Notes to Accounts of Suryalakshmi Cotton Mills Ltd.

Mar 31, 2024

b. Terms/ rights attached to equity shares

{i) The company has only one class of equity shares having a face value of ? 10 per share,

(ii) Each holder of equity share is entitled to one vote per share.

(iii) The dividends recommended by the Board of Directors if any, are subject to the approval of the shareholders in the ensuing finnual General meeting.

d, 2,00,000 5% non Cummulative Redeemable Preference Share of ?100/- each and 5,00,000 10% Cummulative Redeemable Preference Share of ?100/- each were issued and reclasified as Financial Liability and shown as Unsecured Loan. (Refer noted 7}

H. nil the installments falling due uuithin 12 months from the date of Balance Sheet have been classified as current maturities, the aggregate amounts are shotun under ''Short Term Borroiuings''.

B. 1. The term loan referred at (a)(i) above is secured by mortgage of {present & future) movable and immovable

properties of the company on first charge pari passu & second charge pari passu on the current assets of the company uuith existing term lenders and guaranteed by two directors of the company in their personal capacities.

2. The term loans referred at (a){ii) to (a){iii) and b(i) to b{iv) above are secured by mortgage of (present & future) movable and immovable properties of the company on first charge pari passu & second charge pari passu on the current assets of the company uuith existing term lenders and guaranteed by three directors of the company in their personal capacities.

C. (i) Vehicle loans are secured by hypothecation of the respective vehicles and guaranteed by one of the directors

of the company.

(ii) Term loan from Candi Solar in 1 Pvt Ltd., is secured by hypothication of Solar Plant situated at Spinning Division, fimangallu.

a. Secured:

Working capital loans from (a) to {e} are secured by hypothecation of stocks of rauj materials, yarn, fabric, stock-in-process, stores and spares and book debts and by a second mortgage over the (present and future) movable & immovable properties of the company on pari-passu basis and further guaranteed by three Directors of the Company in their personal capacities

a) Fire Accident

On June 22,2023, there was a fire accident in one of the godowns of Denim Division at Ramtek in maharastra. There were no human casualties reported. Evacuation team conducted successful evacuation of persons present in at the time of fire. After preliminary investigation, it was found that the cause of fire was due to short circuit.

Consequent to the above, during the year ended march 31,2024, the carrying value of inventories of ? 393.55 lakhs (including expenses incurred and GST reversals) and carrying value of property plant and equipment of? 51.20 Lakhs has been written off in the statement of profit and loss.

The Company received ? 393.95 Lakhs (including salvage value) from the Insurance Company for the claim lodged against the fire accident. Accordingly, the balance unrecoverable amount of? (50.80) Lakhs is shown as an exceptional loss.

b) ? (80.01) Lakhs on account of Interest Paid on Right of Recompense ("ROR") to Banks.

c) ? (236.92) Lakhs on account of write off of Advance Recoverable form Rajvir Industries For the year ended 31 march, 2023

a) Interest paid on ROR to banks of ? (453.08) Lakhs

b) Arrears of wages of? (204.16) Lakhs

c) Claims written off of ? (62.12) Lakhs

Explanatory notes & Other Disclosures 34.1 Contingent Liabilities and commitments not provided for in respect of: (fill amounts in ? Lakhs, unless otheruuise stated)
SI Parti culars	As at 31.03.2024	As at 31.03.2023
(i) Rgainst Foreign & Inland Letters of Credit	2,799.68	4,260.00
(ii) Rgainst Bank Guarantees	937.27	871.18
(iii) Disputed demand from Customs department toujards differential custom duty on garments exported. The Case is pending for hearing uuith Hon''ble High Court of Judicature of Telangana at Hyderabad.	61.49	61.49
(iv) TSPDCL raised demand for Interest/Late payment of charges/dues on the company arising out of delayed receipt of incentive from State Government. The Company is of the opinion that this liability may not arise as there ujas no delay in payment of dues from Company.	701.25	862.15
(v) Company purchased pouuer from Pouuer exchange for its Spinning division at flmanagallu, mahboobnagar District, Telangana. TSPDCL imposed Cross subsidy to be paid on poiuer drauun from poiuer exchange at the rate of? 1.29 per unit. On a challenge by the Company of the Order of TS8RC, the Hon''ble High Court of Telangana uuas pleased to stay the cross subsidy rate of ?1.29 per unit and alloujing the LUrit petition, directed the DISCOITI to levy only 30 paisa per Unit. Accordingly the Company has been advised that no liability on account of the differential cross subsidy of ? 0.99 paise per unit is likely to arise.	437.27	438.22
Cvi) Cases relating to Industrial disputes uuith ujorkers pending at labour and Industrial Courts, nagpur	480.47	463.74
(vii) Cases relating to Demand for Gram Panchayat Tax raised by nagardhan Gram Panchayat over and above agreement uuith them pending before Divisional Commissioner, maharashtra State, nagpur.	126.98	103.89
(viii) Dy Commissioner of Sales Tax, nagpur, (VAT-8005) has passed Assessment order for Financial year 2013-14 and disallouued VAT input tax credit on purchase of Coal as Rauu material and raised tax demand uuith interest. The Company has filed appeal uuith Commissioner of Sales Tax (Appeals) and is of the opinion that the liability against above demand may not arise, as there are several such judgments, supporting the Company''s contention. (?1.25 Lakhs pre-deposited for filing appeal and shouun as advance	23.69	23.69
(ix) Siri Consultants Ltd filed a suit for recovery against the Company, ujhich ujas decreed by the City Civil Court, Secunderabad. The Company has challenged the decree in the High Court and the High Court of Telangana uuas pleased to stay the execution of Decree pending payment. The matter is pending in the High Court. ?5.78 Lakhs is pre-deposited pursuant to Hon''ble High Court Order.	13.97	13.97
(x) Dy Commissioner of Sales Tax, nagpur, (VPT-8005) has passed Assessment order for Financial year 2015-16 and disalloujed VPT input tax credit on purchase of Coal as Rauu material and raised tax demand uuith interest. The Company has filed appeal uuith Commissioner of Sales Tax (Rppeals) and is of the opinion that the liability against above demand may not arise, as thereareseveralsuchjudgments, supporting Rssessees contention. {?1.52 Lakhs is pre-deposited for filing appeal and shouun as advance)	29.43	29.43

Other Litigations:

fin order has been received from the office of DGFT, Hyderabad for alleged violation of Target Plus Scheme to recover ? 3807 Lakhs including interest and penalties in Fy201 0-11. The High Court of Telangana alloujed the UUrit Petition filed by the company challenging aforesaid order and that of the appellate authority and directed the JDGFT to refund ? 500 lakhs deposited by the company. The office of JDGFT has filed a UUrit fippeal before the High Court of Telangana against this order ujhich is pending, fi shouj cause notice on the same issue uuas issued by DRI and the Commissioner of Customs & Central Excise, nagpur has confirmed the same ujhich has been challenged by the company before CESTRT, mumbai and the same is pending. The company has been advised that no liability is likely to arise under the notice in viem of the High Court alloujing the UUrit Petition filed by the company and the allegations are unfounded and the company is taking adequate steps to defend itself.

34.3 There ujas a major fire accident in spinning department of denim division at Ramtek.nagapur district, maharashtra state during January, 2008, in ujhich the Building, Plant & machinery, Electrical Installations and stocks uuere totally damaged. The factory uuas fully insured under reinstatement policy for fixed assets and under declaration policy for stocks. The Company''s Insurance claim is processed and settled partly. The Company received an amount of ?2,609 lakhs from the Insurance Company including salvage during Fy2007-08 & 2008-09. The part claim of ?490 lakhs ujhich is still to be settled by the Insurance Company is shouun non-Current Other Financial Rssets as under Claims receivable. The Company''s complaint in this matter is pending before national consumer disputes Redressal commission{nCDRC), neuj Delhi.

34.4 Other Statutory Information

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

ii) The Company does not have any transactions uuith struck off companies.

iii) Quarterly returns or statements of current assets filed by the Company ujith banks or financial institutions are in agreement ujith the books of accounts.

iv) The Company does not have any transaction ujhich 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 Ret, 1961

v) fis at march 31,2024, the register of charges of the Company as available in records of the ministry of Corporate Affairs (ITICR) includes charges that ujere created/modified since the inception of the Company. There are certain charges uuhich are historic in nature and it involves practical challenges in obtaining no objection certificates (FIOCs) from the charge holders of such charges, despite repayment of the underlying loans. The Company is in the continuous process of filing the charge satisfaction e-form uuith ITICR, uuithin the timelines,as and ujhen it receives FIOCs from the respective charge holders.

vi) The Company has not revalued its property plant and equipment during the year.

vii) The Company has not been declared as uuilful defaulter by any bank or financial institution or other lender

viii) The Company has complied uuith the number of layers prescribed under clause (87) of section 2 of the Ret read uuith the Companies (Restriction on number of Layers) Rules, 201 7.

ix) no Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Ret, 2013, during the year.

x) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

xi) The Company has not advanced or loaned or invested funds to any other person(s) or entity{ies}, including foreign entities (Intermediaries) ujith the understanding that the Intermediary shall:

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

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

xii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) ujith 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.

notes:

i) Return on Equity Ratio - Profit after tax has decreased during the current year Fy 23-24 due to lower margins in competitive market.

ii) Trade payable Turnover Ratio - Increase in ratio is on account of decrease in Average Trade Payables.

