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Notes to Accounts of Bombay Dyeing & Manufacturing Company Ltd.

Mar 31, 2016

(a) Rights, preferences and restrictions attached to Equity shares

The company has one class of equity shares having a par value ofRs, 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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

Pursuant to the Employee Stock Option Scheme (ESOS) approved by the shareholders on 13th August, 2002 and as further amended by the shareholders on 07th August, 2012, the Company had granted 14,000 options, (70,000 options post sub-division) to the Ex-Joint Managing Director of the Company at an exercise price ofRs, 528.25 (Rs, 105.65 post sub-division) per share. As per the terms of the ESOS, each option is exercisable for conversion into one equity share of the Company (Refer Note 45).

(c) Information regarding issue of shares during last five years

(i) No shares were allotted pursuant to contracts without payment being received in cash. (ii) No bonus shares have been issued. (iii) No shares have been bought back.

(f) Shares held in Abeyance

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment of 4,640 shares (2014-15- 4,640 shares) of face value ofRs,2/- each against warrants carrying rights of conversion into equity shares of the Company has been kept in abeyance in accordance with section 126 of the Companies Act, 2013, till such time as the title of the bonfire owner is certified by the concerned Stock Exchanges.

a) Nature of Security and terms of repayment of secured borrowing:

i) Term Loans (TUFS) aggregating Rs, 7.80 crores (2014-15 Rs, 27.04 croresjare secured by first pari passu charge on the Company''s existing as well as future fixed assets at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga other than fixed assets charged exclusively to term lenders. Repayable in quarterly installments over the remaining period of 1 to 2 years.

ii) Term loan amounting to Rs, 66.64 crores (2014-15 Rs, 100.00 crores) is secured by first pari-passu charge on Company''s plant & machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga. Repayable in half yearly installments in the next year.

iii) Term loan amounting to Rs, Nil (2014-15 Rs, 90.00 crores) is secured by first pari-passu charge on Company''s plant and machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga and second charge of portion of Spring Mills land & buildings and structure thereon.

iv) Term loans aggregating to Rs, 407.20 crores (2014-15 Rs, 529.50 crores) are secured by first / secondary pari-passu charge over part of the land of the Company at Textile Mills at Mumbai and plant and machinery, buildings and structures thereon. Repayable in quarterly installments over the next 2 to 3 years.

v) Term loan amounting to Rs, 26.40 crores (2014-15 Rs, 36.30 crores) is secured by first pari-passu charge of rent receivables from premises given on lease by the Company and second charge of portion of Spring Mills land and buildings and structures thereon. Repayable in monthly installments over the remaining 3 years.

vi) Term loans under consortium arrangement aggregating to Rs, 571.87 crores (2014-15 Rs, 417.82 crores) are secured by first pari-passu charge/Escrow of receivables of One ICC and Two ICC Tower at Spring Mills, Dadar and first parsi passu charge over part of land of the Company at Textile Mills at Mumbai and buildings and structures thereon. Repayable in quarterly installments over a period of 4 to 5 years.

vii) Term loan amounting to Rs, 342.32 crores (2014-15 Rs, Nil) are secured by first pari passu charge over part of land of the Company at Worli and building. Repayable over 2 to 4 years.

viii) Term loan amounting to Rs, 108 crores (2014-15 Rs, Nil) is secured by first pari-passu charge on Company''s plant and machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga and second charge of portion of Spring Mills land & buildings and structure thereon. Repayable in ten monthly installments after initial moratorium of one year.

b) Terms of repayment of unsecured borrowing:

Fixed Deposits from shareholders and public are repayable over a period of 3 years from the date of deposit, maturing between July 2016 and March 2019.

a) Nature of Security for Short term borrowings

(i) Working Capital loans ofRs, 237.58 crores (2014-15 Rs, 158.80 crores) and Buyer''s Credit amounting to Rs, 29.83 crores (2014-15 Rs, 23.81 crores) from banks under consortium arrangement is secured by hypothecation of present and future stocks, book debts and other current assets on pari passu basis and a second charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant and machinery and buildings thereon on pari passu basis.

