Notes to Accounts of Sri Ganapathy Mills Company Ltd.

Mar 31, 2014

1. CONSIGNMENT SALES

The Company records sales to the extent of statements received from the consignees in respect of stock of finished goods despatched to the consignees.

2. FOREIGN CURRENCY TRANSACTION.

Liability in Foreign Currency has been shown at cost incurred at the time of the transaction. Any fluctuation in the liability arising out of the exchange rates will be accounted for at the time of repayment and hence no provision has been made for the difference.

3. RETIREMENT BENEFITS AS - 15

a) GRATUITY

In respect of Unit A, all the employees except few staffs have opted for Voluntary Retirement Scheme and hence in respect of the new employees there is no gratuity liability. In respect of staffs in the Unit A and employees of Unit B, gratuity is payable as and when the employee leaves and the same is accounted on cash basis. However the Company is taking necessary steps to obtain Actuarial valuation certificate in respect of anticipated future gratuity liability.

b) LEAVE ENCASHMENT

The Company normally allows its employees to utilize the leave and no encashment leave has been demanded. In the event of leave entitlement being en-cashable in future it will be accounted on payment basis. However, as at the end of the year no employees have accumulated leave to encash.

c) PROVIDENT FUND

The Company deposits the Provident fund contribution under the Employees Provident Fund Scheme run by the Government.

4. BORROWING COSTS - AS - 16

The Company is following AS-16 with regard to the treatment of borrowing costs. But there are no borrowing costs to be capitalized during the year.

5. CONTINGENT LIABILITIES Rs in lacs

Item 31/03/2014 31/03/2013

Disputed PF & ESI 40.44 70.59 Disputed Sales Tax Liability 17.81 8.42

Disputed Liability towards Labour 11.92 11.92

Disputed Urban land Tax 4.72 4.72

In respect of the Term Loan originally availed from ICICI for purchase of wind mills, the said loan has been transferred to M/s Kotak Mahindra Bank Limited with out the company''s consent. M/s Kotak Mahindra Bank has already filed petition before the Hon''ble High court vide C.P 51/20O5 and as per the directions of the court the company has paid Rs. 25 lacs as Initial payment in 2008 and after that paid Rs. 75.26 lacs so far subsequently. The Hon''ble high court has now insisted to remit Rs. 10 lacs each p.m for the remaining balance of Rs. 99.74 lacs from June 201J onwards and this is being paid regularly.

6. EXPENDITURE IN FOREIGN CURRENCY Nil

7. EARNINGS IN FOREIGN EXCHANGE Nil

8. The balances appearing in the Books of Accounts relating to Debtors, Creditors, Loans and Advances are subject to confirmation and reconciliation wherever necessary. Letters have been sent to the parties soliciting confirmation.

9. Other Income includes Rs. 33.25 lacs is the conversion charges received in unit A working on job work basis on a production of yarn commercially valued at Rs. 80.97 lacs.

10. Disclosure in respect of MSME Sector.

The company does not hold any payment due to the MSME sector. Further information regarding MSME registration has not been provided by the suppliers. However, based on the information available from the company the amount due to MSME creditors for the year towards Principal and Interest - Nil.

11. Income Tax Assessments have been completed up to the assessment year 2011-2012.

12. Segment Reporting:

As per AS 17 recommended by the Institute of Chartered Accountants of India

The Company operates in a single primary business segment namely manufacture of cotton yarn. Hence no separate disclosure is required Secondary Segment Analysis

Sales revenue by geographical market is given as under.

Market 2013-2014 (Rs. in lacs)

India 1707.77

14. The Share Transfer works is presently being done at M/s S.K.D.C. Consultants Ltd, Coimbatore. The Company has opted for dematerlalization of shares with the stock exchanges and become a member of NSDL and CSDL.

15. The balances appearing the books of accounts relating to the following accounts outstanding more than 365 days as follows:

i) Sundry Creditors - Rs. 12.36 lacs

16. As per AS 18 - "Related Parties Transactions" issued by the Institute of Chartered Accountants of India, the details of Related Party Transaction based on disclosure certificate issued by the Directors is given below:

17. AS. 20: Earnings Per Shares : (4.45) per Equity Share.

18. The Liability in respect of assets acquired on Hire Purchase was shown at values equivalent to the principal outstanding.

19. Taxation and Deferred Tax Liability - AS 22 : In view of the loss for the current financial year, no provision for Income Tax and Deferred Tax Liability have been provided.

20. Previous Year''s figures have been regrouped/reclassified wherever necessary.

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Mar 31, 2013

1. EXPENDITURE IN FOREIGN CURRENCY Nil

2. EARNINGS IN FOREIGN EXCHANGE Nil

3. The balances appearing in the Books of Accounts relating to Debtors, Creditors, Loans and Advances are subject to confirmation and reconciliation wherever necessary. Letters have been sent to the parties soliciting confirmation.