34.7 Capital management

The company''s capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-term goals of the company.

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 and other long-term/short term borrowings.

The company''s policy is aimed at combination of short term and long-term borrowings. The company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the company.

34.12 non Current Assets Held for sale and discontinued operations

Rs required by the Ind RS 105, non Current Rssets held for Sale and Discontinued Operations, Some of the Rssets of Garment division are lying in fisset held for sale and the same is expected to be sold during the coming financial year.

34.13 Financial Instruments

The folloujing table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into level 1 to level 3 as described belouu.

Level 1 - Quoted prices in an active market:

This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of Listed Equity shares.

Level 2 - Valuation techniques uuith observable inputs:

This level of hierarchy includes financial assets and liabilities, measured using 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 - Valuation techniques uuith significant unobservable inputs:

This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market (unobservable inputs). Fair values a re determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

34.14 Financial Risk management Objectives and Policies

The company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, market risk, credit risk and liquidity risk. The company has a risk management policy ujhich not only covers the foreign exchange risks, but also other risks associated niith the financial assets and liabilities such as interest rate risks and credit risks. The risk management frameujork aims to:

1. Create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the company''s business plan.

2. Rchieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

The folloLuing sections provide the details regarding the Company''s exposure to the financial risks associated uuith financial instruments held in the ordinary course of business and the objectives policies and processes for the management of these risks.

(i) market Risk:

market risk is the risk that the fair value or future cash floujs of a financial instrument will fluctuate because of changes in market prices, market prices comprise three types of risk, currency rate risk, interest rate risk and other price risks such as equity risk. Financial instruments affected by market risk include investments in equity shares.

a. Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company''s financial instruments will fluctuate because of changes in market interest rates. Since the Company hasonly fixed interestbearing debts, exposure to interest rate risk is minimal.

b. Foreign Currency Risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from goods supplied or received that are denominated in a currency other than the functionalcurrency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company''s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

c. Other price risk

Other price risk is the risk that the fair value or future cash flows of the Company''s financial instruments will fluctuate because of changes in market prices {other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The Company is exposed to price risk arising mainly from investments in Equity shares recognized at FVTOCI.

(ii) Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises from its operation activity primarily from trade receivable and from its financial activity. Customer credit risk is controlled by analysis of credit limit and credit worthiness of the customer on a continuous basis to whom the credit has been granted.

Long outstanding receivable from customer are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivable.

(iii) Liquidity Risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The company ensures that it has sufficient cash on demand to meet expected operational demands including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

34.15 Operating Segments

The company''s operating segments are established on the basis of those components of the company that are evaluated regularly by the Chairman & managing Director {the ''Chief Operating Decision maker as defined in Ind AS 108 - ''Operating Segments''), in deciding houj to allocate resources and in assessing performance. These have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems.

During the year, the Company has changed the structure of its internal organization in a manner that caused the composition of its reportable segments to change from tujo principal operating and reporting segments Viz; Spinning & Denim {Fabrics) as reported till Fy 2022-23 to Only One Operating and Reporting Segment i.e Textiles.

Therefore, there is only one operating and reporting segment namely, "Textiles"

(c) Information about major customers

Revenue from transactions with a single customer exceed 10% or more of entity revenues - During the year under report and in the previous year there is no single customer having transactions ujith the Company''s three operating segments exceeding 10% or more of the entity revenues.

34.16 Leases

The company takes on lease premises (offices/godouuns) for operations and storage purposes. Rccordingly, the Company recognizes a right-of-use asset and a lease liability for its leases, if the contract conveys the right to control the use of an identified asset.

34.17 Dues to micro, Small and medium Enterprises

The information as required to be disclosed m.r.t. micro and Small Enterprises under the micro, Small and medium Enterprises Development Ret, 2006 (Ret) is as given belouj and the information mentioned under Trade Payable uj.r.t. dues to micro and Small Enterprises, has been determined to the extent such parties have been identified on the basis of information available ujith the Company and relied on by the Auditors :

34.18 Previous year''s figures have been reclassified, ujherever necessary so as to conform ujith those of Current year.

---

Mar 31, 2023

1.13. Provisions and contingent liabilities

Provisions are recognized when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic

benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. UUhere the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. UJhen discounting is used, the increase in the provisions due to the passage of time is recognized as a finance cost.

Contingent Liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

1.14. Earnings per share

The Company presents basic and diluted earnings per share ("£PS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees.

1.15. Foreign Currency transactions

• Functional and Reporting Currency:

The Company''s functional and reporting currency is Indian national Rupee

• Initial Recognition:

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amounts the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

• Conversion on reporting date:

Foreign currency monetary items are reported using the closing rate, non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.

• Exchange Differences:

Exchange difference arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at luhich they mere initially recorded during the year or reported in previous financial statements are recognized as income or as expenses in the year in which they arise.

1.16. Employee Benefits

• Short-Term Employee Benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.

• Post-Employment Benefits

Defined Contribution Plan

Employer''s contribution to Provident Fund/ Employee State Insurance which is in the nature of defined contribution scheme is expensed off when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the fund.

Defined Benefit Plan

a. Gratuity and compensated absences

Gratuity and compensated absences are in the nature of defined benefit obligations. These are provided based on independent actuarial valuation on projected unit credit method made at the end of each reporting period as per the requirements of Ind RS 19 "Employee Benefits". Actuarial gain/ (loss)

in the valuation are recognized as other comprehensive income for the period.

1.17. Dividends

Rnnual dividend distribution to the shareholders is recognized as a liability in the period in which the dividend is approved by the shareholders, finy interim dividend paid is recognized on approval by Board of Directors. Dividend payable is recognized directly in equity.

1.18. Recent Recounting Pronouncement

ministry of Corporate Affairs fmCR¹") notifies new standards or amendments to the existing standards under Companies (Indian Recounting Standards) Rules as issued from time to time. On march 31,2023, mefl amended the Companies (Indian Recounting Standards) Amendment Rules, 2023, as below:

i) Ind AS 1 - Presentation of Financial Statements -This amendment requires the entities to disclose their materialaccounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1,2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the financial statements.

ii) Ind PS 8 - Recounting Policies, Changes

in Recounting Estimates and Errors - This amendment has introduced a definition of accounting estimates'' and included amendments to Ind RS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its financial statements.

iii) Ind PS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after Rpril 1, 2023. The Company has evaluated the amendment and there is no impact on its standalone financial statement.

Other Litigations:

fin order has been received from the office of DGFT, Hyderabad for alleged violation of Target Plus Scheme to recover Rs. 3807 Lakhs including interest and penalties in Fy2010-11. The High Court ofTelangana alloujed the UUrit Petition filed by the company challenging aforesaid order and that of the appellate authority and directed the JDGFT to refund Rs. 500 lakhs deposited by the company. The office ofJDGFT has filed a UUrit fippeal before the High Court ofTelangana against this order ujhich is pending, fi shorn cause notice on the same issue Luas issued by DRI and the Commissioner of Customs & Central Excise, nag pur has confirmed the same which has been challenged by the company before CESTfiT, murnbai and the same is pending. The company has been advised that no liability is likely to arise under the notice in view of the High Court allowing the UUrit Petition filed by the company and the allegations are unfounded and the company is taking adequate steps to defend itself.

35.3 There was a major fire accident in spinning department of denim division at Ramtek.nagapur district, fTlaharashtra state during January, 2008, in which the Building, Plant & machinery, Electrical Installations and stocks were totally damaged. The factory was fully insured under reinstatement policy for fixed assets and under declaration policy for stocks. The Company''s Insurance claim is processed and settled partly. The Company received an amount of Rs.2,609 lakhs from the Insurance Company including salvage during Fy2007-08 & 2008-09. The part claim of Rs.490 lakhs which is still to be settled by the Insurance Company is shown under Claims receivable. The Company''s complaint in this matter is pending before national consumer disputes Redressal commission(nCDRC), new Delhi.

35.4 Other Statutory Information

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

ii) The Company does not have any transactions with struck off companies.

iii) Quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.

iv) 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 Ret, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Ret, 1961

v) Rs at march 31, 2023, the register of charges of the Company as available in records of the ministry of Corporate fiffairs (ITICR) includes charges that were created/modified since the inception of the Company. There are certain charges which are historic in nature and it involves practical challenges in obtaining no objection certificates (IROCs) from the charge holders of such charges, despite repayment of the underlying loans. The Company is in the continuous process of filing the charge satisfaction e-form with mCP, within the timelines,as and when it receives noCs from the respective charge holders.

vi) The Company has not revalued its property plant and equipment during the year.

vii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender

viii) The Company has complied with the number of layers prescribed under clause (87} of section 2 of the Ret read with the Companies (Restriction on number of Layers) Rules, 201 7.

ix) no Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Ret, 2013, during the year.

x) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

35.4 Other Statutory Information (Contd..)

xi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) ujith the understanding that the Intermediary shall:

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

(b) provide any guarantee, security or the like to oron behalf of the Ultimate Beneficiaries

xii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) ujith 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.

