Notes to Accounts of Acknit Industries Ltd.

Mar 31, 2018

Note 1 (a)

USE OF ESTIMATE AND JUDGEMENT

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.

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.

A. Judgements in applying accounting policies

The judgements, apart from those involving estimations(see note below), that the Company has made in the process of applying its accounting policies and that have a significant effect on the amounts recognised in these financial statements pertain to useful life of intangible assets. The Company is required to determine whether its intangible assets have indefinite or finite life which is a subject matter of judgement. Certain trademarks have been considered of having an indefinite useful life taking into account that there are no technical, technological or commercial risks of obsolescence or limitations under contract or law. Other trademarks have been amortized over their useful economic life. Refer notes to the financial statements.

B. Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

1. Useful lives of property, plant and equipment and intangible assets:

As described in the significant accounting policies, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period.

2. Fair value measurements and valuation processes

Some of the Company’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets, liabilities and share based payments are disclosed in the notes to the financial statements.

3. Actuarial Valuation:

The determination of Company’s liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in other comprehensive income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the financial statements.

4. Claims, Provisions and Contingent Liabilities:

The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management’s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in notes to the financial statements.

Note 1 (b)

First-time adoption - mandatory exceptions, optional exemptions

(i) Overall Principle

The Company has prepared the opening balance sheet as per Ind AS of April 01, 2016 (“the transition date’) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to the certain exceptions and certain optional exemptions availed by the Company as detailed below.

(ii) De-recognition of financial assets and financial liabilities:

The Company has applied the de-recognition requirements of financial assets and financial liabilities prospectively for transaction occurring on or after April 01, 2016 (‘the transition date’)

(iii) Classification of debt instruments

The Company has determined the classification of debt instruments in terms of whether they meet the amortised cost criteria or the Fair value through other comprehensive income (FVTOCI) criteria based on the fact and circumstances that existed as of the transition date.

(iv) Deemed cost for Property, Plant and Equipment and Intangible assets

The Company has elected to continue with the carrying value of all its plant and equipment and intangible assets recognised as of April 1, 2016 (“transition date”) measured as per the previous GAAP and used that carrying value as its deemed cost as of the transition date.

(v) Determining whether an arrangement contains a lease

The Company has applied Appendix C of Ind AS 17 Determining whether an arrangement contains a Lease to determine whether an arrangement existing at the transition date contain a lease on the basis of facts and circumstances existing at the date.

(vi) Long Term Foreign Currency Monetary Items

The Company elected to continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the fi nancial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP. However there is no long term foreign currency monetary items.

Note:

a. Building Freehold i nclude Rs. 1,18,18,620/- (Prevous Year - Rs. 4,60,92,583/-), aggregate cost of Building on Leasehold Land situated at various l ocations.

b. The company imported plant & machineries under concessional rate or zero customs duty under Export Promotion Capital Goods Scheme (EPCG Scheme). Under the scheme, the company is obliged to export goods equivalent to 6 times of duty saved on capital goods. The company is required to meet this export obligation over a period of 6 years from the date of issue of authorisations. Out of the above, the company has pending export obligation of USD 0.14 Millon upto 31.03.2018.

c. Depreciation of ‘ NIL (Previous Year Rs. 16,55,642) on account of assets whose useful l ife was exhausted on April 01, 2016 has been adjusted against balance of Retained Earnings pursuant to adoption of estimated useful life of fixed assets as stipulated by Schedule II of the Companies Act, 2013 and as per component accounting [Refer note Statement of Changes in Equity].

C Rights, Preference and Restriction attached to Shares

The company has only one class of equity shares having par value of Rs.10 each and i s entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except i n case of i nterim dividend.

The Board of Directors have proposed a dividend of Rs 1.5 per equity share of Rs .10/- each for the financial year ended 31st March 2018.

a) Secured Loans are covered by :

From Bank*

Term Loan from bank i s secured by way of first pari passu charge on machineries and other fixed assets to be procured by way of availing Term Loan and secured by way of hypothecation of plant & machineries and other fixed assets of the company.

From Bank**

Secured by way of hypothecation first charge on Raw Material, Stock-in-process, Finished Goods, spares, stores, consumables, receivables and other current assets of the Company both present and future on pari passu basis with other Banker

b) Repayment Terms of outstanding long term borrowings (including current maturities) as on March 31, 2018 :-

The Scheduled maturity of the Long-term borrowings i s summarised as under:

Terms and conditions of the above financial liabilities:

- A sum of Rs. 62,41,458 payable to Micro and Small Enterprises as at 31st March, 2018. There are no Micro, Small and Medium Enterprises, to whom the company owes dues, which are outstanding for more than 45 days during the year and also as at 31st March, 2018. This information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been i dentified on the basis of information available with the company.

