Notes to Accounts of Sri Nachammai Cotton Mills Ltd.

Mar 31, 2024

Rights, preferences and restrictions in respect of equity shares issued by the Company

The company has only one class of equity shares having a par value of Rs.10 each. The equity shares of the company having par value of Rs.10/- rank pari-passu in all respects including voting rights and entitlement to dividend. The dividend proposed if any, by the Board of Directors, is subject to the approval of the shareholders in the ensuing Annual General Meeting._

Development (MSMED) Act, 2006 are as under

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

Commitments and contingent liability

Contingent Liability
	31-Mar-24	31-Mar-23
1. Contingent Liability
Future Lease Payments	27.00	5.00
Capital Commitments
Particulars	As at	As at
	March 31, 2024	March 31, 2023
Estimated Value of Contracts remaining to be executed on Capital Account and not provided for	739.00	739.45

43 Operating Segments

As the Company''s business activity primarily falls within a single business and geographical segment, there are no additional disclosures to be provided under Accounting Standard - 17 "Segment Reporting", other than those already provided in the financial statements.

44 Operating lease arrangements

The Company has taken the entire Fixed Assets of Supreme Yarn Spinners Private Limited under cancellable operating lease, which are normally renewed on expiry.

As Lessee

The Company has entered into operating lease arrangements for certain facilities. The leases are cancellable at the option of either party to lease and may be renewed based on mutual agreement of the parties.

45. Financial Instruments Capital management

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

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

For the purposes of the Company''s capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders.

Financial risk management objectives

The treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

Market risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management.

Foreign currency sensitivity analysis

Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company''s revenues from its operations. Any weakening of the functional currency may impact the Company''s cost of imports and cost of borrowings and consequently may increase the cost of financing the Company''s capital expenditures. The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2% change in foreign currency rates.

In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

Interest rate risk management

The Company is exposed to interest rate risk because it borrow funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

The 25 basis point interest rate changes will impact the profitability by INR 10.43 Lakhs for the year (Previous INR 9.77 Lakhs)

Credit risk management

Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instrument, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables and from its financing/ investing activities, including deposits with banks, mutual fund investments, investments in debt securities and foreign exchange transactions. The Company has no significant concentration of credit risk with any counterparty.

Exposure to credit risk

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

(a) Trade Receivables

Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and, based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure is backed by either bank, guarantee/letter of credit or security deposits.

The Company does not have higher concentration of credit risks to a single customer. As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.

(b) Investments, Derivative Instruments, Cash and Cash Equivalents and Bank Deposits

Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions, who have been assigned high credit rating by international and domestic rating agencies.

Credit Risk on Derivative Instruments is generally low as the Company enters into the Derivative Contracts with the reputed Banks.

Investments of surplus funds are made only with approved financial institutions/ counterparty. Investments primarily include bank deposits, investment in units of quoted mutual funds issued by high investment grade funds etc. These bank deposits, mutual funds and counterparties have low credit risk. The Company has standard operating procedures and investment policy for deployment of surplus liquidity, which allows investment in bank deposits, debt securities and mutual fund schemes of debt and arbitrage categories and restricts the exposure in equity markets.

Offsetting related disclosures

Offsetting of cash and cash equivalents to borrowings as per the consortium agreement is available only to the bank in the event of a default. Company does not have the right to offset in case of the counter party''s bankruptcy, therefore, these disclosures are not required.

Liquidity risk management

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.

Liquidity tables

The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.

47 Retirement benefit plans Defined contribution plans

In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions, as specified under the law, are made to the Provident Fund.

The total expense recognised in profit or loss of Rs.11.33 lakhs (for the previous year ended : Rs.25.71 lakhs) represents contribution payable to these plans by the Company at rates specified in the rules of the plan.

Defined benefit plans a) Gratuity

Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.

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

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Risk Exposure

The Company''s Gratuity is maintained by an approved trust (Life Insurance Corporation of India). A large portion of the investment made by the LIC is in government bonds and securities and other approved securities. Hence, the company is not exposed to the risk of asset volatility as at the balance sheet date.

Funding arrangements and Funding Policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest data provided by the company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

(b) Compensated absences

As per the policy of the Company, compensated absences are not entitled to be carried forward to the subsequent financial year and lapse at the end of the reporting period. Accordingly, no liabilities towards compensated absences are recognised in these financial statements.

1. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

2. The Company has not traded or invested in Crypto currency or virtual currency during the financial year.

3. The Company has not advanced or loaned or invested funds to any persons or entities, including foreign entities (Intermediaries)

with the understanding that the Intermediary shall:

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

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

4. The Company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

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

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

5. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

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

7. The Company does not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.

8. The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.

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

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Jun 30, 2014

Terms & Conditions of shares:

The Company has two class of shares namely Equity having a par value of Rs. 10/- and Preference having a par value of Rs. 100/- per share. Each Share holder is eligible for one vote per share.

In the event of liquidation, the Equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion of their share holding.

There are no shares alloted as fully paid without payments being received in cash, bonus shares or shares bought back in the immediately preceeding 5 years.

