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Notes to Accounts of Sutlej Textiles & Industries Ltd.
Mar 31, 2025
The Company held investments in its wholly owned subsidiary in the United States of America (USA) which has further invested in a step-down subsidiary in USA. The Company assesses at each reporting date if there is an indication, based on either internal or external sources of information, that investments in the subsidiary (including step down subsidiary) may be impaired in accordance with Ind AS 36 "Impairment of Assets". Where such indicators exist, management performs impairment testing.
In performing such impairment assessment, the Company compares the carrying value of each of the identifiable cash-generating units ("CGUs") to which investments in the subsidiary (including step-down subsidiary) have been allocated with their respective recoverable amounts. The recoverable amount of the CGUs, which is based on the value in use derived from discounted forecast cash flow models to determine if any impairment loss should be recognized.
The step down subsidiary of the Company has incurred losses during the current year and previous years which resulted in erosion of its net worth. Accordingly, the Company carried out impairment assessment of the aforesaid CGU using value in use model which is based on the net present value of the future cash flows, after considering current economic conditions, trends, estimated future operating results, growth rates and anticipated future economic conditions, etc.
The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent management''s assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources.
The cash flow projections included specific estimates for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on management''s estimate of the long-term growth rate, consistent with the assumptions that a market participant would make.
The carrying amount of the CGU was determined to be higher than its recoverable amount and an impairment loss of Rs 22.70 crores is recognised during the year ended 31 March 2025 (31 March 2024: Rs.10.51 crores) . This impairment loss has been recognised under "Exceptional item" (refer note 38 a).
(a) In the financial year 2022-23, the Plant and Equipment of the Captive Co-Generation Power Plant (''CGPP'') were decommissioned and designated as "Assets held for sale" due to its lack of viability for continued operation. According to an agreement to sell with a customer, it was valued at Rs.15 crores (excluding GST), resulting in an impairment loss of Rs. 20.51 crores recorded during the same period. Subsequently, plant and equipment dispatches totalling Rs.7.5 crores (excluding GST) were completed upto 31 March 2024 leaving a remaining balance of Rs.7.5 crore categorized under Assets held for sale.
During the current financial year, the agreement could not be executed due to a dispute with the customer, who has initiated legal proceedings; however, the case has not been admitted by the court. In light of the customer''s noncompliance with the contractual terms, the Company has canceled the agreement. Meanwhile, efforts are underway to identify alternate buyers, and the management remains confident of concluding the sale at the carrying value. No liability is attached to these assets.
(b) The Company decided to sell other obsolete plants & equipment''s and building of Rs.0.44 crores (31 March 2024 0.28 crores), which were originally purchased for production, manufacturing and office. The Company is actively searching for buyers to sell these assets. No liability is attached to these assets.
Non - current fair value measurements :
Assets classified as held for sale are measured at lower of their carrying amount and fair value less cost to sell at the time of reclassification. Fair value of the assets was determined using expected market realizable value using past trend and management assessment. fair value measurement of assets held for sale is a level 3 measurement and key inputs under this approach are price per asset comparable for the machine in similar business and technology.
a. Terms and rights attached to equity shares
Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. There is no restriction on distribution of dividend. However, distribution of dividend is subject to the approval of the shareholders in the Annual General Meeting.
Nature and purpose of reserves/ other equity
General reserve
The Company appropriates a portion to general reserves out of the profits voluntarily to meet future contingencies. The said reserve is available for payment of dividend to the shareholders as per the provisions of the Companies Act, 2013.
Retained earnings:
Retained earnings are the profit that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to investors.
Other comprehensive income
Remeasurements of defined benefit plans represents the following as per Ind AS 19-Employee Benefits:
(a) actuarial gains and losses;
(b) the return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and
(c) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset)
Term loans are secured by first equitable mortgage ranking pari-passu over the Company''s immovable properties situated at Bhawanimandi (Rajasthan), Kathua (Jammu & Kashmir), Baddi (Himachal Pradesh) and Daheli (Gujarat) and moveable assets (save and except book debts) both present and future, subject to prior charges created/to be created, in favour of bankers, on moveable assets including book debts to secure working capital borrowings.
2.Section 115BAA of the Income Tax Act, 1961, introduced by the Taxation Laws (Amendment) Ordinance, 2019, allows any domestic company to pay income tax at the rate of 25.17%, effective from the fiscal year 2019-20, subject to the condition that they will not avail any incentives or exemptions. This new tax scheme provides an option for a lower tax base of 25.17%, while the existing tax rate is 34.94%. Based on the current estimate of the future projections, the Company expects to shift under new tax regime from FY 2028-29 and has re-measured its deferred tax balances. Consequently, credit of Rs. 7.00 crores has been recorded in the Statement of Profit and Loss during the year.
Revenue is measured at the transaction price of the consideration received or receivable. Sales are recognised towards satisfaction of performance obligation. Amounts disclosed as revenue are excluding taxes and net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the company''s activities as described The company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Details of corporate social responsibility expenses
As per Section 135 of Companies Act, 2013, a Company needs to spend at least 2% of its average net profit for the immediately preceding three financial years on Corporate Social Responsibility (CSR) activities. A CSR Committee has been formed by the Company as per act. The CSR Committee and Board had approved the projects with specific outlay on the activities as specified in Schedule VII of the Companies Act, 2013 in pursuant of the CSR policy.
(a) The Company carried out impairment assessment of its investment in wholly owned subsidiary (including step down subsidiary) in accordance with Ind AS 36 and compared the carrying value of investments with their recoverable amounts. The recoverable amount is determined based on the value in use derived from discounted forecast cash flow model performed by an independent valuer. The carrying amount of the investment in wholly owned subsidiary (including step down subsidiary) is determined to be higher than its recoverable amount and an impairment loss of Rs.22.70 crores (31.March 2024 Rs.10.51 crores) is recognised during the year ended 31 March 2025 (refer note 5).
(b) During the previous year, due to challenging market conditions in the spinning industry, the Company decided not to proceed with the greenfield expansion project, which had been approved by the Board of Directors (BOD). The land allotted for the project was surrendered, and as per the agreement, a surrender fee of 20% of the land premium (Rs. 7.68 crores) was written off. Additionally, lease rent and other expenses amounting to Rs. 0.77 crores were written off. The total amount written off, Rs. 8.45 crores, has been disclosed as an "Exceptional items".
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40. Contingent liabilities and commitments |
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Particulars |
As at |
As at |
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31 March 2025 |
31 March 2024 |
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A. Contingent liabilities (to the extent not provided for) in respect of: |
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1. Claim against the Company not acknowledged as debts: |
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Labour matters (including matter in respect of which stay granted by respective Hon''ble High Court), except for which the liability is unascertainable |
4.11 |
4.18 |
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2. Other matters for which the Company is contingently |
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liable: |
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a) Demand raised by excise department for various matters |
- |
0.07 |
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b) Demand raised by GST department for various matters {refer |
9.34 |
3.39 |
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note 40[A(5)]} |
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c) Bank Guarantee given for American Silk Mills* |
20.54 |
20.00 |
* The Company''s has issued a stand by letter of credit to its step down subsidiary for obtaining credit facilities for general corporate purposes
3. Liability of customs duty towards export obligation undertaken by the Company under "Export Promotion Capital Goods Scheme (EPCG)" amounting to Rs. 7.84 crores (31 March 2024: Rs.7.43 crores).
The Company had imported Capital goods under EPCG and saved the custom duty. As per the EPCG terms and conditions, Company needs to export Rs. 31.01 crores (31 March 2024: Rs.35.13 crores) i.e. 6 times (25% of 6 times in case of Jammu & Kashmir) of duty saved on import of Capital goods on FOB basis within a period of 6 years. If the Company does not export goods in prescribed time, then the Company may have to pay interest and penalty thereon.
Note: (i) Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above matters, timing of the cash outflows can be determined only on receipt of judgments/ decisions pending with various forums/ authorities.
Note: (ii) The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required, and disclosures are made for contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceeding to have a materially adverse effect on its financial position . The Company does not expect any reimbursements in respect of the above contingent liabilities.
4 During the financial year 2022-23, The Company filed a writ petition with the Honourable High Court of Chhattisgarh against South Eastern Coal Field Limited (SECL) in relation to an unfulfilled commitment for coal supply and the issuance of debit notes amounting to Rs. 1.85 crore (including GST) for non-lifting of coal under the Minimum Guaranteed Offtake (MGO) clause. The Honourable High Court directed the matter for settlement. However, in the previous financial year, the Company withdrew the petition as the Settlement Committee did not grant any relief. Subsequently, the Company filed a fresh writ petition in the High Court against both SECL and Indian Railways. In the current financial year, the Honourable High Court ruled against the Company. Consequently, the Company is in the process of filing a civil suit before the Court in Bilaspur.
5 During the previous year, the company has received a notice from Directorate General of Analytics & Risk Management (DGARM) for non-compliance relating to provision of rule 96(10)) of the CGST Rules. Basis of legal opinion obtained, the company is contesting for relief of interest and penalty ,with no anticipated adverse implications on the company.
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B. Commitments |
As at 31 March 2025 |
As at 31 March 2024 |
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a) Estimated amount of contracts remaining to be executed on capital account [net of advances] not provided for |
8.09 |
24.95 |
41. Segment informationA. Description of segments and principal activities
Segment information is presented in respect of the Company''s key operating segments. The operating segments are based on the Company''s internal reporting structure. The Board of Directors has been identified as the chief operating decision maker (''CODM''), since Board of Directors is responsible for all major decision with respect to the preparation and execution of business plan, preparation of budget, planning, expansion, alliance, joint venture, merger and acquisition, and expansion of any facility, etc. The Company''s board examines the Company''s performance both from a product and geographic perspective and has identified two reportable segments of its business:
a) Yarn: It comprises of recycle polyester staple fibre, cotton and man made fibres yarn;
b) Home textiles: It comprises of home furnishing and fabric processing
The Company''s board reviews the results of each segment on a quarterly basis. The Company''s board of directors uses segment result to assess the performance of the operating segments.
B. Information about reportable segments
Information related to each reportable segment is set out below. Segment''s earnings before interest and tax (EBIT) is used to measure the segment''s performance because management believes that this information is the most relevant to evaluate the results of the respective segments for comparing it with other entities that operate in the same industries.
The Yarn and Home Textile segments are managed on a worldwide basis, but operate manufacturing facilities and sales offices, primarily, in India. The geographic information analyses the Company''s revenue by the Company''s country of domicile and other countries. In presenting the geographic information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets.
The Company contributes to the following post-employment defined benefit plans in India.
(i) Defined contribution plans:
The Company makes contributions towards provident fund and superannuation fund to a defined contribution benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of specified employment benefit expenses to the benefit plans.
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972 (as amended). Employees in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employee''s last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of completed years of service. Gratuity liability (other than for Baddi units) is being contributed to the gratuity fund formed by the Company and in case of Baddi unit, company makes contributions to Group Gratuity cum Life Assurance Schemes administered by the LIC of India.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out at 31 March 2025. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
A. Movement in net defined benefit (asset) liability
The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset) liability and its components:
Sensitivities due to mortality and withdrawals are insignificant, hence ignored. Sensitivities as regards rate of inflation, rate of increase in payment of pensions, rate of increase in payment of pensions before retirement and life expectancy are not applicable being a lump sum benefit payables on retirement. Although, the analysis does not take account the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions disclosed above.
*The total amount of investments in absolute value is Rs. 5,000 ( 31 March 2024: Rs. 5,000), for reporting purpose rounded up to Rs. 0.0 Crores.
The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents and other bank balances are considered to be the same as their fair values, due to their short-term nature.
The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values. There are no transfers made between level 1 and level 2 during the year.
Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices or dealer quotes for similar instruments
- the fair value of forward foreign exchange contracts is determined as per values provided by banks
- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities and preference shares, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
B. Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are:
(a) recognised and measured at fair value, and
(b) measured at amortised cost and for which fair values are disclosed in the financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted securities.
There are no transfers made between level 1 and level 2 during the year
Valuation process
The Company involves independent valuer to carry out the valuation of the investments, required for financial reporting purposes, including level 3 fair values. The main level 3 inputs for unlisted preference shares used by the Company are derived and evaluated as follows:
- Risk adjusted discount rates are estimated based on expected cash inflows arising from the instrument and the entity''s knowledge of the business and how the current economic environment is likely to impact it.
Changes in level 2 and 3 fair values are analysed at the end of each reporting year.
Cash and cash equivalents and other bank balances
The Company held cash and cash equivalents and other bank balances of Rs.11.36 crores at 31 March 2025 (31 March 2024: Rs.5.58 crores). The cash and cash equivalents and other bank balances are held with bank and financial institution counterparties, which are rated A1 , based on India ratings. Impairment on cash and cash equivalents and other bank balances has been measured on a 12-month expected loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties. There is no impairment allowance at 31 March 2025 and 31 March 2024.
Derivatives
The derivatives are entered into with bank and financial institution counterparties, which are rated A1, based on India ratings
The Company has exposure to the following risks arising from financial instruments:
- Credit risk;
- Liquidity risk and
- Market risk
i. Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the mechanism of properly defined risk management framework.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and responsibilities.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investments in debt securities. The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The Management impact analysis shows credit risk and impact assessment as low.
Trade and other receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.The Company''s management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes market check, industry feedback, past financials and external ratings, if such information is available, and in some cases bank references. Credit limits are established for each customer and reviewed quarterly. Any credit exceeding those limits require approval from the Chief financial officer of the Company.
To monitor customer credit risk, customers are reviewed in terms of their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties
The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables
During the year, the Company has made write-offs of trade receivables, it does not expect to receive future cash flows or recoveries from collection of cash flows previously written off. The Company management also pursue all legal options for recovery of dues wherever necessary based on its internal assessment
iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to manage liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when liabilities are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of fund through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. This is generally carried out at unit level and monitored through corporate office of the Company in accordance with practice and limits set by the Company. These limits vary at units level to take into account requirement, future cash flow and the liquidity in which the entity operates. In addition, the Company''s liquidity management strategy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
The Company uses derivatives such as forward contracts to manage market risks on account of foreign exchange and various debt instruments on account of interest rates. All such transactions are carried out as per guidelines of the Management.
a. Currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD , EUR, CHF and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (Rupees). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the Rupees cash flows of highly
probable forecast transactions by hedging the foreign exchange inflows on regular basis. The Company also consults external experts for their views on the currency rates in volatile foreign exchange markets.
Currency risks related to payables and receivables denominated in foreign currencies have been partially hedged using forward contracts taken by the Company.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates whenever, necessary, to address short-term imbalances.
The Company''s main interest rate risk arises from long-term borrowings with variable rates, which exposes the Company to cash flow interest rate risk. During financial year 2024-25 and financial year 2023-24, the Company''s borrowings at variable rates were denominated in Rupees.
Currently, the Company''s borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.
The Company is exposed to the risk of price fluctuations of raw materials, dyes and chemicals, work-inprogress and finished goods. The Company manages its commodity price risk by maintaining adequate inventory of raw materials, dyes and chemicals, work-in-progress and finished goods considering anticipated movement in prices. To counter raw materials price fluctuation risk, the Company works with varieties of fibers (natural and manmade) with the objective to moderate raw material cost, enhance application flexibility and increase product functionality and also invests in product development and innovation.
