Modern Threads (India) Ltd. के अकाउंट के लिये नोट

Mar 31, 2025

13.1 Nature and purpose of each reserve within equity is as follows:

A) Capital Reserve

Capital Reserve is mainly the reserve created by transferring the capital Subsidy received from Government in earlier years in accordance with applicable accounting standards on that date.

B) Capital Redemption Reserve

Capital Redemption Reserve has been created for redemption of Preference Share Capital.

C) Securities Premium

Security Premium Account was created on issue of shares at premium. These reserves can be utilised in accordance with Section 52 of Companies Act 2013.

D) Debenture Redemption Reserve

Debenture Redemption Reserve has been created for redemption of Debentures.

E) Retained Earnings

Retained earnings represents undistributed earning after taxes of the company which can be distributed to its equity shareholders in accordance with the requirement of Companies Act, 2013.

i. Working Capital Facilities from Bank

a. Working Capital Borrowings from UCO Bank is secured by hypothecation of all type of Stocks of raw material, stock in process finished Goods and receivables of the company both present and future.

It is also secured by way of equitable mortgage on Industrial Property of plot land measuring 150 bigha situated at khasra no. 2702, 2703,705, 2707, 2708, 2709, 2710, 2711, 27192704, 4025/2706, 4021/2697 of Vill Raila & Khasra no 3123/1516,3124/1514 of Vill Lambia Kalan, National Highway -48 Vill Raila along with hypothecation of Plant and Machinery at the above land and building.

b. Working capital facilities repayable on demand and it carry interest at the rate 8.75% per annum.

ii. Bank Overdraft

a. Bank Overdraft from HDFC bank is secured by way of lien on FDR of Rs. 260.00 lakhs for a period of 550 days.

b. It carry interest at the rate 7.25% per annum.

15.1 Balances of trade payables are subject to reconciliation, confirmation and consequential adjustments, if any.

15.2 Disclosures relating to amounts payable as at the year end together with interest paid / payable to Micro and Small Enterprises have been made in the accounts, as required under the Micro, Small and Medium Enterprises Development Act, 2006 (''MSMED Act'') to the extent of information available with the Company determined on the basis of intimation received from suppliers regarding their status and the required disclosure is

16.1 Share Application Money Rs. 1450 Lakhs has been raised pursuant to restructuring/settlement scheme submitted to BIFR. Consequent to enactment

of Sick Industrial Companies (Special Provision) Repeal Act, 2003 (SICA Repeal Act) with effect from 1/12/2016, it became refundable.

16.2 Preference Share Capital

a. Preference Shares Rs. 225 Lakhs were redeemable in F.Y. 2001-02 Rs. 6.25 Lakhs, F.Y. 2002-03 Rs. 72.92 Lakhs F.Y. 2003-04 Rs. 72.92 Lakhs and F.Y. 2004-05 Rs. 72.91 Lakhs. Consequent to enactment of Sick Industrial Companies (Special Provision) Repeal Act, 2003 (SICA Repeal Act) with effect from 1/12/2016, the company is in process of settlement with respective Preference Shareholders.

b. Interest on cumulative redeemable preference shares amounting to Rs. 36.13 Lakhs for the year and Rs. 1047.74 Lakhs cumulative up to 31-032025 (Previous year Rs. 36.13 Lakhs & cumulative up to 31-03-2024 Rs. 1011.61 Lakhs) has not been provided as the company is in process of settlement of remaining redeemable preference share capital.

c. The Cumulative Redeemable Preference Share holders are entitled to cumulative interest at the rate specified. Each share holder of Cumulative Redeemable Preference Shares is entitled to one vote per share only on resolution placed before the company, which directly affects the right attached to cumulative redeemable preference share. Since the interest in respect of cumulative preference share holders has not been paid for more than two years, cumulative redeemable preference share holder have right to 10 votes per share on every resolution placed before the company in a meeting.

d. In the event of liquidation of the company, the holder of cumulative redeemable preference share will have priority over equity share holders in the payment of interest and re-payment of capital.

31 CONTINGENT LIABILITIES AND COMMITMENTS
(A) CONTINGENT LIABILITIES
i.	Bank Guarantees (amount paid their against by way of FDR Rs. 58.98 lakhs, Previous year Rs. 70.13 lakhs)	45.11	54.64
ii.	Disputed demands of GST /Sales Tax/Entry Tax Cases (amount paid Rs. Nil, Previous year Rs. 0.77 Lakhs)	-	0.77
iii.	Disputed Income Tax Demand (amount paid Rs. 11.71 Lakhs, Previous year Rs. 11.71 Lakhs)	11.71	11.71
iv.	Disputed demands of Excise cases under appeal (amount paid Rs. Nil, Previous year Rs. 0.63 Lakhs)	-	0.63
v.	Other disputed demands by Government departments (amount paid Rs. 22.99 Lakhs, Previous year Rs. 7.77 Lakhs)	111.93	159.45
vi.	Disputed liabilities and claim not acknowledged as debts	48.58	104.95
(B) COMMITTMENT
(a)	Estimated amount of Contracts remaining to be executed on capital account and not provided for.	463.58	42.87
(b)	Advance paid their against	118.17	1.00

34 EMPLOYEE BENEFITS

i) Defined benefits plan a) Gratuity

In accordance with the provisions of payment of Gratuity Act, 1972 the company has a defined benefits plan which provides for gratuity payments. Every employee who has completed continuous service of 5 years or more gets a gratuity on retirement/termination at 15 days salary (last drawn) for each completed year of service. Liabilities in respect of gratuity plan are determined by an actuarial valuation. Based on the actuarial valuation obtained in this respect, the following table sets out the details of the employees benefits obligation as at balance sheet date.

Risk exposure

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow- Salary Increase- Actual salary increase will increase the plan’s liability. Increase in salary increase rate assumption in future valuations which also increase the liability.

- Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.

- Discount Rate- Reduction in discount rate in subsequent valuations can increase the plan’s liability.

- Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

- Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact liability.

b Compensated Absences:

The Company permits encashment of compensated absence accumulated by their employees on retirement, separation and during the course of service. The liability in respect of the Company, for outstanding balance of leave at the balance sheet date is determined and provided on the basis of actuarial valuation as at the balance sheet date performed by an independent actuary. The Company doesn’t maintain any plan assets to fund its obligation towards compensated absences.

35 SEGMENT INFORMATION

a Based on the management approach as defined in Ind AS 108 - Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the company''s performance and allocates resources based on an analysis of various performance indicators of business segment/s in which the company operates. The Company is primarily engaged in the business of textile manufacturing which the management and CODM recognise as the sole business segment. Hence, disclosure of segment-wise information is not required and accordingly not provided.

Financial Instruments measured at amortised cost

The carrying amount of financial assets and financial liabilities measured at amortised cost in the Financial Statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled. ii. Fair Value Hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are whether observable or unobservable and consists of the following three levels:

Level 1 : Inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities.

Level 2 : Inputs are other than quoted prices included within level 1 that are observable for the asset or liability either directly or indirectly. Level 3 : Inputs which are not based on observable market data.

The fair value of investments in equity/liquid mutual funds is based active market.

Note 38 : A wholly owned subsidiary Modern Woollens UK Ltd has been incorporated on 18.11.2024 with the Registrar of Companies for England and Wales. Modern Threads (India) Limited has agreed to subscribe 1 share of GBP 1 of Modern Woollens UK Ltd and subscription amount is yet to be paid. Modern Woollens UK Ltd is yet to commence business operations, hence Consolidated Financial Results have not been prepared.

