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Notes to Accounts of Arvind Ltd.

Mar 31, 2023

Rights, Preferences and Restrictions attached to equity shares:

The Company has one class of shares having par value of '' 10 per share. Each shareholder is eligible for one vote per share held. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(v) Shares reserved for issue under options and contracts:

Refer note 37 for details of shares to be issued under employee stock option Scheme (ESOS 2008 and ESOS 2021).

(vi) In the period of five years immediately preceding March 31, 2023:

i) The Company has not allotted any equity shares as fully paid up without payment being received in cash.

ii) The Company has not allotted any equity shares by way of bonus issue.

iii) The Company has not bought back any equity shares.

(a) Capital reserve

Capital Reserve includes forfeiture of application money received on issue of share warrants and Capital Reserves on amalgamation/ Business Combinations.

During the current year, the Company has sold its investment in equity shares of its subsidiary Arvind Smart Textiles Limited, to its another subsidiary Arvind Sports Fashion Private Limited (formerly known as Arvind Ruf and Tuf Private Limited), for a consideration of '' 49.70 crores. Resulting loss of '' 51.30 crores on such sale is accounted for in "Capital Reserve", this being in the nature of common control business combination.

(b) General reserve

General Reserve is a free reserve created by the Company by transfer from Retained earnings for appropriation purposes.

(c) Amalgamation reserve

The reserve was created pursuant to scheme of amalgamation in earlier years. Amalgamation Reserve is a reserve which arose pursuant to the scheme of amalgamation and shall not be considered to be a reserve created by the Company.

(d) Securities premium account

Securities premium reserve is created due to premium on issue of shares. This reserve is utilised in accordance with the provisions of the Companies Act.

(e) Capital redemption reserve

Capital Redemption Reserve is created for redemption of preference shares from its retained earnings. The amount in Capital Redemption Reserve is equal to nominal amount of the preference shares redeemed. Capital Redemption Reserve may be applied by the Company in paying up unissued shares of the Company to be issued to shareholders of the Company as fully paid bonus shares.

(f ) Share based payment reserve

This reserve relates to share options granted by the Company to its employee stock option scheme. Further information about share-based payments to employees is set out in note 37.

(g) Equity instruments through OCI

The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of equity instrument.

(h) Cash flow hedge reserve

The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on the changes of the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.

Nature of security:

Term loan of '' 546.87 Crores and NCD of '' 74.86 Crores

Loans and NCD amounting to '' 208.69 Crores (March 31, 2022''376.21 Crores) are secured by (a) first pari passu charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants and Garment Division at Bangalore; and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage; (b) Secured by second pari passu charge on all the Company''s Current Assets presently relating to the Textile Plants and Garment Division and all the current assets aquired by the Company at any time in future.

Loans amounting to '' NIL Crores (March 31, 2022''76.60 Crores) are secured by (a) first pari passu charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants and Garment Division at Bangalore; and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage; (b) Pledge of shares of Arvind Envisol Limited, wholly own subsidiary of the company ; (c) Secured by second pari passu charge on all the Company''s Current Assets presently relating to the Textile Plants and Garment Division and all the current assets aquired by the Company at any time in future .

Loans amounting to '' 47.06 Crores (March 31, 2022''47.19 Crores) are secured by (a) exclusive charge on some of the Immovable properties at Dholka; (b) first pari passu charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants and Garment Division at Bangalore; and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage; (c) Secured by second pari passu charge on all the Company''s Current Assets presently relating to the Textile Plants and Garment Division and all the current assets aquired by the Company at any time in future .

Loans amounting to '' 241.28 Crores (March 31, 2022''290.42 Crores) are secured by (a) exclusive charge on Immovable properties of Ankur division; (b) first pari passu charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants and Garment Division at Bangalore; and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage; (c) Secured by second pari passu charge on all the Company''s Current Assets presently relating to the Textile Plants and Garment Division and all the current assets aquired by the Company at any time in future .

Note 14 : Financial liabilities 14 (a) Borrowings (Contd.)

Loans amounting to '' 124.69 Crores (March 31, 2022''124.73 Crores) are secured by (a) exclusive charge on some of the Immovable properties at Asarwa; (b) first pari passu charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants and Garment Division at Bangalore; and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage.

Loans of '' 0.01 Crores (March 31, 2022 '' 0.07 Crores) are secured by hypothecation of related vehicles.

Nature of Security

Cash Credit and Other Facilities from Banks

(a) Secured by first pari passu charge on all the Company''s Current Assets presently relating to the Manufacturing Locations and all the Current Assets acquired by the Company at any time after the execution of and during the continuance of the Indenture of Mortgage.

(b) Secured by a second pari passu charge over all the Immovable Properties relating to Textile Plants, Movable Properties presently relating to the Company and all the movable properties aquired by the Company at any time in future after execution of and during the continuance of the Indenture of Mortgage.

Rate of Interest

i. Working Capital Loans from banks carry interest rates ranging from 5.31% to 7.80% per annum.

There are certain income-tax related legal proceedings which are pending against the Company. Potential liabilities, if any have been adequately provided for, and the Company does not currently estimate any probable material incremental tax liabilities in respect of these matters. (Refer note 30).

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

The Company has unused tax capital losses amounting to '' 466.53 crores as at March 31,2023 (March 31,2022: '' 373.86 crores). Out of the same, tax credits on losses of '' 264.09 crores have not been recognised on the basis that recovery is not probable in the foreseeable future. Unrecognised tax capital losses will expire on March 31,2025 & March 31,2029, if unutilized, based on the year of origination.

Note (a):

During the year ended March 31, 2022, the Company had reassessed the expected manner of recovery of the carrying value of all land parcels and had determined that a number of such land parcels would not be delinked from the business as they either form an integral part of the business operations or are proximate to the factory premises. Consequently, the Company expects that in the event of disposal of most of the land parcels in future, these would only be disposed off along with the business and in a slump sale arrangement thereby resulting in no temporary difference between the accounting position and position as per tax laws upon such future disposal.

Accordingly, the Company had reversed deferred tax liability amounting to '' 26.73 crores pertaining to such land parcels in the Statement of Profit and loss during the year ended March 31,2022.

(a) It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

(b) The Company does not expect any reimbursements in respect of the above contingent liabilities.

(c) The Company believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company''s financial position and results of operations.

(d) During the previous year, the Company had reassessed the position of its contingent liability pertaining to Income tax matters as at March 31, 2022. Based on the advice received from its tax counsel, the company had created a provision amounting to '' 13.82 crores in the books of accounts in lieu of the uncertainties involved in the income tax proceedings and the possibility of occurrence of event as probable and possible. Majority of the issues are uncovered by judgment of respective judicial authorities in Company''s own case in different assessment years or for other assessee.

Note 32 : Foreign Exchange Derivatives and Exposures not hedged

The Company holds derivative financial instruments such as foreign currency forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counter party for these contracts is generally a bank.

All derivative financial instruments are recognized as assets or liabilities on the balance sheet and measured at fair value. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation.

The fair values of all derivatives are separately recorded in the balance sheet within current and non-current assets and liabilities depending upon the maturity of the derivatives.

The use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.

Cash Flow Hedges

The Company also enters into forward exchange contracts for hedging highly probable forecast transaction and account for them as cash flow hedges and states them at fair value. Subsequent changes in fair value are recognized in equity until the hedged transaction occurs, at which time, the respective gain or losses are reclassified to the statement of profit or loss. These hedges have been effective for the year ended March 31, 2023 and March 31, 2022.

The Company uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions. The cash flow hedges are taken out by the Company during the year for hedging the foreign exchange rate of highly probable forecast transactions.

The cash flows related to above are expected to occur during the year ended March 31, 2023 and consequently may impact the statement of profit or loss for that year depending upon the change in the foreign exchange rates movements.

Note 33 : Segment Reporting Identification of Segments:

The chief operational decision maker monitors the operating results of its Business segment separately for the purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segment have been identified on the basis of nature of products and other quantitative criteria specified in the Ind AS 108. Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM") of the company.

Operating Segments:

(a) Textiles : Fabrics, Garments and Fabric Retail.

(b) Advanced Material : Human Protection fabric & garments, Industrial Products, Advance Composites and Automotive fabrics.

(c) Others : E-commerce, Agriculture Produce, EPABX and One to Many Radio, Developing of Residential Units and Others. Segment revenue and results:

Revenue and expenses directly attributable to segments are reported under each reportable segment. The expenses and income which are not directly attributable to any business segment are shown as unallocable expenditure (net of unallocable income). Unallocated expenditure consists of common expenditure incurred for all the segments and expenses incurred at corporate level.

Segment assets and Liabilities:

Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. Segment assets include all operating assets used by the operating segment and mainly consist of property, plant and equipment, trade receivables, Inventories and other operating assets. Segment liabilities primarily includes trade payable and other liabilities excluding borrowings. Common assets and liabilities which can not be allocated to any of the business segment are shown as unallocable assets / liabilities. Inter Segment transfer:

Inter Segment revenues are recognised at sales price. The same is based on market price and business risks. Profit or loss on inter segment transfer are eliminated at the company level.

The accounting policies of the reportable segments are the same as the Company''s accounting policies described in Note 3. The Company''s financing (including finance costs and finance income) and income taxes are reviewed on an overall basis and are not allocated to operating segments.

(a) Employees of the Company receive benefits from a provident fund, which is a defined contribution plan.The eligible employees and the company make monthly contributions to the provident fund plan equal to a specified percentage of the employees'' salary. Amounts collected under the provident fund plan are deposited in a government administered provident fund. The remaining portion is contributed to the government-administered pension fund. The company has no further obligation to the plan beyond its monthly contributions. Such contributions are accounted for as defined contribution plans and are recognised as employee benefits expenses when they are due in the Statement of profit and loss.

(b) The Company''s Superannuation Fund is administered by approved Trust. The Company is required to contribute the specified amount to the Trust for the eligible employees. The Company has no further obligations to the plan beyond its contribution to a Trust Fund.

(c) The Company''s Employee State Insurance Fund, for all eligible employees, is administered by ESIC Corporation. The Company is required to contribute specified amount to ESIC Corporation and has no further obligations to the same beyond its contribution.

B. Defined benefit plans:

The Company has following post employment benefit plans which are in the nature of defined benefit plans:

(a) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days (30 days for the employees joined before March 31, 2000 with the grade of M2 and above from the date they are in Grade M2 and above) salary multiplied for the number of years of service. The Gratuity plan is a Funded plan administered by a recognised Trust in India.

Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company fully contributes all ascertained liabilities to the Arvind Limited Employees'' Gratuity Fund Trust (the Trust). Trustees administer contributions made to the Trusts and contributions are invested in a scheme as permitted by Indian law.

The Company recognizes the net obligation of a defined benefit plan in its Balance Sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/(asset) are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligations recognized in other comprehensive income.

(b) Compensatory Pension Scheme

The Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees who have joined before June 30, 1983 and who have rendered not less than 31 years of service before their retirement. The plan is unfunded. Employees do not contribute to the plan.

Liabilities with regard to the Compensatory Pension Scheme are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method.

The above sensitivity analysis may not be representative of the actual benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

In presenting the above sensitivity analysis, the present value of defined benefit obligation has been calculated using the projected unit credit method at the end of reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous period.

The Company does not have any contributions expected towards planned assets for the next year.

C. Other Long term employee benefit plans:

Leave encashment

The Company has a policy on leave encashment which are both accumulating and non-accumulating in nature. The expected cost of accumulating leave encashment is determined by actuarial valuation performed by an independent actuary at each Balance Sheet date using projected unit credit method on the additional amount expected to be paid/availed as a result of the unused entitlement that has accumulated at the Balance Sheet date. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.

(d) Terms and conditions of transactions with related parties

(1) Outstanding balances other than loan given and taken and fair value of financial guarantee contract, at the year-end are unsecured and interest free and settlement occurs in cash.

(2) Loans in INR given to the related party carries interest rate of 8.00% (March 31, 2022: 8.00%). Loans in USD given to the related party carries an interest rate of 6.20% (March 31, 2022 : 2.50%).

(3) Financial guarantee given to Bank on behalf of subsidiaries carries no charge and are unsecured.

(4) No repayment schedule has been fixed in case of above mentioned Loans in the nature of loans given to Subsidiary Companies and are repayable on demand.

(e) Commitments with related parties

The Company has provided commitment of '' 1.89 Crores to the related party as at March 31, 2023 (March 31, 2022: '' 10.13 Crores).

(c) Arvind Limited through its CSR policy aims to work for social, economic, educational, infrastructural, environmental, health, inner wellbeing and cultural advancement of the people and thereby positively impact their quality of life. The broad thematic areas are Educational Advancement, Rural Advancement, Environmental Advancement, Health Advancement and Cultural Advancement.

The CSR initiatives are being carried out by company promoted organizations - Arvind Indigo Foundation, Arvind Foundation (AF) and other Organizations.

(d) Amount spent towards CSR activities includes amount contributed to related party during the year ended on March 31, 2023 was '' 3.30 Crores (March 31, 2022 : '' 2.60 Crores).

Note 41 : Fair value disclosures for financial assets and financial liabilities (Contd.)

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values.

The fair value of borrowings is calculated by discounting future cash flows using rates currently available for debts on similar terms, credit risk and remaining maturities.

For financial assets and financial liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

(b) Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Company''s assets and liabilities.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

There are no transfer between level 1,2 and 3 during the year.

The Company''s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. Note 42 : Financial instruments risk management objectives and policies

The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.

The Company''s risk management is carried out by a Treasury department under policies approved by the Board of directors. The Company''s treasury identifies, evaluates and hedges financial risks in close co-operation with the Company''s operating units. The board provides written principles for overall risk.

(a) Market risk

Market risk refers to the possibility that changes in the market rates may have impact on the Company''s profits or the value of its holding of financial instruments. The Company is exposed to market risks on account of foreign exchange rates, interest rates, underlying equity prices, liquidity and other market changes.

Future specific market movements cannot be normally predicted with reasonable accuracy.

(a1) Interest rate risk

Interest rate risk refers to the possibility that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate.

The Company is exposed to interest rate risk of short-term and long-term floating rate instruments. The Company''s policy is to maintain a balance of fixed and floating interest rate borrowings and the proportion of fixed and floating rate debt is determined by current market interest rates. The borrowings of the Company are principally denominated in Indian Rupees and US dollars with mix of fixed and floating rates of interest. These exposures are reviewed by appropriate levels of management at regular interval.

As at March 31, 2023, approximately 5.53% of the Company''s Borrowings are at fixed rate of interest (March 31, 2022 : 4.33%).

(a2) Foreign currency risk

The Company''s foreign currency risk arises from its foreign operations, investments in foreign subsidiaries, foreign currency transactions and foreign currency borrowings. The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company. The major foreign currency exposures for the Company are denominated in USD and EURO.

Since a significant part of the Company''s revenue is in foreign currency and major part of the costs are in Indian Rupees, any movement in currency rates would have impact on the Company''s performance. Exposures on foreign currency sales are managed through the Company''s hedging policy, which is reviewed periodically to ensure that the results from fluctuating currency exchange rates are appropriately managed. The Company strives to achieve asset liability offset of foreign currency exposures and only the net position is hedged. Consequently, the overall objective of the foreign currency risk management is to minimize the short term currency impact on its revenue and cash-flow in order to improve the predictability of the financial performance. The Company may use forward contracts and foreign exchange options towards hedging risk resulting from changes and fluctuations in foreign currency exchange rate. These foreign exchange contracts, carried at fair value, may have varying maturities varying depending upon the primary host contract requirements and risk management strategy of the company. Hedge effectiveness is assessed on a regular basis.

The movement in the pre-tax effect is a result of a change in the fair value of financial instruments not designated in a hedge relationship. Although the financial instruments have not been designated in a hedge relationship, they act as an economic hedge and will offset the underlying transactions when they occur.

(b) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Financial instruments that are subject to concentrations of credit risk materially consists of trade receivables, investments and derivative financial instruments.