Inventory sensitivity analysis (raw material and dyes and chemicals)
A reasonably possible change of 10% in prices of inventory at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
*During the previous year, the Company created a lease liability amounting to Rs 44.27 crore for leasehold land acquired for a greenfield expansion project. However, due to challenging market conditions in the spinning industry, the leasehold land allocated for the project was surrendered, leading to the written off the aforementioned liability. (refer note -38 (b))
47 . In respect of Okara Mills, Pakistan, (which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company ) no returns have been received after 31 March 1965. Against net assets, amounting to Rs 2.32 crores of Okara Mills, Pakistan, the demerged /transferor Company received adhoc compensation of Rs. 0.25 crores from Government of India in the year 1972-73. These assets now vest with the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India. The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, will be recorded in the year of receipt. In the financial year 2003-04, net assets of Rs. 2.07 crores (net of compensation received) as at 31 March 1965 were valued at pre-devaluation exchange rate, has been provided for.
The primary objective of the management of the Company''s capital structure is to maintain an efficient mix of debt and equity in order to achieve a low cost of capital, while taking into account the desirability of retaining financial flexibility. The Board of directors regularly review the Company''s capital structure in light of the economic conditions, business strategies and future commitments. For the purpose of the Company''s capital management, capital includes issued share capital and all other equity reserves. Debt includes short term and long term borrowings. During the financial year ended 31 March 2025, no significant changes were made in the objectives, policies or processes relating to the management of the Company''s capital structure.
(iii) The Company''s policy is to maintain a strong capital base so as to maintain investors, creditors and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The weighted-average interest expense on interest-bearing borrowings (excluding liabilities with imputed interest) was 8.20 % (31 March 2024: 7.96 %).
50 . At each reporting date, the Company evaluate whether there is objective evidence that the property, plant and machinery of the Cash generating unit "CGU" is impaired in terms of IND AS - 36 "Impairment of Assets". If there is such evidence, the carrying amount is tested for impairment by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount and impairment, if any, is recognized in the standalone financial statement of the Company.
Due to rising input expenses, competitive pressures, and challenging market conditions, particularly in the upholstery and curtains segment, the Damanganga unit ("CGU") has experienced significant losses over recent years. However, in the current year, the unit managed to reduce lossses signifcantly through the implementation of cost-effective measures and a favourable shift in the market dynamics of the upholstery and curtains sector. Despite this improvement, the unit still incurred a cash loss primarily attributable to elevated interest expenses resulting from debt taken against previous cash losses and an increase in repo rates.
Consequently, the Company conducted an impairment assessment of the aforementioned CGU utilizing the fair value less cost to sell model. This model relies on the replacement value of plant and machinery, as well as the market value of land and building assets. The fair valuation process incorporates various assumptions reflecting prevailing market conditions. Additionally, Last year, the Company engaged an independent valuer to conduct a thorough assessment of the fair value of the property, plant, and equipment associated with the CGU.
Some of the key assumptions used by the Valuer for determining the fair value for significant assets are as follows:
(i) Transacted / quoted values for similar properties sold in the subject micro-market;
(ii) Adjustment of achievable transaction value based on site specific physical parameters such as location, accessibility, size, zoning, physical attributes, profile of surrounding developments, etc.
The value of the built up structure on the subject property has been assessed by the ''Depreciated Replacement Cost'' method, where the current replacement cost of the structure (given the current condition of the property) has been evaluated after giving due regards to physical parameters such as construction, specifications, completion status of the building, renovations carried out in the structures and the same has been depreciated based on parameters such as age, remaining useful life, etc. of the structure.
(c ) Plant and Machinery and other Equipment''s valuation
Total economic life for machineries under various categories have been considered on the basis of regulations prescribed under Schedule II of Indian Companies Act, 2013. Further, a salvage value of 2-5% on the replacement cost, as of date of assessment, of plant and machinery and other equipment has been considered. Quotes for similar or Identical machineries from the same or other manufacturer/ suppliers that are available in the market is also considered. In addition, other applicable direct & indirect cost prevalent in the current market conditions has been factored to arrive at the current Replacement Cost New (RCN) for the machineries at the site. Further, indexing method has also been used to assess RCN for a few machineries.
In addition to the above, in perspective and considering the prevailing trends, a marketing and transaction cost in the range of 5-10% has been considered for the subject assets while assessing the fair value.
Technological obsolescence to an extent of 5-10% has considered for the machineries installed during the period 1999 -2015 . Further, functional obsolescence to the extent of 10-15% has also considered.
Based on all the above factors, as per the final report issued by the Valuer, the fair value of the CGU is higher than its carrying value and hence the Company has concluded that no impairment provision needs to be recorded in the financial statements.
51. Regulatory information''s :
(i) The Company does not have any benami property where any proceedings have been initiated or pending against the Company for holding such benami property.
(ii) The Company does not have any transactions with companies that have been struck off.
(iii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(iv) The Company does not have any charges or satisfaction which are yet to be registered with ROC beyond the statutory period.
(v) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.
(vi) During the year, Company has invested an amount of Rs. 28.30 crores and given loan (including interest) of Rs. 7.04 crores to its Subsidiary Company (Sutlej Holdings Inc.) which has further invested and given loan to step down subsidiary of the company (American Silk Mills LLC. ), other than this the Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Group (Ultimate Beneficiaries); or
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or;
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(viii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(ix) The Company does not have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)
(x) The Company(as per the provisions of the Core Investment Companies (Reserve Bank) Directions, 2016) has two Core Investment Company ("CIC") as part of the Company i.e. Ganges Securities Limited and New India Retailing & Investment Ltd (unregistered CIC).
(xi) The Company has compiled with the number of layers prescribed under the Companies Act 2013
(xii) The Company has not declared wilful defaulter by any bank or financial institution or Government or any Government Authority.
52 . The Company has used accounting software for maintaining its books of account, which has the feature of recording audit trail (edit log) facility, and the same has been operational throughout the year for all relevant transactions recorded in the respective software, except in respect of payroll processing for workers, the previously used software had limitations in validating audit trail configurations at both the application and database levels. To address this, the Company implemented a new payroll software solution and parallel run was conducted during the period January 2025 to March 2025, and the system has gone live effective 1st April 2025.
Mar 31, 2024
2.16 Provisions and contingent liabilities
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, 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 measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities
A contingent liability is a possible obligation that arises from a past event, with the resolution of the contingency dependent on uncertain future events, or a present obligation where no outflow is probable. Major contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of economic resources is remote.
2.17 Measurement of fair value
a Financial instruments
The estimated fair value of the Company''s financial instruments is based on market prices and valuation techniques. Fair values are determined with the objective to include relevant factors that market participants would consider in setting a price, and to apply accepted economic and financial methodologies for the pricing of financial instruments. References for less active markets are carefully reviewed to establish relevant and comparable data.
b Marketable and non-marketable equity securities
Fair value for listed shares is based on quoted market prices as of the reporting date. Fair value for unlisted shares is calculated based on market comparison techniques utilizing significant unobservable data, primarily cash flow based models.
The valuation model is based on market multiples derived from quoted prices of companies comparable to the investee and the expected revenue and Earnings before tax, interest and depreciation (EBITDA) of the investee. The estimate is adjusted for the effect of the non-marketability of the relevant equity securities.
If fair value cannot be measured reliably unlisted shares are recognized at cost. c Derivatives
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks and interest rate risk respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value provided by the respective banks. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are recorded directly to statement of profit and loss.
2.18 Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments also include derivative contracts such as foreign currency foreign exchange forward contracts and interest rate swaps.
a. Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Classifications
The Company classifies its financial assets as subsequently measured at either amortised cost or fair value depending on the Company''s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.
Business model assessment
The Company makes an assessment of the objective of a business model in which an asset is held at an instrument level because this best reflects the way the business is managed and information is provided to management.
A financial asset is measured at amortised cost only if both of the following conditions are met:
a. it is held within a business model whose objective is to hold assets in order to collect contractual cash flows.
b. the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (''EIR'') method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
b. Preference share
All preference share instruments in scope of Ind AS 109 are measured at fair value. On initial recognition an preference share investment that is not held for trading, the Company may irrevocably elect to present subsequent
changes in fair value in Other Comprehensive Income (OCI). This election is made on an investment-byinvestment basis.
All other Financial Instruments are classified as measured at fair value through profit and loss (FVTPL).
c. Investments in Subsidiaries
Investments in Subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when: The rights to receive cash flows from the asset have expired, or the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''passthrough'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in profit or loss.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
With regard to trade receivable, the Company applies the simplified approach as permitted by Ind AS 109, financial instruments, which requires expected lifetime losses to be recognised from the initial recognition of the trade receivables.
d. Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, amortised cost, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of amortised cost, net of directly attributable transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities measured at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial recognition as at fair value through profit or loss.
Derecognition of financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when and only when there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
2.19 Income tax
Income tax expense comprises current and deferred tax. It is recognised in statement of profit and loss except to the extent that it relates to items recognised directly in equity or in other comprehensive Income.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimates of the tax amount expected to be paid on received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and liabilities are offset only if, the Company:
a) Has a legally enforceable right to set off the recognised amounts; and
b) Intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
ii. Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Unrecognized deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax are recognised in the statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
Minimum Alternative Tax (MAT) is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset the said asset is created by way of credit to the statement of profit and loss and included in deferred tax assets. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.
2.20 Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.
The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date
less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.
2.21 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors of the Company have been identified as being the chief operating decision maker by the management of the Company.
The Company''s board examines the Company''s performance both from a product and geographic perspective and has identified two reportable segments of its business:
a) Yarn: It comprises of recycle polyester staple fibre, cotton and man made fibres yarn;
b) Home textiles : It comprises of home furnishing and fabric processing Refer note 40 for segment information presented.
2.22 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.
For the purposes of the cash flow statement, cash and cash equivalents is as defined above, net of outstanding bank overdrafts.
2.23 Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
2.24 Dividend
The Company recognises a liability to make distributions to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
2.25 Recent Pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
Note :
The Company held investments in its wholly owned subsidiary in the United States of America (USA) which has further invested in a step-down subsidiary in USA. The Company assesses at each reporting date if there is an indication, based on either internal or external sources of information, that investments in the subsidiary (including step down subsidiary) may be impaired in accordance with Ind AS 36 "Impairment of Assets". Where such indicators exist, management performs impairment testing.
In performing such impairment assessment, the Company compares the carrying value of each of the identifiable cash-generating units ("CGUs") to which investments in the subsidiary (including step-down subsidiary) have been allocated with their respective recoverable amounts. The recoverable amount of the CGUs, which is based on the value in use derived from discounted forecast cash flow models to determine if any impairment loss should be recognized.
The step down subsidiary of the Company has incurred losses during the current year and previous years which resulted in erosion of its net worth. Accordingly, the Company carried out impairment assessment of the aforesaid CGU using value in use model which is based on the net present value of the future cash flows, after considering current economic conditions, trends, estimated future operating results, growth rates and anticipated future economic conditions, etc.
The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent management''s assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources.
a. Terms and rights attached to equity shares
Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. There is no restriction on distribution of dividend. However, distribution of dividend is subject to the approval of the shareholders in the Annual General Meeting.
D Performance obligation
Revenue is measured at the transaction price of the consideration received or receivable. Sales are recognised towards satisfaction of performance obligation. Amounts disclosed as revenue are excluding taxes and net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the company''s activities as described The company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
(a) Due to challenging market conditions in the spinning industry, the Company has decided not to proceed with the greenfield expansion project, which is approved by the Board of Directors (BOD). The land allotted for the project has been surrendered and as per the agreement, surrender fee of 20% of the land premium (Rs. 7.68 crore) has been written off. Additionally, lease rent and other expenses has been written of Rs. 0.77 crore. Total written off of Rs. 8.45 crore have been disclosed as an "Exceptional item". The amount receivable of Rs. 31.21 crore from J&K SIDCO, after deducting the surrender fee is presented under the head "Other current financial assets". The Company is confident that the amount will be recovered in due course.
(b) The Company carried out impairment assessment of its investment in wholly owned subsidiary (including step down subsidiary) in accordance with Ind AS 36 and compared the carrying value of investments with their recoverable amounts. The recoverable amount is determined based on the value in use derived from discounted forecast cash flow model performed by an independent valuer. The carrying amount of the investment in wholly owned subsidiary (including step down subsidiary) is determined to be higher than its recoverable amount and an impairment loss of Rs. 10.51 crore (31.03.2023 Rs. 27.18 crore) is recognised during the year ended 31st March, 2024. (refer note 5)
(c) During the previous year ended 31st March, 2023, the Company discarded Captive Co-Generation Power Plant (''CGPP'') having a book value of 35.51 crore, since it was not considered viable to operate. Subsequently, the Company entered into an agreement for selling the CGPP at a valuation of Rs. 15 crore. This resulted in loss on sale/ discard of Rs. 20.51 crore.
(d) In the previous year ended 31st March, 2023, the Company reversed excess interest subsidy claimed in previous years amounting to Rs. 8.31 crore including interest thereon in relation to a case under TUFS (Technology Upgradation Fund Scheme) basis additional disallowances considered by the Ministry of Textiles.
* The Company''s has issued a stand by letter of credit to its step down subsidiary for obtaining credit facilities for general corporate purposes
3. Liability of customs duty towards export obligation undertaken by the Company under "Export Promotion Capital Goods Scheme (EPCG)" amounting to Rs. 7.43 crore (31st March, 2023: Rs. 15.55 crore).
The Company had imported Capital goods under EPCG and saved the custom duty. As per the EPCG terms and conditions, Company needs to export Rs. 35.13 crore (31st March, 2023: Rs. 98.28 crore) i.e. 6 times (25% of 6 times in case of Jammu & Kashmir) of duty saved on import of Capital goods on FOB basis within a period of 6 years. If the Company does not export goods in prescribed time, then the Company may have to pay interest and penalty thereon.
Note: (i) Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above matters, timing of the cash outflows can be determined only on receipt of judgments/ decisions pending with various forums/ authorities.
Note: (ii) The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required, and disclosures are made for contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceeding to have a materially adverse effect on its financial position . The Company does not expect any reimbursements in respect of the above contingent liabilities.
4 In the previous year, The Company filed a writ petition with the Honourable High Court of Chhattisgarh against South Eastern Coal Field Limited (SECL) regarding an unfulfilled commitment to procure a minimum quantity of coal. The Honourable High Court directed the matter to be settled. However, in the current year, the Company withdrew the petition seeking resolution of grievances as no relief was granted by the Settlement Committee. Subsequently, the Company filed a fresh writ petition in the High Court against both SECL and Indian Railways
39 Contingent liabilities and commitments (Contd.)
5 During the current year, the company has received a notice from Directorate General of Analytics & Risk Management (DGARM) for non-compliance relating to provision of rule 96(10)) of the CGST Rules. Basis of legal opinion obtained, the company is contesting for relief of interest and penalty ,with no anticipated adverse implications on the company.
40 Segment information
A. Description of segments and principal activities
Segment information is presented in respect of the Company''s key operating segments. The operating segments are based on the Company''s internal reporting structure. The Board of Directors has been identified as the chief operating decision maker (''CODM''), since Board of Directors is responsible for all major decision with respect to the preparation and execution of business plan, preparation of budget, planning, expansion, alliance, joint venture, merger and acquisition, and expansion of any facility, etc. The Company''s board examines the Company''s performance both from a product and geographic perspective and has identified two reportable segments of its business:
a) Yarn: It comprises of recycle polyester staple fibre, cotton and man made fibres yarn;
b) Home textiles: It comprises of home furnishing and fabric processing
The Company''s board reviews the results of each segment on a quarterly basis. The Company''s board of directors uses segment result to assess the performance of the operating segments.