40 Wilful Defaulter

The company has been declared as wilful defaulter by banks and Financial Institutions from 31.03.2002 to 31.03.2010 but all the borrowings have settled and paid and default is not continuing, hence other details are not furnished.

41 Capital and Financial Risk Management A Capital Management

The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and maintain an optimal capital structure to reduce the cost of capital.

The Company’s adjusted net debt to equity ratio is as follows.

B Financial Risk Management

The Company’s activities are exposed market risk (including foreign currency risk, interest rate risk and commodity price risk), credit risk and liquidity risk. The company''s financial risk management is an integral part of how to plan and excute its business strategies. In order to minimise any financial performance of the company, derivaties financial instruments are entered. The company''s financial risk management policy is set by the Manading Director and governed by overall direction of Board of Directors of the company. i) Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk mainly from its operating activities (primarily trade receivables) and investing activities including deposits placed with banks, mutual funds and other financial assets. The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of financial assets. A default on a financial asset is when there is a significant increase in the credit risk which is evaluated based on the business environment. The assets are written off when the Company is certain about the non-recovery.

Trade Receivables: Customer credit risk is managed based on company’s established policy, procedures and controls. The company assesses the credit quality of the counterparties taking into account their financial position, past experience and other factors.

Credit risk is reduced by receiving pre-payments and export letter of credit to the extent possible. The Company has a well "defined sales policy to minimize its risk of credit defaults. Outstanding customer receivables are regularly monitored and assessed/"''

Impairment analysis is performed based on historical data at each reporting date on an individual basis.

Deposits with Bank and investments:

The credit risk of fixed deposits with banks and mutual funds are considered negligible, since the counterparties are reputable banks with high quality external credit ratings and the company is in the process of constantly evaluating the risks associated with the investment.

Other financial assets

Other financial assets mainly comprises of security deposits which are given to customers or other governmental agencies, are assessed by the Company for credit risk on a continuous basis.

ii) Liquidity Risk

Liquidity risk is the risk, where the company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The company’s approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due.

The table summarizes the maturity profile of Company''s financial liabilities based on contractual payments.

iii) Market Risk:

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises mainly three types of risk: interest rate risk, currency risk and other price risk such as commodity price risk. a. Foreign currency risk

The company operates internationally and portion of the business is transacted in several currencies and consequently the company is exposed to foreign exchange risk through its sales in overseas and purchase from overseas suppliers in various foreign currencies viz. Euro, GBP, USD, AUD, JPY etc.

During the year, the Company has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign currency exposure on highly probable forecasted transactions. Hedge effectiveness is determined at inception and periodic prospective effectiveness testing is done to ensure the relationship exist between the hedged items and hedging instruments, including whether the hedging instruments is expected to offset changes in cash flows of hedge items.

c. Commodity Risk

Commodity risk is defined as the possibility of financial loss as a result of fluctuation in price of Raw Material/Finished Goods and change in demand of the product and market in which the company operates. The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company has in place policies to manage exposure to fluctuations in the prices of the key raw materials used in operations. The company forecast annual business plan and execute on monthly business plan. Raw material procurement is aligned to its monthly/annual business plan and inventory position is monitored in accordance with future price trend.

43 Figures for previous year have been regrouped/rearranged/restated wherever considered necessary to make them comparable with the figures for the current year and for compliance of Ind AS.

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Mar 31, 2024

13.1 Nature and purpose of each reserve within equity is as follows:

A) Capital Reserve

Capital Reserve is mainly the reserve created by transferring the capital Subsidy received from Government in earlier years in accordance with applicable accounting standards on that date.

B) Capital Redemption Reserve

Capital Redemption Reserve lias been created for redemption of Preference Share Capital.

C) Securities Premium

Securities premium is credited when shares are issued at premium. The securities premium is utilised in accordance with the pi ovisionsof the Companies Act, 2013.

D) Debenture Redemption Reserve

Debenture Redemption Reserve lias been created for redemption of Debentures.

E) Retained Earnings

Retained earnings represents company''s cumulative earnings and losses respectively.

17.1 Share Application Money Rs. 1450 Laths has been raised pursuant to restructuring / settlement scheme submitted to BIFR. Consequent to

enactment of Sick Industrial Companies (Special Provision) RepealAct, 2003 (SICA Repeal Act) with effect from 1/12/2016, it became refundable

17.2 Preference Share Capital

a. Preference Shares Rs. 225 Lakhs were redeemable m F.Y 2001-02 Rs. 6.25 Lakhs, F.Y. 2002-03 Rs. 72.92 Lakhs F.Y. 2003-04 Rs. 72.92 Lakhs and F.Y. 2004-05 Rs. 72.91 Lakhs. Consequent to enactment of Sick Industrial Companies (Special Provision) Repeal Act, 2003 (SICA Repeal Act) with effect horn 1/12/2016, the company is in process of settlement with respective Preference Share holders.

b. Interest on cumulative redeemable preference shares amounting to Rs. 36.13 Lakhs for the year and Rs. 1011.61 Lakhs cumulative up to 31-03-2024 (Previous year Rs. 36.13 Lakhs & cumulative up to 31-03-2023 Rs. 975.48 Lakhs) lias not been provided as the company is in process of settlement of remaining redeemable preference share capital.

c. The Cumulative Redeemable Preference Share holders are entitled to cumulative mterest at the rate specified. Each share holder of Cumulative Redeemable Preference Shares is entitled to one vote per share only on resolution placed before the company, winch directly affects the right attached to cumulative redeemable preference share. Since the mterest in respect of cumulative preference share holders has not been paid for more than two years, cumulative redeemable preference share holder'' have right to 10 votes per share on every resolution placed before die company m a meeting.

d. In the event of liquidation of die company, the holder of cumulative redeemable preference share will have priority over equity share holders ill the payment of interest and re—payment of capital

32 LEASES

Effective April 1, 2019, the Company adopted Ind AS 116 “Leases” and applied the standard to all lease contracts existing onApnl 1,2019 using the modified retrospective method . Consequently, the Company recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate and the light of use asset at an amount equal to the lease liability recognized. Ind AS 116 will result in an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on account of lease payments.

Changes in the callying value of right to use assets are stated in Note No. 3C

The weighted average incremental borrowing rate applied to lease liabilities is 9.50 “op a

33 EMPLOYEE BENEFITS

i) Defined benefits plan a) Gratuity

In accordance with tile provisions of payment of Gratuity''Act, 1972 die company lias a defined benefits plan winch provides for gratuity''payments. Every''employee who lias completed continuous service of 5 years or more gets a gratuity on retirement tenmnation at 15 days salary (last drawn) lor each completed year of service. Liabilities m respect of gratuity plan are detenmned by an actuanal valuation. Based on the actuanal valuation obtained m this respect, the following table sets out the details of the employees benefits obligation as at balance sheet date

Risk exposure

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow

- Salary Increase-Actual salary increase Mill increase the plan’s liability. Increase in salary increase rate assumption in future valuations which also increase the liability.

- Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can unpact the liability.

- Discount Rate- Reduction in discount rate in subsequent valuations can increase the plan’s liability.

- Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed m the valuation can unpact the liabilities.

- Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact liability.

b Compensated Absences:

The Company permits encashment of compensated absence accumulated by their employees on retirement, separation and during the course of set vice The liability- in respect of the Company, for outstanding balance of leave at die balance sheet date is determined and provided oil the basis of actuanal valuation as at the balance sheet date performed by an independent actuary. The Company doesn’t maintain any plan assets to hind its obligation towards compensated absences

34 SEGMENT INFORMATION

a Based oil the management approach as defined in Ind AS 108 - Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the company''s performance and allocates resources based on an analysis of various peifonnance indicators of business segment/s in which the company operates. The Company is primarily engaged in the business of textile manufacturing which the management and CODM recognise as the sole business segment. Hence, disclosure of segment-wise information is not required and accordingly not provided.

