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Notes to Accounts of Arvind Ltd.

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 – 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, 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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