35.5 analytical Patio’s: (Contd..)

notes:

i) Debt Equity Ratio - Decrease in the ratio is on account of decrease in total debt on Prepayment.

ii) Debt Service Coverage Ratio - Decrease in the ratio is due to Prepayment of debt.

iii) Return on Equity Ratio - Profit after tax has increased during the current year Fy 22-23 due to increase in revenue and improvement in profitability.

iv) net Capital Turnover Ratio - Increase in the ratio is on account of decrease in working capital due to realisation from sale proceeds of Power Plant.

v) net Profit Ratio - Profit after tax has increased during the current year Fy 22-23 due to increase in revenue and improvement in profitability.

vi) Return on Capita Employed - Increase in the ratio is on account of the improvement in profitability during the current year.

vii) Return on Investment- Decrease in the ratio is due to decrease in market value of investments in the current year.

35.12 non Current Flssets Held for sale and discontinued operations

During the year, the company has sold Power Plant and from sale proceeds, it repaid its outstanding Term Loans, fis required by the Ind OS 105, non Current Ossets held for Sale and Discontinued Operations, Some of the Ossets of Garment division are lying in Osset held for sale and the same is expected to be sold during the coming financial year. The operating results of the Power Plant for all the periods presented have been regrouped and shown separately under profitAoss from discontinued operations (See note 33)

35.13 Financial Instruments

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into level 1 to level 3 as described below.

Level 1 - Quoted prices in an active market:

This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of Listed Equity shares.

Level 2 - Valuation techniques with observable inputs:

This level of hierarchy includes financial assets and liabilities, measured using 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 - Valuation techniques with significant unobservable inputs:

This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

35.14 Financial Risk management Objectives and Policies

The company is exposed to Financial risks arising from its operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, market risk, credit risk and liquidity risk. The company has a risk management policy ujhich not only covers the foreign exchange risks, but also other risks associated ujith the financial assets and liabilities such as interest rate risks and credit risks. The risk management frameujork aims to:

1. Create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the company''s business plan.

2. Rchieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

The folloujing sections provide the details regarding the Company''s exposure to the financial risks associated ujith financial instruments held in the ordinary course of business and the objectives policies and processes for the management of these risks.

35.14 Financial Risk management Objectives and Policies (Contd..)

(i) market Risk:

market risk is the risk that the fair value or future cash flotusof a financial instrument mill fluctuate because of changes in market prices, market prices comprise three types of risk, currency rate risk, interest rate risk and other price risks such as equity risk. Financial instruments affected by market risk include investments in equity shares.

a. Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash floms of the Company and the Company''s financial instruments mill fluctuate because of changes in market interest rates. Since the Company has only fixed interestbearing debts, exposure to interest rate risk is minimal.

b. Foreign Currency Risk

Currency risk is the risk that the value of a financial instrument mill fluctuate due to changes in foreign exchange rates. Currency risk arises mhen transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from goods supplied or received that are denominated in a currency other than the functional currency. The foreign currencies in mhich these transactions are denominated are mainly in US Dollars {$). The Company''s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The folloming table demonstrates the sensitivity in the USD to the Indian Rupee mith all other variables held constant. The impact on the company''s profit before tax due to changes in the fair value of monetary assets and liabilities is given belouu:

35.14 Financial Risk management Objectives and Policies (Contd..)

(ii) Credit Risk:

Credit risk is the risk that counterparty mill not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises from its operation activity primarily from trade receivable and from its financial activity. Customer credit risk is controlled by analysis of credit limit and credit morthiness of the customer on a continuous basis to mhom the credit has been granted.

Long outstanding receivable from customer are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivable.

(iii) Liquidity Risk:

The risk that an entity mill encounter difficulty in meeting obligations associated mith financial liabilities that are settled by delivering cash or another financial asset.

The company ensures that it has sufficient cash on demand to meet expected operational demands including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

The table belom summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:

35.15 Operating Segments

Factors used to identify the reportable segments

The company''s operating segments are established on the basis of those components of the company that are evaluated regularly by theChairman & managing Director {the''Chief Operating Decision maker''as defined in Ind RS 108-''Operating Segments''), in deciding horn to allocate resources and in assessing performance. These have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems.

The company has tmo principal operating and reporting segments; viz. Spinning & Denim {Fabrics).

The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting.

35.18 Previous year''s figures have been reclassified, ujherever necessary so as to conform ujith those of Current year.

as per our report of even date For and on behalf of Board of Directors

for Brahmayya & Co. (E.V.S.V. Sarma) 0- ⁿ- Agarwal)

Chartered Accountants Company Secretary Chairman & managing Director

Firm Registration no.: 000513S (PS Subramanyam) Din: 00008721

. . President (Finance) , . . _ ..

(K Shravan) (Paritosh K. flgarwal)

Partner managing Director

membership no. 21 5798 Din: 00008738

Place: Hyderabad (navrang Lai Tibreuial)

Date: 29.05.2023 Director

Din: 00030151

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Mar 31, 2018

CORPORATE INFORMATION

Suryalakshmi Cotton Mills Limited (the ‘company’) is a public limited company domiciled and incorporated in India under the Companies Act, 1956. The registered office of the company is located at 6th Floor, Surya Towers, 105 S P Road, Secunderabad, Telangana - 500003.

The company was formed in 1962 as a yarn manufacturing company. It has evolved today as integrated denim & branded Garments manufacturing textile Company. The company also has a captive thermal power plant.

a. Terms/ rights attached to equity shares

(i) The company has only one class of equity shares having a face value of RS.10 per share.

(ii) Each holder of equity share is entitled to one vote per share.

(iii) The dividends recommended by the Board of Directors if any, are subject to the approval of the shareholders in the ensuing Annual General Meeting.

(iv)In the event of liquidation of the Company, the equity share holders are entitled to receive the remaining assets of the Company after distribution of all preferential claims, in proportion to the number of shares held.

A. All the installments falling due within 12 months from the date of Balance Sheet have been classified as current maturities, the aggregate amounts are shown under ‘Other Current Liabilities’.

B. 1. The term loans referred at (a)(i) to (a)(ii) and (b)(i) to (b)(iv) above are secured by mortgage of (present & future) movable and immovable properties of the company on first charge pari passu & on the current assets of the company on second charge pari passu with existing term lenders and guaranteed by two directors of the company in their personal capacities.

2 The term loans referred at (a)(iii) to (a)(vi) and (c) above are secured by mortgage of (present & future) movable and immovable properties of the company on first charge pari passu & on the current assets of the company on second charge pari passu with existing term lenders and guaranteed by three directors of the company in their personal capacities. The term loan referred at (b) (viii) above are also secured with exclusive collateral security of Non-Agricultural property owned by M/s. Jayman Dealers Pvt. Ltd.

3. The loan referred at (b)(v) above is secured by pari-passu first charge by way of hypothecation of entire current assets (existing & future) of the company along with existing working capital credit lenders & guaranteed by three directors of the company in their personal capacities.

C. Vehicle loans are secured by hypothecation of the respective vehicles and guaranteed by one of the directors of the company.

D. Terms of Repayment:

a. Secured:

(i) Workcapital loans from (a) to (g) are secured by hypothecation of stocks of raw materials, yarn, fabric, stock-in-process, stores and spares and book debts and by a second mortgage over the (present and future) movable & immovable properties of the company on pari-passu basis and further guaranteed by three Directors of the Company in their personal capacities.

(ii) Commodity funding Purchase Bill discounting from Axis Bank is secured by pledge of stock of raw material, in the warehouse and further guaranteed by three Directors of the company in their personal capacities

b. Unsecured:

Loan from Directors and Inter corporate deposits are repayable on demand.

(x) In the Summary Suit filed by the Company, against Rajvir Industries Ltd. the Company has initiated the execution proceedings to recover the balance outstanding in the books of the Company (RS.236.93 lakhs) together with the interest as decreed by the City Civil Court, Secunderabad.

(xi) Three cases have been filed against the Company for amounts totaling to RS.1348 Lakhs in respect of three cheques allegedly issued by the company. These claims are being resisted on the plea that these cheques have been misused and in the absence of any legally enforceable debt or liability the company has been advised that the complaints are not maintainable and no liability is likely to arise.

(xii) Rajvir Industries Ltd. had filed an application before the Hon’ble High court of Andhra Pradesh for modification of the Order of the High Court in the scheme of arrangement for transfer of the liability of RS.1000 Lakhs to the company. The application has been dismissed with costs by the High Court and the applicant has preferred an appeal before the High Court which is pending.

(xiii) An order has been received from the office of DGFT Hyderabad for alleged violation of Target plus scheme to recover RS.3807 Lakhs including interest and penalties. Apart from this a penalty of RS.25 Lakhs each on CMD and MD and RS.5 Lakhs on some other Directors of the company has been imposed. The High Court of Andhra Pradesh has granted an interim stay of the dismissal of the appeal by the Company. The Company in compliance with the orders of the High Court has paid RS.500 Lakhs to DGFT, Hyderabad. (The Company has already paid RS.500 Lakhs to DRI in the same matter). A show cause notice on the same issue was issued by DRI and the Commissioner of Customs & Central Excise has confirmed the demand in the Show Cause Notice. The Company’s appeal is pending before CESTAT, Mumbai. The Company has been advised that no liability is likely to arise under the notice as the allegations are unfounded and the company is taking adequate steps to defend itself.

1.1. Upfront lease amount of RS.3,56,75,740/- and RS.2,42,35,600/- paid to Maharastra Industrial Development Corporation (MIDC) towards factory land lease of Amravati Unit -1 (Spinning Unit) and Amravati Unit -2 (Weaving Unit) respectively, is amortized over the lease period of 95 years.

