| 1. Corporate Information
Malwa Cotton Spinning Mills Limited (the company) domiciled in India
and incorporated under the provisions of Companies Act, 1956. The
equity shares of the company are listed on two stock exchanges in
India. The company is engaged in the manufacturing and selling of Yarn
and Thread.
2. Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of
Rs 10 per share. Each holder of equity share is entitled to one vote
per share.
The dividend proposed by the board of directors is subject to the
approval of the shareholders in the ensuing annual general meeting and
each equity share is entitled for the such dividend. In the event of
liquidation of the company, the holder of equity shares will be
entitled to receive remaining assets the company after distribution of
all preferential amounts.
The earliest date of redemption was 30th September, 2011
Arrear of fixed cumulative dividend on preference shares as at 31st
March, 2015 Rs. 4045.00 Lac (As at 31st March, 2014 Rs. 3800.00 Lac).
Cumulative preference shares due for redemption during the year and in
the proceeding year but not redeemed are shown as Preference shares
capital. The preference share holders have option to convert the
defaulted cumulative Redeemable preference shares into equity shares at
par in terms of subscription agreement entered into with the company.
3. Shares of the company held by the holding company, the ultimate
holding company their subsidiaries and associates.
There is no holding or ultimate holding of the company.
Detail of terms of repayment of short term borrowing and security
provided in respect of secured short term borrowings security:
Cash credit is repayable on demand and carries interest @12.75% to
13.25%. Cash credit from banks is secured against :
i) Primary - Pari-passu first charge on the current assets of the
company.
Collateral - Pari-passu second charge on the fixed assets of the
company (present and future).
ii) Exclusive securities:
a) IFCI/IDBI: The 7,86,700 Equity Shares of promoters pledged & 7,56,150
Equity Shares physically held with IFCI/IDBI for working capital loans
outstanding of Rs. 471.25 lacs (previous year Rs. 471.25 lacs).
b) PNB/SBI: Equitable Mortgage of properties at Ludhiana & Barnala on
Pari Passu basis to secure its enhanced WC Limits with PNB/SBI
exclusively for working capital loans outstanding of Rs. 10842.03lac
(previous year Rs. 10942.50 lac.).
iii) Pledge of 24,88,715 equity shares of Promoters as Additional
Collateral security for entire CDR debts (existing and fresh) to be
shared by all CDR lenders on pari-passu basis.
iv) Equitable Mortgage of immoveable properties situated at Kolkata,
Bhilwara, Kanpur, Dehradun and Delhi as Additional Collateral Security
for entire CDR debts as long-term loan and short-term loans (Existing
and Fresh) to be shared by all CDR Lenders on pari-passu basis.
4) The estimates of future salary increases considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in employment market. The
above information is certified by actuary.
5) The financial assumption considered for the calculations are as
under:
Discount Rate: The discount rate has been chosen by reference to market
yield on government bonds as on date of valuation.
Expected Rate of Return: In case of gratuity, the actual return has
been taken.
Salary increase: On the basis of past data provided by the company
6) Short term leave encashment liability as on 31.03.2015 was Rs.108.73
lacs (Previous year Rs. 145.54 lacs). During the year the company has
recognized an expense of Rs.26.11 lacs as contribution to provident
fund (Previous year Rs. 27.58 lacs).
i) The plan assets are maintained with Life Insurance Corporation of
India (LIC). The details of Investments maintained by LIC are not
available with the company and therefore have not been disclosed.
7. Segment Reporting
Segment information as required by Accounting Standard (AS)-17 on
"Segment Reporting" issued by the Companies (Accounting Standared)
Rules, 2006 has been complied on the basis of the financial statements
and is disclosed below:
The Company has identified two segments as reportable segments viz.
Yarn and Thread. The yarn segment comprises manufacturing of various
types of yarns and yarn processing activities. The thread segment
comprises sewing thread and other industrial thread.
8. Segment Revenue and Expenses
Segment revenue comprises sales to external customer and inter-segment
sales. Segment expenses comprise expenses that are directly
attributable to the segment and expenses relating to transactions with
other segment of the enterprise.
9. Segment Assets and Liabilities
Segment assets include all operating assets used by a segment and
consist of cash and bank balances, debtors, inventories and fixed
assets. Segment liabilities include all operating liabilities and
consist of creditors and other liabilities. Segment assets and
liabilities do not include deferred income taxes.
10. Inter Segment Transfer
Inter segment transfer are accounted for at prevailing market prices.
These transfers are eliminated on consolidation.
11. Related Party Disclosures
a) Disclosure of Related Parties with whom Business transactions took
place during the year and relationship between parties.