* Tax l iability demanded by the Kolkata Municipal Tax Authorities was set aside by the Municipal Assessment Tribunal i n their order no. 08 dtd. 30.06.2016 vide M.A.A. 423 of 2016 and directed the Hearing Officer concerned to make a fresh assessment of the liabilities. The company has deposited, on account on several dates, a total sum of Rs. 21,02,421/- (Previous Year - Rs. 21,02,421/-). The amount so paid will be adjusted with the final assessment.

2A Additional Notes to Defined Benefit Plans/Long Term Compensated Absences Defined Contribution Plans -

The employee’s gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognized each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

Provident Fund, Pension and Gratuity Benefits are funded and Leave Encashment Benefits are unfunded in nature. The Defined Benefit Pension Plans are based on employees’ pensionable remuneration and length of service. Under the Provident Fund, Gratuity and Leave Encashment Schemes, employees are entitled to receive lump sum benefits.

Risk Management

The Defined Benefit Plans expose the Company to risk of actuarial deficit arising out of investment risk, interest rate risk and salary cost i nflation risk

Investment Risks: This may arise from volatility in asset values due to market fluctuations and impairment of assets due to credit losses. These Plans primarily invest in debt instruments such as Government securities and highly rated corporatebonds- the valuation of which i s inversely proportional to the interest rate movements.

Interest Rate Risk: The present value of Defined Benefit Plans l iability i s determined using the discount rate based on the market yields prevailing at the end of reporting period on Government bonds. A decrease in yields will increase the fund liabilities and vice-versa.

Salary Cost Inflation Risk: The present value of the Defined Benefit Plan liability i s calculated with reference to the future salaries of participants under the Plan. Increase in salary due to adverse inflationary pressures might lead to higher liabilities.

These Plans have a relatively balanced mix of investments in order to manage the above risks. The investment strategy is designed based on the interest rate scenario, liquidity needs of the Plans and pattern of investment as prescribed undervarious statutes.

The Trustees regularly monitor the funding and investments of these Plans. Risk mitigation systems are in place to ensure that the health of the portfolio is regularly reviewed and investments do not pose any significant risk of impairment. Periodic audits are conducted to ensure adequacy of internal controls. Pension obligation of the employees is secured by purchasing annuities thereby de-risking the Plans from future payment obligation.

The principal assumptions used for the purposes of the actuarial valuations were as follows :

3 Segment Reporting

The company’s operating business are organized and managed separately according to the nature of products. The four identified reportable segments are (i) Hand gloves, (ii) Garments (iii) Power generation segment. The secondary segment is the geographical segment based on the location of manufacturing unit.

The Chief Executive Officer (CODM) monitors the operating results of i ts business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance l s evaluated based on profit or loss and Is measured consistently.

4 RELATED PARTY DISCLOURES

Related Party Disclosures, as required by IND-AS 24, “ Related Party Disclosures” , are given below:

1. COMPANIES / FIRMS WHERE THERE IS A SIGNIFICANT INFLUENCE : (a) Acme Safetywears Limited

(b) Saraf Capital Markets Limited

(c) Prince Vanijya Private Limited

(d) Century Safety Wears Private Limited

(e) Rosinate India Company

2. KEY MANAGEMENT PERSONNEL : (a) Mr. Shri Krishan Saraf

(b) Mr. Deo Kishan Saraf

(c) Ms. Shruti Poddar

(d) Ms. Bandana Saha

3. RELATIVE OF KEY MANAGEMENT PERSONNEL: (a) Mr. Abhishek Saraf

(b) Mr. Aditya Saraf

(c) Mr. Utkarsh Saraf

(d) Ms. Priya Saraf

4. OTHERS : (a) Mr. Swapan Kumar Chakraborty

(b) Mr. Bishnu Kumar Kesan

5 Financial Instruments and Related Disclosures

1. Capital Management

The Company’s financial strategy aims to support its strategic priorities and provide adequate capital to i ts businesses for growth and creation of sustainable stakeholder value. The Company funds its operations through internal accruals. The Company aims at maintaining a strong capital base largely towards supporting the future growth of Its businesses as a going concern. During the year, the Company issued 520,000 equity shares of Rs 10 each at a premium of Rs 110/- each amountingto 624 Lakhs (2017- Nil) towards its issue of equity shares on preferential basis. The securities premium stood at Rs 6,94,88,500 as at 31st March, 2018 (2017 - Rs. 1,22,88,500).

