Mar 31, 2018
1. Use of Critical Judgments, Estimates and Assumptions
The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures, and the disclosure of contingent liabilities.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next financial years are described below. The Company based its assumptions and estimates or parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
(a) Property, Plant and Equipment and Intangible assets
Internal technical or user team assesses the remaining useful life of the Property, Plant and Equipment and Intangible assets. Management believes that assigned useful lives are reasonable.
(b) Embedded Lease
In assessing the applicability to arrangement entered into by the Company, the management has exercised the judgment to evaluate the right to use the asset or assets on substance of the transaction including legally enforced arrangement and other significant terms of the contract to conclude whether the arrangement meets the criteria under Appendix C of the Ind AS 17.
(c) Impairment of non-financial assets
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
(d) Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making assumption and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward estimate at the end of each reporting period.
(e) Investment in associates
As per Ind AS 28, an entity is considered as an associate when the investing Company has significant influence over the entity. The existence of significant influence by an investor is determined 2 based on factors such as, representation on the board of directors or equivalent governing body of investee, participation in policymaking processes, including participation in decisions about dividends or other distributions, material transactions between the entity and it''s investee, interchange of managerial personnel or provision of essential technical information. The Company holds 17.78% (which is less than 20 %) of the equity shares of Bhilwara Energy Limited (BEL). As the amount invested in BEL is significant, the board of directors regularly reviews the progress of the BEL and suggestion/comments/concerns of the board of Company are conveyed to the board of directors of BEL by common directors. In order to monitor the progress of BEL, the board of directors has decided to nominate at least one director on the board of BEL. In Light of above, the board of directors have concluded that, the Company has a significant influence on BEL. Other than BEL, the Company holds 26% of equity shares in LNJ Power Ventures Ltd and 40.66% of equity shares in LNJ Skills and Rozgar Pvt. Ltd and therefore both of these companies have also been termed as associates of the Company.
(f) Assets Held for sale
Management''s Judgment is required for identifying the assets which are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable which could lead to significant judgment. Management is committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
(g) Income taxes
Management''s judgment is required for the calculation of provision for income taxes and deferred tax assets and liabilities. The Company reviews at each balance sheet date the carrying amount of deferred tax assets. The factors used in estimates may differ from actual outcome which could lead to significant adjustment to the amounts reported in the financial statements.
(h) Contingencies
Management''s judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/ litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
(i) Defined Benefit Plans
The cost of the defined benefit plans and other postemployment benefits and the present value of such obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in future. These Include the determination of the discount rate, future salary increases, mortality rates and attrition rate. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
(j) Insurance claims
Insurance claims are recognized when the Company has reasonable certainty of recovery. Subsequently any change in recoverability is provided for.
Notes:
1. *Deduction from Gross Carrying Value represents sale/ transfer/ discarding of Property, Plant & Equipment/ Lease hold rights written off.
2. ** Deduction in depreciation Rs. 1833.14 Lakhs (Previous Year Rs. 77.76 Lakhs) represents adjustment on account of sale/ transfer/discarding of Property, Plant & Equipment.
3. *** Includes value of irrevocable Licencing Rights to use of a flat in New Delhi Rs. 10.00 Lakhs.
4. Deprecaition for the year 2017-18 includes Rs. 57.94 Lakhs (Previous Year Rs. 84.73 Lakhs) against amortisation of Government Capital Grants (refer Note 30)
5. On transition date, the Company has opted to continue with carrying value of all of its property, plant and equipment as deemed cost and net carrying value under previous GAAP as on March 31, 2015 is recognised as gross carrying amount in Ind AS as on 01-04-2015.
6. Assets pledged as security (refer Note 14)
On transition date, the Company has opted to continue with carrying value of all its investment properties as deemed cost and net carrying value under previous GAAP as on March 31, 2015 is recognised as gross carrying amount in Ind AS as on 01-04-2015.
3c (i) Measurement of Fair Value
The fair value of the investment property has been determined by external, independent property valuer, having appropriate qualifications and recent experience in the valuation of properties in the relevant locations and category of the properties being valued. The fair value has been determined based upon the market comparable approach that reflects recent transaction prices for similar properties. The fair value measurement is categorised in Level 3 fair value based on the inputs to the valuation technique used. ( Refer Note 1.20 for definition of Level 3 fair value measurement. )
The Company has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.
The investment properties consist of commercial properties in India. The Management has determined the investment properties as commerical properties based on the nature of their usage.
There has been no change to the valuation technique during the year.
@ The Compulsorily Convertible Debentures are to be compulsorily converted into Equity Shares, based on the fair market valuation to be done by an independent agency at the end of 20th year from March 21, 2013. However, subject to the consent of the lender(s) of the LNJ Power Ventures Limited and with a prior notice of 6 months, the Company has the right to put option (i) @ 25% each from 15th to 18th year or (ii) 100% at any date after the 16th year. Similarly, subject to consent of the lender(s), promoters of LNJ Power Ventures Limited also have the right to exercise call option at any time.
Transfer of Financial Assets
During the year, the Company has discounted trade receivables with an aggregate carrying amount of Rs.11,746.70 Lakhs (as at March 31, 2017 Rs.12,233.61 Lakhs ), with the banks. If the trade receivables are not paid at maturity, the banks have right to recourse the Company to pay the unsettled balance. As the Company has not transferred significant risk and rewards relating to these trade receivables, it continues to recognise the full carrying amount of the receivables and has recognised amount received on the transfer as borrowings (Refer Note 15)
(i) For basis of valuation of Inventories refer Note 1.5
(ii) For Inventories secured against borrowings, Refer Note 14 & Note 15
(iii) The cost of Inventories recognised as expense amount to Rs.1,81,842.54 Lakhs during the year ended March 31, 2018 (Rs.1,81,678.11 Lakhs for the year ended March 31, 2017)
(ii) Terms and rights attached with equity shares:
The Company has only one class of equity shares, having at par value of Rs.10 each. Each holder of the equity shares is entitled to one vote per share. There is no restriction attached to any equity share. The dividend proposed, if any, by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend. The repayment of equity share capital in the event of liquidation and buyback of shares is possible subject to prevalent regulations. In the event of liquidation, normally the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholdings.
Proposed Dividend
After the reporting date, the Board of Directors of the Company has recommended a dividend @ 20% to Equity Shareholders i.e. Rs.2.00 per Equity share amounting to Rs.471.02 Lakhs excluding applicable taxes for the year 2017-18. The dividend proposed by the Directors is subject to approval at the annual general meeting. The dividend has not been recognised as liability.
(i) Term Loans from Banks & Financial Institutions:
Current Year''s Figures
I Term loans secured by way of first pari-passu charge on the entire immovable properties and movable fixed assets of the Company, present and future and pari-passu second charge on the entire current assets of the Company, present and future.
Previous Year''s Figures
Term Loans secured by way of first pari-passu charge on the entire immovable properties and movable fixed assets of the Company, present and future and pari-passu second charge on the entire current assets of the Company, present and future.
III Particulars about 12% Optionally Convertible Redeemable Preference Shares (OCRPS).
a) In terms of the clause 2.7(g) of the Scheme of Amalgamation of Cheslind Textiles Limited into the Company duly approved by the Hon''ble High Courts of Rajasthan and Madras, the holders of 88,54,111 number of Optionally Convertible Redeemable Preference Shares (OCRPS) had exercised the option of conversion of OCRPS into equity shares of the Company. Consequently, the Company, on November 10, 2016, has allotted and issued the 4,02,153 number of equity shares of Rs.10 each aggregating to Rs.40.22 Lakh at a premium of Rs.155 per share aggregating to Rs.623.34 Lakh.
b) The holders of 48,11,324 number of Optionally Convertible Redeemable Preference Shares (OCRPS) had not exercised the option of conversion of OCRPS into equity shares of the Company. In terms of the clause 2.7(h) of the Scheme of Amalgamation of Cheslind Textiles Limited into the Company duly approved by the Hon''ble High Courts of Rajasthan and Madras, the Company, on February 28, 2017, has redeemed the 48,11,324 OCRPS of Rs.7.50 each aggregating to Rs.360.85 Lakh.
Cash credit and other working capital facilities from banks and financial institutions including commercial paper are secured by way of hypothecation of stocks of raw materials, work-in progress, finished goods, stores and spares, packing material, goods at port/in transit/ under shipment, outstanding money, book debts, receivables and other current assets of the Company on pari-passu basis, as well as pari-passu second charge on all the fixed assets of the Company, present and future.
All loans repayable on demand carry floating interest rate from 7.95% to 9.70% per annum, computed monthly.
2 Employee Benefits
The Company participates in defined contribution and benefit schemes, the assets of which are held (where funded) in separately administered funds. For defined contribution schemes the amount charged to the statements of profit or loss is the total of contributions payable during the year.
Employees Provident Fund
In accordance with the Employees Provident Fund & Miscellaneous Provisions Act, 1952, employees are entitled to receive benefits under the Provident Fund. Both the employees and the employer make monthly contributions to the plan at a predetermined rate (12% for FY 2017-18) 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 Employees Provident Fund Organisation (EPFO) or to independently managed and approved funds. The Company has no further obligations under the fund managed by the EPFO beyond its monthly contributions which are charged to the statement of profit and loss in the period they are incurred. The benefits are paid to employees on their retirement or resignation from the Company. Provident fund set up by the employer, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. The Company set up Provident Fund does not have existing deficit of interest shortfall.
Superannuation
Superannuation, another pension scheme applicable in India, is applicable only to senior executives. RSWM Limited holds a policy with Life Insurance Corporation of India (âLICâ), to which it contributes a fixed amount relating to superannuation and the pension annuity is met by LIC as required, taking into consideration the contributions made. The Company has no further obligations under the scheme beyond its monthly contributions which are charged to the statement of profit and loss in the period they are incurred.
Gratuity Plan
In accordance with the provisions of Payment of Gratuity Act 1972, for its eligible employees, the Company contributes to a defined benefit plan (the âGratuity Planâ) . The Gratuity Plan provides a lump sum payment to vested employees at retirement, disability or termination of employment being an amount based on the respective employee''s last drawn salary and the number of years of employment with the Company.
Based on actuarial valuations conducted as at year end, a provision is recognised in full for the benefit obligation over and above the funds held in the Gratuity Plan.
VIII Expected Contribution for Next Financial Year
The expected contribution for Defined Benefit Plan for the next financial year will be Rs.793.04 lakhs
The Estimates of future salary increase considered in actuarial valuation, take account of inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market. The above information is certified by the actuary. The Actual return on plan Assets for the year and estimate of contribution for the next year as per Actuarial Valuation is as under: -
XII Description of Risk Exposures:
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follows -
a) Salary Increases- Actual salary increases will increase the Plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
b) Investment Risk - If Plan is funded then assets liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
c) Discount Rate : Reduction in discount rate in subsequent valuations can increase the plan''s liability.
d) Mortality & disability - Actual deaths and disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
e) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan''s liability.
XIII The plan assets of âGratuity Fund" are managed by the Gratuity Trust formed by the Company. The management of 100% of the ,funds for Earned Leave is entrusted with the Life Insurance Corporation of India. Investment Detail of Plan Assets for each major category plan assets is as below: -
3. Leases
The Company has given office spaces on operating lease. The operating lease arrangements, are renewable on a periodic basis and for most of the leases extend up to a maximum of 9 years from their respective dates of inception and relates to rented premises. Some of these lease agreements have price escalation clauses. and all other leases are cancellable.
C. The Rajasthan Government had imposed surcharge on shortfall in meeting Renewable Energy Obligation on the power produced from Captive Power Plants vide their Notification dated March 23, 2007 and amended later on May 24, 2011, which was stayed by the Hon''ble high Court of Rajasthan. In its judgement dated August 31, 2012, the Hon''ble High Court of Rajasthan upheld the validity of the aforesaid Notification and amended Notification issued thereafter. The Hon''ble Supreme Court in May 2015 dismissed appeals filed by HZL, RTMA and others challenging constitutional validity of Notifications issued in 2007 and thereafter. The nodal agency, Rajasthan Renewable Electricity Corporation Ltd (RREC) filed two petitions (nos 839/2016 and 840/2016) before Rajasthan Electricity Regulatory Commission (RERC) wherein it was stated that RSWM Ltd had surplus nonsolar RE power on account of co-generation but shortfall in solar RE up to 31.03.15. Regulatory commission passed an order on 23.03.2017 allowing adjustment of WHRS/co generation against solar power obligation. After passing of this order, we have not received any recovery notice in this matter. In view of above, the Company does not foresee any liability on account of Renewable Purchase Obligation. The Company has a captive 20 MW wind power unit generating 350 Lakhs units per annum. The Company has also commissioned Solar Power Unit of 1.50 MW during the year 2017-18.
D. TNEB limited the electricity supply to all their HT consumers based on their previous three years consumption and introduced cross subsidy surcharge for the unutilized portion of âunits quotaâ so fixed, whenever power was purchased by a consumer from 3rd party or from Energy Exchange. On being legally challenged, Supreme Court by its order dated 20.07.2015 directed that the status quo has to be maintained i.e. no cross subsidy charges to be collected. Therefore, management does not foresee any possible liability in this regards.
E. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company also believes that the above issues, when finally settled are not likely to have any significant impact on the financial position of the Company. The Company does not expect any third party reimbursements in respect of above contingent liabilities. (see note no. 45 on litigation).
4. Segment Information
For management purposes, the Company is organised into business units based on its products and services and has following reportable segments:
- Yarn
- Fabric
No operating segments have been aggregated to form the above reportable operating segments.
Identification of Segments
The Board of Directors of the Company has been identified as Chief Operating Decision Maker who monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with the profit or loss in the financial statements.
