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Notes to Accounts of Alok Industries Ltd.

Mar 31, 2016

1. As a consequence of the prolonged working at depleted levels, the Company''s losses have significantly mounted leading to a decrease in the net worth. The company will take due measures to inform concerned authorities of this development in due course.

Certain events / conditions could possibly impact the ‘going concern'' assumption of the Company. The lenders had invoked the ‘Strategic Debt Restructuring'' (SDR) on 27 Nov 2015 pursuant to Reserve Bank of India guidelines and the implementation thereof is under process. Considering this development, the Company has presented these financial statements on a ‘going concern'' basis.

2. Company has unabsorbed depreciation and business losses as at the Balance Sheet date on which net deferred tax assets of Rs 1051.85 crore has been recognized based on the concrete measures taken by the Company for ramping up operations and enhancing operating efficiency. Based on timely infusion of working capital, running order book position, reliability of raw material supply and the technical viability report prepared by recognized industry experts, the company is virtually certain that there would be sufficient taxable income in future to offset the deferred tax asset.

3. Pursuant to the applicability of Schedule II to the Companies Act, 2013, with effect from April 01, 2015, the Company has aligned the useful lives of its tangible assets with those specified In Schedule II or as assessed based on technical advice. Consequently, the depreciation charge for the year ended 31st March,2016 is lower by Rs. 290.63 crores.

4. In the opinion of management, the current assets and other non-current assets after necessary provisions / write offs have a value on realization in the ordinary course of the business, at least equal to the amount at which they are stated except otherwise stated.

5. Employee benefit plans:

i) Defined contribution plans:

Amounts recognized as expenses towards contributions to provident fund, and other similar funds by the Company are Rs. 4.83 Crores (Previous period Rs. 6.97 Crores).

ii) Defined benefit plans:

a) Gratuity Plan: The Company makes annual contribution to the Employee''s Group Gratuity Assurance Scheme, a funded defined benefit plan for qualifying employees. The Fund invests in the scheme of insurance with the Life Insurance Corporation of India, First Life Insurance Company Limited, SBI Life Insurance Company Limited and Canara HSBC Oriental Bank of Commerce. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

b) Compensated absences: Employees'' entitlement to compensated absences in future periods based on unveiled leave as at balance sheet date, as per the policy of the Company, is expected to be a long term benefit and is actuarially valued.

6. Operating Lease

The Company has lease agreement for various premises which are in the nature of operating lease. The tenure of Lease arrangement ranges up to 1 year which are cancellable lease. There is no obligation for renewal of these lease agreements and are renewable by mutual consent. Lease payment recognized in the Statement of Profit & Loss is Rs.16.30 crores (previous period Rs. 29.09 crores).

7. Disclosure Pursuant to Security and Exchange board of India ( Listing Obligations and Disclosures requirements) regulation, 2015 and section 186(4) of the Companies Act, 2013 are as under:

a. Loans and advances in the nature of loans given to subsidiaries/entities under common control utilized for the business purpose are as under :

8. Corporate Social Responsibility

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects.

A CSR committee has been formed by the company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.

9. Certain creditors/lenders have filed winding up petitions in the Bombay Court for non-payment of their dues / installments / interest etc. The Company has taken appropriate measures to defend itself in this regard.

10. The Company is yet to pay the debenture interest payment due for a period beyond one year as at the Balance sheet date. This attracts the provisions of Section 164 (2) of the Companies Act, 2013 as per which all directors retiring by rotation at the ensuing Annual General Meeting and eligible for reappointment render themselves ineligible for such reappointment. Further, Section 167 of the said Act appears ambiguous regarding the vacation of the Board, if and when such a contravention continues. The Company is informed that the Company Law Committee appointed by the Government of India has already recommended appropriate amendments to Section 167 to remove the apparent ambiguity. The Company is further informed the recommendation has been incorporated in the Companies (Amendment) Bill, 2016 which has been introduced in the Lok Sabha for discussion and is pending for confirmation.

11. The previous financial year of the Company was for a period of 18 months from 1 October 2013 to 31 March 2015, whereas the current financial year of the Company is for a 12 months from 1 April 2015 to 31 March 2016. The figure of the two periods are therefore not strictly comparable.

12. Previous period''s figures have been regrouped / reclassified wherever necessary to correspond with the current period''s classification / disclosure and are given in brackets.


Mar 31, 2015

1 BACKGROUND INFORMATION

Alok Industries Limited ("The Company") is a public limited company, domiciled in India and incorporated under the provisions of the Companies Act, 1956. The equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). It is primarily engaged in the business of textile manufacturing including mending and packing activities.

2 Contingent Liabilities in respect of :

(Rs. Crores) Sr.No. Particulars Current Previous Period Period A Custom duty on shortfall in export Amount Amount obligation in accordance with Unascertained Unascertained EXIM Policy (The Company is hopeful of meeting the export obligation within the stipulated period)

B Corporate guarantees given to banks for loans taken by subsidiary companies 1747.44 2,642.48

C Bills discounted 33.77 365.18

D Claims against the Company not acknowledged as debts :

a) Income taxes 6.18 0.31

b) Maharashtra value added tax 8.07 8.07

c) Other tax demands 1.57 1.57

d) Others - disputes under litigation - 19.34

3 Related Party Disclosure

A) Name and Transaction / balances with related parties

I. Name of related parties and nature of relationship

As per Accounting Standard 18 (AS-18) "Related Party Disclosures", Company''s related parties disclosed as below:

(i) Associate companies

Alspun Infrastructure Limited Next Creation Holdings LLC

Ashford Infotech Private Limited (up to 7 April 2014)

(ii) Entities under common control

Alok Denims (India) Private Limited Nirvan Exports

Alok Knit Exports Limited Pramatex Enterprises

Alok Textile Traders Ashok Realtors Private Limited

Buds Clothing Co. D. Surendra & Co. Triumphant Victory Holdings Limited.

(iii) Subsidiaries

Alok Industries International Ltd. @ Alok Infrastructure Limited

Alok New City Infratex Private Limited Springdale Information and Technologies Private Limited #

Alok International, Inc. Kesham Developers & Infotech Private Limited #

Alok International (Middle East) FZE Alok Singapore Pte Ltd.