Financial Instruments measured at amortised cost

Tlie carrying amount of financial assets and financial liabilities measured at amortised cost in the Financial Statements are a reasonable approximation of their fail'' values since the Company does not anticipate that die carrying amounts would be sigmficandy different from the values that would eventually be received or settled, ii. Fair Value Hierar chy

The fail’ value hierarchy is based on inputs to valuation techniques that are used to measure fair value tiiat are whether observable or unobservable and consists of the following three levels:

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities.

Level 2: Inputs are other than quoted prices included within level 1 that are observable forthe asset or liability either directly or indirectly.

Level 3: Inputs which are not based on observable market data.

The fair value of investments m equity/liquid funds is based on the price quotation at die reporting date derived from quoted maricet prices m active market.

38 Wilful Defaulter

The company lias been declared as wilful defaulter by banks andFmancial Institutions from 31.03 .2002 to 31.03.2010 but all the borrowings have settlled and paid and default is not continuing., hence other details are not furnished.

39 Capital and Financial Risk Management A Capital Management

The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stakeholders and maintam an optimal capital structure to reduce the cost of capital

Adjusted Net debt to equity ratio is not calculated as and there is no debt as on 31.03.2024 and 31.03.2023.

B Financial Risk Management

The Company’s activities are exposed to a variety of financial risks from its operations. The key financial risks niclude maiket risk (including foreign cunency risk interest rate risk and commodity pnce risk), credit ride and liquidity risk i) Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk mainly from its operating activities (primarily trade receivables).

Trade Receivables: Customer credit risk is managed based on company’s established policy, procedures and controls The cony any assesses the credit quality of the counterparties taking into account then'' financial position, past experience and other factors.

Credit risk is reduced by receiving pie—payments and export letter of credit to the extent possible. Ilie Company has a well defined sales policy to minimize its risk of credit defaults. Outstanding customer receivables are regularly monitored and assessed Impanment analysis is performed based on histoncal data at each reporting date on an individual basis. However, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively

ii) Liquidity Risk

Liquidity nsk is the risk, where the company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled bv delivennp cash or another financial asset The company’s approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due.

iii) Market Risk:

Maiket risk is the risk that the fan value of future cash flows of a financial instrument will fluctuate because of changes in maiket prices. Market risk comprises mainly three types of nsk: interest rate risk, currency risk and other price nsk such as commodity price risk,

a. Foreign currency risk

The company operates internationally and portion of the business is transacted in several currencies and consequently the company is exposed to foreign exchange nsk through its sales in overseas and purchase from overseas suppliers in various foreign currencies viz Euro, GBP, USD, AUD, JPY etc.

b. Interest rate risk

Interest rate risk is the risk that changes in maricet interest rates will lead to change in interest income and expense for the Company, hi order to optimize the Company''s position with regards to interest income & expense and to manage the interest risk, the Company performs comprehensive interest risk management by balancing the proportion of fix & variable rate financial instruments.

c. Commodity Risk

Commodity risk is defined as the possibility of financial loss as a result of fluctuation in price of Raw Material Finished Goods and change in demand of the product and market in which the company operates. The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company lias in place policies to manage exposure to fluctuations in the prices of the key raw materials used in operations. Tlie company forecast annual business plan and execute on monthly business plan. Raw material procurement is aligned to its monthly/annual business plan and inventory position is monitored in accordance with future pnee trend.

41 Figures for previous year have been regrouped rearranged¹ restated wherever considered necessary to make them comparable with the figures for the current year and for compliance of Lid AS

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Mar 31, 2023

K) Provisions, Contingent Liabilities & Contingent Assets

A. Provisions are recognized when the Company has a present
obligation as a result of past events and it is probable that
the outflow of resources will be required to settle the
obligation and in respect of which reliable estimates can be
made. A disclosure for contingent liability is made when
there is a possible obligation that may, but probably will not
require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the
likelihood of outflow of resources is remote, no provision''
disclosure is made. Provisions and contingencies are
reviewed at each balance sheet date and adjusted to reflect
the correct management estimates. Contingent assets are
neither recognized nor disclosed in financial statements.
However, when the realization of income is virtually certain,
then the related asset is not a contingent assets and its
recognition is appropriate.

B. Ifthe effect ofthe time value ofmoney is material, provisions
are discounted using a cunent pretax rate that reflects, when
appropriate, the risks specific to the liability.

L) Taxes on Income

Cunent Tax is recognised in the statement of profit and loss account
but deferred tax asset is not recognised in the statement of profit and
loss as the company is not confident of earning sufficient profits to
utilise unabsorbed depreciation in future.

Cunent tax

Cunent tax comprises the expected tax payable or receivable on the
taxable income or loss for the year and any adjustment to the tax
payable or receivable in respect of previous years. The amount of
cunent tax reflects the best estimate of the tax amount expected to
be paid or received after considering the uncertainty, if any, related
to income taxes. It is measured using tax rates (and tax laws) enacted
or substantively enacted by the reporting date.

Deferred Tax

Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying values of assets and liabilities in
the financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. In contrast, deferred
tax assets are only recognised to the extent that it is probable that
future taxable profits will be available against which the temporary
differences can be utilised.

The carrying value of defeired tax assets is reviewed at the end of
each reporting period and reduced to the extent that it is no longer

probable that sufficient taxable profits will be available to allow all
or part of the asset to be recovered.

Defeired tax assets and liabilities are measured at the tax rates that
are expected to apply in the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date. Deferred tax
assets and defeired tax liabilities are offset if a legally enforceable
right exists to set off current tax assets against current income tax
liabilities and when the deferred tax balances relate to the same
taxation authority.

M) Revenue Recognition

Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The specific recognition criteria described below
also be met before revenue is recognised.

Revenue from Sale of goods and sendees
Revenue from the sale of goods is recognised, when control of goods
being sold is transferred to customer and where there are no longer
any unfulfilled obligations. The performance obligations in contracts
are considered as fulfilled in accordance with the tenns agreed with
the respective customers.

Revenue from the sale of goods is measured at the fair value of the
consideration received or receivable, net of returns and allowances,
trade discounts and volume rebates. Sales as disclosed, are exclusive
of Goods and Services Tax.

The company considers the terms of the contract and its customary
business practices to determine the transaction price. The transaction
price is the amount of consideration to which the company expects
to be entitled in exchange for transferring promised goods to a
customer, excluding amount collected on behalf of third parties (for
example taxes collected on behalf of government). The consideration
promised in a contract with a customer may include fixed
consideration, variable consideration (if reversal is less likely in
future), or both. The transaction price is allocated by the company to
each perfomiance obligation in an amount that depicts the amount
of consideration to which it expects to be entitled in exchange for
transferring the promised goods to the customer
Revenue from job woric chaiges is recognised at a point of time when
the control is transferred usually when the material is fully processed
and dispatched to customers.

Export Incentives

Income from export incentiv es and duty drawbacks is recognised on
accrual basis when no significant uncertainties as to the amount of
consideration that would be derived and as to its ultimate collection
exist.

Interest income

For all interest bearing financial assets measured at amortised cost,
interest income is recorded using the effective interest rate (EIR).

N) Foreign currency tr ansactions and translations

Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation of monetary
assets and liabilities denominated in foreign currencies at year end
exchange rates are generally recognised in profit and loss.
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date when
the fair value was determined. Translation differences on assets
and liabilities earned at fair value are reported as part of the fair
value gain or loss. The gain or loss arising on translation of non¬
monetary items measured at fair value is treated in line with the

recognition of the gain or loss on the change in fair value of the
item.