Accounting policy in respect of segments is in conformity with the accounting policy of the company as a whole.
Inter-segment Transfer
Segment revenue resulting from transactions with other business segments is accounted for on the basis of transfer price agreed between the segments. Transfer prices between operating segments are on an arm''s length basis in a manner similar to transactions with third parties. These transfers are eliminated in consolidation.
Segment Revenue and Results
The Revenue and Expenditure in relation to the respective segments have been identified and allocated to the extent possible. Other revenue and expenditure non allocable to specific segments are being disclosed separately as unallocated and adjusted directly against the total income of the Company.
Segment Assets and Liabilities
Segment assets include all operating assets used by the operating segment and mainly consisting of property, plant & equipment, trade receivables, cash and cash equivalents and inventory etc. Segment liabilities primarily include trade payables and other liabilities. Common assets and liabilities which can not be allocated to specific segments are shown as a part of unallocable assets/liabilities.
Non-current assets
There are no non current assets outside India.
Information about major customers
No single customer represents 10% or more of the total revenue during the year ended March 31, 2018 and March 31, 2017.
Terms & Conditions of transactions with related Parties:
The sales and purchases, services rendered to/from related parties and interest are made on terms equivalent to those that prevail in arms length transaction. Outstanding balances at the year end are unsecured and settlement occurs in cash. For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amount owed by related parties. This assessment is undertaken through out the financial year through examining the financial position of the related parties and the market in which the related parties operate.
b Fair value hierarchy
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 assets or liabilities that are not based on observable market data (unobservable inputs).
Valuation Technique used to determine Fair Value
The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair values:
1) Fair value of cash and deposits, trade receivables, trade payables, and other current financial assets and liabilities measured at amortized cost is approximate to their carrying amounts largely due to the short-term maturities of these instruments. The fair value of other non-current financial assets and liabilities (security deposit taken/given and advance to employees) carried at amortized cost is approximately equal to fair value. Hence carrying value and fair value is taken same.
2) Long-term variable-rate borrowings measured at amortized cost are evaluated by the Company based on parameters such as interest rates, specific country risk factors, credit risk and other risk characteristics. Fair value of variable interest rate borrowings approximates their carrying values. Risk of other factors for the company is considered to be insignificant in valuation.
3) The fair values of the forward contract is determined using the forward exchange rate at the balance sheet date based on quotes from banks and financial institutions. Management has evaluated the credit and non-performance risks associated with its derivative counterparties and believe them to be insignificant and not warranting a credit adjustment.
4) The fair values of the Quoted Equity shares have been done on quoted price of stock exchange as on reporting date.
5) Investment in the Unquoted Debenture have been valued considering the market coupon rate of similar financial instruments.
c Financial Risk Management
The Company''s Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Board of directors has established the risk management committee, which is responsible for developing and monitoring the Company''s risk management policies. The Committee reports regularly to the board of directors on its activities.
The Company''s risk management policies are established to identify and analyse the risk faced by the Company, to set appropriate risks limits and controls and to monitor risks and adherence to limits. Risk Management policies and systems are reviewed regularly to reflect changes in the market condition and Company''s Activities.
The audit committee oversees how management monitors compliances with the Company''s risk management policies and procedures and review the adequacy of the risk management framework in relation to risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes review of risks management controls and procedures, the results of which are reported to the audit committee.
Financial risk factors
The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk.
(i) Market Risk:
Market risk is the risk that changes in the market prices such as foreign currency risk, interest risk, equity price and commodity prices. The market risk will affect the company''s income or value of its holding of financial instruments. The objective of the market risk management is to manage and control market risk exposure within acceptable parameters, while optimizing the returns.
(i)a Foreign Currency Risk
The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions primarily with respect to USD and EURO. Foreign currency risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.
The sensitivity analysis is computed by comparing weighted average exchange rate for the period ended March 31, 2018 and March 31, 2017
(i) b. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will lead to changes in interest income and expense for the Company. Based on market intelligence, study of research analysis reports, company reviews its short/long position to avail working capital loans and minimise interest rate risk.
In order to optimize the Company''s position with regards to interest income and interest expenses and to manage the interest risk, the Company performs comprehensive corporate interest risk management by balancing the proportion of fix rate and floating rate financial instruments.
Sensitivity Analysis
Fair Value Sensitivity Analysis for Fixed Rate Instruments
The Company does not account for any fixed rate financial assets or financial liabilities at fair value through Profit or Loss, therefore change in interest rate at the reporting date would not affect profit or loss.
Cash Flow Sensitivity Analysis for Variable Rate Instruments
An increase of 7 basis points in interest rate at the reporting date would have increased, (decreased) Profit or Loss by the amount shown below. This analysis assumes that all other variables, remain constant.
The sensitivity analysis is computed by comparing weighted average interest rate for the period ended March 31, 2018 and March 31, 2017.
(i) c. Price Risk
Exposure
The Company is exposed to equity securities price risk arises from investments held by the Company and classified in the balance sheet at fair value through Other Comprehensive Income. Material investments are managed on individual basis and all buy and sell decisions are approved by the management. The primary goal of the investment strategy is to maximize investment returns.
Sensitivity Analysis
Increase/decrease of 10% in the equity prices would have impact of H3121.17 Lakhs (H228.56 Lakhs in previous year) on the Other Comprehensive Income and Equity. These changes would not have an effect on Profit or Loss.
(ii) Credit Risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk from its operating activities (Primarily trade receivables) and from its financing activities including deposit with banks and financial institutions, loans, investment in debt securities, forward exchange contract and other financial instruments.
The Company considers the probability of default upon initial recognition of assets and when there has been significant increase in credit risk and on an on going basis throughout each reporting date to assess whether there is an significant increase in credit risk, the Company compares the risk of default occurring on assets as at reporting date with the risk of default as at the date of initial recognition by considering reasonable forward looking estimations.
Financial assets are written off when there is no reasonable expectation of recovery. Whereas, the loans and receivables were written off and subsequently recoveries are made, these are recognised as an income in the financial statements.
Trade Receivables
Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets. A default on a financial assets is when a counter party fails to make the payment within 365 days, when they fall due. This definition of default is determined by considering the business environment in which the entity operates and other macro economic factors. The company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors such as financial condition, ageing of outstanding and the Company''s historical experience for customers.
Financial assets to which loss allowances measured using 12 months expected credit loss.
For financial assets (other than trade receivables)which are not measured at fair value through Profit and Loss account, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The Company does not have any expected credit loss on financial assets which are measured on 12 month ECL and also has not observed any significant increase in credit risk since initial recognition of the financial assets.
Cash and Cash Equivalents, Deposit with Banks
Credit risk on cash and cash equivalents and deposit with banks is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.
Derivatives (Forward Contracts)
Derivatives are entered with banks, counter parties which have low credit risk, based on external credit ratings of counter parties.
For other financial assets the company monitors ratings, credit spreads and financial strengths of its counterparties. Based on its ongoing assessment of the counter party''s risk, the company adjust, its exposures to various counter parties. Based on the assessment there is no impairment in other financial assets.
(iii) Liquidity risk
The Company''s objective is at all times to maintain optimum levels of liquidity to meet its cash and collateral requirements. The company''s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. The Company relies on a mix of borrowings, capital infusion and excess operating cash flows to meet its needs for funds. The current committed lines of credit are sufficient to meet its short to medium term expansion needs. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company monitors rolling forecasts of its liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
5.A Financial Instruments
(iv) Derivative financial instruments
(iv) a. Disclosure of effects of hedge accounting on financial position:
The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The objective of hedges is to minimize the volatility of INR cash flows of highly probable forecast transaction. The Company''s risk management policy is to hedge around 70% to 90% of the net exposure with forward exchange contract, having a maturity upto 12 months.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.
6. Capital Management
For the purpose of the Company''s capital management, capital includes issued equity share capital, share premium and all other equity reserves attributable to the equity shareholders of the parent. The primary objective of the Company''s capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio between 60% and 80%. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period. No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.
7. Impairment Loss on Fixed Assets
In terms of Indian Accounting Standard 36 - Impairment of Assets, as on reporting date, the Company evaluated each CGU''s Intangible Assets and PPE Based on such evaluation, which is also supported by external information, more particularly the market value and economic performance of the assets, no indication of impairment has been determined.
8. Recent Accounting Pronouncements
Standards issued but not yet effected
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) Amendments Rules, 2018, notifying amendments to Ind AS 21, âForeign Currency Transactions'' and Ind AS 115, âRevenue from Contract with Customers.'' The amendments are applicable to the Company from April 1, 2018.
Appendix B to Ind AS 21, Foreign Currency Transactions and Advance Consideration:
On March 28, 2018, Ministry of Corporate Affairs (âMCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
Ind AS 115- Revenue from Contract with Customers:
On March 28, 2018, Ministry of Corporate Affairs (âMCA") has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers. The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018. The Company will adopt the standard from April 1, 2018. The effect on adoption of Ind AS 115 is expected to be insignificant.
Mar 31, 2016
1 Foreign Trade Policy 2009-2014 introduced Status Holder incentive Scheme (SHIS), under which an Exporter is entitled for scrips @1% of FOB Value of Exports. These scrips can be used within 18 months of the date of scrip, for payment of import /Excise duties on capital goods and spare parts and are freely transferable.
During the year, Company purchased SHIS scrips of a face value of Rs.456.68 lac at a price of Rs.300.04 lac. Out of available scrips face value of Rs.348.12 Lac (Cost H214.80 lac) were utilized for payment of applicable duty. Scrip face value Rs.5.58 Lacs (cost Rs.1.86 Lacs) could not be used on account of the expiry of validity. Difference of face value of scrips used and its cost of acquisition amounting to Rs.126.91 Lac has been recognized as Other income.
SHIS scrip purchased for the face value of Rs.145.42 lac (Cost Rs.97.54 lac), are in hand as on 31st March, 2016.
2 The Company has adopted Accounting Standard (AS)-30 "Financial instruments: Recognition and Measurement" and the gain on account of change in effective portion of such forward contracts is taken into Hedging Reserve Rs.82.50Lacs as on 31/03/2016, (Previous year Rs.65.03 lac) and Loss of Rs.17.96 Lacs on ineffective portion of hedge is taken into Statement of Profit & Loss (Previous year gain Rs.54.76 lac). (also Refer Note No. 45)
3 A The loans & advances, debtors and other current assets are reviewed annually and their value in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet as assessed by the management. However, balance confirmation from parties is under process.
4 B Response to the letter(s) sent by Company requesting confirmation of balances has been insignificant. Company notes that the Marketing and Accounting team has a system of periodical verification of balances and required adjustments are carried-on that basis regularly. in view of the above, management considered that impact of reconciliation, on receipt of balance confirmation would not be significant on the same.
5 in view of legal opinion and various reliefs available under income Tax Act, 1961 provision for taxation has been considered adequate.
6 The figures for the previous year have been regrouped and/or rearranged wherever found necessary to make these comparable with those of the current year.
7 Accounting Standard (AS)-17, Segment Reporting
The Company''s operations predominantly relate to manufacturing of Yarn and Fabric & Denim. On the basis of assessment of the risk and return differential in terms of Accounting Standard (AS)-17, ''Segment Reports'' the Company has identified Yarn and Fabric & Denim as primary reportable business segments. Further the geographical segments have been considered as secondary segments and divided into India, Europe, Middle East, America and Other Countries.
The accounting policy in respect of Segments is in conformity with the accounting policies of the enterprise as a whole. The inter segment transfers are accounted at the prevailing market prices charged to unaffiliated customers for similar goods. These transfers are eliminated in consolidation.
The revenue and expenditure in relation to the respective segments have been identified and allocated to the extent possible. Other items i.e. extraordinary items, Loss /Profit on sale of investments and foreign currency transactions, corporate office expenses, etc. not allocable to specific segments are being disclosed separately as unallocated and adjusted directly against the Total income of the Company.
8 ACCOUNTING STANDARD (AS) -19 ''LEASES''
There is no disclosure under Accounting Standard (AS) 19, as there are no cancellable lease.
9 IMPAIRMENT OF ASSETS (AS 28)
The Company based on both external & internal source of information, more particularly the market value and economic performance of the assets has recognized in its statement of profit & loss under the line item ''depreciation, impairment & amortization expense'' an impairment loss of Rs.1176.80 lacs in one of its cash generating unit (CGU) being a plant of its ''yarn'' reportable segment as per paragraph 87 - 89 of the Accounting Standard (AS) - 28, impairment of Assets on its goodwill (Rs.28.34 lacs), buildings (Rs.740.76 lacs), plant & machinery (Rs.323.15 lacs) & other assets (Rs.84.55 lacs) as disclosed in note no. 13 of fixed assets and note no. 39 on segment reporting based on the net selling price of the individual assets as per an external valuation report.
10 PROVISIONS & CONTINGENT LIABILITIES AND COMMITMENTS (AS 29) :
D. The Rajasthan Government had imposed surcharge on shortfall in meeting Renewable Energy Obligation on the power produced from Captive Power Plants vide their Notification dated 23rd March, 2007 and amended later on 24th May, 2011, which was stayed by Hon''ble high Court of Rajasthan. in its judgment dated 31st August, 2012, Hon''ble High Court of Rajasthan upheld the validity of the aforesaid Notification and amended Notification issued thereafter.
Supreme Court in May 2015 dismissed appeal filed by HZL, RTMA and others challenging constitutional validity of Notification issued in 2007 and thereafter.
Based on Legal Opinion taken, company is not exposed to Renewal Power Obligation in view of setting-up of Wind Power Unit in 2011-12 & Waste Heat Recovery for use as Steam in our Unit. The management does not foresee any possible liability in this regards.
