Laxmi Cotspin Ltd. நிறுவனத்தின் கணக்கியல் கொள்கைகள்

Mar 31, 2025

i) Valuation of Inventories:

_# ^a) Raw materials and stores and spares are valued at lower of cost, computed on
net realizable value. Cost includes the purchase price as well as incidental
expenses. Cotton Waste is valued at estimated realizable value. However, in case
of raw materials, stores and spares held for use in the production of finished
goods are not written down below cost if the finished products are expected to
be sold at or above cost.

b) Work-in-process is valued at lower of estimated cost or net realizable value and
finished goods are valued at lower of weighted average cost or net realizable
value. Cost for this purpose includes direct cost and appropriate administrative
and other overheads.

c) Finished goods are valued at the lower of cost or net realizable value. Cost
included cost of materials, conversion cost and related overheads paid or
payable on such goods.

d) The Company has borrowings from banks and financial institutions based on
security of current assets. During the year company have submitted quarterly
statement with banks are in agreement with the books of accounts subject to

'' non-materialized discrepancies.

ii) Cash and Cash Equivalents (For purpose of Cash Flow Statement):

a) Cash flow statement has been prepared under indirect method as set out in the
Indian Accounting Standard 7 on Cash Flow Statement.

b) The Company considers all highly liquid financial instruments, which are readily
convertible into known amounts of cash that are subject to an insignificant risk of
change in value and having original maturities of three months or less from the

“date of purchase, to be cash equivalents. Cash and cash equivalents consist of
balances with banks which are unrestricted for withdrawal and usage.

iii) Revenue Recognition:

a) Sales are exclusive of indirect taxes and net off trade discount, returns and rate*
difference. Other income is accounted on accrual basis whereas dividend is
accounted as and when right to receive arises.

b) Interest Income is recognized on time proportion basis.

c) Commodities hedging and F/O transaction gain or loss are recorded on the date
of their settlement in respect of the settled contracts and the gain or loss
determined on day to day basis.

d) Duty drawback income against export sale is recorded on receipt basis

e) Other income is accounted on accrual basis

iv) Property, Plant & Equipment and Depreciation:

a) Fixed assets have stated at cost of acquisition or construction less accumulated
depreciation/ amortization. Cost represents all cost relating to the acquisition and
installation, net-off tax, which is refundable or set-off, allowed. Cost also
includes finance cost. Other expenses incurred in connection to the
commencement of commercial production have treated as part of the assets and
capitalized.

b) Depreciation on fixed assets is provided under straight-line method based on the
estimated useful life of the Assets specified in schedule II to the Companies Act,
2013 and depreciation on the assets acquired during the year is provided on pro¬
rata basis from/to the date of addition/deduction.

c) The management has estimated the useful lives and residual values of all assets
and adopted useful lives based on management''s technical assessment of their
respective economic useful lives.

d) The old asset before 31st March 2022, whose useful life is over has been
measured below scrap value since amount is not recoverable from them based
on management assumption. Balance other assets are depreciated as per
Companies Act 2013 and whose life is over is maintained at scrap value.

e) - Capital work in progress: It is stated at cost incurred for acquisition and

construction of Plant & Machineries, Electrical Installation, misc. Assets and
Factory building. Projects under which assets are not ready for their intended use
are disclosed under Capital Work-in-Progress.

f) Pre-operative Expenses: It is stated at cost incurred for acquisition of fixed assets
including borrowing Cost and administrative expenses.

g) Leasehold land is accounted at cost including incidental expenses, if any.

h) Land: IND AS 101 allows entity to elect to measure Property, Plant and
Equipment on the transition date at its fair value or previous GAAP carrying
value (book value) as deemed cost. The company has elected to measure land at
fair market value.

v) Foreign Currency Transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing at
the date of the transaction. Monetary foreign currency assets and liabilities are
translated at the year-end exchange rates and resultant gains / losses are
recognized in the statement of profit & loss for the year, except to the extent that
they relate to new projects till the date of capitalization which are carried to
capital work-in progress and those relating to fixed assets which are adjusted to
the carrying cost of the respective assets.

vi) Derivative Instrument and Hedge Accounting:

The company uses Commodity Forward Contract with Commodity Exchanges to
hedge its risks on account of price fluctuation in commodity dealt. The company
designates these Hedging Instruments as "Instruments Available for Sale"
applying the recognition and measurement principles set out in the Indian
Accounting Standard 109 "Financials Instruments: Recognition and
Measurement".

