4 Provisions and contingencies
Provisions: A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount in the present value of those cash flows (when the effect of time value of money is material).
Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Contingent Asset: A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
5 Leases - Arrangements in the nature of Lessee
The Company, at the inception of a contract, assessess whether the contract is a lease or not lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a time in exchange for a consideration. This policy has been applied to contracts existing and entered into on or after April 1, 2019.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company’s incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense over the lease term.
In the comparative period, leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the
minimum lease payments at the inception of the lease, whichever is lower. Lease payments and receipts under operating leases are recognised as an expense and income respectively, on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
6 Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are shortterm balances (with an original maturity of three months or less from the date of acquisition) and highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks.
7 Trade receivables
Trade receivables are recognised initially at fair value unless they do not carry a significant financing component, in which case they are recognized at the transaction price. The Company generally determines the allowance for expected credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to industries the company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future.
8 Trade Payables
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
9 Cash Flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. Cash and cash equivalents include cash on hand, cash with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the company.
10 Earning Per Share
Basic earnings per share have been computed by dividing the net income by the weighted average number of shares outstanding during the year. Diluted earnings per share has been computed using the weighted average number of shares and diluted potential shares, except where the result would be anti-dilutive
11 Dividends
Final dividends on shares are recorded on the date of approval by the shareholders of the Company.
NOTE 27 - SEGMENT INFORMATION
The Chairman & Managing Director of the company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 Operating Segments. The CODM evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by industry classes. Accordingly, segment information has been presented.
The Company is structured into two reportable business segments - “Textiles” and “Rental Services”. Textiles consists of manufacturing and sale of yarn and trading in cloth and garments. Rental services consist of letting out of properties. The reportable business segments are in line with the segment wise information which is being presented to the CODM.
Each segment item reported is measured at the measure used to report to the chief operating decision maker for the purposes of making decisions about allocating resources to the segment and assessing its performance.
Geographic information is based on business sources from that geographic region. Accordingly the geographical segments are determined as Domestic ie., within India and External ie., Outside India.
Income and direct expenses in relation to segments are categorized based on items that are individually identifiable to that segment, while the remainder of costs are apportioned on an appropriate basis. Certain expenses are not specifically allocable to individual segments as the underlying services are used interchangeably. The management therefore believes that it is not practicable to provide segment disclosures relating to such expenses and accordingly such expenses are separately disclosed as “unallocated” and directly charged against total income.
NOTE 31 - EMPLOYEE BENEFIT PLANS
(a) Defined Contribution Plan
The Company makes Provident Fund, Superannuation Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company has recognised Rs. 104.81 Lakhs (Previous year: Rs 99.73 Lakhs) as contribution to Provident Fund, Rs. 24.58 lakhs (Previous year Rs. 22.93 lakhs) as contribution to Superannuation Fund and Rs 35.45 Lakhs (Previous year: Rs 30.94 Lakhs) as contribution to Employee State Insurance (ESI) in the Statement of Profit and Loss. These contributions have been made at the rates specified in the rules of the respective schemes and has been recognised in the Statement of Profit and Loss under the head Employee Benefits Expense.
(b) Defined Benefit Plans:
Gratuity
The Company has partly funded its gratuity obligations. The following table sets out the status of the defined benefit schemes and the amount recognised in the financial statements as per the Actuarial Valuation done by an Independent Actuary.
Market risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate / government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
Legislative risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation /regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation. The new labour code is a case in point and the same will have to be recognized immediately in the year when any such amendment is effective.
Liquidity risk: Employees with high salaries and long durations of service or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign / retire from the company there can be strain on the cash flows.
NOTE 32 - RELATED PARTY DISCLOSURES
List of related parties where control exists and also related parties with whom transactions have taken place and relationships
Disclosure in respect of Related Party Transactions during the year:
1. Purchase of goods/assets includes Lakshmi Card Clothing Mfg. Company Private Ltd Rs. 26.82 lakhs; (Previous year Rs. 29.41 Lakhs); Petal Home LLP Rs.NIL Lakhs.(Previous year Rs. 0.15 lakhs) ; Lakshmi Machine Works Ltd Rs.1,253.03 lakhs(Previous year Rs.1,045.94 lakhs);Rajshree Biosolutions LLP Rs.0.75 lakhs (Previous year Rs.0.14 lakhs)
2. Sale of Goods / assets include Lakshmi Card Clothing Mfg. Company Private Ltd Rs. 1.04 Lakhs. (Previous year Rs. 1.14 Lakhs); Petal Home LLP Rs.5.98 Lakhs.(Previous year Rs. 14.13 Lakhs); Lakshmi Automatic Loom Works Ltd Rs.Nil lakhs (Previous Year Rs.265.50 lakhs); Premier Spg and Wvg Mills Pvt Ltd Rs.54.51 lakhs (Previous year Rs.213.78 lakhs); Rajshree Sugars and Chemicals Ltd Rs.11.06 lakhs (Previous Year Rs.10.68 lakhs).