E. TNEB limited the electricity supply to all their HT consumers based on their previous three years consumption and introduced cross subsidy surcharge for the unutilized portion of "units quota" so fixed, whenever Power was purchased by a consumer from 3rd party or from Energy Exchange. On being legally challenged, Supreme Court by its order dated 20.07.2015 directed that the status quo has to be maintained i.e. no cross subsidy charges to be collected. Therefore, management does not foresee any possible liability in this regards.
F. The Payment of Bonus Act, 1965 was amended with retrospective effect from 01-4-2014 vide notification no. 06/2016 published in the Official Gazette dated 01.01.2016. On the basis of the legal opinion obtained by the Company, such amendment with retrospective operation is illegal, arbitrary and contrary to the Article 14, 19(1)(g) and 300Aof the Constitution of India.
Applicability of the amendment notification retrospectively was challenged in various High Courts including the Rajasthan High Court, which in case of the civil writ petition filed by Employers'' Association of Rajasthan, has granted interim stay against the applicability of the amendment notification retrospectively by giving direction that it would take effect only from the financial year 2015-16. in view of the stay granted and the direction given by the Rajasthan High Court together with the aforementioned legal opinion, the management doesn''t foresee any possible obligation in future for payment of bonus as per amended act for the period 01/04/2014 to 31/03/2015. However pending final judgment of the Court, the Company is contingently liable of Rs.116.94 Lacs for the aforesaid period.
G. There is no other present obligations requiring provisions, in accordance with the guiding principles as enunciated in Accounting Standard (AS) - 29 "Provisions, Contingent Liabilities & Contingent Assets" other than provided in the books of accounts.(Also see note 51 on litigation)
11 ACCOUNTING STANDARD (AS)-32 FINANCIAL INSTRUMENT DISCLOSURES-''HEDGE ACCOUNTING''
(a) The Company hedges its realizations on export sales and import obligation for Capital Assets/Raw Material through Foreign Exchange Derivative & Hedge Contracts in the normal course of business so as to reduce the risk of exchange fluctuations. No Foreign Exchange Derivative & Hedge Contracts are taken /used for trading or speculative purpose.
(b) The Company has following gross derivatives exposure outstanding as at March 31, 2016 which have been designated as cash flow hedge to its exposure to movements in foreign exchange rates:
(c) The periods during which the cash flows from the cash flow hedges outstanding as at March 31, 2016 are expected to occur and affect the statement of P&L are disclosed as under:
(e) During the year there are no forecasted transactions for which hedge accounting had been used in the previous periods, but which is no longer expected to occur.
(f) The foreign currency exposures that are not hedged by derivative instruments or otherwise are as under:
12 The Company has incurred Rs.199.29 Lacs(previous year: Rs.150.41 Lacs) as corporate social responsibility expenditure pursuant to section 135 of the Companies Act, 2013.
Mar 31, 2015
1 The whole Undertaking of Transferor Company Cheslind Textiles
Limited (CTL) is merged into RSWM Limited (Transferee Company) with
effect from appointed date of 1st April 2013. Upon coming into effect
of the Merger Scheme 1 (one) Optionally Convertible Redeemable
Preference Share (OCRPS) of the nominal value of Rs.7.50 (Rupees Seven
and Fifty paise) at par of Transferee Company and credited as fully
paid up for every 1 (One) Equity Share of nominal value of Rs.10
(Rupees Ten) each fully paid up held in Transferor Company. (See Note
30)
2 The major terms and conditions of the OCRPS are as under:
(a) Dividend rate
12% p.a. on the paid up value per share of Rs. 7.50
(b) Accumulation of dividend
Cumulative
(c) Payment of dividend
The preference shares will qualify for preferential payment of dividend
at the rate set out above from the allotment date upto the date of
redemption or conversion.
(d) Tenure
5 years from the date of allotment
(e) Listing
The preference shares will, subject to the applicable laws and
regulations, be listed and/or admitted to trading on the relevant stock
exchange(s), where the existing shares of the Company are listed and/or
admitted to trading.
(f) Convertibility and conversion price ratio
The said preference shares will carry the right and option to apply for
conversion of the said preference shares into the equity shares of the
Company in the ratio 1 (one) equity share of Rs.10/- (Rupees Ten) each
at par of the Company credited as fully paid up for every 22 (Twenty
two) OCRPS of Rs.7.50/- (Rupees Seven and Fifty paise) each to be
issued and allotted by the Company. The said right must be exercised by
the eligible preference shareholders before the expiry of 6 months from
the date of allotment of such preference shares failing which the right
shall lapse. No coupons shall be issued by the Company towards any
fractional entitlement and all fractional entitlements, if any, shall
be ignored.
(g) Redemption Terms
The Company shall have an option to redeem by giving not less than 3
months' notice to all the outstanding preference shares (i.e. such
preference shares for which the option to convert into equity shares
has not been exercised, as mentioned above) at par any time after the
expiry of the conversion option period and before the expiry of 5 years
from the allotment date.
3. The number of issued, subscribed and fully paid up shares remained
unchanged during the year as there were no buy back or issue of share
capital.
4. The Company has only one class of Issued and Subscribed Equity
Shares having a par value of Rs.10/-. Each holder of equity shares is
entitled to one vote per share. There are no restrictions attached to
any equity shares. The Company declares and pays dividends, if any, in
Indian rupees. During the year ended 31st March 2015, the amount of per
share dividend recoginzed as distribution to equity share holders was
Rs.10/- (Previous year Rs.12.50/-). The dividend proposed by the Board
of Directors is subject to the approval of the shareholders in the
ensuing Annual General Meeting. In the event of liquidation of the
Company, the holders of equity shares will be entitled to receive
remaining assets of the Company, after distribution of all preferential
amounts. The distribution will be in proportion to the number of equity
shares held by the respective shareholders.
5. There are no shares issued for consideration other than cash in the
last 5 financial years. However, 1,35,13,607 Equity shares of Rs.10/-
each were issued as fully paid up bonus shares by capitalisation of
reserves in earlier years. 12,28,689 Equity shares of Rs.10/- each were
issued for consideration other than cash,pursuant to the scheme of
merger of erstwhile Jaipur Polyspin Limited and Mordi Textiles &
Processors Limited as approved by the Hon'ble High Court of Rajasthan.
6 Pursuant to the (a) order dated 26th March, 2015 of Hon'ble High
Court of Rajasthan at Jodhpur in Company petition No.10 of 2014; (b)
order dated 31st March, 2015 of Hon'ble High Court of Madras at Chennai
in Company petition No.79 of 2015; (c) taken on record by the Registrar
of Companies, Rajasthan on 30th April, 2015 and Registrar of Companies,
Tamil Nadu on 30th April, 2015, (the last of the date being the
'effective date') in the matter of amalgamation of Cheslind Textiles
Limited (CTL) with RSWM Limited in a scheme of amalgamation under
section 391 to 394 of the Companies Act, 1956 (the 'Scheme') from the
'appointed date' (1st April, 2013), in accordance with paragraph 8 of
the scheme of amalgamation, with effect from the appointed date, the
company has accounted for amalgamation of Cheslind Textiles Limited in
its books of accounts as per "Purchase Method" as described in
Accounting Standard(AS)-14 "Accounting for Amalgamations" issued by the
Institute of Chartered Accounts of India. In accordance with Para 12 of
Accounting Standard (AS) 14, 'Accounting for Amalgamation', the company
has effected said amalgamation recognizing the identifiable assets at
fair value. In accordance with Paragraph 37 of aforesaid Accounting
Standard-14, the excess of amount of consideration over the value of
net assets of Cheslind Textiles Limited, amounting to Rs.63 lac, has
been recognized as Goodwill arising on amalgamation, to be written off
in 5 years as required by Paragraph 38 of Accounting Standard (AS)- 14.
The current year's figures in these financial statements as at and for
the year ended 31st March, 2015 include results of CTL as at and for
the year ended on that date as amalgamated with RSWM Limited. The
results of CTL from the 'appointed date' (1st April 2013) to 31st
March, 2014 have been recognized in the opening balances of these
financial statements. The previous year figures in these financial
statements are of RSWM Limited only. Hence in these financial
statements, the current year figures consisting of RSWN Limited after
amalgamation of CTL are not comparable with the previous year's figures
that are of RSWM Limited only without effecting the amalgamation of
CTL. Had the amalgamation of CTL with RSWM Limited been effected from
the 'appointed date', the comparable figures of previous year with that
of current year would have been as under:
Disclosures as per AS 14
a) Names and general nature of business of the amalgamating companies;
Cheslind Textiles Limited(Transferor Company) and RSWM Limited
(Transferee Company) are both engaged in similar business of spinners,
doublers, weavers, bleachers, dyers in cotton, wool, jute, linen and
all others synthetic fibers.
b) Effective date of amalgamation for accounting purposes; 30th April
2015
c) Method of accounting used to reflect the amalgamation; " Purchase
Method" as per Para 12 of Accounting Standard - AS- 14 " Accounting of
Amalgamations" in compliance of Para 8 of the Scheme of Amalgamation.
d) Particulars of the scheme sanctioned under a statute: The same are
available on company's website www.rswm.in.
e) Consideration for the amalgamation and a description of the
consideration paid or contingently payable; Rs.1024.91 lac in the form
of 12% Optionally Convertible Redeemable Preference Shares of Rs.7.50
each fully paid up.
The amount of any difference between the consideration and the value of
net identifiable assets acquired, and the treatment thereof including
the period of amortization of any goodwill arising on amalgamation
(Rs.63 lac) to be amortized over a period of 5 years.
7 Jodhpur Bench of Hon'ble Rajasthan High Court, in its interim
order on constitutional validity of the levy of Entry Tax, had
directed the Company to pay 50% of the assessed entry tax and provide
solvent guarantee for the balance assessed and non-assessed tax and
interest thereon till the date of payment. In its final order dated
11th December, 2014 the said Court dismissed the petition and
discharged the interim order. The said Final Order was challenged in
the Hon'ble Supreme Court, which in its interim order dated 30th
January, 2015 directed to pay 50% of the arrears of the tax/demand
within 6 weeks and provide bank guarantee for the balance amount.
Subsequently, the Government of Rajasthan announced an Amnesty Scheme
on 18th March, 2015, allowing waiver of interest & penalty if an
assessee paid full amount of Entry Tax due and withdrew all legal
proceedings from Courts. Company applied for amnesty under the scheme
after withdrawing its petition from the Hon'ble Supreme Court and paid
a sum of Rs.975.87 lac during the year towards outstanding liability of
Entry Tax. Accordingly, provision for outstanding liability of Interest
amounting to Rs.367.95 has been written back.
8 Foreign Trade Policy 2009-2014 introduced Status Holder Incentive
Scheme (SHIS), under which an Exporter is entitled for scripts @1% of
FOB Value of Exports. These scripts can be used within 18 months of the
date of script, for payment of Import /Excise duties on capital goods
and spare parts and are freely transferable.
Based on opinion obtained from an expert, the full face value of SHIS
Scripts receivable aggregated to H1005.95 lac at the end of previous
years, upon ascertaining it's probable use in the normal course of
business based on projects approved by the Board. Out of aforesaid SHIS
scripts for a value of H1005.95 lac, scripts for a value of H981.99 lac
were used during the current financial year. script valuing
Rs.12.83.lac could not be used on account of expiry of validity and
loss on such script is accounted for in the current period.
During the year, Company also purchased SHIS scripts of a face value of
Rs.1048.17 lac at a price of Rs.416.33 lac .Out of this purchased SHIS
scripts, scripts of the face value of Rs.1022.43 lac (Cost Rs.404.04
lac) were utilized for payment of applicable duty and difference of
face value of scripts used and its cost of acquisition amounting to
Rs.618.39 lac has been recognized as Other Income.
SHIS script for the face value of Rs.36.87 lac (Cost Rs.12.29 lac)
inclusive of own eligibility and purchase, are in hand as on 31st
March, 2015 valid for utilisation within next 3 months, Utilisation
thereof within the next 3 month has been ascertained.
9 After commissioning of Thermal Power Plant at Banswara in 2007, HFO
fuelled Wartsila power generators at various units considered as
standby, became redundant. During financial year 2012-2013, company had
also invested under Group Captive Scheme in a Special Purpose Vehicle
(SPV) viz. LNJ Power Ventures Limited, which on 29th March 2013
commissioned a 20 MW Wind Power Unit in Rajasthan. As per Power Purchase
Agreement signed by Company with SPV, 100% power generated by SPV
starting 29th March, 2013 is available for use by company for 20 years
at a fixed price. Considering very high cost of retention of Wartsila
Power generators and uneconomical power generation, Company decided to
retire them from active use and sell them at all locations, retaining
only one at Denim Unit at Mayur Nagar as back-up for use in case of
extreme emergency. Pending disposal of these assets, estimated
realizable value of Wartsila Generators Rs.1068.46 lac was transferred
to "Assets held for sale" as on 31.03.2013. During financial year
2013-2014, Generators having carrying value of Rs.358.53 had been sold
out at a value of Rs.201.69 lac, resulting into a further loss of
Rs.156.64 lac. Remaining generators had been accounted for at estimated
realizable value of Rs.532.33 lac as on 31st March, 2014.
Out of above estimated realizable value as on 31st March, 2014, during
the year Generator with carrying value of H297.37 lac was sold at a
value of H264.19 lac resulting into further loss of Rs.33.18 lac. For
remaining one generator carrying value of Rs.234.96 lac, there is a
confirmed order of sale at the value of Rs.280.00 lac therefore it has
been accounted for at estimated realizable value of Rs.280 lac as on
31st March, 2015.
