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Moneycontrol.com India | Accounting Policy > Textiles - Processing > Accounting Policy followed by Shri Lakshmi Cotsyn - BSE: 526049, NSE: SHLAKSHMI
YOU ARE HERE > MONEYCONTROL > MARKETS > TEXTILES - PROCESSING > ACCOUNTING POLICY - Shri Lakshmi Cotsyn

Shri Lakshmi Cotsyn

BSE: 526049|NSE: SHLAKSHMI|ISIN: INE851B01016|SECTOR: Textiles - Processing
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Shri Lakshmi Cotsyn is not traded in the last 30 days
Mar 14
Accounting Policy Year : Mar '15
A.  Corporate Information
 
 Shri Lakshmi Cotsyn Limited (The Company) is a public limited
 company, domiciled in India and incorporated under the provisions of
 the Companies Act, 1956. The equity shares of the Company are listed on
 the Bombay Stock Exchange (BSE), National Stock Exchange (NSE). It is
 primarily engaged in the business of textile manufacturing integrated
 backward & forward to include spinning and readymade garments.
 
 1.  Basis of Preparation of Financial Statements
 
 The financial statements of the Company have been prepared in
 accordance with the Generally Accepted Accounting Principles in India
 (Indian GAAP) to comply with the Accounting Standards specified under
 Section 133 of the Companies Act, 2013, read with Rule 7 of the
 Companies (Accounts) Rules, 2014 and the relevant provisions of the
 Companies Act, 2013 (the 2013 Act) / Companies Act, 1956 (the 1956
 Act), as applicable.
 
 2.  Use of Estimates
 
 The preparation of financial statements in conformity with the
 generally accepted accounting principles require estimates and
 assumptions to be made that affect the reported amounts of assets and
 liabilities and disclosure relating to contingent liabilities on the
 date of the financial statements and the reported amounts of revenues
 and expenses during the reporting period. Differences between the
 actual results and estimates are recognised in the period in which the
 results are known/materialise.
 
 3.  Revenue Recognition
 
 Revenue from sale of goods is recognised when all significant
 contractual obligations have been satisfied, significant risks and
 rewards of ownership are transferred to the customers and no effective
 ownership is retained by the Company. Revenue from sale of goods is
 recognised gross of taxes, and net of rebates and normal discounts.
 Exportturnover excludes related export benefits.
 
 4.  Fixed Assets :
 
 i) Tangible Assets:
 
 Fixed Assets are stated at cost of acquisition or construction less
 accumulated depreciation and impairment losses. Costs of acquisition
 comprise all costs incurred to bring the assets to their location and
 working condition up to the date the assets are ready for use. Costs of
 construction are composed of those costs that relate directly to
 specific assets and those that are attributable to the construction
 activity in general and can be allocated to specific assets up to the
 date the assets are ready for use.
 
 ii) Intangible Assets:
 
 Intangible assets are recognised only if it is probable that the future
 economic benefits that are attributable to the assets will flow to the
 enterprise and the cost of the assets can be measured reliably.
 Intangible assets are stated at cost less accumulated amortisation and
 impairment losses.
 
 5.  Investments:
 
 Investments classified as Long Term Investments are stated at cost.
 Provision is made to recognise a decline, other than temporary, in the
 value of investments. Current investments are carried at cost or fair
 value, whichever is lower.
 
 6.  Depreciation / Amortisation:
 
 Depreciation is provided based on useful life of assets as prescribed
 in Schedule II to the Companies Act, 2013.  Depreciation on Fixed
 Assets is provided on Straight Line Value (SLM).
 
 The carrying amount of the asset as at the opening of the year has been
 either depreciated over the remaining useful life of the asset as per
 schedule II or where the remaining useful life of an asset is nil,
 after retaining the residual value, has been charged in the opening
 balanceof retained earnings. The amount charged to the opening reserves
 during the financial year is Rs. 1.42 Cr.
 
 7.  Inventories:
 
 Items of Inventories are valued on the basis given below:
 
 i. Raw Materials, Packing Materials, Stores and Spares: At cost
 determined on First-In-First-Out (FIFO) basis or net realisable value,
 whichever is lower.
 
 ii. Process stock and finished goods: At cost or net realisable values
 whichever is lower. Cost comprises of cost of purchase, cost of
 conversion and other costs incurred in bringing the inventory to their
 present location and condition.
 