3. Receiving of Services include Balakumar Shipping & Clearing Agency P.Ltd Rs. 21.28 Lakhs (Previous year Rs. 24.16 Lakhs); Aloha Tours & Travels (India) Private Ltd Rs. 35.45 Lakhs (Previous year Rs. 47.22 Lakhs); Lakshmi Card Clothing Mfg. Company Private Ltd Rs. 3.36 Lakhs (Previous year Rs. 4.26 Lakhs); Chakradhara Aerospace and Cargo Private Ltd Rs. 13.38 Lakhs (Previous year Rs.17.43 Lakhs);
Lakshmi Automatic Loom Works Ltd Rs. 18.95 Lakhs (Previou year Rs. 16.09 Lakhs); Major Corporate Services (India) LLP Rs. 19.58 lakhs (Prevoius year Rs. 7.19 Lakhs) ; Petal Home LLP Rs.9.44 lakhs (Previous year Rs.14.16 lakhs) ;
4. Sitting fees paid to Directors- Sri.R.Santharam Rs.1.55 lakhs (Previous Year Rs.1.20 Lakhs), Sri.Sanjay Jayavarthanavelu Rs.0.75 lakhs(Previous Year Rs.0.70 lakhs),Sri.D.Rajendran Rs.1.70 lakhs (Previous year Rs.1.20 lakhs), Sri.Satish Ajmera Rs.1.85 lakhs (Previous Year Rs.1.85 lakhs), Smt.Suguna Ravichandran Rs.1.05 lakhs (Previous year Rs.1.40 lakhs), Sri Vijay Venkataswamy Rs.0.60 lakhs(Previous year Rs.0.55 lakhs)
5. Rendering of Services include Lakshmi Card Clothing Mfg. Company Private Ltd Rs. 17.86 Lakhs (Previous year Rs. 16.35 Lakhs); Lakshmi Automatic Loom Works Ltd Rs. 31.39 Lakhs (Previous year Rs. 29.78 Lakhs) ; Sans Craintes Knitters Rs. Nil Lakhs (Previous year Rs. 2.93 Lakhs); Petal home LLP Rs.0.92 lakhs (Previous year Rs.0.28 Lakhs);Rajshree Biosolutions LLP Rs.0.36 lakhs (Previous year Rs.0.24)
6. Remuneration to Key Managerial Personnel includes Sri S. Pathy Rs. 99.22 Lakhs (Previous year Rs. 93.22 Lakhs); Sri Aditya Krishna Pathy Rs. 68.29 Lakhs (Previous year Rs. 63.22 Lakhs); Sri N.Singaravel Rs. 16.13 Lakhs (Previous year Rs. 15.19 Lakhs); Sri A.Doraisamy Rs. 17.62 Lakhs (Previous year Rs. 16.88 Lakhs).
7. Contribution to Gratuity Fund includes Sri.S.Pathy Rs. 2.22 Lakhs (Previous year Rs. 2.13 Lakhs) ; Sri.Aditya Krishna Pathy Rs.0.86 lakhs (Previous Year Rs.0.83 lakhs) ; Sri.N.Singarvel Rs.0.29 Lakhs (Previous year Rs.0.24 lakhs)
8. Contribution to Superannuation Fund includes Sri.S.Pathy Rs. 14.34 Lakhs (Previous year Rs. 13.44 Lakhs) ; Sri.Aditya Krishna Pathy Rs.8.81 lakhs (Previous Year Rs.8.19 lakhs).
9. Amount Receivable from other related parties includes Lakshmi Automatic Loom Works Ltd Rs. 1.38 Lakhs (Previous year Rs. 1.50 Lakhs); Sans Craintes Knitters Rs. Nil Lakhs (Previous year Rs. 1.31 Lakhs); and Lakshmi Card Clothing Mfg. Company Private Ltd Rs. 12.63 Lakhs (Previous year Rs. 15.19 Lakhs) Petal Home LLP Rs. 2.43 (Previous year Rs. 2.06 Lakhs); Premier Spinning and Weaving Mills Private Ltd Rs.4.64 lakhs (Previous year Rs.0.18 lakhs); Rajshree Sugars and Chemicals Ltd Rs.Nil lakhs (Previous year Rs.0.86) Rajshree Biosolutions LLP Rs.0.03 lakhs (Previous year Rs. Nil lakhs)
10. Amount payable for Post retirement employee benefit plan includes The Lakshmi Mills Co. Ltd. Employees Gratuity Fund Rs. 591.93 Lakhs (Previous year Rs. 526.89 Lakhs).
11. Amount payable to other related parties include Aloha Tours & Travels (India) Private Ltd Rs. 5.91 Lakhs (Previous year Rs. 1.55 Lakhs); Balakumar Shipping & Clearing Agency P.Ltd Rs. 2.71 Lakhs (Previous year Rs.5.51 lakhs); Major Corporate Services (India) LLP Rs. 2.64 Lakhs (Previous Year Rs.Nil lakhs); Chakadhara Aerospace and Cargo Private Ltd Rs. 1.38 lakhs (Previous year Rs.4.17 lakhs)
12. a) Capital Advance Rs.35.80 lakhs (Previous year Rs.332.26 lakhs) paid to related party Lakshmi Machine Works Ltd for supply of Machinery.(b) Commitments (Net of Advances): Rs.36.32 lakhs (Previous year Rs.817.96 Lakhs) to related party Lakshmi Machine Works Ltd.
