accounting Standards 11. The company will revisit the accounting treatment on effective date of applicability of relevant guidance/accounting standards and appropriate treatment will be made. Had the Company continued with the existing accounting policy, investment would have been higher by Rs 742.98 lacs; the Reserves & Surplus would have been higher by Rs 783.23 lacs, the current assets would have been higher by Rs 20.33 lacs, Non-current assets would have been higher by Rs 1018.99 lacs and the loss for the year would have been higher by Rs 1008.06 lacs.

13. Subsidy receivable from government (net of provisons) represents '2051.07 lacs (previous year Rs1496.23 lacs) of interest subsidy on TUF scheme loans and Rs1145.82 (previous year Rs 1145.82 lacs) of capital subsidy on investments and ' 75 lacs of grant receivable for reimbursement of expenditure from Karnataka Government.

14. During the year the company has received capital & revenue subsidy from Government of Karnataka under the "Suvarna Vastra Neethi" 2008-13 scheme. The Details of the subsidy received are as under:

a) State Investment Subsidy of Rs 700 lacs.

b) Effluent Treatment Plant & Hazardous waste disposal facility -Rs 300 Lacs.

c) Reimbursement of Expenditure in relation to ESI, PF & power -Rs 75 Lacs.

The amount of state investment subsidy received towards reimbursement of promoter's contribution relating to technical textiles project at Hassan has been classified as capital reserve under reserves and surplus. The amount received in respect of specific fixed asset has been shown as a deduction from the respective fixed asset and the amount received towards reimbursement of expenses has been credited to natural head of accounts.In the event of the conditions not being met the above subsidy shall be refundable.

15. Depreciation is provided on straight line method based on the useful life as specified in schedule II of the Companies Act, 2013, except in respect of plant and machinery where the useful life is estimated to be 20 years (10 years on triple shift basis) based on technical assessment.

Consequent to the above, depreciation for the year is lower by Rs 557.34 lacs.

In respect of assets whose remaining useful life is already exhausted as at 1st April 2014, depreciation of Rs 27.88 lacs has been adjusted against the opening balance of surplus in statement of profit and loss as on that date.

16. Benwood Corporation Sdn Bhd, the Malaysian subsidiary of the company had filed an application for Members' Voluntary Winding Up on 28th May 2013 and an order for winding up has been passed on 29th December 2014. The excess of amount realised over the cost of investment has been appropriately considered.

17. Net Deferred tax asset has not been recognised considering prudence.

18. Exceptional items represents profit on sale of long term investments and the impact on account of Discontinuation of AS 30 & 32 as specified in note no. 2.34

19. Related Party Disclosure :

List of related parties with whom transactions have taken place Holding Co : Nil

Subsidiary Cos. : Suprem Textiles Processing Limited, Multiflora Processing Coimbatore Limited, Precot Meridian Energy Limited, Benwood Corporation Sdn Bhd*

Key Management Personnel (KMP) : Mr D Sarath Chandran, Mr Ashwin Chandran and Mr Prashanth Chandran.

Others : Suprem Associates (Partnership firm), Pricol Limited, Pricol Packaging Limited and Mr Vijay Mohan

20. The amount and disclosure included in the financial statements of the previous year have been regrouped and reclassified wherever necessary to conform to the current year's classification.

21. The amount and disclosure included in the financial statements of the previous year have been regrouped and reclassified wherever necessary to conform to the current year’s classification.


Mar 31, 2014

1. Contingent liabilities in respect of :

Bills discounted 1,449.18 2,752.43

Guarantees 4,784.28 213.01

Letters of credit outstanding 71.57 1,225.80

As of the Balance Sheet date, the Company''s net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs. 3,074.41 Lacs (Rs. 5,353.15 Lacs as at March 31,2013).

2. The amounts and disclosures included in the financial statements of the previous year have been reclassified where ever necessary to conform to the current year''s classification.

3. The Company has opted out of levy of ExcisedutyfromJuly2004.

4. The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates" for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Statement of Profit & Loss and general reserve .In order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

5. The company, having adopted AS30 with effect from 1st April 2008, continues to comply with its requirements. There is no outstanding amount of forward contracts not recognised in the books of accounts as on the balance sheet date. (Previous year - Rs. 136.70 lacs)

6. The term loans from bank includes loan of Rs. 12,000 lakhs from ICICI Bank to fund its technical textiles project in Hassan, which is a 100% export oriented project. In order to hedge the interest rate and currency risks, the company has entered into a INR-Euro swap with the INR term loan as the underlying asset. The said transaction involves exchange of interest on a monthly basis and exchange of principal on a semi-annual basis and is intended to be held till the maturity date of 30" July, 2021. The Company has adopted the accounting treatment and disclosures in accordance with the principles laid down in AS 30 and AS 32 on foreign currency derivative contracts. These instruments meet the management''s foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting. Accordingly, as on the Balance Sheet date, the fair value of the hedge resulting in a notional loss amounting to Rs. 1671.59 lakhs and the realised gain on the interest swap of the transaction amounting to Rs. 293.91 lakhs have been appropriately reflected in the hedge reserve.