The 10% Cumulative Redeemable Preference shares are to be redeemed in 15 half yearly instalments commencing from the 4th year from the date of allotment i.e. 26/04/2012.

1 Interest on Bank Loans is net of interest subsidy (TUF) amounting to Rs. 13,47,837/- (Previous year Rs. 21,34,519/-)

2 Income Tax Assessment uptoA.Y.-2011 -2012 has been completed.

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

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

5 Balances of certain sundry debtors, advances and sundry creditors are subject to confirmation / reconciliation, as the Company has received replies only from few parties for the confirmation statements sent by the Company. The adjustments thereof, if any, having an impact of revenue nature will be made in the year in which the same are finalized and settled.

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Jun 30, 2012

OTHERS USE OF ESTIMATES:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to the estimates is recognized prospectively.

Terms & Conditions of shares:

The Company has two class of shares namely Equity having a par value of Rs. 10/- and Preference having a par value of Rs. 100/- per snare. Each Share holder is eligible for one vote per share.

In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferentiai amounts in proportion of their share holding.

1 Additional Information To Financial Statements

1 Contingent Liabilities not provided for:

a) The Company has undertaken export obligation under EPCG Scheme to Export within a period of eight years for the following years - 2005 - Rs. 43,756,024/-, 2007 - Rs. 27,524,920/-, 2010 - Rs. 124,364,744/-, 2011 - Rs. 116,144,515/-, 2012 - Rs. 32,286,384/- failing which additional customs duty of Rs. 35,341,102/- along with interest shall be payable. Of the above, the company has fulfilled obligation to the extent of Rs. 65,517,836/- upto 30.06.2012.

b) The Bank has given guarantees for Rs. 6,971,780/- (previous year - Rs. 6,364,280/-) towards payment of customs duty in respect of import of Machinery.

c) Future Lease rental payable 6,000,000 10,500,000

d) The Amount called up but not for IDBI Shares including interest 5,702,233 5,702,233

e) Some of the dismissed employees have appealed before the labour court for reinstating them along with back wages from the date of dismissal, which the company is contesting. As the quantum of liability, if any, is dependent on the orders to be passed no provision is made in the accounts as it has not reached finality.

2 Interest in respect of partly paid share is not presently ascertainable for the Current year and hence not included under IDBI partly paid shares.

3 Interest on Bank Loans disclosed under financial charges is net of interest subsidy on TUF Loan amounting to Rs. 29,23,351/- (Previous year Rs. 37,00,902/-)

4 (a) Income Tax Assessment upto the year ended 31.03.2010 (AY - 2010/2011) has been completed.

(b) (i) VAT Assessment has been completed upto 31.03.2011. (ii) CST Assessment has been completed upto 31.03.2010.

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

6 (a) In the opinion of the Board of Directors, assets other than fixed assets have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

(b) Balance of certain sundry debtors, advances and sundry creditors are subject to confirmation / reconciliation, as the Company has received replies only from few parties for the confirmation statements sent by the Company. The adjustments thereof, if any, having an impact of revenue nature will be made in the year in which the same are finalized and settled.

7 Amount of Sales Tax / Value Added Tax of Rs. 2,76,75,156/- collected on Sales has not been included in the Turnover of the Company.

8 Segment Report (AS-17)

As the Company operates under single segment related to Textiles, segment reporting is not applicable to the Company for the year under review.

9 Lease Disclosure (AS-19):

Disclosure of operating lease taken by the Company as per AS-19 are as follows:

a) The Company has taken the entire Fixed Assets of Supreme Yarn Spinners Limited under cancelable operating lease, which are normally renewed on expiry.

10 Disclosure as required under listing agreement:

Statement of loans and advances to associates: (As required under Clause 32 of listing agreement with the stock exchanges) To associates: Rs. NIL

11 During the year ended 30th June 2012 the Revised Schedule V! notified under the Companies Act, 1956, has become applicable to the company and accordingly the Company has reclassified / regrouped previous year figures to confirm to this year's classifcation reclassified wherever necessary.

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Jun 30, 2010

1. Contingent Liabilities not provided for:

a) The Company has undertaken export obligation under EPCG Scheme to Export within a period of eight years for the following years - 2004 - Rs.43752496/-, 2005 - Rs.24926920/-, 2006 - Rs.2598000/-, 2008 - Rs.77903360/- and 2009 -Rs.41730256/- failing which additional customs duty of Rs.23863879/- along with interest shall be payable. Of the a bove, the company has fuIfilled obligation to the extent of Rs. 1,16,90,010/- upto 30.06.2010.

b) The Bank has given guarantees for Rs.45,34,815/- (previous year - Rs.27,04,465/-) towards payment of customs duty in respect of import of Machinery.

As at As at 30.06.2010 30.06.2009 Rs. Rs.

c) Future Lease rental payable 45,48,387 30,50,000

d) The Amount called up but not paid for IDBI Shares including interest 57,02,233 57,02,233

2. Interest in respect of partly paid shares is not presently ascertainable for the Current year and hence not included under IDBI partly paid shares.