41 During the previous year, the Company has noticed theft in one of the units, for an amount of Rs. 3.85 crore (net). This loss was been charged in the statement of profit and loss under head "cost of material consumed" and netted off from "Inventories" in Balance Sheet. The Company took appropriate steps to address the situation, including filing a FIR with the police and implementing preventive measures to avoid such incidents in future. In the current year, an insurance claim was filed and the survey has been completed and the report is awaited.
42 Borrowing cost
During the year, Company has capitalized borrowing cost amounting to Rs. 1.06 crore (31st March, 2023: Rs. 1.65 crore) under head plant and equipment and building . The capitalisation rate used to determine the amount of borrowing cost for capitalisation purpose is weighted average interest rate to the company i.e. 7.96% ( 31st March, 2023 6.62%). Details of capitalisation is as below:
(ii) Defined benefit plan:
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972 (as amended). Employees in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employee''s last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of completed years of service. Gratuity liability (other than for Baddi units) is being contributed to the gratuity fund formed by the Company and in case of Baddi unit, company makes contributions to Group Gratuity cum Life Assurance Schemes administered by the LIC of India.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out at 31st March, 2024. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
B. Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are:
(a) recognised and measured at fair value, and
(b) measured at amortised cost and for which fair values are disclosed in the financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted securities.
There are no transfers made between level 1 and level 2 during the year
Valuation process
The Company involves independent valuer to carry out the valuation of the investments, required for financial reporting purposes, including level 3 fair values. The main level 3 inputs for unlisted preference shares used by the Company are derived and evaluated as follows:
- Risk adjusted discount rates are estimated based on expected cash inflows arising from the instrument and the entity''s knowledge of the business and how the current economic environment is likely to impact it.
Changes in level 2 and 3 fair values are analysed at the end of each reporting year.
Cash and cash equivalents and other bank balances
The Company held cash and cash equivalents and other bank balances of Rs. 5.58 crore at 31st March, 2024 (31st March, 2023: Rs. 6.12 crore). The cash and cash equivalents and other bank balances are held with bank and financial institution counterparties, which are rated A1 , based on India ratings. Impairment on cash and cash equivalents and other bank balances has been measured on a 12-month expected loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties. There is no impairment allowance at 31st March, 2024 and 31st March, 2023.
Derivatives
The derivatives are entered into with bank and financial institution counterparties, which are rated A1 , based on India ratings
II. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk;
- Liquidity risk and
- Market risk
i. Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the mechanism of properly defined risk management framework.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and responsibilities.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investments in debt securities. The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The Management impact analysis shows credit risk and impact assessment as low.
Trade and other receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Company''s management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes market check, industry feedback, past financials and external ratings, if such information is available, and in some cases bank references. Credit limits are established for each customer and reviewed quarterly. Any credit exceeding those limits require approval from the Chief financial officer of the Company.
To monitor customer credit risk, customers are reviewed in terms of their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties
The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables
During the year, the Company has made write-offs of trade receivables, it does not expect to receive future cash flows or recoveries from collection of cash flows previously written off. The Company management also pursue all legal options for recovery of dues wherever necessary based on its internal assessment
iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to manage liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when liabilities are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of fund through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. This is generally carried out at unit level and monitored through corporate office of the Company in accordance with practice and limits set by the Company. These limits vary at units level to take into account requirement, future cash flow and the liquidity in which the entity operates. In addition, the Company''s liquidity management strategy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
The Company uses derivatives such as forward contracts to manage market risks on account of foreign exchange and various debt instruments on account of interest rates. All such transactions are carried out as per guidelines of the Management.
a. Currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD , EUR, CHF, JPY and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (Rupees). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the Rupees cash flows of highly
probable forecast transactions by hedging the foreign exchange inflows on regular basis. The Company also consults external experts for their views on the currency rates in volatile foreign exchange markets.
Currency risks related to payables and receivables denominated in foreign currencies have been partially hedged using forward contracts taken by the Company.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates whenever, necessary, to address short-term imbalances.
c. Commodity price risks
The Company is exposed to the risk of price fluctuations of raw materials, dyes and chemicals, work-inprogress and finished goods. The Company manages its commodity price risk by maintaining adequate inventory of raw materials, dyes and chemicals, work-in-progress and finished goods considering anticipated movement in prices. To counter raw materials price fluctuation risk, the Company works with varieties of fibers (natural and manmade) with the objective to moderate raw material cost, enhance application flexibility and increase product functionality and also invests in product development and innovation.
Inventory sensitivity analysis (raw material and dyes and chemicals)
A reasonably possible change of 10% in prices of inventory at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.
47 In respect of Okara Mills, Pakistan, (which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company ) no returns have been received after 31st March, 1965. Against net assets, amounting to Rs. 2.32 crore of Okara Mills, Pakistan, the demerged /transferor Company received adhoc compensation of Rs. 0.25 crore from Government of India in the year 1972-73. These assets now vest with the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India. The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, will be recorded in the year of receipt. In the financial year 2003-04, net assets of Rs. 2.07 crore (net of compensation received) as at 31st March, 1965 were valued at pre-devaluation exchange rate, has been provided for.
49 Capital management
The primary objective of the management of the Company''s capital structure is to maintain an efficient mix of debt and equity in order to achieve a low cost of capital, while taking into account the desirability of retaining financial flexibility. The Board of directors regularly review the Company''s capital structure in light of the economic conditions, business strategies and future commitments. For the purpose of the Company''s capital management, capital includes issued share capital and all other equity reserves. Debt includes short term and long term borrowings. During the financial year ended 31st March, 2024, no significant changes were made in the objectives, policies or processes relating to the management of the Company''s capital structure.
(iii) The Company''s policy is to maintain a strong capital base so as to maintain investors, creditors and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The weighted-average interest expense on interestbearing borrowings (excluding liabilities with imputed interest) was 7.96 % (31st March, 2023: 6.62%).
50 At each reporting date, the Company evaluate whether there is objective evidence that the property, plant and machinery of the Cash generating unit "CGU" is impaired in terms of IND AS - 36 "Impairment of Assets". If there is such evidence, the carrying amount is tested for impairment by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount and impairment, if any, is recognized in the standalone financial statement of the Company.
Due to rising input expenses, competitive pressures, and challenging market conditions, particularly in the upholstery and curtains segment, the Damanganga unit (""CGU"") has experienced significant losses over recent years. However, in the current year, the unit managed to achieve positive EBITDA through the implementation of cost-effective measures and a favourable shift in the market dynamics of the upholstery and curtains sector. Despite this improvement, the unit still incurred a cash loss primarily attributable to elevated interest expenses resulting from debt taken against previous cash losses and an increase in repo rates. Consequently, the Company conducted an impairment assessment of the aforementioned CGU utilizing the fair value less cost to sell model. This model relies on the replacement value of plant and machinery, as well as the market value of land and building assets. The fair valuation process incorporates various assumptions reflecting prevailing market conditions. Additionally, the Company engaged an independent valuer to conduct a thorough assessment of the fair value of the property, plant, and equipment associated with the CGU.
Some of the key assumptions used by the Valuer for determining the fair value for significant assets are as follows:
(a) Land Valuation :
(i) Transacted / quoted values for similar properties sold in the subject micro-market;
(ii) Adjustment of achievable transaction value based on site specific physical parameters such as location, accessibility, size, zoning, physical attributes, profile of surrounding developments, etc.
(b) Building Valuation:
The value of the built up structure on the subject property has been assessed by the ''Depreciated Replacement Cost'' method, where the current replacement cost of the structure (given the current condition of the property) has been evaluated after giving due regards to physical parameters such as construction, specifications, completion status of the building, renovations carried out in the structures and the same has been depreciated based on parameters such as age, remaining useful life, etc. of the structure.
(c ) Plant and Machinery and other Equipment s valuation
Total economic life for machineries under various categories have been considered on the basis of regulations prescribed under Schedule II of Indian Companies Act, 2013. Further, a salvage value of 2-5% on the replacement cost, as of date of assessment, of plant and machinery and other equipment has been considered. Quotes for similar or Identical machineries from the same or other manufacturer/ suppliers that are available in the market is also considered. In addition, other applicable direct & indirect cost prevalent in the current market conditions has been factored to arrive at the current Replacement Cost New (RCN) for the machineries at the site. Further, indexing method has also been used to assess RCN for a few machineries.
In addition to the above, in perspective and considering the prevailing trends, a marketing and transaction cost in the range of 5-10% has been considered for the subject assets while assessing the fair value.
Technological obsolescence to an extent of 5-10% has considered for the machineries installed during the period 1999 -2015 . Further, functional obsolescence to the extent of 10-15% has also considered.
Based on all the above factors, as per the final report issued by the Valuer, the fair value of the CGU is higher than its carrying value and hence the Company has concluded that no impairment provision needs to be recorded in the financial statements.
51 Regulatory informations :
(i) The Company does not have any benami property where any proceedings have been initiated or pending against the Company for holding such benami property.
(ii) The Company does not have any transactions with companies that have been struck off.
(iii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(iv) The Company does not have any charges or satisfaction which are yet to be registered with ROC beyond the statutory period.
(v) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.
(vi) During the year, the Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Group (Ultimate Beneficiaries); or
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or;
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(viii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(ix) The Company does not have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
51 Regulatory informations : (Contd.)
(x) The Company(as per the provisions of the Core Investment Companies (Reserve Bank) Directions, 2016) has two Core Investment Company ("CIC") as part of the Company i.e. Ganges Securities Limited and New India Retailing & Investment Ltd (unregistered CIC).
(xi) The Company has compiled with the number of layers prescribed under the Companies Act, 2013.
(xii) The Company has not declared wilful defaulter by any bank or financial institution or Government or any Government Authority.
52 The Ministry of Corporate Affairs introduced Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, which requires the Company to have a feature of recording audit trail (edit log) facility for its accounting softwares used for maintaining its books of account and the same has operated throughout the year for all relevant transactions recorded in the respective softwares. However, the Company has noticed below shortfall in meeting these requirements:
(i) In case of software used for maintaining the books of account relating to payroll of the Company for workers, The Company has activated the audit trail feature in the above-referred software but there is a system limitation to validate the configuration for recording audit trail (edit log) facility at both application and database levels. To overcome this situation, the Company is in the process of upgrading the payroll software.
(ii) In case of software used for maintaining the books of account relating to payroll of the Company for staff, the Company uses third party service provider software for payroll processing. In the absence of the Service Organization Controls Report (SOC Report) for the whole year, the Company is unable to verify the functionality of the audit trail feature in this software. However, the software provider has assured that they will provide the SOC report by June 2024, ensuring compliance with the requirements outlined in Rule 11(g) of the Companies (Audit and Auditors) Rules.
Signatures to Notes 1 to 53
The notes referred to above form an integral part of these standalone financial statements For B S R & Co. LLP For and on behalf of the Board of Directors of
Chartered Accountants Sutlej Textiles and Industries Limited
ICAI Firm Regn. No.101248W / W-100022
Rajiv Goyal Rajan Dalal C. S. Nopany
Partner Director Executive Chairman
Membership No. -094549 DIN: 00546264 DIN: 00014587
Place: Jaipur Place: Mumbai Place: Mumbai
Date: 9th May, 2024 Date: 9th May, 2024 Date: 9th May, 2024
Rajib Mukhopadhyay Manoj Contractor
Whole time Director and CFO Company Secretary
DIN: 2895021 M.No.: A11661
Place: Mumbai Place: Mumbai
Date: 9th May, 2024 Date: 9th May, 2024
Mar 31, 2023
The Company held investments in its wholly owned subsidiary in the United States of America (USA) which has further invested in a step-down subsidiary in USA. The Company assesses at each reporting date if there is an indication, based on either internal or external sources of information, that investments in the subsidiary (including step down subsidiary) may be impaired in accordance with Ind AS 36 "Impairment of Assets". Where such indicators exist, management performs impairment testing.
In performing such impairment assessment, the Company compares the carrying value of each of the identifiable cash-generating units ("CGUs") to which investments in the subsidiary (including step-down subsidiary) have been allocated with their respective recoverable amounts. The recoverable amount of the CGUs, which is based on the value in use derived from discounted forecast cash flow models to determine if any impairment loss should be recognized.
The step down subsidiary of the Company has incurred losses during the current year and previous years which resulted in erosion of its net worth. Accordingly, the Company carried out impairment assessment of the aforesaid CGU using value in use model which is based on the net present value of the future cash flows, after considering current economic conditions, trends, estimated future operating results, growth rates and anticipated future economic conditions, etc.
The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent management''s assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources.
The cash flow projections included specific estimates for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on management''s estimate of the long-term growth rate, consistent with the assumptions that a market participant would make.
The carrying amount of the CGU was determined to be higher than its recoverable amount and an impairment loss of INR 27.18 crore is recogised during the year ended 31 March 2023 (31 March 2022: nil) . This impairment loss has been recognised under "Exceptional item" (refer note 38).
(a) Asset classified as held for sales includes plant and machinery along with other category of Property, plant and equipments of discarded assets of Captive Co-Generation Power Plant (''CGPP'') of Rs. 11.00 crore. CGPP has been valued at recoverable amount based on agreement entered by the Company. Accordingly, an impairment losses of Rs. 20.51 crore for write-downs of the disposal assets to the lower of its carrying amount and its fair value less costs to sell have been recognised in ''Exceptional Item'' (see note 38). No liability is attached to these assets.
(b) The Company decided to sell other obsolete plants & equipment''s and building of Rs. 0.31 crore (31 March 2022 Rs. 0.03 crore), which were originally purchased for production, manufacturing and office. The Company is actively searching for buyers to sell these assets. No liability is attached to these assets.
Non - current fair value measurements :
Assets classified as held for sale are measured at lower of their carrying amount and fair value less cost to sell at the time of reclassification. Fair value of the assets was determined using expected market realizable value using past trend and management assessment. fair value measurement of assets held for sale is a level 3 measurement and key inputs under this approach are price per asset comparable for the machine in similar business and technology.
a. Terms and rights attached to equity shares
Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. There is no restriction on distribution of dividend. However, distribution of dividend is subject to the approval of the shareholders in the Annual General Meeting.
Nature and purpose of reserves/other equity
General reserve
The Company appropriates a portion to general reserves out of the profits voluntarily to meet future contingencies. The said reserve is available for payment of dividend to the shareholders as per the provisions of the Companies Act, 2013.
Retained earnings:
Retained earnings are the profit that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to investors.
Other comprehensive income
Remeasurements of defined benefit plans represents the following as per Ind AS 19-Employee Benefits:
(a) actuarial gains and losses;
(b) the return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and
(c) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset)
a. Securities
Term loans are secured by first equitable mortgage ranking pari-passu over the Company''s immovable properties situated at Bhawanimandi (Rajasthan), Kathua (Jammu & Kashmir), Baddi (Himachal Pradesh) and Daheli (Gujarat) and moveable assets (save and except book debts) both present and future, subject to prior charges created/to be created, in favour of bankers, on moveable assets including book debts to secure working capital borrowings.
Section 115BAA of the Income Tax Act, 1961, introduced by the Taxation Laws (Amendment) Ordinance, 2019, allows any domestic company to pay income tax at the rate of 25.17%, effective from the fiscal year 2019-20, subject to the condition that they will not avail any incentives or exemptions. This new tax scheme provides an option for a lower tax base of 25.17%, while the existing tax rate is 34.94%. The Company have utilized the MAT credit of Rs. 28.07 crore during the year. The Company is assessing tax position in consulting with a tax consultant for adoption of new tax regim from the next financial year.