10 The Company has adopted Accounting Standard (AS)-30 'Financial
Instruments: Recognition and Measurement' and the gain on account of
change in effective portion of such forward contracts is taken into
Hedging Reserve Rs.65.03lac as on 31/03/2015, (Previous year H188.92
lac) and gain of H54.76 lac on ineffective portion of hedge is taken
into Statement of Profit & Loss (Previous year Loss of H18.31 lac).
(Refer Note 45)
11 A The loans & advances, debtors and other current assets are
reviewed annually and their value in the ordinary course of
business will not be less than the amount at which they are stated in
the Balance Sheet as assessed by the management. However, balance
confirmation from parties is under process.
12 B Response to the letter(s) sent by Company requesting
confirmation of balances has been insignificant. Company notes
that the Marketing and Accounting team has a system of periodical
verification of balances and required adjustments are carried-on that
basis regularly. In view of the above, management considered that
impact of reconciliation, on receipt of balance confirmation would not
be significant on the same.
13 In view of legal opinion and various reliefs available under
Income Tax Act, 1961 provision for taxation has been considered
adequate.
14 The figures for the previous year have been regrouped and/or
rearranged wherever found necessary to make these comparable with those
of the current year.
15 ACCOUNTING STANDARD (AS)-17, SEGMENT REPORTING
The Company's operations predominantly relates to manufacturing of Yarn
and Fabric & Denim. On the basis of assessment of the risk and return
differential in terms of Accounting Standard (AS)-17, Segment Reports
the Company has identified Yarn and Fabric & Denim as primary
reportable business segments. Further the geographical segments have
been considered as secondary segments and divided into India, Europe,
Middle East, America and Other Countries.
The accounting policy in respect of Segments is in conformity with the
accounting policies of the enterprise as a whole. The inter segment
transfers are accounted at the prevailing market prices charged to
unaffiliated customers for similar goods. These transfers are
eliminated in consolidation.
The revenue and expenditure in relation to the respective segments have
been identified and allocated to the extent possible. Other items i.e.
extraordinary items, Loss /Profit on sale of investments and foreign
currency transactions, corporate office expenses, etc. not allocable
to specific segments are being disclosed separately as unallocated and
adjusted directly against the Total Income of the Company.
16 ACCOUNTING STANDARD (AS) -19, 'LEASES'
There is no disclosure under Accounting Standard (AS) 19, as there are
no cancellable lease.
17 ACCOUNTING STANDARD (AS)-29'PROVISIONS & CONTINGENT LIABILITIES
AND COMMITMENTS'
S. PARTICULARS Carrying Additional Amt
No amount as provisions during
at 31.3.14 during the the
year year
A. PROVISIONS
B. CONTINGENT LIABILITY
NOT PROVIDED
FOR :
(a) Claims against the 8.99 - -
company not
acknowledged as debt
(b) Guarantees
(i) Guarantee in favour of 600.00 - -
International Finance
Corporation with M/s. HEG
Ltd on joint and
several basis on behalf
of M/s A. D. Hydro
power Limited.
(ii) Guarantee by ICICI Bank 1,000.00 - -
Ltd to LNJ Power
Ventures Ltd
(c ) Other money for which the
company is
contingently liable.
(i) Excise & Customs Duties, 675.99 - -
Sales tax and Other
demands disputed by the
Company.
(ii) Future Export Obligation - - -
Against EPCG
C. COMMITMENTS OUTSTANDING :
(i) Estimated Value of 4,210.86 8,058.14 4,222.67
contracts remaining to
be executed on capital
Accounts and not
provided for
(ii) Commitment in 2012-13 to
buy Rs.350 lac
unit per year at a fixed
rate of Rs.5.75 per unit
for 20 years
(a) Current Commitment 2,013.00 - -
(for next 12
Months)
(b) Non-current commitment 36,225.00 - 2,013.00
(for next 17
years)
Rs. in lac
S. PARTICULARS used Unused & Carrying
No reverted during amount as at
the year 31.03.15
A. PROVISIONS
B. CONTINGENT LIABILITY
NOT PROVIDED
FOR :
(a) Claims against the - 8.99
company not
acknowledged as debt
(b) Guarantees
(i) Guarantee in favour of - 600.00
International Finance
Corporation with M/s. HEG
Ltd on joint and
several basis on behalf
of M/s A. D. Hydro
power Limited.
(ii) Guarantee by ICICI Bank - 1,000.00
Ltd to LNJ Power
Ventures Ltd
(c ) Other money for which the
company is
contingently liable.
(i) Excise & Customs Duties, 284.99 391.00
Sales tax and Other
demands disputed by the
Company.
(ii) Future Export Obligation - -
Against EPCG
C. COMMITMENTS OUTSTANDING :
(i) Estimated Value of 3,441.35 4,604.98
contracts remaining to
be executed on capital
Accounts and not
provided for
(ii) Commitment in 2012-13 to
buy Rs.350 lac
unit per year at a fixed
rate of Rs.5.75 per unit
for 20 years
(a) Current Commitment - 2,013.00
(for next 12
Months)
(b) Non-current commitment - 34,212.00
(for next 17
years)
18 ACCOUNTING STANDARD (AS)-29'PROVISIONS & CONTINGENT LIABILITIES
AND COMMITMENTS' (Contd.)
D. The Rajasthan Government had imposed surcharge on shortfall in
meeting Renewable Energy Obligation on the power produced from Captive
Power Plants vide their Notification dated 23rd March, 2007 and amended
later on 24th May, 2011, which was stayed by Hon'ble High Court of
Rajasthan. In its Judgement dated 31st August, 2012, Hon'ble High Court
of Rajasthan upheld the validity of the aforesaid Notification and
amended Notification issued thereafter The Company has filed a SLP in
the Hon'ble Supreme Court through Rajasthan Textile Mills Association
(RTMA) against aforesaid Judgment of Hon'ble High Court of Rajasthan
which has been accepted.
On the basis of the legal opinion obtained by the Company, the said
Notification and amended Notification to date on Renewable Energy
Surcharge are violation of the Article 19 (1) (g) of the Constitution
so far as these relate to Captive Power Plants. The Management does not
foresee any possible liability in future in view of Commissioning of 20
MW Wind Power Unit set-up under the Group Captive Scheme by its
Associate Company "LNJ Power Ventures Ltd", power from which will be
solely used by the Company; together with the aforementioned legal
opinions.
E There is no other present obligations requiring provisions, in
accordance with the guiding principles as enunciated in Accounting
Standard (AS) - 29 "Provisions, Contingent Liabilities & Contingent
Assets" other than provided in the books of accounts.(Also see note
51on litigation)
19 ACCOUNTING STANDARD (AS)-32 FINANCIAL INSTRUMENT
DISCLOSURES-'HEDGE ACCOUNTING'
(a) The Company hedges its realizations on export sales and import
obligation for Capital Assets/Raw Material through Foreign Exchange
Derivative & Hedge Contracts in the normal course of business so as to
reduce the risk of exchange fluctuations. No Foreign Exchange
Derivative & Hedge Contracts are taken /used for trading or speculative
purpose.
(b) The Company has following gross derivatives exposure outstanding as
at March 31, 2015 which have been designated as cash flow hedge to its
exposure to movements in foreign exchange rates:
Mar 31, 2014
1. Jodhpur Bench of Hon Rajasthan High Court, in its interim order on
constitutional validity of the levy of Entry Tax, has directed the
company to pay 50% of the assessed Entry Tax and provide solvent
guarantee for the balance assessed and non-assessed Tax and interest
thereon till the date of payment. Accordingly, the company has paid Rs.
415.32 Lacs against the entry tax payable up to March 31, 2011 being
50% of assessed Entry Tax and provided solvent guarantee to the State
Government for the balance amount. As on March 31, 2014 the Company has
accounted for provision of Rs. 1,140.11 lacs (Previous Year Rs.
1,022.50 lacs) including interest of Rs. 488.69 lacs (Previous Year
Rs. 414.77 lacs).
2. Under the Technology Up-gradation Fund Scheme (TUFS) established by
Government of India for Textiles, the Company has incurred an
expenditure of Rs. 1,36,442.24 lacs on various projects (Previous Year
Rs. 1,31,133.57 Lacs). The interest subsidy accrued for the year under
this scheme is Rs. 3,058.19 lacs (Previous Year Rs. 3,529.17 lacs) out
of which, Rs. 3,056.67 lacs (Previous Year Rs. 3,327.21 lacs) has been
credited to Statement of Profit and Loss Net of interest subsidy
capitalised. (Ref. Note 27 for details of Interest cost).
3. The capital subsidy under TUFS is accounted, adopting Deferred
Income Approach, and is recognised in Statement of Profit & Loss on a
systematic and rational basis over useful life of the assets. A sum of
Rs. 452.29 lacs till date of Financial Statements is therefore,
considered as deferred income, out of which, a sum of Rs. 48.88 lacs
(previous year Rs. 47.83) has been recognised against depreciation
during the year (up to year Rs. 132.36 lacs).
4. Foreign Trade Policy 2009-2014 introduced Status Holder Incentive
Scheme (SHIS), under which an Exporter is entitled for Scripts @1% of
FOB Value of Exports. These Scripts can be used within 18 months of the
date of Script, for payment of Import /Excise duties on capital goods
and spare parts and are freely transferable .
Based on opinion obtained from an expert, the full value of SHIS
Scripts received/receivable aggregating to Rs. 1,908.53 lacs was
accounted for as other operating revenue in previous year, upon
ascertaining it''s probable use in the normal course of business based
on projects approved by the Board. Out of total SHIS Scripts received
for a value of Rs. 1,908.53 lacs, Scripts for a value of Rs. 1,006.96
lacs were used during the Financial Year. Scripts valuing Rs. 61.39
lacs were sold at a price of Rs. 18.17 lacs and loss on such Scripts of
Rs. 43.22 lacs is accounted for in the current period.
SHIS Scripts for a value of Rs. 901.57 lacs are valid for utilisation
within next 12 months, utilisation thereof within the next 12 month has
been ascertained by the Management based on investment plans approved
by the board on the date of approval of Accounts.
5. After commissioning of Thermal Power Plant at Banswara in 2007, HFO
fuelled Wartsila power generators at various units considered as
standby, became redundant. During previous year, company has also
invested under Group Captive Scheme in a Special Purpose Vehicle (SPV)
viz. LNJ Power Ventures Limited, which on 29th March 2013 commissioned
a 20 MW Wind Power Unit in Rajasthan. As per Power Purchase Agreement
signed by Company with SPV, 100% power generated by SPV starting 29th
March, 2013 will be for use by company for 20 years at a fixed price.
Considering very high cost of retention of Wartsila Power generators
and uneconomical power generation, Company during previous year decided
to retire them from active use and sell them at all locations,
retaining only one at Denim Unit at Mayur Nagar as back-up for use in
case of extreme emergency.
Resultantly Realisable value of Wartsila Generators (Rs. 1,068.46 Lacs)
and Spares and Stores (Rs. 20.13 Lacs) had been transferred to "ASSETS
HELD FOR SALE" as on 31.03.2013 and shown separately, pending disposal
of these assets in Financial Year 2013-14 in terms of the Board''s
decision dated 1st May, 2013.
During the year, 3 Generators of a WDV of Rs. 358.53 Lacs had been sold
out at a value of Rs. 201.69 lacs, resulting into a further loss of Rs.
156.64 lacs. Remaining generators have been accounted for at estimated
realisable value of Rs. 399.34 lacs.
6. Company''s subsidiary Cheslind Textiles Ltd (CTL) had suffered losses
eroding its entire net worth and experienced difficulties in repayment
of Term Loans, which were partly guaranteed by RSWM Ltd. CDR Cell
approved restructuring of its Debts effective from December 1, 2011. In
compliance of the Corporate Debts Restructuring (CDR) Scheme approved
on April 9, 2012, loans & advances aggregating to Rs. 1640 lacs given to
CTL were converted into 1,64,00,000 equity shares of Rs. 10 each and
interest free loan of Rs. 60 lacs had been granted to CTL as approved by
the Board of Directors in their meeting on 26th October, 2012.
Board of Directors of the Company in its meeting held on 9th April,
2014 decided to merge Cheslind Textiles Limited (CTL) with the Company.
Based on Scheme of Amalgamation approved by the Boards of Directors of
RSWM Limited and Cheslind Textiles Limited based on the Valuation
Report of an Independent Valuer and Fairness Opinion thereon by SEBI
approved Merchant Banker, each share holder of Cheslind Textiles
Limited is being offered 1 Optionally Convertible Redeemable Preference
Shares (OCRPS) of nominal value of Rs. 7.50 fully paid up of the Company
for every one equity share of nominal value of Rs. 10.00 fully paid-up
held in CTL. Proposed appointed date for merger is 1st April, 2013.
OCRPS shall carry dividend rate of 12% on paid-up value of Rs. 7.50,
will have a tenure of 5 years from the date of allotment, will be listed
and/or admitted to trading on the designated stock exchange(s) and will
be optionally convertible in the ratio of 22 OCRPS of Rs. 7.50 paid up
for 1 equity share of the Company upon exercise of the option within 6
months of the allotment. OCPRS not converted within specified time can
be redeemed before maturity by the Company by giving 3 months notice.
The Scheme of Amalgamation is subject to approval of High Courts of
Rajasthan and Madras.
During the year 2013-14, Cheslind Textiles Limited have reported a PBDT
of Rs. 1,034.74 Lacs (Previous Year Rs. 1,206.89 Lacs). On the basis
of detailed examination, expected economies & synergies upon effective
merger and on its best estimates, the Management considers the decline
in the value of investment in Cheslind Textiles Ltd (CTL) a temporary
diminution in such value and hence in line with the valuation under AS
-13, no provision for diminution in such value is made as at 31st
March, 2014.