7. Subsidy receivable from Government represents Rs. 1496.23 lacs (previous year Rs. 714.54 lacs) of interest subsidy on TUF scheme loans and Rs. 1145.82 (previous year Rs. 1145.82 lacs) of capital subsidy on investments in its Technical Textiles project at SEZ, Hassan.

8. The technical textile project at Hassan, with a capital expenditure of Rs. 18,157 lakhs, commenced its commercial production on 12th June 2013.

The borrowing cost capitalized during the year is Rs. 164.24 Lacs (previous year-Rs. 937.64 Lacs).

9. Benwood Corporation Sdn Bhd, the Malaysian subsidiary of the company has filed an application for Members'' Voluntary Winding Up on 28th May 2013 and is awaiting the winding up order.

10. The Company has obtained an approval from the share holders under section 293(1 )(a) of the Companies Act, 1956 to dispose off the weaving and processing division. Effect is being given in the financial statements as and when disposal happens. The effect of disposal of the weaving division during the year has been shown underthe extra ordinary items.

11. The company has recognized deferred tax asset ofRs. 1681.19 lacs in line with the requirements of AS 22. The said deferred tax asset has been recognized on the unabsorbed depreciation and carry forward of losses under tax laws to the extent that there is virtual certainty supported by convincing evidence based on the nature of business that sufficient future taxable income will be available against which such deferred tax assets can be realized.

12 Related Party Disclousure:

List of related parties with whom transactions have taken place

Holding Co: Nil, Subsidiary Co: Suprem Textiles Processing Limited, Multiflora Processing (CBE) Limited,

Precot Meridian Energy Limited, Benwood Corporation Sdn Bhd.

Key Management Personnel (KMP): Mr. D Sarath Chandran, Mr. Ashwin Chandran and Mr. Prashanth Chandran.


Mar 31, 2013

1.1 The amounts and disclosures included in the financial statements of the previous year have been reclassified wherever necessary to conform to the current year''s classification.

1.2 The Company has opted out of levy of Excise duty from July 2004.

1.3 The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 " The Effects of Changes in Foreign Exchange Rates” for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Statement of Profit & Loss and general reserve .In order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

1.4 The company, having adopted AS30 with effect from 1st April 2008, continues to comply with its requirements. The outstanding amount of forward contracts not recognised in the books of accounts as on the balance sheet date is Rs. 136.70 lacs.

1.5 During the year the company has entered in to a INR to EURO total currency swap transaction with ICICI Bank Limited, for an amount of Rs. 10,000 lacs under which the company would receive INR notional, interest and inturn would pay equivalent EURO notional interest determined by the EUR/INR spot prevailing at the time of executing the trade. The total currency swap transaction has an effect of transforming the INR denominated liability to a EURO denominated liability. The tenor of the swap repayments is 15 unequal semi annual instalments commencing from 31.7.2014 with the maturity date of 30.07.2021.

1.6 The proceeds from the preferential issue of convertible share warrants to the directors are utilised as below:

1.7 The Company has obtained an approval from the share holders under section 293(1)(a) of the Companies Act 1956 to dispose off the weaving and processing division. Effect is being given in the financial statements as and when disposal happens. The effect of the disposal of some of the assets during the year has been shown under extraordinary items.

1.8 Related Party Disclosure :

List of related parties with whom transactions have taken place

Holding Company : Nil

Subsidiary Company : Suprem Textiles Processing Ltd

Multiflora Processing (CBE) Ltd Precot Meridian Energy Ltd Benwood Corporation Sdn Bhd

Key Management Personnel (KMP) : Mr D Sarath Chandran

Mr. Ashwin Chandran and Mr. Prashanth Chandran

Others : Suprem Associates (Partnership firm)


Mar 31, 2012

1. As notified by Minstry of Corporate Affairs, Revised Schedule VI under the Companies Act 1956 is applicable to the Financial Statements for the financial year commencing on or after 1st April, 2011.