C. Financial risk management objectives

The Company has a system-based approach to risk management, anchored to policies and procedures and internal financial controls aimed at ensuring early identification, evaluation and management of key financial risks (such as market risk, credit risk and liquidity risk) that may arise as a consequence of its business operations as well as its i nvesting and financing activities. Accordingly, the Company’s risk management framework has the objective of ensuring that such risks are managed within acceptable and approved risk parameters I n a disciplined and consistent manner and in compliance with applicable regulation. It also seeks to drive accountability I n this regard.

Liquidity Risk

The Company’s Current assets aggregate to Rs. 89,03,34,792 (2017 - Rs. 88,32,89,861 ; 2016 - Rs. 78,60,11,195) including Cash and cash equivalents and Other bank balances of Rs. 1,54,74,849 (2017 - Rs. 1,87,26,986; 2016 - Rs. 53,07,792) against an aggregate Current l iability of Rs. 64,09,22,978 (2017 - Rs. 70,55,01,638; 2016 - Rs. 63,63,10,725); Non-current l iabilities due between one year to three years amounting to Rs. 2,27,02,640 (2017 - Rs. 1,39,31,502 ; 2016 - Rs. 1,83,38,394) and Noncurrent I iability due after three years amounting to Rs. 47,68,286 (2017 - ‘ NIL; 2016 - Rs. 45,61,245) on the reporting date.

Further, while the Company’s total equity stands at Rs. 41,32,20,835 (2017 - Rs. 34,39,66,567; 2016 - Rs. 30,04,81,776), it has borrowings of Rs. 10,17,20,926 (2017 - Rs. 7,94,31,502; 2016 - Rs. 9,83,99,639). In such circumstances, l iquidity risk or the risk that the Company may not be able to settle or meet i ts obligations as they become due does not exist.

Market Risks

The Company is not an active investor in equity markets; it continues to hold certain investments in equity for long term value accretion.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The Company’s senior management is supported by a Senior officer that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist personnel’s that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks.

Foreign currency risk

The Company undertakes transactions denominated in foreign currency (mainly US Dollar & Euro ) which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency, including the Company’s net i nvestments i n foreign operations (with a functional currency other than Indian Rupee), are also subject to reinstatement risks.

The carrying amount of foreign currency denominated financial assets and l iabilities including derivative contracts, are as follows :

D. Fair value measurement Fair value hierarchy

Fair value of the financial i nstruments i s classified i n various fair value hierarchies based on the following three i evels :

Level 1: Quoted prices (unadjusted) i n active market for i dentical assets or i iabilities.

Level 2: Inputs other than quoted price included within l evel 1 that are observable for the asset or l iability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

The fair value of financial instruments that are not traded i n an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant i nputs required to fair value an i nstrument are observable, the i nstrument i s i ncluded i n Level 2. Derivatives are valued using valuation techniques with market observable inputs such as foreign exchange spot rates and forward rates at the end of the reporting period, yield curves, risk free rate of returns, volatility etc., as applicable.

Level 3: Inputs for the assets or i iabilities that are not based on observable market data (unobservable i nputs).

If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.

The fair value of trade receivables, trade payables and other Current financial assets and liabilities i s considered to be equal to the carrying amounts of these i tems due to their short-term nature. Where such items are Non-current i n nature, the same has been classified as Level 3 and fair value determined using discounted cash flow basis. Similarly, unquoted equity instruments where most recent i nformation to measure fair value is insufficient, or if there is a wide range of possible fair cost has been considered as the best estimate of fair value.

There has been no change i n the valuation methodology for Level 3 inputs during the year. The Company has not classified any material financial i nstruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year.

6. Financial Instruments and Related Disclosures (Contd.)

The following table presents the fair value hierarchy of assets and i iabilities measured at fair value on a recurring basis:

7. First-time Adoption of Ind AS

(i) Ind AS 101 (First-time Adoption of Indian Accounting Standards) provides a suitable starting point for accounting in accordance with Ind AS and is required to be mandatorily followed by first-time adopters. The Company has prepared the opening Balance Sheet as per Ind As as of 1st April, 2016 (the transition date) by :

a. recognising all assets and i iabilities whose recognition is required by Ind AS,

b. not recognising i tems of assets or i iabilities which are not permitted by Ind AS,

c. reclassifying items from previous Generally Accepted Accounting Principles (GAAP) to Ind AS as required under Ind AS, and

d. applying Ind AS i n measurement of recognised assets and liabilities.