7. The Company has adopted AS 30 "Financial Instruments: Recognition
and Measurement" and the gain on account of change in effective portion
of such forward contracts is taken into Hedging Reserve Rs. 188.92 Lacs
as on 31st March 2014, (Previous year loss 44.94 lacs) and loss of Rs.
18.31 lacs on ineffective portion of hedge is taken into Statement of
Profit & Loss (Previous year Rs. 25.01 lacs ). Refer Note No. 47
8. A The loans & advances, debtors and other current assets are
reviewed annually and their value in the ordinary course of
business will not be less than the amount at which they are stated in
the Balance Sheet as assessed by the Management. However, balance
confirmation from parties is under process.
B Response to the letter(s) sent by Company requesting confirmation of
balances has been insignificant. Company notes that the Marketing and
Accounting team has a system of periodical verification of balances and
required adjustments are carried-on that basis regularly. In view of
the above, management considered that impact of reconciliation, on
receipt of balance confirmation, would not be significant on the same.
9. In view of legal opinion and various reliefs available under Income
Tax Act, 1961 provision for taxation has been considered adequate.
10. The figures for the previous year have been regrouped and/or
rearranged wherever found necessary to make these comparable with those
of the current year.
11. Employee benefits - AS - 15
The company has complied with Accounting Standard 15 (Revised 2005) and
the required disclosures are given hereunder:
(a) Defined Benefit Plans (Funded)
The Following table set out the status of the gratuity Plan and Earned
Leave Plan as required under AS-15 (Revised 2005)
The Guidance Note on Implementation of AS-15 (Revised),"Employee
Benefits" issued by the ICAI states that Provident Fund set up by the
employers, which requires interest shortfall to be met by the employer
needs to be treated as defined benefits plan. The Company set up
Provident Fund does not have existing deficit of interest shortfall.
With regard to future obligation arising due to interest shortfall
(i.e. Government interest to be paid on the Provident Fund Scheme
exceeding rate of interest earned on investment) pending issuance of
the Guidance Note from Actuarial Society of India, Company actuary has
expressed his inability to reliably measure the Provident Fund
liability.
The Companys operations predominantly relates to manufacturing of Yarn
and Fabric & Denim. On the basis of assessment of the risk and return
differential in terms of AS-17, the Company has identified Yarn and
Fabric & Denim as primary reportable business segments. Further the
geographical segments have been considered as secondary segments and
divided into India, Europe, Middle East, America and Other Countries.
The accounting policy in respect of Segments is in conformity with the
accounting policies of the enterprise as a whole. The inter segment
transfers are accounted at the prevailing market prices charged to
unaffiliated customers for similar goods. These transfers are
eliminated in consolidation.
The revenue and expenditure in relation to the respective segments have
been identified and allocated to the extent possible. Other items i.e.
extraordinary items, Loss /Profit on sale of investments and foreign
currency transactions, corporate office expenses, etc. not allocable to
specific segments are being disclosed separately as unallocated and
adjusted directly against the Total Income of the Company.
D. The Rajasthan Government had imposed surcharge on shortfall in
meeting Renewable Energy Obligation on the power produced from Captive
Power Plants vide their Notification dated 23rd March, 2007 and amended
later on 24th May, 2011, which was stayed by Hon''ble High Court of
Rajasthan. In its Judgement dated 31st August, 2012, Hon''ble High Court
of Rajasthan upheld the validity of the aforesaid Notification and
amended Notification issued thereafter The Company has filed a SLP in
the Hon''ble Supreme Court through Rajasthan Textile Mills Association
(RTMA) against aforesaid Judgment of Hon''ble High Court of Rajasthan
which has been accepted
On the basis of the legal opinion obtained by the Company, the said
Notification and amended Notification to date on RE Surcharge are
violative of the Article 19 (1) (g) of the Constitution so far as these
relate to Captive Power Plants. The Management does not foresee any
possible liability on this account and hence provision of liability to
date Rs. 3,138.27 lacs (Previous Year Rs. 2,920.83 lacs) as per original
Notification but only Rs. 735.79 lacs as per amended Notification has not
been made in the books of accounts as no demand has, so far, been
raised on account of these dues by Government. The Management does not
foresee any liability in future in view of Commissioning of 20 MW Wind
Power Unit set-up under the Group Captive Scheme by its Associate
Company "LNJ Power Venture Ltd", power from which will be solely used
by the Company; together with the aforementioned legal opinions
E. There is no other present obligations requiring provisions, in
accordance with the guiding principals as enunciated in Accounting
Standard (AS) - 29 "Provisions, Contingent Liabilities & Contingent
Assets" other than provided in the books of accounts
I HEDGE ACCOUNTING - AS - 32
(a) The Company hedges its realisations on export sales and import
obligation for Capital Assets/Raw Material through Foreign Exchange
Derivative & Hedge Contracts in the normal course of business so as to
reduce the risk of exchange fluctuations. No Foreign Exchange
Derivative & Hedge Contracts are taken /used for trading or speculative
purpose.
(b) The Company has following gross derivatives exposure outstanding as
at March 31, 2014 which have been designated as cash flow hedge to its
exposure to movements in foreign exchange rates:
(e) During the year there are no forecasted transactions for which
hedge accounting had been used in the previous periods, but which is no
longer expected to occur.
Mar 31, 2013
1 Jodhpur Bench of Hon Rajasthan High Court, which had earlier in its
interim order stayed payment of entry tax on the grounds of
constitutional validity, has vide order dated January 21, 2011 modified
its earlier order following the judgement dated January 12, 2011 of the
Hon''ble Supreme Court of india in the case of Binani Cement Ltd''s
Special Leave petition and directed the Company to pay 50% of the
assessed entry tax and provide solvent guarantee for the balance
assessed and non-assessed tax and interest thereon till the date of
payment. Accordingly, the Company has paid Rs.380.18 Lacs against the
entry tax payable up to 31st March, 2010, being 50% of assessed entry
tax and provided solvent guarantee to the State Government for the
balance amount. As on 31st March, 2013 the Company has accounted for
provision of Rs.1,022.50 Lacs (previous Year Rs.985.54 Lacs) including
interest of Rs.414.77 Lacs (previous Year Rs.344.08 Lacs).
2 under the technology up-gradation Fund Scheme (TuFS) established by
Government of india for textiles, the Company has incurred an
expenditure of Rs.1,31,133.57 Lacs on various projects (previous Year
Rs.1,27,296.79 Lacs). the interest subsidy accrued for the year under
this scheme is Rs.3,529.17 Lacs (previous Year Rs.3,384.15 Lacs),out of
which Rs.3,327.21 Lac (previous Year Rs.3158.41 Lac) has been credited
to Statement of profit and Loss net of interest subsidy capitalised.
(Ref. note 27 for details of interest cost).
3 the capital subsidy under TuFS is accounted adopting deferred income
Approach, and is recognised in Statement of profit and Loss on a
systematic and rational basis over useful life of the assets. A sum of
Rs.452.29 Lacs till date of Financial Statements is therefore,
considered as deferred income, out of which, a sum of Rs.47.83 Lacs
(previous year Rs.46.81) has been recognised against depreciation
during the year (up to year Rs.181.24 Lacs).
4 Foreign trade policy 2009-2014 introduced Status Holder incentive
Scheme (SHiS), under which an exporter is entitled for Scripts @1% of
FoB Value of exports. these Scripts can be used within 18 months of the
date of Script, for payment of import /excise duties on capital goods
and spare parts and are freely transferable .
due to inadequate Government Clarification/notification on eligibility,
the application for SHiS was delayed. upon legal opinion received by
the Company during the current year, these applications were made on
23rd August, 2012 & 17th September, 2012 for the year 2009-10 & 2010-11
respectively. Scripts for value of Rs.487.41 Lacs for the year
2009-2010 and for Rs.731.61 Lacs for the year 2010-2011 were allotted
on 8th october, 2012 and 22nd october, 2012 respectively.
Based on opinion obtained from an expert, the full value of SHiS
Scripts received (Rs.487.41 Lacs for the year 2009-10 & Rs.731.61 Lacs
for the year 2010-11) and Scripts receivable (Rs.689.51 Lacs for the
year 2012-13), aggregating to Rs.1908.53 Lacs have been accounted for
as other operating revenue in current Financial Year upon ascertaining
it''s probable use in the normal course of business and measurement with
virtual certainty during the defined period, based on projects approved
by the Board, on the date of approval of Balance Sheet.
The SHIS issued during 2012 are valid for utilisation within next 12
months. Thus, the utilisation of such SHIS has been asserted by the
Management to be done within the next 12 months, based on investment
plans approved by the Board and Investment Committee on the date of
approval of Accounts. Such investments are scheduled to be executed
within the next 12 months based on such projects approval by the Board.
5 After commissioning of Thermal Power Plant at Banswara in 2007, HFO
fuelled Wartsila power generators at various units were considered as
standby. During the year, company also invested under Group Captive
Scheme in a Special Purpose Vehicle (SPV) viz. LNJ Power Ventures
Limited, which on 29th March, 2013 commissioned a 20 MW Wind Power Unit
in Rajasthan. As per Power Purchase Agreement signed by Company with
SPV, 100% power generated by SPV starting 29th March, 2013 will be for
use by company for 20 years at a fixed price. Considering very high
cost of retention of Wartsila Power Generators and uneconomical power
generation, Company during the year decided to retire them from active
use and sell Wartsila Power Generators at all locations, retaining only
one at Denim Unit at Mayur Nagar as back-up for use in case of extreme
emergency. Consequently Company also decided to sell spare parts and
stores of these Wartsila Generators. Resultantly, Rs.1901.19 Lac being
difference of WDV and realisable value of these generators and Rs.93.12
Lacs being difference of Book Value and realisable value of related
spare parts and stores, have been charged to Statement of Profit and
Loss. Realisable value of Wartsila Generators (Rs.1,068.46 Lac) and
Spares and Stores (Rs.20.13 Lacs) has been transferred to "ASSETS HELD
FOR SALE" as on 31st March, 2013 and shown separately, pending
disposal of these assets in Financial Year 2013-14 in terms of the
Boards decision dated 1st May, 2013.
6 Dispute with Bank of Maharashtra over resetting rate of interest on
Term Loan was decided by Banking Ombudsman, Rajasthan, RBI vide his
award dated 24th February, 2012. The said award was only partially
implemented by Bank of Maharashtra against which Company filed an
appeal with Appellate Authority, Dy. Governor, RBI. The Appellate
Authority remanded back the case to the Banking Ombudsman, Rajasthan,
RBI, who in his revised award dated 16th July, 2012 upheld Company''s
contention and directed Bank of Maharashtra not to charge interest
prospectively at the rate more than 11.75%. Bank of Maharashtra filed
appeal against revised award of the Banking Ombudsman, Rajasthan, RBI.
Upon submission of our reply to the issues raised by them, Bank of
Maharashtra decided to withdraw its appeal and implement awards passed
by Banking Ombudsman, Rajasthan, RBI. As a result, Company paid to Bank
of Maharashtra outstanding interest amount of Rs.45.82 Lacs (Rs.42.53
Lacs for previous year fully provided for and Rs.3.27 Lacs for current
year) and closed loan account with the Bank.
7 Company''s subsidiary Cheslind Textiles Ltd (CTL) engaged in
manufacturing Cotton Yarn had suffered losses eroding its entire net
worth. Experiencing difficulties in repayment of Term Loans, which were
partly guaranteed by RSWM Ltd; CTL approached its lenders for
restructuring of its Debts effective from 1st December, 2011. The
scheme of certain debts restructuring specifying sacrifices by the
lenders and promoters requiring to infuse fresh capital, conversion of
existing loans into equity shares and extension of guarantees and
additional comfort letters got approved under Corporate Debts
Restructuring (CDR) Mechanism on March 30, 2012. As per the approval of
Board of Directors, loan of Rs.1,200 Lacs and advance of Rs.200 Lacs
(given on 23.04.12) and Rs.240 Lacs (given on 7th May, 2012)
respectively (aggregating to Rs.1,640 Lacs) have been converted into
1,64,00,000 Equity Shares of Rs.10 each in compliance of the
aforementioned approved CDR Scheme. Further, interest free loan of
Rs.60 Lacs has been granted to Cheslind Textile Ltd. in September,
2012, as approved by the Board of Directors in their meeting on 26th
October, 2012.
During the year 2012-13, Cheslind Textiles Ltd. has reported a PBDT of
Rs.1,206.89 Lacs. On the basis of detailed examination and on its best
estimates, the Management considers the decline in the value of
investment in Cheslind Textiles Ltd (CTL) a temporary diminution in
such value and hence in line with the valuation under AS-13, no
provision for diminution in such value is made as at 31st March, 2013.
8 The Company has incurred expenditure on implementation of Spinning
projects at Kharigram and denim unit at Mordi, Banswara, which have
been considered as pre-operative Expenses and capitalised to the
respective projects on completion. The details of these expenses are
as under:-
9 The Company has adopted Accounting Standard AS-30 "Financial
instruments: Recognition and Measurement" and the loss on account of
change in effective portion of such forward contracts is taken into
Hedging Reserve Rs.44.93 Lacs (Loss) as on 31st March, 2013 (previous
year Rs.163.09 lac (Loss) and loss Rs.96.97 lac on ineffective portion
of hedge is taken into Statement of profit & Loss (Rs.121.98 Lacs
previous Year) , Refer Note No. 49.
10 The loans & advances, debtors and other current assets are reviewed
annually and their value in the ordinary course of business will not be
less than the amount at which they are stated in the Balance Sheet as
assessed by the Management. However, balance confirmation from parties
is under process.