O) Borrowing costs

General and specific borrowing costs that are directly attributable to
the acquisition, construction or production of a qualifying asset are
capitalised dunng the period of time that is required to complete and
prepare the asset for its intended use or sale. Qualifying assets are
assets that necessarily take a substantial period of time to get ready
for their intended use or sale.

Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation
Other borrowing costs are expensed in the period in which they are
incurred.

P) Segment Reporting

Operating segments are reported in a manner consistent with the
internal reporting provided to the chief decision maker being MD of
the company. The MD assesses the financial performance and the
position of the company as a whole, and strategic decisions.

The accounting policies adopted for Segment reporting are in line
with tlie accounting policies of the Company with the following
additional policies:

• Inter-segment revenue is accounted on the basis of
transactions winch are primarily detennined based on market''
fair value factors

• Revenue and expenses have been identified to segments on
the basis of their relationship to the operating activities of
the Segment. Revenue and expenses, which relate to the
enterprise as a whole and are not allocable to segments on a
reasonable basis have been included under “Un-allocated
expenses/revenue”.

Q) Financial Instruments

A. Financial Instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity.

Financial assets

a. Classification : The company classify its financial assets
in the following measurement categories

• Those to be measured subsequently at fair value (
either through other comprehensive, or through
Statement of profit and loss ), and

• Those measured at amortised cost.

The classification depends on the company’s business model
for managing the financial assets and the contractual terms
of the cash flows.

For assets measured at fair value, gains and losses will either
be recorded in the Statement of Profit or Loss or other
comprehensive income.

b. Initial recognition and measurement: All financial assets
are recognised initially at fair value plus, in the case of
financial assets not recorded at fair value through profit or
loss, transaction costs that are attributable to the acquisition
of the financial asset. Purchases or sales of financial assets
that require delivery of assets within a time frame established
by regulation or convention in the maricet place [regular way
trades] are recognised on the settlement date, ie., tire date
that the Company settles to purchase or sell the asset.

c. Subsequent measurement : For purposes of subsequent
measurement, financial assets are classified in following
categories:

i) Debt Instrument at amortised cost: ‘Debt
instrument’ is measured at the amortised cost if both
the following conditions are met: (a) The asset is held
within a business model whose objective is to hold
assets for collecting contractual cash flows, and (b)
Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount
outstanding. After initial measurement, financial
assets are subsequently measured at amortised cost
using the EIR method. Amortised cost is calculated
by taking into account any discount or premium on
acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included in
finance income in the Statement of Profit and Loss.
The losses arising from impairment are recognised
in Hie Statement of Profit and Loss.

ii) Debt Instrument atFVTOCI: Debt instruments are
measured at fair value through other comprehensive
income if these financial assets are held within a
business model whose objective is to hold these assets
in order to collect contractual cash flows or to sell
these financial assets and the contractual terms of
the financial asset give rise on specified dates to cash
flows that are solely payments of principal and
interest on the principal amount outstanding. Debt
instruments included within the FVTOCI category
are measured at fair value with all changes recognized
m die Other Comprehensive Income.

iii) Debt Instrument at FYTPL: FYTPL is a residual
category for debt instruments. Any debt instrument,
which does not meet the criteria for categorization
as at amortized cost or as FVTOCI, is classified as at
FYTPL. Debt instruments included within the
FVTPL category are measured at fair value with all
changes recognized in the Statement of Profit and
Loss.

is'') Equity Instruments measured at FVTOCI or
FVTPL: All equity investments in scope of Ind-AS
109 are measured at fair value. Equity instruments
which are held for trading are classified as at FYTPL.
For all other equity instruments, the Company
decides to classify the same either as at FVTOCI or
FYTPL. The Company makes such election on an
instrument-by-instrument basis. The classification is
made on initial recognition and is irrevocable. If the
Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in
the other comprehensive income (OC1). There is no
recycling of the amounts from OCI to P&L, even on
sale of investment. However, the Company may
transfer the cumulative gain or loss within equity.
Equity instruments included within the FYTPL
category are measured at fair value with all changes
recognized in the Statement of Profit and loss.

v) Equity'' instruments measured at Cost: Equity
investments in subsidiaries / joint ventures /
associates are accounted at cost.

d. Derecognition: A financial assetis derecognised only when:

- the Company has transfeired the rights to receive
cash flows from the financial asset or

- retains the contractual rights to receive the cash flows

of the financial asset, but assumes a contractual
obligation to pay the cash flows to one or more
recipients

Where the entity has transferred an asset, the Company
evaluates whether it has transferred substantially all risks
and rewards of ownership of the financial asset. In such cases,
tiie financial asset is derecognised. Where the entity has not
transferred substantially all risks and rewards of ownership
of the financial asset, the financial asset rs not derecognised.
Where the entity has neither transferred a financial asset nor
retains substantially all risks and rewards of ownership of
tiie financial asset, the financial asset is derecognised if the
Company has not retained control of the financial asset.
Where die Company retains control of the financial asset,
the asset is continued to be recognised to the extent of
continuing involvement in tiie financial asset,
e) Impairment of financial assets : hi accordance with Ind-
AS 109, the Company applies expected credit loss (ECL)
model for measurement and recognition of impairment loss
on the following financial assets and credit risk exposure:

i) Financial assets that are debt instruments, and are
measured at amortised cost e g., loans, debt securities,
deposits, and bank balance

ii) Trade receivables - The application of simplified
appioach does not require the Company to track
changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs
at each reporting date, right from its initial
recognition

Financial Liabilities

i) Classification : Debt and equity instruments issued
by the Company are classified as either financial
liabilities or as equity in accordance with the
substance of the contractual airangements and tiie
definition of a financial liability and an equity
instrument.

An equity instrument is any contract tiiat evidences
a residual interest in the assets of an entity after
deducting all of its liabilities.

ii) Measurement : Financial liabilities are initially
recognised at fair value, reduced by transaction costs
(in case of financial liability not at fair value through
statement of profit or loss), that are directly
attributable to the issue of financial liability. After
initial recognition, financial liabilities are measured
at amortised cost using effective interest method. The
effective interest rate is die rate that exactly discounts
estimated future cash outflow (including all fees paid,
transaction cost, and other premiums or discounts)
through the expected life of the financial liability,
or, where appropriate, a shorter period, to the net
cairying amount on initial recognition. At the time
of initial recognition, there is no financial liability''
irrevocably designated as measured at fair value
through statement of profit and loss.

iii) Borrowings : Boirowings are initially recognised at
fair value, net of transaction costs incurred.
Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is
recognised in statement of profit and loss over the

period of the borrowings using the effective interest
method

Borrowings are removed from the balance sheet when
the obligation specified in the contract is discharged,
cancelled or expired. The difference between the
carrying amount of a financial liability that has been
extinguished or transfeired to another party and the
consideration paid, including any non-cash assets
transfeired or liabilities assumed, is recognised in
statement of profit and loss.

is'') Trade and other payables : Trade and other payables
represent liabilities for goods and services provided to the
Company prior to the end of financial year which are unpaid.
They are recognised initially at their fair value and
subsequently measured at amortised cost using the effective
interest method.

s'') Derecognition : A financial liability is derecognised when the
obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by
anotiier from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the de¬
recognition of the original liability and the recognition of a
new liability. The difference in the respective carrying
amounts is recognised in the statement of profit and loss.
Offsetting financial instillments

Financial assets and liabilities are offset and the net amount
is reported in the balance sheet where there is a legally
enforceable right to offset the recognised amounts and there
is an intention to settle on a net basis or realise die asset and
settle the liability simultaneously. The legally enforceable
right must not be contingent on future events and must be
enforceable in the nonnal course of business and in the event
of default, insolvency or bankruptcy of the Company or the
counterparty.