The Company is exposed to credit risk from its operating activities (primarily trade receivables and also from its investing activities including deposits with banks, forex transactions and other financial instruments) for receivables, cash and cash equivalents, financial guarantees and derivative financial instruments.

All trade receivables are subject to credit risk exposure. The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country, in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through established policies, controls relating to credit approvals and procedures for continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit. The history of trade receivables shows a negligible provision for bad and doubtful debts. Therefore, the Company does not expect any material risk on account of nonperformance by any of the Company''s counterparties. The Company does not have significant concentration of credit risk related to trade receivables. No single third party customer contributes to more than 10% of outstanding accounts receivable (excluding outstanding from subsidiaries) as of March 31, 2023 and March 31, 2022.

Trade receivables are non-interest bearing and are generally on 7 days to 180 days credit term.

With respect to derivatives, the Company''s forex management policy lays down guidelines with respect to exposure per counter party i.e. with banks with high credit rating, processes in terms of control and continuous monitoring. The fair value of the derivatives are credit adjusted at the period end.

(c) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time, or at a reasonable price. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company generates cash flows from operations to meet its financial obligations, maintains adequate liquid assets in the form of cash & cash equivalents and has undrawn short term line of credits from banks to ensure necessary liquidity. The Company closely monitors its liquidity position and deploys a robust cash management system.

During the year, the Company has been regular in repayment of principal and interest on borrowings on or before due dates. The Company did not have defaults of principal and interest as on reporting date.

The Company requires funds both for short-term operational needs as well as for long-term investment programmes mainly in growth projects.

Note 43 : Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to ensure that it maintains an efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder value.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions or its business requirements to optimise return to our shareholders through continuing growth. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The funding requirements are met through a mixture of equity, internal fund generation and other non-current borrowings. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings less cash and short-term deposits (including other bank balance). The Company is not subject to any externally imposed capital requirements.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any long term borrowing in the current period except for one loan. The Company has obtained letter from the lender before the date of adoption of financial statements for not accelerating the payment of this loan within one year from the balance sheet date subject to regularisation of the breach by end of March 31,2024. Accordingly, the management has considered the classification of loan based upon the original repayment schedule.

No changes were made in the objectives, policies or processes for managing capital during the current period.

Note 45 : Additional Regulatory Disclosures As Per Schedule III Of Companies Act, 2013

Additional Regulatory Information pursuant to Clause 6L of General Instructions for preparation of Balance Sheet as given in Part I of Division II of Schedule III to the Companies Act, 2013, are given hereunder to the extent relevant and other than those given elsewhere in any other notes to the Financial Statements.

a. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

b. The Company has Fund-based and Non-fund-based limits of Working Capital from Banks and Financial institutions. For the said facility, the revised submissions made by the Company to its lead bankers based on closure of books of accounts at the year end, the revised quarterly returns or statements comprising stock statements, book debt statements, credit monitoring arrangement reports, statements on ageing analysis of the debtors/other receivables, and other stipulated financial information filed by the Company with such banks or financial institutions are in agreement with the unaudited books of account of the Company of the respective quarters and no material discrepancies have been observed.

c. The Company has not been declared as a willful defaulter by any lender who has powers to declare a company as a willful defaulter at any time during the financial year or after the end of reporting period but before the date when the financial statements are approved.

d. The Company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Company Act, 1956.

e. The Company has compiled with the number of layers prescribed under clause (87) of section 2 of the Companies Act 2013 read with Companies (Restrictions on number of Layers) Rules, 2017.

f. The Company has not advanced or loaned or invested funds to any other person(s) or entity(is), including foreign entities(intermediaries), with the understanding that the intermediary shall;

i. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

ii. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

g. The Company has not received any funds from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall;

i. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate beneficiaries) or

ii. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

h. The Company does not have any transactions which is not recorded in the books of accounts but has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 ( such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

i. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

Note 46 : Discontinued Operation

(A) The Company has entered into agreement on July 19, 2022 to sell its Omuni Undertaking to Bigfoot Retail Solutions Private Limited. In order to execute this transaction, the Company has transferred its Internet division to its wholly owned subsidiary company, Arvind Internet Limited with effective date of June 30, 2022 at a consideration of '' 152.30 crores. Hence, the Company has considered business of Arvind Internet Undertaking as "Discontinued Operations" in accordance with Ind AS 105 and accordingly, re-classified the financial results for various periods presented. Company has presented gain on this transaction as an exceptional item in the financial results.

The Company has sold net assets worth '' 0.24 crores and booked gain of '' 152.06 crores on sale of Omuni undertaking. Post completion of all conditions subsequent to the transaction as on September 30, 2022, the Company has transferred its wholly owned subsidiary company Arvind Internet Limited to Bigfoot Retail Solutions Private Limited.

Note 47 : Code on Social Security, 2020

The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Indian Parliament approval and Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

Note 48 : Standards issued but not yet effective

The Ministry of Corporate Affairs (MCA) notifyies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended Companies (Indian Accounting Standards) Amendment Rules, 2023, as below.

Ind AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the standalone financial statements.

Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1,2023. The Company has evaluated the amendment and there is no impact on its standalone financial statements.

Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its standalone financial statement.

Note 49 : Events occurring after the reporting period

The Company evaluates events and transactions that occur subsequent to the balance sheet date but prior to the approval of financial statements to determine the necessity for recognition and/or reporting of subsequent events and transactions in the financial statements.

The Board of Directors recommended a final dividend of '' 3.75 per equity share and one-time special dividend of '' 2.00 per equity share, totalling to a dividend of '' 5.75 per equity share of face value of '' 10 each, for the financial year ended March 31, 2023, subject to approval of shareholders in the ensuing Annual General Meeting.

For and on behalf of the Board of Directors of Arvind Limited

Sanjay S. Lalbhai Jayesh K. Shah R. V. Bhimani

Chairman & Managing Director Director & Group Chief Financial Company Secretary

DIN: 00008329 DIN: 00008349

Place: Ahmedabad Date: May 18, 2023

Mar 31, 2018

1. Corporate Information

Arvind Limited (âthe Companyâ) is one of Indiaâs leading vertically integrated textile companies with the presence of almost eight decades in this industry. It is among the largest denim manufacturers in the world. It also manufactures a range of cotton shirting, denim, knits and bottom weights (Khakis) fabrics and Jeans and Shirts Garments. The Company through its subsidiary company, Arvind Fashions Limited and its subsidiaries is marketing in India the branded apparel under various brands. The brands portfolio includes Domestic and International brands like Flying Machine, Arrow, US Polo, Izod, Elle, Cherokee etc. It also operates apparel value retail stores UNLIMITED. The Company also has the presence in Telecom business directly and through its subsidiaries and joint venture companies. Recently, The Company has made foray in to Technical Textiles on its own and in joint venture with leading global players.

The Company is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 2013 (âthe Actâ erstwhile Companies Act, 1956) applicable in India. Its equity shares are listed on the National Stock Exchange (âNSEâ) and the BSE Limited. The registered office of the Company is located at Naroda Road, Ahmedabad - 380025.

The financial statements have been considered and approved by the Board of Directors at their meeting held on May 09, 2018.

2. Statement of Compliance and Basis of Preparation:

The financial statements have been prepared on a historical cost convention on the accrual basis except for the certain financial assets and liabilities measured at fair value, the provisions of the Companies Act, 2013 to the extent notified (âthe Actâ) and guidelines issued by the Securities and Exchange Board of India (SEBI).

Accounting policies were consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standards requires a change in the accounting policy hitherto in use.

These financial statements comprising of Balance Sheet, Statement of Profit and Loss including other comprehensive income, Statement of Changes in Equity and Statement of Cash Flows as at March 31, 2018 have been prepared in accordance with Ind AS as prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 ofthe Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

Amounts for the year ended March 31, 2017 were audited by the predecessor auditor.

Rounding of amounts

The financial statements are presented in Indian Rupee (âINRâ) and all values are rounded to the nearest crore as per the requirement of Schedule III, except when otherwise indicated. Figures less than Rs.50,000 which are required to be shown separately, have been shown actual in brackets.

2. Critical accounting estimates and assumptions

The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

2.1. Estimates and assumption

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Taxes

The Company has Rs.152.38 crores (March 31, 2017: Rs.180.38 crores) of tax credits carried forward. These credits expire in 15 years from the date of initial recognition. The Company has taxable temporary difference and tax planning opportunities available that could partly support the recognition of these credits as deferred tax assets. On this basis, the Company has determined that it can recognise deferred tax assets on the tax credits carried forward.

Further details on taxes are disclosed in Note 29.

(b) Useful life of Property, plant and equipment and Intangible Assets

As described in Note 3.6 and 3.10 of 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.

(c) Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

(d) Provisions and contingencies

The assessments undertaken in recognising provisions and contingencies have been made in accordance with the applicable Ind AS. A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Where the effect of time value of money is material, provisions are determined by discounting the expected future cash flows. The Company has significant capital commitments in relation to various capital projects which are not recognized on the balance sheet. In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Guarantees are also provided in the normal course of business. There are certain obligations which management has concluded, based on all available facts and circumstances, are not probable of payment or are very difficult to quantify reliably, and such obligations are treated as contingent liabilities and disclosed in the notes but are not reflected as liabilities in the financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings in which the Company involved, it is not expected that such contingencies will have a material effect on its financial position or profitability (Refer Note 16 and 30).

(e) Defined benefit plans

The determination of Companyâs 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.

Further details about defined benefit obligations are provided in Note 34.

The description of the nature and purpose of each reserve within equity is as follows

a. Capital reserve

Capital Reserve includes forfeiture of application money received on issue of share warrants and Capital Reserves on amalgamation/Business Combinations.

b. General reserve

General Reserve is a free reserve created by the Company by transfer from Retained earnings for appropriation purposes.

c. Amalgamation reserve

d. Securities premium account

Securities premium reserve is created due to premium on issue of shares. These reserve is utilised in accordance with the provisions of the Companies, Act.

e. Capital redemption reserve

Capital Redemption Reserve is created for redemption of preference shares from its retained earnings. The amount in Capital Redemption Reserve is equal to nominal amount ofthe preference shares redeemed. Capital Redemption Reserve may be applied by the Company in paying up unissued shares of the Company to be issued to shareholders of the Company as fully paid bonus shares.

f. Debenture redemption reserve

The Company is required to create a debenture redemption reserve out of the profits which is available for purpose of redemption of debentures. This reserve will not be utilised by the Company except to redeem debentures.

g. Share based payment reserve

This reserve relates to share options granted by the Company to its employee share option plan. Further information about share-based payments to employees is set out in Note 37.

h. Equity instruments through OCI

i. Cash flow hedge reserve

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on the changes of the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.

Notes :

I) Installments falling due within a year in respect of all the above Loans aggregating Rs.124.73 crore (March 31, 2017 : Rs.104.33 crore) have been grouped under âCurrent maturities of long-term debtâ (Refer Note 15(c))

II) Nature of security:

Term loan of Rs.558.71 Crores

Loans amounting to Rs.543.23 Crores (March 31, 2017 Rs.639.56 Crores) are secured by (a) first pari passu charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants and Garment Division at Bangalore; and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage; (b) charge on the Companyâs Trademarks; (c) Secured by second pari passu charge on all the Companyâs Current Assets presently relating to the Textile Plants and Garment Division and all the current assets aquired by the Company at any time in future .

Loans of Rs.15.48 Crores (March 31, 2017 Rs.17.31 Crores) are secured by hypothecation of related vehicles.

Nature of Security

Cash Credit and Other Facilities from Banks

(a) Secured by first pari passu charge on all the Companyâs Current Assets presently relating to the Manufacturing Locations and all the Current Assets acquired by the Company at any time after the execution of and during the continuance of the Indenture of Mortgage. (b) Secured by a second pari passu charge over all the Immovable Properties relating to Textile Plants, Movable Properties presently relating to the Company and all the movable properties aquired by the Company at any time in future after execution of and during the continuance of the Indenture of Mortgage.â

Rate of Interest

i. Working Capital Loans from banks carry interest rates ranging from 4.45% to 9.60% per annum.

ii. Inter Corporate Deposit carries interest rate of 8% per annum.

iii. Commercial Papers carry interest rates ranging from 7.60% to 7.65% per annum.

iv. Buyerâs credit arrangements carry interest rates ranging from 0.30% to 5.25%

Note

â(i) The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 and hence disclosures as required under Section 22 of The Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 regarding:â

(a) Principal amount and the interest due thereon remaining unpaid to any suppliers as at the end of accounting year;

(b) Interest paid during the year;

(d) Interest due and payable for the period of delay in making payment;

(e) Interest accrued and unpaid at the end of the accounting year; and

(f) Further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise have not been given.

The Company is making efforts to get the confirmations from the suppliers as regard to their status under the said Act.

(ii) For amount payable to related parties, refer Note 35.

The Company has unused tax capital losses amounting to Rs.386.40 crores as at March 31, 2018 (March 31, 2017: Rs.416.00 crores). Tax credits on such losses have not been recognised on the basis that recovery is not probable in the foreseeable future. Unrecognised tax capital losses will expire on March 31, 2025, if unutilized, based on the year of origination.

Notes :

(a) It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

(b) The Company does not expect any reimbursements in respect of the above contingent liabilities.

(c) The Company believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Companyâs financial position and results of operations.

Note 3 : Foreign Exchange Derivatives and Exposures not hedged

The fair values of all derivatives are separately recorded in the balance sheet within current and non-current assets and liabilities depending upon the maturity of the derivatives.

Cash Flow Hedges

The Company uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions.

The cash flow hedges are taken out by the Company during the year for hedging the foreign exchange rate of highly probable forecast transactions. The cash flows related to above are expected to occur during the year ended March 31, 2019 and consequently may impact the statement of profit or loss for that year depending upon the change in the foreign exchange rates movements.

Note 4 : Segment Reporting Identification of Segments:

Operating Segments:

(a) Textiles : Fabrics, Garments and Fabric Retail.

(b) Branded Apparels : Branded Garments, accessories and manufacturing & selling of customised clothing. Manufacturing and selling of branded accessories is reclassified and considered as branded apparels segment w.e.f. July 1,2017.

(d) Engineering : Engineering

(e) Others : Technical Textiles, Agriculture Produce, EPABX and One to Many Radio, Water Treatment, Other including newly commenced business.

Segment revenue and results:

Segment assets and Liabilities:

Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. Segment assets include all operating assets used by the operating segment and mainly consist of property, plant and equipments, trade receivables, Inventories and other operating assets. Segment liabilities primarily includes trade payable and other liabilities excluding borrowings.

Inter Segment transfer:

Inter Segment revenues are recognised at sales price. The same is based on market price and business risks. Profit or loss on inter segment transfer are eliminated at the company level.

The accounting policies ofthe reportable segments are the same as the Companyâs accounting policies described in Note 3. The Companyâs financing (including finance costs and finance income) and income taxes are reviewed on an overall basis and are not allocated to operating segments.

Geographical segment

Geographical segment is considered based on sales within India and rest of the world.

Summarised segment information for the years ended March 31, 2018 and March 31, 2017 are as follows:

Note

(a) The Companyâs Provident Fund is administered by approved Trust and are charged to the Statement of Profit and Loss as and when it is incurred. The Company is liable for the contribution and any shortfall in interest rates between the amount of interest realised by the investments and the interest payable to the members at the rates declared by the Government of India in respect of the administered trust. Having regard to the assets of the fund and the return on the investments, the Company does not have any deficiency as at March 31, 2018.

(b) Certain employees of the company are eligible for contribution to Pension Fund. The Company has no further obligation to the plan beyond its contribution which are periodically contributed to the government agencies.

(c) The Companyâs Superannuation Fund is administered by approved Trust. The Company is required to contribute the specified amount to the Trust. The Company has no further obligations to the plan beyond its contribution to a Trust Fund.

B. Defined benefit plans:

The Company has following post employment benefit plans which are in the nature of defined benefit plans:

(a) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The Gratuity plan is a Funded plan administered by a Trust and the Company makes contributions to recognised Trust in India.

Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company fully contributes all ascertained liabilities to the Arvind Limited Employeesâ Gratuity Fund Trust (the Trust). Trustees administer contributions made to the Trusts and contributions are invested in a scheme as permitted by Indian law.

The Company recognizes the net obligation of a defined benefit plan in its Balance Sheet as an asset or liability. Gains and losses through remeasurements of the net defined benefit liability/(asset) are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligations recognized in other comprehensive income.

(b) Post-Retirement Medical Benefit

Under this Scheme, employees & their spouse are covered for hospitalisation benefits after the employee has retired from the company only on completion of specified number of years services. The cover is available to these beneficiaries until they are alive. These beneficiaries are covered under Companyâs general group hospitalisation cover from insurance company. Liabilities with regard to the Post- Retirement Medical Benefit Plan are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company recognizes the net obligation of a defined benefit plan in its Balance Sheet as an asset or liability. Gains and losses through remeasurements of the net defined benefit liability/(asset) are recognized in the statement of profit and loss.

(c) Compensatory Pension Scheme

The Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees who have joined before 30th June 1983 and who have rendered not less than 31 years of service before their retirement. The plan is unfunded. Employees do not contribute to the plan.Liabilities with regard to the Compensatory Pension Scheme are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company recognizes the net obligation of a defined benefit plan in its Balance Sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/(asset) are recognized in the statement of profit and loss.

In presenting the above sensitivity analysis, the present value of defined benefit obligation has been calculated using the projected unit credit method at the end of reporting period.

The followings are the expected future benefit payments for the defined benefit plan :

The Company does not have any contributions expected towards planned assets for the next year.

C. Other Long term employee benefit plans:

Leave encashment

The Company has recognised Rs.14.27 Crores (March 31, 2017: Rs.11.93 Crores) as expenses and included in Note No. 24 âEmployee benefit expenseâ.

(d) Terms and conditions of transactions with related parties

(1) Outstanding balances other than loan given and taken and fair value of financial guarantee contract, at the year-end are unsecured and interest free and settlement occurs in cash.

(2) Loans in INR given to the related party carries interest rate of 8.00% - 8.15% (March 31, 2017: 8.00% - 10.25% ). Loans in USD given to the related party carries an interest rate of 3.90% (March 31, 2017 : 3.90%).

(3) Loans in INR taken from the related party carries an interest rate 8.00% (March 31, 2017 : 8.00%-10.25%)

(4) Financial guarantee given to Bank on behalf of subsidiaries and joint ventures carries no charge and are unsecured.

(5) No repayment schedule has been fixed in case of above mentioned Loans in the nature of loans given to Subsidiary Companies and are repayable on demand.

(e) Commitments with related parties

The Company has not provided any commitment to the related party as at March 31, 2018 (March 31, 2017: â Nil)

The amounts disclosed in the table are the amounts recognised as an expense during the year excluding expense of share based payment of Rs.1.85 crores (March 31, 2017 Rs.2.84 crores) in respect of Director & Chief Financial Officer. The remuneration of key management personnel is determined by the Remuneration committee.

Note 5 : Share based payments

A. The Company has instituted Employee Stock Option Scheme 2008 (ESOP 2008), pursuant to the approval of the shareholders of the company at their extra ordinary general meeting held on October 23, 2007. Under ESOP 2008, the Company has granted options convertible into equal number of equity shares of the face value of Rs 10 each to its certain employees.

D. Share Options Outstanding at the end of the year:

The share options outstanding at the end of the year had a weighted average exercise price of Rs.266.72 (as at March 31,2017: Rs.257.40),and a weighted average remaining contractual life of 4.25 Years (as at March 31,2017: 5.23 years)

E. Expense arising from share- based payment transactions

Total expenses arising from share- based payment transactions recognised in profit or loss as part of employee benefit expense were as follows :

Note 6 : Lease Rent

A. Where company as a lessee in case of Operating Lease

The Company has various cancellable and non-cancellable operating leases for Buildings, Plant and Machineries and various residential and office premises. The lease has varying terms, escalation clauses and renewal rights. On renewal, terms of the leases are renegotiated. These leasing arrangements are ranging in between 11 months and 20 years generally. The Company has not given any property on sub-lease which is taken under operating lease contracts. Future minimum lease payments in respect of which are as follows:

B. Where company as a lessor in case of Operating Lease

The Company has given Land and Buildings under non-cancellable operating lease, the future minimum lease payments receivables in respect of which are as under:

Note 7 : Corporate Social Responsibility (CSR) Activities:

(a) The Company is required to spend Rs.8.50 Crores (March 31, 2017 : Rs.8.76 Crores) on CSR activities under section 135 of the Act.

(b) Amount spent during the year towards CSR activities are as follows:

Note 8 : Fair value disclosures for financial assets and financial liabilities:

Set out below is a comparison, by class, of the carrying amounts and fair value of the Companyâs financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

The fair value of borrowings is calculated by discounting future cash flows using rates currently available for debts on similar terms, credit risk and remaining maturities.

For financial assets and financial liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

Fair value hierarchy

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

There are no transfer between level 1, 2 and 3 during the year.

The Companyâs policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

Note 9 : Financial instruments risk management objectives and policies

The Companyâs activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Companyâs risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Companyâs activities.

The Companyâs risk management is carried out by a Treasury department under policies approved by the Board of directors. The Companyâs treasury identifies, evaluates and hedges financial risks in close co-operation with the Companyâs operating units. The board provides written principles for overall risk.

(a) Market risk

Market risk refers to the possibility that changes in the market rates may have impact on the Companyâs profits or the value of its holding of financial instruments. The Company is exposed to market risks on account of foreign exchange rates, interest rates, underlying equity prices, liquidity and other market changes.

Future specific market movements cannot be normally predicted with reasonable accuracy.

(ai) Interest rate risk

Interest rate risk refers to the possibility that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rate. The Company is exposed to interest rate risk on short-term and long-term floating rate instruments and on the refinancing of fixed rate debt. The Companyâs policy is to maintain a balance of fixed and floating interest rate borrowings and the proportion of fixed and floating rate debt is determined by current market interest rates. The borrowings of the Company are principally denominated in Indian Rupees and US dollars with mix of fixed and floating rates of interest. These exposures are reviewed by appropriate levels of management at regular interval.

As at March 31, 2018, approximately 33% of the Companyâs Borrowings are at fixed rate of interest (March 31, 2017 : 38%).

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings as follows:

(a2) Foreign currency risk

The Companyâs foreign currency risk arises from its foreign operations, investments in foreign subsidiaries, foreign currency transactions and foreign currency borrowings. The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company. The major foreign currency exposures for the Company are denominated in USD and EURO.

Since a significant part of the Companyâs revenue is in foreign currency and major part of the costs are in Indian Rupees, any movement in currency rates would have impact on the Companyâs performance. Exposures on foreign currency sales are managed through the Companyâs hedging policy, which is reviewed periodically to ensure that the results from fluctuating currency exchange rates are appropriately managed. The Company strives to achieve asset liability offset of foreign currency exposures and only the net position is hedged. Consequently, the overall objective of the foreign currency risk management is to minimize the short term currency impact on its revenue and cash-flow in order to improve the predictability of the financial performance. The Company may use forward contracts, foreign exchange options or currency swaps towards hedging risk resulting from changes and fluctuations in foreign currency exchange rate. These foreign exchange contracts, carried at fair value, may have varying maturities varying depending upon the primary host contract requirements and risk management strategy of the company. Hedge effectiveness is assessed on a regular basis.

Foreign currency sensitivity

The foreign exchange rate sensitivity is calculated by the aggregation of the net foreign exchange rate exposure in USD and EURO with a simultaneous parallel foreign exchange rates shift in the currencies by 2% against the functional currency of the respective entities. The companyâs exposure to foreign currency changes for all other currencies is not material.

(b) Credit risk

All trade receivables are subject to credit risk exposure. The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country, in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through established policies, controls relating to credit approvals and procedures for continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit. The history of trade receivables shows a negligible provision for bad and doubtful debts. Therefore, the Company does not expect any material risk on account of non-performance by any of the Companyâs counterparties. The Company does not have significant concentration of credit risk related to trade receivables. No single third party customer contributes to more than 10% of outstanding accounts receivable (excluding outstanding from subsidiaries) as of March 31, 2018 and March 31, 2017.

Trade receivables are non-interest bearing and are generally on 7 days to 180 days credit term.

With respect to derivatives, the Companyâs forex management policy lays down guidelines with respect to exposure per counter party i.e. with banks with high credit rating, processes in terms of control and continuous monitoring. The fair value of the derivatives are credit adjusted at the period end.

(c) Liquidity risk

The Company requires funds both for short-term operational needs as well as for long-term investment programmes mainly in growth projects The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments:

* Includes contractual interest payment based on interest rate prevailing at the end of the reporting period over the tenor of the borrowings.

# Other financial liabilities includes interest accrued but not due of Rs.11.38 Crores (March 31, 2017 : Rs.5.15 Crores).

Note 10 : Capital management:

For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to ensure that it maintains an efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder value.

In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any long term borrowing in the current period except for two loans. The Company has obtained letter from the lender before the date of adoption of financial statements for not accelerating the payment of these loans within one year from the balance sheet date subject to regularisation ofthe breach by end of March 31, 2019. Accordingly, the management has considered the classification of loan based upon the original repayment schedule.

No changes were made in the objectives, policies or processes for managing capital during the current period.

Note 11 : Standards issued but not yet effective

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration

On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.

The amendment will come into force from April 1, 2018. The Company is evaluating the requirement ofthe amendment and the impact on the financial statements. The effect on adoption of Ind AS 21 is expected to be insignificant.

Ind AS 115 Revenue from contracts with customers

In March 2018, the Ministry of Corporate Affairs has notified the Companies (Indian Accounting Standards) Amended Rules, 2018 (âamended rulesâ). As per the amended rules, Ind AS 115 âRevenue from contracts with customersâ supersedes Ind AS 11, âConstruction contractsâ and Ind AS 18, âRevenueâ and is applicable for all accounting periods commencing on or after April 1, 2018.

Ind AS 115 introduces a new framework of five step model for the analysis of revenue transactions. The model specifies that revenue should be recognised when (or as) an entity transfer control of goods or services to a customer at the amount to which the entity expects to be entitled. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers. The new revenue standard is applicable to the Company from April 1, 2018.

The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)

The Company is evaluating the requirement of the amendment and the impact on the financial statements. The effect on adoption of Ind AS 115 is expected to be insignificant

Ind AS 112 Disclosure of Interests in Other Entities

The amendments clarify that the disclosure requirements in Ind AS 112, other than those in paragraphs B10-B16, apply to an entityâs interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal Company that is classified) as held for sale.

Ind AS 12 Income Taxes

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount. Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity ofthe earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact.

Ind AS 40 Investment Property

The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in managementâs intentions for the use of a property does not provide evidence of a change in use. Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with Ind AS 8 is only permitted if it is possible without the use of hindsight.

The amendment will come into force from April 1, 2018. The Company is evaluating the requirement of the amendment and the impact on the financial statements. The effect on adoption of Ind AS 40 is expected to be insignificant.

Ind AS 28 Investment in Associates and Joint Ventures

The amendments clarify that a venture capital organisation or a mutual fund, unit trust and similar entities may elect, at initial recognition, to measure investments in an associate or joint venture at fair value through profit or loss separately for each associate or joint venture. Further, Ind AS 28 permits an entity that is not an investment entity to retain the fair value measurement applied by its associates and joint venture (that are investment entities) when applying the equity method. Therefore, this choice is available, at initial recognition, for each investment entity associate or joint venture.

The amendment will come into force from April 1, 2018. The Company is evaluating the requirement of the amendment and the impact on the financial statements. The effect on adoption of Ind AS 28 is expected to be insignificant.

Note 12 : Business Combinations

(I). Pursuant to the Scheme of Amalgamation (the Scheme) sanctioned by National Company Law Tribunal vide its order dated August 24, 2017, Arvind Brands and Retail Limited (ABRL), Arvind Garments Park Private Limited (AGPPL) and Dholka Textile Park Private Limited (DTPPL) (collectively referred as âsubsidiariesâ or âamalgamated entitiesâ) have been merged with the Company w.e.f April 1, 2016 (the appointed date). The Scheme came into effect on October 7, 2017, the day on which the order was delivered to the Registrar of the Companies. Entire business, assets and liabilities, income and expense have been transferred to the Company included w.e.f. April 1, 2016.

No new shares are being issued and the investments held in the amalgamated companies by the Company stand cancelled and difference has been adjusted against Amalgamation Reserve.

The comparative Ind AS financial statements of the Company for the year ended March 31, 2017 is approved by shareholders in its annual general meeting held on August 4, 2017 which is audited by the predecessor auditor. Subsequently, to give the effect of the scheme on account of amalgamation of the subsidiaries with the Company in accordance with Ind AS 103, comparative Ind AS financial statements of the Company for the year ended March 31, 2017 were restated.

ABRL, wholly owned subsidiary of the Company was engaged in business of Branded Garments.

AGPPL and DTPPL, subsidiaries of the Company were engaged in business of textiles.

(II). I n the board meeting held on November 8, 2017, the Board of Directors of the Company has approved a scheme of arrangement between the Company and its subsidiary companies, Arvind Fashions Limited (AFL) and The Anup Engineering Limited (Anup) as well as with Anveshan Heavy Engineering Limited (Anveshan) whereby it is proposed to demerge Branded Apparel Undertaking and Engineering undertaking of the Company to AFL and Anveshan respectively and Anup will be merged with Anveshan. Subsequently, as part of the Scheme AFL and Anup would be demerged from the Group. The Scheme is subject to approval of relevant regulatory authorities. Pending such approvals, the Company has not given effect of the scheme in the financial statements for the year ended March 31, 2018.

(III). The company has acquired the business of âAditexfab LLPâ w.e.f June 1, 2017 at a consideration of Rs.34.50 crores. Value of net assets acquired is determined at Rs.34.50 crores, consequently no goodwill has been recognized. The management believes that the fair value of the net assets acquired is not likely to remain significantly different from the book value of the net assets acquired. Accordingly, Management has exercised the option to measure the business purchase on provisional basis for a period of 12 months in accordance with Ind AS 103 - âBusiness Combinationâ.

Aditexfab LLP was engaged in the business of the giving looms for Spinning and Weaving to Arvind Limited on lease basis.

Note 13 Expenditure on Research and Development

The Company has separate in-house Research and Development Centre at Naroda, Santej, Khatraj and Pune locations. From the four locations, Naroda, Santej and Khatraj are duly recognized and approved by Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. The details of Capital and Revenue expenditure incurred on Research and Development by all Centres are as under:

Note 14 : Regrouped, Recast, Reclassified

Previous periodâs figures in the financial statements, including the notes thereto, have been reclassified wherever required to conform to the current periodâs presentation/classification.

Note 15 : Events occurring after the reporting period

(i) The Board of Directors recommended dividend of Rs.2.40 per equity share (March 31, 2017 : Rs.2.40 per equity share) of face value of Rs.10 each, which is subject to approval by shareholders of the Company.

Mar 31, 2017

1. Corporate Information

Arvind Limited (âthe Companyâ) is one of Indiaâs leading vertically integrated textile companies with the presence of almost eight decades in this industry. It is among the largest denim manufacturers in the world. It also manufactures a range of cotton shirting, denim, knits and bottom weights (Khakis) fabrics and Jeans and Shirts Garments. Arvind, through its subsidiary company Arvind Fashions Limited and its subsidiaries is marketing in India the branded apparel under various brands. The brands portfolio of the Company includes Domestic and International brands like Flying Machine, Arrow, US Polo, Izod, Elle, Cherokee etc. It also operates apparel value retail stores UNLIMITED. Arvind also has the presence in Telecom business directly and through joint venture companies. Recently Arvind has made foray in to Technical Textiles on its own and in joint venture with leading global players.

The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on two recognised stock exchanges in India. The registered office of the Company is located at Naroda Road, Ahmedabad - 380025.

