Notes to Accounts of LS Industries Ltd.

Mar 31, 2024

x. Contingent liabilities and provisions

Contingent liabilities are disclosed after evaluation of the facts and legal aspects of the matter involved, in line with the provisions of Ind AS 37. The Company records a liability for any claims where a potential loss probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosures in the financial statements but does not record a liability in its financial statements unless the loss becomes probable.

Provisions are recognised when the Company has a legal / constructive obligation as a result of a past event, for which it is probable that a cash outflow may be required and a reliable estimate can be made of the amount of the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

xi. Earnings per share

Basic earnings / (loss) per share is calculated by dividing the net profit / (loss) for the current year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average share considered for calculating basic earnings / (loss) per share, and also the weighted average number of shares, which would have been issued on the conversion of all dilutive potential equity shares. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The number of equity shares and potentially dilutive equity shares are adjusted for bonus shares as appropriate.

xii. Income taxes

Provision for current taxation is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income-tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised on unabsorbed depreciation and carry forward of losses based on virtual certainty with convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Income tax and deferred tax are measured on the basis of the tax rates and tax laws enacted or substantively enacted at the end of the reporting period and are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the income tax and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.

XIII. Use of estimates and judgement

The preparation of the financial statements in conformity with recognition and measurement principles of Ind AS requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The following are the key assumptions concerning the future, and other sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in future are:

(i) Useful lives and residual value of property, plant and equipment, intangible assets and investment properties: Useful life and residual value are determined by the management based on a technical evaluation considering nature of asset, past experience, estimated usage of the asset, vendor''s advice etc and same is reviewed at each financial year end.

(ii) Impairment of investments: The Company has reviewed its carrying value of long term investments in equity/preference shares of subsidiaries and other companies carried at cost/amortized cost at the end of each reporting period. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.

(iii) Deferred tax assets : The Company has reviewed the carrying amount of deferred tax assets including MAT credit at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

(iv) Revenue Recognition : Provision for Sales Returns and Discounts are estimated based on past experience, market conditions and announced schemes.

XIV Operating Cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

Note 28 - Capital Management

The Company endeavors to optimize debt and equity balance and provide adequate strength to the balance sheet. The Company monitors capital on the basis of debt equity ratio.

Note 29 - Financial Risk Management

The Company''s activities expose it to credit risk Credit risk management

Credit risk arises from credit exposure to customers (including receivables and deposit), loans and other financial assets. The Company perform credit evaluation and defines credit limits for each customer/counter party. The Company also continuously reviews and monitors the same.

The provision for doubtful debts or provision for impairment of investments etc. is made on case to case basis, based on the information related to financial position, past history, and other relevant available information about the counterparty.

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Mar 31, 2010

1. Commitments and Contingent liabilities not provided for: Outstanding Bank Guarantee is Rs.15.75 Lac (Previous Year-Nil). The company has madeamargin money deposit of Rs. 15.75 Lac (Previous Year-Nil).

2. Related party transactions:-

(a) Disclosure of related parties and relationship between the parties: -

Holding Company : Strategybot Finance Private limited

Fellow Subsidiaries : SB Infosoft Ludhiana Private Limited

Enterprises under common control : Miracle Leasing & Finance Limited

Victor Leasing Limited Key Management Personnel : Mr. Birendra Kumar

3. SEGMENT REPORTING

On the basis of assessment of the risk and return differential in terms of AS-17, the Company has identified Trading and Textile as primary reportable business segments. Further, the geographical segments have been considered as secondary segments and bifurcated into within India and outside India. The accounting policy in respect of segments is in conformity with the accounting policies of the enterprise as a whole. The revenue and expenditure in relation to the respective segments have been identified and allocated to the extent possible. Other items i.e. 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. The future export obligations against EPCG licenses are of Rs. 463,781 (Previous Year Rs.Nil) and are to be fulfilled within the specified period.

5. During the year, the Company has received a sum of Rs. 51,96,82,814 against proposed issue of 6,22,30,000 Convertible Warrants to Promoters and 2,15,51,871 Mandatory convertible preference shares to non promoters of face value of Rs.10 each at a price of Rs. 12.20 per share on preferential basis. The said issue has been approved by the Board of Directors in their meeting held on dated 27.02.2010 and by the shareholders in Extra Ordinary General Meeting held on 31.3.2010.

Amounts received up to 31.03.2010 in respect of said issue has been shown under the head Application Money in the Balance Sheet. The said amount has been utilized for business purpose of the Company as approved by the members. Subsequently, in the month of July 2010, the above said convertible warrants and preference shares have been converted into equity shares of the company.

6. 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.

7. Balances of sundry debtors, sundry creditors, advances given, advances received are subject to reconciliation and confirmation from respective parties. The balance of said sundry debtors, sundry creditors, and advances given and received are taken as shown by the books of accounts. The ultimate outcome of such reconciliation and confirmation cannot presently be determined, therefore, no provision for any liability that may result out of such reconciliation and confirmation has been made in the financial statement.

8. Previous year figures have been regrouped and reclassified, wherever material and considered necessary to conform to current years classification.

9. Figures in bracket indicate deductions.

10. Schedules 1 to 18 form an integral part of the Balance Sheet and Profit & Loss A/c for the year ended 31 st March, 2010.

11. Events after the Balance Sheet date:

(a) The Honble High Court of Gujrat at Ahmedabad had sanctioned the scheme of reduction of capital by 80% i.e Rs.8.00 per share against writing off past accumulated losses to the tune of Rs. 4.40 Crores vide order dated 17.12.2009 & 12.4.2010. Subsequently, the above said order and minutes were filed to the office of the Registrar of Companies and got registered on 17.5.2010 and became effective from the date of its registration.

(b) The Company made 100% acquisition of shares of EZY Infosoft Private Limited and took control and managementof the Company on 19.05.2010.