(ii) Packing credit from bank ofRs, 110.84 crores (2014-15Rs, 95 crores) is secured by way of registered mortgage on the immovable properties in Wadia International Centre (Text rising Building and Hemming Building) located at Worli, Mumbai.

(iii) Packing credit from bank ofRs, 20.50 crores (2014-15Rs, Nil) is secured by way of current assets of the company (excluding real estate) on a pari passu basis with other member banks in consortium lead by SBI and second charge on the Textile mill land at Worli admeasuring 89,819.85 sq.m. and plant and machinery and Building on pari passu basis with other lenders in consortium.

(iv) Packing credit from bank of Rs, 35.00 crores (2014-15 Rs, Nil) is secured by first pari-passu charge over part of the land of the Company at Textile Mills at Mumbai and plant and machinery, buildings and structures thereon.

(v) Buyer''s Credit aggregating Rs,46.61 crores (2014-15Rs, 96.45 crores) is secured by first pari-passu charge on land of the Company at Spring Mills at Mumbai admeasuring 36,617.13 square metres.

a)* During the year, the Company has transferred an amount ofRs, 0.12 crore (2014-15 Rs, 0.14 crore) to the Investor Education & Protection Fund under section 125 of the Companies Act,2013. There is no amount due for payment to the Fund as at the year end.

b) Interest accrued and due on borrowings represents interest due as on Balance Sheet date but debited by the bank after the Balance Sheet date.

a) Loans and advances to related parties include a deposit ofRs, 15.22 crores (2014-15Rs, 15.22 crores) and amounts recoverable ofRs, 4.85 crores (net of provisions) (2014-15 Rs, 6.86 crores) from PT. Five Star Textile Indonesia (PTFS), a jointly controlled entity. PTFS has been incurring continuous losses. The Company has proposed disposal of surplus lands / assets of the undertaking for recovery of the deposits and advances. In the opinion of the management the advances and deposits are considered good and fully recoverable.

Note: Real Estate development work-in-progress includes expenditure amounting toRs, 39.12 crore (2014-15Rs, 50.70 crore) incurred by the Company on projects which are delayed or yet to be commenced. Management expects to commence these projects in the near future and does not expect any loss on this account.

(a) Trade receivables includes Rs, 38.41 crores (2014-15 Rs, 36.64 crores) due from a customer towards part compensation for sale of property, common area maintenance charges and project related costs. The receivables are under dispute and the matter has been referred to the arbitration. Pending finalization of arbitration proceedings, the receivables are considered good.

(a) Balances with banks in escrow accounts represents amounts held in escrow in accordance with the directions of the Monitoring Committee for redevelopment of land of Cotton Textile Mills.

a) Advances recoverable in cash or in kind or for value to be received includesRs, 0.73 crore (2014-15 Rs, 0.73 crore) on account of remuneration recoverable from Mr. M.K.Singh, Executive Director, whose services were terminated on 6th July, 2008 consequent to detection of irregular conduct. A suit has been filed by the Company in the High Court of Judicature of Mumbai alleging fraudulent misconduct. The matter is pending before the Court.

(b) Bank deposits include restricted deposits as under :

Fixed deposits under lean towards security for guarantees issued on behalf of the Company and as security against a claim on the Company - Rs, 19.31 crores (2014-15 Rs, 25.19 crores).

Fixed deposits held in trust out of funds received as corpus fund and maintenance deposits from flat owners Rs, Nil (2014-15 Rs, 3.80 crores).

Short term deposits relating to amounts held under Escrow in accordance with the loan arrangements with a consortium of bankers Rs, 6.32 crores (2014-15 Rs, 29.78 crores)

The Company is committed to a plan to sell the assets of the Ranjangaon Unit and for this purpose has entered into a term sheet with a proposed purchaser to sell the entire assets including land, building, machineries etc.on slump sale basis. Accordingly the carrying amount of the Ranjangaon assets have been reclassified as held for sale.

1. During the year 2000-01, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The titles in respect of certain immovable properties amalgamated into the Company are still in the process of transfer.