11 Response to the letter(s) sent by Company requesting confirmation of
balances has been insignificant. Company notes that the Marketing and
Accounting team has a system of periodical verification of balances and
required adjustments are carried-on that basis regularly. in view of
the above, Management considered that impact of reconciliation, on
receipt of balance confirmation, would not be significant on the same.
12 in view of legal opinion and various reliefs available under income
Tax Act, 1961 provision for taxation has been considered adequate.
13 The figures for the previous year have been regrouped and/or
rearranged wherever found necessary to make these comparable with those
of the current year.
14 SEGMENT REPORTING - AS - 17
the Company''s operations predominantly relates to manufacturing of Yarn
and Fabric & denim. on the basis of assessment of the risk and return
differential in terms of AS-17, the Company has identified Yarn and
Fabric & denim as primary reportable business segments. Further the
geographical segments have been considered as secondary segments and
bifurcated into india, europe, Middle east, America and other
Countries.
the accounting policy in respect of Segments is in conformity with the
accounting policies of the enterprise as a whole. the inter segment
transfers are accounted at the prevailing market prices charged to
unaffiliated customers for similar goods. these transfers are
eliminated in consolidation.
the revenue and expenditure in relation to the respective segments have
been identified and allocated to the extent possible. other items i.e.
extraordinary items, Loss /profit on sale of investments and foreign
currency transactions, corporate office expenses, etc. not allocable to
specific segments are being disclosed separately as unallocated and
adjusted directly against the total income of the Company.
15. HEDGE ACCOUNTING - AS - 32
(a) The Company hedges its realisations on export sales and import
obligation for Capital Assets/Raw Material through Foreign Exchange
Derivative & Hedge Contracts in the normal course of business so as to
reduce the risk of exchange fluctuations. No Foreign Exchange
Derivative & Hedge Contracts are taken /used for trading or speculative
purpose.
Mar 31, 2012
1. There are no shares issued for consideration other than cash in the
last 5 financial years. However, 1,35,13,607 Equity Shares of Rs. 10/-
each were issued as fully paid up bonus shares by capitalisation of
reserves in earlier years. 12,28,689 Equity Shares of Rs. 10/- each were
issued for consideration other than cash, pursuant to the scheme of
merger of erstwhile Jaipur Polyspin Limited and Mordi Textiles and
Processors Limited as approved by the Hon'ble High Court of Rajasthan.
2. The number of issued, subscribed and fully paid up shares remained
unchanged during the year as there were no buy back or issue of share
capital.
3. The Company has only one class of Equity Shares having a par value
of Rs. 10/-. Each holder of Equity Shares is entitled to one vote per
share. There are no restrictions attached to any Equity Shares. The
Company declares and pays dividends, if any, in Indian Rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting. In the event
of liquidation of the Company, the holders of Equity Shares will be
entitled to receive remaining assets of the Company, after distribution
of all preferential amounts. The distribution will be in proportion to
the number of Equity Shares held by the respective shareholders.
1. Secured loans repayable on demand include working capital loans
(except from Axis Bank of Rs. 3,454.10 Lacs which are secured by pledge
and possessive lien on stocks of Rs. 4,605.46 Lacs) secured by
hypothecation of remaining raw materials, stock in process, finished
goods, semi finished goods, stores, spares, book debts and other
current assets as well as second charge on Fixed Assets of the Company
on pari-passu basis.
2. All loans repayable on demand carry floating interest rate of
10.60% to 13.75%.
Note: 4.
Jodhpur Bench of the Hon'ble Rajasthan High Court, which had earlier in
its interim order stayed payment of Entry Tax on the grounds of
constitutional validity, has vide order dated January 21, 2011 modified
its earlier order following the judgement dated January 12, 2011 of The
Hon'ble Supreme Court of India in the case of Binani Cement Ltd's
Special Leave Petition and directed the Company to pay 50% of the
assessed Entry Tax and provide solvent guarantee for the balance
assessed and non-assessed tax and interest thereon till the date of
payment. Accordingly the Company has paid Rs. 265.27 Lacs against the
entry tax payable up to March 31, 2009 being 50% of assessed Entry Tax
and provided solvent guarantee to the State Government for the balance
amount as on March 31, 2012 of Rs. 985.54 Lacs (Previous Year Rs. 957.75
Lacs) including interest of Rs. 344.08 Lacs.
Note: 5.
Under the Technology Up-gradation Fund Scheme (TUFS) established by
Government of India for Textiles, the Company has incurred an
expenditure of Rs. 1,27,296.79 Lacs on various projects (Previous Year Rs.
95,218.02 Lacs). The interest subsidy accrued for the year under this
scheme is Rs. 3,094.09 Lacs (Previous Year Rs. 3,453.83 Lacs) which has
been credited to Statement of Profit and Loss.
Note: 6.
The Capital Subsidy under TUFS is accounted adopting Deferred Income
Approach and is recognized in Statement of Profit and Loss on a
systematic and rational basis over useful life of the assets. A sum of
Rs. 432.67 Lacs up to date is therefore considered as deferred income,
out of which, a sum of Rs. 46.81 Lacs (Previous Year Rs. 86.48 Lacs) has
been recognized against depreciation during the year (up to this year Rs.
209.91 Lacs).
Note: 7.
Company's subsidiary Cheslind Textiles Ltd (CTL) engaged in
manufacturing Cotton Yarn has suffered losses eroding its entire net
worth. Experiencing difficulties in repayment of Term Loans, which are
partly guaranteed by RSWM Ltd; CTL approached its lenders for
restructuring of its Debts effective from December 1, 2011. The scheme
of certain debts restructuring specifying sacrifices by the lenders and
promoters requiring to infuse fresh capital, conversion of existing
loans into Equity Shares and extension of guarantees and additional
comfort letters got approved under Corporate Debts Restructuring (CDR)
Mechanism on April 9, 2012. Implementation of the same is in progress.
On the basis of detailed examination and on its best estimates, the
Management considers the decline in the value of investment in Cheslind
Textiles Ltd (CTL) a temporary diminution in such value and hence in
line with the valuation under AS 13, no provision for diminution in
such value is made as at March 31, 2012.
Note: 8.
Interest on Term Loan taken from Bank of Maharashtra in December, 2006
@ 9% was due for resetting in December, 2009 which was inordinately
delayed by the Bank until March 24, 2011 when it communicated to the
Company to pay interest @11.75% with retrospective effect. Aggrieved by
Bank's action, Company approached Ombudsman, RBI, Rajasthan who vide
his order dated February 24, 2012 directed bank to charge interest only
prospectively from the date of communication to borrower. Bank vide its
letter dated April 3, 2012 waived off excess interest charged to
account up to March 24, 2011 but demanded interest @ 16.70% for period
thereafter. Without prejudice to Company's legal position, it has
offered to settle the issue by paying interest @11.75% w.e.f. March 24,
2011. The difference of interest payable @ 11.75% up to March 31, 2012
amounting to Rs.42.53 Lacs is fully provided for.
Note: 9.
The Company has been hitherto, following the guidelines issued by the
Institute of Chartered Accountants of India on "Accounting for
Derivatives" dated March 29, 2008, wherein the variations at the
reporting dates on mark to market basis on Foreign Exchange
Derivatives/ Hedge were acknowledged through the Statement of Profit
and Loss.
During the year, Company has early adopted AS-30 "Financial
Instruments: Recognition and Measurement" and the gain / loss on
account of change in effective portion of such forward contracts is
taken into Hedging Reserve (Rs. 163.09 Lacs as on March 31, 2012,
Previous Year Nil) and gain on ineffective portion of Hedge is taken
into Statement of Profit and Loss (Rs. 121.98 Lacs, Previous Year Nil).
As a result thereof the loss for the period is understated by Rs. 163.09
Lacs.
Note: 10.
The loans and advances, debtors and other current assets are reviewed
annually and their value in the ordinary course of business will not be
less than the amount at which they are stated in the Balance Sheet as
assessed by the Management. However, balance confirmation from parties
is under process.
Note: 11.
Response to the letter(s) sent by Company requesting confirmation of
balances has been insignificant. Company notes that the Marketing and
Accounting team has a system of periodical verification of balances and
required adjustments are carried on that basis regularly. In view of
the above, Management considered that impact of reconciliation, on
receipt of balance confirmation, would not be significant on the same.
Note: 12.
In view of legal opinion and various reliefs available under Income Tax
Act, 1961 provision for taxation has been considered adequate. Note:
40.
The figures for the previous year have been regrouped and / or
rearranged wherever found necessary to make these comparable with those
of the current year.
relevant factors, such as supply and demand in the employment market.
The above information is certified by the actuary. The estimate of
contribution for the next year as per actuarial valuation is as under:
a) Gratuity - Rs. 396.28 Lacs
b) Earned leave - Rs. 34.01 Lacs
viii)The overall expected return on assets is assumed based on the
market prices prevailing on that date over the accounting period. The
Company is having approved Gratuity Trust and Leave Encashment Scheme,
which is having Insurer Managed Fund. The description of Insurance
Policies are "ICICI Pru Group Gratuity Platinum Policy and Employees
Leave Encashment-cum-life Assurance of Life Insurance Corporation of
India".
The Guidance Note on Implementation of AS-1 5 (Revised),"Employee
Benefits" issued by the ICAI states that Provident Fund set up by the
employers, which requires interest shortfall to be met by the employer
needs to be treated as defined benefits plan. The Company set up
Provident Fund does not have existing deficit of interest shortfall.
With regard to future obligation arising due to interest shortfall
(i.e. Government interest to be paid on the Provident Fund Scheme
exceeding rate of interest earned on investment) pending issuance of
the Guidance Note from Actuarial Society of India. Company Actuary has
expressed his inability to reliably measure the Provident Fund
liability.
Note: 13. SEGMENT REPORTING - AS - 17
The Company's operations predominantly relates to manufacturing of Yarn
and Fabric and Denim. On the basis of assessment of the risk and return
differential in terms of AS-17, the Company has identified Yarn and
Fabric and Denim as primary reportable business segments. Further the
geographical segments have been considered as secondary segments and
bifurcated into India, Europe, Middle East, America and Other
Countries.
The Accounting Policy in respect of Segments is in conformity with the
Accounting Policies of the enterprise as a whole. The inter segment
transfers are accounted at the prevailing market prices charged to
unaffiliated customers for similar goods. These transfers are
eliminated in consolidation.
The revenue and expenditure in relation to the respective segments have
been identified and allocated to the extent possible. Other items
Note: 14. CONTINGENT LIABILITIES AND COMMITMENTS (AS-29): (Rs. Lacs)
SI. Year ended Year ended
No. Particulars March 31, 2011 March 31,2011
A. Contingent liability not
provided for :
a) Claims against the Company not
acknowledged as debt 44.93 69.38
b) Guarantees
i) Default deferred payment guarantee
to Exim Bank, ICICI, IDBI, Canara Bank,
SBI and SBOM for securing loan given
to Cheslind Textile Ltd.
Outstanding Loan {Maximum amount for
which Company may be liable during
next 12 Months - Rs. 289.66 Lacs} 816.31 1,047.73
ii) The Company has provided Guarantee in
favour of International Finance
Corporation with M/s. HEG Ltd on
joint and several basis on behalf of
M/s. AD Hydro Power Limited 600.00 600.00
c) Other money for which the Company is
contingently liable.
i) Excise and Customs Duties, Sales tax
and Other demands disputed by the
Company 273.85 230.75
ii) Future Export Obligation
Against EPCG 10,997.00 231.16
B. Commitments outstanding :
i) Estimated Value of contracts
remaining to be executed on
Capital Accounts and
not provided for 9,797.46 24,582.23
ii) Bills Discounted with Banks 9,151.68 11,737.16
C. The Rajasthan Government had imposed surcharge on shortfall in
meeting Renewable Energy Obligation on the power produced from Captive
Power plants vide their Notification dated March 23, 2007 on which stay
has been granted by the Hon'ble High Court. The same has been
challenged in the Hon'ble High Court of Rajasthan through Rajasthan
Textiles Mills Association. On the basis of opinion
Note: 15. CONTINGENT LIABILITIES AND COMMITMENTS (AS 29): (Contd...)
of the consultant that the said notification and amended notifications
to date on RE Surcharge are violative of the Article 19(1) (g) of the
Constitution so far as these relate to Captive Power Plants, the
Management does not foresee any possible liability on this account and
hence no provision of liability to date Rs. 2,920.83 Lacs (Previous Year
Rs. 2,402.48 Lacs) has been made in the book of accounts.
D. There is no other present obligations requiring provisions in
accordance with the guiding principals as enunciated in Accounting
Standard (AS) - 29 "Provisions, Contingent Liabilities and Contingent
Assets".
Note: 16. HEDGE ACCOUNTING - AS - 32
a) The Company Hedges its realizations on export sales and import
obligation for Capital Assets/ Raw Material through Foreign Exchange
Derivative and Hedge Contracts in the normal course of business so as
to reduce the risk of exchange fluctuations. No Foreign Exchange
Derivative and Hedge Contracts are taken / used for trading or
speculative purpose.
b) The Company has following gross derivatives exposure outstanding as
on Balance Sheet date which have been designated as cash flow hedge to
its exposure to movements in foreign exchange rates:
Mar 31, 2011
1 Contingent liabilities
( Rs. in Lacs)
As at
31st March, 2011 As at
31st March, 2010
A. Contingent liabilities not provided for :
i) Excise & Custom Duties, Sales Tax and
Other demands disputed by the Company. 230.75 230.30
ii) Claims not acknowledged by the Company 69.38 53.45
iii) Default Deferred Payment Guarantee
provided to :-
Exim Bank for securing the loans given by
them to RSWM International B. V.
Netherlands.