Alok Worldwide Limited

Grabal Alok (UK) Limited

Mileta, a.s. Grabal Alok International Alok Grabal Trading Limited @ (Middle East) FZE Alok Merchant Singapore Pte. Ltd. (Incorporated on 7 July 2014) (Incorporated on 7 March 2014) Alok Global Singapore Pte. Ltd. Alok Universal Singapore Pte.Ltd. (Incorporated on 7 March 2014) (Incorporated on 7 March 2014) Alok Trading Singapore Pte. Ltd. (Incorporated on 7 March 2014) # Liquidation under process @ Entire stake sold to Alok Infrastructure Limited on 28 March 2012

(iv) Joint Venture

Aurangabad Textiles & Apparel Parks Limited New City Of Bombay Mfg. Mills Limited

(v) Key Management Personnel Ashok B. Jiwrajka Chandrakumar Bubna (Resigned w.e.f 30 September 2013) Dilip B. Jiwrajka Director Surendra B. Jiwrajka Sunil O Khandelwal (appointed as Executive Director Director w.e.f. 10 November 2012) K H Gopal (appointed as Executive Director w.e.f.10 November 2012) Alok A. Jiwrajka - COO (w.e.f.1 December 2012) Varun S Jiwrajka - Joint COO (w.e.f.1 December 2012) Neeraj D. Jiwrajka - Joint COO (w.e.f.1 December 2012)

(vi) Relatives of Key Alok A. Jiwrajka (up to Management Personal 30 November 2012) Suryaprakash Bubna (resigned w.e.f.28 February 2013)

(VII) Firms in which AVAN Packaging & Boards Relatives of Key Linear Design Management Personnel C. J. Corporation are interested

4 Employee benefit plans:

i) Defined contribution plans:

Amounts recognized as expenses towards contributions to provident fund, superannuation and other similar funds by the Company are Rs. 6.97 Crores (Previous period Rs. 9.60 Crores) for the period ended 31 March 2015.

ii) Defined benefit plans:

a) Gratuity Plan: The Company makes annual contribution to the Employee''s Group Gratuity Assurance Scheme, administered by the Life Insurance Corporation of India (''LIC''), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

b) Compensated absences: Employees'' entitlement to compensated absences in future periods based on unavailed leave as at balance sheet date, as per the policy of the Company, is expected to be a long term benefit and is actuarially valued.

5 Segment Reporting

a) Primary Segment: Geographical Segment

The company has identified geographical segment as its primary segment.

The geographic segment consists of:

a) Domestic (Sales to customers located in India)

b) International (Sales to customers located outside India)

Revenue directly attributable to segments is reported based on items that are individually identifiable to that segment. The company believes that it is not practical to allocate segment expenses, segment results, assets used, except trade receivables, in the company''s business or liabilities contracted since the resources / services / assets are used interchangeably within the segments. Accordingly, no disclosure relating to same is made. All fixed assets are located in India.

6 Exceptional items during the previous period included unrealized exchange fluctuation on foreign currency assets/ liabilities and foreign exchange derivative contracts of Rs. 317.39 crores , considering the unusual volatility of Indian Rupee against US dollar, and Rs. 146.35 crores on write off of investments/ advances in respect of subsidiaries in retail business.

7 The Company has extended the accounting year end from 30 September 2014 to 31 March 2015 to align with the requirements of having 31 March as the year end as required under the Companies Act, 2013. Accordingly, the current accounting period is for 18 months from 1 Oct 2013 to 31 Mar 2015. The previous accounting period of the Company was also for 18 months from 1 April 2012 to 30 September 2013. The figures of the two periods are therefore not strictly comparable.

8 Previous period''s figures have been regrouped / reclassified wherever necessary to correspond with the current period''s classification / disclosure.


Sep 30, 2013

1) Accounting for Derivatives

i. The company uses derivative instruments like foreign currency forward contracts, foreign currency options and Interest rate swaps to hedge its exposure to movements in foreign exchange rates, interest rates and currency risks. The objective of these derivative instruments is to reduce the risk or cost to the company and is not intended for trading or speculation purposes.

ii. Interest Rate Swaps, Foreign Currency Options and Currency Swaps, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are accounted based on the principles of prudence as enunciated in Accounting Standard 1 (AS-1) "Disclosure of Accounting Policies". Thus, mark to market loses (net) are accounted for by the company, net gains are ignored.

iii. In respect of foreign currency forward contracts entered into to hedge foreign currency exposure in respect of recognized monetary items, the premium or discount on such contracts is amortized over the life of the contract. The exchange difference measured by the change in exchange rate between the inception dates of the contract/ last reporting date as the case may be and the balance sheet date is recognized in the statement of profit and loss. Any gain / loss on cancellation of such forward contracts are recognised as income / expense of the period.

iv. The Company designates foreign currency forward contracts taken with respect to highly probable forecast transactions and firm commitments as hedges and accounts for the same by applying the recognition and measurement principles set out in the Accounting Standard (AS-30) "Financial Instruments: Recognition and Measurement". Accordingly, the Company records the gain or loss on effective cash flow hedges in the Cash Flow Hedging Reserve account until the forecasted transaction materializes. Gain or loss on ineffective cash flow hedges (if any) is recognized in the statement of profit and loss. (efer Note No. 33(ii)).

2. EMPLOYEE STOCK OPTION SCHEME (ESOS)

All outstanding Options granted under Grant 1 and Grant 2 of ESOS 2010 scheme issued in the previous year are voluntarily surrendered by Employees during the current period and accordingly, Company has reversed employee compensation expenses of Rs. 2.27 crores recognised in previous year.

Pursuant to ESOS scheme 2010 approved by the shareholders, vide postal ballot, in 2011, Company granted 23,044,650 shares (Grant 3) on September 28, 2013. Such options vest over a period of 1 year from grant date. Details of options granted under Grant 3 duly approved by the Remuneration and Compensation Committee under the said scheme are as under:

The Company has followed the intrinsic value-based method of accounting for stock options granted, based on Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Charted Accountants of India and accordingly compensation cost has not been recorded during the period on such grant since the market price was less than the exercise price at the date of grant. Had the compensation cost for the Company''s stock based compensation plan been determined in the manner consistent with the fair value approach as described in the Guidance note, Company''s net income would be lower by Rs. 0.03 crore, without any change in the earning per share, as reported.