A. Reconciliation of total comprehensive i ncome for the year ended 31st March, 2017 i s summarised as follows:

iii) Ind AS 101 mandates certain exceptions and allows first-time adopters exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions i n the financial statements:

a. Property, plant and equipment and i ntangible assets were carried in the Balance Sheet prepared i n accordance with previous GAAP on 31st March, 2016. Under Ind AS, the Company has elected to regard such carrying values as deemed cost at the date of transition.

(iv) In addition to the above, the principal adjustments made by the Company in restating its previous GAAP financial statements, including the Balance Sheet as at 1st April, 2016 and the financial statements as at and for the year ended 31st March, 2017 are detailed below:

a. Under previous GAAP, dividend payable on equity shares (including the tax thereon) was recognised as a liability i n the period to which it relates. Under Ind AS, dividends (including the tax thereon) to shareholders are recognised when declared by the members i n a general meeting.

b. Under previous GAAP, non-current investments were stated at cost. Where applicable, provision was made to recognise a decline, other than temporary, in valuation of such investments. Under Ind AS, equity instruments [other than investment in subsidiaries, joint ventures and associates] have been classified as Fair Value through Other Comprehensive Income (FVTOCI) through an i rrevocable election at the date of transition.

c. Under previous GAAP, current i nvestments were stated at lower of cost and fair value. Under Ind AS, these financial assets have been classified as Fair Value through Profit or Loss (FVTPL) on the date of transition and fair value changes after the date of transition has been recognised in profit or i oss.

d. The Company uses derivative financial instruments, such as currency forwards, options and exchange traded commodity futures, to hedge its foreign currency risks and commodity price risks, respectively. Under previous GAAP, the net mark to market losses on the outstanding portfolios of such instruments, other than those designated as cash flow hedges, were recognised i n the profit or i oss, and the net gain, if any, were i gnored.

Under Ind AS, changes i n the fair value of derivatives designated as cash flow hedges are recognised i n equity. Amounts deferred in equity are transferred to the Statement of Profit and Loss i n line with the hedged transaction. Changes i n the fair value of any derivative instruments that are not designated for hedge accounting are recognised i n the Statement of Profit and Loss.

e. Under previous GAAP, actuarial gains and losses related to the defined benefit schemes for gratuity were recognised in profit or l oss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability/asset which is recognised in OCI. Consequently, the tax effect of the same has also been recognised i n OCI instead of profit or l oss.

f. Under previous GAAP, movements in cash credit facilities, repayable on demand, were reflected in cash flows from financing activities in cash flow statement. Under Ind AS, such cash credit facilities are included in cash and cash equivalents in the cash flow statement.

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Mar 31, 2015

The company's operating business are organized and managed separately according to the nature of products. The five identified reportable segments are (i) Own manufactured cotton & synthetic gloves, (ii) Leather gloves, (iii) Readymade Garments (iv) Other & traded items and (v) Power generation segment. The secondary segment is the geographical segment based on the location of manufacturing unit.

1. RELATED PARTY DISCLOURES

Related Party Disclosures, as required by Accounting Standard 18," Related Party Disclosures", are given below:

1. ENTERPRISES WHERE THERE (a) Acme Safety wears Limited

IS A SIGNIFICANT INFLUENCE (b) Saraf Capital Markets Limited

(c) Prince Vanijya Pvt Ltd

(d) Century Safety Wears Pvt. Ltd

(e) Rosinate India Company

2. KEY MANAGEMENT PERSONNEL (a) Mr. Shri Krishan Saraf

(b) Mr. Deo Kishan Saraf

(c) Mr. Swapan Kumar Chakraborty

(d) Mr. Bishnu Kumar Kesan

(e) Mr. Abhishek Saraf

(f) Ms. Deepa Singh

2. DERIVATIVE INSTRUMENTS:

The company uses forward exchange contracts to hedge its exposures in foreign currency related to firm commitments and highly probable for casted transactions. The information on derivative instruments is as follows:-

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Mar 31, 2014

1 Corporate Information

Acknit Industries Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The company is engaged in manufacturing and selling of Industrial Hand Gloves, Garments and Safety wears.

The company was first amongst the various units producing safety gloves in India. Because of approved international quality standards and its comparatively competitive sales price, the products of the company were accepted immediately in the European market.

Over the years the company has grown in its operation which has been multiplied continuously and in the process the company has diversified its products from gloves to garments and safety wears.