3. Estimated amount of contracts remaining to be executed on Capital account. 14,72,85,144 19,92,50,360

4. Interest on Fixed Loans disclosed under financial charges is net of interest subsidy on TUF Loan amounting to Rs.58,20,485/- (Previous year Rs.49,23,208/-)

5. a) Income Tax Assessment upto the year ended 31.03.2007 (AY - 2007/2008} has been completed, b) Sales Tax Assessment upto the year ended 31.03.2007 has been completed.

6. No provision is made for doubtful debts for Rs.34,39,782/-. The effect of such non provision is that less as stated in Profit and Loss Account is less by Rs.34,39,782/- with corresponding effect on the accumulated losses carried forward.

7. a} In the opinion of Directors, current assets, loans and advances have the value at which they are stated in the BaIance Sheet if realized in theordinary course of business. b) Balances of certain sundry debtors, advances and sundry creditors are subject to confirmation / reconciliation, as the Company has received replies only from few parties for the confirmation statements sent by the Company. The adjustments thereof, if any, having an impact of revenue nature will be made in the year in which the same are finalized and settled.

8. Amount of Sales Tax/Value Added Tax of Rs.2,30,57,360/- collected on Sales has not bean included in the Turnover of the Company.

9. Segment Report (AS-17)

As the Company operates under single segment related to Textiles, segment reporting is not applicable to , the Company for the year under review.

10. Related Party Disclosure (AS-18) (as identified by the Management): i) Names of related parties and description of relationship:

a) Associates : Supreme Yarn Spinners Ltd

Raja Yarns Private Limited

b) Key Management Personnel : 1. Shri.R Palaniappan, Chairman cum Managing Director

2. Smt. RUmayal, Joint Managing Director.

c) Relatives of Key Management : 1. Smt. R.GeethanjaliRamasamy Personnel 2. Smt. RM. Umaiyal

3. Shri. R Palaniappan (HUF)

4. Shri. MC. Ramasamy (HUF)

11- Disclosure as required under listing agreement:

Statement of loans and advances to associates: (As required under Clause 32 of listing agreement with the stock exchanges) To Associates: Rs. Nil

12. (a) There are no derivative financial instruments either for hedging or for speculation outstanding as atthe Balance Sheet date

13, Current year figures have been rounded off to the nearest rupee and figures in respect of the previous year have been regrouped and reclassified wherever necessary.

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Jun 30, 2009

1. Contingent Liabilities not provided for:

a) The Company has undertaken export obligation under EPCG Scheme to Export worth of Rs. 7,12,27,416/- spread over a period of 8 years from 2004 failing which additional customs duty of Rs. 81,39,761/-along with interest at the appropriate rate shall be payable. Of the above, the company has fulfilled obligation to the extent of Rs. 93,86,190/- upto 30.06.2009

2. Tax amounting to Rs. 3,81,073/- was paid under protest to Sales Tax Department against the demand on treating premium on Hank Yarn Obligation as sales for the assessment years 1997-1998,2002-2003 & 2004-2005. However, the Company after paying the above demand under protest, has appealed and the matter is pending before the Sales Tax Tribunal.

3. Interest on Fixed Loans disclosed under financial charges is net of interest subsidy on TUF Loan amounting to Rs. 49,23,208/- (Previous year Rs. 54,38,200/-)

4. a) Income Tax Assessment upto the year ended 31.03.2007 (AY - 2007/2008) has been completed. b) Sales Tax Assessment upto the year ended 31.03.2007 has been completed.

5. No provision is made for doubtful debts for Rs. 29,13,783/-. The effect of such non provision is that less as stated in Profit and Loss Account is less by Rs. 29,13,783/- with corresponding effect on the accumulated losses carried forward.

6. a) In the opinion of Directors, current assets, loans and advances have the value at which they are stated in the Balance Sheet if realized in the ordinary course of business. b) Balances of certain sundry debtors, advances and sundry creditors are subject to confirmation / reconciliation, as the Company has received replies only from few parties for the confirmation statements sent by the Company. The adjustments thereof, if any, having an impact of revenue nature will be made in the year in which the same are finalized and settled.

7. Amount of Sales Tax /Value Added Tax of Rs. 1,48,21,764/- collected on Sales has not been included in the Turnover of the Company.

8. Segment Report (AS-17)

The Company is engaged in the business of manufacturing yarn which comes under a single segment. Hence, Segment reporting is not applicable to the Company for the year under review.

9. Related Party Disclosure (AS-18) (as identified by the Management): i) Names of related parties and description of relationship:

a) Associates : Supreme Yarn Spinners Ltd

Raja Yarns Private Limited

b) Key Management Personnel : 1. Shri.R Palaniappan, Chairman cum Managing Director

2. Smt. R Umayal, Joint Managing Director.

c) Relatives of Key Management : 1. Smt. Geethanjali Ramasamy Personnel 2. Smt. RM. Umaiyal

3. Shri.R Palaniappan (HUF)

4. Shri.MC. Ramasamy (HUF)

10. Current year figures have been rounded off to the nearest rupee and figures in respect of the previous year have been regrouped and reclassified wherever necessary.