The financial statements were authorised for issue in accordance with a resolution of the directors on May 11, 2017.

2. Statement of Compliance and Basis of Preparation

2.1 Compliance with Ind AS

The financial statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) as issued under the Companies (Indian Accounting Standards) Rules, 2015.

For all periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with Accounting Standards specified in Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 (âIndian GAAP") and other relevant provision of the Act. These financial statements for the year ended March 31, 2017 are the first financial statements that the Company has prepared in accordance with Ind AS. Refer to Note 46 for information of how the transition from previous GAAP to Ind AS has affected the Companyâs Balance sheet, Statement of profit & loss and Statement of cash flow.

2.2 Historical Cost Convention

The financial statements have been prepared on a historical cost basis, except for the followings:

- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments);

- Derivative financial instruments measured at fair value;

- Assets held for sale - measured at fair value less cost to sell;

- Share based payments;

- Defined benefit plans - plan assets measured at fair value;

- Value in Use

In addition, the carrying values of recognised assets and liabilities designated as hedged items in fair value hedges that would otherwise be carried at amortised cost are adjusted to record changes in the fair values attributable to the risks that are being hedged in effective hedge relationships.

2.3 Rounding of amounts

The financial statements are presented in INR and all values are rounded to the nearest crore as per the requirement of Schedule III, except when otherwise indicated.

3. Significant accounting judgements, estimates and assumptions

3.1. Significant judgements in applying the Companyâs accounting policies

In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

Finance lease commitments - Company as lessee

The Company has entered into leases whereby it has taken land on lease. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term constituting a major part of the economic life of the property and the fair value of the asset, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as finance leases.

Revenue recognition

The Company assesses its revenue arrangement in order to determine if its business partner is acting as a principle or as an agent by analysing whether the Company has primary obligation for pricing latitude and exposure to credit / inventory risk associated with the sale of goods. The Company has concluded that certain arrangements are on principal to agent basis where its business partner is acting as an agent. Hence, sale of goods to its business partner is recognised once they are sold to the end customer.

3.2. Estimates and assumption

Defined benefit plans

The cost of the defined benefit plans and other post-employment benefits and the present value of the obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate, management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation and extrapolated as needed along the yield curve to correspond with the expected term of the defined benefit obligation. The underlying bonds are further reviewed for quality. Those having excessive credit spreads are excluded from the analysis of bonds on which the discount rate is based, on the basis that they do not represent high quality corporate bonds.

The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at intervals in response to demographic changes. Future salary increases are based on expected future inflation rates for the country.

Further details about defined benefit obligations are provided in Note 34.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair value of financial instruments. See Note 42 for further disclosures.

Allowance for uncollectible trade receivables

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Estimated irrecoverable amounts are based on the ageing of the receivable balance and historical experience. Additionally, a large number of minor receivables is grouped into homogeneous groups and assessed for impairment collectively. Individual trade receivables are written off when management deems them not to be collectible. The carrying amount of allowance for doubtful debts is Rs.4.03 Crores (March 31, 2016 : Rs.0.95 Crores and April 1, 2015 : Rs.0.75 Crores).

Share-based payments

The Company initially measures the cost of equity-settled transactions with employees using a binomial model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. For equity-settled share-based payment transactions, the liability needs to be measured at the time of grant. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 37. Taxes

Deferred tax assets are recognised for unused tax credits to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

The Company has Rs.240.81 Crores (March 31, 2016 : Rs.231.90 Crores, April 1, 2015 : Rs.242.65 Crores) of tax credits carried forward. These credits expire in 15 years. The Company has taxable temporary difference and tax planning opportunities available that could partly support the recognition of these credits as deferred tax assets. On this basis, the Company has determined that it can recognise deferred tax assets on the tax credits carried forward.

Further details on taxes are disclosed in Note 29.

Revenue recognition - Customer loyalty program reward points

The Company estimates the fair value of points awarded under the Customer loyalty program by applying statistical techniques. Inputs to the model include making assumptions about expected redemption rates, the mix of products that will be available for redemption in the future and customer preferences. As points issued under the programme do not expire, such estimates are subject to significant uncertainty. As at 31 March 2017, the estimated liability towards unredeemed points amounted to approximately Rs.0.45 Crores (March 31, 2016 : Rs.0.83 Crores and April 1, 2015: Rs.0.33 Crores).

Intangible assets

Refer Note 3.10 for the estimated useful life of Intangible assets. The carrying value of Intangible assets has been disclosed in Note 7.

Property, plant and equipment

Refer Note 3.6 for the estimated useful life of Property, plant and equipment. The carrying value of Property, plant and equipment has been disclosed in Note 5.

Impairment of non-financial assets

Above Assets and liability are of Real Estate Undertaking of Arvind Limited which has been classified as held for sale considering the following scheme of arrangement.

Scheme of Arrangement

A Composite Scheme of Arrangement (âthe Schemeâ) in the nature of Demerger and transfer of Real Estate Undertaking of Arvind Limited (âthe Companyâ) to Arvind Infrastructure Limited (âAILâ) and Restructuring of Share Capital, under sections 391 to 394 read with sections 78, 100 and 103 of the Companies Act, 1956 has been sanctioned by the High Court of Gujarat at Ahmedabad on April 22, 2015. The Scheme has become effective from the appointed date 1st April 2015.

Pursuant to the Scheme, the Real Estate Undertaking stood demerged from the Company and transferred to and vested in AIL as a going concern with effect from the appointed date 1st April 2015. Upon the Scheme becoming effective:

a) From the appointed date, the assets and liabilities of the Real Estate Undertaking of the Company (Demerged Undertaking) have been transferred to AIL at their respective Book values.

b) AIL has credited its Share Capital Account with the aggregate face value of the equity shares issued 1 (One) fully paid Equity Shares of Rs.10/- each of AIL for every 10 (Ten) fully paid up Equity Shares of Rs.10/- each held by the shareholders of the Company.

c) The existing shares of AIL held by the Company and its nominees shall stand cancelled and the amount of such investment in the books of the Company shall be written off against the Securities Premium Account.

d) The amount of difference in the net value of assets transferred pursuant to the Scheme and the amount of consideration as issued, netted by existing share capital cancelled shall be adjusted against the Securities Premium Account.

Pursuant to the Scheme, Demerged Undertaking has been demerged from the Company with effect from 1st April 2015, (the appointed date):

a) As on appointed date, all the assets and the liabilities have been transferred to AIL at their respective book values.

b) As consideration, AIL has subsequently issued and allotted Equity Shares of Rs.10/- each fully paid up in the ratio of 1 (One) Equity Share of Rs.10/- each for every 10 (Ten) Equity Shares of Rs.10/- each of the Company, to the shareholders of the Company.

c) The amount of investment in AIL in the books of the Company of Rs.100.05 Crores has been adjusted against the Securities Premium Account.

d) The difference between the value of assets and liabilities transferred of Rs.0.08 Crores has been adjusted against the Securities Premium Account.

4.1. Terms/Rights attached to the equity shares

The Company has one class of shares referred to as equity shares having a par value of Rs.10 each. Each shareholder is entitled to one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

4.2. Shares allotted as fully paid up pursuant to contract without payment being received in cash (during 5 years immediately preceding March 31, 2017)

3,410,528 Equity Shares of Rs.10 each were issued during the year 2012-2013 to the erstwhile shareholders of Arvind Products Limited pursuant to the Scheme of Amalgamation without payment being received in cash.

4.3. Shares reserved for issue under options

Refer Note 37 for details of shares to be issued under options

4.4 Objective, policy and procedure of capital management, refer Note 45

Nature of security:

Term loan of Rs.656.87 Crores

a Loans amounting to Rs.639.56 Crores (March 31, 2016 Rs.1499.36 Crores , April 01, 2015 Rs.1407.86 crores) are secured by (a) first charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants excluding Immovable properties of Asoka Spintex Textile Plant and Arvind International Textile Plant and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage; (b) additional charge by way of mortgage on Immovable Properties at villages Jethlaj, Karoli, Vadsar, Moti Bhoyan, Santej and Khatrej; (c) charge on the Companyâs Trademarks; (d) Secured by second charge on all the Companyâs Current Assets both present and future relating to the Textile Plants and (e) first charge on Movable Fixed Assets of Jeans and Shirts Garment divisions at Bangalore.

b Loans of Rs.17.31 Crores (March 31, 2016 Rs.14.42 Crores , April 01, 2015 Rs.8.15 Crores) are secured by hypothecation of related vehicles.

c Rate of Interest and Terms of Repayment

d Nature of Security

Cash Credit and Other Facilities from Banks

Secured by first charge on all the Companyâs Current Assets presently relating to the Textile Plants and all the Current Assets acquired by the Company at any time after the execution of and during the continuance of the Indenture of Mortgage. They are also secured by a second charge over all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage. Some of the facilities are additionally secured by second charge on movable Plant and Machinery of the Jeans and Shirts Garment divisions at Bangalore.

e Rate of Interest

i. Working Capital Loans from banks carry interest rates ranging from 4.95% to 10.35% per annum.

ii. Inter Corporate Deposit carries interest rate of 8% to 10.25% per annum.

iii. Commercial Papers carry interest rates ranging from 6.44% to 6.50% per annum.

iv. Buyerâs credit arrangements carry interest rates ranging from 0.22% to 2.73%

5 (a) Trade payable

a The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 and hence disclosures as required under Section 22 of The Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 regarding:

(a) Principal amount and the interest due thereon remaining unpaid to any suppliers as at the end of accounting year;

(b) Interest paid during the year;

(d) Interest due and payable for the period of delay in making payment;

(e) Interest accrued and unpaid at the end of the accounting year; and

(f) Further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise. have not been given.

The Company is making efforts to get the confirmations from the suppliers as regard to their status under the said Act.

Note 6 : Segment Reporting

In accordance with Ind AS 108 âOperating Segmentâ, segment information has been given in the Consolidated Financial Statements of the Company and therefore, no separate disclosure on segment information is given in the Standalone Financial Statements.

The Companyâs Provident Fund is administered by the Trust. The Rules of the Companyâs Provident Fund administered by a Trust require that if the Board of the Trustees are unable to pay interest at the rate declared for Employeesâ Provident Fund by the Government under Para 60 of the Employeesâ Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

B. Defined benefit plans:

The Company has following post employment benefits which are in the nature of defined benefit plans:

(a) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan administered by a Trust and the Company makes contributions to recognised Trust.

The company has instituted Employee Stock Option Scheme 2008 (ESOP 2008), pursuant to the approval of the shareholders of the company at their extra ordinary general meeting held on October 23, 2007. Under ESOP 2008, the Company has granted options convertible into equal number of equity shares of the face value of Rs.10 each.

During the year, the Company had specified bank notes or other denomination notes as defined in MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBNs) held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per notification is given below:

*For the purposes of this clause, the term âSpecified Bank Notesâ shall have the same meaning provided in the notification of the Government of India, Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated November 8, 2016.

Note 7 : Long-term foreign currency monetary items

The Company has elected the option to continue the below stated policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the financial statements for the period ending immediately before March 31, 2016 as per the previous GAAP

(a) Exchange rate differences of long-term foreign currency loans which are related to acquisition of depreciable fixed assets have been added to or deducted from the cost of the assets and depreciated over the balance life of the assets and;

(b) Exchange rate differences on other long-term foreign currency loans have been transferred to âForeign Currency Monetary Item Translation Difference Accountâ to be amortized over the balance period of loans.

As a result:

(a) An amount of Rs.0.44 Crores (March 31, 2016 : 3.76 Crores and April 1, 2015 : 2.84 Crores) being the exchange rate loss for the year has been adjusted against the fixed assets.

(b) An amount of Rs.Nil (March 31, 2016 : Nil and April 1, 2015 : Rs.3.88 Crores) being the exchange rate loss for the year remains to be amortized as at the balance sheet date.

Note 8 : Lease Rent

Operating Lease

(A) Factory Building is taken on lease period of 8 to 20 years with no option of renewal, no sub lease of the building. The particulars of these leases are as follows:

(B) Plant & Machineries are taken on operating lease for a period of 8 years with the option of renewal The particulars of these leases are as follows:

(C) The Company has taken various residential and office premises under operating lease or leave and license Agreements. These are generally cancellable, having a term between 11 months and 9 years and have no specific obligation for renewal. Payments are recognised in the Statement of Profit and Loss under âRentâ in Note 27.

(D) Rent Income also includes Lease Rental received towards Land and Buildings. Such operating lease is generally for a period from 12 to 15 years with the option of renewal on mutual consent and premature termination of agreement through agreed notice period.

Note 9 : Corporate Social Responsibility (CSR) Activities:

a. The Company is required to spend Rs.8.76 Crores ; (March 31, 2016 7.27 Crores, April 01, 2015 : Rs.4.39 Crores) on CSR activities.

b. Amount spent during the year on:

Note 10 : Fair value disclosures for financial assets and financial liabilities

The management assessed that the fair values of cash and cash equivalents, other bank balances, loans, trade receivables, other current financial assets, trade payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

The fair value of borrowings and other financial liabilities is calculated by discounting future cash flows using rates currently available for debts on similar terms, credit risk and remaining maturities.

The discount for lack of marketability represents the amounts that the Company has determined that market participants would take into account when pricing the investments.

The Companyâs principal financial liabilities, other than derivatives, comprise borrowings and trade & other payables. The main purpose of these financial liabilities is to finance the Companyâs operations and to support its operations. The Companyâs principal financial assets include Investments, loans given, trade and other receivables and cash & short-term deposits that derive directly from its operations.

The Companyâs activities expose it to market risk, credit risk and liquidity risk. In order to minimise any adverse effects on the financial performance of he company, derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts are entered to hedge certain foreign currency exposures and interest rate swaps to hedge certain variable interest rate exposures. Derivatives are used exclusively for hedging purposes and not as trading / speculative instruments.

The Companyâs risk management is carried out by a Treasury department under policies approved by the Board of directors. Companyâs treasury identifies, evaluates and hedges financial risks in close co-operation with the Companyâs operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

(a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings, deposits, Investments, trade and other receivables, trade and other payables and derivative financial instruments.

Within the various methodologies to analyse and manage risk, Company has implemented a system based on âsensitivity analysisâ on symmetric basis. This tool enables the risk managers to identify the risk position of the entities. Sensitivity analysis provides an approximate quantification of the exposure in the event that certain specified parameters were to be met under a specific set of assumptions. The risk estimates provided here assume:

- a parallel shift of 50-basis points of the interest rate yield curves in all currencies.

- a simultaneous, parallel foreign exchange rates shift in which the INR appreciates / depreciates against all currencies by 2%

- 10% increase / decrease in equity prices of all investments traded in an active market, which are classified as financial asset measured at FVOCI.

The potential economic impact, due to these assumptions, is based on the occurrence of adverse / inverse market conditions and reflects estimated changes resulting from the sensitivity analysis. Actual results that are included in the Statement of profit & loss may differ materially from these estimates due to actual developments in the global financial markets.

The analyses exclude the impact of movements in market variables on: the carrying values of gratuity, pension and other post-retirement obligations and provisions.

The following assumption has been made in calculating the sensitivity analyses:

- The sensitivity of the relevant statement of profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2017, March 31, 2016 and April 1, 2015 including the effect of hedge accounting.

- The sensitivity of equity is calculated by considering the effect of any associated cash flow hedges as at March 31, 2017, March 31, 2016 and April 1, 2015 for the effects of the assumed changes of the underlying risk

Interest rate risk

Interest rate risk arises from the sensitivity of financial assets and liabilities to changes in market rates of interest. The Company seeks to mitigate such risk by entering into interest rate derivative financial instruments such as interest rate swaps or cross-currency interest rate swaps. Interest rate swap agreements are used to adjust the proportion of total debt, that are subject to variable and fixed interest rates.