- Outstanding Loan (Refer note No.6) NIL 1,620.89
iv) Default Deferred Payment Guarantee for
securing the loan taken by CTL
Exim Bank, ICICI, IDBI, Canara Bank, SBI
and SBOM
- Outstanding Loan 1047.73 2182.94
{Maximum amount for which Company may be
liable during next 12 Months Ã
Rs 289.96 lac}
v) Un-expired Letters of Credit, for which
counter guarantee given by the Company 4185.72 413.79
vi) Counter guarantees given by the
Company in respect of Guarantees given by
the Company's Bankers. 942.26 964.78
vii) The Company has provided Guarantee in
favour of International Finance
Corporation with M/s. HEG Limited on
Joint and several basis
on behalf of M/s. AD Hydro Power Limited. 600.00 600.00
B. Obligations and commitments outstanding :
i) Estimated value of contracts remaining to
be executed on Capital Account
and not provided for 24582.23 832.14
ii) Bills Discounted with Banks 11737.16 7,935.50
C. The export obligations against EPCG licenses have been timely
fulfilled by the Company. The future additional export obligations
against EPCG licences are of Rs.231.16 lac (Previous Year Rs.11,490
lac) and are to be fulfilled within the specified period.
D. The Rajasthan Government had imposed surcharge on shortfall in
meeting Renewable Energy Obligation on the power produced from Captive
Power plants vide their Notification dated 23.3.2007 on which stay has
been granted by the Hon'ble High Court. The same has been challenged in
the Hon'ble High Court of Rajasthan through Rajasthan Textiles Mills
Association. On the basis of opinion of the consultant that the said
notification and amended notifications to date on RE Surcharge are
violative of the Article 19 (1) (g) of the Constitution so far as these
relate to Captive Power Plants, the Management does not foresee any
possible liability on this account and hence no provision of liability
to date Rs.2402.48 lac (Previous Year Rs.1,634.95 lac) has been made in
the Book of Accounts.
2. Jodhpur Bench of Hon Rajasthan High Court, which had earlier in its
interim order stayed payment of Entry Tax on the grounds of
constitutional validity, has vide order dated 21/01/2011 modified its
earlier order following the judgement dated 12/01/2011 of The Hon'ble
Supreme Court of India in the case of Binani Cement Ltd's Special Leave
Petition and directed the Company to pay 50% of the assessed Entry Tax
and provide solvent guarantee for the balance assessed and non-assessed
Tax and interest thereon till the date of payment. Accordingly the
Company has paid Rs.192.16 Lac on 01/03/2011 being 50% of assessed
Entry Tax and provided solvent guarantee to the State Government for
the balance amount as on 31.03.2011 of Rs.957.75 Lacs (Previous Year
808.33) including interest of Rs.270.64 lac.
3. The Company hedges its export realisations through Foreign Exchange
Derivative & Hedge Contracts in the normal course of business so as to
reduce the risk of exchange fluctuations. No Foreign Exchange
Derivative & Hedge Contracts are taken /used for trading or speculative
purpose. Pursuant to the announcement on "Accounting for Derivatives"
issued by the Institute of Chartered Accountants of India on 29th
March, 2008 and as per Companies Accounting Policy, the Company has
accounted for gains aggregating Rs.16.74 lac (Previous year Rs.37.78
lac loss) during the current year, computed on mark to market basis on
the Foreign Exchange Derivative & Hedge Contracts outstanding as on
31st March, 2011.
4. Under the Technology Up-gradation Fund Scheme (TUFS) established by
Government of India for Textiles, the Company has incurred an
expenditure of Rs.95218.02 lac on various projects. The interest
subsidy accrued for the year under this scheme is Rs.3453.83 lac
(Previous Year Rs.3740.45 lac) which has been credited to Profit & Loss
Account.
5. The capital subsidy under TUFS is accounted adopting Deferred
Income Approach and is recognised in Profit & Loss Statement on a
systematic and rational basis over useful life of the assets. A sum of
Rs.432.67 lac up to date is therefore considered as deferred income,
out of which, a sum of Rs.86.51 lac (including Rs.39.69 lac of prior
period to match with the revised useful life of the Denim Plant) has
been recognised against depreciation during the year (up to year
Rs.175.99 lac).
6. The Company had a wholly owned overseas subsidiary viz RSWM
International BV, incorporated as a Special Purpose Vehicle (SPV) in
the year 2007 with an investment in the equity of Rs.277.30 lac.
Further, loans of Rs.779.96 lac were advanced by the Company up to
30.09.2010 in normal course of business. As authorised by Company's
Memorandum of Association, the Company had also given a Perpetual &
Irrevocable Default Payment Guarantee to SPV's lendor viz Exim Bank of
India, against a term loan of USD3.80 million granted to RSWM
International BV. The said SPV, RSWM International BV had made a
strategic investment in the 50% equity of RSWM SISA, Spain with whom
the Company had entered into the JV Agreement on 13th April, 2007.
Business with JV RSWM SISA was discontinued due to continued losses on
09.06.2009. Company's SPV RSWM International BV exited out of JV by
selling its share to JV Partner in RSWM SISA on 23.11.2009.
Consequently RSWM International BV was left with no Business activity
and it applied for liquidation of Company.
Exim Bank devolved bank guarantee given by the Company for the balance
amount of loan outstanding as on 28.10.2010 amounting to Rs.1,442,05
lac, which as a normal business activity, was honoured by the Company
on 29.10.2010. The same being a trading loss incidental to Company's
business has been charged off during the year.
Further, in line with scheme of arrangement by RSWM International BV
with its creditors, RSWM International BV remitted Euro 230,000
equivalent to Rs.139.79 lac to the Company in full and final settlement
of loans due and balance amount of Rs.640.17 lac being irrecoverable
has been written off as normal trading loss.
On approval of Liquidation of RSWM International BV by appropriate
authority on 04.02.2011, the Company received Euro 3,419.19 equivalent
to Rs.2.13 lac against equity share capital held by it. Consequently,
investment loss on liquidation of RSWM International, amounting to
Rs.275.17 lac also has been written off this year as normal business
practice.
Consequently provision of Rs.571.82 lac for doubtful loans and advances
and Rs.277.30 lac for diminution in the value of investment made in
previous year have been written back as no longer required.
7. The loans & advances, debtors and other current assets are reviewed
annually and their value in the ordinary course of business will not be
less than the amount at which they are stated in the Balance Sheet as
assessed by the Management, However, balance confirmation from parties
are under process.
8. In view of legal opinion and various reliefs available under Income
Tax Act, 1961, provision for taxation has been considered adequate.
9. Adjustment relating to previous year includes Expenses Rs.4.38 lac
and Income Rs.NIL lac (Previous Year Expenses Rs.10.16 lac and Income
Rs.0.40 lac).
10. The figures for the previous year have been regrouped and / or
rearranged wherever found necessary to make these comparable with those
of the current year.
C. DISCLOSURES
1. Segment reporting
The Company's operations predominantly relates to manufacturing of Yarn
and Fabric & on the basis of assessment of the risk and return
differential in terms of AS-17, the Company has identified Yarn and
Fabric & Denim as primary reportable business segments. Further the
geographical segments have been considered as secondary segments and
bifurcated into India, Europe, Middle East, America and Other
Countries.
The accounting policy in respect of Segments is in conformity with the
accounting policies of the enterprise as a whole. The inter segment
transfers are accounted at the prevailing market prices charged to
unaffiliated customers for similar goods. These transfers are
eliminated in consolidation.
The revenue and expenditure in relation to the respective segments have
been identified and allocated to the extent possible. Other items i.e.
extraordinary items, Loss /Profit on sale of investments and foreign
currency transactions, corporate office expenses, etc. not allocable
to specific segments are being disclosed separately as unallocated and
adjusted directly against the Total Income of the Company.
4. Related party
a) Enterprises that directly or indirectly through one or more
intermediaries, control or were controlled by or are under common
control with the reporting enterprise (this includes holding companies,
subsidiaries and fellow subsidiaries).
I) Cheslind Textiles Limited.
II) RSWM International B.V. (Since liquidated on 04/02/2011)
b) Associate None
c) Individuals owning directly or indirectly, an interest in the voting
power of the reporting enterprise that gives them control or
significant influence over the enterprise, and relatives of any such
individual.
None
d) Key Management Personnel and their relatives
1) Shri L.N. Jhunjhunwala
2) Shri Ravi Jhunjhunwala
3) Shri Shekhar Agarwal
4) Shri Arun Churiwal
5) Shri J. C. Laddha
e) Enterprises over which any person described in (c) or (d) is able to
exercise significant influence.
S. No Company's Name
01. A.D. Hydro Power Ltd
02. Agarwal Finestate Pvt. Ltd
03. Bagrodia Investment & Finlease Pvt. Ltd.
04. Bhilwara Energy Ltd
05. Bhilwara Scribe Pvt. Ltd
06. Bhilwara Software Pvt. Ltd
07 Bhilwara Technical Textiles Ltd.
08. BMD Private Ltd
09 BSL Ltd
10. Deepak Knits Private Ltd
11. Diplomat Leasing Pvt. Ltd.
12. Essay Marketing Co. Ltd
13. Expert Fabric & Textiles Pvt. Ltd.
14. Ganga Yamuna Auto Pvt. Ltd.
15. Giltedged India Securities Ltd
16. HEG Limited
17. Indo Canadian Consultancy Services Ltd
18. Investors India Ltd
19. Jagur Finvest Pvt. Ltd.
20 Jyoti Knits Pvt. Ltd.
21. Kalati Holding Private Ltd.
22. LNJ Financial Services Ltd.
23. Malana Power Company Ltd
24. Maral Overseas Ltd
25. Mayur Knits Pvt. Ltd
26. Raghav Commercial Ltd
27. Raghav Knits & Textiles Private Ltd.
28. Ramkant Sales & Services Pvt. Ltd
29. Shashi Commercial Co. Ltd.
30. Shree Vardhman Stock Holding Pvt. Ltd
31. Sudiva Spinners Pvt. Ltd
32. USS Investment & Finlease Pvt. Ltd
5. Jointly controlled assets
The Company jointly owns 50% share in a building 'Bhilwara Bhawan' at
New Delhi with M/s. HEG Limited. The aggregate amount of the Assets,
Liabilities, Income and Expenditure has been recognised in the
respective heads of the financial statements.
vi) There is no amount included in the fair value of plan assets for
Company's own financial instruments and property occupied by or other
assets used by the Company.
The estimates of future salary increase considered in actuarial
valuation, take account of: inflation, seniority promotion and other
relevant factors, such as supply and demand in the employment market.
The above information is certified by the Actuary. The estimate of
contribution for next year as per actuarial valuation is as under:-
a) Gratuity - Rs.424.85 lac
b) Earned Leave - Rs.65.25 lac
viii)The overall expected rate of return on assets is assumed based on
the market prices prevailing on that date over the accounting period.
The Company is having approved Gratuity Trust and Leave Encashment
Scheme, which is having Insurer Managed Fund. The description of the
Insurance Policies are "ICICI Pru Group Gratuity Platinum Policy and
Employees Group Leave Encashment- cum-Life Assurance of Life Insurance
Corporation of India".
The Guidance Note on Implementation of AS-15 (Revised), "Employee
Benefits" issued by the ICAI states that Provident Fund set up the
employers, which requires interest shortfall to be met by the employer,
needs to be treated as defined benefits plan. The Company set up
Provident Fund does not have existing deficit of interest shortfall.
With regards to future obligation arising due to interest shortfall
(i.e. government interest to be paid on the Provident Fund Scheme
exceeding rate of interest earned on investment) pending issuance of
the Guidance Note from Actuarial Society of India, the Company's
actuary has expressed his inability to reliably measure the Provident
Fund liability.
Mar 31, 2010
1. Contingent Liabilities:
(Rs.in Lac)
This Year Previous Year
A. Contingent liabilities not
provided for :
i) Excise & Custom Duties, Sales
Tax and Other
demands disputed by the Company. 230.30 106.53
ii) Claims not acknowledged by the
Company 53.45 2.80
iii) Default Deferred Payment Guarantee
provided to :-
(a) Exim Bank for securing the loans given
by them to RSWM International B.V.,
Netherlands. Outstanding Loan 1,620.89 1,927.36
{Maximum amount for which Company may
be liable during next 12 Months -
Rs.341.24 lac}
This Year Previous Year
(b) Exim Bank, ICICI, IDBI, Canara
Bank, SBI and SBOM for securing loan
given by them to Cheslind Textiles Ltd.
Outstanding Loan 2,182.94 -
{Maximum amount for which Company
may be liable during next 12 Months -
Rs.898.93 lac}
iv) Un-expired Letters of Credit,
for which counter
guarantee given by the Company. 413.79 276.44
v) Counter guarantees given by
the Company in respect
of Guarantees given by the
Companys Bankers. 964.78 822.10
vi) The Company has provided
Guarantee in favour of
International Finance Corporation
with M/s. HEG Limited on Joint
and several basis on behalf
M/s. AD Hydro Power Limited. 600.00 350.00
B. Obligations and commitments
outstanding :
i) Estimated value of contracts
remaining to be executed
on Capital Account and not
provided for 832.14 1,048.55
II) Bills Discounted with Banks 7,935.50 5,799.41
C. The export obligations against EPCG licenses have been timely
fulfilled by the Company. The future additional export obligations
against EPCG licences are of Rs.11,490 lac (Previous Year Rs.11,639
lac) and are to be fulfilled within the specified period.