1.2. The Dividend Distribution tax on the preference dividend payable on 5% Non Cumulative Redeemable Preference shares amounting to RS.10 lacs and on 10% Cumulative redeemable Preference shares amounting to RS.50 lacs will be RS.12.21 lacs.

1.3. There was a major fire accident in spinning department of denim division at Ramtek, Nagapur district, Maharashtra state during January, 2008, in which the Building, Plant & Machinery, Electrical Installations and stocks were totally damaged. The factory was fully insured under reinstatement policy for fixed assets and under declaration policy for stocks. The Company’s Insurance claim is processed and settled partly. The Company received an amount of RS.2609 lakhs from the Insurance Company including salvage.The part claim of RS.490 lakhs which is still to be settled by the Insurance Company is shown under Claims receivable. The Company’s complaint in this matter is pending before National Consumer Disputes Redressal Commission (NCDRC), New Delhi.

1.4. Disclosures in accordance with Companies (India Accounting Standards) Rules, 2015 notified by the Central Government:

1.4.1. Capital Management

The company’s capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-term goals of the company.

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 and other long-term/short term borrowings.

The company’s policy is aimed at combination of short term and long-term borrowings. The company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the company.

F. Sensitivity Analysis

The financial results are sensitive to the actuarial assumptions. The changes to the Defined Benefit Obligations for increase/ decrease of 1% from assumed salary escalation, withdrawal and discount rates are given below:

E. Sensitivity Analysis

The financial results are sensitive to the actuarial assumptions. The changes to the Defined Benefit Obligations for increase/ decrease of 1% from assumed salary escalation, Attrition and discountrates are given below

1.5.1. Financial Instruments

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into level 1 to level 3 as described below.

Level 1 - Quoted prices in an active market:

This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of mutual fund investments.

Level 2 - Valuation techniques with observable inputs:

This level of hierarchy includes financial assets and liabilities, measured using 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 - Valuation techniques with significant unobservable inputs:

This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

1.5.2. Financial Risk Management Objectives and Policies

The company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, market risk, credit risk and liquidity risk. The company has a risk management policy which not only covers the foreign exchange risks, but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management framework aims to:

1. Create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the company’s business plan.

2. Achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

The following sections provide the details regarding the Company’s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives policies and processes for the management of these risks.

(i) Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk, currency rate risk, interest rate risk and other price risks such as equity risk. Financial instruments affected by market risk include investments in equity shares.

a. Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company’s financial instruments will fluctuate because of changes in market interest rates. Since the Company has only fixed interest-bearing debts, exposure to interest rate risk is minimal.

b. Foreign Currency Risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from goods supplied or received that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company’s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The following table demonstrates the sensitivity in the USD to the Indian Rupee with all other variables held constant. The impact on the company’s profit before tax due to changes in the fair value of monetary assets and liabilities is given below:

c. Other price risk

Other price risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market.

The Company is exposed to price risk arising mainly from investments in Equity shares recognized at FVTPL.

Sensitivity analysis of 1% change in price of security as on reporting date.

(ii) Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises from its operation activity primarily from trade receivable and from its financial activity. Customer credit risk is controlled by analysis of credit limit and credit worthiness of the customer on a continuous basis to whom the credit has been granted.

Long outstanding receivable from customer are regularly monitored. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivable.

(iii) Liquidity Risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The company ensures that it has sufficient cash on demand to meet expected operational demands including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:

(c) Information about major customers

Revenue from transactions with a single customer exceed 10% or more of entity revenues in case of 1 customer in Denim (Fabric) Division and 2 customers in Garments Division.

1.5.3. Dues to Micro, Small and Medium Enterprises

On the basis of details furnished by the suppliers, there are no amounts to be reported as dues to micro, small and medium enterprises as required under section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (‘‘MSMED Act’).

1.5.4. Previous Year’s figures have been reclassified, wherever necessary so as to conform with those of Current Year.

1.5.5. FIRST TIME ADOPTION OF IND AS

For all periods, up to and including the year ended 31st March 2017 the company has prepared its financial statements in accordance with generally accepted accounting principles and accounting standards notified under section 133 of the Companies Act 2013 read together with Rule 7 of the Companies (Accounts) Rules 2014 (“Previous GAAP”).

These financial statements for the year ended 31st March 2018 are the company’s first annual Ind AS complied financial statements.

The company has prepared financial statements which comply with Ind AS applicable for period beginning on or after 01st April 2016 (transition date) as described in the accounting policies. This note explains the principal adjustment made by the company in restating its Balance Sheets as at 01st April 2016 & 31st March 2017 and Statement of Profit & Loss for the year ended 31st March 2017.

A. Optional Exemptions from retrospective application

Ind AS 101 permits first-time adopters certain exemptions from retrospective application of certain requirements under Ind AS. The Company has elected to apply the following optional exemptions from retrospective application:

(i) Business Combinations:

Ind AS 101 provides the option to apply Ind AS 103 - Business Combinations prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Hence, Business combinations occurring prior to the transition date have not been restated.

(ii) Deemed cost for property, plant & equipment and Intangible asset:

The Company has elected to continue with the Previous GAAP carrying value for all its property, plant and equipment and intangible assets and use that as deemed cost on the date of transition to Ind AS.

B. Mandatory Exceptions from retrospective application

The Company has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101:

(i) Estimates:

On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.

(ii) Classification and measurement of financial assets:

The classification of financial assets to be measured at amortized cost or fair value through Profit and loss or fair value through other comprehensive income is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.

(iii) Government loans:

The requirements of Ind AS 20 - Accounting for Government Grants and Disclosure of Government Assistance and Ind AS 109 - Financial Instruments in respect of interest free loans from government authorities is opted to be applied prospectively to government loans existing at the date of transition to Ind AS. Consequently, the carrying amount of such interest free loans as per the financial statements of the Company prepared under Previous GAAP is continued as carrying amount in the opening Ind AS Balance Sheet.

C. Transition to Ind AS - Reconciliations

The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:

I. Reconciliation of Equity as at 1st April 2016

II. A. Reconciliation of Equity as at 31st March 2017

B. Reconciliation of Statement of Profit and Loss for the year ended 31st March 2017

III. Adjustments to Statement of Cash Flows for the year ended 31st March 2017

Previous GAAP figures have been reclassified/regrouped wherever necessary to conform with financial statements prepared under Ind AS.

Notes to reconciliation of financial statements as previously reported under Previous GAAP to Ind AS

Notes to Reconciliation of Financial Statements as previously reported under previous GAAP to Ind AS

(i) Due to Ind AS Adjustments

1. Lease hold land:

Under Previous GAAP leasehold lands were recognized as assets under PPE. As per Ind AS 17, the company has treated leasehold lands as operating leases and premium paid is considered as pre-paid lease rentals. Thereafter, amortization of prepaid lease rentals is charged to Profit and loss.

2. Borrowing cost (Upfront fees):

Under the previous GAAP the transactions costs relating to origination of term loans raised specifically for acquisition of items of Property, Plant & Equipment were capitalized.

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the proceeds of borrowings on initial recognition. These costs are treated as part of the interest expense by applying the effective interest method.

Hence upfront fees capitalized under Previous GAAP is reversed and reduced from term loan (financial liability). Interest (calculated using effective interest method) upto date of addition is capitalized and after the date of addition, it is charged to Profit and loss account as part of finance cost.

3. Fair valuation of financial liability (sales tax deferment):

Under previous GAAP, the sales tax deferral incentive, which is sales tax collected and repayable after a fixed tenure was recognized at cost. Under Ind AS, sales tax deferment is a financial liability classified as subsequently measured at amortized cost. Hence it is to be measured at fair value and the difference between transaction value and fair value is to be recognized as Government grant. The Company has availed mandatory exception under Ind AS 101 and accordingly, there is no change in accounting treatment on the amount carried forward on the date of transition.

After transition date, the difference between transaction value and fair value has been recognized as Government grant in Balance Sheet. The Government grant has been recognized in the Statement of Profit and Loss on a straight-line basis over the period of grant and unwinding of interest on fair value of sales tax deferment liability has been recognized as finance cost.

4. Preference Shares:

Under Previous GAAP, Preference share capital is treated as part of Share Capital and dividend on redeemable preference shares were adjusted to Reserves when the dividend is declared and paid.

As per Ind AS, cumulative redeemable preference shares meet the definition of financial liability. Hence it is reclassified as financial liability (borrowings) classified as subsequently measured at amortised cost. Consequently, it is to be measured at fair value and the difference between transaction value and fair value is to be credited to Other Equity. Interest (Dividend) is to be charged to the statement of Profit and Loss using Effective Interest Rate (EIR).

5. Excise duty:

Under the previous GAAP, revenue from sale of products was presented net of excise duty. Excise duty is collected by the company on its own account and hence as per Ind AS, revenue from sale of goods is presented inclusive of excise duty. There is no impact on the total equity and profit.

6. Remeasurement of Defined Benefit Plans:

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

Under the previous GAAP, these remeasurements were forming part of the Statement of Profit and Loss for the year. There is no impact on the total equity.

7. Revaluation Reserve:

On adoption of Ind AS, the company has elected to continue the previous GAAP carrying values of Property, Plant & Equipment and use those amounts as deemed cost. Hence, Revaluation Reserve created under previous GAAP is reversed and reduced from carrying amount of Property, Plant & Equipment.