The use of hedging instrument is governed by the principals set by Companies
Board of Directors, and such principals are consistent with the Company''s Risk
management strategy. Hedging instruments are initially measured at fair value
and are premeasured at subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges of "Instruments
Available for Sale" and are recognized.

vii) Government Grants, Subsidy and Incentives:

a) Interest subsidy received or receivable on Term Loan taken under Technology up
Gradation Fund Scheme (TUFS) Subsidy are reduced from the term loan interest

- being a revenue nature. TUFS subsidy on Interest pertaining to pre-operative
period is attributable to the cost of acquisition/installation of fixed assets till the
commencement of commercial production is capitalized.

b) Capital subsidy received or receivable on Term loan taken under Technology up
Gradation Fund Scheme (TUFS) Subsidy is treated as income and apportioned to
revenue over the period of life of asset i.e. 10 years.

c) Export duty drawback is accounted on the accrual basis.

viii) Employee Benefits:

-Expenses & liabilities in respect of employee benefits are recorded in accordance
with Indian Accounting Standard (IND AS)-19 - ''Employee Benefits''.

a) Short term employees'' benefits:

Company has recognized all such benefits like salary, wages on accrual basis
i.e. m the period in which the employees renders related services and at actual
cost i.e. undiscounted basis.

b) Post-employment benefits: Defined Contribution Plan:

State governed provident fund, insurance and labour welfare schemes are
defined contribution plan of company. The company recognizes all such
benefits on accrual basis i.e. charge to revenue in the period in which the
employee''s renders related services and at amount of actual fixed contribution.

c) Retirement Benefits:

Retirement benefits in the form of Provident Fund which are defined
contribution plans are charged to the Profit & Loss Account of the year when
the contributions to the respective funds are due. There are no other obligations
other than the contribution payable to the respective funds.

d) Gratuity:

Gratuity liabilities is defined benefit obligations and are provided for on the
basis of an actuarial valuation on projected unit credit method made at the end
of each financial year. Actuarial gains/losses are immediately taken to profit
and loss account and are not deferred.

Bifurcation of Employee benefit obligation is given below:

e) Leave Encashment:

It is provided as and when due. During the year, the company has made the
appropriate provision as required by the statute.

ix) Borrowing Cost:

In Accordance with IND AS 23 ''Borrowing Cost'', borrowing costs net of
Technology up Gradation Finance Scheme (TUFS) related to a qualifying asset is
worked out on the basis of actual utilization of funds out of project specific loans
and/or other borrowings to the extent identifiable with the qualifying asset and
is capitalized with the cost of qualifying asset. Other borrowing costs net of TUFS
incurred during the period are charged to statement of profit and loss.

x) Segment Accounting:

The company is engaged mainly in Cotton products consisting of various types
of cotton yarn, Cotton bales, and Cotton seeds, cotton oil and oil cakes. The
company operates in one geographical segment viz. India, therefore no
geographical segments is reported in accordance with IND AS 108 - ''Segment
Reporting''.

xi) Taxes on Income:

a) Taxes on income are accounted for in accordance within Indian Accounting
Standard 12 on "Income Taxes". Tax Expenses comprise of Current Tax and
Deferred Tax.

b) Current Tax expense comprises taxes on income from operations in India. The
Income Tax is determined at amount expected to pay for recoverable from the
authorities in accordance with the provisions of the Income Tax Act, 1961.