4. Other Income includes Rs. 59.86 lacs is the conversion charges received in unit A working on job work basis on a production of yarn commercially valued at Rs. 242.87 lacs

5. Disclosure in respect of MSME Sector.

The company does not hold any payment due to the MSME sector. Further information regarding MSME registration has not been provided by the suppliers. However, based on the information available from the company the amount due to MSME creditors for the year towards

6. Income Tax Assessments have been completed up to the assessment year 2010-2011 and wealth tax assessments have been completed up to the Assessment year 1997-98.

7. Segment Reporting:

As per AS 17 recommended by the Institute of Chartered Accountants of India

The Company operates in a single primary business segment namely manufacture of cotton yarn. Hence no separate disclosure is required Secondary^Segment Analysis

8. The Share Transfer works is presently being done at M/s S.K.D.C.Consultants Ltd, Coimbatore. The Company has opted for dematerialization of shares with the stock exchanges and become a member of NSDL and CSDL.

9. The Liability in respect of assets acquired on Hire Purchase was shown at values equivalent to the principal outstanding.

10. Taxation and Deferred Tax Liability - AS 22 : In view of the loss for the current financial year, no provision for Income Tax and Deferred Tax Liability have been provided.

11. The Revised Schedule VI has become effective from 1.4.2011 for preparation of financial statements. This has significantly imparted the disclosure and presentations in the financial statements. Previous Year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year classification/disclosure.

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Mar 31, 2012

Security Details for the aforesaid Long Term Loans

Term Loan outstanding balance of Rs. 234.92 lacs with KVB secured by exclusive 1st charge over the entire. Fixed Assets of the company excluding the assets financed by the other NBFC's

Hire Purchase outstanding of Rs, 131.51 lacs with indo Wind Energy Ltd secured by exclusive charge over four number of wind mills HP outstanding of Rs. 57.53 lacs with Indonet Global Ltd, secured by exclusive charge over number of wind mill HP outsanding of Rs. 23.73 lacs with Loyal Credit Investments Ltd, secured by exclusive charge over the specific items of machinery. Terms of repayment :

1. All Term Loans with KVB except Corporate Loan to the tune of Rs. 200 lacs, is due for repayment before 31-03-2013

2. With regard, Corporate Loan, repayable in 60 monthly instalment starting from August 2012 onward";.

3. In respect of the Term Loan originally availed from ICICI for purchase of wind mills, the said loan has been transferred to M/s Kotak Mahindra Bank Limited with out the company's consent. M/s Kotak Mahindra Bank has already filed petition before the Hon'ble High court vide C.P 51/2005 and as per the directions of the court the company has paid Rs. 25 lacs as initial payment in 2008 and after that paid Rs. 2 lacs per month as monthly installments without interest. During the financial year under audit, the company has paid Rs. 6 lacs to M/s Kotak Mahindra Bank Ltd, as dues. The Scheme has been agreed to in principle by M/s. Kotak Mahindra Bank and accepts the dues. Hence no provision has been made towards interest.

4. EXPENDITURE IN FOREIGN CURRENCY Nil

5. EARNINGS IN FOREIGN EXCHANGE Nil

6. The balances appearing in the Books of Accounts relating to Debtors, Creditors, Loans and Advances are subject to confirmation and reconciliation wherever necessary. Letters have been sent to the parties soliciting confirmation.

7. Other Income of Rs. 93.73 lacs is the conversion charges received in unit A working on job work basis on a production of yarn commercially valued at Rs. 416.54 lacs

8. Disclosure in respect of MSME Sector.

The company does not hold any payment due to the MSME sector. Further information regarding MSME registration has not been provided by the suppliers. However, based on the information available from the company the amount due to MSME creditors for the year towards

9. Income Tax Assessments have been completed up to the assessment year 2009-2010 and wealth tax assessments have been completed up to the Assessment year 1997-98.

10. Segment Reporting:

As per AS 17 recommended by the Institute of Chartered Accountants of India The Company operates in a single primary business segment namely manufacture of cotton yarn. Hence no separate disclosure is required

11. The Share Transfer works is presently being done at M/s S.K.D.C.Consultants Ltd, Coimbatore. The Company has opted for dematerialization of shares with the stock exchanges and become a member of NSDL and CSDL.

12. As per provisions of Accounting Standard 18 - "Related Parties Transactions" issued by the Institute of Chartered Accountants of India, the details of Related Party Transaction based on disclosure certificate issued by the Directors is given below:

13. The Liability in respect of assets acquired on Hire Purchase was shown at values equivalent to the principal outstanding.