Under an interest rate swap agreement, the Company either agrees to pay an amount equal to a specified fixed-rate of interest times a notional principal amount, and to receive in return an amount equal to a specified variable-rate of interest times the same notional principal amount or, vice-versa, to receive a fixed-rate amount and to pay a variable-rate amount. The notional amounts of the contracts are not exchanged. No other cash payments are made unless the agreement is terminated prior to maturity, in which case the amount paid or received in settlement is established by agreement at the time of termination, and usually represents the net present value, at current rates of interest, of the remaining obligations to exchange payments under the terms of the contract.

As at March 31, 2017, after taking into account the effect of interest rate swaps, approximately 38% of the Companyâs Borrowings are at fixed rate of interest (March 31, 2016 : 20% and April 1, 2015 : 19%)

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings, as follows:

Exclusion from this analysis are as follows:

- Fixed rate financial instruments measured at cost : Since a change in interest rate would not change the carrying amount of this category of instruments, there is no net income impact and they are excluded from this analysis

- The effect of interest rate changes on future cash flows is excluded from this analysis.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currency, primarily in USD. The Company has obtained foreign currency loans and has foreign currency trade payables and receivables etc. and is, therefore, exposed to foreign exchange risk. The Company may use forward contracts, foreign exchange options or currency swaps towards hedging risk resulting from changes and fluctuations in foreign currency exchange rate. These foreign exchange contracts, carried at fair value, may have varying maturities varying depending upon the primary host contract requirements and risk management strategy of the company.

The Company manages its foreign currency risk by hedging appropriate percentage of its foreign currency exposure, as approved by Board as per established risk management policy. Details of the hedge & unhedged position of the Company given in Note no.32

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD ,EUR and GBP rates to the functional currency of respective entity, with all other variables held constant. The Companyâs exposure to foreign currency changes for all other currencies is not material. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities. The impact on the Companyâs pre-tax equity is due to changes in the fair value of foreign currency monetary items designated as cash flow hedge.

Equity price risk

The Companyâs investment consists of investments in publicly traded companies held for purposes other than trading. Such investments held in connection with non-consolidated investments represent a low exposure risk for the Company and are not hedged.

As at March 31, 2016, the exposure to listed equity securities at fair value was Rs.99.51 Crores. A decrease of 10% on the BSE market index could have an impact of approximately Rs.9.95 Crores on the OCI or equity attributable to the Company. An increase of 10% in the value of the listed securities would also impact OCI and equity. These changes would not have an effect on profit or loss.

As at March 31, 2017 the Company does not have any material exposure to listed equity securities

(b) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally on 7 days to 180 days credit term. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 8. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

The requirement of impairment is analysed as each reporting date. Refer Note 8 for details on the impairment of trade receivables.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made only with approved counterparties who meets the minimum threshold requirements under the counterparty risk assessment process. The Company monitors the ratings, credit spreads and financial strength of its counterparties. Based on its on-going assessment of counterparty risk, the group adjusts its exposure to various counterparties. The Companyâs maximum exposure to credit risk for the components of the Balance sheet as of March 31, 2017, March 31, 2016 & April 1, 2015 is the carrying amount as disclosed in Note 42 except for financial guarantees. The Companyâs maximum exposure for financial guarantee is given in Note 30.

(c) Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Companyâs objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt and overdraft from both domestic and international banks at an optimised cost. It also enjoys strong access to domestic capital markets across equity.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings less cash and short-term deposits (including other bank balance).

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2017, March 31, 2016 and April 1, 2015.

Loan covenants

Under the terms of the major borrowing facilities, the Company has complied with the required financial covenants through out the reporting periods.

These financial statements, for the year ended March 31, 2017, are the first annual Ind AS financial statements, the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at April 1, 2015, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the previously published Indian GAAP financial statements as at and for the year ended March 31, 2016.

A. Exemptions applied

Ind AS 101 âFirst-time Adoption of Indian Accounting Standardsâ allows first-time adopter certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

Ind AS optional exemptions

1 Deemed cost

Ind AS 101 permits a first time adopter to elect to measure an item of property, plant and equipment at the transition to Ind AS at its fair value and use that fair value as its deemed cost at that date. This exemption can also be used for intangible assets covered by Ind AS 38. Accordingly, the Company has elected to measure all of its property, plant and equipment & intangible assets at fair value on the date of transition to Ind AS and used those fair value as deemed cost of Property, plant and equipment & Intangible assets.

Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all of its Investment property as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.

Accordingly, since there is no change in the functional currency, the Company has elected to continue with the carrying value for all of its Investment properties, as recognised in its Indian GAAP financials, as deemed cost at the transition date.

2 Long Term Foreign Currency Monetary Items

The Company has elected the option provided under Ind AS 101 to continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP.

3 Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of facts and circumstances at the date of transition to Ind AS.

The Company has elected to apply this exemption.

4 Investment in Subsidiaries and Joint ventures

The Company has elected the option provided under Ind AS 101 to measure all its investments in Subsidiaries and Joint venture at previous GAAP carrying value on the date of transition in its separate financial statement and used that carrying value as the deemed cost of such investments.

5 Non-current assets held for sale and discontinued operations

The Company has elected the option provided under Ind AS 101 to measure non-current assets held for sale and discontinued operations at the lower of carrying value and fair value less cost to sell at the date of transition to Ind ASs.

Ind AS mandatory exceptions

1 Estimates

An entityâs estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP, unless there is objective evidence that those estimates were in error.

Ind AS estimates as at April 1, 2015 and March 31, 2016 are consistent with the estimates as at the same date made in the conformity with previous GAAP . The Company made estimates for the following in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

1. Investment in equity instruments carried at FVOCI

2. Impairment of financial assets based on Expected Credit Loss model

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015, the date of transition to Ind AS and as of March 31, 2016.

2 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS:

Notes to the reconciliation of equity as at April 1, 2015 and March 31, 2016 and total comprehensive income for the year ended March 31, 2016

i. Fair Valuation of Property, plant and equipment & Intangible assets

The Company has elected to measure all items of Property, Plant and Equipment (PPE) & certain item of Intangible assets at fair value at the date of transition to Ind AS and to use the fair value as deemed cost on the date of transition. The resulting change has been adjusted in retained earnings. Change in depreciation & amortisation of the subsequent period due to fair valuation of items of PPE & Intangible assets have been recognised in statement of profit & loss.

ii. Impact of fair valuation of Financial Instruments

Under previous GAAP, the long-term investments were measured at cost less permanent diminution in value, if any. Ind AS requires all investments to be measured at fair value at the reporting date and all changes in the fair value subsequent to the transition date to be recognised either in the Statement of profit and loss or Other Comprehensive Income (based on the category in which they are classified).

Under previous GAAP, financial guarantee provided to the Banks on behalf of the subsidiaries, joint ventures and other third parties are disclosed as contingent liability. Under Ind AS, financial guarantee contracts are recognised as liability on the date of transition at the higher of (i) the amount of the loss allowance determined on the date of transition and (ii) the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.

iii. Proposed Dividend and tax thereon

Under Previous GAAP, proposed dividends are recognized as liability in the period to which they relate irrespective of the approval by shareholders. Under Ind AS, a proposed dividend is recognised as a liability in the period in which it is declared by the company (on approval of Shareholders in a general meeting) or paid. Therefore, the liability recorded under previous GAAP has been derecognised.

iv. Provision for Expected Credit Losses on financial instruments

Under previous GAAP, the Company has created provision for impairment of receivables consists only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Loss model (ECL). On the date of transition, Expected Credit Loss on trade receivables and on loans have been adjusted in retained earnings and subsequent changes in Expected credit loss have been charged to the Statement of profit and loss.

v. Tax impacts on Ind AS adjustments

The impact of transition adjustments together with Ind AS mandate of using balance sheet approach (against profit and loss approach under previous GAAP) for computation of deferred tax has resulted in adjustment to Reserves, with consequential impact in the subsequent periods to the Statement of profit and loss or Other comprehensive income, as the case may be.

vi. Share based payment

Under the previous GAAP, the cost of equity-settled employee shares-based plan were recognised using the intrinsic method. Under Ind AS, the cost of equity-settled share based payment plan is recognised based on the fair value of the options as at the grant date. Consequently, the amount recognised in share based payment reserve account increased by Rs.4.79 crores as at March 31, 2016 (April 1, 2015 : Rs.2.20 crores). The profit for the year ended March 31, 2016 decreased by Rs.2.59 crores. There is no impact on total equity.

vii. Re-measurement gain / loss on defined benefit plan

Under Ind AS, re-measurement i.e. actuarial gain loss and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurement were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended on March 31, 2016 increased by Rs.2.21 crores. There is no impact on the total equity as at March 31, 2016.

viii. Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Item of income and expense that are not recognised in profit or loss but are shown in the Statement of profit and loss as âother comprehensive incomeâ includes fair value gain / loss on FVOCI equity instruments, effective portion of gains / losses on cash flow hedging instruments and re-measurement of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.

ix. Other adjustments

Other adjustments includes adjustments due to the GAAP differences related to recognition and measurement of employee benefits, financial charges etc.

x. Retained earnings

Retained earnings as at April 1, 2015 has been adjusted consequent to the above Ind AS transition adjustments.

xi. Classification & Presentation

a. Trade receivables where bills discounted

Under the previous GAAP, on discounting of bills receivables, such receivables are derecognised and are shown as contingent liability. Under Ind AS, as such bill discounting arrangement does not comply the derecognition criteria stated in Ind AS 109, such receivables are not derecognised and liability in the form of bill discounted has been recognised as borrowings.

b. Recognition of certain Government grant as deferred income

The government grant related to fixed assets was netted off with the cost respective Property, Plant and Equipment under previous GAAP. Under Ind AS, Property, Plant and Equipment has been recognised at gross cost and government grant has been recognised as deferred income.

The deferred income is recognised as income in the statement of Profit and Loss on a systematic basis over the useful life of the assets for which it is received.

c. Investment property

Under the previous GAAP, Land & Building given on lease has been shown as Investment property and disclosed under the head Investments. Moreover, some portion of the land which is not in use are classified as Land held for sale and shown under the head other current assets. Under Ind AS, Land & Building given on lease are disclosed separately as Investment property on the face of the Balance sheet. Land which is currently not in determined use and does not comply the criteria for classification of non-current assets held for sale as per the requirement of Ind AS 105 are also classified as Investment property.

d. Assets classified as held for sale and discontinued operation

A Composite Scheme of Arrangement (âthe Scheme") in the nature of Demerger and transfer of Real Estate Undertaking of Arvind Limited (âthe Company") to Arvind Infrastructure Limited (âAILâ) and Restructuring of Share Capital, under sections 391 to 394 read with sections 78, 100 and 103 of the Companies Act, 1956 has been sanctioned by the High Court of Gujarat at Ahmedabad on April 22, 2015 and the Scheme has become effective from the appointed date 1st April 2015. Under the previous GAAP, the concept of disposal group held for sale does not exist. The assets and liabilities of disposal group have not been presented as held for sale.

Ind AS 105 Non-current assets held for sale and Discontinued operations required disposal group to be identified as held for sale if the carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. Ind AS 105 lays down detailed guidelines and criteria in this regards. Based on the assessment performed by the management, it has been determined that the assets and liabilities of Real Estate undertaking should be presented as held for sale under Ind AS. Consequently, the assets and liabilities of disposal group held for sale have been presented separately from the other assets and other liabilities respectively in the opening balance sheet as at April 1, 2015 (Refer note 12 for details) . There is no impact on the total equity as a result of this adjustment.

e. Excise duty

Under the previous GAAP, sale of goods was presented as net of excise duty. Under Ind AS, revenue from sale of products is presented inclusive of excise duty. The excise duty paid on sale of products is separately presented on the face of statement of profit and loss as a part of expense. Thus sale of goods under Ind AS has increased by Rs.7.55 crores with a corresponding increase in other expense.

f. Discounts and incentives to customers

Under the previous GAAP, discounts and incentives to the customers were shown as a part of finance cost and other expense respectively. Under Ind AS, revenue from sale of products are recognised at net of discounts and incentives to the customers. Thus, sale of products under Ind AS has decreased by Rs.44.80 crores with a corresponding decrease in finance cost and other expense.

xii. Statement of cash flows

The impact of transition from previous GAAP to Ind AS on the statement of cash flows is due to various reclassification adjustments recorded under Ind AS in Balance sheet and Statement of profit and loss and difference in the definition of cash and cash equivalents under these two GAAPs like bank overdraft.

Note 11 : Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, âStatement of cash flowsâ and Ind AS 102, âShare-based payment.â The amendments are applicable to the Company from April 1, 2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. The effect on the financial statements is being evaluated by the Company.

Amendment to Ind AS 102:

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes. It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity settled awards. Market-based performance conditions and non-vesting conditions are reflected in the âfair valuesâ, but nonmarket performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement. The effect on the financial statements is being evaluated by the Company.

The Company has separate In-House Research & Development Centre at Naroda and Santej locations. Both the centres are involved into new product development, new process development etc. and are duly recognised and approved by Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. The details of Capital and Revenue Expenditure incurred on Research and Development by both the Centres are as under:

Note 12 : Rounding off

Figures less than Rs.50,000/- which are required to be shown separately, have been shown as actual in brackets.

Note 13 : Regrouped, Recast, Reclassified

Figures of the earlier year have been regrouped or reclassified to conform to Ind AS presentation requirements. The accompanying notes are an integral part of the financial statements.

Mar 31, 2015

1. COMPANY BACKGROUND

Arvind Limited is one of India''s leading vertically integrated textile companies with the presence of almost eight decades in this industry. It is among the largest denim manufacturers in the world. It also manufactures a range of cotton shirting, denim, knits and bottom weights (Khakis) fabrics and Jeans and Shirts Garments. Arvind, through its subsidiary company Arvind Lifestyle Brands Limited, is marketing in India the branded apparel under various brands and is also licensee in India for various international brands. The brands portfolio of the company includes International brands like Arrow, US Polo, Izod, Elle, Cherokee etc. It also operates apparel Value Retail stores MEGAMART. It also operates the specialty retail stores under the licensing arrangement with international brands of Debanhams & Next. Arvind also has the presence in Telecom business directly and through joint venture companies. Recently Arvind has made foray in to Technical Textiles on its own and in joint venture with leading global players.

A Rights, Preferences and Restrictions attached to Shares Equity Shares:

The Company has one class of shares referred to as equity shares having a par value of Rs. 10 each. Each shareholder is entitled to one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

B Shares reserved for issue under options

Refer note 36 for details of shares to be issued under options

C Shares allotted as fully paid up pursuant to contract without payment being received in cash (during 5 years immediately preceding March 31, 2015)3,410,528 Equity Shares of Rs. 10 each were issued during the year 2012-2013 to the erstwhile shareholders of Arvind Products Limited pursuant to the Scheme of Amalgamation without payment being received in cash.

D Nature of Security:

Term Loans of Rs. 1416.01 Crores

i Loans amounting to Rs. 1407.86 Crores are secured by (a) first charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants excluding Immovable properties of Asoka Spintex Textile Plant and Arvind International Textile Plant and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage; (b) additional charge by way of mortgage on Immovable Properties at villages Jethlaj, Karoli, Vadsar, Moti Bhoyan, Santej and Khatrej; (c) charge on the Company''s Trademarks and (d) Secured by second charge on all the Company''s Current Assets both present and future relating to the Textile Plants. Out of these Rs. 1363.02 Crores are additionally secured by first charge on Movable Fixed Assets of Jeans and Shirts Garment divisions at Bangalore.

ii Loans of Rs. 8.15 Crores are secured by hypothecation of related vehicles.

a Nature of Security

Cash Credit and Other Facilities from Banks

Secured by first charge on all the Company''s Current Assets presently relating to the Textile Plants and all the Current Assets acquired by the Company at any time after the execution of and during the continuance of the Indenture of Mortgage. They are also secured by a second charge over all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the Indenture of Mortgage. Some of the facilities are additionally secured by second charge on movable Plant and Machinery of the Jeans and Shirts Garment divisions at Bangalore.