c) Deferred Tax Expense and Benefit is recognized on timing difference being the
difference between taxable incomes and accounting income that originate in
one period and are capable of reversal in one or more subsequent periods.
Deferred Tax Assets and Liabilities are measured using the tax rates and the tax
laws that have been enacted or substantively enacted by the Balance Sheet date.

d) The company offsets deferred tax assets and deferred tax liabilities if it has a
legally enforceable right and these relate to taxes on income levied by the same
governing taxation laws.

xii) Earnings Per Share:

Basic Earnings per share is computed by dividing the Profit/ (Loss) after tax
(Including the post tax effect of extra ordinary items, if any) by the weighted
average number of equity shares outstanding dining the year. Basic and Diluted
EPS are same because the company has not issued any of the shares having a
dilutive effect on the original shareholders. Refer Notes on accounts 2.2 (VI) to the
financial statements.

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Mar 31, 2024

Note 2.1 Summary of Material Accounting Policies:

i) Valuation of Inventories:

a) Raw materials and stores and spares are valued at lower of cost, computed on net realizable value. Cost includes the purchase price as well as incidental expenses. Cotton Waste is valued at estimated realizable value. However, in case of raw materials, stores and spares held for use in the production of finished goods are not written down below cost if the finished products are expected to be sold at or above cost.

b) Work-in-process is valued at lower of estimated cost or net realizable value and finished goods are valued at lower of weighted average cost or net realizable value. Cost for this purpose includes direct cost and appropriate administrative and other overheads.

c) Finished goods are valued at the lower of cost or net realizable value. Cost included cost of materials, conversion cost and related overheads paid or payable on such goods.

d) The Company has borrowings from banks and financial institutions based on security of current assets. During the year company have submitted quarterly statement with banks are in agreement with the books of accounts subject to non-materialized discrepancies.

ii) Cash and Cash Equivalents (For purpose of Cash Flow Statement):

a) Cash flow statement has been prepared under indirect method as set out in the Indian Accounting Standard 7 on Cash Flow Statement.

b) The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.

iii) Revenue Recognition:

a) Sales are exclusive of indirect taxes and net off trade discount, returns and rate difference. Other income is accounted on accrual basis whereas divid£f^ljs^> accounted as and when right to receive arises.

Interest Income is recognized on time proportion basis.

c) Commodities hedging and F/O transaction gain or loss are recorded on the date of their settlement in respect of the settled contracts and the gain or loss determined on day to day basis.

d) Duty drawback income against export sale is recorded on receipt basis

e) Other income is accounted on accrual basis

iv) Property, Plant & Equipment and Depreciation:

a) Property, Plant & Equipment have stated at cost of acquisition or construction less accumulated depreciation/amortization. Cost represents all cost relating to the acquisition and installation, net-off tax, which is refundable or set-off, allowed. Cost also includes finance cost. Other expenses incurred in connection to the commencement of commercial production have treated as part of the assets and capitalized.

b) Depreciation on fixed assets is provided under straight-line method based on the estimated useful life of the Assets specified in schedule II to the Companies Act, 2013 and depreciation on the assets acquired during the year is provided on prorata basis from/ to the date of addition/deduction.

c) The management has estimated the useful lives and residual values of all assets and adopted useful lives based on management''s technical assessment of their respective economic useful lives.

d) The old asset before 31st March 2022, whose useful life is over has been measured below scrap value since amount is not recoverable from them based on management assumption. Balance other assets are depreciated as per Companies Act 2013 and whose life is over is maintained at scrap value.

e) Capital work in progress: It is stated at cost incurred for acquisition and construction of Plant & Machineries, Electrical Installation, misc. Assets and Factory building. Projects under which assets are not ready for their intended use are disclosed under Capital Work-in-Progress.

f) Pre-operative Expenses: It is stated at cost incurred for acquisition of fixed assets including borrowing Cost and administrative expenses.

Leasehold land is accounted at cost including incidental expenses.