Accordingly the financial statements for the year ended March 31st, 2012 are prepared in accordance with the Revised Schedule VI. The amounts and disclosures included in the financial statements of the previous year have been reclassified to conform to the requirements of revised Schedule VI.

1.1 Share Capital

i) Terms/rights attached to equity shares:

The company has only one class of issued shares referred to as equity shares having a par value of Rs. 10 each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors, if any, is subject to the approval of shareholders in the Annual General Meeting.

1. a) Term loan from SBI, ICICI, Andhra Bank, Export Import Bank of India and IDBI Bank are secured by

way of pari passu first charge on entire movable and immovable assets of the company and pan passu second charge on current assets of the company.

b) Term loan from Yes Bank is secured by way of pari passu first charge on entire movable fixed assets.

c) Term loan from IDBI Bank, Dubai Branch is secured by way of exclusive first charge on the windmills and related equipments, systems and assets located at Eragampatti and Manurpalayam Village in Tirupur district.

2. The loans are repayable in monthly/quarterly/half-yearly installments.

3. In respect of the above, Rupee Term Loans carry interest ranging from 7.5% p.a. to 14% p.a. and Foreign Currency Term Loans carry interest ranging from 1.6% p.a. to 3% p.a. plus applicable LIBOR.

1.2 Short Term Borrowings

1. Working capital loans from SBI, Andhra Bank, Corporation Bank, IDBI, ICICI, Yesbank and The South Indian bank are secured by way of pari passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company.

2. In respect of the above, working capital rupee loans carry interest ranging from 11.25% p.a. to 15.25% p.a. and working capital foreign currency loan and buyer's credit foreign currency loans carry interest ranging from 1.4% p.a. to 3.5% p.a. plus applicable LIBOR.

3. Unsecured short term loan from Axis Bank carries interest at 11% p.a. for which the company has extended a corporate guarantee.

1.3 Contingent liabilities in respect of :

2011-12 2010-11 Rs. Lacs Rs. Lacs

I) Claims against the company not acknowledged as debts:

Disputed Statutory Liabilities not provided for 2,663.59 1,244.82

Disputed Other Liabilities not provided for 285.96 265.14

Guarantees 123.39 122.38

Bills discounted 2,904.13 1,692.92

Letters of credit outstanding 9,389.31 Nil

ii) Commitments

Estimated amount of contracts remaining to be 1,456.55 37.63 executed on capital account and not provided for

1.4 The Company has opted out of levy of Excise duty from July 2004.

1.5 Disclosures regarding Gratuity Plan:

a) Description of the company's defined benefit plan

The company operates a defined benefit plan for payment of post employment benefits in the form of gratuity.

Benefits under the plan are based on pay and years of service and are vested on completion of five years of service, as provided for in the payment of Gratuity Act, 1972. The terms of the benefits are common for all the employees of the company.


Mar 31, 2011

1 Security for Borrowings:

a Term Loans from ICICI bank, Andhra Bank, State Bank of India, Export Import Bank of India and IDBI Bank are secured by way of pari passu first charge on entire movable and immovable fixed assets of the company and pari passu second charge on current assets of the company.

b Term Loan from YES Bank is secured by way of pari passu first charge on entire movable fixed assets.

c Working capital loans / Short Term Loans from State Bank of India, Andhra Bank, Corporation Bank, ICICI Bank, IDBI Bank, YES Bank and The South Indian Bank are secured by way of pari passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company.

d Term loan to an extent of Rs.14.23 crores from IDBI Bank, Dubai branch is secured by way of Exclusive First charge on the Windmills and related equipments, systems and accessories located at Eragampatti and Manurpalayam villages in Tirupur district.

2 a Loans and advances include an amount of Rs.71.62 lacs advanced to Suprem Associates, a partnership firm in which the company is a partner.

b Advances includes an amount of Rs.20.65 lacs due from subsidiaries.

c Other Liabilities include an amount of Rs.85.63 lacs due to subsidiaries.

3 Income Tax assessments have been completed upto Assessment Year 2008-2009.

4 Previous year's figures have been regrouped whereever necessary to conform to current year's classification.

5 The Company has opted out of levy of Excise duty from July 2004.

6 Voluntary retirement compensation paid amounting to Rs.17.97 Lacs has been written off during the year.

7 The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 " The Effects of Changes in Foreign Exchange Rates" for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Profit & Loss account and general reserve. In order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

8 The company having adopted AS 30 "Financial Instruments - Recognition and Measurment" with effect from 1st April 2008, continues to comply with its requirements. The outstanding amount of forward contracts not recognised in the books of accounts as on the balance sheet date is Rs. 1724.88 Lacs.