*The Company submits provisional drawing power (DP) statements on monthly basis to Punjab National Bank (PNB) being the lead bank on 15th of the next month and also to other member banks, in which DP limit is computed as per the terms and conditions of the sanction letter. The difference between DP statement and financial statement arise since DP statements are prepared on a provisional basis after exclusion of certain items of inventory and debtors are done as per the bank sanction letter. On 31 March 2023, the Company has submitted revised DP statements tallying with the books of accounts. In FY22-23, the actual utilization of working capital remained within the bank sanction/DP limits.
Others - Contingencies
Provision for disputed statutory matters have been made, where the Company anticipates probable outflow. The amount of provision is based on estimate made by the Company considering the facts and circumstances of each case. The timing and amount of cash flow will be determined by the relevant authorities on settlement of cases.
Details of corporate social responsibility expenses
As per Section 135 of Companies Act, 2013, a Company needs to spend at least 2% of its average net profit for the immediately preceding three financial years on Corporate Social Responsibility (CSR) activities. A CSR Committee has been formed by the Company as per act. The CSR Committee and Board had approved the projects with specific outlay on the activities as specified in Schedule VII of the act, in pursuant of the CSR policy.
(a) The Company had discarded Captive Co-Generation Power Plant (''CGPP'') during the year ended 31 March 2023 having a book value of Rs. 35.51 crore, since it was not considered viable to operate. The Company entered into an agreement for selling the CGPP at a valuation of Rs. 15 crore. This resulted into loss on sale/ discard of Rs. 20.51 crore.
(b) The Company carried out impairment assessment of its investment in wholly owned subsidiary (including step down subsidiary) in accordance with Ind AS 36 and compared the carrying value of investments with their recoverable amounts. The recoverable amount is determined based on the value in use derived from discounted forecast cash flow model performed by an independent valuer. The carrying amount of the investment in wholly
owned subsidiary (including step down subsidiary) is determined to be higher than its recoverable amount and an impairment loss of Rs. 27.18 crore is recognised during the year ended 31 March 2023. (refer note 5)
(c) In the current year, the Company has reversed excess interest subsidy claimed in previous years amounting to Rs 8.31 crore including interest thereon in relation to a case under TUFS (Technology Upgradation Fund Scheme) basis additional disallowances considered by the Ministry of Textiles.
(d) In the previous year, the Joint Inspection Team (JIT) of the Ministry of Textiles carried out an inspection for the cases under various TUFS (Technology Upgradation Fund Scheme). Based on certain disallowances in the JIT reports, the Company had reversed excess interest subsidies of Rs. 7.81 crore of earlier years along with interest thereon (net of provision of Rs. 4.20 crore) during the previous year. The Company has adjusted the excess subsidy amount against interest subsidies receivable and provided for interest thereon.
|
40 Contingent liabilities and commitments |
||
|
Particulars |
As at |
As at |
|
31 March 2023 |
31 March 2022 |
|
|
A. Contingent liabilities (to the extent not provided for) in respect of: 1. Claim against the Company not acknowledged as debts: |
||
|
Labour matters (including matter in respect of which stay granted |
4.55 |
4.51 |
|
by respective Hon''ble High Court), except for which the liability is unascertainable 2. Other matters for which the Company is contingently liable: |
||
|
a) Demand raised by excise department for various matters |
0.07 |
0.07 |
|
b) Demand raised by GST department for various matters |
0.06 |
0.06 |
|
c) Demand raised by the income tax authorities |
0.13 |
0.36 |
|
d) Bank Guarantee given to Dakshin Gujarat Vij Company Limited |
1.67 |
1.67 |
|
e) Bank Guarantee given to American Silk Mills1 |
19.73 |
- |
Note: (ii) The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required, and disclosures are made for contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceeding to have a materially adverse effect on its financial position . The Company does not expect any reimbursements in respect of the above contingent liabilities.
4 The Company has filed a writ petition with the Honorable High Court of Chhattisgarh against South Eastern Coal Field Limited (SECL) in relation to an unfulfilled commitment to procure a minimum quantity of coal. Accordingly, Honorable High Court has directed for the settlement of the matter. Currently, the Company is in the process of settlement with SECL.
|
B. Commitments |
||
|
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
|
a) Estimated amount of contracts remaining to be executed on capital account [net of advances] not provided for |
41.54 |
46.33 |
b) The Company has availed certain government subsidies/grants. As per the terms and conditions attached to these government subsidies/grants, the Company has to continue with production of goods for specified number of years and others conditions failing which amount of subsidies/grants availed along with interest, penalty etc. may have to be refunded. Impact, if any is not quantifiable.
41 Segment information
A. Description of segments and principal activities
Segment information is presented in respect of the Company''s key operating segments. The operating segments are based on the Company''s internal reporting structure.The Board of Directors has been identified as the chief operating decision maker (''CODM''), since Board of Directors is responsible for all major decision with respect to the preparation and execution of business plan, preparation of budget, planning, expansion, alliance, joint venture, merger and acquisition, and expansion of any facility, etc. The Company''s board examines the Company''s performance both from a product and geographic perspective and has identified two reportable segments of its business:
a) Yarn: It comprises of recycle polyester staple fibre, cotton and man made fibres yarn;
b) Home textiles : It comprises of home furnishing and fabric processing
The Company''s board reviews the results of each segment on a quarterly basis. The Company''s Board of Directors uses segment result to assess the performance of the operating segments.
C. Geographic information
The Yarn and Home Textile segments are managed on a worldwide basis, but operate manufacturing facilities and sales offices, primarily, in India. The geographic information analyses the Company''s revenue by the Company''s country of domicile and other countries. In presenting the geographic information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets.
42 There was an incident involving a fire at the Baddi plant where certain raw material inventories were damaged during the year ended 31 March 2021. The Company has assessed the loss of inventory due to the said incident aggregating to Rs.9.06 crore and the same was netted off from loss on inventories due to fire recorded under consumption of raw material and was presented as a claim receivable under "Other Current Financial Assets" as at 31 March 2021. In the previous year the Company has received an amount of Rs.7.23 crore against the aforesaid insurance claim, hence shortfall of Rs.1.83 crore was recognised as loss by fire in the Statement of Profit and Loss account.
During the year, Company has capitalized borrowing cost amounting to Rs.1.65 crore (31 March 2022: Rs.1.63 crore) under head plant and equipment and building . The capitalisation rate used to determine the amount of borrowing cost for capitalisation purpose is weighted average interest rate to the company i.e. 6.62% ( 31 March 2022 6.47%). Details of capitalisation is as below:
(ii) Defined benefit plan:
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972 (as amended). Employees in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employee''s last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of completed years of service. Gratuity liabilty (other than for Baddi units) is being contributed to the gratuity fund formed by the Company and in case of Baddi unit, company makes contributions to Group Gratuity cum Life Assurance Schemes administered by the LIC of India.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out at 31 March 2023. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
Sensitivities due to mortality and withdrawals are insignificant, hence ignored. Sensitivities as regards rate of inflation, rate of increase in payment of pensions, rate of increase in payment of pensions before retirement and life expectancy are not applicable being a lump sum benefit payables on retirement. Although, the analysis does not take account the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions disclosed above.
B. Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are:
(a) recognised and measured at fair value, and
(b) measured at amortised cost and for which fair values are disclosed in the financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
*The total amount of investments in absolute value is Rs. 5,000 (31 March 2022: Rs. 5,000), for reporting purpose rounded up to Rs. 0.0 crore.
The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents and other bank balances are considered to be the same as their fair values, due to their short-term nature.
The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values. There are no transfers made between level 1 and level 2 during the year.
Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices or dealer quotes for similar instruments;
- the fair value of forward foreign exchange contracts is determined as per values provided by banks; and
- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities and preference shares, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
*The total amount of investments in absolute value is Rs. 5,000, but for reporting purpose rounded up to Rs. 0.0 crore.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted securities.
There are no transfers made between level 1 and level 2 during the year.
Valuation process
The Company involves independent valuer to carry out the valuation of the investments, required for financial reporting purposes, including level 3 fair values. The main level 3 inputs for unlisted preference shares used by the Company are derived and evaluated as follows:
- Risk adjusted discount rates are estimated based on expected cash inflows arising from the instrument and the entity''s knowledge of the business and how the current economic environment is likely to impact it.
Changes in level 2 and 3 fair values are analysed at the end of each reporting year.
Cash and cash equivalents and other bank balances
The Company held cash and cash equivalents and other bank balances of Rs.6.12 crore at 31 March 2023 (31 March 2022: Rs.4.92 crore). The cash and cash equivalents and other bank balances are held with bank and financial institution counterparties, which are rated A1 , based on India ratings.Impairment on cash and cash equivalents and other bank balances has been measured on a 12-month expected loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties. There is no impairment allowance at 31 March 2023 and 31 March 2022.
Derivatives
The derivatives are entered into with bank and financial institution counterparties, which are rated A1 , based on India ratings.
II. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk;
- Liquidity risk; and
- Market risk
i. Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Board of Directors has established the processes to ensure that executive management controls risks through the mechanism of properly defined risk management framework.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed by the board annually to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and responsibilities.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investments in debt securities. The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The Management impact analysis shows credit risk and impact assessment as low.
Trade and other receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Company''s management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes market check, industry feedback, past financials and external ratings, if such information is available, and in some cases bank references. Credit limits are established for each customer and reviewed quarterly. Any credit exceeding those limits require approval from the President of the Company.
To monitor customer credit risk, customers are reviewed in terms of their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties.
The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables.
During the year, the Company has made write-offs of trade receivables, it does not expect to receive future cash flows or recoveries from collection of cash flows previously written off. The Company management also pursue all legal options for recovery of dues wherever necessary based on its internal assessment.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of fund through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. This is generally carried out at unit level and monitored through corporate office of the Company in accordance with practice and limits set by the Company. These limits vary at units level to take into account requirement, future cash flow and the liquidity in which the entity operates. In addition, the Company''s liquidity management strategy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
The credit limit facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in Rupees and have an average maturity of 2 years 8 month as at 31 March 2023 (31 March 2022 - 3 years and 4 months).
(b) Maturities of financial liabilities
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and exclude contractual interest payments and the impact of netting agreements.
iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to manage liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when liabilities are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
The interest payments on variable interest rate loans in the table above reflect market forward interest rates at the reporting date and these amounts may change as market interest rates change.
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
The Company uses derivatives such as forward contracts to manage market risks on account of foreign exchange and various debt instruments on account of interest rates. All such transactions are carried out as per guidelines of the Management.
a. Currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD , EUR, CHF, JPY and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (Rupees). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the Rupees cash flows of highly probable forecast transactions by hedging the foreign exchange inflows on regular basis. The Company also consults external experts for their views on the currency rates in volatile foreign exchange markets.
Currency risks related to payables and receivables denominated in foreign currencies have been partially hedged using forward contracts taken by the Company.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates whenever, necessary, to address short-term imbalances.
Sensitivity analysis
A reasonably possible strengthening (weakening) of the Rupees (Rs.) against foreign currencies at year end would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
b. Interest rate risk
The Company''s main interest rate risk arises from long-term borrowings with variable rates, which exposes the Company to cash flow interest rate risk. During financial year 2022-23 and financial year 2021-22, the Company''s borrowings at variable rates were denominated in Rupees.
Currently, the Company''s borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
c. Commodity price risks
The Company is exposed to the risk of price fluctuations of raw materials, dyes and chemicals, work-inprogress and finished goods. The Company manages its commodity price risk by maintaining adequate inventory of raw materials, dyes and chemicals, work-in-progress and finished goods considering anticipated movement in prices. To counter raw materials price fluctuation risk, the Company works with varieties of fibers (natural and manmade) with the objective to moderate raw material cost, enhance application flexibility and increase product functionality and also invests in product development and innovation.
48 In respect of Okara Mills, Pakistan, (which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company) no returns have been received after 31 March 1965. Against net assets, amounting to Rs. 2.32 crore of Okara Mills, Pakistan, the demerged/transferor Company received adhoc compensation of Rs. 0.25 crore from Government of India in the year 1972-73. These assets now vest with the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India. The Company shall continue to pursue its claim for compensation/restoration of assets. Hence, further compensation, if any received, will be recorded in the year of receipt. In the financial year 2003-04, net assets of Rs. 2.07 crore (net of compensation received) as at 31 March 1965 were valued at pre-devaluation exchange rate, has been provided for.
50 Capital management and regulatory information
The primary objective of the management of the Company''s capital structure is to maintain an efficient mix of debt and equity in order to achieve a low cost of capital, while taking into account the desirability of retaining financial flexibility. The Board of directors regularly review the Company''s capital structure in light of the economic conditions, business strategies and future commitments. For the purpose of the Company''s capital management, capital includes issued share capital and all other equity reserves. Debt includes short term and long term borrowings. During the financial year ended 31 March 2023, no significant changes were made in the objectives, policies or processes relating to the management of the Company''s capital structure.
(xii) The Company''s policy is to maintain a strong capital base so as to maintain investors, creditors and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.The weighted-average interest expense on interest-bearing borrowings (excluding liabilities with imputed interest) was 6.62 % (31 March 2022: 6.47%).
51 At each reporting date, the Company evaluate whether there is objective evidence that the property, plant and machinery of the Cash generating unit "CGU" is impaired in terms of IND AS - 36 "Impairment of Assets". If there is such evidence, the carrying amount is tested for impairment by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount and impairment, if any, is recognized in the standalone financial statement of the Company.
On account of increased input costs, competitive pressure and unfavourable market conditions in Damanganga unit, particularly upholstery and curtains, the Damanganga ("CGU") incurred significant losses during the year. The Company carried out an impairment assessment of the aforesaid CGU using the fair value less cost to sell model which is based on the replacement value of plant and machinery and market value of land and building. Fair valuation is calculated using certain assumptions i.e. prevailing market dynamics. The Company has also involved independent valuer to carried out the fair value of the property, plant and equipment of CGU.
Some of the key assumptions used by the Valuer for determining the fair value for significant assets are as follows:
(a) Land Valuation :
(i) Transacted / quoted values for similar properties sold in the subject micro-market;
(ii) Adjustment of achievable transaction value based on site specific physical parameters such as location, accessibility, size, zoning, physical attributes, profile of surrounding developments, etc.
(b) Building Valuation:
The value of the built up structure on the subject property has been assessed by the ''Depreciated Replacement Cost'' method, where the current replacement cost of the structure (given the current condition of the property) has been evaluated after giving due regards to physical parameters such as construction, specifications, completion status of the building, renovations carried out in the structures and the same has been depreciated based on parameters such as age, remaining useful life, etc. of the structure.
(c ) Plant and Machinery and other Equipments valuation
Total economic life for machineries under various categories have been considered on the basis of regulations prescribed under Schedule II of Indian Companies Act, 2013. Further, a salvage value of 2-5% on the replacement cost, as of date of assessment, of plant and machinery and other equipment has been considered. Quotes for similar or Identical machineries from the same or other manufacturer/ suppliers that are available in the market is also considered. In addition, other applicable direct & indirect cost prevalent in the current market conditions has been factored to arrive at the current Replacement Cost New (RCN) for the machineries at the site.Further, indexing method has also been used to assess RCN for a few machineries.
In addition to the above, in perspective and considering the prevailing trends, a marketing and transaction cost in the range of 5-10% has been considered for the subject assets while assessing the fair value.
Technological obsolescence to an extent of 5-10% has considered for the machineries installed during the period 1999 -2015 . Further, functional obsolescence to the extent of 10-15% has also considered.
Based on all the above factors, as per the final report issued by the Valuer, the fair value of the CGU is higher than its carrying value and hence the Company has concluded that no impairment provision needs to be recorded in the financial statements.