2 Note: - A sum of Rs. 67,77,228/- payable to Micro Small and Medium Enterprises as at 31st March, 2014 (Previous year - Rs. 47,81,549/-) There are no Micro, Small and Medium Enterprises, to whom the company owes dues, which are outstanding for more than 45 days during the year and also as at 31st March, 2014. This information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

3 Note:

1. Building Freehold include Rs. 37,541,129/- (previous Year - Rs. 36,556,198/-), aggregate cost of Building on Leasehold Land situated at various locations.

2. Office Premises include Rs. 52,71,635/- (previous Year - Rs. 52,71,635/-), aggregate cost of Office Premises on lease. While the ownership of office premises Rs. 52,71,635/- is in the name of the company has not yet effected formal transfer.

3. The company imported plant & machineries under concessional rate or zero customs duty under Export Promotion Capital Goods Scheme (EPCG Scheme). Under the scheme, the company is obliged to export goods equivalent to 8 times of duty saved on capital goods. The company is required to meet this export obligation over a period of 8 years from the date of issue of authorisations. Out of the above, the company has fulfilled export obligation of USD 1.96 lacs upto 31.03.2014.

4. Depreciation had been provided at WDV up to the additions made on 31.03.95 and at SLM on the additions made on or after 31.03.95 as per Companies Act, 1956 (as amended). The Total depreciation provided Rs. 16,683/- on WDV method on Gross Block of Rs. 33,03,142/-( previous year depreciation Rs. 28,464/- on Gross Block of Rs. 33,03,142/-) and Rs. 1,72,04,312/- on SLM on Gross Block of Rs. 3,32,445,572/- (previous year depreciation Rs. 1,70,58,404/- on Gross Block of Rs. 3,12,333,777/-).

5. CONTINGENT LIABILTIES

(a) Claims against the company not acknoledged as debts

(i) Sales Taxes claims disputed by the company relating to issues of 76,29,958 76,29,958 applicability classification and disallowance.

(ii) Tax liability demanded by the Kolkata Municipal Tax Authorities*. 25,62,342 25,62,342

(b) Guarantees

Letter of Credit 1,91,23,102 1,52,39,170

(c) Other money for which company is contingently liable

Bills discounted by the Bank 6,97,78,878 4,55,92,365

* Tax liability demanded by the Kolkata Municipal Tax Authorities for the periods prior to acquisition of a property of Rs. 12,65,475/- (Previous Year. - Rs. 12,65,475/-), for the periods after acquisition of the property of Rs. 2,45,025/-(Previous Year. - Rs. 2,45,025/- and penalty and interest for above amounting to Rs. 10,51,842/- (Previous Year. - Rs. 10,51,842/-) is pending disposal before Hon''ble High Court at Kolkata against which the company has deposited on account a sum of Rs. 17,00,000/- (Previous Year. - Rs. 17,00,000/-).

6. SEGMENT REPORTING

The company''s operating business are organized and managed separately according to the nature of products. The five identified reportable segments are (i) Own manufactured cotton & synthetic gloves, (ii) Leather gloves, (iii) Readymade Garments (iv) Other & traded items and (v) Power generation segment. The secondary segment is the geographical segment based on the location of manufacturing unit.

7. Balance under heading trade receivables, trade payables and Ioans and advances are subject to confirmations.

8. Figures have been rounded off to the nearest rupee.

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Mar 31, 2013

1. SEGMENT REPORTING

The company''s operating business are organized and managed separately according to the nature of products. The five identified reportable segments are (i) Own manufactured cotton & synthetic gloves, (ii) Leather gloves, (iii) Readymade Garments (iv) Other & traded items and (v) Power generation segment. The secondary segment is the geographical segment based on the location of manufacturing unit.

2. RELATED PARTY DISCLOSURES

Related Party Disclosures, as required by Accounting Standard 18, " Related Party Disclosures" , are given below :

1. ASSOCIATES : (a) Acme Safetywears Limited

(b) Saraf Capital Markets Limited

2. KEY MANAGEMENT PERSONNEL : (a) Mr. Shri Krishan Saraf

(b) Mr. Deo Kishan Saraf

(c) Mr. Swapan Kumar Chakraboarty

(d) Mr. Bishnu Kumar Kesan

(e) Mr. Abhishek Saraf

3. COMPANIES WHERE THERE IS A

SIGNIFICANT INFLUENCE : (a) Rosinate India Company

(b) Prince Vanijya Pvt Ltd.