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h) Land: IND AS 101 allows entity to elect to measure Property, Plant and Equipment on the transition date at its fair value or previous GAAP carrying value (book value) as deemed cost. The company has elected to measure land at fair market value.

v) Foreign Currency Transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognized in the statement of profit & loss for the year, except to the extent that they relate to new projects till the date of capitalization which are carried to capital work-in progress and those relating to fixed assets which are adjusted to the carrying cost of the respective assets.

vi) Derivative Instrument and Hedge Accounting:

The company uses Commodity Forward Contract with Commodity Exchanges to hedge its risks on account of price fluctuation in commodity dealt. The company designates these Hedging Instruments as "Instruments Available for Sale" applying the recognition and measurement principles set out in the Indian Accounting Standard 109 "Financials Instruments: Recognition and Measurement".

The use of hedging instrument is governed by the principals set by Companies Board of Directors, and such principals are consistent with the Company''s Risk management strategy. Hedging instruments are initially measured at fair value and are premeasured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of "Instruments Available for Sale" and are recognized.

^yii) Government Grants, Subsidy and Incentives:

a) Interest subsidy received or receivable on Term Loan taken under Technology up Gradation Fund Scheme (TUFS) Subsidy are reduced from the term loan interest being a revenue nature. TUFS subsidy on Interest pertaining to pre-operative period is attributable to the cost of acquisition/installation of fixed assets till the commencement of commercial production is capitalized.

b) Capital subsidy received or receivable on Term loan taken under Technology up Gradation Fund Scheme (TUFS) Subsidy is treated as income and apportioned to revenue over the period of life of asset i.e. 10 years.

c) Export duty drawback is accounted on the accrual basis.

viii) Employee Benefits:

Expenses & liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard (IND AS)-19 - ''Employee Benefits''.

a) Short term employees'' benefits:

_____ Company has recognized all such benefits like salary, wages on accrual basis''-^

i e. in the period in which the employees renders related services and at ¦¦

°_St i-e. undiscounted basis. J/V

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b) Post-employment benefits: Defined Contribution Plan:

State governed provident fund, insurance and labour welfare schemes are defined contribution plan of company. The company recognizes all such benefits on accrual basis i.e. charge to revenue in the period in which the employee''s renders related services and at amount of actual fixed contribution.

c) Retirement Benefits:

Retirement benefits in the form of Provident Fund which are defined contribution plans are charged to the Profit & Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

d) Gratuity:

Gratuity liabilities is defined benefit obligations and are provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

Bifurcation of Employee benefit obligation is given below:

e) Leave Encashment:

It is provided as and when due. During the year, the company has made the appropriate provision has required by the statute.

ix) Borrowing Cost:

In Accordance with IND AS 23 ''Borrowing Cost'', borrowing costs net of Technology up Gradation Finance Scheme (TUFS) related to a qualifying asset is worked out on the basis of actual utilization of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalized with the cost of qualifying asset. Other borrowing costs net of TUFS incurred during the period are charged to statement of profit and loss.

x) Segment Accounting;

The company is engaged mainly in Cotton products consisting of various types of cotton yarn, Cotton bales, and Cotton seeds, cotton oil and oil cakes. The company operates in one geographical segment viz. India, therefore no geographical segments is reported in accordance with IND AS 108 - ''Segment Reporting''.

xi) Taxes on Income:

a) Taxes on income are accounted for in accordance within Indian Accounting Standard 12 on "Income Taxes". Tax Expenses comprise of Current Tax and Deferred Tax.

b) Current Tax expense comprises taxes on income from operations in India. The Income Tax is determined at amount expected to pay for recoverable from the authorities in accordance with the provisions of the Income Tax Act, 1961.

c) Deferred Tax Expense and Benefit is recognized on timing difference being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date.

d) The company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

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xii) Earnings Per Share;

Basic Earnings per share is computed by dividing the Profit/ (Loss) after tax (Including the post tax effect of extra ordinary items, if any) by the weighted average number of equity shares outstanding during the year. Basic and Diluted EPS are same because the company has not issued any of the shares having a dilutive effect on the original shareholders. Refer Notes on accounts 2.2 (VI) to the financial statements.