R) Earnings Per Share

Basic earnings per Share : Basic earnings per share is computed by
dividing the profit/(loss) after tax by the weighted average number
of equity shares outstanding during the year.

Diluted earnings per share : Diluted earnings per share is computed
by dividing the profit/(loss) aftertax as adjusted for dividend, interest
and other cliaiges to expense or income relating to the dilutive
potential equity shares, by the weighted average number of equity
shares considered for deriving basic earnings per share and the
weighted average number of equity shares which could have been
issued on the conversion of all dilutive potential equity shares.

S) Cash Flow Statement

Cash flows are reported using the indirect method, as set out in Ind
AS 7 ‘Statement of Cash Flows’, whereby profit''(loss) before tax for
the period is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.

I) Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash
and cash equivalents includes cash on hand, cheque on hand, balance
with bank on current account and other short-term, highly liquid
investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.

U) Government Giants

Government grants are not recognised until there is reasonable
assurance that the Company will comply with the conditions attaching
to tliem and that the grant will be received.

Government grants relating to mcome expense are determined and
recognised m the statement of profit and loss over the period necessary
to match them with the cost that they are intended to compensate
and presented within other income.

Government grants relating to die property, plant and equipment are
credited to deferred revenue income on account of capital subsidy
and recognised in profit and loss on a systematic basis over the period
in which entity recognises as expenses die related costs for which
the grants are intended to compensate.

V) Fan^- Value Measurement

The Company measures financial instruments at fair value at each
balance sheet date. Fair value is the pnce tiiat would be received to

sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value
of an asset or a liability is measured using die assumptions tiiatmaifcet
participants would use when pricing tile asset or liability, assuming
that maricet participants act in their economic best interest.

All assets and liabilities for which fair value is measured or disclosed
in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that
is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for
identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that
is significant to the fair value measurement is directly or indirectly
observable.

Level 3 - Valuation techniques for which the lowest level input that
is significant to the fair value measurement is unobservable.

17.2 Preference Share Capital

a. Preference Shares Rs. 225 Lakhs were redeemable in F.Y. 2001-02Rs. 6.25 Lakhs, F.Y. 2002-03Rs. 72.92 Lakhs F.Y 2003-04 Rs. 72.92
Lakhs and F.Y. 2004-05 Rs. 72 .91 Lakhs. Consequent to enactment of Sick Industrial Companies (Special Provision) Repeal Act, 2003 (SICA
Repeal Act) with effect from 1/12/2016, the company is in process of settlement with respective Preference Shareholders.

b. Interest on cumulative redeemable preference shares amounting to Rs. 36.13 Lakhs for the year and Rs. 975.48 Lakhs cumulative up to
31-03-2023 (Previous year Rs. 36.13 Lakhs & cumulative up to 31-03-2022 Rs. 939.35 Lakhs) has not been provided as the company is in
process of settlement of remaining redeemable preference share capitaL

c. The Cumulative Redeemable Preference Share holders are entitled to cumulative interest at the rate specified. Each share holder of Cumulative
Redeemable Preference Shares is entitled to one vote per share only on resolution placed before the company, which directly affects the right
attached to cumulative redeemable preference share. Since the interest in respect of cumulative preference share holders has not been paid for
more than two years, cumulative redeemable preference share holder have right to 10 votes per share on every resolution placed before the
company in a meeting.

d. In the event of liquidation of the company, the holder of cumulative redeemable preference share will have priority over equity share holders
in the payment of interest and re-payment of capital

Financial Instruments measured at amortised cost

The carrying amount of financial assets and financial liabilities measured at amortised cost in the Financial Statements are a reasonable approximation
of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would
eventually be received or settled,
ii Fair Value Hierarchy

The fair value hierarchy is based on mputs to valuation techniques that are used to measure fair value that are whether observable or
unobservable and consists of the following three levels:

Level 1: Inputs are quoted prices (unadjusted) in active maricets for identical assets and liabilities.

Level 2: Inputs are other than quoted prices included within level 1 that are observable for the asset or liability either directly (i.e.

prices) or indirectly (i.e. derived from prices).

Level 3: Inputs are not based on observable market data unobservable inputs. Fair value are detennined in whole or in part using a

valuation model based on assumptions that are neither supported by prices from observable current market transactions in the
same instrument nor are they based on available market data.

The investment included in Level 3 of fair value hierarchy lias been valued using the cost approach to arrive at their fair value. The cost
of unquoted investment approximate the fair value because there is a wide range of possible fair value measurements and the cost
represents estimate of farr value within that range.

38 Wilful Defaulter

The company has been declared as wilful defaulter by banks and Financial Institutions from 31.03.2002 to 31.03.2010 but all the borrowings
have settlled and paid and defalut is not continuing, hence other details are not furnished.

39 Capital and Financial Risk Management

A Capital Management

Equity share capital and oilier equity are considered for the purpose of Company’s capital management. The Company’s objective for capital
management is to manage its capital to safeguard its ability to continue as a going concern, to provide returns to its shareholders, benefits to its
other stakeholders and to support the growth of the Company. The capital structure of the Company is based on management’s judgement of its
strategic and day-to-day needs with a focus on total equity so as to maintain investors, creditors and market confidence. The funding requirements
are met through operating cash and working capital facilities availed from the banks.

The Company monitors capital using a ratio of ‘adjusted net debt’ to ‘adjusted equity’. For this purpose, adjusted net debt is defined as total
liabilities, comprising interest-bearing loans and borrowings and obligations under finance leases, less cash and cash equivalents. Total equity
comprises all components of equity.

B Financial Risk Management

The Company’s financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables
and other receivables and financial liabilities comprise mainly of borrowings trade payables and other payables.

Company is exposed to maiket risk, credit risk and liquidity risk The Company’s Board oversees the management of these risks. The Company’s
Board is supported by senior management team that advises on financial risks and the appropnate financial risk governance framework for the
Company. The senior management provides assurance to the Company’s Board that the Company’s financial risk activities are governed by
appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and
risk objectives.

The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below,
i) Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk
mainly from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks.

(a) Credit risk on trade receivables is managed by the Company through credit approvals, establishing credit limits and continuously
monitoring the creditworthiness of customers to which the Company grants credit teims in the normal course of business.

An impairment analysis is performed at each reporting date on an individual basis for all clients. The maximum exposure to credit risk
at tiie reporting date is the carrying value of each class of financial assets disclosed in Note 36. The Company does not hold any collateral
as security against the receivables. The Company uses expected credit loss model to assess the impairment loss or gain. The Company
uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account
available external and internal credit risk factors such as financial condition, ageing of outstanding and the Company’s historical
experience for customers,
b) Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s Management in accordance with Company’s
policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty.
Company monitors rating, credit spreads and financial strength of its counter parties. Based on ongoing assessment Company adjust it’s
exposure to various counterparties,
h) Liquidity Risk

Liquidity risk is the risk that the Company may not be able to meet its pre sent and future cash flow obligations without incurring unacceptable
losses. Company’s objectrve rs to, at all time mamtam optimum levels of liquidity to meet its cash requirements. Company closely monitors
its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including overdraft, debt
from banks at optimised cost and cash flow from operations

The table summarizes the maturity profile of Company’s financial liabilities based on contractual undiscounted payments.

Foi S.S. Sui ana & Co. Rajesh Ranka - Chairman & Managing Director (DIN : 03438721)

Chartered Accountants _ . . _ _ ___T ...