33.1 Capital management
The Company’s capital management objectives are:
- to ensure the Company’s ability to continue as a going concern
- to create value for shareholders by facilitating the meeting of long term and short term goals of the Company.
The Company determines the amount of capital required on the basis of annual business plan coupled with long term and short term strategic expansion plans. The funding needs are met through equity, cash generated from operations, long term and short term bank borrowings.
The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt portfolio of the Company. Net debt includes interest bearing borrowings less cash and cash equivalents and other bank balances (including non-current earmarked balances)
33.2 Categories of Financial Instruments
This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments. The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, and financial liability are disclosed in Note 2C (7) of Material Accounting Policies.
B. Fair value hierarchy
The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
33.3 Financial risk management objective
The Company’s activities expose it to certain financial risks. The Company’s primary focus is to foresee the unpredictability of such risks and seek to minimize potential adverse effects on its financial performance.
The Company has a risk management process and framework in place. This process is coordinated by the Board, which meets regularly to review risks as well as the progress against the planned actions. The Board seeks to identify, evaluate business risks and challenges across the Company through such framework. These risks include market risks, credit risk and liquidity risk.
The risk management process aims to:
- improve financial risk awareness and risk transparency
- identify, control and monitor key risks
- identify risk accumulations
- provide management with reliable information on the Company’s risk situation
- improve financial returns
Market risk - Foreign exchange
The Company undertakes transactions denominated in foreign currencies and thus it is exposed to exchange rate fluctuations. The Company actively manages its currency rate exposures, arising from transactions entered and denominated in foreign currencies, through its finance division and uses derivative instruments such as foreign currency forward contracts to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by Management.
The Company, as its policy, does not undertake any trading in derivatives financial instruments for speculation purpose.
Credit Risk
Credit risk is the risk that a customer or counterparty to a financial liability will fail to perform or pay amounts due to the Company causing financial loss. It arises from cash and cash equivalents, deposits with banks, security deposits, loans and advances principally from credit exposures to customers relating to outstanding receivables. The Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at reporting date.
Credit risk on outstanding receivables is the exposure to billed receivable and are normally unsecured and derived from revenue earned from customers in India and abroad. Credit risk is managed by the company through credit approvals and continuously monitoring the credit worthiness of the customer to which
EQUITY PRICE RISK
Equity Price Risk is related to the change in market reference price of the investments in quoted equity securities. The fair value of some of the Company’s investments in quoted shares measured at fair value through other comprehensive income exposes the Company to equity price risks. These investments are subject to changes in the market price of securities. The fair value of Company’s investment in quoted equity securities as of March 31, 2024 and March 31, 2023 was Rs. 79,619.03 Lakhs and Rs. 52,189.37 Lakhs respectively.
A 5% change in equity price as of March 31,2024 and March 31,2023 would result in an impact of Rs.3,980.95 Lakhs and Rs. 2,609.47 Lakhs respectively.
NOTE - 34: ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS 34.1 Dividend:
The directors have not recommended any dividend for the current year in view of the losses.
34.11 OTHER STATUTORY INFORMATION
1 The Company has not received any fund from any persons or entities, 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.”
2 The Company has not advanced or loaned or invested funds to any persons or entities, 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 Company (Ultimate Beneficiaries) or
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.”
3 The company did not undertake transactions that were not recorded in the books of accounts and which have 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).
4 The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond the statutory period.
5 The Company has not made investments in more than one layer of body corporate in accordance with provisions of clause (87) of section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.
34.12 A litigation arising from the failure to honour the material payment terms by the buyers, as per agreement, in respect of an immovable property of the company, being wrongfully pursued by the buyers as a suit for specific performance against the company, is pending before the appropriate court. The company is legally advised that the case is likely to be disposed off in its favour.
34.13 All figures have been rounded off to Lakhs unless stated otherwise. Discrepancies, if any, in between the totals and the sum of the items forming part of such totals are due to rounding off in the financial statements. Wherever, figures are indicated as 0.00 lakhs, it represents value less than Rs. 0.01 lakhs due to rounding off to the nearest lakhs.
34.14 The financial statements of Lakshmi Mills Company Limited were approved by the Board of Directors and authorised for issue on 28th May 2024.
For and on behalf of the Board In terms of our report of even date
For Subbachar & Srinivasan
S. Pathy R. Santharam
Firm Registration No. 004083S
Chairman & Managing Director Vice Chairman
Chartered Accountants
DIN: 00013899 DIN: 00151333
T.S.V.Rajagopal
Place : Coimbatore N. Singaravel A.Doraiswamy Partner
Date : 28th May 2024 Company Secretary Chief Financial Officer Membership No. 200380
|