(c) Century Safety Wears Ltd.

3. DERIVATIVE INSTRUMENTS :- The company uses forward exchange contracts to hedge its exposure in foreign currency related to firm commitments and highly probable forcasted transactions. The information on derivative instruments is as follows :-

4 Balance under heading trade receivables, trade payables and loans and advances are subject to confirmations.

5 Figures have been rounded off to the nearest rupee.

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Mar 31, 2012

A) Rights, Preference and Restriction attached to Shares

The company has one class of Equity Shares having par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuring Annual General Meeting, except in case of interim dividend.

a) Secured Loans are covered by :

From Bank:

1. Primary charge on plant & machinery and equipment acquired at Falta & Ganganagar Unit.

2. Extension of equitable mortgage of Company's leasehold land and factory premises at Shed No. 2, Southern side, Falta Export Processing Zone, West Bengal.

3 Extension of equitable mortgage of Company's Land at Ganganagar Unit.

From Financial Institution

1. Term Loan, including current maturities, from financial institution is secured by way of both immovable and moveable assets / properties, both existing & future pertaining to the Project, Personal guarantee of Directors, PDC.

Note : A sum of Rs. 4,392,764/- payable to Micro and Samll Enterprises as at 31st March, 2012 (Previous year - Rs. 2,124,618/-). There are no Micro, Small and Medium Enterprises, to whom the company owes dues, which are outstanding for more than 45 days during the year and also as at 31 st March, 2012. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been indefied on the basis of information available with the company.

NOTES TO THE FINANCIAL STATEMENTS

2. The company imported plant & machineries under concessional rate or zero customs duty under Export Promotion Capital Goods Scheme (EPCG Scheme). Under the scheme, the company is obliged to export goods aggregating USD 4.42 lacs, equiva- lent to 8 times of duty saved on capital goods. The company is required to meet this export obligation over a period of 8 years from the date of issue of authorisations. Out of the above, the company has fulfilled export obligation of USD 0.99 lacs upto 31.03.2012.

3. Depreciation had been provided at WDV up to the additions made on 31.03.95 and at SLM on the additions made on or after 31.03.95 as per Companies Act, 1956 (as amended). The Total depreciation provided on Rs. 7,111/- WDV method on Gross Block of Rs. 3,303,142/- (previous year depreciation Rs. 15,058/- on Gross Block of Rs. 3,303,142/-) and Rs. 16,142,486/- on SLM on Gross Block of Rs. 305,455,990/- (previous year depreciation Rs. 15,369,364/- on Gross Block of Rs. 270,838,112/-)

Note: No provision was made in respect of Leave encashment in the account.

As required by Accounting Standard 15 “Employee Benefits” (AS-15), the disclosures are as under:

(i) Employer's Contribution to Provident Fund Rs. 1,241,919 Rs. 1.382.521

Defined Benefit Plan :

The employees' gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognized each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

There was a major fire on 16.09.2010, midnight, at one of its unit at Falta SEZ. In the same fire, Plant & Machineries, Electric Installations, Other Equipments alongwith Factory Building and Shed and Furniture & Fixtures were damaged. Moreover Inventories also destroyed in the same fire. All these Fixed Assets and Inventories were insured under “Standard Fire and Special Perils Policy”. During the year, the claim was fully settled at Rs. 51,457,777/- after all deductions and expenditure incurred for cost of restoration.

The Company had deducted the cost of Inventories forRs.28,835,562/-(Net after salvage), WDV of Fixed Assets on the date of fire forRs. 15,133,902/- and cost of restoration of Fixed Assets forRs. 10,430,140 from the Claim so settled and net shortfall of Rs. 2,941,827/- was shown in the Statement of Profit & Loss Account Under heading “Exceiptional Items - Loss on Fire”.

1. CONTINGENT LIABILTIES

a) Claims against the company not acknoledged as debts 127,598,142 820,500

(i) Sales Taxes claims disputed by the company relating to issues of applicability classification and disallowance

(ii) Tax liability demanded by the Kolkata Municipal Tax Authorities* 2,562,342 2.562,342

b) Guarantees

Letter of Credit 23,843,457 23,357.990

c) Other money for which company is contingently liable

Bills discounted by the Bank 42,971,235 49.288,779 Tax liability demanded by the Kolkata Municipal Tax Authorities for the periods prior to acquisition of a property of Rs. 1,265,475/- (P.Y. -Rs. 1,265,475/-), for the periods after acquisition of the property of Rs. 245,025/- (PY. - Rs. 245,025/-) and penalty and interest for above amounting to Rs. 1,051,842/- (P.Y. - Rs. 1,051,842/-) is pending disposal before Hon'ble High Court at Kolkata against which the company has deposited on account a sum of Rs. 1,700,000/- (P.Y. - Rs. 1,700,000/-).