FRN 001079C Ram ^^watar Kabra - Executive Director (DIN : 00945603)

C M. Jain — Non-Executive - Independent Director (DIN : 09566506)

(Prahalad Gupta) An Vita Jam - Non-Executive - Independent Director (DIN : 09598249)

Proprietor p.K_ Nahar — Chief Financial Officer —

M. No. 074458

B L.Saini — Company Secretary —

Place : Bhilwara .

Date : 29.05.2023 ^{P ace Bhl wara}

UDIN : 23074458BG''\''WNX4606 ^{1)316 :} 29.05.2023

---

Mar 31, 2015

1. Preference Shares were redeemable in 4 equal annual instalments commencing from the year 2003-04. The same will now be redeemed as per rehabilitation scheme.

2. Dividend on cumulative redeemable preference shares amounting to Rs. 140.38 lacs for the year Rs. 2667.13 lacs cumulative upto 31.03.2015) has not been provided in view of accumulated losses. The Company expects waiver / relief under rehabilitation scheme which is under consideration.

3. The Cumulative Redeemable Preference Share holders are entitled to cumulative dividend at the rate specified. Each share holder of Cumulative Redeemable Preference Shares is entitled to one vote per share only on resolution placed before the company, which directly affects the rights attached to cumulative redeemable preference share. Since the dividend in respect of cumulative preference share holders has not been paid for more than two years, cumulative redeemable preference share holder have right to 10 votes per share on every resolution placed before the company in a meeting.

4. In the event of liquidation of the company the holder of cumulative redeemable preference shares will have priority over equity share holders in the payment of dividend and re-payment of capital.

5. Equity share application money represents subscription pursuant to the draft rehabilitation scheme. The instruments will be issued on sanction of the scheme by BIFR. In view of pending approval of rehabilitation scheme by BIFR, no application money is due for refund.

6. Debentures, term loan and accrued interest are secured by way of first charge and equitable mortgage of respective immovable properties both present & future consisting of land, building and plant and machinery and hypothecation of all movable assets of the Company. The said borrowings settled at 3450 lacs against which 1655 lacs paid up to 31/03/2015 and balance payable in 4 years i.e. Rs. 450 lacsp.a. from 2015-16 to 2017-18 and Rs. 445 lacs in 2018-19 as agreed with the present assignee. The remaining amount Rs. 17279.85 lacs will be written back on discharge of full payment obligation.

7. Sales Tax loan from Rajasthan State Industrial Development & Investment Corporation Limited under interest free sales-tax loan scheme of the Government of Rajasthan is guaranteed by the Ex-Director of the Company and after due date of re-payment, interest has not been provided Rs. 0.19 lacs for current year and cumulative Rs. 18.29 lacs as the company expects waiver / relief under rehabilitation scheme.

8. Deferred Sales tax is as per Sales Tax deferment Scheme 1987 being availed w.e.f. 02.03.2005 and repayable after 7 Years in 10 half yearly instalments of 12.88 lacs commencing from 03/04/2012. The amount payable within one year is Rs. 25.76 lacs.

9. Public fixed deposit carries interest rate of 14% p.a.

10. The Hon'ble Company Law Board had passed order on 17.04.2002 that "The repayment of fixed deposits of Modern Threads (India) Limited shall be made by the company in accordance with the revival scheme as and when approved by the BIFR under provisions of "SICA.

In view of above, the company has been advised that as the repayment of the matured fixed deposits are covered by the above referred order and the DRS is pending for consideration before the Hon'ble BIFR, the same are not remained unclaimed and unpaid. As such no amounts are required to be transferred to the Investor Education and Protection Fund. However payment on compassionate grounds are being made regularly as per decision of the committee formed by Hon'ble Company Law Board for this purpose.

11. The company has not received information from vendors regarding their status under the Micro, small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at year end together with interest paid / payableunder this Act ha,ve not been given.

12. Balances of trade payables pertaining to Thread Division of the company which is lying closed due to seizure of entire plant and office block by Ajmer Vidyut Vitaran Nigam Limited, are subject to confirmation and consequential adjustments, if any.

13. Provision of change in foreign exchange rate on trade payables (under litigation) prevailing at the time of transaction took place and as on the Balance sheet date amounting to Rs. (139.02) lacs for the year and Rs. 236.44 lacs up to 31.03.2015 have not been recognized as an expense as the company expects waiver/ relief under Rehabilitation Scheme.

14. Addition to land is on account of taxes.

15. Deduction under the head plant & machinery represents discarded assets

16. Deprecation includes Rs. 14.49 lacs (Previous year Rs. 14.53 lacs ) provided on the assets of Threads Division which is not in operation.

17. Pursuant to the enactment of Companies Act,2013, the company has applied the useful life as specified in Schedule II. Accordingly transitional depreciation on tangible fixed assets with NIL remaining useful life amounting to Rs. 12.91 lacs charged to profit & loss account during the year.

18. In Pursuance to Accounting Standard 28 issued by The Institute of Chartered Accountants of India, the fixed assets of the company pertaining to the Thread Division and PTA project have been valued as at 01/04/2004 and necessary provision made for the impairment loss amounting to Rs. 22303.48 lacs during the financial year 2004-2005, based on valuation report by an expert .Further Impact of impairment if any in respect of assets of Thread Division of the company not ascertainable as the unit is attached by AVVNL for recovery of their dues

19. Provisions foT income tax for the current year has not been made in view of accumulated losses.

20. The Companyds entitled for set off of carried forward losses and unabsorbed depreciation against the future income under the Income Tax Act. However, based on present scenario, the company is not confident of earning sufficient profits to utilize these carried forward losses and unabsorbed depreciation in future and accordingly the Company has recognized deferred tax assets only to the extent there is deferred tax liability in compliance with Accounting Standard 22 issued by The Institute of Chartered Accountants of India. The major components of deferred tax assets and liabilities on account of timing difference are as given below:

21. RELATED PARTY DISCLOSURE

(as per Accounting Standard 18 as issued by ICAI)

Names and Relationship of related parties

Where Control exists:

NIL

Key Management personnel

Shri Rajesh Ranka (Chairman and Managing Director)

Shri J.P. Agarwal (Director and Sr. President) up to 14.08.2014

Shri P.K. Nahar (Chief Financial Officer)

Shri B.L. Saini (Company Secretary)

Relative of Key Management Personnel and their enterprises:

Shubham Corporate advisory Services Pvt.Ltd.

22. The net worth of the company has been eroded fully as on 31st March,2001 as per provisions of Sick Industrial Companies (Special provisions) Act, 1985. The Company has also filed reference based on audited accounts for the financial year ended 31st March, 2004.The Board for Industrial and Financial Reconstruction (BIFR) has declared the company as "Sick Company" pending approval of rehabilitation scheme,the accounts of the company has been prepared on going concern basis.

23. The figures of the previous year have been regrouped and rearranged wherever found necessary.

24. The above cash flow statement has been prepared under the indirect method set out in Accounting Standard 3 issued by the Institute of Chartered Accountants of India.

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Mar 31, 2013

1. RELATED PARTY DISCLOSURE

(as per Accounting Standard 18 as issued by ICAI) Names and Relationship of related parties

Where Control exists:

NIL

Key Management personnel and relatives :

Shri Rajesh Ranka (Chairman and Managing Director)

Shri J.P. Agarwal (Director and Sr. President w.e.f. 01.07.2012) Relative of Key Management Personnel and their enterprises, where transactions have taken place:

Shubham Corporate advisory Services Pvt.Ltd.