---

Mar 31, 2023

Note 2.1 Significant Accounting Policies:

i) Valuation of Inventories:

a) Raw materials and stores and spares are valued at lower of cost, computed on net realizable value. Cost includes the purchase price as well as incidental expenses. Cotton Waste is valued at estimated realizable value. However, in case of raw materials, stores and spares held for use in the production of finished goods are not written down below cost if the finished products are expected to be sold at or above cost.

b) Work-in-process is valued at lower of estimated cost or net realizable value and finished goods are valued at lower of weighted average cost or net realizable value. Cost for this purpose includes direct cost and appropriate administrative and other overheads.

c) Finished goods are valued at the lower of cost or net realizable value. Cost included cost of materials, conversion cost and related overheads paid or payable on such goods.

d) The Company has borrowings from banks and financial institutions based on security of current assets. During the year company have submitted quarterly statement with banks are in agreement with the books of accounts subject to non-materialized discrepancies.

ii) Cash and Cash Equivalents (For purpose of Cash Flow Statement):

a) Cash flow statement has been prepared under indirect method as set out in the Indian Accounting Standard 7 on Cash Flow Statement.

b) The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.

iii) Revenue Recognition:

a) Sales are exclusive of indirect taxes and net off trade discount, returns and rate difference. Other income is accounted on accrual basis whereas dividend is accounted as and when right to receive arises.

b) Interest Income is recognized on time proportion basis.

c) Commodities hedging and F/O transaction gain or loss are recorded on the date of their

settlement in respect of the settled contracts and the gain or loss determined on day to day basis. .

d) Duty drawback income against export sale is recorded on receipt basis

e) Other income is accounted on accrual basis

iv) Property, Plant & Equipment and Depreciation:

a) Fixed assets have stated at cost of acquisition or construction less accumulated depreciation/amortization. Cost represents all cost relating to the acquisition and installation, net-off tax, which is refundable or set-off, allowed. Cost also includes finance cost. Other expenses incurred in connection to the commencement of commercial production have treated as part of the assets and capitalized.

b) Depreciation on fixed assets is provided under straight-line method based on the estimated useful life of the Assets specified in schedule II to the Companies Act, 2013 and depreciation on the assets acquired during the year is provided on pro-rata basis from/to the month of addition/deduction.

c) Capital work in progress: It is stated at cost incurred for acquisition and construction of Plant & Machineries, Electrical Installation, misc. Assets and Factory building. Projects under which assets are not ready for their intended use are disclosed under Capital Work-in-Progress.

d) Pre-operative Expenses: It is stated at cost incurred for acquisition of fixed assets including borrowing Cost and administrative expenses.

e) Leasehold land is accounted at cost including incidental expenses.

f) Land: IND AS 101 allows entity to elect to measure Property, Plant and Equipment on the transition date at its fair value or previous GAAP carrying value (book value) as deemed cost. The company has elected to measure land at previous GAAP carrying value (book value) and will apply fair value prospectively after the date of transition of IND AS.

v) Foreign Currency Transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognized in the statement of profit & loss for the year, except to the extent that they relate to new projects till the date of capitalization which are carried to capital work-in progress and those relating to fixed assets which,are adjusted to the carrying cost of the respective assets.

vi) Derivative Instrument and Hedge Accounting:

The company uses Commodity Forward Contract with Commodity Exchanges to hedge its risks on account of price fluctuation in commodity dealt. The company designates these Hedging Instruments as "Instruments Available for Sale" applying the recognition and measurement principles set out in the Indian Accounting Standard 109 "Financials Instruments: Recognition and Measurement".

The use of hedging instrument is governed by the principals set by Companies Board of Directors, and such principals are consistent with the Company''s Risk management strategy. Hedging instruments are initially measured at fair value and are premeasured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of "Instruments Available for Sale" and are recognized.