Key Management Personnel : Mr. Jangi Lal Oswal
12. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED
FOR) - No cash outflow is expected
i) Contingent Liabilities: (Rs Lacs)
Particulars As at 31.03.15 As at 31.03.14
a) Claims against company not 1.16 1.16
acknowledged as debts
b) Guarantees given by Company on behalf 3850.00 3850.00
of others utilized to the extent of
Rs.498.92 lacs (Previous year Rs.465.14
lacs)
c) Bank Guarantees and letters of credit - -
outstanding
d) Other monies for which the company is contingently liable :
The Company has contested the additional demands of Excise duty,
service tax, sales tax and entry tax amounting to Rs 962.54 lacs
(Gross) (Previous year Rs. 948.17 lac). Out of this a sum of Rs 183.61
lac (Previous year Rs. 178.95 lac) has been deposited with the
concerned authorities under Protest. No provision has been made in the
books of Account as company is confident to get desired relief at the
appellate level. The said amount stands included in advances receivable
in cash or in kind for value to be received.
ii) Commitments: Rs. Lacs
Particulars As at As at
31.03.15 31.03.14
a) Estimated amount of contracts remaining 456.10 456.10
to be executed on capital account
b) The Company has executed excise duty bond 1670.00 1670.00
in favour of President of India under
the Central Excise Act,
1944. There is no likelihood of any outflow
on account of executed excise duty bond.
c) Export obligation outstanding against import 37.97 211.98
of raw material.
13. Export entitle benefits
The Company is entitled to benefit under Focus Market Scheme (FMS)/Duty
Drawback /SHIS on export sales made during the year. SHIS benefit
availed can be transferred in the open market. The Company has realized
Rs.50.85 lac amount (Previous year Rs.20.52 lac) in respect of export
entitle benefits during the year.
14. Impairment of assets
In accordance with Accounting of Accounting Standard (AS)-28 on
"Impairment of Assets" issued by the Companies (Accounting Standard)
Rule 2006, the company has assessed as on balance sheet date, whether
there are any indications (listed on paragraphs 8 to 10 of the
standard) with regard to the impairment of any of the assets. Based on
such assessment it has been ascertained that no potential loss is
present and therefore, formal estimate of recoverable amount has not
been made. Accordingly no impairment loss has been provided in the
books of account.
15. Disclosure regarding the foreign currency exposure of the company.
a) The company has entered into forward contracts to hedge its risk
associated with fluctuations in foreign currency transactions. The
company does not use forward contracts for speculative purpose. There
is no forward contract (Previous year Nil ) against export outstanding
as at the close of the year.
b) The foreign currency exposures remaining unhedged at the year end
Nil (Previous year Nil). The company has negotiated all the export
bills with banks.
16. Trade Payables and Trade Receivables are shown net of advances.
17. Trade Receivables, Trade Payables and advances amounting to
Rs.4144.31 lac (previous year Rs.5806.68 lac) are subject to
confirmation on account of certain commercial disputes. The company is
in the process of settling disputes with parties and hopeful of
recovery.
18. The company has accumulated losses of Rs.25762.83 lacs as at 31st
March 2015. The total net worth as on date is minus Rs.22247.93 lacs.
The consortium banks who had lent the money to the company have
recalled their debts and taken action under SARFAESI Act, 2002.
Although these events or conditions indicates material uncertainty that
may cast significant doubt about the company's ability to continue on
going concern. Based on detailed evaluation of its current situation
and plans formulated and active discussion with prospective investor,
the management is confident of raising adequate finance for its
revival.
It has also filed application with BIFR and reference is registered as
case no. 27/2013 on 24.05.2013. Therefore management holds the view
that the company will realize its assets and discharge liabilities in
the normal course of business.
Accordingly the financial statements have been prepared on the basis
that company is going concern and that no adjustments are required to
the carrying value of assets and liabilities.
19. The consortium banks have recalled their entire outstanding loans
and taken action under SARFAESI ACT, 2002 during the year 2013-14. The
company has contested such action before appropriate forums.
Accordingly, the borrowing outstanding to the consortium banks as at
March31, 2015 have been classified as long term and current liabilities
without taking into cognizance of the recall but as per schedule of
repayments stipulated.
Therefore, the interest accrued on long term and short term borrowings
amount to Rs.5913.60 lacs for the period from 1st April,2013 to 31st
March,2015 has not been provided in the statement of profit and loss
account as these loans have been recalled by the banks and financial
institutions.
20. Pursuant to applicability of Companies Act, 2013 for accounting
period commencing from 1st April, 2014, the company has provided for the
depreciation based on useful life of assets as prescribed in the
Schedule II of the Companies Act, 2013. In case where assets' life has
been completed as on 31.03.2014, the carrying amount of the same has
been adjusted in Surplus/(deficit) under the head Reserve & Surplus and
the effect of the same has been resulted in increase in deficit by Rs.
189.72 lacs. Also providing the depreciation as per the Schedule II of
the Companies Act, 2013 has resulted in decrease in depreciation for
Rs.38.88 lacs in twelve months period ended on 31.03.2015.
21. Previous year's figures
Previous year figures have been regrouped/reclassified wherever
necessary to correspond with current year classification/disclosure.
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