 8.  Employees Benefits:
 
 Short-term employee benefits are recognized as an expense at the
 undiscounted amount in the statement of profit and loss of the year in
 which the related services are rendered. Post-employment and other
 long-term benefits are recognized as an expense in the statement of
 profit and loss of the year in which the employee has rendered services
 in compliance with AS-15 Employee Benefits.
 
 9.  Government Grants:
 
 Grants, in the nature of interest subsidy under the Technology
 Upgradation Fund Scheme (TUFs), are accounted for as per claims filed
 by the banks to MOT. However amount are considered in leftout case due
 to late filing of claims by bank and some claim in respect of
 denim/sheeting expansion and technical textile is under dispute due to
 some technical reasons. Decision of Textile commissioner Mumbai on the
 said aspect is awaited.
 
 10.  Foreign exchange transaction:
 
 In compliance with Accounting Standard -11 The Effect of Change in
 Foreign Exchange Rate, transactions in foreign currency are accounted
 at the exchange rate prevailing on the date of such transactions.
 Current monetary assets and liabilities are translated at the exchange
 rate prevailing at the reporting date. Non-monetary items are carried
 at cost.
 
 11.  Provisions, contingent liabilities and contingent assets:
 
 a.  Contingent liabilities are disclosed in respect of possible
 obligations that arise from past events but their existence will be
 confirmed by the occurrence or non-occurrence of one or more uncertain
 future events.  A provision is made when it is probable that an outflow
 of resources embodying economic benefits will be required to settle an
 obligation and in respect of which a reliable estimate can be made.
 Provision is not discounted and is determined based on best estimate
 required to settle the obligation at the year-end date.
 
 b.  Contingent Assets are not recognized or disclosed in the financial
 statements.
 
 12.  Earnings Per Share:
 
 Basic earnings per share is computed and disclosed using the weighted
 average number of equity shares outstanding during the year. Dilutive
 earnings per share is computed and disclosed using the weighted average
 number of equity and dilutive equity equivalent shares outstanding
 during the year, except when the results would be anti-dilutive.
 
 13.  Segment Reporting:
 
 The Company is engaged in manufacturing of textiles which in the
 context of Accounting Standard -17  Segment Reporting as notified
 under the Companies Accounting Standards Rules, 2006, is considered as
 the only business segment.
 
 14.  Principles of Consolidation
 
 The Consolidated Financial Statements relate to Shri Lakshmi Cotsyn
 Ltd. (the Company) and its subsidiary companies viz. SLCL Overseas
 (FZC), Shri Lakshmi Defence Solutions Ltd. and Synergy Global Home
 Inc., U.S.A. The Consolidated Financial Statements have been prepared
 on the following basis:
 
 i) The Financial Statements of the company and its subsidiary companies
 have been combined on a line-by- line basis adding together the book
 values of like items of assets, liabilities, income and expenses after
 fully eliminating intra group & Intra group transactions resulting in
 unrealized profit & losses as per Accounting Standard 21- The
 Consolidated Financial Statements notified by the companies Accounting
 Standards Rules, 2006.
 
 ii) The Financial Statements of the subsidiaries used in the
 consolidation are drawn upto the same reporting date as that of the
 company i.e., 31st March 2015.
 
 iii) The Consolidated Financial Statements have been prepared in
 accordance with AS-21.
 
 iv) The difference between the cost of investment in the subsidiaries,
 and the Company''s share of net assets at the time of acquisition of
 shares in the subsidiaries is recognized in the financial statements as
 Goodwill or Capital reserves as the case may be.
 
 v) Minority Interest in the net assets of consolidated subsidiaries is
 identified and presented in the consolidated Balance Sheet separately
 from liabilities and equity of the company''s shareholders.
 
 Minority interest in the net assets of consolidated subsidiaries
 consists of:
 
 - The amount of equity attributable to minority at the date on which
 the investment in subsidiary is made; and
 
 - The minority share of movements in equity since the date the parent
 subsidiary relationship came into existence.
 
 vi) Minority''s share of net profit for the year of consolidated
 subsidiaries is identified and adjusted against the Profit after Tax of
 the Group.
 
 vii) Accounting for Investments in Associate in Consolidated Financial
 Statements as per Accounting Standard - 23 Accounting for Investment
 in Associates in Consolidated Financial Statements notified by the
 companies (Accounting Standards) Rules, 2006.
 