8. Unsecured Loans from Directors

As per Ind AS, Unsecured Loan from Directors meet the definition of financial liability. Hence it is reclassified as financial liability (borrowings) classified as subsequently measured at amortised cost. Consequently, it is to be measured at fair value and the difference between transaction value and fair value is to be credited to Other Equity. Interest (Dividend) is to be charged to the statement of Profit and Loss using Effective Interest Rate (EIR).

9. Deferred Tax:

Deferred tax is created on all the temporary differences arising on adjustments arising on adoption of Ind AS.

10. Investments in Equity Shares

Under Previous GAAP, Investment in Equity shares are treated as current investments and shown at lower of cost and fair value.

As per Ind AS, Investments in Equity Instruments are carried at fair value (through Other Comprehensive Income) and resultant fair value changes are recognized in Other Comprehensive Income.

(ii) Due to Errors made under Previous GAAP

11. Preliminary, Product Development and Trial Run Expenditure

As per Previous GAAP, Preliminary and Product Development expenses are to be charged off to the statement of Profit and loss in the year in which they were incurred and trial run expenditure is to be capitalized along with cost of the item of Property, plant and equipment. Erroneously, these were treated amortised to the statement of Profit and loss and unamortised portion is shown under other Non-Current assets. On adoption of Ind AS, the error is rectified.

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Mar 31, 2016

Note 1. Significant Accounting Policies: 1 Accounting Convention

The financial statements are prepared under historical cost convention and on accrual basis in accordance with the generally accepted accounting principles.

2 Fixed Assets

Fixed Assets are stated at cost net of depreciation provided

The Company''s Insurance claim is processed and settled partly. The Company received an amount of RS,2,609 Lakhs from the Insurance Company including salvage. The part claim of RS,490 Lakhs which is still to be settled by the Insurance Company is shown under Claims receivable.

3 On 4th July, 2015, there was a major fire accident in Sizing Machine in Weaving department of denim division at Ramtek, Nagapur district, Maharashtra state, in which one of the Sizing Machines & its accessories, etc., was damaged. The factory was fully insured under reinstatement policy for fixed assets and under declaration policy for stocks. Due to this damage, there was production loss also. New sizing machine was purchased, installed and decommissioned on 23.02.2016. The Company has already filed its claim for reinstatement of assets damaged and also for loss of profit under Business Interruption (Fire) Policy.

4 During the financial year, the Company has successfully commissioned its state of art of Spinning unit of 25,344 spindles at Amravati District of Maharashtra on 25th September, 2015.

5 During the financial year 2014-15, the Company had revised the Useful life of its fixed assets to comply with the useful life as mentioned under Schedule II of the Companies Act, 2013.

6 Previous year''s figures : Figures for the previous year have been regrouped wherever necessary to correspond with the current year''s figures.

7 Except when otherwise stated, the figures are presented in Rupees Lakhs.

in the statements. Cost of acquisition of Fixed Assets is inclusive of all direct and indirect expenditure up to the date of commercial use.

Depreciation is provided in accordance with the Useful Life prescribed under Schedule II of the Companies Act, 2013

8 Inventories

Raw material and Stores & Spares are valued at cost on weighted average basis. Stock-in-process and Finished Goods are valued at lower of cost or net realizable value.

The Excise Duty payable on finished / Saleable goods is accounted for on clearance of goods from the factory premises, wherever applicable.

9 Investments

Investments are stated at cost and diminution / increase in the value, which is permanent in nature, is provided for.

10 Contingent Liabilities and Provisions

All Contingent liabilities are indicated by way of a note and will be paid / provided on crystallization.

6 Retirement Benefits

Provident Fund contribution is charged to the Profit and Loss Account as and when the contributions are due In respect of Gratuity, the Company has covered the gratuity liability by obtaining the group gratuity policy. The premium charged by Life Insurance Corporation of India is paid as stipulated and charged to Profit and Loss Account. The Company has also made required Gratuity & Leave encashment liability provision as per Actuarial valuation.

7 Foreign Exchange Transactions

a) Export Sales are initially accounted at the exchange rate prevailing on the date of documentation/invoicing and the same is adjusted with the difference in the rate of exchange arising on actual receipt of proceeds in foreign exchange.

b) Earnings in foreign currency other than export sales are accounted for at the rate of conversion on the date of realization.

c) Imports of material / capital equipment are accounted at the rates at which the actual payments are made.

d) Assets and liabilities arising out of foreign exchange transactions are translated at the rates of exchange ruling on the date of Balance Sheet and are suitably adjusted to the appropriate Revenue/Capital account.

8 Impairment of Assets

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods, is reversed if there has been a change in the estimate of recoverable amount.

9 Leasehold Land

Leasehold Land is treated as an asset for the period of its Lease as per the Lease Agreement entered, and the amount of lease will be amortized as depreciation on straight line basis and charged to Profit & Loss account over the lease term.

10 Sales

Sales represents the amount receivable for goods sold including excise duty and sales Tax thereon. Incentives on export sales are recognized as income on accrual basis.

11 Provision for Taxation

Provision for Taxation for the year is based on Tax liability computed in accordance with relevant Tax rates and Tax laws as at the Balance Sheet date. Provision for deferred Tax is made for all timing differences arising between Taxable income and accounting income at rates that have been enacted or substantively enacted as at the Balance Sheet date. Deferred Tax assets / MAT Credit are recognized only if there is a reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying value at each Balance Sheet date.

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Mar 31, 2015

1.(a) During the financial year, the Authorised Capital of the Company has been reclassified consisting of 3,00,00,000 Equity Shares of Rs. 10/- each, 672,000 - 10% Cumulative Redeemable Preference Shares of Rs. 100 each and 2,00,000 - 5% Non Cumulative Preference Shares of Rs. 100 each, as approved by the members in the Annual General Meeting held on 4th August, 2014.

(b) During the current financial year, the Company has issued and allotted 2,150,000 fully paid up Equity shares of Rs. 10/- each at a Share premium of Rs. 65/- per Equity Share.

(c) During the current financial year, the Company has issued 500,000 - 10% Cumulative Redeemable Preference Shares of Rs. 100 each as issued, subscribed and paid up, to part finance Company's Spinning Project at Amravathi, near Nagpur, Maharashtra. The same will be redeemed on 18th August, 2026.

(d) 8,032,267/- Equity shares of Rs. 10 each are allotted as fully paid up by way of Bonus shares by capitalisation of reserves.

(e) During the previous financial year, the Company has issued 200,000 - 5% Non Cumulative Redeemable Preference Shares of Rs. 100 each as issued, subscribed and paid up, as per the Schme of Amalgamation, to the preference shareholders of erstwhile Suryakiran International Ltd. The same will be redeemed on 21st December, 2021.

# Persuant to Scheme of Amalgamation, the excess of Equity Share Capital Rs. 445.78 Lakhs, & Security Premium account Rs. 434.58 Lakhs, totaling to Rs. 880.36 Lakhs, of erstwhile Suryakiran International Ltd. over Investment by the Company amounting to Rs. 666.01 Lakhs in SKIL, i.e., Rs. 214.35 Lakhs is considered as Amalgamation / Capital Reserve during the previous financial year.

Note :

1. The Loans referred at I (a) to (i), (k) and (n) above are secured by mortgage of (present & future) movable and immovable properties of the Company on first charge pari passu basis & second pari passu charge on the current assets of the Company with existing term lenders and guaranteed by two Directors of the Company in their personal capacities.

2. The Loans referred at (l) to (m) and (II)(a) above are secured by mortgage of (present & future) movable and immovable properties of the Company on first charge pari passu basis & second pari passu charge on the current assets of the Company with existing term lenders and guaranteed by three Directors of the Company in their personal capacities.

3. The Loan referred at I (j) above is secured by mortgage of present and future movable and immovable properties of the Garment division of the Company and guaranteed by two Directors of the Company.

4. The Loan referred at I (o) above is secured by pari-passu first charge by way of hypothecation of entire current assets (existing & future) of the Company along with existing Working Capital credit lenders & guaranteed by three Directors of the Company in their personal capacities.

The Sales tax deferment liability amounting to Rs. 114.15 Lakhs shown under unsecured loans above, is due for repayment as under.

All Working Capital loans are secured by hypothecation of stocks of raw materials, yarn, fabric, stock-in-process, stores and spares and book debts and by a second mortgage over the (present and future) movable & immovable properties of the Company on pari-passu basis and further guaranteed by three Directors of the Company in their personal capacities.

Note 2

Notes forming part of Balance Sheet as at 31st March, 2015 and Statement of Profit and Loss for the year ended on that date.