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vii) Government Grants, Subsidy and Incentives:

a) Interest subsidy received or receivable on Term Loan taken under Technology up Gradation Fund Scheme (TUFS) Subsidy are reduced from the term loan interest being a revenue nature. TUFS subsidy on Interest pertaining to pre-operative period is attributable to the cost of acquisition/installation of fixed assets till the commencement of commercial production is capitalized.

b) Export duty drawback is accounted on the accrual basis.

viii) Employee Benefits:

Expenses & liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard (IND AS)-19 - ''Employee Benefits''.

a) Short term employees'' benefits:

Company has recognized all such benefits like salary, wages on accrual basis i.e. in the period in which the employees renders related services and at actual cost i.e. undiscounted basis.

bj Post-employment benefits: Defined Contribution Plan:

State governed provident fund, insurance and labour welfare schemes are defined contribution plan of company. The company recognizes all such benefits on accrual basis i.e. charge to revenue in the period in which the employee''s renders related services and at amount of actual fixed contribution.

c) Retirement Benefits:

Retirement benefits in the form of Provident Fund which are defined contribution plans are charged to the Profit & Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

d) Gratuity:

Gratuity liabilities is defined benefit obligations and are provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

e) Leave Encashment:

It is provided as and when due. During the year, the company has made the appropriate provision has required by the statute.

ix) Borrowing Cost:

In Accordance with IND AS 23 ''Borrowing Cost'', borrowing costs net of Technology up Gradation Finance Scheme (TUFS) related to a qualifying asset is worked out on the basis of actual utilization of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalized with the cost of qualifying asset. Other borrowing costs net of TUFS incurred during the period are charged to statement of profit and loss.

x) Segment Accounting:

The company is engaged mainly in Cotton products consisting of various types of cotton yarn, Cotton bales, and Cotton seeds, cotton oil and oil cakes. The company operates in one geographical segment viz. India, therefore no geographical segments is reported in accordance with IND AS 108 - ''Segment Reporting''.

xi) Taxes on Income:

a) Taxes on income are accounted for in accordance within Indian Accounting Standard 12 on "Income Taxes". Tax Expenses comprise of Current Tax and Deferred Tax.

b) Current Tax expense comprises taxes on income from operations in India. The Income Tax is determined at amount expected to pay for recoverable from the authorities in accordance with the provisions of the Income Tax Act, 1961.

c) Deferred Tax Expense and Benefit is recognized on timing difference being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date.

d) The company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

xii) Earnings Per Share:

Basic Earnings per share is computed by dividing the Profit/ (Loss) after tax (Including the post tax effect of extra ordinary items, if any) by the weighted average number of equity sha’res outstanding during the year. Basic and Diluted EPS are same because the company has not issued any of the shares having a dilutive effect on the original shareholders Refer Notes on accounts 2.2 (VI) to the financial statements.

Note 2.2 Notes on Accounts

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Mar 31, 2018

Notes to the financial statement as at and for the period ended 31^st March, 2018

1) Overview:

i) Laxmi Cotspin Limited (hereinafter referred as an “LCL”) was originally incorporated under the Companies Act, 1956, as private limited company. In the year 2010, the management decided to go for expansion and the company was converted into a public Limited company and consequently the name of the company was changed to Laxmi Cotspin Limited pursuant to fresh certificate of incorporation issued by Registrar of Companies Mumbai, Maharashtra. LCL has spinning unit of 16,800 spindles and 48DR Ginning & Pressing unit at Samangaon, Dist. Jalna (Maharashtra).