Rs. in Crores As at As at March 31, March 31, 2 Contingent Liabilities 2015 2014

(to the extent not provided for)

(a) Bills Discounted 198.36 151.72

(b) Claims against the Company not 5.68 8.38 acknowledged as debts

(c) Guarantees given by the Banks on 83.94 65.41 behalf of the Company

(d) Guarantees given by the Company 631.96 533.31 to Banks on behalf of Subsidiaries/ Joint Ventures

(e) Disputed Demands in respect of Excise/Custom Duty 32.47 33.71

Sales Tax 20.37 20.37

Income Tax 6.22 4.79

Service Tax 3.00 0.70

Notes:

1 The Company has considered business segment as the primary reporting segment. Segments have been identified taking into account the nature of the products and services, differential risks and returns, the Organizational structure and internal reporting system. Consequently, the geographical segment has been considered as a secondary segment.

2 The business segment comprise of the following:

Textiles : Fabric, Yarn and Garments

Brands and Retail : Retailing of Branded Garments, Apparels and Fabrics

Real Estate : Real Estate Development

Others : Electronics, Technical Textile, Construction and Project Activity

The Company is in the process of demerging Real Estate Segment (Note 46).

3 Geographical segment is considered based on sales within India and outside India.

4 Intersegment Revenues are recognised at sales price.

(D) The Company has taken various residential and office premises under operating lease or leave and license Agreements. These are generally cancellable, having a term between 11 months and 9 years and have no specific obligation for renewal. Payments are recognised in the Statement of Profit and Loss under ''Rent'' in Note 29.

(E) Rent Income also includes Lease Rental received towards Land and Buildings. Such operating lease is generally for a period from 12 to 15 years with the option of renewal on mutual consent and premature termination of agreement through agreed notice period.

5 Impairment of Fixed Assets

In accordance with the Accounting Standard (AS -28) on ''Impairment of Assets'' , the Company has reassessed its fixed assets and is of the view that no further impairment/reversal is considered to be necessary in view of its expected realisable value.

6 Early adoption of AS 30, Financial Instruments :Recognition and Measurement

(a) Consequent to the Announcement of the Institute of Chartered Accountants of India (ICAI), the Company had chosen to early adopt ''Accounting Standard - 30, Financial Instruments: Recognition and Measurement'' in its entirety, read with the clarification issued on application of AS -30. Accordingly, the Company has changed the designation and measurement of all its significant financial assets and liabilities. All the financial assets and financial liabilities and derivatives have been remeasured at their respective fair values or at amortized cost as against cost except for those items whose accounting treatment is covered by the existing accounting standards.

(b) As a result, as on Balance Sheet date, Long Term Borrowings are lower by Rs. 6.98 Crores, (Previous year Rs. 8.04 Crores) and Hedge Reserve account is debited by Rs. 8.24 Crores (Previous year credited by Rs. 21.71 Crores) on account of fair valuation of outstanding derivatives.

7 Foreign Exchange Differences

As per the notification issued by the Ministry of Corporate Affairs dated 31st March, 2009 as amended from time to time, the Company had already exercised the option for accounting of exchange rate differences with effect from April 1, 2007.

Consequent to the adoption of that option:

(a) Exchange rate differences of long-term foreign currency loans which are related to acquisition of depreciable fixed assets have been added to or deducted from the cost of the assets and depreciated over the balance life of the assets and;

(b) Exchange rate differences on other long-term foreign currency loans have been transferred to ''Foreign Currency Monetary Item Translation Difference Account'' to be amortized over the balance period of loans or up to 31st March, 2020 whichever is earlier.

As a result:

(a) An amount of Rs. 2.84 Crores being the exchange rate loss for the year (Previous year Rs. 6.19 Crores) has been adjusted against the fixed assets.

(b) An amount of Rs. 3.88 Crores being the exchange rate loss for the year (Previous year Rs. 5.00 Crores) remains to be amortized as at the balance sheet date.

8 Effective from April 1, 2014, the Company has revised useful lives of tangible fixed assets based on an independent evaluation. Accordingly, the carrying value of fixed assets as on that date, net of residual value, has been depreciated over the revised remaining useful lives. Further, an amount of Rs. 60.93 Crores (Net of deferred tax of Rs. 32.25 Crores) representing the carrying value of assets, whose remaining useful life is Nil as at April 1, 2014, has been charged to general reserve pursuant to the provisions of the Companies Act, 2013. As a result of such change in the estimates, the charge for the year ended March 31, 2015 is lower by Rs. 35.54 Crores for the assets held on April 1, 2014.

9 Discontinuing Operation:

a On 30 July 2014, the Company publicly announced the decision of its board of directors for the demerger of its Real Estate Division which is also a separate segment as per AS 17 Segment Reporting. The proposed demerger is consistent with the Company''s long-term strategy to focus its activities in the areas of Textile, Engineering and related services, and to divest unrelated activities. The Company has filed the Composite Scheme of Arrangement in the nature of demerger and transfer of Real Estate Division to its wholly owned subsidiary company - Arvind Infrastructure Limited.

10 Figures less than Rs. 50,000/- which are required to be shown seperately, have been shown as actual in brackets.

11 In the opinion of the Board, all assets other than fixed assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated except for reconciliation adjustments in respect of some of the payables and receivables.

12 Previous year figures have been regrouped or recast wherever necessary to make them comparable with those of the current year.

Mar 31, 2014

1. COMPANY BACKGROUND

Arvind Limited is one of the India''s leading vertically integrated textile companies with the presence of almost eight decades in this industry. It is among the largest denim manufacturers in the world. It also manufactures a range of cotton shirting, denim, knits and bottom weights (Khakis) fabrics and Jeans and Shirts Garments. Arvind, through its subsidiary company Arvind Lifestyle Brands Limited, is marketing in India the branded apparel under various brands and is also licensee in India for various international brands. The brands portfolio of the company includes International brands like Arrow, US Polo, Izod, Elle, Cherokee etc. It also operates apparel Value Retail stores MEGAMART. It also operates the specialty retail stores under the licensing arrangement with international brands of Debanhams & Next. Arvind also has the presence in Telecom business directly and through joint venture companies. Recently Arvind has made foray in to Technical Textiles on its own and in joint venture with leading global players.

Rs. in Crores

As at As at March 31, March 31,

2 Contingent Liabilities 2014 2013 (to the extent not provided for)

(a) Bills Discounted 151.72 117.59

(b) Claims against the Company not 8.38 7.82 acknowledged as debts

(c) Guarantees given by the Banks on 65.41 69.48 behalf of the Company

(d) Guarantees given by the Company 533.31 398.99 to Banks on behalf of Subsidiaries/ Joint Ventures

(e) Disputed Demands in respect of 33.71 29.33 Excise/Custom Duty

Sales Tax 20.37 20.37

Income Tax 4.79 19.04

Service Tax 0.70 0.84

Note: Future cash outflows in respect of (e) above are determinable only on receipt of judgements/ decisions pending with various forums/ authorities.

3 Employee Share Based Payment:

i The Company has formulated Employee Stock Option Scheme (ESOS 2008), the features of which are as follows :

ii Intrinsic Value Method has been used to account for the employee share based payment plans. The intrinsic value of each stock option granted under the ESOS 2008 plan is Rs. Nil since the market price of the underlying share at the grant date was same as the exercise price and consequently the accounting value of the option (compensation cost) is Rs. Nil.

iv The Black-Scholes-Mertons Option Pricing Model have been used to derive the estimated value of stock option granted if the fair value method to account for the employee share based payment plans were to be used. The estimated value of each stock options and the parameters used for deriving the estimated value of Stock Option granted under Black-Scholes-Mertons Option Pricing Model is as follows:

4 Employee benefits

As per Accounting Standard on Employee benefits (AS 15 Revised 2005), the following disclosures have been made as required by the Standard:

(i) defined Contribution Plans

The Company has recognised the following amounts in the Statement of profit and Loss for defined Contribution Plans:

The Company''s Provident Fund is administered by the Trust. The Rules of the Company''s Provident Fund administered by a Trust require that if the Board of the Trustees are unable to pay interest at the rate declared for Employees'' Provident Fund by the Government under Para 60 of the Employees'' Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the defciency shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any defciency in the foreseeable future.

(ii) State Plans

The Company has recognised the following amounts in the Statement of profit and Loss for Contribution to State Plans:

(iii) defined benefit Plans

(a) Leave Encashment/Compensated Absences

Salaries, Wages and Bonus include Rs. 4.07 Crores (Previous Year Rs. 5.36 Crores) towards provision made as per actuarial valuation in respect of accumulated leave encashment/compensated absences.

(b) Contribution to Gratuity Funds

The details of the Company''s Gratuity Fund for its employees including Managing Director are given below which is certified by the actuary and relied upon by the auditors:

5 Impairment of Fixed Assets

In accordance with the Accounting Standard (AS -28) on ''Impairment of Assets'' , the Company has reassessed its fixed assets and is of the view that no further impairment/reversal is considered to be necessary in view of its expected realisable value.

6 Early adoption of AS 30, Financial Instruments :Recognition and Measurement

(a) Consequent to the Announcement of the Institute of Chartered Accountants of India (ICAI), the Company had chosen to early adopt ''Accounting Standard Â 30, Financial Instruments: Recognition and Measurement'' in its entirety, read with the clarifcation issued on application of AS -30. Accordingly, the Company has changed the designation and measurement of all its Significant financial assets and liabilities. All the financial assets and financial liabilities and derivatives have been remeasured at their respective fair values or at amortized cost as against cost except for those items whose accounting treatment is covered by the existing accounting standards.

(b) As a result, as on Balance Sheet date, Long Term Borrowings are lower by Rs. 8.04 Crores, (Previous year Rs.7.32 Crores) and Hedge Reserve account is credited by Rs. 21.71 Crores (Previous year debited by Rs. 23.64 Crores) on account of fair valuation of outstanding derivatives.

7 Foreign Exchange Diferences

As per the notifcation issued by the Ministry of Corporate Afairs dated 31st March, 2009 as amended from time to time, the Company had already exercised the option for accounting of exchange rate diferences with effect from April 1, 2007.

Consequent to the adoption of that option:

(a) Exchange rate diferences of long-term foreign currency loans which are related to acquisition of depreciable fixed assets have been added to or deducted from the cost of the assets and depreciated over the balance life of the assets and;

(b) Exchange rate diferences on other long-term foreign currency loans have been transferred to ''Foreign Currency Monetary Item Translation Diference Account'' to be amortized over the balance period of loans or up to 31st March, 2020 whichever is earlier.

As a result:

(a) An amount of Rs. 6.19 Crores being the exchange rate loss for the year (Previous year Rs. 3.75 Crores) has been adjusted against the fixed assets.

(b) An amount of Rs. 5.00 Crores being the exchange rate loss for the year (Previous year Rs. 4.90 Crores) remains to be amortized as at the balance sheet date.

8 Figures less than Rs. 50,000/- which are required to be shown seperately, have been shown as actual in brackets.

9 In the opinion of the Board, all assets other than fixed assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated except for reconciliation adjustments in respect of some of the payables and receivables.

10 Previous year figures have been regrouped or recast wherever necessary to make them comparable with those of the current year.

Mar 31, 2013

1. COMPANY BACKGROUND

Arvind Limited is one of the India''s leading vertically integrated textile companies with the presence of almost eight decades in this industry. It is among the largest denim manufacturers in the world. It also manufactures a range of cotton shirting, denim, knits and bottom weights (Khakis) fabrics and Jeans and Shirts Garments. Arvind, through its subsidiary company Arvind Lifestyle Brands Limited, is marketing in India the branded apparel under various brands and is also licensee in India for various international brands. The brands portfolio of the company includes International brands like Arrow, US Polo, Izod, Elle, Cherokee etc. It also operates apparel Value Retail stores MEGAMART. It also operates the specialty retail stores under the licensing arrangement with international brands of Debanhams & Next. Arvind also has the presence in Telecom business directly and through joint venture companies. Recently Arvind has made foray in to Technical Textiles on its own and in joint venture with leading global players.

2 Deferred Tax

In terms of the provisions of the Accounting Standard - 22 "Accounting for Taxes on Income" notified by Companies (Accounting Standards) Rules, 2006, there is a net deferred tax asset on account of accumulated business losses and unabsorbed depreciation.

In compliance with provisions of Accounting Standard and based on General Prudence, the Company has not recognised the deferred tax asset nor written back excess deferred tax liability, while preparing the accounts of the year under review.

Rs. in Crores

As at As at March 31, March 31, 3 Contingent Liabilities 2013 2012 (to the extent not provided for)

Bills Discounted 117.59 111.40

Claims against the Company not 7.82 8.55 acknowledged as debts

Guarantees given by the Banks on 69.48 59.00 behalf of the Company

Guarantees given by the Company to 398.99 355.83 Banks on behalf of Subsidiaries/Joint Ventures

Disputed Demands in respect of Excise/Custom Duty 28.85 30.83

Sales Tax 20.37 20.37

Income Tax 19.04 18.11

Service Tax 0.84 1.19

a It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

4 Employee Benefits

Consequent to the adoption of Accounting Standard on Employee Benefits (AS 15 Revised 2005) notified by Companies (Accounting Standards) Rules, 2006, the following disclosures have been made as required by the Standard:

The Company''s Provident Fund is administered by the Trust. The Rules of the Company''s Provident Fund administered by a Trust require that if the Board of the Trustees are unable to pay interest at the rate declared for Employees'' Provident Fund by the Government under Para 60 of the Employees'' Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

5 Related Party Disclosures :

As per the Accounting Standard on "Related Party Disclosures" (AS 18) notified by Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows :

6 Impairment of Fixed Assets

In accordance with the Accounting Standard (AS -28) on ''Impairment of Assets'' notified by Companies (Accounting Standards) Rules, 2006, the Company has reassessed its fixed assets and is of the view that no further impairment/reversal is considered to be necessary in view of its expected realisable value.

7 Early adoption of AS 30, Financial Instruments :Recognition and Measurement

(a) Consequent to the Announcement of the Institute of Chartered Accountants of India (ICAI), the Company had chosen to early adopt ''Accounting Standard - 30, Financial Instruments: Recognition and Measurement'' in its entirety, read with the clarification issued on application of AS -30. Accordingly, the Company has changed the designation and measurement of all its significant financial assets and liabilities. All the financial assets and financial liabilities and derivatives have been remeasured at their respective fair values or at amortized cost as against cost except for those items whose accounting treatment is covered by the existing standards notified by Companies (Accounting Standards) Rules, 2006.

(b) As a result, as on Balance Sheet date, Long Term Borrowings are lower by Rs. 4.20 Crores, (Previous year higher by Rs. 1 Crores) and Hedge Reserve account is debited by Rs. 23.64 Crores (Previous year Rs. 98.25 Crores) on account of fair valuation of outstanding derivatives.

8 Foreign Exchange Differences

As per the notification issued by the Ministry of Corporate Affairs dated 31st March, 2009 as amended from time to time, the Company had already exercised the option for accounting of exchange rate differences with effect from April 1, 2007.

Consequent to the adoption of that option:

(a) Exchange rate differences of long-term foreign currency loans which are related to acquisition of depreciable fixed assets have been added to or deducted from the cost of the assets and depreciated over the balance life of the assets and;

(b) Exchange rate differences on other long-term foreign currency loans have been transferred to ''Foreign Currency Monetary Item Translation Difference Account'' to be amortized over the balance period of loans or up to 31st March, 2020 whichever is earlier.

As a result:

(a) An amount of Rs. 3.75 Crores being the exchange rate loss for the year (Previous year Rs. 0.30 Crores) has been adjusted against the fixed assets.

(b) An amount of Rs. 4.90 Crores being the exchange rate loss for the year (Previous year Rs. 4.19 Crores) remains to be amortized as at the balance sheet date.

9 Expenditure on Research and Development:

The Company has separate In-House Research & Development Centre at Naroda and Santej locations. Centre at Naroda location is duly recognised and approved by Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India while the company is in the process of applying to Department of Scientific and Industrial Reserach, Ministry of Science and Technology, Government of India, for recognition of Centre at Santej Centre. Both the Centres are involved into new product development, new process development etc. The details of Capital and Revenue Expenditure incurred on Research and Development by both the Centres are as under:

10 Figures less than Rs. 50,000/- which are required to be shown seperately, have been shown as actual in brackets.

11 In the opinion of the Board, all assets other than fixed assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated except for reconciliation adjustments in respect of some of the payables and receivables.