2. The proposed sale and transfer of the entire Undertaking consisting of the Textile factory/ plant of the Company situated at Ranjangaon, Maharashtra, on a slump sale basis as a going concern and on as is where is basis for a total consideration ofRs, 230 crore under the Term Sheet signed by the Company on May 13, 2015 could not be consummated and accordingly the Company had forfeited the deposit ofRs, 25 lac paid by the proposed purchaser. The proposed purchaser has again revived the offer and the Company has signed another Term Sheet dated March 28, 2016 with the same proposed purchaser for sale of the textile processing unit at Ranjangaon, on a slump sale basis for the same total consideration ofRs, 230 crores. The proposed purchaser is required to deposit earnest money deposit ofRs, 23 crore in an escrow account before the expiry of 60 days from the date of execution of the Term Sheet. The Company is also considering offers for sale of vacant land separately as well as making efforts to sell the land, building and machinery separately under the "assets sale" route.

3. Based on the advice obtained by the Company, the premium charged by the Company on sale of apartments under the deferred payment scheme compared to the price charged under the normal sales scheme is also considered as part of sales consideration and is recognized as revenue under the percentage of completion method

4. The Company vide notice dated 8th January 2013 notified the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid / provided to such employees the terminal dues, closure compensation and ex-gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier. The liability in respect of the monthly payments has been actuarially determined as on the Balance sheet date atRs, 7.17 crores (2014-15 -Rs,7.26 crores) by the independent actuary. As at the time of the previous voluntary retirement schemes, the initial cost relating to ex-gratia compensation was added to the development cost of land. The actuarial loss for the year amounting to Rs, 0.48 crore (2014-15 -Rs, 1.40 crore) has been recorded in the Statement of Profit & Loss.

5. The Company has agreed to sell several apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd, a Group company, in terms of various Memorandum of Understanding (MOUs) entered between the companies till March 31, 2016. Based on the method of accounting (percentage of completion) followed by the company, net revenue ofRs,239.26 crores (March 2015 Rs, 301.11 crores) and the resultant profit before tax of Rs, 158.63 crores (March 2015 Rs, 224.49 crores) has been recognized during the year ended March 31, 2016 in respect of the sales to SCAL During the year, SCAL has requested the Company for certain concessions on grounds that due to the huge delays in construction by the Company, it had incurred substantial interest costs on account of its borrowings against the unsold inventory of flats, which could not be sold due to the delays in the project. Pursuant to the request, the Company, considering the facts and circumstances that led to SCALs inability to sell the flats, has granted SCAL deferment of milestone payments till June 2017 or till the sale of all unsold flats, and also considering that SCAL was a bulk customer who had purchased a large number of flats and had not received the discounts given to other bulk purchasers, the Company reduced the advance payment made by SCAL to 7.5% resulting in refund of about Rs, 270.35 crore to SCAL.

6.Recognition of income and expenses on on-going real estate project under long term contracts is based on actual sales; estimated costs and work completion status. Determination of profits/ losses, the percentage of completion, costs to completion and readability of the construction work in progress & unbilled revenues necessarily involves making estimates by the Company, some of which being of a technical nature, are being relied upon by auditors. Profit from these contracts and valuation of construction work in progress / unbilled revenue is based on such estimates.

7. Pursuant to the Order of the Supreme Court dated August 2, 2013 and the Order of the Bombay High Court dated November 20, 2013 permitting the Company to surrender land at one location i.e. Spring Mills, Wadala, under the Integrated Development Scheme for consolidating handover obligation, the Company had in December 2014 given advance possession of 32,829.02 sq. mtrs of land to MCGM and 33,822.89 sq. mtrs of land to MHADA at Spring Mills, Wadala after completion of necessary boundary wall, and internal filling/ leveling, SWD, etc. as per the provisions of DCR 58 (6) read with DCR 58 (1) (a) & (b). Both MCGM and MHADA have taken advance possession of the said lands, pending completion of certain administrative formalities, which as per the company''s architect are routine.

As per the provisions of DCR 54 and as certified by the Company''s Architects, the Company is entitled to Development Rights (FSI) of 43,661.11 sq. mtrs generated in lieu of lands earmarked and handed over to MCGM for utilization by the owners on the said land and to Transferable Development Rights (TDR) of 44,984.44 sq. mtrs. in lieu of lands earmarked and handed over to MHADA under the Integrated Development Scheme as per the provisions of DCR 58.