(Figures in Rs. Lakhs)

Particulars As at As at 31st March 31st March

1 Contingent Liabilities not provided for

a) Contracts to be executed 7255.54 4450.65 on capital accounts.

b) Against Foreign & Inland 673.38 0.00 Letters of Credit

c) Against Bank Gaurantees 1627.34 1595.04

d) Against Bills discounted 515.75 1298.42

e) Demand against Reversal 32.89 32.89 of Excise duty on Finished goods and Cenvat Credit involved in the stock of inputs while opting for the Central Excise Notification No. 30/2004. Company's appeal was allowed by Appellate Commissioner of Customs & Central Excise, Nagpur. However, the Central Excise Department has filed an appeal against the above Order with CESTAT

f) Disputed demand from sales tax 28.82 28.82 department on subjecting the turnover of unit at Maharashtra to tax along with the turnover of Andhra Pradesh and set off. The company has filed appeal before STAT(A.P),Hyderabad against the revised demand issued by the DC(CT), Begumpet Division, Hyderabad.

g) Disputed demand from Central 11.43 11.43 Excise department on clearance of unbranded garments without payment of duty. Cenvat on exempted garments reversed and paid. The company has filed appeal before CESTAT, Bangalore

h) Disputed demand from Customs 61.49 61.49 department towards differential custom duty on garments exported. The Case is pending for hearing with Hon'ble High Court of Judicature of Andhra Pradesh at Hyderabad.

i) Disputed demand from DCIT, Range : 3.93 3.93 3(2), Hyderabad towards Income tax on disallowance of expenditure on account of Customs duty paid for previous year, during the Assessment Year 2008-09. The case is pending in appeal before the Commissioner of Income Tax (Appeals-IV), Hyderabad

j) Disallowance of Unpaid Leave 10.85 10.85 encashment provision in assessment proceedings for the Assessment Year 2011-12 by Addl. CIT, Range 3, Hyderabad. The case is pending in appeal before the Commissioner of Income Tax (Appeals-IV), Hyderabad

k) Disputed demand from DCIT, Range : 65.27 - 3(2), Hyderabad towards disallowance of Credit towards Surcharge and Education Cess as Minimum Alternate Tax credit. The case is pending in appeal before the Commissioner of Income Tax (Appeals-IV), Hyderabad

3 The legal proceedings against M/s.Rajvir Industries Ltd., for the recovery of the balance outstanding in the books of the company of Rs. 236.93 Lakhs (Previous year Rs. 236.93 Lakhs) are pending.

4 Three cases have been filed against the Company for amounts totaling to Rs. 1,348 Lakhs in respect of three cheques allegedly issued by the company. These claims are being resisted on the plea that these cheques have been misused and in the absence of any legally enforceable debt or liability the company has been advised that the complaints are not maintainable and no liability is likely to arise.

5 (i) Rajvir Industries Ltd., has filed an application before the Hon,ble High court of Andhra Pradesh for modification of the

Order of the High Court in the scheme of arrangement for transfer of the liability of Rs. 1,000 Lakhs to the company. The application has been dismissed with costs by the High Court and the applicant has preferred an appeal before the High Court which is pending.

(ii) Rajvir Industries Limited (RIL) had also filed criminal complaint against the Company, certain Directors, Sr. Executives and the Auditor of the company in the above matter which however was quashed by the Hon'ble High Court of A.P RIL has preferred a special leave petition before the Hon'ble Supreme Court which is pending.

6 An order has been received from the office of DGFT Hyderabad for alleged violation of Target plus scheme to recover Rs. 3,807 Lakhs including interest and penalties. Apart from this a penalty of Rs. 25 Lakhs each on CMD and MD and Rs. 5 Lakhs on some other Directors of the company has been imposed. The High Court of Andhra Pradesh has granted an interim stay of the dismissal of the appeal by the Company. The Company in compliance with the orders of the High Court has paid Rs. 500 Lakhs to DGFT, Hyderabad. (The Company has already paid Rs. 500 Lakhs to DRI in the same matter). A show cause notice on the same issue was issued by DRI. The Company has been advised that no liability is likely to arise under the notice as the allegations are unfounded and the company is taking adequate steps to defend itself.

7 The Company carried out a revaluation of its assets, i.e., Land, Buildings and Plant & Machinery in its Denim Division at Ramtek and Spinning Division at Amanagallu, by an approved valuer. Revaluation of Power Plant assets was not done, as it was relatively new Plant. The written up value of the assets on revaluation amounting to Rs. 174.58 Crores was added to the cost of the assets / Gross Block as on 31st March, 2014. The depreciation of Rs. 84.84 Crores for the previous financial year 2013- 14 and Rs. 12.89 crores for the financial year 2014-15, totalling to Rs. 97.73 crores on written up value of Gross Block has been added to depreciation, and the net increase in depreciated value Rs. 76.85 crores (Previous year Rs. 89.74 Crores), is considered as revaluation reserve and the same will be written off as per the depreication method followed by the company.

8 Employee Benefits : Gratuity

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the Standard for Actuarial valuation of Gratuity.

Employee Benefits : Actuarial valuation of Leave encashment

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the Standard for Actuarial valuation of Leave encashment.

9 In the opinion of the Board, the current assets and loans & advances have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

10 Vide Notification No.30/09.07.2004 of the Central Excise Department we can opt for zero rate of duty by not taking Cenvat credit on Inputs and vide Tariff rate (Previous year under Notification No.29/09.07.2004) of Central Excise Department option can be exercised for payment of duty on Final products by taking credit on inputs and capital items. Accordingly in case of Denim Fabric and Cotton yarn the Company has opted for Zero rate of duty and not availed Cenvat credit on the purchase of inputs and capital items, where as in case of Polyster yarn we have taken cenvat credit on part of the raw material which are used for production of polyster yarn meant for export, and cleared the material for export on payment of duty.

11 There was a major fire accident in spinning department of denim division at Ramtek, Nagapur district, Maharashtra state during January, 2008, in which the Building, Plant & Machinery, Electrical Installations and stocks were totally damaged. The factory was fully insured under reinstatement policy for fixed assets and under declaration policy for stocks. The Company's Insurance claim is processed and settled partly. The Company received an amount of Rs. 2609 Lakhs from the Insurance Company including salvage. The part claim of 490 Lakhs which is still to be settled by the Insurance Company is shown under Claims receivable.

12 During the financial year, the Company has revised the Useful life of its fixed assets to comply with the useful life as mentioned under Schedule II of the Companies Act, 2013 and in view of the transitional provisions, the Company has adjusted Rs. 366.77 lacs with the opening balances of retained earnings, i.e., surplus in the statement of profit and loss. Had the Company continued to follow the earlier useful life under the Companies Act,1956, the depreciation expense for the year to date would have been higher by Rs. 200.49 lacs and Profit before tax & the Net Block of Fixed Assets for the year to date would have been lower by Rs. 200.49 lacs.

13 Previous Year's Figures : Figures for the previous year have been regrouped wherever necessary to correspond with the current year's figures.

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Mar 31, 2013

1. The legal proceedings againt M/s.rajvir Industries ltd., for the recovery of the balance outstanding in the books of the company of Rs.236.93 lakhs (Previous year Rs.236.93 lakhs) are pending.

2. Three cases have been filed against the Company for amounts totaling to Rs.1348 lakhs in respect of three cheques allegedly issued by the company. These claims are being resisted on the plea that these cheques have been misused and in the absence of any legally enforceable debt or liability the company has been advised that the complaints are not maintainable and no liability is likely to arise.

3. rajvir Industries ltd., has filed an application before the hon,ble high court of andhra Pradesh for modification of the Order of the high Court in the scheme of arrangement for transfer of the liability of Rs.1000 lakhs to the company. The application has been dismissed with costs by the high Court and the applicant has preferred an appeal before the high Court which is pending.

4. an order has been received from the office of dGFT hyderabad for alleged violation of Target plus scheme to recover Rs.3807 lakhs including interest and penalties. apart from this a penalty of Rs.25 lakhs each on CMd and Md and Rs.5 lakhs on some other directors of the company has been imposed. The high Court of andhra Pradesh has granted an interim stay of the dismissal of the appeal by the Company. The Company in compliance with the orders of the high Court has paid Rs.500 lakhs to dGFT, hyderabad. (The Company has already paid Rs.500 lakhs to drI in the same matter). a show cause notice on the same issue was issued by drI. The Company has been advised that no liability is likely to arise under the notice as the allegations are unfounded and the company is taking adequate steps to defend itself.

5 Employee Benefits : Gratuity

Consequent to the adoption of accounting Standard on Employees Benefits (aS-15) (revised 2005) issued by the Institute of Chartered accountants of India, the following disclosures have been made as required by the Standard for actuarial valuation of Gratuity

6. In the opinion of the Board, the current assets and loans & advances have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

7. Vide notification no.30/09.07.2004 of the Central Excise department we can opt for zero rate of duty by not taking Cenvat credit on Inputs and vide Tariff rate (Previous year under notification no.29/09.07.2004) of Central Excise department option can be exercised for payment of duty on Final products by taking credit on inputs and capital items. accordingly in case of denim Fabric and Cotton yarn the Company has opted for Zero rate of duty and not availed Cenvat credit on the purchase of inputs and capital items, where as in case of Polyster yarn we have taken cenvat credit on part of the rawmaterial which are used for production of polyster yarn meant for export, and cleared the material for export on payment of duty.

8. There was a major fire accident in spinning department of denim division at ramtek, nagapur district, Maharashtra state during January, 2008, in which the Building, Plant & Machinery, Electrical Installations and stocks were totally damaged. The factory was fully insured under reinstatement policy for fixed assets and under declaration policy for stocks. The Company''s Insurance claim is processed and settled partly. The Company received an amount of Rs.2609 lakhs from the Insurance Company including salvage.The part claim of Rs.490 lakhs which is still to be settled by the Insurance Company is shown under Claims receivable.

9. The company has given corporate guarantee to SBI on behalf of its subsidary M/s Surya kiran International limited, for 21.31 crores.