9 The company has initiated the process of obtaining confirmation from suppliers who have registered themselves under the "Micro, Small and Medium Enterprises Development Act, 2006". Based on the information and evidence available with the company, there are no dues to micro,small and medium enterprises, outstanding as on 31st March 2011.

10 Disclosures regarding Gratuity Plan:

a) Description of the company's defined benefit plan

The company operates a defined benefit plan for payment of post employment benefits in the form of gratuity.

Benefits under the plan are based on pay and years of service and are vested on completion of five years of service, as provided for in the payment of Gratuity Act,1972. The terms of the benefits are common for all the employees of the company.

11 Related Party Disclousure :

List of related parties with whom transactions have taken place Holding Company: Nil

Subsidiary Company: 1. Suprem Textiles Processing Limited, 2. Multiflora Processing (CBE) Limited, 3. Precot Meridian Energy Limited, 4. Benwood Corporation Sdn Bhd Key Management Personnel: 1. Mr D Sarath Chandran, 2. Mr Ashwin Chandran and 3. Mr Prashanth Chandran. Others : Suprem Associates.


Mar 31, 2010

1 Security for Borrowings:

a Term Loans from ICICI bank, Andhra Bank.State Bank of India,Export Import Bank of India and IDBI Bank banks are secured by way of paripassu first charge on the entire movable and immovable fixed assets of the company and parri passu second charge on the current assets of the company.

b Term Loan from YES bank is secured by way of parri passu first charge on the entire movable fixed assets only.

c Working capital loans / Short term Loans from State bank of India, Andhra Bank .Corporation bank, ICICI Bank, IDBI and YES Bank are secured by way of parripassu first charge on the current assets of the company and paripassu second charge on the entire immovable assets of the company.

2 a Loans and advances also include an amount of Rs.71.62 lacs advanced to Suprem Associates, a partnership firm in which the company is a partner.

b Advances includes an amount of Rs.210.61 lacs due from subsidiaries

c Other Liabilities includes an amount of Rs.285.98 lacs due to subsidia -ries

3 a Income Tax assessments have been completed upto Assessment Year 2007-2008.

b Based on recent judicial pronouncements relating to claim of certain expenses as revenue expenditure, the company, as a prudent measure, has provided a sum of Rs 1000 lacs towards Income tax provision for earlier years.

4 Previous years figures have been regrouped whereever necessary to confirm to current years classification.

5 The Company has opted out of levy of Excise duty from July 2004.

6 Voluntary retirement compensation paid amounting to Rs.123.54 Lacs has been written off during the year.

7 The Ministry of Corporate Affairs, through its notification dated March 31,2009 has relaxed the provisions of Accounting Standard (AS) 11 " The Effects of Changes in Foreign Exchange Rates" for treating the exchange gain/loss arising on restatement of long term foreign currency monetary items. Accordingly, companies are permitted to adjust in their carrying cost of depreciable assets, the exchange differences arising out of exchange rate fluctuations with corresponding adjustments in Profit & Loss account and general reserve. In order to give effect to the aforesaid amendment, companies are required to exercise their option. The company has exercised the option and the following adjustments have been made.

8 Pursuant to The Institute of Chartered Accountants of Indias (ICAI) Announcement "Accounting for Derivatives", the Company had early adopted AS 30 "Financial Instruments: Recognition and Measurement", with effect from 1stApril, 2008. The outstanding amount of forward contracts not recognised in the books of accounts as on the balance sheet date is Rs.2398.76 Lacs.

9 The company has initiated the process of obtaining confirmation from suppliers who have registered themselves under the "Micro, Small and Medium Enterprises Development Act, 2006". Based on the information and evidence available with the company, there are no dues to micro, small and medium enterprises, outstanding as on 31.03.2010.

10 Disclosures regarding Gratuity Plan:

a) Description of the companys defined benefit plan

The company operates a defined benefit plan for payment of post employment benefits in the form of gratuity.

Benefits under the plan are based on pay and years of service and are vested on completion of five years of service, as provided for in the payment of Gratuity Act, 1972. The terms of the benefits are common for all the employees of the company.

11 Related Party Disclousure :

List of related parties with whom transactions have taken place Holding Company : Nil

Subsidiary Company :

1. Suprem Textiles Processing Limited

2. Multiflora Processing (CBE) Limited

3. Precot Meridian - Energy Limited and

4. Benwood Corporation Sdn Bhd

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