2. The net worth of the Company has been eroded fully as on 31 st March,2001 as per provisions of Sick Industrial Companies (Special Provisions) Act 1985.The Company has also filed reference based on audited accounts for the financial year ended 31 st March ,2004. The Board for Industrial and Financial Reconstruction (BIFR) has declared the company as "Sick Company" pending approval of rehabilitation scheme, the accounts of the company has been prepared on going concern basis.

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Mar 31, 2012

Notes on Financial Statements for the year ended 31st March,2012

1.1 Equity capital includes 19442900 shares allotted in pursuance to the scheme of arrangement for reconstruction/amalgamation.

1.2 Each Equity share holder is entitled to one vote per share.

1.3 In the event of liquidation of the company the holders of the equity shares will be entitled to receive any of the remaining assets of the company after distribution of all preferencial amount. The distribution will be in proportion to the number of equity shares held by the share holder.

1.4 Preference Shares were redeemable in 4 equal annual instalments commencing from the year 2003-04. The same will now be redeemed as per rehabilitation scheme.

1.5 Dividend on cumulative redeemable preference shares amounting to Rs. 140.37 lacs for the year (Cumulative Rs. 2246.00 lacs) have not been provided in view of accumulated losses. The Company expects waiver/relief under rehabilitation scheme which is under consideration.

1.6 The Cumulative Redeemable Preference Share holders are entitled to cumulative dividend at the rate specified. Each share holder of Cumulative Redeemable Preference Shares is entitled to one vote per share only on resolution placed before the company, which directly affects the rights attached to cumulative redeemable preference shares. Since the dividend in respect of cumulative preference share holders has not been paid for more than two years, cumulative redeemable preference share holder have right to 10 votes per share on every resolution placed before the company in a meeting.

1.7 In the event of liquidation of the company the holder of cumulative redeemable preference shares will have priority over equity share holders in the payment of dividend and re-payment of capital.

2.1 Debentures, Term Loans and accrued interest are secured by way of first charge and equitable mortgage of respective immovable properties both present & future consisting of land, building and plant and machinery and hypothecation of all movable assets of the Company. The said borrowings have been settled with the assignee at Rs. 3475 lacs payable Rs. 550 lacs before 31/03/2012 (Paid and adjusted from above) and balance in 5 years up to 31st March, 2017. The remaining amount of Rs. 18722.35 lacs will be written back on discharge of full payment obligation, as per terms & conditions of the settlement.

2.2 Sales Tax loan from Rajasthan State Industrial Development & Investment Corporation Limited under interest free sales-tax loan scheme of the Government of Rajasthan is guaranteed by the Ex-Director of the Company and after due date of re-payment interest has not been provided for current year Rs. 0.77 Lacs and cumulative Rs. 16.56 lacs as the company expects waiver/relief under rehabilitation scheme.

3. Deferred Sales tax is as per Sales Tax deferment Scheme 1987 being availed w.e.f. 02.03.2005 and repayable after 7 years in instalments commencing from 02/09/2012

4. Interest provision have not been made on Public fixed deposit amounting Rs. 103.77 Lacs for the year (cumulative Rs. 636.20 Lacs) as the company expects waiver/relief under rehabilitation scheme which is under consideration.

5. The Hon'ble Company Law Board had passed order on 17.04.2002 that "The repayment of fixed deposits of Modern Threads (India) Limited shall be made by the company in accordance with the revival scheme as and when approved by the BIFR under provisions of "SICA".

In view of above, the company has been advised that as the repayment of the matured fixed deposits are covered by the above referred order and the DRS is pending for consideration before the Hon'ble BIFR, the same are not remained unclaimed and unpaid within the meaning of section 205C of the Companies Act, 1956, and as such no amounts are required to be transferred to the Investor Education and Protection Fund. However payment on compassionate grounds are being made regularly as per decision of the committee formed by Hon'ble Company Law Board for this purpose.

6.1 The company has not received information from vendors regarding their status under the Micro, small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at year end together with interest paid/payable under this Act have not been given.

6.2 The balances have been taken as per books of accounts and are subject to confirmation.

6.3 Exchange fluctuations on Trade payables (under litigation) amounting to Rs. 127.82 Lacs for the year and cumulative Rs. 333.14 Lacs have not been recognized as an expense as the Company expects waiver/relief under Rehabilitation Scheme.

7.1 Addition to land is on account of taxes and deduction to plant and machinery are on account of items discarded.

7.2 Deprecation includes Rs.195.98 lacs (Previous year Rs. 198.14 lacs) provided on the assets of Threads Division which is not in operation

7.3 In Pursuance to Accounting Standard 28 issued by The Institute of Chartered Accountants of India, the fixed assets of the company pertaining to the Thread Division and PTA project have been valued as at 01/04/2004 and necessary provision made for the impairment loss amounting to Rs.303.48 lacs during the financial year 2004-2005, based on valuation report by an expert.

7.4 Impact of impairment if any in respect of assets of thread Division of the company not ascertainable as the unit is attached by AWNL for recovery of their dues.

8. Exceptional items consist of amount written back on account of settlement of some of the loans/borrowings and interest thereon and others Rs. 1076.34 lacs (Previous year Rs. 618.451acs).

9.1 Provisions for income tax for the current year has not been made in view of accumulated losses.

9.2 The Company is entitled for set off of carried forward losses and unabsorbed depreciation against the future income under the Income Tax Act. However, based on present scenario, the company is not confident of earning sufficient profits to utilize these carried forward losses and unabsorbed depreciation in future and accordingly the Company has recognized deferred tax assets only to the extent there is deferred tax liability in compliance with Accounting Standard 22 issued by The Institute of Chartered Accountants of India. The major components of deferred tax assets and liabilities on account of timing difference are as given below:

10. The net worth of the Company has been eroded fully as on 31st March,2001 as per provisions of Sick Industrial Companies (Special Provisions) Act 1985 .The Company has also filed fresh reference based on audited accounts for the financial year ended 31st March ,2004. The Board for Industrial and Financial Reconstruction (BIFR) has declared the company as "Sick Company" pending approval of rehabilitation scheme, the accounts of the company has been prepared on going concern basis.

(Rs. in Lacs)

As at 31.03.2012 As at 31.03.2011

11. CONTINGENT LIABILITIES NOT PROVIDED FOR

i. Bank Guarantees 2.68 2.68

ii.Disputed demands of Sales Tax Cases under appeal. 249.94 251.18 (Amount paid Rs. 1.80 Previous year Rs. 1.80)

iii. Disputed demand of Excise cases under appeal. 80.30 80.30 (Amount paid Rs. 5.16 Previous year Rs. 5.16)

iv. Other disputed demands by Government departments 65.00 65.00 (Amount paid Rs. 4.73 Previous year Rs. 4.23)

v. Disputed liabilities and claims not acknowledged as 1,361.33 926.49 debts

12. The previous year figures have been regrouped and rearranged to make them comparable with the current year. Till the year ended 31st March, 2011, the company was using pre-revised schedule VI to the Companies Act, 1956 for preparation and presentation of it's financial statements. During the year ended 31st March, 2012 revised schedule VI notified under the companies Act 1956, has been applicable to the company. The Company has re-classified previous years figures to confirm to this classification. The adoption of revised schedule VI does not impact recognition and measurement principals followed for preparation of financial statements. However it significantly impact presentation and disclosures made in the financial statements, particularly presentation of Balance Sheet.

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Mar 31, 2010

1. Contingent Liabilities not Provided for:

(a) Bank Guarantees and Letter of credits outstanding Rs.4.18 lacs (Previous Year Rs. 240.61 lacs) against which Rs.4.18 lacs paid as margin (Previous year Rs. 4.18 Lacs).