52 During the current year, Company has noticed theft in one of the units, for an amount of Rs. 3.85 crore (net). This loss has been charged in the statement of profit and loss under head "cost of material consumed" and netted off from "Inventories" in Balance Sheet. The Company has taken appropriate steps to address the situation, including filing an FIR with the police.
(i) The Company does not have any benami property where any proceedings have been initiated or pending against the Company for holding such benami property.
(ii) The Company does not have any transactions with companies that have been struck off.
(iii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(iv) The Company does not have any charges or satisfaction which are yet to be registered with ROC beyond the statutory period.
(v) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.
(vi) During the year the Company''s Subsidiary Company (Sutlej Holdings Inc.) has invested in its step down subsidiary company (American Silk Mills LLC. ), other than this the Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Group (Ultimate Beneficiaries); or
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or;
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(viii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(ix) The Company does not have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(x) The Company(as per the provisions of the Core Investment Companies (Reserve Bank) Directions, 2016) has one Core Investment Company ("CIC") as part of the Company i.e. Ganges Securities Limited (unregistered CIC).
The Company''s has issed a stand by letter of credit to its step down subsidiary for obtaining credit facilities for general corporate purposes
3. Liability of customs duty towards export obligation undertaken by the Company under "Export Promotion Capital Goods Scheme (EPCG)" amounting to Rs. 15.55 crore (31 March 2022: Rs. 13.71 crore). The Company had imported Capital goods under EPCG and saved the custom duty. As per the EPCG terms and conditions, Company needs to export Rs.98.28 crore (31 March 2022: Rs.79.79 crore) i.e. 6 times (25% of 6 times in case of Jammu & Kashmir) of duty saved on import of Capital goods on FOB basis within a period of 6 years. If the Company does not export goods in prescribed time, then the Company may have to pay interest and penalty thereon.
Note: (i) Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above matters, timing of the cash outflows can be determined only on receipt of judgments/ decisions pending with various forums/authorities.
Mar 31, 2018
1 Segment information
A. Description of segments and principal activities
Segment information is presented in respect of the Company''s key operating segments. The operating segments are based on the Company''s internal reporting structure. The Board of Directors have been identified as the chief operating decision maker (''CODM''), since they are responsible for all major decision w.r.t. the preparation and execution of business plan, preparation of budget, planning, expansion, alliance, joint venture, merger and acquisition, and expansion of any facility. The Company''s board examines the Company''s performance both from a product and geographic perspective and have identified two reportable segments of its business:
a) Yarn: It comprises of cotton and man-made fibres yarn;
b) Home textiles : It comprises of home furnishing and fabric processing.
The Company''s board reviews the results of each segment on a quarterly basis. The Company''s board of directors uses segment result to assess the performance of the operating segments.
B. Information about reportable segments
Information related to each reportable segment is set out below. Segment EBITDA is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries.
C. Geographic information
The Yarn and Home Textile segments are managed on a worldwide basis, but operate manufacturing facilities and sales offices primarily in India. The geographic information analyses the Company''s revenue by the Company''s country of domicile and other countries. In presenting the geographic information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets.
2 Leases
Operating lease
The Company''s significant leasing arrangements are in respect of operating leases of premises for offices and guesthouses. These leasing arrangements, which are cancellable, are typically for a period of 11 months and are usually renewable on mutually agreeable terms. The Company has recognised expense amounting to RS, 1.32 crore (31 March 2017 RS, 0.99 crore)
The Company has entered into agreement to take office on operating lease from a third party. The lease arrangement is for 6 years, including a non-cancellable term of 36 months.
The future minimum lease payments and payment profile of non-cancellable operating leases are as under:-
3 Borrowing cost
During the year, Company has capitalized borrowing cost amounting to RS, 0.50 crore (31 March 2017 RS, 12.85 crore) under head plant and equipment and building. The capitalized rate used to determine the amount of borrowing cost to be capitalized is weighted average interest rate applicable to the entities general borrowing during including term loan and working capital the year is ~6.55 % (31 March 2017 ~6.75%).
4 Employee benefits
The Company contributes to the following post-employment defined benefit plans in India.
(i) Defined contribution plans:
The Company makes contributions towards provident fund and superannuation fund to a defined contribution benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage
of payroll cost to the benefit plan to fund the benefits.
(ii) Defined benefit plan:
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. Gratuity liability (other than for Baddi unit) is being contributed to the gratuity fund formed by the Company and in case of Baddi unit makes contributions to Group Gratuity cum Life Assurance Schemes administered by the LIC of India.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2018. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
A. Movement in net defined benefit (asset) liability
The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset) liability and its components:
Assumptions regarding future mortality have been based on published statistics and mortality tables.
The Company expects to pay RS, 6.32 crore (Previous year RS, 6.42 crore) in contribution to its defined benefit plans in the next year.
D. Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
Sensitivities due to mortality and withdrawals are insignificant hence ignored. Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement and life expectancy are not applicable being a lump sum benefit on retirement. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
E. Description of risk exposures:
Defined benefit plans expose the Company to actuarial risks such as: Interest rate risk, salary risk and demographic risk.
i. Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the bond yield falls, the defined benefits obligation will tended to increase.
ii. Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.
iii. Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawals, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the employee benefit of a short career employee typically costs less per year as compared to a long service employee.
*The total amount of investments in absolute value is RS, 5,000, but for reporting purpose rounded up to RS, 0.0 crore
The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents and other bank balances are considered to be the same as their fair values, due to their short-term nature.
The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
There are no transfers between level 1 and level 2 during the year Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices or dealer quotes for similar instruments
- the fair value of forward foreign exchange contracts is determined as per valuation provided by the bank
- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities and preference shares, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
B. Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are:
(a) recognised and measured at fair value and
(b) measured at amortised cost and for which fair values are disclosed in the financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
*The total amount of investments in absolute value is RS, 5,000, but for reporting purpose rounded up to RS, 0.0 crore
There are no transfers between level 1 and level 2 during the year Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices or dealer quotes for similar instruments
- the fair value of forward foreign exchange contracts is determined as per valuation provided by the bank
- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities and preference shares, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
Valuation process
The Company gets the valuations performed from an independent valuer, required for financial reporting purposes, including level 3 fair values.
The main level 3 inputs for unlisted preference shares used by the Company are derived and evaluated as follows:
- Risk adjusted discount rates are estimated based on expected cash inflows arising from the instrument and the entity''s knowledge of the business and how the current economic environment is likely to impact it.
Changes in level 2 and 3 fair values are analysed at the end of each reporting year.
II. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk;
- Liquidity risk and
- Market risk
i. Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the mechanism of property defined framework.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market
conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investments in debt securities. The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The Management impact analysis shows credit risk and impact assessment as low.
Trade and other receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Company management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the President of the Company.
About 40% of the Company''s customers have been transacting with the Company for over four years, and no significant impairment loss has been recognized against these customers. In monitoring customer credit risk, customers are reviewed according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties
The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables.
The carrying amount net of loss allowances of trade receivables is RS, 325.32 (31 March 2017 RS, 242.09).
During the year, the Company has made no write-offs of trade receivables, it does not expect to receive future cash flows or recoveries from collection of cash flows previously written off. The Company management also pursue all legal option for recovery of dues wherever necessary based on its internal assessment.
iii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. This is generally carried out at unit level and monitored through corporate office of the Company in accordance with practice and limits set by the Company. These limits vary by location to take into account requirement, future cash flow and the liquidity in which the entity operates. In addition, the Company''s liquidity management strategy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
(a) Financing arrangements
The Company had access to the following undrawn borrowing facilities at the end of the reporting
period:
The credit limit facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in INR and have an average maturity of 4 years 2 months as at 31 March 2018 (as at 31 March 2017 - 4 years).
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates
- will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
The Company uses derivatives like forward contracts to manage market risks on account of foreign exchange and various debt instruments on account of interest rates. All such transactions are carried out as per guidelines of the Management.
a. Currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and small exposure in EUR and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions by hedging the foreign exchange inflows on regular basis. The Company also take help from external consultants who for views on the currency rates in volatile foreign exchange markets.
Currency risks related to the principal amounts of the Company''s foreign currency receivables and payables, have been partially hedged using forward contracts taken by the Company.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
(i) Exposure to currency risk
The summary quantitative data about the Company''s exposure to currency risk as reported by the management of the Company is as follows
Sensitivity analysis
A reasonably possible strengthening (weakening) of the INR. against USD at 31 March would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
b. Interest rate risk
The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31 March 2018 and 31 March 2017, the Company''s borrowings at variable rate were denominated in INR.
Currently the Company''s borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and statement of profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
Fair value sensitivity analysis for fixed-rate instruments
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
A change of 50 basis points in interest rates would have increased or decreased equity by RS, 3.41 crore after tax (31 March 2017 RS, 3.12 crore). This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
c. Commodity price risks
The Company is exposed to the risk of price fluctuations of raw materials, dyes and chemicals, work-in-progress and finished goods. The Company manage its commodity price risk by maintaining adequate inventory of raw materials, dyes and chemicals, work-in-progress and finished goods considering future price movement. To counter raw materials risk, the Company worked with varieties of fibres (natural and manmade) with the objective to moderate raw material cost, enhance application flexibility and increase product functionality and also invested product development and innovation.
Note -Figures in brackets represents previous year''s amounts.
# Due to approval of Composite scheme of arrangement by Hon''ble National Company Law Tribunal (NCLT), Bench at Allahabad, on March 2, 2017 exposure''s in ICDS in Upper Ganges Sugar & Inds. Ltd. has swapped to MSEL.
5. In respect of Okara Mills, Pakistan, (Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company) no returns have been received after 31 March 1965. Against net assets of Okara Mills, Pakistan amounting to RS, 2.32 crore, the demerged /transferor Company had received adhoc compensation of RS, 0.25 crore from Government of India in the year 1972-73. These assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India. The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of RS, 2.07 crore (net of compensation received) as on 31 March 1965, valued at pre-devaluation exchange rate, has been provided for.
6. Capital management
The primary objective of the management of the Company''s capital structure is to maintain an efficient mix of debt and equity in order to achieve a low cost of capital, while taking into account the desirability of retaining financial flexibility to pursue The Board of directors regularly review the Company''s capital structure in light of the economic conditions, business strategies and future commitments. For the purpose of the Company''s capital management, capital includes issued share capital and all other equity reserves. Debt includes term loans. During the financial year ended 31 March 2018, no significant changes were made in the objectives, policies or processes relating to the management of the Company''s capital structure.
(iii) The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The weighted-average interest expense on interest-bearing borrowings (excluding liabilities with imputed interest) was 5.79 % (31 March 2017: 5.88%).
7. The disclosures in the financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made since, they do not pertain to the financial year ended 31 March 2018. However, amounts as appearing in the audited financial statements for the year ended 31 March 2017 have been disclosed.
8. Previous year figures have been audited by another firm of chartered accountants.
Mar 31, 2017
1. Segment information
2. Description of segments and principal activities
Segment information is presented in respect of the company''s key operating segments. The operating segments are based on the company''s internal reporting structure.
The Board of Directors have been identified as the Chief Operating Decision Maker (''CODM''), since they are responsible for all major decision w.r.t. the preparation and execution of business plan, preparation of budget, planning, expansion, alliance, joint venture, merger and acquisition, and expansion of any facility.
The company''s board examines the Company''s performance both from a product and geographical perspective and have identified two reportable segments of its business:
3. Yarn: It comprises of Cotton and Man Made Fibres Yarn
4. Home textiles : It comprises of Home Furnishing and Fabric Processing.
5. Leases Operating lease
The Company''s significant leasing arrangements are in respect of operating leases of premises for offices and guesthouses. These leasing arrangements, which are cancellable, are typically for a period of 11 months and are usually renewable on mutually agreeable terms. The Company has recognized expense amounting to Rs.0.99 crores (Previous year Rs.1.60 crores).
6. Borrowing Cost
During the year, company has capitalized borrowing cost amounting to Rs.12.85 crores ( Previous year Rs.6.75 crores). The capitalized rate used to determine the amount of borrowing cost to be capitalized is weighted average interest rate applicable to the entities general borrowing (including term loan and working capital) during the year is ~ 6.75% (Previous Year~8.25%).
7. Employee benefits
The Company contributes to the following post-employment defined benefit plans in India.
8. Defined Contribution Plans:
The Company makes contributions towards provident fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits.
9. Defined Benefit Plan:
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. Gratuity liability (other than for BTM unit) is being contributed to the gratuity fund formed by the Company and in case of BTM unit makes contributions to Group Gratuity cum Life Assurance Schemes administered by the LIC of India.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2017. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
Sensitivities due to mortality & withdrawals are insignificant & hence ignored. Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable being a lump sum benefit on retirement.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
10. Description of Risk Exposures:
Defined benefit plans expose the Company to actuarial risks such as: Interest rate risk, salary risk and Demographic Risk.
11. Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the bond yield falls, the defined benefits obligation will tined to increase.
12. Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.
13. Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawals, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
Level 1: Hierarchy includes financial instruments measured using quoted prices. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.
There are no transfers between level 1 and level 2 during the year
Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices or dealer quotes for similar instruments
- the fair value of forward foreign exchange contracts is determined as per valuation provided by the bank
- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities and preference shares, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
Valuation process
The Company gets the valuations performed from an independent valuer, required for financial reporting purposes, including level 3 fair values.
The main level 3 inputs for unlisted preference shares used by the Company are derived and evaluated as follows:
- Risk adjusted discount rates are estimated based on expected cash inflows arising from the instrument and the entity''s knowledge of the business and how the current economic environment is likely to impact it.
Changes in level 2 and 3 fair values are analyzed at the end of each reporting period.
The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents and other bank balances are considered to be the same as their fair values, due to their short-term nature.
The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
14. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk;
- Liquidity risk;
- Market risk and
- Commodity price risk
15. Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the mechanism of property defined framework.
The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
16. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investments in debt securities.
The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The Management impact analysis shows credit risk and impact assessment as low.
Trade and other receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Company Management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the President of the Company.
More than 60 % of the Company''s customers have been transacting with the Company for over four years, and no significant impairment loss has been recognized against these customers. In monitoring customer credit risk, customers are reviewed according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties
The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables.
The carrying amount net of loss allowances of trade receivables is Rs.242.09 crores (31 March 2016 - Rs.210.90 crores, 1 April 2015 - Rs.192.55 crores).
17. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. This is generally carried out at unit level and monitored through corporate office of the Company in accordance with practice and limits set by the Company. These limits vary by location to take into account requirement, future cash flow and the liquidity in which the entity operates. In addition, the Company''s liquidity management strategy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
18. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
The Company uses derivatives like forward contracts to manage market risks on account of foreign exchange and various debt instruments on account of interest rates. All such transactions are carried out as per guidelines of the Management.
19. Currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and small exposure in EUR and GBP. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the company''s functional currency (H). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimize the volatility of the H cash flows of highly probable forecast transactions by hedging the foreign exchange inflows on regular basis. The Company also take help from external consultants who for views on the currency rates in volatile foreign exchange markets.
Currency risks related to the principal amounts of the Company''s foreign currency receivables and payables, have been partially hedged using forward contracts taken by the Company.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
20. Interest rate risk
The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31 March 2017 and 31 March 2016, the Company''s borrowings at variable rate were denominated in Rs..
Currently the Company''s borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.
Exposure to interest rate risk
The interest rate profile of the Company''s interest-bearing financial instruments as reported to the management of the Company is as follows.