2. SEGMENT REPORTING

The company's operating business are organized and managed separately according to the nature of products. The four identified reportable segments are (i) Own manufactured cotton & synthetic gloves, (ii) Leather gloves, (iii) Other & traded items and (iv) Power generation segment. The secondary segment is the geographical segment based on the location of manufacturing unit.

3. DERIVATIVE INSTRUMENTS

The company uses forward exchange contracts to hedge its exposure in foreign currency related to firm commitments and highly probable forcasted transactions. The information on derivative instruments is as follows

4. Balance under heading trade receivables, trade payables and loans and advances are subject to confirmations.

5. Figures have been rounded off to the nearest rupee.

6. The financial statements for the year ended March 31,2011 were prepared as per the then applicable, erstwhile Schedule VI of the Companies Act, 1956. Consequent to notification of Revised Schedule VI under the Companies Act, 1956, the financial statement for the year ended March 31, 2012 areHl prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for the previous year figures does not impact recognition and measurement principals followed for preparation of financial statements.

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Mar 31, 2011

1. Contingent Liability in respect of :- a) Bills discounted by the Bank amounting to Rs.49,288,779/- (Previous year Rs. 33,557,522/-).

b) In respect of Letter of Credit Rs. 23,357,990/- approx (Previous year Rs. 7,482,562/- approx)

c) Counter Guarantee given to Bank Rs.2,488,630/- (Previous year Rs.3,167,833/-)

d) Tax liability demanded by the Kolkata Municipal Tax Authorities for the periods prior to acquisition of a property of Rs. 1,265,475/- (Previous year Rs. 1,265,475/-), for the periods after acquisition of the property of Rs. 245,025/- (Previous year Rs. 245,025/-) and penalty and interest for the above amounting to Rs. 1,051,842/ - (Previous year Rs. 1,051,842/-) is pending disposal before Hon'ble High Court at Kolkata against which the Company has deposited on account a sum of Rs. 1,700,000/- (Previous year Rs. 1,700,000/-)

2. Cyclic expenditure such as Professional Tax, Rates, Taxes, Bonus, Insurance, Telephone expenses are treated on cash basis.

3. Valuation of inventories certified and decided by the management are according to normally accepted accounting principal.

4. Balance under heading Sundry Debtors, Creditors and Loans & Advances are subject to confirmations.

5. Depreciation had been provided at WDV up to the additions made on 31.03.95 and at SLM on the additions made on or after 31.03.95 as per Companies Act, 1956 (as amended). The Total depreciation provided Rs.15,056/- on WDV method on Gross Block of Rs. 3,303,143/-( previous year depreciation Rs. 28,042/- on Gross Block of Rs. 3,707,017/-) and Rs. 15,369,366/- on SLM on Gross Block of Rs. 270,838,111/- (previous year depreciation Rs. 15,128,217/- on Gross Block of Rs. 260,593,093/-)

6. No provision was made in respect of Leave encashment in the accounts.

7. 480,000 Equity shares of Rs.10/- each forfeited in terms of Board resolution during the year 1998-99.

8. With reference to disclosure for amount due to SSI undertakings in Schedule 'M', to the extent of availability of information as to the identify of SSI undertaking, no amount was due to such undertaking in excess of Rs. 1.00 lacs and no outstanding was for more than 45 days as at Balance Sheet date.

9. There was a major fire on 16.09.2010, midnight, at one of its unit at Falta SEZ. In the same fire, Plant & Machineries, Electric Installations, Other Equipments along with Factory Building and Shed and Furniture & Fixtures were damaged. More over inventories also destroyed in the same fire. All these Fixed Assets and inventories were insured under "Standard Fire and Special Perills Policy". During the year, the claim was fully settled at Rs. 51,457,777/- after all deductions and expenditure incurred for cost of restoration.

The company had deducted the cost of inventories for Rs. 28,835,562/- (Net after salvage), WDV of Fixed on the date of fire for Rs. 15,133,902/- and cost of restoration of Fixed Assets for Rs. 10,430,140/- from the claim so settled and net shortfall of Rs. 2,941,827/- was shown in the Profit & Loss A/c under heading "Extra ordinary items - Loss incurred from Fire."