14. Taxation : In view of the loss for the current financial year, no provision for Income Tax has been provided.

15. Deferred Tax Liability - AS 22

The company has provided a sum of Rs. 19.43 lacs, towards Deferred Tax Asset during the current financial year in view of timing differences in depreciation charged as per Income Tax and Company's Act provisions.

16. The Revised Schedule VI has become effective from 1.4.2011 for preparation of financial statements. This has significantly imparted the disclosure and presentations in the financial statements. Previous Year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year classification/disclosure.

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Mar 31, 2010

1. CONSIGNMENT SALES

The Company records sales to the extent of statements received from the consignees in respect of stock of finished goods despatched to the consignees.

2. FOREIGN CURRENCY TRANSACTION.

Liability in Foreign Currency has been shown at cost incurred at the time of the transaction. Any fluctuation in the liability arising out of the exchange rates will be accounted for at the time of repayment and hence no provision has been made for the difference.

3. RETIREMENT BENEFITS AS - 15 a. GRATUITY

In respect of Unit A, all the employees except few staffs have opted for Voluntary Retirement Scheme and hence in respect of the new employees there is no gratuity liability. In respect of staffs in the Unit A and employees of Unit B, gratuity is payable as and when the employee leaves and the same is accounted on cash basis. However the Company is taking necessary steps to obtain Actuarial valuation certificate in respect of anticipated future gratuity liability.

b. LEAVE ENCASHMENT.

The Company normally allows its employees to utilize the leave and no encashment leave has been demanded. In the event of leave entitlement being en-cashable in future it will be accounted on payment basis. However, as at the end of the year no employees have accumulated leave to encash.

c. PROVIDENT FUND

The Company deposits the Provident fund contribution under the Employees Provident Fund Scheme run by the Government.

4. BORROWING COSTS - AS - 16.

The Company is following AS-16 with regard to the treatment of borrowing costs. But there are no borrowing costs to be capitalized during the year.

5. CONTINGENT LIABILITIES

31/03/2010 31/03/2009

Disputed Service Tax 2.22 2.22

Disputed PF & ESI 39.74 39.74

Disputed Sales Tax Liability 11.92 11.92 11.92

Disputed Liability towards Labour 14.42 14.42

Disputed Income Tax 45.26 -

I. The Commissioner of Urban Land Tax has vide his Order dt. 08/07/91 imposed a sum of Rs. 2,80,956/- as Urban Land Tax in respect of the Companys property located at Chatrampudukulam village being the tax liability for a period of 15 years. The company has filed a Writ appeal against this order before Honble High Court Chennai. However, the company has paid Rs. 54,280/- as urban land tax as per the earlier directions of the High Court. Now the amount was enhanced to Rs. 5,27,220/-as tax liability. The Balance of Rs. 4,72,940/- remains contingent

II. In respect of the Term Loan originally availed from ICICI for purchase of wind mills by the company and transferred to M/s Kotak Mahindra Bank Limited without the companys consent. M/s Kotak Mahindra Bank has already filed petition before the Honble High court vide C.P 51/ 2005 and as per the directions of the court the company has paid Rs. 25 lacs as initial payment in 2008 and after that paid Rs. 2 lacs per month as monthly installments without interest. During the financial year the company has paid Rs. 23 lacs to M/s Kotak Mahindra Bank Ltd, as dues. The Scheme has been agreed to in principle by M/s. Kotak Mahindra Bank and accepts the dues. Hence no provision has been made towards interest.

6. The balances appearing in the Books of Accounts relating to Debtors, Creditors, Loans and Advances are subject to confirmation and reconciliation wherever necessary. Letters have been sent to the parties soliciting confirmation.

7. Other Income of Rs. 183.31 lacs is the conversion charges received in unit A working on job work basis on a production of yarn commercially valued at Rs. 663.58 lacs

8. Disclosure in respect of MSME Sector.

The company does not hold any payment due to the MSME sector. Further information regarding MSME registration has not been provided by the suppliers. However, based on the information available from the company the amount due to MSME creditors for the year towards

Principal - Rs. Nil

interest - Rs. Nil

9. Income Tax Assessments have been completed up to the assessment year 2007-2008 and wealth tax assessments have been completed up to the Assessment year 1997-98.

10. Segment Reporting:

As per AS 17 recommended by the Institute of Chartered Accountants of India

The Company operates in a single primary business segment namely manufacture of cotton yarn. Hence no separate disclosure is required

11. The Share Transfer works is presently being done at M/s S.K.D.C.Consultants Ltd, Coimbatore. The Company has opted for dematerialization of shares with the stock exchanges and become a member of NSDL and CSDL.

12. The Liability in respect of assets acquired on Hire Purchase was shown at values equivalent to the principal outstanding.

13. Deferred Tax Asset / Liability - AS 22

In view of Losses during current year no deferred tax liability has been recognized

14. Previous Years figures have been regrouped wherever necessary.