The Company has adopted Black Scholes option pricing model to determine fair value of stock options. The fair value of each options granted under Grant 3 in current period is estimated on the date of grant based on the following assumptions:

3. EMPLOYEE BENEFIT PLANS:

i) Defined contribution plans:

Amounts recognized as expenses towards contributions to provident fund, superannuation and other similar funds by the Company are Rs. 9.60 crores (Previous Year Rs. 9.27 crores) for the period ended 30 September 2013.

ii) Defined benefit plans:

a) Gratuity Plan: The Company makes annual contribution to the Employee''s Group Gratuity Assurance Scheme, administered mainly by the Life Insurance Corporation of India (''LIC''), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

b) Compensated absences: Employees'' entitlement to compensated absences in future periods based on unavailed leave as at balance sheet date, as per the policy of the Company, is expected to be a long term benefit and is actuarially valued.

The following table sets out the status of the gratuity plan for the period ended 30 September 2013 as required under AS 15 (Revised)

4. SEGMENT REPORTING

a) Primary Segment: Geographical Segment

The company is in the business of manufacturing of Textile products. Considering its high level of international operations and present internal financial reporting based on geographical location of customer, the company has identified geographical segment as primary segment.

The geographic segment consists of:

a) Domestic (Sales to Customers located in India)

b) International (Sales to Customers located outside India)

Revenue directly attributable to segments is reported based on items that are individually identifiable to that segment. The company believes that it is not practical to allocate segment expenses, segment results, assets used, except trade receivables, in the company''s business or liabilities contracted since the resources/services/assets are used interchangeably within the segments. Accordingly, no disclosure relating to same is made. All fixed assets are located in India.

b) Secondary Segment: Business Segment

The company is operating in a single business i.e. Textile and as such all business activities revolve around this segment. Hence, there is no separate secondary segment to be reported considering the requirement of AS 17 on "Segment Reporting"

5. i. Fair values (Mark to market values) (loss) of Foreign currency options, Interest rate swaps and forward contracts (other than those considered for hedging) as at 30 September 2013 aggregating to Rs. 150.47 crores (previous year Rs. 179.57 crores) has been accounted for by the Company. Such fair values are based on the report of counter parties. MTM gain on such derivatives of Rs. 29.10 crores (previous year loss of Rs. 106.61 crores) have been recognised during the period.

ii. Derivative contracts entered into by the company and outstanding as on 30 September 2013 for hedging currency and interest rate related risks. Nominal amounts of derivative contracts entered into by the company and outstanding as on 30 September 2013 amount to Rs. 1,202.95 crores (previous year Rs. 3,477.99 crores). Category wise break-up is given below.

6 During earlier year, Deutsche Bank, Singapore Branch subscribed to unsecured floating rate compulsory convertible bonds issued by Alok Industries International Limited ("Alok BVI") and Grabal Alok (UK) Ltd, a company incorporated in the United kingdom (subsidiary) of the company, of USD 56.5 million each, with a green shoe option of USD 25 million. These bonds are secured by subservient charge on current and movable assets of the company which was created by executing a Deed of Hypothecation on 28 October 2010 in favour of AXIS Trustee Services Limited, Mumbai, India.

7 The company has transferred investments in the form of equity capital in its wholly owned subsidiary namely, Alok H & A Ltd ("Alok H&A"), Alok Land Holdings Private Ltd ("Alok Landholdings"), Alok Retail (India) Ltd. ("Alok Retail") & Alok Apparel Private Ltd. ("Alok Apparel") to Alok Infrastructure Limited ("Alok Infra"), another wholly owned subsidiary. Consequent to such sale of shares, Alok Infra became the immediate holding Company for these subsidiaries in March 2013. Further, vide scheme of amalgamation approved by the Bombay High Court, all such subsidaries were amalgamated with Alok Infra effective 1 April 2012.

8 In line with the amended Accounting Standard (AS) 11 - ''Effect of changes in Foreign Exchange Rates'', the Company has chosen to exercise the option under paragraph 46 inserted in the Standard by the notification.

i. Added to fixed assets/ capital work-in-progress Rs. 234.73 crores (previous year Rs. 114.47 crores) being exchange difference on long term monetary items relatable to acquisition of fixed assets.

ii. Carried forward Rs. 4.56 crores (previous year Rs. 0.98 crore) in the ''Foreign Currency Monetary Item Translation Difference Account'' being the amount remaining to be amortised as at 30 September 2013.

9 Exceptional Items Include :

i) Exchange loss/ gain arising out of a) restatement of foreign currency liabilities/ assets and b) Mark to market (MTM) losses on foreign exchange derivatives taken by the Company, considering the unusual fluctuation in the Indian Rupee (INR) against US Dollar (USD) aggregating to Rs. 317.39 crores (Previous year Rs. 121.27 crores).

ii) Advances written off Rs. 109.25 crores and loss on sale of investment Rs. 37.10 crores in respect of subsidiaries in the retail business during the period ended 30 September 2013.

10 The Company has extended its accounting year end from 31 March 2013 to 30 September 2013. Accordingly, figures for the current year are for a period of 18 months from 1 April 2012 to 30 September 2013, whereas figures for the previous year are for a period of 12 months and hence such figures are not comparable.

11 Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current period''s classification/disclosure.


Mar 31, 2012

1 Contingent Liabilities in respect of :

Sr. No. Particulars Current Year Previous Year

A Customs duty on shortfall in export obligation in accordance Amount Amount with EXIM Policy Unascertained Unascertained

(The company is hopeful of meeting the export obligation within the stipulated period)

B Pending Litigation 0.05 0.05

C Guarantees given by banks on behalf of the Company 73.48 24.69

D Corporate Guarantees given to bank for loans taken by 977.62 213.35 Subsidiary Companies

E Bills discounted 214.79 242.94

F Taxation Matters :

a) Income tax demand mainly on account of alleged 1.69 - short deduction of taxes for Ay 2010-11 and AY 2011-

12 on certain payments. The company has filed an appeal with the Commissioner of Income Tax (A) and is hopeful of favourable decision.

b) Income Tax demand during the previous years of 0.23 5.91 Rs 5.91 crore mainly on account of alleged short deposition of TDS amounts arising from wrong TAN numbers mentioned while uploading the TDS return and certain payments not considered by the Tax authorities, although duly paid by the company and short deduction of tax in respect of certain payments with respect to AY 2006-07 to 2009-10. The company had filed an appeal with the Commissioner of Income Tax (A) and also made application for rectification u/s 154 providing details of amounts paid to the bank.