Since physical possession of the earmarked lands is handed over and Advance Possession Receipts obtained from MCGM and MHADA, the Company has during 2014-15 recognized the entitlement of additional Development Rights (FSI) available for its own use and accordingly converted the same into stock in trade at market value (as ascertained by registered valuers). The Transferable Development Rights (TDR) will be recognized on receipt of TDR certificates

8. Litigations

(a) During the year 2010-11, the Company had agreed to sell certain area in the proposed tower TWO ICC to Shaan Realtors Pvt. Ltd., formerly Accord Holding Pvt. Ltd. ("the claimants"). The area agreed to be sold is under dispute and the matter was referred to arbitration. The arbitrator vide order dated 13th January 2014 passed the final award directing the company to allot to the claimants and/ or its associates, friends, nominees carpet area of 1,00,000 sq. ft. less the carpet area as already allotted to them in the proposed tower TWO ICC, namely additional carpet area of 48,495 sq. ft. The Company has filed an appeal in the Bombay High Court under section 34 of the Arbitration & Conciliation Act, 1996 against the said award, for which the hearings are in progress. The Company is confident that the final award passed by the learned arbitrator will get reversed in view of the strong merits in the case. However, the requisite area has been set aside by the Company and the total area to be allotted to the claimants will be accounted on disposal of the appeal filed in the High Court. No adjustment has been made in the financial statements in view of the uncertainty involved.

(b) The Bombay High Court vide its order dated November 20,2013 permitted the Company to surrender land at one location i.e. Wadala, as per the application made by the company under integrated development scheme. As per this order the total of 66,651 sq. meter of land has been surrendered to MCGM and MHADA at Island City Centre, Wadala. During the year 2013-14, the Union had filed a writ petition requiring the company to surrender non textile mill land. The Bombay High Court has directed the Company to reserve additional 10,000 sq. meters of land adjacent to the land to be surrendered. The Company believes that above said writ petition filed in Bombay High Court has no impact on the development of the two towers at ICC since the reserved land of 10,000 sq. meters is different from the one where construction of the two towers is in progress.

(c) The company had during the year 2010-11 sold the building known as ''Wadia Tower A to Axis Bank Ltd for a consideration of ^ 782.62 crores. The purchaser has till date paid a sum of Rs, 753.69 crores and the balanceRs, 28.93 crores is still outstanding. Axis bank has claimed interest for delayed handover for a period of 4 months from October 2010 to January 2011, and has not paid the common area maintenance charges amountingRs, 9.48 crores (31.3.2015 : Rs,7.71 crores). Since the matter could not be amicably resolved, the same was referred to arbitration. Claims from the Bank regarding costs for work completed by the Bank on behalf of the Company and by the Company on behalf of Axis Bank are also matters under arbitration. Pending finalization of arbitration proceedings, the receivables are considered good.

9. The remuneration paid to Managing Director for the year ended March 31, 2016 is in excess of the limits laid down in section 197 of the Companies Act, 2013 read with Schedule V of the said Act. The excess remuneration of Rs, 4.40 crore is subject to the approval of the Central Government, in respect of which the Company has made an application and the approval is awaited. The remuneration payable to the Managing Director for the year ended March 31, 2015 which was in excess of the limits prescribed under sections 197 and 198 of the Companies Act, 2013 has been approved by the Central Government under section 196,197,198 & 200 read with schedule V to the Companies Act, 2013 vide approval dated December 17, 2015.

vii a. The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risk, historical results of return on plan assets and the Company''s policy for plan assets management.

viii The above information is certified by the actuary.

C. Other long term benefits-

i Amount recognized as a liability in respect of compensated leave absences as per the actuarial valuation as on March 31, 2016 is Rs, 8.54 crores [2014-15- Rs, 5.69 crores]

ii Amount recognized as a liability in respect of long service awards as per the actuarial valuation as on March 31, 2016 is Rs, 2.43 crores [2014-15-Rs, Nil]

In the absence of virtual certainty regarding future taxable income, deferred tax assets relating to unabsorbed depreciation under the Income Tax Act is recognized only to the extent of deferred tax liability.