 Other Notes:
 
 15.  Personal Accounts Balance:
 
 Balances of certain debtors, creditors and advances are subject to
 confirmation/reconciliation, if any.Certain debtors are raising counter
 claims due to supply of inferior quality of cloth or there was delay in
 supplying the material and could not be sold due to expiry of season.
 However company is not accepting the same and try to realize maximum
 amount.The amount of claims to be paid at the time of settlement is not
 reasonably ascertainable.
 
 All the inventories are valued at lower of cost or net realisable value
 except waste which is being valued at net realisable value.
 
 17.  Interest Cost
 
 The bank account company had become NPA. Certain bankers are charging
 interest on the balance amount of loan outstanding while some others
 are not, as per the policy adopted by each bank. In order to reconcile
 the loans outstanding amount with the bankers, the interest cost has
 been considered as charged by banks. Gross interest cost charged to
 profit & loss during the current year is Rs. 18,570.75 lacs.,and
 Interest TUFS subsidy amounting to Rs 1582.18lac received during year
 has been credited to interest charged account. Accordingly interest
 costs net of TUFS subsidy charged during the year amounts to Rs.
 16,988.57 lac.
 
 18.  Promoter Contribution under CDR
 
 As per the CDR Package approved by the CDR EG on 28th June 2013 a sum
 of Rs. 93.80 crores was stipulated to be inducted as promoter''s
 contribution. In compliance with the same the company raised Rs. 93.90
 Crore as Unsecured Loans from business associates to be converted into
 equity subject to approval of BSE/NSE, at a rate as mutually agreed
 between investor and the company. However, due to continuous sale of
 shares which were pledged to one institution, the approval for issuance
 of shares against such promoter''s contribution could not be received.
 
 19.  Debtors & Provision for Bad & doubtful debts
 
 Provisioning of Bad & Doubtful debts has been created to the tune of
 Rs. 45.43Cr. against debts which have been outstanding for a period of
 exceeding 1 Yearhave been reflected as short term provision.The
 management is still pursuing the recovery of the same through constant
 follow up, negotiations, allowance for discounts, legal notices etc.
 The management may take recourse to filling suit against such
 non-recovery however, the current stringent financial position of the
 company deters the company to involve itself in legal recourse which is
 a costly and a lengthy process.
 
 20.  Status at BIFR
 
 The Accumulated losses of the company as at 31.03.2015 have amounted to
 1350.74 Crore. The company is already registered under BIFR vide case
 no. 45/2014 as per the provisions Sick Industrial Companies (Special
 Provisions) Act, 1985. The first hearing was held on 06-07-2015 wherein
 the bankers have been required to file their objections and company to
 file rejoinder. The next hearing has been scheduled to be held on
 01-10-2015.
 
 21.  Accumulated Losses
 
 The company has incurred a loss of Rs. 934 .30Cr. during the period
 under consideration. Out of the above, loss of Rs. 430.22 Cr. has been
 incurred on account of loss on sale of obsolete/slow moving stock and
 loss on sale of stacked raw material. The company has made provision
 for bad/doubtful debts amounting to Rs. 45.43 Cr. and also booked bad
 debts of Rs. 18.60 Cr. Loss has also been incurred by the company to
 the tune of Rs. 20.88 Cr. for compensation to various parties on
 account loss on sale of shares of the company held by them and pledged
 to IFCI as security against loan to company which were sold by IFCI at
 a very low price as compare to the cost of acquisition of these shares.
 
 22.  Opportunity for OTS
 
 The company is seeking strategic investors who may do one time
 settlement with the banks and also infuse working capital to increase
 the capacity utilization of the plants and to induct funds for capex to
 make their technical textile unit, yarn dyed shirting and spinning
 plant operational.
 
 23.  CDR Package Status
 
 The company is under operating under CDR package. However, due to
 non-receipt of quantum of TUFS subsidy and non-release of total
 priority loans (as approved under CDR) the company has not been able to
 increase the capacity utilization as anticipated and hence has not been
 able to discharge its financial obligations under CDR and all bank
 accounts of the company have become NPA.
Source : Dion Global Solutions Limited
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