Such rectification was carried out during the year for majority of the amount and for the balance of Rs 0.23 crore mainly pertaining to short deduction of taxes, the company is hopeful of favourable decision.

c) Demands of Works Contract Tax contested not 0.59 0.59 acknowledged as debts as the company is hopeful of favourable decision.

d) Income tax amounting to Rs 11.29 crore, mainly on 11.29 - account of disallowance of interest and expenditure incurred towards exempt income. The company has filed an appeal with the Commissioner of Income Tax (A) and is hopeful of favourable decision.

2 Related Party Disclosure

A) Name and Transaction / balances with related parties

I. Name of related parties and nature of relationship

As per Accounting Standard 18 (AS-18) "Related Party Disclosures", Companys related parties disclosed as below:

3 Employee Stock Option Scheme(ESOS)

In 2011, the shareholders of the Company approved the Employee Stock Option Scheme ("Alok Industries Limited - ESOS 2010 Scheme") vide postal ballot, in accordance with the Securities and Exchange Board of India (ESOP & ESOS) Guidelines, 1999. Such scheme provides for grant of options up to 2,50,00,000 options to the eligible employees and /or directors of the Company and / or its subsidiaries. The exercise price for such options can be up to 50% discount to the market price as per the discretion of the compensation committee. 1,07,91,500 options were granted during the year and 1,05,87,950 options were outstanding as on 31 March 2012. Such options vest over a period of two years, 50% at the end of one year from the date of grant and 50% at the end of two years from the date of grant.

Details of options granted duly approved by the Remuneration and Compensation Committee under the said scheme are as under:

The Company has followed the Intrinsic Value-based method of accounting for stock options granted, based on Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India, and accordingly, compensation cost of Rs 4.67 crore has been recorded during the year on such grant. The compensation cost recognised as a charge during the year was Rs 2.27 crore. Had the compensation cost for the Companys stock based compensation plan been determined in the manner consistent with the fair value approach as described in the Guidance note, the Companys net income would be lower by Rs 4.20 crore and earnings per share as reported would be lower as indicated below:

4 Employee benefit plans:

i) Defined contribution plans:

Amounts recognized as expenses towards contributions to provident fund, superannuation and other similar funds by the Company are Rs 10.58 Crore (Previous Year Rs 8.08 crore) for the year ended 31 March 2012.

ii) Defined benefit plans:

a) Gratuity Plan: The Company makes annual contribution to the Employees Group Gratuity Assurance Scheme, administered by the Life Insurance Corporation of India (LIC), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

b) Compensated absences: Employees entitlement to compensated absences in future periods based on unavailed leave as at balance sheet date, as per the policy of the Company, is expected to be a long term benefit and is actuarially valued.

The following table sets out the status of the gratuity plan for the year ended 31 March 2012 as required under AS 15 (Revised)

* Expected rate of return on plan assets is based on expectation of the average long term rate of return expected to prevail over the estimated term of the obligation on the type of the investments assumed to be held by LIC, since the fund is managed by LIC. The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotions and other relevant factors.

Asset Allocations

Since the investments are held in the form of deposit with LIC, these are not volatile and the market value of assets is the cost value of assets and has been accordingly considered for the above disclosure.

5 Segment Reporting

a) Primary Segment: Geographical Segment

The company is in the business of manufacturing of Textile products. Considering its high level of international operations and present internal financial reporting based on geographical location of customer, the company has identified geographical segment as primary segment.

The geographic segment consists of:

a) Domestic (Sales to Customers located in India)

b) International (Sales to Customers located outside India)

Revenue directly attributable to segments is reported based on items that are individually identifiable to that segment. The company believes that it is not practical to allocate segment expenses, segment results, assets used, except debtors, in the companys business or liabilities contracted since the resources / services / assets are used interchangeably within the segments. Accordingly, no disclosure relating to same is made. All fixed assets are located in India.

b) Secondary Segment: Business Segment

The company is operating in a single business i.e. Textile and as such all business activities revolve around this segment. Hence, there is no separate secondary segment to be reported considering the requirement of AS 17 on "Segment Reporting"

6 i. Due to unusual depreciation in the value of the Indian Rupee (INR) against US Dollar (USD) during the year, the exchange loss/ gain arising out of:

(i) Restatement of foreign currency liabilities/assets, and;

(ii) Mark to Market (MTM) losses on foreign exchange derivatives taken by the Company, has been presented as an exceptional item with corresponding changes for the previous year.

ii. The Company, during the year, based on the announcement of the ICAI (Accounting for derivatives), has accounted for derivative forward exchange contracts taken towards highly probable forecast transactions and firm commitments, at fair values considering the principles of recognition and measurement stated in AS-30 Financial Instruments: Recognition and Measurement. Consequent upon such change, the profit after tax for the year ended March 31, 2012 is higher by Rs16.78 crore and reserves and surplus are lower by an equivalent amount. Fair value (net loss) of the derivative instruments identified as cash flow hedges is Rs 16.78 crore as at March 31, 2012, which is expected to be reclassified to the profit and loss account over the next year.

iii. Fair values (Mark to market values) (loss) of Foreign currency options , Interest rate swaps and forward contracts (other than those considered for hedging) as at 31 March 2012 aggregating to Rs 179.57 crore (previous year Rs 72.96 crore) has been accounted for by the Company. Such fair values are based on the report of counter parties. MTM losses on such derivatives of Rs 106.61 crore have been recognised during the year.

iv. Derivative contracts entered into by the company and outstanding as on 31 March 2012 for hedging currency and interest rate related risks. Nominal amounts of derivative contracts entered into by the company and outstanding as on 31 March 2012 amount to Rs 3,477.99 Crore (previous year Rs 2,841.73 Crore). Category wise break-up is given below.

7 During the previous year, Deutsche Bank, Singapore Branch subscribed to unsecured floating rate compulsory convertible bonds issued by Alok Industries International Limited ("Alok BVI") and Grabal Alok (UK) Ltd, a company incorporated in the United kingdom (subsidiary) of the company, of USD 56.5 million each, with a green shoe option of USD 25 million. These bonds are secured by subservient charge on current and movable assets of the company which was created by executing a Deed of Hypothecation on 28 October 2010 in favour of AXIS Trustee Services Limited, Mumbai, India.