10 Current Liabilities

The amount of dues owed to Micro, Small and Medium Enterprises as on 31st March, 2016 amounted to Rs, Nil (31st March, 2015- Rs, 0.16 crore). This amount has been outstanding for more than 45 days at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

11. The Company had introduced the Employee Stock Option Scheme (ESOS) as approved by the shareholders at the Annual General Meeting held on 13th August 2002. The scheme was amended by the shareholders at the Annual General Meeting held on 23rd July 2004 to incorporate the amendments under The Stock Option Guidelines vide SEBI circular dated 30th June 2003. The scheme has been further amended by the shareholders at the Annual General Meeting held on 7th August 2012 wherein the exercise price shall be based on the market price as defined in the SEBI (Employee Stock Option Scheme) Guidelines 1999 i.e. at the latest available closing market price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted.

As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Whole-time Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Vesting of an option is subject to continued employment.

Under the Scheme, during the financial years from 2002-03 to 2006-07 the Company granted 1,64,410 options, each option representing one equity share ofRs, 10/- each. Out of these 1,57,910 options were exercised into equity shares and balance 6,500 options lapsed.

On 7th August 2012, the Board of Directors had granted 14000 stock options (70,000 stock options post sub - division) to the Ex - Joint Managing Director of the Company at an exercise price ofRs, 528.25 (Rs, 105.65 post subdivision) per share for the years 2011-12 and 2012-13 which options have vested on 7th August 2013. Consequent upon the sub-division of shares on and from 31st October, 2012, the number of options and the exercise price have been appropriately adjusted.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to the Whole-time Director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option isRs, Nil. Consequently the accounting value of the option (compensation cost) is also Rs, Nil.

Fair Value Methodology:

Options have been valued based on Fair Value Method of accounting as described under Guidance Note on Accounting for Employee Share- based Payments using Black-Scholes valuation option-pricing model, using the market values of the Company''s shares as quoted on the National Stock Exchange. If the stock based compensation cost was calculated as per the Fair Value method prescribed by Securities and Exchange Board of India, the total cost to be recognized in the financial statements for the period April 1,2015 - to March 31,2016 would also be nil.

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, ''Financial Instruments: Recognition and Measurement'', issued by The Institute of Chartered Accountants of I ndia. Accordingly, the foreign exchange (gain)/loss of Rs, (0.92) crores (2014-15 Rs, 0.45 crores) as on 31st March, 2016 on forward foreign exchange contracts entered into to hedge firm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognized in the profit and loss account when the forecasted transactions arise.

(iii) The lease agreements are for a period of four years for vehicles and for a period of one to nine years for retail shops including further periods for which the Company has the option to continue the lease of retail shop with the condition of increase in rent, for a period of one year for god owns and for a period of 3 years for Retail Shops

(b) The Company has given commercial space on operating lease. The particulars in respect of such leases are as follows:-

12. Related party disclosures

(a) Names of related parties and nature of relationship:

1. Enterprise controlled by the Company

Subsidiary Company: Archway Investment Company Limited (w.e.f. 23rd Oct 2014)

2. Other related parties with whom Company had transaction during the year

Associate Companies: Archway Investment Company Limited (up to 22nd Oct 2014)

Pintail Textile Dealers Limited

Bombay Dyeing Real Estate Company Limited

Joint Venture Company: PT.Five Star Textile Indonesia

Key Management Personnel: Mr. Jehangir N Wadia - Managing Director

Mr. Vinod Hiran-Chief Financial Officer (19th May 2015 to 02nd Nov 2015)

Mr. K. Subharaman - Company Secretary & Compliance Officer (w.e.f. 1st June 2015)

Mr. Jairaj C Bham - Company Secretary (up to 31st May 2015)

Mr. Raghuraj Balkrishna -Chief Financial Officer (up to 08th Aug 2014)

Relative of Key Management Personnel : Mr. Nusli N. Wadia - Chairman - Father of Managing Director

Mr. Ness N Wadia - Director- Brother of Managing Director

Mrs. Saroj Jairaj Bham - Spouse of the Company Secretary (up to 31st May 2015)

Entities over which key management

personnel and relatives exercise significant influence: Go Airlines (India) Limited

Gladrags Media Ltd.