D. The Rajasthan Government has imposed surcharge on shortfall in
meeting Renewable Energy Obligation on the power produced from Captive
Power plants vide their Notification dated 23.3.2007. The same has been
challenged in the Honble High Court of Rajasthan through Rajasthan
Textiles Mills Association. The Management does not foresee any
possible liability on this account and hence no provision of liability
to date Rs.1,634.95 lac (Previous Year Rs.1,041.11 lac) has been made
in the Book of Accounts.
2. The Jodhpur Divisional Bench of Honble High Court of Rajasthan had
declared the applicability of Entry Tax in Rajasthan as ultra virus,
vide order dated 21st of August, 2007 on writ filed by M/s.Dinesh
Pouches Limited. Writ petition has also been filed in our matter in the
same bench, which was admitted and stay granted in our favour.
Subsequently in the matter of M/s. Godfrey Philips (India) Ltd, Jaipur
Bench of Honble High Court of Rajasthan had declared the levy entry
tax as valid and now the aforesaid issue is pending in Honble Supreme
Court for final decision. On the basis of evaluation assessment and
degree of probability and exercise of best judgment, the Company has
made provision of demand of entry tax Rs.808.33 lac up to 31st March,
2010 (Previous Year Rs.188.09 lac).
3. The Company hedges its export realizations through Foreign Exchange
Derivative & Hedge Contracts in the normal course of business so as to
reduce the risk of exchange fluctuations. No Foreign Exchange
Derivative & Hedge Contracts are taken /used for trading or speculative
purpose. Pursuant to the announcement on "Accounting for Derivatives"
issued by the Institute of Chartered Accountants of India on 29th
March, 2008 and following the Principles of Prudence, the Company has
accounted for losses aggregating Rs.28.91 lac (Previous year Rs.45.34
lac) during the current year, computed on mark to market basis on the
Foreign Exchange Derivative & Hedge Contracts, outstanding as on 31st
March, 2010, those are without underlying export order/product.
4. The Company has incurred Rs.95,218.02 lac to date on the projects
under the Technology Up- gradation Fund Scheme (TUFS) for Textiles
established by Government of India for modernizations, expansions and
up-gradations. The Interest Subsidy accrued under this scheme for the
year Rs.3,740.45 lac (Previous year Rs.3,792.99 lac), out of which
Rs.3,740.45 lac has been credited against Term Loan Interest in Profit
& Loss Account and Rs. NIL (Previous year Rs.31.34 lac) has been
credited against Pre-operative Expenses.
5. The capital subsidy under TUFS is accounted adopting Deferred
Income Approach. A sum of Rs.432.67 lac up to date is therefore
considered as deferred income. Out of which a sum of Rs.31.57 lac
(previous year Rs.30.82 lac) has been recognized against depreciation
(up to year Rs.89.48 lac).
6. On annual review of the CENVAT Credit receivable on the Balance
Sheet date, a sum of Rs.944.53 lac, out of the unutilisable amount of
Rs.1,701.16 lac has been considered as likely to be utilized
within reasonable foreseeable future in the normal course of business
and has been de-capitalised on the respective fixed assets. The balance
amount of CENVAT Receivable of Rs.756.63 lac (Previous year Rs.1,701.16
lac) continues to be capitalized on respective fixed assets being not
likely to be utilized within reasonable foreseeable future in the
normal course of trade, though the debit entries in the excise records
have not been passed. Consequently, the depreciation on the
de-capitalised amount Rs.298.42 lac (Previous year Rs.73.95 lac) has
been written back.
7. To fall in line with the Guidance Note No: GN (A) 8 (Issued 1994)
in respect to the Amendment to Schedule XIV of the Companies Act, 1956
issued by The Institute of Chartered Accountants of India, the Company
has changed the method of providing depreciation of its Denim unit,
which hitherto was provided at the rates applicable for Continuous
Process Plant to the rates applicable for Tripple Shift Operation as
prescribed by Schedule XIV of the Companies Act,1956. As a result
whereof the charge for depreciation for the year is higher by
Rs.1,757.90 lac including Rs.1,114.81 lac of the previous years and the
profit for the year is lower by this value.
8. During the year, the Company had terminated the Sales Contract
dated 21st March, 2008 for sale of land ad-measuring 1,26,207 Sq.ft. at
Bhilwara on the request of Vendee. The land was sold for a
consideration of Rs.1500 lac and Company had received Rs.100 lac from
Vendee after giving possession of the land, the balance was to be
received by 30th September, 2009. At the time of sale, the Company
booked profit of Rs.904.58 lac in Profit & Loss Account of FY 2007-08.
Consequent upon termination of the sale agreement, the Company has
taken back the possession of the land during the year and forfeited
Rs.100 lac received from the Vendee, by reinstating the original fixed
assets in the Companys books of accounts. The loss of Rs.804.58 lac
after netting back of Rs.100 lac of the amount forfeited has been
charged to Profit & Loss Account.
9. The Company has a wholly owned overseas subsidiary incorporated as
a Special Purpose Vehicle in the year 2007 with an investment in the
equity of Rs.277.30 lac. Further, a loan of Rs.571.82 lac is
outstanding as on 31st March, 2010 from the wholly owned overseas
subsidiary. The Company has also given a Perpetual & Irrevocable
Default Payment Guarantee to the lendor Export Import Bank of India,
against a term loan of US$ 3.8 million granted to RSWM International
BV. The outstanding amount of US$ 3.61 million as on 31st March 2010 is
shown as a contingent liability as no devolvement has occurred until
31st March, 2010.
RSWM International BV had made a strategic investment in the 50% equity
of RSWM SISA, Spain with whom the Company had entered into the JV
Agreement on 13th April, 2007.
During the year, JV agreement between the Company and RSWM SISA, Spain
was terminated by mutual consent on 9th June, 2009 owing to continued
losses. The erstwhile JV i.e. RSWM SISA, Spain filed a Insolvency
Petition before the designated authority in Spain during the year.
Consequent upon the termination of the JV and filing of Insolvency
Petition and failure of wholly owned overseas subsidiary to fulfill its
financial obligation towards the lender and the parent company
following provisions have been made:
a) Provision for doubtful loan and advance of Rs.571.82 lac has been
made on the basis of evaluation of degree of probability and exercise
of the prudent judgment of the Management.
b) A provision for diminution in the value of investment in the wholly
owned subsidiary of Rs.277.30 lac has been made in terms of Para 32 of
Accounting Standard 13, after determination based on expert opinion
obtained by the Company that the diminution is "other than temporary".
10. Two cases of fraud involving employees of the Company have been
detected during the year involving aggregate amount of Rs.61.45 lac,
which have been booked as Fraud & Embezzlement Loss in the Profit &
Loss Account of current year. The frauds related to misappropriated
funds through series of Bank transactions and unauthorized collection
of cash from customers. The Company has got the frauds investigated and
has taken strict follow-up action including legal action and review and
revision of internal control system.
11. To augment long term resources, the Company, on 1st December, 2007
had issued and allotted 35,00,000 warrants of Rs.87/- each aggregating
to Rs.3,045 lac and received Rs.304.50 lac (being 10% of the total
amount) to the promoters and employees of the Company with the option
of conversion of each warrant into 1 Equity of share Rs.10/- each,
within a period of 18 months from the date of allotment on payment of
balance amount of Rs.2740.50 lac. Consequent upon failure to exercise
the conversion right and make the payment of balance amount, the
Company has forfeited the allotment money of Rs.304.50 lac and credited
to Capital Reserve Account after cancellation of 35,00,000 warrants.
12. The particulars of payments to Auditors are as under: -
13. The Company incurred expenditure on feasibility, acquisition,
implementation of Spinning, Weaving, Denim Fabric, Power, and New
Projects, which have been considered as Pre-operative Expenses and
capitalized to the respective projects on completion or charged to
revenue on abandonment. The details of these expenses are as under:-
* Abandoned
14. Based on the information so far obtained by the Company, payment to
enterprises covered under the Micro, Small and Medium enterprises
Development Act, 2006. (MSMED ACT) has been made with in 45 days and
disclosure in accordance with Section 22 of MSMED ACT is as under:-
* None of the unpaid amount is overdue.
15. The loans & advances, debtors and other current assets are
reviewed annually and their value in the ordinary course of business
will not be less than the amount at which they are stated in the
Balance Sheet as assessed by the Management, However, balance
confirmation from parties are under process.
16. In view of legal opinion and various reliefs available under Income
Tax Act, 1961, provision for taxation has been considered adequate.
17. Adjustment relating to previous year includes Expenses Rs.10.16
lac and Income Rs. 0.40 lac (Previous Year Expenses Rs.0.12lac and
Income Rs. NIL).
18. The figures for the previous year have been regrouped and / or
rearranged wherever found necessary to make these comparable with those
of the current year.
C. DISCLOSURES
1. SEGMENT REPORTING
The Companys operations predominantly relates to manufacturing of Yarn
and Fabric and on the basis of assessment of the risk and return
differential in terms of AS-17, the Company has identified Yarn and
Fabric as primary reportable business segments. Further, the
geographical segments have been considered as secondary segments and
bifurcated into India, Europe, Middle East, Americas and Other
Countries.
The accounting policy in respect of Segments is in conformity with the
accounting policies of the enterprise as a whole. The inter-segment
transfers are accounted at the prevailing market prices charged to
unaffiliated customers for similar goods. These transfers are
eliminated in consolidation.
The revenue and expenditure in relation to the respective segments have
been identified and allocated to the extent possible. Other items i.e.
extraordinary items, Loss /Profit on sale of investments and foreign
currency transactions, corporate office expenses, etc. not allocable to
specific segments are being disclosed separately as unallocated and
adjusted directly against the Total Income of the Company.
* Includes captive & standby Power 2. TAXES ON INCOME
The Break-up of Deferred Tax Liability and Assets into major components
are as under:-
3. EARNINGS PER SHARE
The basic and diluted Earnings Per Share (EPS) have been calculated by
dividing Net Profit for the year attributable to equity shareholders by
the weighted average number of Equity Shares as per AS 20 are as under:
-
4. RELATED PARTY
(a) Enterprises that directly or indirectly through one or more
intermediaries, control or are controlled by or are under common
control with the reporting enterprise (this includes holding companies,
subsidiaries and fellow subsidiaries).
I) Cheslind Textiles Limited
II) RSWM International B.V.
(b) Associate
None
(c) Individuals owning directly or indirectly, an interest in the
voting power of the reporting enterprise that gives them control or
significant influence over the enterprise, and relatives of any such
individual.
None
(d) Key Management Personnel and their relatives
1) Mr. L. N. Jhunjhunwala
2) Mr. Ravi Jhunjhunwala
3) Mr. Shekhar Agarwal
4) Mr. Arun Churiwal
5) Mr. J. C. Laddha
6) Mr. Riju Jhunjhunwala
7) Mr. Rishabh Jhunjhunwala
8) Mr. Nivedan Churiwal
9) Mr. Varun Laddha
(e) Enterprises over which any person described in
(c) or (d) is able
to exercise significant influence.
S. Companys Name No.
No.
1. AD Hydro Power Ltd.
2. Agarwal Finestate Pvt. Ltd.
3. Bagrodia Investment & Finlease Pvt. Ltd.
4. Bhilwara Energy Ltd.
5. Bhilwara Scribe Pvt. Ltd.
6. Bhilwara Software Pvt. Ltd.
7. Bhilwara Spinners Ltd.
8. Bhilwara Technical Textiles Ltd.
9. BMD Private Ltd.
10. BSL Ltd.
11. Deepak Knits Private Ltd.
12. Diplomat Leasing Pvt. Ltd.
13. Essay Marketing Co. Ltd.
14. Expert Fabric & Textiles Pvt. Ltd.
15. Ganga Yamuna Auto Pvt. Ltd.
16. Giltedged Industrial Securities Ltd.
17. HEG Limited
18. Indo Canadian Consultancy Services Ltd.
19. Investors India Ltd.
20. Jagur Finvest Pvt.Ltd.
21. Jyoti Knits Pvt. Ltd.
22. Kalati Holding Private Ltd.
23. LNJ Financial Services Ltd.
24. Malana Power Company Ltd.
25. Maral Overseas Ltd.
26. Mayur Knits Pvt. Ltd.
27. Raghav Commercial Ltd.
28. Raghav Knits & Textiles Private Ltd.
29. Ramkant Sales & Services Pvt. Ltd.
30. RSWM SISA S.A. Spain
31. Shashi Commercial Co. Ltd.
32. Shree Vardhman Stock Holding Pvt. Ltd.
33. Sudhiva Spinners Private Ltd.
34. USS Investment & Finlease Pvt. Ltd.
f) Transaction with Related Parties
The following transactions were carried out with the related parties in
the ordinary course of business:
5. JOINTLY CONTROLLED ASSETS
The Company jointly owns 50% share in a building Bhilwara Bhawan at
New Delhi with M/s. HEG Limited. The aggregate amount of the Assets,
Liabilities, Income and Expenditure has been recognized in the
respective heads of the financial statements.
6. EMPLOYEE BENEFITS
The Company has complied with Accounting Standard 15 (Revised 2005) and
the required disclosure are given hereunder:-
The Guidance Note on Implementation of AS-15 (Revised), "Employee
Benefits" issued by the ICAI states that Provident Fund set up the
employers, which requires interest shortfall to be met by the employer,
needs to be treated as defined benefits plan. The Company set up
Provident Fund does not have existing deficit of interest shortfall.
With regards to future obligation arising due to interest shortfall
(i.e. government interest to be paid on the Provident Fund Scheme
exceeding rate of interest earned on investment) pending issuance of
the Guidance Note from Actuarial Society of India, the Companys
actuary has expressed his inability to reliably measure the Provident
Fund liability.
7. OPERATING LEASES
The Company has taken cars on operating lease, which are non-cancelable
for tenure of four years. The minimum rental payables under Operating
Leases are as under: -