8 During the year, the company has transferred investments in the form of equity capital and cumulative redeemable preference shares in Alok Industries International Ltd ("Alok BVI") & Grabal Alok International Ltd ("Grabal BVI"), its two wholly owned subsidiary companies to Alok Infrastructure Limited ("Alok Infra"), another wholly owned subsidiary as a strategy to consolidate all investible assets under one umbrella. During the previous year, vide a novation agreement, the Company had taken over the obligation of Grabal Alok (UK) Ltd, (then an associate company of Alok BVI & Grabal BVI in the United Kingdom) towards its liability pertaining to a JPY/USD foreign currency derivative. Consequent to the sale of shares in Alok BVI and Grabal BVI to Alok Infra, Alok Infra has taken over such obligation of Alok Industries Ltd. during the current year.

9 During the year, the Honourable High Court, Bombay sanctioned the scheme of amalgamation (scheme) between the Company (transferee) and Grabal Alok Impex Limited (transferor) with appointed date of 1 April 2011. Grabal Alok Impex is in the business of manufacturing embroidery textiles. The scheme has been effective from 1 March 2012.

The Company issued 2,24,85,000 equity shares of Rs 10 each to shareholders of Grabal Alok Impex Limited (of which 19,00,000 shares were issued to Alok BenefitTrust) considering exchange ratio of 1:1 as per the scheme. There were no significant differences in accounting policies of two companies. The Company has accounted for such amalgamation under pooling of interest method as under;

Pursuant to the scheme, with effect from the Appointed Date up to and including the Effective Date, the transferor company is deemed to have been carrying on all business and activities in trust for Alok Industries Limited. Pending completion of relevant formalities of transfer of certain assets and liabilities pursuant to the Scheme, such assets and liabilities remain under the name of the Grabal Alok Impex Ltd.

On amalgamation of the Company and Grabal Alok Impex Ltd, Grabal Alok (UK) Ltd, an associate company of both companies, has now become a majority owned subsidiary of Alok Industries Ltd.

Current year figures of the Company include amount of revenue of Rs 160.96 crore & profit before tax of Rs 7.58 crore for the year and hence are not strictly comparable.

11 In line with the amended Accounting Standard (AS) 11 - Effect of changes in Foreign Exchange Rates, the Company has chosen to exercise the option under paragraph 46 inserted in the Standard by the notification.

i. Added to fixed assets/ capital work-in-progress Rs 114.47 crore (previous year Rs 23.48 crore) being exchange difference on long term monetary items relatable to acquisition of fixed assets.

ii. Carried forward Rs 0.99 crore (previous year Rs (0.22) crore) in the Foreign Currency Monetary Item Translation Difference Account being the amount remaining to be amortised as at 31 March 2012.

12 The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous years figures have been regrouped / reclassified wherever necessary to correspond with the current years classification / disclosure.


Mar 31, 2011

1 Contingent Liabilities in respect of : (Rs. Crore)

Sr. No. Particulars Current Year Previous Year

A Customs duty on shortfall in export obligation in accordance with EXIM Amount Amount Policy Unascertained Unascertained (The company is hopeful of meeting the export obligation within the stipulated period)

B Pending Litigation 0.05 0.05

C Guarantees given by banks on behalf of the Company 24.69 43.96

D Corporate Guarantees given to bank for loans taken by Subsidiary 213.35 212.79 Companies

E Bills discounted 242.94 71.47

F Taxation Matters :

a) During the year, the Company received Income Tax demand mainly 5.91 - on account of alleged short deposition of TDS amounts for four years arising from wrong TAN numbers mentioned while uploading the TDS return and certain payments not considered by the Tax authorities, although duly paid by the company. The Company has filed an appeal with the Commissioner of Income Tax (A) and also made application for rectification u/s 154 providing details of amounts paid to the bank and is hopeful of a favourable order.

b) Demands of Works Contract Tax not acknowledged as debts and not 0.59 - provided for. The company has initiated proceedings against such demand and is hopeful of favourable decision.

G Guarantee provided to New City of Bombay Mfg. Mills Limited (Joint 18.00 - Venture company) for loan given to Grabal Alok Impex Limited and another company

2 Related Party Disclosure

A. Name and transaction / balances with related party.

1. Name of related parties and nature of relationship

As per Accounting Standard 18 (AS-18) "Related Party Disclosures", Company's related parties disclosed as below:

I Associate Companies

Grabal Alok (UK) Ltd. (Formerly known as Hamsard 2353 Limited)

Alspun Infrastructure Ltd.

Ashford Infotech Private Limited

Nirvan Builders Private Limited

Next Creation Holdings LLC

II Entities under common control

Alok Denims (India) Private Limited

Alok Finance Private Limited

Alok Knit Exports Limited

Alok Textile Traders

Ashok B. Jiwrajka (HUF)

Ashok Realtors Private Limited

Buds Clothing Co.

D. Surendra & Co.

Dilip B. Jiwrajka (HUF)

Grabal Alok Impex Limited

Grabal Alok International Limited

Gogri Properties Private Limited

Green Park Enterprises

Jiwrajka Associates Private Limited

Jiwrajka Investment Private Limited

Niraj Realtors & Shares Private Limited

Nirvan Exports

Nirvan Holdings Private Limited

Pramatex Enterprises

Pramita Creation Private Limited

Surendra B. Jiwrajka (HUF)

Trumphant Victory Holdings Limited.

III Subsidiaries

Alok Inc.

Alok Industries International Ltd.

Alok Retail (India) Limited (Formerly known as Alok Homes &

Apparel Private Limited)

Alok Land Holdings Private Limited

Alok Aurangabad Infratex Private Limited

Alok H&A Limited

Alok International, Inc.

Alok European Retail, s.r.o. Mileta, a.s.

Alok Infrastructure Limited

Alok Apparels Private Limited

Alok New City Infratex Private Limited

Alok Realtors Private Limited

Alok HB Hotels Private Limited

Alok HB Properties Private Limited

Springdale Information and Technologies

Private Limited

Kesham Developers & Infotech Private Limited

IV Joint Venture

Aurangabad Textiles & Apparel Parks Limited

New City Of Bombay Mfg. Mills Limited

V Key Management Personnel

Ashok B. Jiwrajka

Chandrakumar Bubna

Directors

Dilip B. Jiwrajka

Surendra B. Jiwrajka

VI Relatives of Key Management Personnel

Alok A. Jiwrajka

Suryaprakash Bubna

c. Joint Venture

In compliance with the Accounting Standard 27 on 'Financial Reporting of interest in Joint Ventures' as notified by the (Companies Accounting Standards) Rules, 2006, the Company has interests in the following jointly controlled entities, which are incorporated in India.