Fair value sensitivity analysis for fixed-rate instruments
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
A change of 50 basis points in interest rates would have increased or decreased equity by Rs.3.12 crores after tax (Previous year Rs.2.64 crores). This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
21. Commodity price risks
The Company is exposed to the risk of price fluctuations of raw material as well as finished goods. The company manage its commodity price risk by maintaining adequate inventory of raw materials and finished goods considering future price movement. To counter raw materials risk, the Company worked with varieties of fibres (natural and manmade) with the objective to moderate raw material cost, enhance application flexibility and increase product functionality and also invested product development and innovation. To counter finished goods risk, the company address wide range of customers (knitting, weaving, home applications, industrial etc.) and manages these risk through inventory management and proactive vendor development practices.
Inventory sensitivity analysis (Raw Material, Work-in-progress and finished goods)
A reasonably possible change of 10% in prices of inventory at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.
22. Business combinations
The Division with all rights, title and interest have been transferred from Chambal Fertilizers and Chemicals Limited to Sutlej Textiles and Industries Limited from the date of effective control i.e. closure of the business hours on September 30, 2015 as a going concern on a slump sale basis for a fixed consideration of Rs.232.63 crores under the business transfer agreement.
As per para 18 of Ind AS 103 (Business Combinations), all identifiable assets and liabilities were assumed by Sutlej Textiles and Industries Limited at fair values as of October 1, 2015 (i.e. closure of the business hours on September 30, 2015)
23. Acquisition-related costs
The Company incurred acquisition-related costs of Rs.0.46 crores on legal fees and due diligence costs. These costs were included in ''Miscellaneous expenses'' during the year 2015-16.
24. Identifiable assets acquired and liabilities assumed
The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition.
25. First Time Adoption of Ind AS
As stated in note 2, these are the Company''s first financial statements prepared in accordance with Ind AS.
The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS statement of financial position at 1 April 2015 (the Company''s date of transition). In preparing its opening Ind AS statement of financial position, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Indian GAAP (previous GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables. Exemptions and exceptions availed Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
26. Ind AS optional exemptions
27. Deemed cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.
Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.
28. Leases
Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The Company has elected to apply this exemption for such contracts/arrangements.
29. Ind AS mandatory exceptions
30. Estimates
An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for Impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP
31. Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
32. Notes to first-time adoption:
33. Fair valuation of investments
Under the previous GAAP, investments in equity shares and preference shares were classified as long-term investments. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Under Ind AS, these investments are required to be measured at fair value through profit and loss. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in the statement of profit and loss for the year ended 31 March 2016. This increase the retained earnings net of tax by Rs.2.29 crores as at 31 March 2016 (1 April 2015 decrease in retained earnings- Rs.17.99 crores).
34. Borrowings
Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method.
Under previous GAAP, these transaction costs were charged to profit or loss and PPE as and when incurred. Accordingly, borrowings as at 31 March 2016 have been reduced by Rs.0.41 crores (1 April 2015- Rs.0.44 crores) with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount of retained earnings. The profit for the year ended 31 March 2016 reduced by Rs.0.03 crores as a result of the additional interest expense.
35 Proposed Dividend
Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend and tax thereon of Rs.25.63 crores as at 31 March 2016 (1 April 2015- Rs.19.72 crores) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount
36. Re-measurements of post-employment benefit obligations
Under Ind AS, re-measurements 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 statement of profit and loss. Under the previous GAAP, these re-measurements were forming part of the statement of profit and loss for the year. As a result of this change, the profit for the year ended March 31, 2016 increased by Rs.1.14 crores. There is no impact on the total equity as at 31 March 2016.
37. Deferred Tax
Under previous GAAP, deferred tax was prepared using income statement approach. Under Ind AS, company has prepared deferred tax using balance sheet approach. Also, deferred tax have been recognized on the adjustments made on transition to Ind AS.
38. Retained earnings
Retained earnings as at April 1, 2015 has been adjusted consequent to the above Ind AS transition adjustments.
39. Excise Duty
Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented under other expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31 March 2016 by Rs.0.44 crores. There is no impact on the total equity and profit.
40. Trade receivables
Under previous GAAP, company had a policy to derecognize the trade receivables upon discounting on the same and the same were presented as contingent liability. Under Ind AS, the said trade receivables do not meet the de-recognition conditions are defined under Ind AS 109, hence the company has re-recognized the trade receivables with the corresponding impact in short term borrowings. This has resulted in increase in trade receivables balance by Rs.38.18 crores as at 31 March 2016 (1 April 2015 Rs.55.75 crores) with corresponding increase in short term borrowings.
41. Business Combinations
The Company has acquired Birla Textile Mills (BTM) from Chambal Fertilizers and Chemicals Ltd as a going concern on slump sale basis effective from 1st April, 2015. However, control as defined in Ind AS 103 (Business Combinations) including various approvals was obtained by the Company and control vests with the Company after closing of Business Hours on 30th September, 2015. Accordingly, accounting for business combination was made and results for the previous year ended 31st March, 2016 includes results of BTM for the period from 01.10.2015 to 31.03.2016 only.
42 Fair valuation of derivatives
The company has taken forward contracts to hedge foreign currency receivables/ payable. Under previous GAAP, AS 11 accounting was followed to account for these contracts. Under Ind AS all these derivatives has been valued at fair value as per Ind AS 109. This has increased retained earnings by Rs.0.19 crores as at 31 March 2016 and by Rs.0.22 crores as at April 2015 respectively.
43 Other comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in the statement of profit and loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes re-measurements of defined benefit plans and tax thereon. The concept of other comprehensive income did not exist under previous GAAP.
50 In respect of Okara Mills, Pakistan, (Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company) no returns have been received after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting to Rs.2.32 crores, the demerged/transferor Company had received adhoc compensation of Rs.0.25 crores from Government of India in the year 1972-73. These assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India. The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of Rs.2.07 crores (net of compensation received) as on 31.03.1965, valued at pre-devaluation exchange rate, has been provided for.
44 Capital management
The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The weighted-average interest expense on interest-bearing borrowings (excluding liabilities with imputed interest) was 5.88% (Previous year: 6.48%).
45. The Company has acquired Birla Textile Mills (BTM) from Chambal Fertilizers and Chemicals Ltd as a going concern on slump sale basis effective from 1st April, 2015. However, control as defined in Ind AS 103 (Business Combinations) including various approvals was obtained by the Company and control vests with the Company after closure of business hours on 30th September, 2015. Accordingly, accounting for business combination was made and hence previous year figures are excludes figures for the period 01.04.15 to 30.09.15 of BTM, hence not comparable.
Mar 31, 2016
Note 1.
In respect of Okara Mills, Pakistan, ( Which remained with the Company
as a result of transfer of textiles division of Sutlej Industries
Limited with the Company ) no returns have been received after
31.03.1965. Against net assets of Okara Mills, Pakistan amounting to
H232.35 lakhs, the demerged/transferor Company had received adhoc
compensation of H25 lakhs from Government of India in the year 1972-73.
These assets now vest in the Custodian of Enemy Property, Pakistan for
which claim has been filed with the Custodian of Enemy Property in
India. The Company shall continue to pursue its claim for compensation/
restoration of assets. Hence, further compensation, if any received,
credit for the same will be taken in the year of receipt. In the year
2003-04, net assets of H207.35 lakhs (net of compensation received) as
on 31.03.1965, valued at pre-devaluation exchange rate, has been
provided for.
Note 2.
Proportionate expenses reimbursed for utilizing services of
establishments maintained by other entities have been included in
respective
heads of expenses.
Note 3.
The Company had acquired Birla Textile Mills (BTM), a textile unit from
Chambal Fertilizers and Chemicals Limited along with all rights, title
and interest relating thereto as a going concern on a slump sale basis
w.e.f. 1st April, 2015 for a fixed consideration of H23263.18 lakhs
under the business transfer agreement. The consideration has been
settled by the Company in cash. All the acquired assets and liabilities
have been accounted at fair value on the date of acquisition. The fair
value has been allocated to the net assets acquired as below
# Deposited in Indian Rupees in the Bank Accounts maintained by the
shareholders in India.
Note 4.
Figures for the year ended includes figures of Birla Textile Mills
acquired w.e.f. 1st April 2015 and hence not comparable with
corresponding previous period. Previous year figures have been
regrouped/rearranged wherever necessary.
Note:1. The above Cash Flow Statement has been prepared under the
"Indirect Method" as set out in Accounting Standard- 3 on "Cash Flow
Statement".
Note: 2. Cash Flow Statement has been prepared after giving the effect
of the Business Transfer Agreement (BTA) for purchase of BTM on slum
purchase to the opening balance sheet from appointed date i.e. 01st
April 2015.
Mar 31, 2015
1 NATURE OF OPERATIONS
The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made
Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning units
viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile Mills,
Kathua (J & K), one weaving unit (upto 01.10.2014) & processing unit
viz. Damanganga Fabrics, and one Home Textiles unit viz. Damanganga Home
Textiles at Village Daheli, near Bhilad (Gujarat).
2 In respect of Okara Mills, Pakistan, (Which remained with the
Company as a result of transfer of textiles division of Sutlej
Industries Limited with the Company ) no returns have been received
after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting
to `232.35 lakhs, the demerged/transferor Company had received adhoc
compensation of `25.00 lakhs from Government of India in the year
1972-73. These assets now vest in the Custodian of Enemy Property,
Pakistan for which claim has been filed with the Custodian of Enemy
Property in India .The Company shall continue to pursue its claim for
compensation/ restoration of assets. Hence, further compensation, if
any received, credit for the same will be taken in the year of receipt.
In the year 2003-04, net assets of ` 207.35 lakhs (net of compensation
received) as on 31.03.1965, valued at pre-devaluation exchange rate,
has been provided for.
3 Proportionate expenses reimbursed for utilising services of
establishments maintained by other entities have been included in
respective heads of expenses.
4 During the first quarter of the financial year 2014-15, some stocks
of finished goods in a godown were totally gutted by fire. In a
separate incident, there was damage to some factory buildings &
machinery and stocks due to a severe hailstorm. The Company has already
filed claims for the above damages with the Insurance Companies and the
Surveyors have also filed their reports with the respective Insurance
Companies. To reflect true and fair results for the year ended, the
Company had accounted for insurance claims of `1333.63 lakhs towards
cost of finished goods damaged by fire and expenses incurred for
replacement of the damaged assets, instead of accounting on receipt
basis as per earlier policy. The Management is hopeful of recovery of
the entire insurance claim. If earlier accounting policy would have
been followed, other operating income would have decreased by ` 930.99
lakhs, other expenses would have increased by ` 402.64 lakhs and Income
Tax & Profit after Tax for the year would have been reduced by ` 453.30
lakhs & ` 880.33 lakhs respectively
5 The Company has closed its weaving unit (Part of fabric division)
w.e.f. 01.10.2014 situated at Daheli as per decision taken by its Board
of Directors in their meeting held on 17.09.2014. As it is not a major
line of business hence no separate disclosure for discontinuing
operation has made in the financial statement
6 CONTINGENT LIABILITIES AND COMMITMENTS
(Rs. in lakhs)
Particulars As at As at
31st March, 31st March,
2015 2014
A. Contingent Liabilities
(Not provided for) in respect of:
1 Claim against the Company not
acknowledged as debts:
a) Labour Matters, except for
which the liability is
unascertainable 69.31 69.45
2 Other matters for which the
Company is contingently liable:
a) Demand raised by Excise
Department for various matters 216.08 220.95
b) Demand for Service Tax 23.91 23.91
c) Demand for Entry Tax
(penalty & interest on penalty) 555.50 483.05
(Net of Rs. 582.59 lakhs
provided in accounts/ paid)
The Company has a strong chance of
success in the above cases, therefore
no provision is considered necessary.
3 Bills Discounted with Bankers 3831.08 4683.58
(Since Realised upto 30.04.2015
Rs. 1530.62 lakhs, Previous year
Rs. 1907.33 lakhs)
4 The Company has discharged its
export obligation under EPCG
Scheme for procurement of
certain capital goods at
concessional rate of duty.
Therefore, the Company is not liable
to pay any differential custom duty
(Previous year Rs. 354.50 lakhs).
B. Commitments :
a) Estimated amount of Contracts
remaining to be executed on Capital
Account [Net of 4360.43 9463.00
Advances] and not provided for
b) The Company has availed
certain government subsidies/
grants. As per the terms and
conditions, the Company has to
continue production for
specified number of years
failing which amount of subsidies
availed alongwith interest,
penalty etc. will have to be
refunded.
c) The Board of Directors at
their meeting held on 14th March
2015, has approved the purchase
of Birla Textile Mills (BTM) a unit
of Chambal Fertilisers and
Chemicals Limited as a going concern
on 'slump sale' basis effective from
1st April 2015, subject to necessary
approvals. BTM is located at Baddi
(Himachal Pradesh) and is having
83,376 Spindles and manufactures
Cotton, Synthetic and Blended Yarn
in Grey and Dyed forms.
7 NATURE OF OPERATIONS
The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made
Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning
units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile
Mills, Kathua (J & K), one weaving unit (upto 01.10.2014) & processing
unit viz. Damanganga Fabrics, and one Home Textiles unit viz.
Damanganga Home Textiles at Village Daheli, near Bhilad (Gujarat).
31.03 In respect of Okara Mills, Pakistan, (Which remained with the
Company as a result of transfer of textiles division of Sutlej
Industries Limited with the Company ) no returns have been received
after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting
to Rs. 232.35 lakhs, the demerged/transferor Company had received adhoc
compensation of Rs. 25.00 lakhs from Government of India in the year
1972-73. These assets now vest in the Custodian of Enemy Property,
Pakistan for which claim has been filed with the Custodian of Enemy
Property in India .The Company shall continue to pursue its claim for
compensation/ restoration of assets. Hence, further compensation, if
any received, credit for the same will be taken in the year of receipt.
In the year 2003-04, net assets of Rs. 207.35 lakhs (net of
compensation received) as on 31.03.1965, valued at pre-devaluation
exchange rate, has been provided for.
8 Proportionate expenses reimbursed for utilising services of
establishments maintained by other entities have been included in
respective heads of expenses.
9 During the first quarter of the financial year 2014-15, some
stocks of finished goods in a godown were totally gutted by fire. In a
separate incident, there was damage to some factory buildings &
machinery and stocks due to a severe hailstorm. The Company has already
filed claims for the above damages with the Insurance Companies and the
Surveyors have also filed their reports with the respective Insurance
Companies. To reflect true and fair results for the year ended, the
Company had accounted for insurance claims of Rs. 1333.63 lakhs towards
cost of finished goods damaged by fire and expenses incurred for
replacement of the damaged assets, instead of accounting on receipt
basis as per earlier policy. The Management is hopeful of recovery of
the entire insurance claim. If earlier accounting policy would have
been followed, other operating income would have decreased by Rs.
930.99 lakhs, other expenses would have increased by Rs. 402.64 lakhs
and Income Tax & Profit after Tax for the year would have been reduced
by Rs. 453.30 lakhs & Rs. 880.33 lakhs respectively
10 The Company has closed its weaving unit (Part of fabric division)
w.e.f. 01.10.2014 situated at Daheli as per decision taken by its Board
of Directors in their meeting held on 17.09.2014. As it is not a major
line of business hence no separate disclosure for discontinuing
operation has made in the financial statement.
11 Other Information:
(i) The Company is organised into two main business segments, namely;
* Yarn comprising of Cotton and Man Made Fibres Yarn;
* Fabrics comprising woven of Worsted/ Synthetic Staple Yarn, Fabric
Processing and Home Furnishings.
(ii) The segment revenue in the geographical segments considered for
disclosure are as follows:
(a) Revenue within India includes sales to customers located within
India and earnings in India.