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Mar 31, 2012

Note:

1. The Loans referred at (a) to (f), (h) to (i) above are secured by mortgage of (present & future) movable and immovable properties of the Company on first charge pari passu basis and guaranteed by two Directors of the Company in their personal capacities.

2. The Loan referred at (j) above is secured by mortgage of the fixed assets created by virtue of the said term loan for the present movable and immovable properties of the Company on first charge pari passu basis.

3. The Loan referred to in (g) above is secured by hypothecation of specified plant and machinery as per the scheme and guaranteed by two Directors of the Company.

4. The Loan referred to in (i)-(k) & (ii)-(a) are secured by pari passu first charge on the entire fixed assets (movable & immovable, present & future) of the Company & second pari passu charge on the current assets of the Company with existing term lenders, guaranteed by two Directors of the Company.

5. The Loan referred to in (i)-(l) is secured by pari passu first charge on the entire fixed assets (present & future) of the Company & second pari passu charge on the current assets of the Company with existing term lenders, guaranteed by two Directors of the Company.

As at As at 31.03.2012 31.03.2011

NOTES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2012 AND STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED ON THAT DATE.

1. Contingent Liabilities not provided for

a) Contracts to be executed on capital accounts. 5557.80 11532.39

b) Against Foreign & Inland Letters of Credit 257.05 96.44

c) Against Bank Guarantees 763.37 129.67

d) Against Bills discounted 2308.17 4489.84

e) Demand from Central Excise Department in connection with the clearance of 78.50 78.50 the goods disputed by the Company and allowed by the Commissioner Appeals, Nagpur in Company's favour. However the department has preferred an appeal against the Commissioner's order.

f) Demand against Reversal of Excise duty on Finished goods and Cenvat 32.89 32.89 Credit involved in the stock of inputs while opting for the Central Excise Notification No.30/2004. Company's appeal was allowed by Appellate Commissioner of Customs & Central Excise, Nagpur. However, the Central Excise Department has filed an appeal against the above Order with CESTAT

g) Disputed demand from sales tax department on Input tax credit, 58.74 58.74 Appeal remanded by Appellate Dy. Commissioner (CT). Pending for verification & orders with Dy./Asst. Commissioner (CT), Begumpet Division, Hyderabad

h) Disputed demand from sales tax department on subjecting the turnover of unit at Maharashtra to tax along with the turnover of Andhra Pradesh and set off. The company has filed appeal before STAT(A.P),Hyderabad against the revised demand issued by the DC(CT), Begumpet Division, Hyderabad. 28.82 28.82

2. The legal proceedings againt M/s.Rajvir Industries Ltd., for the recovery of the balance outstanding in the books of the compnay of Rs. 236.93 lakhs (Previous year Rs. 236.93 lakhs) are pending.

3. Claim against the company not acknowledged as debts :

M/s Rajvir Industries Limited has filed a suit against the company claiming export incentives allegedly due to them amounting to Rs. 295.70 Lakhs relating to export performance of erstwhile Mahabubnagar Unit of the periods prior to demerger. The Company has been advised that the claim is not admissible and is taking adequate steps to resist the claim.

4. Three cases have been filed against the Company for amounts totaling to Rs. 1348 lakhs in respect of three cheques allegedly issued by the company. These claims are being resisted on the plea that these cheques have been misused and in the absence of any legally enforceable debt or liability the company has been advised that the complaints are not maintainable and no liability is likely to arise.

5. Rajvir Industries Ltd., has filed an application before the Hon,ble High court of Andhra Pradesh for modification of the Order of the High Court in the scheme of arrangement for transfer of the liability of Rs. 1000 lakhs to the company. The application has been dismissed with costs by the High Court and the applicant has preferred an appeal before the High Court which is pending.

6. An order has been received from the office of DGFT Hyderabad for alleged violation of Target plus scheme to recover Rs. 3807 lakhs including interest and penalties. Apart from this a penalty of Rs. 25 lakhs each on CMD and MD and Rs. 5 lakhs on some other Directors of the company has been imposed. The High Court of Andhra Pradesh has granted an interim stay on the dismissal of the appeal by the Company. The Company in compliance with the orders of the High Court has paid Rs. 500 lakhs to DGFT, Hyderabad. (The Company has already paid Rs. 500 lakhs to DRI in the same matter). A show cause notice on the same issue was issued by DRI. The Company has been advised that no liability is likely to arise under the notice as the allegations are unfounded and the company is taking adequate steps to defend itself.

7. Employee Benefits : Gratuity

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the Standard for Actuarial valuation of Gratuity

Employee Benefits : Actuarial valuation of Leave encashment

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the Standard for Actuarial valuation of Leave encashment.

8. Pursuant to Scheme of restructuring package of Term Loans the Company has alloted 0.1% Cumulative Redeemable Preference Shares of Rs. 100/- each on 28th October, 2002 to IDBI and IFCI. Out of which the company has redeemed Rs. 271.60 Lakhs on 31.07.2011 to IFCI & the balance of Rs. 400 Lakhs to be redeemed to IDBI before May,2012.

9. In the opinion of the Board, the current assets and loans & advances have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

10. Vide Notification No.30/09.07.2004 of the Central Excise Department we can opt for zero rate of duty by not taking Cenvat credit on Inputs and vide Tariff rate (Previous year under Notification No.29/09.07.2004) of Central Excise Department option can be exercised for payment of duty on Final products by taking credit on inputs and capital items. Accordingly in case of Denim Fabric and Cotton yarn the Company has opted for Zero rate of duty and not availed Cenvat credit on the purchase of inputs and capital items, where as in case of polyster / viscose / blended yarn we have taken cenvat credit on part of the rawmaterial which are used for production of polyster / viscose / blended yarn meant for export, and cleared the material for export on payment of duty.

11. There was a major fire accident in spinning department of denim division at Ramtek, Nagapur district, Maharashtra state during January, 2008, in which the Building, Plant & Machinery, Electrical Installations and stocks were totally damaged. The factory was fully insured under reinstatement policy for fixed assets and under declaration policy for stocks. The Company's Insurance claim is processed and settled partly. The Company received an amount of Rs. 2609 lakhs from the Insurance Company including salvage.The part claim of Rs. 490 lakhs which is still to be settled by the Insurance Company is shown under Claims receivable.

12. The company has given corporate guarantee to its subsidary M/s SuryaKiran International Limited, to the extent of Rs. 500 Lakhs.

13. Consequent to the Notification under the Companies Act, 1956, the financial statements for the year ended 31st March,2012 are prepared under Revised Schedule VI accordingly. The Previous year's figures also have been reclassified to conform to this year's classification.

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Mar 31, 2011

(Amount in Rs.) As at As at 31.03.2011 31.03.2010

1 Contingent Liabilities not provided for

a) Contracts to be executed on 1,153,239,045 130,279,355 capital accounts.

b) Against Foreign & Inland 9,643,815 4,533,043 Letters of Credit

c) Against Bank Gaurantees 12,966,600 466,940

d) Against Bills discounted 448,984,388 191,313,664

e) Demand from the Central Excise Department under Textiles and Textile Articles Act (TTA), disputed – 28,534,563 by the Company pending in appeals with the Commissioner, Customs and Central Excise, Nagpur, not provided for.

f) Demand from Central Excise 7,850,277 7,850,277 Department in connection with the clearance of the goods disputed by the Company and allowed by the Commissioner Appeals, Nagpur in Company's favour. However the department has preferred an appeal against the Commissioner's order.

g) Demand against Reversal of 3,288,688 3,288,688 Excise duty on Finished goods and Cenvat Credit involved in the stock of inputs while opting for the Central Excise Notification No.30/2004. Company's appeal was allowed by Appellate Commissioner of Customs & Central Excise, Nagpur. However, the Central Excise Department has filed an appeal against the above Order with CESTAT

h) Disputed demand from sales 5,874,266 5,874,266 tax department on Input tax credit,Appeal remanded by Appellate Dy. Commissioner (CT). Pending for verification & orders with Dy./Asst.Commissioner (CT), Begumpet Division, Hyderabad

i) Disputed demand from sales tax 2,881,750 2,163,938 department on subjecting the turnover of unit at Maharashtra to tax along with the turnover of Andhra Pradesh and set off. The company has filed appeal before STAT(A.P),Hyderabad against the revised demand issued by the DC(CT), Begumpet Division, Hyderabad.

j) Interest charged U/s.234B of – 11,866,089 the Income Tax Act,1961 - Interest waiver Petition filed before Hon'ble Chief Commissioner of Income Tax-I, Hyderabad

2 The legal proceedings against M/s Rajvir Industries Ltd., for the recovery of the balance outstanding in the books of the company of Rs.2,36,92,934/- (Previous Year Rs.2,36,92,934/-) are pending.

3 Claim against the company not acknowledged as debts :

M/s Rajvir Industries Limited has filed a suit against the company claiming export incentives allegedly due to them amounting to Rs.295.70 Lakhs relating to export performance of erstwhile Mahabubnagar Unit of the periods prior to demerger. The Company has been advised that the claim is not admissable and is taking adequate steps to resist the claim.

4 Three cases have been filed against the Company for amounts totaling to Rs. 13.48 crores in respect of three cheques allegedly issued by the company. These claims are being resisted on the plea that these cheques have been misused and in absence of any legally enforceable debt or liability the company has been advised that the complaints are not maintainable and no liability is likely to arise.