3 Employee Stock Option Scheme (ESOS)

During the year, the shareholders of the Company approved the Employee Stock Option Scheme vide postal ballot, in accordance with the Securities and Exchange Board of India (ESOP & ESPS) Guidelines, 1999. Such scheme provides for grant of options to the eligible employees and /or directors of the Company and / or its subsidiaries. The Company is yet to grant any options under the scheme at the balance sheet date.

4 Employee benefit plans:

i) Defined contribution plans:

Amounts recognized as expenses towards contributions to provident fund, superannuation and other similar funds by the Company are Rs. 8.08 Crore (Previous Year Rs. 6.31 crore) for the year ended 31 March 2011.

ii) Defined benefit plans:

a) Gratuity Plan: The Company makes annual contribution to the Employee's Group Gratuity Assurance Scheme, administered by the Life Insurance Corporation of India ('LIC'), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

b) Compensated absences: Employees' entitlement to compensated absences in future periods based on unavailed leave as at balance sheet date, as per the policy of the Company, is expected to be a long term benefit and is actuarially valued.

The following table sets out the status of the gratuity plan for the year ended 31 March 2011 as required under AS 15 (Revised)

5 Segment Reporting

a) Primary Segment: Geographical Segment

The company, considering its high level of international operations and present internal financial reporting based on geographical location of customer, has identified geographical segment as primary segment.

The geographic segment consists of:

a) Domestic (Sales to Customers located in India)

b) International (Sales to Customers located outside India)

Revenue directly attributable to segments is reported based on items that are individually identifiable to that segment. The company believes that it is not practical to allocate segment expenses, segment results, fixed assets used in the company's business or liabilities contracted since the resources/services/assets are used interchangeably within the segments. Accordingly, no disclosure relating to same is made

b) Secondary Segment: Business Segment

The company is operating in a single business i.e. Textile and as such all business activities revolve around this segment. Hence, there is no separate secondary segment to be reported considering the requirement of AS 17 on "Segment Reporting"

6 Provision for Income Tax of Rs. 120.57 crore (previous year Rs. 63.56 crore) has been computed on the basis of Minimum Alternate Tax (MAT) in accordance with Section 115JB of the Income Tax Act, 1961, in view of deductions available to the company. Considering the future profitability and taxable positions in the subsequent years, the company has recognized 'MAT credit entitlement' amounting to Rs. 42.25 crore (Previous year Rs. 34.26 crore), aggregating to Rs.110.39 crore (previous year Rs. 68.14 crore), as an asset by crediting the Profit and Loss Account for an equivalent amount and disclosed under 'Loans and Advances' (Schedule 11) in accordance with the Guidance Note on "Accounting for credit available in respect of Minimum Alternate Tax under the Income Tax Act, 1961" issued by The Institute of Chartered Accountants of India.

7 Grabal Alok (UK) Ltd, an associate Company, ("Grabal Alok UK") has entered into a JPY/USD foreign currency derivative entailing monthly settlement up to October 2012 with a 'knock-out' feature at a stipulated JPY/USD mark. Vide a Novation agreement, the Company has taken over the obligation to meet the liability which may arise from this derivative. Based on an assessment considering a forecast model, Grabal Alok UK has quantified the probable outgo at GBP 2.151 million in it's audited accounts. The Company has accordingly made a provision for an amount of Rs. 15.47 crore (GBP 2.151 mio) against it's obligation.

8 The Company had invested Rs. 79.15 crore in 1% cumulative redeemable preference shares of Alok Industries International Ltd ("Alok BVI"), its wholly owned subsidiary in an earlier year, which were redeemed during the year. Alok BVI has investments in step down subsidiaries, an associate company and others ("investee companies"). As of the year end an amount of Rs. 62.28 crore is due to the Company from Alok BVI. Based on an objective assessment of expected cash flow from investee companies, Alok BVI considers the provision for diminution made in the books as adequate. Accordingly, the Company has considered such advance as good of recovery.

9 During the previous year, the Company invested in a newly formed company, Triumphant Victory Holding Limited ("TVHL") in the British Virgin Islands, as a strategic long term investment. TVHL has availed of a short term loan facility from Axis Bank-DIFC-Dubai Branch for investment in Alok Industries International Limited by way of Compulsory Convertible Debentures with put option on the Company at the end of due date. The said put option was backed by a lien on fixed deposit of Nil (Previous Year Rs. 444.00 crore) of the Company held by Axis Bank, New Delhi.

10 a) The Company, during the year based on the Announcement of The Institute of Chartered Accountants of India "Accounting for Derivatives" along with the principles of prudence as enunciated in Accounting Standard 1 (AS-1) "Disclosure of Accounting Polices" has accounted for derivative forward contracts at fair values.

On that basis, changes in the fair value / (loss) of the derivative instruments as at 31 March 2011 aggregating to Rs. 72.96 Crore (previous year Rs. 23.95 Crore) has been accounted for by the Company. The charge on account of derivative losses has been computed on the basis of MTM values based on the report of counter parties. Net gain is fair values have been ignored.

b) Derivative contracts entered into by the company and outstanding as on 31 March 2011 for hedging currency and interest rate related risks

11 During the year Deutsche Bank, Singapore Branch has subscribed to unsecured floating rate compulsory convertible bonds issued by Alok Industries International Limited (ALOK BVI), a company incorporated in British Virgin Islands (a wholly owned subsidiary) and Grabal Alok (UK) Ltd (GAUK) a company incorporated in the united kingdom (associate) of the company, of USD 56.5 million each, with a green shoe option of USD 25 million. These bonds are secured by subservient charge on current and movable assets of the company which was created by executing a Deed of Hypothecation on 28 October 2010 in favour of AXIS Trustee Services Limited, Mumbai, India.