(b) Revenue outside India includes sales to customers located outside
India and earnings outside India and export incentives benefits.
(iii) The company has common assets for producing goods for domestic
market and overseas market. However, it has export trade receivable Rs.
3671.99 lakhs (Previous year Rs. 3963.06 lakhs).
12 RELATED PARTY DISCLOSURE
(a) Key Management Personnel and Shri S.K. Khandelia [President]
their relatives Smt. Manju Khandelia (wife),
Smt. Indra Devi Khandelia (mother),
& Shri Anurag Khandelia (son)
Shri Dilip Kumar Ghorawat
(Wholetime Director & CFO) (w.e.f.
28.01.2014)
Shri C. Singhania
(Wholetime Director & CFO)
(upto 20.07.2013)
13 Previous year figures have been regrouped/rearranged wherever
necessary.
Mar 31, 2014
1.01 Nature of Operations
The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made
Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning
units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile
Mills, Kathua (J & K), one weaving & processing unit viz. Damanganga
Fabrics, and one Home Textiles unit viz. Damanganga Home Textiles at
Village Daheli, near Bhilad (Gujarat).
1.02 In respect of Okara Mills, Pakistan, ( Which remained with the
Company as a result of transfer of textiles division of Sutlej
Industries Limited with the Company) no returns have been received
after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting
to Rs.232.35 lakhs, the demerged/transferor Company had received adhoc
compensation of Rs.25 lakhs from Government of India in the year 1972-73.
These assets now vest in the Custodian of Enemy Property, Pakistan for
which claim has been filed with the Custodian of Enemy Property in
India The Company shall continue to pursue its claim for compensation/
restoration of assets. Hence, further compensation, if any received,
credit for the same will be taken in the year of receipt. In the year
2003-04, net assets of Rs.207.35 lakhs (net of compensation received) as
on 31.03.1965, valued at pre-devaluation exchange rate, has been
provided for.
1.03 Proportionate expenses reimbursed for utilising services of
establishments maintained by other entities have been included in
respective heads of expenses.
Other Information:
(i) The Company is organised into two main business segments, namely;
- Yarn comprising of Cotton and Man Made Fibres Yarn;
- Fabrics and apparels comprising woven of Worsted/ Synthetic Staple
Yarn, Fabric Processing , Home Furnishings and Garments. However,
operations of Garment Division closed w.e.f. 31st January, 2013.
(ii) The segment revenue in the geographical segments considered for
disclosure are as follows:
(a) Revenue within India includes sales to customers located within
India and earnings in India.
(b) Revenue outside India includes sales to customers located outside
India and earnings outside India and export incentives benefits.
(iii) The company has common assets for producing goods for domestic
market and overseas market. However, it has export trade receivable
Rs.3963.06 lakhs (Previous year Rs.2998.83 lakhs).
Note 1.04: RELATED PARTY DISCLOSURE
(a) Key Management Personnel and their relatives
Shri S.K. Khandelia [President ]
Smt. Manju Khandelia (wife), Smt. Indra Devi Khandelia (mother), & Shri
Anurag Khandelia (son)
Shri Dilip Kumar Ghorawat (Wholetime Director) (w.e.f. 28.01.2014) #
Shri C. Singhania (Wholetime Director) (upto 20.07.2013)
Shri K.C. Agarwal (Joint Executive President, Daheli Unit) (upto
11.01.2013;
Smt. Savita Agarwal (wife), Ms. Sweta Agarwal (daughter), Smt. Indra
Devi Agarwal (mother), & Radhey Shyam Agarwal (father) HUF
# Subject to approval of Shareholders in the forthcoming Annual General
Meeting.
$ Remuneration to Key managerial personnel do not include provision for
leave encashment and contribution to the approved
gratuity fund of the Company, which are actuarially determined for the
Company as a whole. Note : The above information has been identified
on the basis of information available with the Company and relied upon
by the Auditors.
# Pursuant to the resolution passed by the Shareholders through Postal
Ballot Shares of Rs.10/- each as fully paid-up Bonus Shares in the Ratio
of 1 (one) Bonus Share for every 2 (two) existing Equity Share held by
the Shareholders as on the Record Date i.e., 28th June, 2013 and date
of allotment is 1st July, 2013. Consequently, the number of equity
shares of the Company has increased from 10921908 to 16382862 and the
Earnings per Share (EPS) has been recomputed for the previous year as
per AS-20 (Earnings Per Share).
Mar 31, 2013
1.01 NATURE OF OPERATIONS
The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made
Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning
units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile
Mills, Kathua (] & l<), one weaving & processing unit viz. Damanganga
Fabrics, one Garments unit viz. Damanganga Garments and one Home
Textiles unit viz. Damanganga Home Textiles at Village Daheli, near
Bhilad (Gujarat). The Management has decided to close the operations of
Damanganga Garments w.e.f. 31st January, 2013, in view of its
un-economic working.
1.02 In respect of Okara Mills, Pakistan, ( Which remained with the
Company as a result of transfer of textiles division of Sutlej
Industries Limited with the Company ) no returns have been received
after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting
to Rs.232.35 lakhs, the demerged/transferor Company had received adhoc
compensation of Rs.25.00 lakhs from Government of India in the year
1972-73. These assets now vest in the Custodian of Enemy Property,
Pakistan for which claim has been filed with the Custodian of Enemy
Property in India .The Company shall continue to pursue its claim for
compensation/ restoration of assets. Hence, further compensation, if
any received, credit for the same will be taken in the year of receipt.
In the year 2003-04 net assets of Rs. 207.35 lakhs (net of compensation
received) as on 31.03.1965, valued at pre-devaluation exchange rate,
being diminution in value has been provided for.
1.03 Proportionate expenses reimbursed for utilising services of
establishments maintained by other entities have been included in
respective heads of expenses.
NOTE 2
(a) Key Management Personnel and their relatives
Shri S.K. Khandelia [President]
Smt. Manju Khandelia (wife), Smt. Indra Devi Khandelia (mother),
Shri Ashish Khandelia (son) & Shri Anurag Khandelia (son)
Shri C. Singhania (Wholetime Director)
Shri K.C. Agarwal (Joint Executive President, Daheli Unit) (upto
11.01.2013)
Smt. Savita Agarwal (wife), Ms. Sweta Agarwal (daughter), Smt. Indra
Devi Agarwal (mother), Shri Harsut Agarwal (son) & Radhey Shyam Agarwal
(father) HUF
NOTE 3 Previous year figures have been regrouped/rearranged wherever
necessary.
Mar 31, 2012
Terms/ rights attached to Equity shares
Each holder of equity shares is entitled to one vote per share. In the
event of liquidation of the Company, the holders of equity shares will
be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
There is no restriction on distribution of dividend. However same is
subject to the approval of the shareholders in the Annual General
Meeting.
@ The Board of Directors has recommended dividend of Rs.5 per Equity
Share (Previous year Rs.5 per Equity Share and a one time special
dividend of Rs.2.50 per Equity Share ) of Rs.10 each for the year ended
31st March, 2012. The dividend proposed by the Board of Directors is
subject to the approval of the shareholders in the ensuing Annual
General Meeting.
(a) (i) Securities :
Term Loans are secured/to be secured by first equitable mortgage
ranking pari- passu over the Company's Immovable Properties situated at
Bhawanimandi (Rajasthan), Kathua (Jammu 8 Kashmir) and Daheli (Gujarat)
and moveable assets (save and except book debts) both present and
future, subject to prior charges created/to be created in favour of
Bankers on moveables including book debts for securing Working Capital
Borrowings.
(b) Secured by subservient charge over moveable fixed assets and
current assets of the Company, carries rate of Interest @ 11.25% p.a.
(Previous year 11% p.a.) and repayable within 1 year from the balance
sheet date.
(c) (i) Fixed deposit from public carries rate of interest @ 9.50% to
10% p.a. ( Previous year 8.50% to 9% p.a.) and are repayable after 2 to
3 years ( Previous year 2 to 3 years) from the date of acceptance of
Deposits.
(ii) Current maturities of fixed deposits includes amount accepted from
related parties Rs.678.20 lakhs.(Previous year Rs.504.60 lakhs)
(i) Provision of disputed statutory matters are on account of legal
matters, where the Company anticipates probable outflow. The amount of
provision is based on estimate made by the Company considering the
facts and circumstances of each case. The timing and amount of cash
flow that will arise from these matters will be determined by the
relevant authorities only on settlement of these cases.
(ii) Figures in brackets represents previous year's amounts.
* The Company has not received any intimation from its suppliers being
registered under Micro, Small and Medium Enterprises Development Act,
2006 (MSME). Hence the necessary disclosure required under MSME Act,
2006 can not be made. However, the Company generally makes payment to
all its suppliers within the agreed credit period (generally less than
45 days) and thus the Management is confident that the liability of
interest under this Act, if any, would not be material.
Notes:
1 Land includes Freehold Land of Rs.511.11 lakhs( Previous year
Rs.382.43 lakhs ) and Leasehold Land of Rs.409.27 lakhs ( Previous year
Rs.404.27 lakhs ). In case of Kathua unit Leasehold Land for Rs.263.37
lakhs ( Previous year Rs.258.37 lakhs) are pending for registration in
the name of the unit.
2 Fixed assets includes share of the company in a Holiday Flome at
Flaridwar jointly owned with other Bodies Corporates.
3 Additions includes Borrowing Cost Rs.20.28 lakhs ( Previous Year Nil)
8 Employees cost Rs.7.86 lakhs ( Previous Year Nil)
# Represents Amortisation of Lease Rent.
@ The same has been recognised by the Company, represents that portion
of MAT liability, which can be recovered and set off in subsequent
years based on the provisions of Section 115JAA of the Income Tax Act,
1961. The management based on the present trend of profitability and
also the future profitability projections, opines that there would be
sufficient taxable income in foreseeable future, which will enable the
Company to utilise MAT credit entitlement.
# Includes Rs.108.33 lakhs (Previous year Rs.108.33 lakhs) being not
allowed by Excise Department towards simultaneous claim for rebate of
duty on input 8 finished goods, hence Company has filed writ petition
before the Hon'ble Rajasthan High Court, Jaipur against the order.
Pending disposal of appeal by the Hon'ble High Court, above amount has
been considered good by the Management.
(Rs.in lakhs)
As at
31st March'
2012 31st March'
2011
NOTE NO. 1
Contingent Liabilities and Commitments
(A) Contingent Liabilities (Not provided
for) in respect of:
1 Claim against the Company not
acknowledged as debts:
a) Labour Matters, except for which the
liability is unascertainable 84.31 93.84
b) Demand raised by Excise Department
for various matters 66.28 66.28
c) Demand for Service Tax, being
contested by the Company 23.91 23.91
d) Demand for Entry Tax (including
penalty & interest): 365.25 317.47
(stay granted by the Tribunal)
Note: The management believes that the Company has a strong chance of
success in above mentioned cases and hence, no provision their against
is considered necessary.
2 Bills Discounted with Bankers 1961.03 5696.09
(Since Realised upto 30.04.2012 Rs.1106.11 lakhs, Previous year
Rs.2037.84 lakhs)
3 The Company has procured certain capital goods under EPCG Scheme at
concessional rate of duty. As on 31st March, 2012, the Company is
contingently liable to pay differential custom duty Rs.3257.92 lakhs
(Previous year Rs.4334.58 lakhs) on such import. In view of past
export performance and future projections, the management is hopeful of
completing the export obligation within stipulated time, and expect no
cash outflow on this account.
(B) Commitments:
1 Estimated amount of Contracts remaining to
be executed on Capital Account [Net 257.27 1249.06
of Advances Rs.208.81 lakhs (Previous Year
Rs.575.20 lakhs)] and not provided for
2 The Kathua unit of the Company has availed certain government
subsidies. As per the terms and conditions, the unit has to continue
production for specified number of years failing which amount of
availed subsidies alongwith interest, penalty etc. will have to be
refunded.
@ Amount is net of Nil (Previous year Rs.42.72 lakhs) Insurance Subsidy
received under Central Government Scheme.
* Includes excise duty on increase/(decrease) of finished goods stock
Nil (Previous year Rs.6.17 lakhs), Wealth Tax Rs.6.49 lakhs (Previous
year Rs.6.10 lakhs) and Sales tax Rs.56.82 lakhs (Previous year Rs.8.15
lakhs).
$ Amount is net of credit of Rs.196.40 lakhs ( Previous year Rs.209.46
lakhs) for Sharing of Common Expenses with a body corporate.
# Including service tax wherever applicable.
$$ Previous year includes Stores 8 Spares Consumed Rs.9.57 lakhs ,
Power, Fuel and Water Charges Rs.44.07 lakhs and Miscellaneous Expenses
Rs.8.50 lakhs related to earlier years.
## The Company has complied with the announcement issued by the
Institute of Chartered Accountants of India (ICAI) on Accounting for
Derivatives' requiring provision for loss on all outstanding derivative
contracts by marking them to market rate.
Accordingly Loss on Forward Contracts amounting to Rs.109.70 lakhs
included herein above (Previous year Rs.3.90 lakhs is net off with Net
Gain on Foreign Currency transactions and translation under Note no.
21-Other income).
# Net of 4% / 5% interest subsidies received/receivable under TUF
(Technology Upgradation Fund) scheme amounting to Rs.2353.15 lakhs
(Previous year Rs.2634.94 lakhs).
$ Previous year includes Rs.83.64 lakhs related to earlier years .
@ The Minimum Alternate Tax (MAT) provided during the year is as per
provisions of section 115 JB of the Income Tax Act, 1961 and same is
eligible for set off in the specified assessment years as per the
provisions of the Income Tax Act,1961.
2.01 Nature of Operations
The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made
Fibres blended yarn 8 Cotton Yarn and Fabrics. It has two spinning
units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) 8 Chenab Textile
Mills, Kathua (J 8 K), one weaving 8 processing unit viz. Damanganga
Fabrics, one Garments unit viz. Damanganga Garments and one Home
Textiles unit viz. Damanganga Home Textiles at Village Daheli, near
Bhilad (Gujarat) .
2.02 In respect of Okara Mills, Pakistan, ( Which remained with the
Company as a result of transfer of textiles division of Sutlej
Industries Limited with the Company ) no returns have been received
after 31.03.1965. Against Net Assets of Okara Mills, Pakistan amounting
to Rs.232.35 lakhs, the demerged/transferor Company had received adhoc
compensation of Rs.25 lakhs from Government of India in the year
1972-73. These assets now vest in the Custodian of Enemy Property,
Pakistan for which claim has been filed with the Custodian of Enemy
Property in India .The Company shall continue to pursue its claim for
compensation/ restoration of assets. Hence, further compensation, if
any received, credit for the same will be taken in the year of receipt.
In the year 2003-04, net assets of Rs. 207.35 lakhs (net of
compensation received) as on 31.03.1965, valued at pre-devaluation
Exchange Rate, being diminution in value has been provided for.
2.3 Proportionate expenses reimbursed for utilising services of
establishments maintained by other entities have been included in
respective heads of expenses.
2.4 Segment Reporting
Segment information has been prepared in conformity with the accounting
policies adopted for preparing and presenting the financial statements
of the Company.
As part of Secondary reporting, revenues are attributed to geographic
areas based on the location of the customers.
The following tables present the revenue, profit, assets and
liabilities information relating to the Business/Geographical segment
for the year ended 31.03.2012.
Other Information:
The company has common assets for producing goods for domestic market
and overseas market. However, it has Export Trade Receivable Rs.1703.96
lakhs (Previous year Rs.4049.06 lakhs).