5 An order has been received from the office of DGFT Hyderabad for alleged violation of Target plus scheme (TPS) and to recover Rs.38.07 crores including interest and penalties. Apart from this a penalty of Rs.25 lakhs each on CMD and MD and Rs.5 lakhs on some other directors of the company has been imposed. A show cause notice on the same issue for Rs. 10.59 crores was issued by DRI The company has been advised that no liability is likely to arise under the notice as the allegations are unfounded and the company is taking adequate steps to defend itself. However, the Company has paid Rs.5 crores to DRI in this connection.

6 Information about Business Segments

Other Disclosures

Allocation of Corporate Office expenses to segment is at cost.

All Profit / (Losses) on inter segment transfers are eliminated at Company's level.

Types of Product and Services in each Business Segment.

Business Segment Type of Product

a) Spinning Cotton Yarn, Combed Yarn and P V Yarn

b) Denim Denim Fabric

c) Power Project & Others Power

7 Pursuant to Scheme of restructuring package of Term Loans the Company has alloted 0.1% Cumulative Redeemable Preference Shares of Rs.100/- each on 28th October, 2002 to IDBI and IFCI and the same will be redeemed to IDBI in March, 2012 (Rs.400 lacs) and to IFCI in July, 2011 (Rs.271.60 Lacs)

8 The amount of CRPS of 671.60 lakhs payable on redemption to IDBI and IFCI as stated in note No.27 is treated as deferred revenueRs. expenditure, to be written off over the term of the CRPS.

10 During the year 2005-06 the Company has incurred an amount of Rs.12,523,000/- being the expenditure incurred for raising equity. The same will be amortised over a period of 5 Years from the date of commencement of operations, i.e. from the financial year 2006-07.

11 In the opinion of the Board, the current assets and loans & advances have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

12 Vide Notification No.30/09.07.2004 of the Central Excise Department we can opt for zero rate of duty by not taking Cenvat credit on Inputs and vide Tariff rate (Previous year under Notification No.29/09.07.2004) of Central Excise Department option can be exercised for payment of duty on Final products by taking credit on inputs and capital items. Accordingly in case of Denim Fabric and Cotton yarn the Company has opted for Zero rate of duty and not availed Cenvat credit on the purchase of inputs and capital items, where as in case of Polyster yarn we have taken cenvat credit on part of the raw material which are used for production of polyster yarn meant for export, and cleared the material for export on payment of duty.

13 There was a major fire accident in spinning department of denim division at Ramtek, Nagapur district, Maharashtra state during January, 2008, in which the Building, Plant & Machinery, Electrical Installations and stocks were totally damaged. The factory was fully insured under reinstatement policy for fixed assets and under declaration policy for stocks. The Company's Insurance claim is processed and settled partly. The Company received an amount ofRs.26.09 crores from the Insurance Company including salvage.The part claim of Rs.4.90 crores which is still to be settled by the Insurance Company is shown under Claims receivable

14 The company has given corporate guarantee to its subsidiary M/s Surya Kiran International Limited, to the extent of Rs.5 crores.

15 Previous year's figures have been regrouped where ever necessary. Paise have been rounded off to the nearest rupee. Previous year Figures are shown in brackets.

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Mar 31, 2010

(Amount in Rupees)

As at As at

31.03.2010 31.03.2009

1 Contingent Liabilities not provided for

a) Contracts to be executed on capital accounts. 130,279,355 122,509,299

b) Against Foreign & Inland Letter of Credits 4,533,043 34,087,616

c) Against Bank Gaurantees 466,940 466,940

d) Against Bills discounted 191,313,664 155,380,313

e) Demand from the Central Excise Department under Textiles and Textile Articles Act (TTA), disputed by the Company pending in appeals with the

Commissioner, Customs and Central Excise, Nagpur, not provided for. 28,534,563 28,534,563

f) Demand from Central Excise Department in connection with the clearance of the goods disputed by the Company and allowed by the Commissioner Appeals, Nagpur in Companys favour. However the department has

preferred an appeal against the Commissioners order. 7,850,277 7,850,277

g) Demand against Reversal of Excise duty on Finished goods and Cenvat Credit involved in the stock of inputs while opting for the Central Excise Notification No.30/2004. Companys appeal was allowed by Appellate Commissioner of Customs & Central Excise, Nagpur. However, the Central Excise Department has filed an appeal

against the above Order with CESTAT 3,288,688 -

h) Disputed demand from sales tax department on Input tax credit, Appeal remanded by 5,874,266 5,874,266

Appellate Dy. Commissioner (CT). Pending for verification & orders with

Dy./Asst. Commissioner (CT), Begumpet Division, Hyderabad

I) Disputed demand from sales tax department on subjecting the turnover of uni 12,163,938 2,163,938 at Maharashtra to tax along with the turnover of Andhra Pradesh and set off.The appleal filed before STAT(A.P) by the Company was partly allowed and the balance was remanded for verification by the department.

j) Interest charged U/s.234B of the Income Tax Act,1961 - Interest waiver Petition filed before Honble Chief Commissioner of Income Tax-I, Hyderabad 11,866,089 -



2 The legal proceedings against M/s Rajvir Industries Ltd., for the recovery of the balance oustanding in the books of the Company of Rs. 2,36,92,934/- (Previous Year Rs. 2,36,92,934/-) are pending.

3 Claim against the Company not acknowledged as debts :

M/s Rajvir Industries Limited has filed a suit against the Company claiming export incentives allegedly due to them amounting to Rs. 295.70 Lakhs relating to export performance of erstwhile Mahabubnagar Unit of the periods prior to demerger. The Company has been advised that the claim is not admissable and is taking adequate steps to resist the claim.

4 Three cases have been filed against the Company for amounts totalling to Rs.13.48 crores in respect of three cheques allegdly issued by the Company. These claims are being resisted on the plea that these cheques have been misused and in absence of any legally enforceable debt or liability the Company has been advised that the complaints are not maintainable and no liability is likely to arise.

5 Rajvir Industries Ltd has filed a compliant against the Company and its officers in connection with the transfer of liability of Rs. 10 crores in the scheme of arrangement. The Company has been advised that the complaint is not maintainable in law and is taking adequate steps to defend its position.

6 Rajvir Industries Ltd., has filed an application before the Honble High Court of Andhra Pradesh for modification of the Order of the Honble High Court of Andhra Pradesh in the scheme of arrangement for transfer of the liability of Rs.10 crores to the Company. The application is pending before the Honble High Court of Andhra Pradesh. The Company has been advised that the complaint is not maintainable in law and is taking adequate steps to defend its position.

7 A show cause notice has been received from the office of DGFT Hyderabad for alleged violation of Target plus scheme to recover Rs.17.29 crores and levy other penalties. The Company has been advised that no liability is likely to arise under the notice as the allegations are unfounded, and the Company is taking adequate steps to defend itself.

8 Employee Benefits : Gratuity

Consequent to the adoption of Accounting Standard on Employees Benefits (AS-15) (Revised 2005) issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the Standard for Actuarial valuation of Gratuity.

9 Pursuant to Scheme of restructuring package of Term Loans the Company has alloted 0.1% Cumulative Redeemable Preference Shares of Rs. 100/- each on 28th October, 2002 to IDBI and IFCI and the same will be redeemed to IDBI in March, 2012 (Rs. 400 lacs) and to IFCI in July, 2011 (Rs. 271.60 Lacs).

10 The amount of CRPS of Rs. 671.60 lacs payable on redemption to IDBI and IFCI as stated in note No.30 is treated as deferred revenue expenditure, to be written off over the term of the CRPS.

11 During the year 2005-06 the Company has incurred an amount of Rs. 1,25,23,000/- being the expenditure incurred for raising equity.The same is being amortised over a period of 5 Years from the date of commencement of operations, i.e. from the financial year.

12 In the opinion of the Board, the current assets and loans & advances have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

13 Vide Notification No.30/09.07.2004 of the Central Excise Department we can opt for zero rate of duty by not taking Cenvat credit on Inputs and vide Tariff rate (Previous year under Notification No.29/09.07.2004) of Central Excise Department option can be exercised for payment of duty on Final products by taking credit on inputs and capital items. Accordingly in case of Denim Fabric and Cotton yarn the Company has opted for Zero rate of duty and not availed Cenvat credit on the purchase of inputs and capital items, where as in case of Polyster yarn we have taken cenvat credit on part of the rawmaterial which are used for production of polyster yarn meant for export, and cleared the material for export on payment of duty.

14 There was a major fire accident in spinning department of denim division at Ramtek, Nagapur district, Maharashtra state during January, 2008, in which the Building, Plant & Machinery, Electrical Installations and stocks were totally damaged. The factory was fully insured under reinstatement policy for fixed assets and under declaration policy for stocks. The Companys Insurance claim is processed and settled partly. The Company received an amount of Rs. 26.09 crores from the Insurance Company including salvage.The part claim of Rs. 4.90 crores which is still to be settled by the Insurance Company is shown under Claims receivable and the amount of loss of Rs. 2.45 crores which is not expected to be received, has been written off under Claims written off under the head Other expenses (Ref. Schedule 19 of the Annual Accounts).

15 Previous years figures have been regrouped wherever necessary. Paise have been rounded off to the nearest rupee. Previous year Figures are shown in brackets.