12 In line with the notification dated 31 March 2009 issued by the Ministry of Corporate Affairs, amending Accounting Standard (AS) 11 – 'E ffect of changes in Foreign Exchange Rates', the Company has chosen to exercise the option under paragraph 46 inserted in the Standard by the notification.

i) Added to fixed assets/ capital work-in-progress Rs. 23.48 crore (Previous year Rs. 75.00 crore) being exchange difference on long term monetary items relatable to acquisition of fixed assets.

ii) Carried forward Rs. (0.22) crore (previous year Rs. 0.17 crore) in the 'Foreign Currency Monetary Item Translation Difference Account' being the amount remaining to be amortised as at 31 March 2011.

13 The amounts in balance Sheet, Profit and Loss account and cash flow statement are rounded off to the nearest lakh and denominated in crore of rupees. The figures of the previous year have been reclassified / regrouped wherever necessary to correspond with those of the current year.


Mar 31, 2010

1 Contingent Liabilities in respect of :

(Rs. Crore)

Sr. No. Particulars Current Year Previous Year

A Customs duty on shortfall in export obligation in accordance with EXIM Amount Amount Policy Unascertained Unascertained

(The company is hopeful of meeting the export obligation within the stipulated period)

B Pending Litigation 0.09 0.04

C Guarantees given by banks on behalf of the Company 43.96 47.94

D Corporate Guarantees given to bank for loans taken by Subsidiary 212.79 214.25

Companies

E Bills discounted 71.74 86.45

2 Related Party Disclosure

1. Name of related parties and nature of relationship

As per Accounting Standard 18 (AS-18) "Related Party Disclosures", Companys related parties disclosed as below:

I Associates

Alok Denims (India) Private Limited

Alok Finance Private Limited

Alok Knit Exports Limited

Alok Textile Traders

Ashok B. Jiwrajka (HUF)

Ashok Realtors Private Limited

Buds Clothing Co.

D. Surendra & Co.

Dilip B. Jiwrajka (HUF)

Grabal Alok Impex Limited

Grabal Alok International Limited

Grabal Alok (UK) Ltd. (Formerly known as Hamsard 2353 Ltd.)

Gogri Properties Private Limited

Green Park Enterprises

Jiwrajka Associates Private Limited

Jiwrajka Investment Private Limited

Niraj Realtors & Shares Private Limited

Nirvan Exports

Nirvan Holdings Private Limited

Pramatex Enterprises

Pramita Creation Private Limited

Surendra B. Jiwrajka (HUF)

Alspun Infrastructure Ltd.

Ashford Infotech Private Limited

Nirvan Builders Private Limited

Triumphant Victory Holdings Limited.



II Subsidiaries

Alok Inc.

Alok Industries International Ltd.

Alok Retail (India) Limited (Formerly known as Alok Homes & Apparel Private Limited)

Alok Land Holdings Private Limited

Alok Aurangabad Infratex Private Limited

Alok H&A Limited

Alok International, Inc.

Alok European Retail, s.r.o. Mileta, a.s.

Alok Infrastructure Limited

Alok Apparels Private Limited

Alok New City Infratex Private Limited

Alok Realtors Private Limited

Alok HB Hotels Private Limited

Alok HB Properties Private Limited

Springdale Information and Technologies Private Limited

Kesham Developers & Infotech Private Limited



III Joint Venture

Aurangabad Textiles & Apparel Parks Limited

New City Of Bombay Mfg. Mills Limited



IV Key Management Personnel Ashok B. Jiwrajka

Chandrakumar Bubna Dilip B. Jiwrajka Directors

Surendra B. Jiwrajka

V Relatives of Key Management Alok A. Jiwrajka

Personnel

3 Qualified Institutional Placements

1. During the year, the Company has issued & allotted 182,100,248 equity shares of Rs. 10 each at a premium of Rs. 13.32 per equity share to Qualified Institutional Buyers in terms of Chapter VIII of Security and Exchange Board of India (Issue of Capital And Disclosure Requirements) Regulation 2009.

2. The Company intends to use the proceeds of issue, after deducting the Issue expenses, for Long term working capital margin and Capex requirements.

4 During the year, the warrant holder aggregating to Rs. 10.20 Crore representing 1,00,00,000 warrants of the face value of Rs. 10 each, had decided not to exercise the option of conversion and the company has forfeited such warrants & transferred the amount to Capital Reserve.

5 475 FCCBs (previous year 475 FCCBs) are carried forward from earlier year and pending conversion/ redemption as at the yearend aggregating Rs.107.21 crore (Previous Year Rs. 121.01 Crore) are disclosed under "Unsecured Loans" (Schedule 4). The total proceeds on this account have been fully utilised during the earlier years. The Company has on 26 May 2010 redeemed these 475 FCCBs

6 Employee benefit plans:

i) Defined contribution plans:

Amounts recognized as expenses towards contributions to provident fund, superannuation and other similar funds by the Company are Rs.11.92 Crore (Previous Year Rs. 9.54 crore) for the year ended 31 March 2010.

ii) Defined benefit plans:

a) Gratuity Plan: The Company makes annual contribution to the Employees Group Gratuity Assurance Scheme, administered by the Life Insurance Corporation of India (LIC), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

b) Compensated absences: Employees entitlement to compensated absences in future periods based on unavailed leave as at balance sheet date, as per the policy of the Company, is expected to be a long term benefit and is actuarially valued.

7 Segment Reporting

a) Primary Segment: Geographical Segment

The company, considering its high level of international operations and present internal financial reporting based on geographical location of customer, has identified geographical segment as primary segment.

The geographic segment consists of:

a) Domestic (Sales to Customers located in India)

b) International (Sales to Customers located outside India)

8 In the opinion of the Board, carrying value of all Current assets, loans and advances and other receivables is not less than their realizable value in the ordinary course of business.

9 Provision for Income Tax of Rs. 63.56 crore (previous year Rs. 32.98 crore) has been computed on the basis of Minimum Alternate Tax (MAT) in accordance with Section 115JB of the Income Tax Act, 1961, in view of deductions available to the company. Considering the future profitability and taxable positions in the subsequent years, the company has recognized MAT credit entitlement amounting to Rs. 34.26 crore (Previous year Rs. 28.65 crore), aggregating to Rs. 68.14 crore (previous year Rs. 33.88 crore), as an asset by crediting the Profit and Loss Account for an equivalent amount and disclosed under Loans and Advances (Schedule 11) in accordance with the Guidance Note on "Accounting for credit available in respect of Minimum Alternate Tax under the Income Tax Act, 1961" issued by The Institute of Chartered Accountants of India.