12 Previous year figures have been regrouped or recast wherever necessary to make them comparable with those of the current year.

Mar 31, 2012

1. COMPANY BACKGROUND

Arvind Limited is one of the India's leading vertically integrated textile companies with the presence of almost eight decades in this industry. It is among the largest denim manufacturers in the world. It also manufactures a range of cotton shirting, denim, knits and bottom weights (Khakis) fabrics and Jeans and Shirts Garments. Arvind, through its subsidiary company Arvind Lifestyle Brands Limited, is marketing in India the branded apparel under various brands and is also licensee in India for various international brands. The brands portfolio of the company includes International brands like Arrow, US Polo, Izod, Elle, Cherokee etc. Through another subsidiary company, Arvind Retail Limited, Arvind operates apparel Value Retail stores MEGAMART. Arvind also has the presence in Telecom business directly and through joint venture companies.

Rs. in Crores

As at As at March 31, March 31, 2 Contingent Liabilities 2012 2011 (to the extent not provided for)

Bills Discounted 111.40 129.53

Claims against the Company not 8.55 8.29 acknowledged as debts

Guarantees given by the Banks on behalf 59.00 23.84 of the Company

Guarantees given by the Company to 355.83 330.73 Banks on behalf of Subsidiaries/Joint Ventures

Disputed Demands in respect of Excise/Custom Duty 30.83 16.04

Sales Tax 20.37 18.02

Income Tax 18.11 3.82

Service Tax 1.19 1.33

a It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

3 Scheme of Arrangement

i A Composite Scheme of Arrangement ("the Scheme") between Arvind Limited ("the Company") and Arvind Products Limited ("APL") and Asman Investments Limited ("AIL"), the subsidiaries of the Company, under Sections 391 to 394 of the Companies Act, 1956 for amalgamation of APL with the Company and demerger and transfer of Investment Division of AIL into the Company has been sanctioned by the High Court of Gujarat at Ahmedabad on 29th December 2011. The Scheme has become effective from the appointed date 1st January 2011.

ii Pursuant to the Scheme, the Investment division of AIL stood demerged from AIL and transferred to and vested in the Company as a going concern with effect from the appointed date 1st January 2011 :

a. Upon the Scheme becoming effective and from the appointed date, the Investment Division of AIL (Demerged Undertaking) including all debts and liabilities have been transferred to the Company and have been accounted for at their respective fair values.

b. Upon the scheme becoming effective, the interse amounts of loans, advances and other current account balances of the demerged investment division in the Company have been treated as cancelled.

c. As consideration for the demerger, the Company has adjusted the amount of fair value of the division against the outstanding balance of loan to AIL.

iii Pursuant to the Scheme, APL has been amalgamated with the Company with effect from 1st January 2011, (the appointed date):

a. The amalgamation has been accounted for under the "purchase method". Accordingly, as on appointed date, all the assets of APL have been taken at their fair value and all the liabilities including the contingent liabilities have been accounted for on the basis of accrual and certainty as decided by the management.

b. Upon the scheme becoming effective, the interse amounts of loans, advances, other current account balances of APL with the Company and investment in APL have been treated as cancelled.

c. As consideration for the amalgamation, the Company has subsequent to the date of the balance sheet issued and allotted 34,10,528 Equity Shares of Rs. 10/- each fully paid up in the ratio of 1 (One) Equity Share of Rs. 10/- each for every 11 (Eleven) Equity Shares of Rs. 10/- each of APL in the Capital of the Company, to the members of APL other than the Company whose names appeared in the Register of Members on the record date which are shown under 'Equity Share Suspense Account' as on Balance Sheet date.

d. The difference between the value of assets and liabilities taken over amounting to Rs. 45.49 Crores has been debited to "Goodwill on Amalgamation" and the same has been adjusted against the opening balance of Statement of Profit and Loss of the Company along with the additional charge of Rs. 10.82 Crores on account of alignment of accounting policies of APL with the Company.

4 Employee Benefits

Consequent to the adoption of Accounting Standard on Employee Benefits (AS 15 Revised 2005) notified by Companies (Accounting Standards) Rules, 2006, the following disclosures have been made as required by the Standard:

(iii) Defined Benefit Plans

(a) Leave Encashment/Compensated Absences

Salaries, Wages and Bonus include Rs. 3.57 Crores (Rs. 3.77 Crores) towards provision made as per actuarial valuation in respect of accumulated leave encashment/compensated absences.

5 Impairment of Fixed Assets

In accordance with the Accounting Standard (AS -28) on 'Impairment of Assets' notified by Companies (Accounting Standards) Rules, 2006, the Company has reassessed its fixed assets and is of the view that no further impairment/reversal is considered to be necessary in view of its expected realisable value.

6 Early adoption of AS 30, Financial Instruments :Recognition and Measurement

(a) Consequent to the Announcement of the Institute of Chartered Accountants of India (ICAI), the Company had chosen to early adopt 'Accounting Standard Ã 30, Financial Instruments: Recognition and Measurement' in its entirety, read with the clarification issued on application of AS -30. Accordingly, the Company has changed the designation and measurement of all its Significant financial assets and liabilities. All the financial assets and financial liabilities and derivatives have been remeasured at their respective fair values or at amortized cost as against cost except for those items whose accounting treatment is covered by the existing standards notified by Companies (Accounting Standards) Rules, 2006.

(b) As a result, as on Balance Sheet date, Long Term Borrowings are higher by Rs. 1 Crore, (Previous year Rs. 3.96 Crores) and Hedge Reserve account is debited by Rs. 98.25 Crores (Previous year credited by Rs. 31.89 Crores) on account of fair valuation of outstanding derivatives.

7 Foreign Exchange Differences

As per the notification issued by the Ministry of Corporate Affairs dated 31st March, 2009 as amended from time to time, the Company had already exercised the option for accounting of exchange rate differences with effect from April 1, 2007. Consequent to the adoption of that option:

(a) Exchange rate differences of long-term foreign currency loans which are related to acquisition of depreciable fixed assets have been added to or deducted from the cost of the assets and depreciated over the balance life of the assets and;

(b) Exchange rate differences on other long-term foreign currency loans have been transferred to 'Foreign Currency Monetary Item Translation Difference Account' to be amortized over the balance period of loans or up to 31st March, 2020 whichever is earlier.

As a result:

(a) An amount of Rs. 0.30 Crores being the exchange rate difference for the year (Previous year Rs. Nil) has been adjusted against the fixed assets.

(b) An amount of Rs. 4.19 Crores being the exchange rate loss for the year (Previous year gain of Rs. 0.75 Crores) remains to be amortized as at the balance sheet date.

8 Figures less than Rs. 50,000/- which are required to be shown seperately, have been shown as actual in brackets.

9 In the opinion of the Board, all assets other than fixed assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated except for reconciliation adjustments in respect of some of the payables and receivables.

10 The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31,2012 are 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 previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

Mar 31, 2011

1 Contingent Liabilities :

Claims against the company not acknowledged as debts :

(Rs.in Lacs)

2 The estimated amount of contracts remaining to be executed on capital account and not provided for. 1185.89 61.11

3 PREFERENCE SHARES :

(i) 1,35,000 10% Redeemable Cumulative Non-convertible Preference Shares (Previous Year 1,35,000 Preference Shares) of Rs.10/-each redeemable at par on 19.01.2010 which are not paid.

(ii) 60,00,000 13.5% for 1999-2000, 10% p.a. from April 1,2000 till March 31,2004 and 12% p.a. thereafter, Redeemable Cumulative Non-convertible Preference Shares (Previous Year 60,00,000 Preference Shares) of Rs.100/-each redeemable at par in 28 quarterly instalments commencing from April 1, 2003 and ending on January 1, 2010. Instalments due have not been paid.

4 NOTES ON SECURED LOANS :

Term Loans from Financial Institutions and Banks :

The Term Loans of Rs.272.00 lacs from Financial Institutions and Term Loans of Rs.8114.88 lacs from Banks are secured by fi rst interse pari-pasu charge/equitable mortgage and /or hypothication charges created over all immovable and movable assets of the Company both present and future, of (I) Arvind Intex situated at Rajpur Road,Gomtipur,Ahmedabad, (ii) Ankur Textiles situated at Outside Raipur Gate,Ahmedabad,(iii) Bottom Weigtht Division situated at Santej,Taluko Kalol, (iv) lease hold land of Arvind Cotspin situated at Kolhapur, (v) freehold land situated at Vadsar, (vi) frehold land situated at Moti Bhoyan and (vii) freehold land situated at Khatraj and second charge of current assets both present and future of the Company.

Cash Credit and Other Facilities from Banks : Cash Credits and other facilities from Banks of Rs.4760.79 lacs are secured by fi rst charge by way of hypothecation of inventories and book debts, both present and future, besides second charge on all fixed assets of the Company. All these securities to rank pari- passu among the banks.

5 The Company has not received any information from "suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act,2006 and hence disclosure regarding :

a) Amount due and outstanding to suppliers as at the end of accounting year

b) Interest paid during the year

c) Interest payable at the end of the accounting year

d) Interest accrued and unpaid at the end of accounting year, has not been provided.

The Company is making efforts to get the confirmations from the suppliers as regards their status under the act.

6 (a) Plant & Machinery taken on lease for a period of 5 years with the option of renewal.

The particulars of these leases are as follows :

(b) Plant & Machineries are given on operating lease for a period of 12 to 60 months with the option of renewal.

The particulars of lease are as under :

7 In terms of the provisions of the Accounting Standard No.22 "Accounting for tax on Income notifi ed by Companies (Accounting Standards) Rules,2006, there is a net deferred tax assets on account of accumulated business losses and unabsorbed depreciation.

In compliance with provisions of Accounting Standard and based on General Prudence, the Company has not recognised the deferred tax asset while preparing the accounts for the year under review.

8 Segment information for the year ended 31st March,2011

Information about Primary Business Segments

The Company is in the business of manufacturing,trading and dealing in textiles only.

In view of the above the Company has only one reportable segment i.e. Textiles.

Mar 31, 2010

1 Contingent Liabilities :

Claims against the company not acknowledged as debts :

(Rs.in Lacs)

Balance as on 31.03.2010 31.03.2009

(i) For excise matters 1430.78 1475.82

(ii) Other matters 63.49 76.66

(iii) Income tax matters 10.32 5.95

(iv) Guarantees given by the Bank on behalf of the Company 80.05 0.00

2 PREFERENCE SHARES :

(I) 1,35,000 10% Redeemable Cumulative Non-convertible Preference Shares (Previous Year 1,35,000 Preference Shares ) of Rs.10/-each redeemable at par on 19.01.2010 which are not paid.

(ii) 60,00,000 13.5% for 1999-2000, 10% p.a. from April 1,2000 till March 31,2004 and 12% p.a. thereafter, Redeemable Cumulative Non-convertible Preference Shares (Previous Year 60,00,000 Preference Shares ) of Rs.100/-each redeemable at par in 28 quarterly instalments commencing from April 1,2003 and ending on January 1, 2010. Instalments due have not been paid.

3 NOTES ON SECURED LOANS :

Term Loans from Financial Institutions and Banks :

The Term Loans of Rs.544.00 lacs from Financial Institutions and Term Loans of Rs.9432.35 lacs from Banks are secured by fi rst interse pari-pasu charge/equitable mortgage and /or hypothication charges created over all immovable and movable assets of the Company both present and future, of (I) Arvind Intex situated at Rajpur Road,Gomtipur,Ahmedabad, (ii) Ankur Textiles situated at Outside Raipur Gate,Ahmedabad,(iii) Bottom Weigtht Division situated at Santej,Taluko Kalol, (iv) lease hold land of Arvind Cotspin situated at Kolhapur, (v) freehold land situated at Vadsar, (vi) frehold land situated at Moti Bhoyan and (vii) freehold land situated at Khatraj and second charge of current assets both present and future of the Company.

Cash Credit and Other Facilities from Banks :

Cash Credits and other facilities from Banks of Rs.5163.60 lacs are secured by fi rst charge by way of hypothecation of inventories and book debts, both present and future, besides second charge on all fi xed assets of the Company. All these securities to rank pari-passu among the banks.

4 The Company has not received any information from "suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act,2006 and hence disclosure regarding :

a) Amount due and outstanding to suppliers as at the end of accounting year

b) Interest paid during the year

c) Interest payable at the end of the accounting year

d) Interest accrued and unpaid at the end of accounting year, has not been provided.

The Company is making efforts to get the confirmations from the suppliers as regards their status under the act.

5 In terms of the provisions of the Accounting Standard No.22 "Accounting for tax on Income notifi ed by Companies (Accounting Standards) Rules, 2006, there is a net deferred tax assets on account of accumulated business losses and unabsorbed depreciation.

In compliance with provisions of Accounting Standard and based on General Prudence, the Company has not recognised the deferred tax asset while preparing the accounts for the year under review.

6 Segment information for the year ended 31st March,2010 Information about Primary Business Segments

The Company is in the business of manufacturing,trading and dealing in textiles only.

In view of the above the Company has only one reportable segment i.e. Textiles.

7 Related Party Disclosure :

As per the Accounting Stanadard on "Related Party Disclosures: (AS18) notifi ed by Companies (Accounting Standards) Rules, 2006 the related parties of the Company are as follows:

(1) List of Related Parties Relationship :

(A) Name of the related parties Description of relationship

1 Arvind Limited Ultimate Holding Company

2 Asman Investments Limited Holding Company

3 Arvind Spinning Ltd.,Mauratius Subsidiary of Ultimate Holding Company

4 Arvind Overseas (M) Subsidiary of Ultimate Limited,Mauritius Holding Company

5 Arvind Worldwide (M) Subsidiary of Ultimate Inc.,Mauritius Holding Company

6 Arvind Worlwide Inc. (USA) Subsidiary of Ultimate Holding Company

7 Arvind Textiles Mills Subsidiary of Ultimate Ltd,Bangladesh Holding Company

8 Arvind Retail Ltd. Subsidiary of Ultimate Holding Company

9 Anup Engineering Ltd. Subsidiary of Ultimate Holding Company

10 Arvind Lifestyle Brands Ltd. Subsidiary of Ultimate Holding Company

11 Arvind Accel Ltd. Subsidiary of Ultimate Holding Company

12 Syntel Telecom Ltd. Subsidiary of Ultimate Holding Company

13 Arvind Infrastructure Ltd. Subsidiary of Ultimate Holding Company

14 Silverstone Properties Ltd. Subsidiary of Ultimate Holding Company

(B) Key Management Personnel

Mr. Anang A Lalbhai Chairman & Managing Director

Note : Related party relationship is as identifi ed by the Company and relied upon by the Auditors.

8 Consequent to the adoption of Accounting Standard on Employees Benefits (AS15) (Revised 2005) notifi ed by Companies (Accounting Standards) Rules,2006, the following disclosures have been made as required by the Standard :

a) ( i ) defined Contribution Plans

The Company has recognised the following amounts in the Profit and Loss Account which are included under Contribution to Provident Funds & Other Funds :

The Rules of the Companys Provident Fund administered by a Trust require that if the Board of the Trustees are unable to pay interest at the rate declared for Employees Provident fund by the Government under para 60 of the Employees Provident Fund Scheme,1952 for the reason that the return on investment is less or for any other reason,then the defi ciency shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any defi ciency in the forceeable future.

(ii) State Plans

The Company has recognised the following amounts in the Profit and Loss Account for Contribution to State Plans :

(iii) defined Benefit Plans

(a) Leave Encashment/Compensated Absences Salaries,Wages and Bonus includes Rs.(30.30 lacs) (Previous Year Rs.(22.08 lacs)) towards (Reversal) made as per actuarial valuation in respect of accumulated leave salary encashable on retirement.