10. Segment Reporting

The Companies operating business are organized and managed separately according to the nature of Products. The four identified reportable segments are (i) own manufactured cotton & synthetic gloves, (ii) Leather Gloves (iii) Other & traded items & (iv) Power Generation Segment. The secondary segment is the Geographical segment based on the location of manufacturing unit.

11. Schedule "A" to "X" and Annexure "A" for Company's General Business Profile, forms a part of Balance Sheet and Profit & Loss Account for the year ended on 31st March, 2011.

12. An asset is treated as impaired when cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit & Loss Account in the Year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

13. The company has recognize the Income, for the shortfall in minimum generation of power for earlier year on actual realization basis.

14. Previous year figures have been regrouped / rearranged wherever necessary to conform to current year figures.

15. Figures have been rounded off to the nearest of rupee.

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Mar 31, 2010

Schedule - U : - Related Party Transactions

The company has transactions with the following rotated parties :

Subsidiaries : Nil

Associates : a) Roslnate India Company.

b) Acme Safety Wears Limited.

c) Saraf Capital Markets Limited.

Key Management Personnel

a) Mr. Shri Krishan Saraf : Chairman cum Managing Director

b) Mr. Deo Krishan Saraf : Executive Director

c) Mr. Swapan Kumar Chakravarty : Works Manager

d) Mr. Bishnu Kumar Kesan : General Manager

e) Mr. Abhishek Saraf : Senior Executive

1. Contingent Liability in respect of :-

a) Bills discounted by the Bank amounting to Rs.33,557,522/- (Previous year Rs.22.975.882/-).

b) In respect of Letter of Credit Rs. 7,482,562/- approx (Previous Year Rs. 8,478,429/- approx)

c) Counter Guarantee given to Bank Rs.3,167,833/- (Previous year Rs.1,868.229/-)

d) Tax liability demanded by the Kolkata Municipal Tax Authorites for the periods prior to acquisition of a property of Rs. 1,265,475/- (Previous year Rs. 1,265,475/-), for the period after acquisition of the property of Rs. 245,025/- (Previous year Rs. 245,025/-) and penalty and interest for the above amounting to Rs. 1,051,842/. (Previous year Rs. 1,051,842/-) is pending disposal before Honble High Court at Kolkata against which the Company has deposited on account a sum of Rs 1,700,000/- (Previous year Rs. 700,000/-)

2. Cyclic expenditure such as Professional Tax, Rates, Taxes, Bonus, Insurance, Telephone expenses are treated on cash basis.

3. valuation of inventories certified and decided by the management are according to normally accepted accounting principal.

4. Balance under heading Sundry Debtors, Creditors and Loans & Advances are subject to confirmations.

5. Depreciation had been provided at WDV up to the additions made on 31 .03.95 and at SLM on the additions made on or after 31.03.95 as per Companies Act, 1956 (as amended) The Total depreciation provided Rs.28,042/- on WDV method on Gross Block of Rs. 3.707,017/- (previous year depreciation Rs. 36,076/- on Gross Block of Rs. 3,707,017/-) and Rs. 15,128,217/- on SLM on Gross Block of Rs. 260,593,093/- (previous year depreciation Rs. 14,945,836/- on Gross Block of Rs. 252,622,020/-)

6. No provision was made in respect of Leave encashment in the accounts.

7. 480,000 Equity shares of Rs. 10/- each forfeited in terms of Board resolution during the year 1998-99.

8. With reference to disclosure for amount due to SSI undertakings in Schedule L, to the extent of availability of information as to the identify of SSI undertaking, no amount was due to such undertaking in excess of Rs. 100 lacs and no outstanding was for more than 30 days as at Balance Sheet date.

9. Segment Reporting

The Companys operating business are organized and managed separately according to the nature of Products. The (our identified reportable segments are (i) own manufactured cotton & synthetic gloves, (ii) Leather Gloves (iii) Other & traded items & (iv) Power Generation Segment The secondary segment is the Geographical segment based on the location of manufacturing unit.

10. Schedule "A" to "U" and Annexure "A" for Companys General Business Profile, forms a part of Balance Sheet and Profit & Loss Acoount for the year ended on 31st March, 2010.

11. An asset is treated as impaired when cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit & Loss Account in the Year m which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

Defined Benefit Plan

The employees gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method. which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

12. The company has recognize the Income, for the shortfall in minimun generation of power for earlier year on actual realization basis.

13. Previous year figures have been regrouped / rearranged wherever necessary to conform to current year figures

14. Figures have been rounded off to the nearest of rupee.