10 Excess provision for dividend of earlier year of Rs. Nil (Previous Year Rs. 0.17 cores) [including dividend tax Rs. Nil (Previous year Rs. 0.02 crore)] represent the difference between the amount provided and paid considering the legal opinion obtained by the company and the amount finally paid on the shares allotted as on outcome of conversion of FCCBs

11 The company has invested in a subsidiary company viz; Alok Industries International Limited aggregating to Rs 79.37 Crore (Previous year Rs. 368.12 Crore) (including share application money) as at year end, which is a strategic long-term investment.

a) The subsidiary company has made investment in Alok European Retail, s.r.o. (AER), a 100% subsidiary, of Rs. 0.06 crore and granted an advance aggregating Rs. 0.74 crore. As per the audited financial statements as at 31 March 2010, the AER has incurred losses. The subsidiary company, for the time being, does not intend to continue with the business plans of investing further in this subsidiary and out of abundant caution, has made provision towards diminution in the value of investment of Rs. 0.06 crore and for doubtful advances Rs. 0.74 crore which would be adjusted, if any, based on future operational results of the subsidiary company. Accordingly, the investment in and advances to such subsidiary stand fully provided for.

b) The subsidiary company has made investment in its subsidiary viz; Mileta, a.s. aggregating Rs. 44.76 crore [Previous year Rs. 39.80 crore] and given interest free loan aggregating Rs. 25.00 crore [Previous year Rs. 58.24 crore] which is outstanding as at the yearend. Mileta has embarked upon a business growth plan for streamlining its opeartion and is expected to generate cash surplus from 2010-11. On that basis and the obective assessment of expected cash flow, investment in Mileta and the loan amount as at the year end is considered good and recoverable.

c) The subsidiary company has investment in an associate viz; Grabal Alok (UK) Limited aggregating to Rs. 314.22 crore (Previous year Rs. 354.66 crore) and given interest free loan of Rs. 7.40 crore (Previous year Rs. Nil) and interest bearing loan of Rs. 16.72 crore (Previous year Rs. Nil) which is a strategic long-term investment. The subsidiary company has also invested Rs. 54.04 crore [Previous year Rs. 38.06 crore] in another associate viz; Grabal Alok International Limited and given interest free loan of Rs. Nil [Previous year Rs. 16.73 crore], which has entirely invested such amounts in Grabal Alok (UK) Limited. Grabal Alok (UK) Ltd. has embarked upon a plan for revamping its retailing operations in Europe through an optimized sourcing strategy and opening of additional stores. On that basis and the obective assessment of expected cash flow, in the opinion of the Company, the aforesaid investments and the loan amounts outstanding as at 31 March 2010 are considered good and recoverable.

d) Rs. 33.43 crore (Previous Year Rs. 37.71 crore), being subscription money paid to PowerCor LLC towards 5% Group B Membership interest, which was made with a view to participate in the probable gains from commercializing of certain niche technology – plans, the said company is yet to commence its operations and has exclusive rights to market, commercialise and sell specific software used in development and implementation of certain products. It is Pre-mature to Re-assess the Potential of this venture, pending full clarity on the starts of their business plans, the subsidiary has made provision for Diminution in value of its investment to the extent of 25%.

e) Rs.5.91 crore (Previous Year Rs.6.67 crore) in 22 (Privious year 22) senior units of the equity capital of Aisle 5 LLC (Aisle), which is in the business of development, marketing and licensing of trade brands. Subsequent to the year end, an involuntary petition for liquidation under chapter 7 was filed against Aisle 5 LLC in the US Bankruptcy Court. Based on such liquidation petition, the Subsidiary Company has considered and made provision for diminution.

On the above basis and objective assessment of the expected cash flow of the subsidiary Company, in opinion of the company the investment in subsidiary company viz Alok Industries International Limited in considered good.

12. During the year, the Company invested in a newly formed company, Triumphant Victory Holding Limited ("TVHL") in the British Virgin Islands, as a strategic long term investment. TVHL has availed of a short term loan facility from Axis Bank-DIFC-Dubai Branch for investment in Alok Industries International Limited by way of Compulsory Convertible Debentures with put option on the Company at the end of due date. The said put option is backed by a lien on fixed deposit of Rs. 444.00 crore of the Company held by Axis Bank, New Delhi.

13. a) The Company, during the year based on the Announcement of The Institute of Chartered Accountants of India "Accounting for Derivatives" along with the principles of prudence as enunciated in Accounting Standard 1 (AS-1) "Disclosure of Accounting Polices" has accounted for derivative forward contracts at fair values.

On that basis, changes in the fair value of the derivative instruments as at 31 March 2010 aggregating to Rs. 23.95 Crore (previous year Rs. 16.85 Crore) have been debited to the Profit and Loss Account. The charge on account of derivative losses has been computed on the basis of MTM values based on the report of counter parties.

b) Derivative contracts entered into by the company and outstanding as on 31 March 2010 For hedging currency and interest rate related risks

c) All derivative and financial instruments acquired by the company are fir heding purpose only.

d) The yearend foreing currency exposure that has not been hedged by derivative instruments or otherwise are as below:

14. During the year the company has received Rs. 42.75 crore towards full & final settlement of insurance claim for material damage of Rs. 190.66 crore filed with the Insurer for fire occurred to its Texturising unit in previous years, and has recognised loss of Rs. 37.91 crore in the Profit & Loss Account.

15. In line with the notification dated 31 March 2009 issued by the Ministry of Corporate Affairs, amending Accounting Standard (AS) 11 – Effect of changes in Foreign Exchange Rates, the Company has chosen to exercise the option under paragraph 46 inserted in the Standard by the notification.

i) In effect of the above the company hasAdded to fixed assets/ capital work-in-progress Rs.75.00 crore (Previous year Rs. 166.46 crore) being exchange difference on long term monetary items relatable to acquisition of fixed assets.

ii) Charged to Profit & Loss Account Rs. 0.17 crore (Previous year Rs. 6.55 crore).

iii) Carried forward Rs. 0.17 crore (previous year Rs. 11.20 crore) in the Foreign Currency Monetary Item Translation Difference Account being the amount remaining to be amortised as at 31 March 2010.

16 The amounts in balance Sheet, Profit and Loss account and cash flow statement are rounded off to the nearest lakh and denominated in crore of rupees.

17. The figures of the previous year have been reclassified regrouped wherever necessary to correspond with those of the current year.

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