(b) Bills discounted with banks Rs. Nil (Previous year Rs.23.53 Jacs).

(c) Guarantees given by the Company to others Rs.500.00 lacs (Previous year- Rs: 2084.07 lacs).

(d) Disputed demand for excise and customs Rs. 77.06 lacs ( Previous Year Rs. 80.30 lacs) and other demands by Government Department Rs.65.00 lacs (Previous Year Rs. 65.38 lacs) against which amount paid Rs.5.16 lacs (Previous Year Rs.5.16 lacs) and Rs.4.23 lacs (Previous year Rs 4.42 lacs) respectively.

(e) Sales Tax demand against various assessment years disputed by the Company Rs. 251.18 lacs (Previous year Rs. 251.18 lacs) against which amount paid Rs. 1.80 lacs ( Previous year Rs. 1.80 lacs).

(f) Claims not acknowledged as debts by the company Rs.848.44 lacs (Previous year Rs. 773.88 Lacs).

(g) In respect of restructured debts future payment obligation are to be fulfilled as stipulated, failing which the original liability will fall back with interest and penal interest, amount of which is not ascertainable.

2. Depreciation includes Rs.223.36 lacs (Previous year Rs. 240.48 lacs) provided on the assets of Threads Division, which is not in operation.

3. (a) Balances of debtors, creditors and advances have been taken as per books and are subject to reconciliation / confirmation and consequential adjustments, if any. (b) Balances of secured and unsecured lenders have been taken as per books and arc subject to reconciliation / confirmation, pending settlement with respective lenders.

4. Inventories include goods in transit and those lying with consignment agents/ third parties.

5. Pending fulfillment of terms and conditions of restructuring/settlement and/or satisfaction of charge, Rs.98.00 lacs paid during the year (Cumulative Rs. 1724.67 lacs) to various secured lenders has been shown as Advances recoverable in Cash or in Kind or for value to be received and secured loan amount has been shown accordingly.

6. Sales includes Job charges Rs. 475.60 lacs (Previous Year Rs. 474.65 lacs).

7. Effect of restructuring / reschedulement of debts and liabilities as per the restructuring scheme considered by financial institutions during March, 1998 has been given in Accounts. In some cases instruments are yet to be issued,.pending approval/ documentation / reconciliation.

8. Interest Provisions have not been made in case of following dues as the company expects waiver/relief under rehabilitation scheme which is under consideration: -

(a) On accrued interest upto cut off date i.e. 30 September, 1998 converted / convertible into 16% optionally fully convertible debentures (OFCDs) amounting to Rs. 110.82 lacs for the year (Cumulative Rs. 1274.07 lacs).

(b) On other loans/dues amounting to Rs. 50.35 lacs for the year (Cumulative Rs. 492.37 lacs).

(c) On public fixed deposits amounting to Rs. 111.43 lacs for the year (Cumulative Rs. 1099.62 lacs).

(d) On debentures and term loan of PTA project amounting to Rs. 1709.62 lacs for the year (Cumulative Rs. 12781.19 lacs).

9. Compounding interest, penal interest and liquidated damages have not been considered on dues of Financial institutions, Banks and others, amount of which is unascertainable; pending reconciliations/confirmation with respective lenders. The company expects waiver / relief under rehabilitation scheme being submitted to BIFR.

10. Exchange fluctuations on Trade creditors"(under litigation) amounting to Rs. 119.29 Lacs have not been recognized as an expense as the company expects waiver / relief under rehabilitation Scheme being submitted to BIFR.

11. In view of the losses, Debenture Redemption reserve has not been created.

12. Dividend on cumulative redeemable preference shares amounting to Rs. 140.38 lacs for the year (Cumulative Rs.1965.29 lacs) has not been provided in view of losses. The company expects waiver/relief under rehabilitation scheme being submitted to BIFR.

13. Ajmer Vidyut Vitran Nigam Ltd. (AVVNL) had issued notices for recovery of their dues amounting to Rs. 241.60 lacs against Threads division of the Company and in exercise of power conferred under Rajasthan Land Revenue Act, 1956 attached the entire plant and office block at Raila on 19.10.2001. Therefore the physical verification of assets and inventories could not be carried out and certain records lying at plant could not be produced to auditors for their verification.

14. Loss for the year has been arrived at after adjusting prior year debits Rs. 0.72 lacs (Previous year Rs. 1.46 lacs) charged to respective heads of account, other than those crystalised during the year.

15. Provisions for income tax for the current year has not been made in view of losses.

16. The net worth of the Company has been eroded fully as on 31s1 March, 2001 as per provisions of Sick Industrial Companies (Special Provisions) Act, 1985.The Company has also filed fresh reference based on audited accounts for the financial year ended 31st March, 2004. The Board for Industrial and Financial Reconstruction (B1FR) has declared the company as "Sick Company" and State Bank of India has been appointed as operating Agency. Accordingly, pending approval of rehabilitation scheme, the accounts of the company has been prepared on going concern basis.

17. The Honble Company Law Board has passed order on 17.04.2002 that "The repayment of fixed deposits of Modern Threads (India) Limited shall be made by the company in accordance with the revival scheme as and when approved by the BIFR under provisions of "SICA". However payment on compassionate grounds are being made regularly as per decision of the committee formed by Honble Company Law Board for this purpose.

18. In the opinion of the Board of Directors, Current Assets, Loans and Advances have a value of realisation at least equal to the amount at which they are stated in the Balance Sheet. Adequate provisions have been made in accounts for all known liabilities except stated otherwise.

19. Exceptional items consist of amount written back on account of settlement of somcof the Loans / borrowings and interest there on Rs 638.25 lacs (Previous year Rs. 13322.33 lacs) & others Rs.71.38 lacs (previous year Nil).

20. In view of insufficient information from suppliers regarding their status as SSI units, the name of such small - scale undertakings could not be ascertained and accordingly could not be disclosed.

21. The company has not received information from vendors regarding their status under the Micro, small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at year end together with interest paid / payable under this Act have not been given.

22. Remuneration and perquisites to the Chairman & Managing Director and Executive Director:

23. Related Party Disclosure as per Accounting Standard 18 as issued by ICAI:

(I) Related Party Relationships :

a) Where Control Exists:

Modern Insulators Ltd.

b) Key Management Personnel:

Shri H.S. Ranka (Chairman and Managing Director)

Shri M.L- Pamecha (Executive Director)

c) Relative of Key Management Personnel and their enterprises, where transaction have taken place:

Shubham Corporate advisory Services Pvt. Ltd.

24. The Company is entitled for set off of carried forward losses and unabsorbed depreciation against the future income under the Income Tax Act. However, based on present scenario, the company is not confident Of earning sufficient profits to utilize these carried forward losses and unabsorbed depreciation in future and accordingly the Company has recognized deferred tax assets only to the extent there is deferred tax liability in compliance with Accounting Standard 22 issued by The Institute of Chartered Accountants of India. The major components of deferred tax assets and liabilities on account of timing difference are as given below:

The net Deferred Tax Assets of Rs. 8138.83 lacs have not been recognized in accounts due to the reasons as mentioned above.

25. In pursuance to Accounting Standard 28 issued by The Institute of Chartered Accountants of India, the fixed assets of the company pertaining to the Thread Division and PTA project have been valued as at 01/04/2004 and necessary provision made for the impairment loss amounting to Rs. 22303.48 lacs during the financial year 2004-2005, based on valuation report by an expert. Since then there has not been further impairment of assets.

26. Figures for the previous year have been re-arranged /re-grouped wherever considered necessary to make them comparable.