Note 1 Corporate Information

Ambika Cotton Mills Limited is engaged in manufacturing and selling speciality cotton yarn catering to the needs of manufacturers of premium branded shirts and t-shirts. Exports constitute significant portion of the operations. The company operates with total installed spindle capacity of 108288 (Previous Year 108288 Spindles) of compact facility housed in four units and Knitting facility of converting 30,000 Kgs of yarn per day into fabrics. The company has installed 27.4 MW wind power capacity for captive consumption of spinning segment. The Spinning Plants are located at Kanniyapuram, Dindigul and Windmills are located in Tirunelveli, Dharapuram and Theni in the State of Tamilnadu. The financial statements are approved for issue by the Company’s Board of Directors on 25th May 2018.

2. Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in note. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Information about such estimates and judgments are included in the relevant notes together with the basis of calculation for relevant line item in the financial statements. Estimates and judgments are based on historical experience and other factors, including expectations of future events that may have a financial impact on the company and that are believed to be reasonable under the circumstances.

The company has issued only one class of Equity share having a par value of Rs.10 per share. They entitle the holder to participate in dividends, and to share in the proceeds of winding up the of company in proportion to the number of and amounts paid on the shares held. Every holder of equity shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

1,50,000 equity shares of Rs.10 each (representing 2.55% of the total number of paid up equity shares of the company) was bought back from the shareholders of the company through stock exchange at the average price of Rs. 1048.81 per share for an aggregate amount of Rs. 1573.22 Lakhs, in accordancewith the provisions of the Companies Act, 2013 and SEBI (Buyback of Securities) Regulations, 1998.The shares bought back were cancelled.

3.1. DISCLOSURE AS PER SCHEDULE

As defined under Micro, Small and Medium Enterprises Development Act, 2006, the disclosure in respect of the amounts payable to such enterprises as at the end of the year has been made in the financial statements based on information received and available with the Company.

iii) Fair Value of financial assets and liabilities measured at amortised cost

The carrying amounts of trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values, due to their short term and settlement on demand nature.

For all other financial assets and liabilities measured at amortised cost, the Company considers that their carrying amounts approximates their fair values.

Information about major customers Contributing 10 % or more to the Company’s revenue

The sale revenue of textiles segement includes sale to a customer amounting to Rs.7596 Lakhs (Previous year Rs.7911 Lakhs) contributing more than 10 % of the company’s sale revenue both for FY 2017-18 & FY 2016-17.

3.2. APPROVAL OF FINANCIAL STATEMENTS

The Financial statements were approved by the issue by the Board of Directors on 25.05.2018

3.3. FINANCIAL RISK MANAGEMENT OBJECTIVES

The Company prima facie is exposed to financial risks which is inclusive of Market risk, Interest rate risk, Price risk, Credit risk and Liquidity risk.

Market Risk : The substantial operations of the company are into exports and imports and are subject to foreign currency fluctuation risk. The company enters into foreign currency forward contracts based on underlying to mitigate such fluctuation risks. Further the company is also having natural hedge on account of exports exceeding imports .

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Interest Rate Risk: The company’s working capital borrowings are short term in nature and hence any fluctuation in market interest rates would not impact the profitability of the company in terms of debt servicing and liquidating of such borrowings.

Price Risk: The price risk arises on account of holding marketable financial assets. The company’s equity investments forms insignificant portion and hence any price fluctuation would not have any impact over the financial position of the company.

Credit Risk : Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The credit risk in trade receivables is managed by selling goods to specific orders and reputed customers. Exports are made against irrevocable letter of credits. Domestic sales are largely against advance payments. However certain exceptions are made in specific cases. There are no other financial assets carrying credit risk.

Liquidity Risk: Liquidity risk refers to the risk that the company cannot meet its financial obligations. The company carries substantial current assets to pay off short term obligations arising from working capital bank borrowings, trade payables and other related liabilities.

Capital Management: The company manages its capital to ensure that it will continue to operate as a going concern while maximising the return to stakeholders. The core focus is to safeguard and maintain the company’s financial stablity and independence. The fund requirements of the company are generally met through internal accruals. The working capital borrowings are meant for agumenting current assets.Substantial capital assets and current assets are built and maintained.

3.4

Previous years’ figures have been restated to comply with IND AS to make them comparable with the current period . Further, previous years’ figures have been regrouped / reclassified, wherever necessary, to conform with the current period presentation.