Notes:
(i) The Company is organised into two main business segments, namely;
- Yarn comprising of Cotton and Man Made Fibres Yarn;
- Fabrics and Apparels comprising woven of Worsted/ Synthetic Staple
Yarn, Fabric Processing, Home Furnishings and Garments.
Segments have been identified and reported taking into account, the
nature of products, the differing risks and returns, the organisation
structure, and the internal financial reporting systems.
(ii) Segment revenue in each of the above domestic business segment
primarily includes sales, other income and export incentives in the
respective segments.
(iii) The segment revenue in the geographical segments considered for
disclosure are as follows:
(a) Revenue within India includes sales to customers located within
India and earnings in India.
(b) Revenue outside India includes sales to customers located outside
India and earnings outside India and export incentives benefits.
(iv) Segment, Revenue, Results, Assets and Liabilities include the
respective amounts identifiable to each of the segments and amounts
allocated on a reasonable basis.
(v) Previous year figures has been regrouped to make them comparable
with current year figures.
$ Remuneration to Key Managerial personnel do not include provision for
leave encashment and contribution to the approved Gratuity Fund of the
Company, which are actuarially determined for the Company as a whole.
Note : The above information has been identified on the basis of
information available with the Company and relied upon by the Auditors.
# Deposited in Indian Rupees in the Bank Accounts maintained by the
shareholders in India.
2.5 The Company has prepared current year account as per presentation
and disclosure requirement of Revised Schedule VI to the Companies Act,
1956 applicable with effect from 1st April, 2011. Previous year figures
have been reclassified/regrouped to conform current year figures.
Mar 31, 2011
1) Nature of Operations
The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made
Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning
units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile
Mills, Kathua (J & K), one weaving & processing unit viz. Damanganga
Fabrics, one Garments unit viz. Damanganga Garments and one Home
Textiles unit viz. Damanganga Home Textiles at Village Daheli, near
Bhilad (Gujarat) .
(Rupees in lakhs)
31.03.2011 31.03.2010
2) Contingent Liabilities (Not provided
for) in respect of:
a) Bills Discounted with Bankers 5696.09 4113.29
(Since Realised upto 30.04.2011
Rs. 2037.84 lakhs, Previous year
Rs. 1745.72 lakhs)
b) Labour Matters, except for
which the liability is unascertainable- 93.84 89.88
c) Demand raised by Excise Department
for various matters- 66.28 66.65
d) Demand for Service Tax, being contested
by the Company- 23.91 23.91
e) Demand for Entry Tax
(including penalty & interest):
à Bhawanimandi unit à 66.34
à Daheli unit (stay granted by
the Tribunal)- 317.47 163.73
f) Sales tax Demand under dispute à 64.80
3) The Company has not received any intimation from its suppliers being
registered under Micro, Small and Medium Enterprises Development Act,
2006 (MSME). Hence the necessary disclosure required under the schedule
VI of the Companies Act,1956 and MSME Act, 2006 can not be made.
However, the Company generally makes payment to all its suppliers
within the agreed credit period (generally less than 45 days) and thus
the Management is confident that the liability of interest under this
act, if any, would not be material.
4) In respect of Okara Mills, Pakistan, (Which remained with the
Company as a result of transfer of textiles division of Sutlej
Industries Limited with the Company) no returns have been received
after 31.03.1965. Against Net Assets of Okara Mills, Pakistan amounting
to Rs. 232.35 lakhs, the demerged/transferor Company had received adhoc
compensation of Rs. 25 lakhs from Government of India in year 1972-73.
These Assets now vest in the Custodian of Enemy Property, Pakistan for
which claim has been filed with the Custodian of Enemy Property in
India. The Company shall continue to pursue its claim for compensation/
restoration of assets. Hence, further compensation, if any received,
credit for the same will be taken in the year of receipt. In the year
2003-04, net assets of Rs. 207.35 lakhs (net of compensation received)
as on 31.03.1965, valued at pre-devaluation Exchange Rate, being
diminution in value has been provided for.
5) Advances includes to the officer Nil (Previous year Nil). Maximum
balance during the year Nil (Previous year Rs. 1.00 lakh) of the
officer.
6) Proportionate expenses reimbursed for utilising services of
establishments maintained by other entities have been included in
respective heads of expenses.
7) Sales includes Export Incentives/Benefits Rs. 2602.15 lakhs
(Previous year Rs. 2529.56 lakhs).
8) Installments of Term Loans payable within one year Rs. 6901.36
lakhs (Previous year Rs. 4871.89 lakhs).
9) The Excise Department has not allowed simultaneous claim for rebate
of duty on input & finished goods for Rs. 108.33 lakhs, hence Company
has filed writ petition before the Honble Rajasthan High Court, Jaipur
against the order. Pending disposal of appeal by the Honble High
Court, above amount has been considered good by the Management and
included in Schedule-11 - Other Current Assets.
10) The asset of Rs. 2625.65 lakhs (Previous Year Nil) recognized by
the Company as ÃMAT credit entitlement under ÃLoans and Advances
represents that portion of MAT liability, which can be recovered and
set off in subsequent years based on the provisions of Section 115JAA
of the Income Tax Act, 1961. The management based on the present trend
of profitability and also the future profitability projections, opines
that there would be sufficient taxable income in foreseeable future,
which will enable the Company to utilize MAT credit assets.
11) Previous year Capital work in progress includes pre-operative
expenditure during construction period and trial run expenditures
related to 12 MW Thermal Power Plant at Bhawanimandi (capitalised
during the previous year), 31104 spindles project at Kathua
(capitalised during the previous year) and 3 MW Thermal power plant
project at Daheli (capitalised during the previous year)
12) The Company has procured certain capital goods under EPCG Scheme at
concessional rate of duty. As on 31st March, 2011, the Company is
contingently liable to pay differential custom duty Rs. 4334.58 lakhs
(Previous year Rs. 6880.12 lakhs) on such import. In view of past
export performance and future projections, the management is hopeful of
completing the export obligation within stipulated time, and expect no
cash outflow on this account.
13) Interest paid on term loan is net of 4% / 5% interest subsidies
received/receivable under TUF (Technology Upgradation Fund) scheme
amounting to Rs. 2634.94 lakhs (Previous year Rs. 2795.19 lakhs) and
Interest paid to banks and others is net of interest subvention on
export credit facilities amounting to Nil (Previous year Rs. 168.27
lakhs).
14) Segment Reporting
Segment information has been prepared in conformity with the accounting
policies adopted for preparing and presenting the financial statements
of the Company.
As part of Secondary reporting, revenues are attributed to geographic
areas based on the location of the customers.
(iii) The segment revenue in the geographical segments considered for
disclosure are as follows:
(a) Revenue within India includes sales to customers located within
India and earnings in India.
(b) Revenue outside India includes sales to customers located outside
India and earnings outside India and export incentives/benefits.
(iv) Segment Revenue, Results, Assets and Liabilities include the
respective amounts identifiable to each of the segments and amounts
allocated on a reasonable basis.
(v) Previous year figures have been regrouped to make them comparable
with current year figures.
Mar 31, 2010
1) Nature of Operations
The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made
Fibres Blended Yarn & Cotton Yarn and Fabrics. It has two spinning
units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) &
Textile Mills, Kathua (J & K), one weaving & processing unit viz.
Damanganga Fabrics, one Garments unit viz. Damanganga Garments and one
Home Textiles unit viz. Damanganga Home Textiles at Village Daheli,
near Bhilad (Gujarat).
(Rupees in lakhs)
31.03.2010 31.03.2009
2) Estimated amount of Contracts
remaining to be executed on Capital
Account 208.00 262.04
[Net of Advances Rs. 175.99 lakhs
(Previous Year Rs. 504.12 lakhs)]
and not provided for
4) Contingent Liabilities
(Not provided for) in respect of:
a) Bills Discounted with Bankers 4113.29 2505.36
(Since Realised Rs. 1745.72 lakhs,
Previous year Rs. 990.60 lakhs)
b) Labour Matters, except for which
the liability is unascertainable* 89.88 95.75
c) Demand raised by Excise Department
for various matters* 66.65 66.28
d) Demand for Service Tax, being
contested by the Company* 23.91 23.91
e) Demand for Entry Tax
(including penalty & interest):
- Bhawanimandi unit # 66.34 34.01
- Daheli unit (stay granted by the
Tribunal)* 163.73 -
f) Sales tax Demand under dispute* 64.80 -
g) Demand raised by Electricity
Department and contested by the Company - 7.65
[Deposit Nil (Previous year Rs. 3.82 lakhs)]
h) Income Tax Demands against which
Company has preferred Appeals - 8.10
(i) Bank Guarantee given to J&K
Electricity Board 800.00 -
* The management believes that the Company has a strong chance of
success in above mentioned cases and hence, no provision there against
is considered necessary.
# The Company has challenged the constitutional validity of Entry of
Goods into Local Area Act, 1999 in the HonÃble Rajasthan High Court,
Jodhpur and accordingly HonÃble Rajasthan High Court, Jodhpur has
granted stay against the demand for the year 2006-07. As stay has been
granted against payment of Entry Tax, the Company has not accounted for
the Entry Tax from accounting year 2007-08 to 2009-10.
3) The Company has not received any intimation from its suppliers being
registered under Micro, Small and Medium Enterprises Development Act,
2006 (MSME). Hence the necessary disclosure required under the schedule
VI of the Companies Act,1956 and MSME Act, 2006 can not be made.
However, the Company generally makes payment to all its suppliers
within the agreed credit period (generally less than 45 days) and thus
the Management is confident that the liability of interest under this
act, if any, would not be material.
4) In respect of Okara Mills, Pakistan, (Which remained with the
Company as a result of transfer of textiles division of Sutlej
Industries Limited with the Company) no returns have been received
after 31.03.1965. Against Net Assets of Okara Mills, Pakistan amounting
to Rs. 232.35 lakhs, the demerged/transferor Company had received adhoc
compensation of Rs. 25 lakhs from Government of India in year 1972-73.
These Assets now vest in the Custodian of Enemy Property, Pakistan for
which claim has been filed with the Custodian of Enemy Property in
India The Company shall continue to pursue its claim for compensation/
restoration of assets. Hence, further compensation, if any received,
credit for the same will be taken in the year of receipt. In the year
2003-04, net assets of Rs. 207.35 lakhs (net of compensation received)
as on 31.03.1965, valued at pre-devaluation Exchange Rate, being
diminution in value has been provided for.
5) Advances includes to the officer Nil (Previous year Nil). Maximum
balance during the year Rs.1 lakh (Previous year Rs.1 lakh) of the
officer.
6) Proportionate expenses reimbursed for utilising services of
establishments maintained by other entities have been included in
respective heads of expenses.
7) Sales includes Export Incentives/Benefits Rs. 2529.56 lakhs
(Previous year Rs. 1948.12 lakhs).
8) Details of Remuneration and Perquisites of the Wholetime Directors
are as under: (Rupees in lakhs)
Above remunerations exclude provision for leave encashment and
gratuity, which is actuarially determined for the Company as a whole.
9) Installments of Term Loans payable within one year Rs. 4871.89
lakhs (Previous year Rs. 3232.98 lakhs).
10) The Excise Department has not allowed simultaneous claim for rebate
of duty on input & finished goods for Rs. 108.33 lakhs, hence Company
has filed writ petition before the HonÃble Rajasthan High Court, Jaipur
against the order. Pending disposal of appeal by the HonÃble High
Court, above amount has been considered good by the Management and
included in Schedule-11 - Other Current Assets.
11) In respect of Daheli unit of the Company, a fraud was committed in
earlier year by employees (by drawing money from the bank account
through forged cheques and cash embezzlement), the matter is still
under investigation & litigation and outcome is awaited. However, on
the basis of the legal advice available with the Company, the Company
is hopeful of recovery of the amount involved. Still as a matter of
abundant caution, an amount of Rs. 42.49 lakhs (net of recoveries/
credits) was provided for in earlier year.
12) Capital work in progress includes pre-operative expenditure during
construction period and trial run expenditures related to 12 MW Thermal
Power Plant at Bhawanimandi (capitalised during the year), 31104
spindles project at Kathua (capitalised during the year) and 3 MW
Thermal power plant project at Daheli (capitalised during the year),
(Previous years figures also includes 12672 spindles project
capitalised at Bhawanimandi). (Rupees in lakhs)
13) The Company has procured certain capital goods under EPCG Scheme at
concessional rate of duty. As on March 31, 2010, the Company is
contingently liable to pay differential custom duty Rs. 6880.12 lakhs
(Previous year Rs. 8905.64 lakhs) on such import. In view of past
export performance and future projections, the management is hopeful of
completing the export obligation within stipulated time, and expect no
cash outflow on this account.
14) Interest paid on term loan is net of 4% / 5% interest subsidies
received/receivable under TUF (Technology Upgradation Fund) scheme
amounting to Rs. 2795.19 lakhs (Previous year Rs. 2590.32 lakhs) and
Interest paid to banks and others is net of interest subvention on
export credit facilities amounting to Rs. 168.27 lakhs (Previous year
Rs. 96.40 lakhs).
15) Segment Reporting
Segment information has been prepared in conformity with the accounting
policies adopted for preparing and presenting the financial statements
of the Company.
As part of Secondary reporting, revenues are attributed to geographic
areas based on the location of the customers.
Other Information:
The company has common assets for producing goods for domestic market
and overseas market.
Notes:
(i) The Company is organised into two main business segments, namely;
- Yarn comprising of Cotton and Man Made Fibres Yarn;
- Fabrics and Apparels comprising woven of Worsted/ Synthetic Staple
Yarn, Fabric Processing , Home Furnishings and Garments. Segments have
been identified and reported taking into account, the nature of
products, the differing risks and returns, the organisation structure,
and the internal financial reporting systems.
(ii) Segment revenue in each of the above domestic business segment
primarily includes sales, other income and export incentives in the
respective segments.
(iii) The segment revenue in the geographical segments considered for
disclosure are as follows:
(a) Revenue within India includes sales to customers located within
India and earnings in India.
(b) Revenue outside India includes sales to customers located outside
India and earnings outside India and export incentives/benefits.
(iv) Segment Revenue, Results, Assets and Liabilities include the
respective amounts identifiable to each of the segments and amounts
allocated on a reasonable basis.
(v) Previous year figures have been regrouped to make them comparable
with current year figures.
* The Company avails services provided by Bank in normal course of
banking business.
** Remuneration to Key Managerial personnel do not include provision
for leave encashment and contribution to the approved Group Gratuity
Fund which are actuarially determined for the Company as a whole.
# Including remuneration paid in the capacity of Wholetime director of
Rs. 24.65 lakhs.
Note: 1 The above information has been identified on the basis of
information available with the Company and relied upon by the Auditors.
2 Figures in brackets represents previous years amounts.
16) Taxation
a) Provision for Current Tax includes Wealth Tax Rs. 5.00 lakhs
(Previous Year Rs. 5.33 lakhs).
b) The Minimum Alternate Tax (MAT) provided during the year is as per
provisions of section 115 JB of the Income Tax Act, 1961 and same is
eligible for set off in the subsequent ten assessment years as per the
provisions of the Income Tax Act,1961.
17) The Company has complied with the announcement issued by the
Institute of Chartered Accountants of India (ICAI) on Accounting for
Derivatives requiring provision for loss on all outstanding derivative
contracts by marking them to market rate. Accordingly Loss on Forward
Contracts amounting Rs. 10.59 lakhs is net off with "Foreign exchange
fluctuation gain" under Schedule -15-Other Income. (Previous year Rs.
89.13 lakhs has been provided under the head "Foreign Exchange
Fluctuation loss" in Schedule-18-Operating and Other Expenses).
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