(b) Contribution to Gratuity Funds

The details of the Companys post-retirement benefit plans for its employees are given below which is certified by the actuary and relied upon by the auditors :

9 Exchange Rate Difference

As per the notification issued by the Ministry of Corporate Affairs dated 31st March,2009, the Company has exercised the option for accounting of exchange rate differences with effect from April 1,2007. Consequent to the adoption of that option, the exchange rate differences arising on restatement of long term foreign currency loans which are related to acquisition of depreciable fixed assets at the rate prevailing as at the Balance Sheet date, the Company has added to/or deducted from the cost of the assets and depreciated over the balance life of the assets. By following the same, an amount of Rs.79.65 lacs being exchange rate differnece (previous year Rs.370.22 lacs) and depreciation charge of Rs.31.33 lacs(Previous Year Rs.94.34 lacs) for the year has been adjusted against the fixed assets and depreciation respectively.

10 Previous years figures are shown in brackets and are regrouped or recast wherever necessary.

Sep 30, 2001

1. Contingent Liabilities :

(a) Claims against the Company not acknowledged as debts : (Rs. in Lacs)

Balance as on 30/09/2001 31/03/2000

(i) For excise matters 1119.14 1228.91

(ii) Other matters 85.46 74.20

(iii) Income Tax demands in dispute 0.16 1183.29

1204.76 2486.40

(b) Bills discounted 1320.99 2487.09

(c) Bank guarantees 67.08 947.95

1388.07 3435.04

(d) The estimated amount of contracts remaining to be executed on capital account and not provided for. 29.40 244.88

(e) Dividend on 13.50% cumulative redeemable preference shares 2025.00 810.00

(f) Dividend on 10.00% cumulative redeemable preference shares 3.38 1.35

2. Preference Shares :

(i) 1,35,000 10% Redeemable Cumulative Non-convertible Preference Shares (Previous Year 1,35,000 Preference Shares) of Rs.10/-each redeemable at par at the end of 10 years from the date of allotment i.e. 19/01/2000 or earlier at the option of the Company by giving three months notice.

(ii) 60,00,000 13.50% Redeemable Cumulative Non- convertible Preference Shares (Previous Year 60,00,000 Preference Shares) of Rs.100/-each. Out of which -

20,00,000 Preference Shares are redeemable at par in three equal annual instalments on 24/09/2001, 24/09/ 2002 and 24/09/2003.

15,00,000 Preference Shares are redeemable at par in three equal annual instalments on 30/09/2001, 30,09/ 2002 and 30/09/2003.

25,00,000 Preference Shares are redeemable at par in three equal annual instalments on 23/09/2001, 23/09/ 2002 and 23/09/2003.

Instalments due on 23rd, 24th and 30th of September, 2001 have not been paid.

3. Notes on Secured Loans :

ARVIND INTEX :

Loans from Financial Institutions/Banks :

a. Rupee term loan of Rs. 264.01 lacs and foreign currency term loan of Rs. 530.13 lacs from the State Bank of India is secured by way of first charge by way of equitable mortgage of immovable properties of the Division ranking pari passu with EXIM Bank and ICICI and second charge by way of hypothecation of current assets of the Division.

b. Rupee term loan of Rs. 780.77 lacs and foreign currency term loan of Rs.Nil lacs from EXIM Bank is secured by way of hypothecation of movable assets of the Division both present and future and secured by way of equitable mortgage of immovable properties of the Division both present and future. Both the securities are ranking pari passu with SBI and ICICI. Further, out of rupee term loan of Rs. 780.77 lacs, Rs.272 lacs has been guaranteed by The Arvind Mills Ltd.

c. Cash credit & other facilities of Rs.1606.69 lacs from the bank is secured by way of hypothecation of entire stocks and book debts and second charge by way of equitable mortgage of the immovable properties of the Division.

d. Foreign currency term loan of Rs. 1836.21 lacs and rupee term loan of Rs. 5333.28 lacs from ICICI is secured by way of hypothecation of movable assets of the Division both present and future and secured by way of equitable mortgage of immovable properties of the Division both present and future. Both the securities are ranking pari passu with SBI and EXIM.

ARVIND COTSPIN :

Loans from Financial Institutions/Banks :

a. Rupee term loan of Rs.432.93 lacs from EXIM Bank has been secured by first charge by way of hypothecation of all the movable fixed assets including movable machinery both present and future installed at Kolhapur & ranking pari passu.

b. Rupee term loan of Rs.2090.00 lacs from I.D.B.I, has been secured by first charge on the immovable properties, both present and future and a first charge on movable machinery, present and future installed at Kolhapur & ranking pari passu.

c. Cash credit and other facilities of Rs.393.77 lacs from a bank are secured against hypothecation of stocks of raw material, stores, goods in process, finished goods and receivables.

OTHER DIVISIONS :

Loans from Financial Institutions/Banks :

a. In terms of the loan agreements the financial institutions have right to convert at its option during the currency of loan outstanding, the whole of the outstanding amount of the loans or a part not exceeding 20% of the loan into equity shares at par in case of default in payment or repayment of installments of principal amount of loan or interest thereon or any combination thereof.

b. The term loan of Rs. 3.40 lacs from I.D.B.I, is secured by charge of all movable assets of Saraspur Division (save and except book debts) including machinery, machinery spares, tools and accessories both present and future by way of deed of hypothecation subject to and rank after the mortgages and charges created in favour of bank and financial institutions.

c. Term loan of Rs. 2325.00 lacs from I.D.B.I, is secured by first charge on all movable assets of the Division (save and except book debts) including movable machinery, machinery spares, tools and accessories both present and future by way of deed of hypothecation subject to prior charge created in favour of Divisions bankers for securing working capital requirements of the Division.

d. Cash credits & working capital demand loans totalling Rs.1653.04 lacs from banks are secured against hypothecation of stock and book debts of Ankur Textiles and second charge on assets mortgaged to financial institutions.

e. Term loan of Rs. 2056.73 lacs from EXIM Bank is secured by joint equitable mortgage immovable properties of Ankur Textile Division & Bottomweights Fabrics Division by way of deposit of title deeds and first charge on movable fixed assets of Ankur Textile Division & Bottomweights Fabric Division including its movable plant and machinery, machinery spares, tools & accessories and other movables both present and future by way of deed of hypothecation ranking pari passu with other term lenders.

f. Foreign currency loans of Rs. 1924.80 lacs and rupee loans of Rs. 4503.49 lacs from banks are secured by joint equitable mortgage of immovable properties of Ankur Textile Division & Bottomweights Fabrics Division by way of deposit of title deed and also first charge on movable fixed assets of Ankur Textile Division and Bottomweights Fabrics Division including its movable plant and machinery, machinery spares, tools & accessories and other movable both present and future by way of deed of hypothecation ranking pari passu with other term lenders.

4. Future rental obligation in respect of Plant & Machinery taken on lease is Rs.541.76 Lacs (Rs.791.80 Lacs). Lease rental payable within one year Rs.166.70 Lacs (Rs.166.70 Lacs).

5. Extra-ordinary items in Schedule 15 is on account of remission of liability of principal amount of Rs.550 lacs and interest of Rs.42.48 lacs in respect of unsecured loan from Amex Bank.

6. Current period figures are for 18 months period and hence not comparable with previous years figures.

7. Previous years figures are shown in brackets and are regrouped or recast wherever necessary.

Mar 31, 2000

1. Contingent Liabilities :

(a) Claims against the Company not acknowledged as debts:

(Rs. in Lacs) As at 31.03.2000

(i) For excise matters 1228.91

(ii) Other matters 74.20

(iii) Income Tax demands in dispute 1183.29

2486.40

(b) Bills discounted 2487.09

(c) Bank guarantees 947.95

3435.04

(d) Approximate amount of contracts remaining to be executed on capital account and not provided for. 244.88

(e) Arrears of dividend on 13.50% cumulative redeemable preference shares 810.00

(f) Arrears of dividend on 10.00% cumulative redeemable preference shares 1.35

2. Notes On Secured Loans :

ARVIND INTEX :

Loans from Financial Institutions/Banks:

a. Rupee term loan of Rs. 264.01 lacs and foreign currency term loan of Rs. 478.03 lacs from the State Bank of India is secured by way of first charge by way of equitable mortgage of immovable properties of the Division ranking pari passu with Exim Bank and ICICI and second charge by way of hypothecation of current assets of the Division.

b. Rupee term loan of Rs. 200.00 lacs and foreign currency term loan of Rs.391.63 lacs from EXIM Bank is secured by way of hypothecation of movable assets of the Division both present and future and secured by way of equitable mortgage of immovable properties of the Division both present and future. Both the securities are ranking pari passu with SBI and ICICI. Further, out of rupee term loan of Rs. 200.00 lacs, Rs. 61.80 lacs has been guaranteed by The Arvind Mills Ltd.

c. Cash credit & other facilities of Rs.2195.08 lacs from the bank is secured by way of hypothecation of entire stocks and book debts and second charge by way of equitable mortgage of the immovable properties of the Division and guaranteed by The Arvind Mills Limited to the extent of Rs. 450.00 lacs.

d. Foreign currency term loan of Rs. 5118.66 lacs and rupee term loan of Rs. 1040 lacs from ICICI is secured by way of hypothecation of movable assets of the Division both present and future and secured by way of equitable mortgage of immovable properties of the Division both present and future. Both the securities are ranking pari passu with SBI and EXIM.

e. Guarantees of SBI for Rs. 32.44 lacs are secured by extension of hypothecation charge over stocks, stores and book debts of the Division, second charge by way of equitable mortgage of the immovable properties of the Division. Guarantees of ICICI for Rs.900.00 lacs secured by extension of first charge by way of hypothecation of movable properties and equitable mortgage of immovable properties, both present and future.

ARVIND POLYCOT :

Loans from Financial Institutions/Banks:

a. In terms of the loan agreements the financial institutions have right to convert at its option during the currency of loan, the whole of the outstanding amount of the loans or a part not exceeding 20% of the loan into equity shares at par in case of default in payment or repayment of installments of principal amount of loan or interest thereon or any combination thereof.

b. The term loan of Rs. 13.60 lacs from I.D.B.I, is secured by charge of all movable assets of Saraspur Division (save and except book debts) including machinery, machinery spares, tools and accessories both present and future by way of deed of hypothecation subject to and rank after the mortgages and charges created in favour of bank and financial institutions.

c. Term loan of Rs. 2325.00 lacs from I.D.B.I, is secured by first charge on ail movable assets of the Division [save and except book debts) including movable machinery, machinery spares, tools and accessories both present and future by way of deed of hypothecation subject to prior charge created in favour of Divisions bankers for securing working capital requirements of the Division.

d. Cash credits & working capital demand loans totaling Rs. 2070.20 Lacs from banks are secured against hypothecation of stock and book debts of Ankur Textiles and second charge on assets mortgaged to financial institutions.

e. Term loan of Rs. 1696.16 lacs from Exim Bank is secured by joint equitable mortgage immovable properties of Ankur Textile Division & Bottomweights Fabrics Division by way of deposit of title deeds and first charge on movable fixed assets of Ankur Textile Division & Bottom Weights Fabric Division including its movable plant and machinery, machinery spares, tools & accessories and other movables both present and future by way of deed of hypothecation ranking pari-passu with other term lenders.

f. Foreign currency loans of Rs.2045.51 lacs and rupee loans of Rs. 4552.34 lacs from banks are secured by joint equitable mortgage of immovable properties of Ankur Textile Division & Bottomweights Fabrics Division by way of deposit of title deed and also first charge on movable fixed assets of Ankur Textile Division and Bottomweights Fabrics Division including its moveable plant and machinery, machinery spares, tools & accessories and other movable both present and future by way of deed of hypothecation ranking pari-passu with other term lenders.

ARVIND COTSPIN :

Loans from Financial Institutions/Banks:

a. Rupee term loan of Rs.331.86 lacs from Exim Bank has been secured by first charge by way of hypothecation of all the moveable fixed assets including moveable machinery both present and future installed at Kolhapur & ranking pari passu.

b. Rupee term loan of Rs.2090.00 lacs from I.D.B.I, has been secured by first charge on the immovable properties, both present and future and a first charge on moveable machinery, present and future installed at Kolhapur & ranking pari passu.

c. Cash credit and other facilities of Rs. 1651.61 lacs from a bank are secured against hypothecation of stocks of raw material, stores, goods in process, finished goods and receivables.

Notes on Amalgamation :

Amalgamation of Arvind Intex Limited (AIL), Arvind Polycot Limited (APL) and Arvind Cotspin Limited (ACL) with the Company.

(i) Pursuant to the scheme of amalgamation of AIL, APL and ACL with the Company as approved by the Honble High Court of Gujarat vide its order dated 06.12.1999 all the assets, liabilities and reserves of APL, AIL and ACL stand transferred to and vested in the Company with effect from the appointed date i.e. October 1, 1998.

AIL and ACL were engaged in the business of manufacturing of cotton yarn and APL was engaged in the business of manufacturing and dealing in cotton and blended fabrics and its allied products.

(ii) Pursuant to the Scheme of Amalgamation referred to in (I) above,

23679400 equity shares of Rs. 10/- each has been issued to the equity shareholders of erstwhile APL in the ratio of

1 equity share of the face value of Rs. 10/- each in the Company for every 1 equity share of the face value of Rs. 10/- each in APL

27849874 equity shares of Rs. 10/- each has been issued to the equity shareholders of erstwhile AIL in the ratio of 4 equity shares of the face value of Rs. 10/- each in the Company for every 7 equity shares of the face value of Rs. 10/- each in AIL. No shares shall be issued in lieu of forfeited shares.

29410714 equity shares of Rs. 10/- each has been issued to the equity shareholders of erstwhile ACL in the ratio of 5 equity shares of the face value of Rs. 10/- each in the Company for every 7 equity shares of the face value of Rs. 10/- each in ACL.

15000 equity shares of Rs.10/- each and 135000 10% cumulative redeemable preference shares of Rs. 10/- each has been issued in exchange of 150000 equity shares of Rs. 10/- each to existing shareholders.

2000000 13.50% cumulative redeemable preference shares of Rs. 100/- each has been issued to the preference shareholders of erstwhile APL in the ratio of 1 preference share of the face value of Rs. 100/- each in the Company for every 1 preference share of the face value of Rs. 100/- each in APL.

1500000 13.50% cumulative redeemable preference shares of Rs. 100/- each has been issued to the preference shareholders of erstwhile AIL in the ratio of 1 preference share of the face value of Rs. 100/- each in the Company for every 1 preference share of the face value of Rs. 100/- each in AIL.

2500000 13.50% cumulative redeemable preference shares of Rs. 100/- each has been issued to the preference shareholders of erstwhile ACL in the ratio of 1 preference share of the face value of Rs. 100/- each in the Company for every 1 preference share of the face value of Rs. 100/- each in ACL.

(iii) The amalgamation has been accounted for under the "purchase method" as prescribed by Accounting Standard (AS -14) issued by the Institute of Chartered Accountants of India.

Following treatment has been given to reserve and surpluses of the erstwhile companies as per order of Gujarat High Court dated 06.12.1999.

(a ) Capital investment subsidy reserve appearing in the books of ACL as at October 1, 1998, investment allowance reserve, investment allowance (utilised) reserve and general reserve appearing in the books of APL have become the corresponding reserves of the Company.

(b) Balance lying to the credit of the profit & loss account in the books of ACL, AIL and APL as at October 1, 1998 have been credited to the profit and loss account of the Company.

(c) The assets and liabilities as at October 1, 1998 of APL, AIL and ACL have been incorporated in the accounts of the Company. The net surplus arising out of the difference between the value of net assets acquired and consideration as reduced by reserves retained as above is treated as amalgamation reserve.

6. Extraordinary item represents expenses incurred for stamp duty, filing fees in respect of increase in capital on account of amalgamation.

11. Previous years figures for Note Nos. 2 , 8. 9 & 10 have not been provided as no such business was carried out during the prevoius year.

12. In view of amalgamation, current years figures are not comparable with previous years figures.

13. Previous years figures have been regrouped wherever necessary.

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