2) Significant Accounting Policies and Notes to Accounts: Note 2.1 Significant Accounting Policies: i) Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention, on going concern basis and in terms of the Accounting Standards notified by Companies (Accounting Standard) Rules, 2006 in compliance with Section 133 of the Companies Act, 2013 {erstwhile Section 211(3C) of the Companies Act, 1956}. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realization in respect of income. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India. The accounting policies have been consistently applied by the Group and are consistent with those used in previous year.

ii) Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities and commitments at the end of the reporting period and results of operations during the reporting period. Although these estimates are based upon the management’s best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual result and estimates are recognized in the period in which the results are known/ materialized.

iii) Valuation of Inventories:

a) Raw materials and stores & spares are valued at lower of cost, computed on net realizable value. Cost includes the purchase price as well as incidental expenses. Cotton Waste is valued at estimated realizable value. However, in case of raw materials, stores and spares held for use in the production of finished goods are

not written down below cost if the finished products are expected to be sold at or above cost.

b) Work-in-process is valued at lower of estimated cost or net realizable value and finished goods are valued at lower of weighted average cost or net realizable value. Cost for this purpose includes direct cost and appropriate administrative and other overheads.

c) Finished goods are valued at the lower of cost or net realizable value. Cost included cost of materials, conversion cost and related overheads paid or payable on such goods.

d) Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

iv) Cash and Cash Equivalents (For purpose of Cash Flow Statement):

Cash flow statement has been prepared under indirect method as set out in the

Accounting standard (AS 3) issued by the ICAI.

v) Fixed Assets - Depreciation:

a) Tangible Assets:

Tangible Assets are stated at cost less accumulated depreciation and impairment losses, if any. Costs include costs of acquisitions or constructions, including incidental expenses thereto and other attributable costs of bringing the asset to its working condition for its intended use and are net of available duty/tax credits.

b) Capital work-in-progress:

Expenditure related to and incurred on implementation of new/ expansion-cum-modernization projects is included under capital work-in-progress and the same is allocated to the respective tangible asset on completion of its construction / erection.

c) Depreciation:

Depreciation on fixed assets is provided under straight-line method based on the estimated useful life of the Assets as follows and useful life specified in schedule II to the Companies Act, 2013 and depreciation on the assets acquired/ sold during the year is provided on pro-rata basis from/to the month of addition / deduction.

* Note: The above useful life is as per management estimate.

vi) Revenue Recognition:

a) Sales are exclusive of sales tax and net off trade discount, returns and rate difference. Other income is accounted on accrual basis whereas dividend is accounted as and when right to receive arises.

b) Interest Income is recognized on time proportion basis.

vii) Foreign Currency Transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognized in the statement of profit & loss for the year, except to the extent that they relate to new projects till the date of capitalization which are carried to capital work-in progress and those relating to fixed assets which are adjusted to the carrying cost of the respective assets.

viii) Government Grants, Subsidy and Incentives:

a) Interest subsidy received or receivable on Term Loan taken under Technology up Gradation Fund Scheme (TUFS) Subsidy are reduced from the term loan interest being a revenue nature. TUFS subsidy on Interest pertaining to pre-operative period is attributable to the cost of acquisition / installation of fixed assets till the commencement of commercial production is capitalized.

b) State Government incentive under Maharashtra Government Capital Subsidy (TUFS) is accounted on accrual basis and considered as a capital receipt, as subsidy amount is linked to investment made by company. The same has been transferred to Capital reserve of the company.

ix) Employee Benefits:

Expenses & liabilities in respect of employee benefits are recorded in accordance with Accounting Standard (AS)-15 - ‘Employee Benefits’.

a) Short term employees’ benefits:

Company has recognized all such benefits like salary, wages on accrual basis i.e. in the period in which the employees renders related services and at actual cost i.e. undiscounted basis.

b) Post-employment benefits: Defined Contribution Plan:

State governed provident fund, insurance and labour welfare schemes are defined contribution plan of company. The company recognizes all such benefits on accrual basis i.e. charge to revenue in the period in which the employee’s renders related services and at amount of actual fixed contribution.

c) Gratuity:

It is provided as and when due. During the year, the company has not provided for gratuity since none of the employees have crossed five years of continuous service with the company.

d) Leave Encashment:

The Company has a HR policy that all the employees have to compulsorily avail their leave in the year itself and no carry forward as well encashment is allowed. In view of the above no provision for leave encashment is made in the books.

x) Borrowing Cost:

In Accordance with AS 16 ‘Borrowing Cost’, borrowing costs net of Technology up Gradation Finance Scheme (TUFS) related to a qualifying asset is worked out on the basis of actual utilization of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalized with the cost of qualifying asset. Other borrowing costs net of TUFS incurred during the period are charged to statement of profit and loss.

xi) Segment Accounting:

The company is engaged mainly in Cotton products consisting of various types of cotton yarn, Cotton bales, and Cotton seeds. The company operates in one geographical segment viz. India, therefore no geographical segments is reported in accordance with AS 17- ‘Segment Reporting’.

xii) Taxes on Income:

a) Taxes on income are accounted for in accordance with Accounting Standard (AS) 22 on “Accounting for Taxes on Income”. Tax Expenses comprise of Current Tax and Deferred Tax.

b) Current Tax expense comprises taxes on income from operations in India. The Income Tax is determined at amount expected to pay for recoverable from the authorities in accordance with the provisions of the Income Tax Act, 1961.

c) Deferred Tax Expense and Benefit is recognized on timing difference being the difference between taxable incomes and accounting income that originate in one

period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date.

d) The company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

xiii) Earnings Per Share:

Basic Earnings per share is computed by dividing the Profit/ (Loss) after tax (Including the post tax effect of extra ordinary items, if any) by the weighted average number of equity shares outstanding during the year. Basic and Diluted EPS are same because the company has not issued any of the shares having a dilutive effect on the original shareholders. Refer Notes on accounts 2.2 (VI) to the financial statements.

Note 2.2 Notes on Accounts i) Contingent Liability:

a) Guarantees by banks on behalf of the company:

- The company has given Bank Guarantee in favor of MSEB against the electricity consumption is Rs. 91.87 Lakhs.

- The company has given Bank Guarantee in favor of Director of Agriculture Produce Marketing Committee State Pune Rs. 3 Lakhs.

- The company has given Bank Guarantee in favour of Dy. Commissioner of Customs against Imported Spare Clearance of Rs. 5.04 Lacs.

- The company has given Bank guarantee in favour of DGFT for export obligation is Rs. 9.66 Lacs.

b) Claims against the company not acknowledged as debt:

- In respect of Sales Tax matters:

- Sales tax department has worked out VAT demand Rs. 13,47,287/- by disallowing the proportionate Input VAT on account of non-submission of Form ‘F’ and purchases made from those dealers i.e., short/non-filers of VAT Returns. Against the same company has filed appeal with higher authorities.

- Sales tax department has worked out CST demand Rs. 12,24,600/- by disallowing the proportionate Input VAT on account of non-submission of Form ‘C’ and purchases made from those dealers i.e., short/non-filers of VAT Returns

- In respect of civil suits against the company:

- On account of cancellation of forward contract for Supply of cotton bales, the Cotton Association of India (CAI) has given decision against Company and directed to pay compensation of Rs. 34,27,251/- to the aggrieved party. Against the said order, the company has filed appeal with civil court.

- In respect of service tax matter

- Service Tax department has worked out Service Tax demand of Rs. 15,87,854/- under proviso to section 73(1) of the Finance Act, 1994 on the service provided by the Director to the company (other than negative list). Against the same company has filed appeal with higher authorities.

ii) Sundry creditors, Sundry debtors and advance are subject to confirmation. Further in the opinion of the management the current assets, loans and advances have the value for realization in the ordinary course of business at least equal to the amount at which it’s stated in the accounts.

iii) The company is in the process of compiling the information about the status of their suppliers or creditors those falls under small-scale industrial undertaking as defined The Micro Small and Medium Enterprises Developments Act 2006 (MSMED Act). Therefore, no information is being provided in current year.

viii) Previous Year Figures regrouped/rearranged/reclassified where ever necessary to confirm to current year grouping & classifications.