The Bombay Burmah Trading Corporation Ltd.

13. Corporate Social Responsibility Statement (CSR)

The company was required to spent Rs, 1.30 crores towards CSR during the year in accordance with the provisions of Section 135 of the Companies Act, 2013. However, the company has spent sum ofRs, 0.30 crores towards Chennai Flood Relief. Accordingly, there is a shortfall in CSR spent byRs,1 crores during 2015-16.

14. The financial statements have not been signed by the Company Secretary as required under the provision of Section 134 of the Companies Act, 2013 consequent to his resignation with effect from 30-April-2016.

15. Figures in Brackets indicate corresponding figures for the previous year.

16. Previous year figures have been regrouped where necessary.


Mar 31, 2015

1.Share Capital

(a) Rights, preferences and restrictions attached to Equity shares

The company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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

Pursuant to the Employee Stock Option Scheme (ESOS) approved by the shareholders on 13th August, 2002 and as further amended by the shareholders on 07th August, 2012, the Company has granted 14,000 options, (70,000 options post sub-division) to the Joint Managing Director of the Company at an exercise price of Rs. 528.25 (Rs. 105.65 post sub-division) per share. As per the terms of the ESOS, each option is exercisable for conversion into one equity share of the Company (Refer Note 45).

(c) Information regarding issue of shares during last five years

(i) No shares were allotted pursuant to contracts without payment being received in cash.

(ii) No bonus shares have been issued.

(ii) No shares have been bought back.

(d) Shares held in Abeyance

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment of 4,640 shares (2013- 14-4,640shares) of face value of Rs. 2/- each against warrants carrying rights of conversion into equity shares of the Company has been kept in abeyance in accordance with section 126 of the Companies Act, 2013, till such time as the title of the bonafide owner is certified by the concerned Stock Exchanges.

2.RESERVES AND SURPLUS

a) Nature of Security and terms of repayment of secured borrowing:

i) Term Loans (TUFS) aggregating Rs. 27.04 crores (2013-14' 47.26 crores) are secured by first pari passu charge on the Company's existing as well as future fixed assets at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga other than fixed assets charged exclusively to term lenders. Repayable in quarterly instalments over a period of 2 to 3 years.

ii) Term loan amounting to Rs. Nil (2013-14 Rs. 3.37 crores) was secured by first pari-passu charge on the fixed assets of the Company at Polyester Division at Patalganga.

iii) Term loans aggregating Rs. Nil (2013-14 Rs. 41.66 crores) were secured by first pari-passu charge over part of the land of the Company at Textile Mills at Mumbai admeasuring upto 89,819.85 square metres and plant and machinery, buildings and structures thereon.

iv) Term loans aggregating Rs. 100.00 crores (2013-14 Rs. 250.00 crores) are secured by first pari passu charge on Company's plant & machinery at Textile Processing unit at Ranjangaon and the Polyester Division at Patalganga. Repayable in half yearly instalments over 1 to 2 years.

v) Term loan aggregating Rs. 90.00 crores (2013-14 Rs. Nil) is secured by first pari passu charge on Company's plant & machinery at Textile Processing unit at Ranjangaon and the Polyester Division at Patalganga and second charge of portion of Spring Mills land and buildings and structures thereon. Repayable in the next year.

vi) Term loans aggregating Rs. 529.50 crores (2013-14 Rs. 406.25 crores) are secured by first / secondary pari-passu charge over part of the land of the Company at Textile Mills at Mumbai and plant and machinery, buildings and structures thereon. Repayable in quarterly instalments over a period of 3 to 4 years.

vii) Term loan amounting to Rs. 36.30 crores (2013-14 Rs. 45.00 crores) is secured by first pari-passu charge of rent receivables from premises given on lease by the Company and second charge of portion of Spring Mills land and buildings and structures thereon. Repayable in monthly instalments over 4 years.

viii) Term loans under consortium arrangement amounting to Rs. 417.82 crores (2013-14 Rs. Nil) is secured by first pari-passu charge / Escrow of receivables of One ICC and Two ICC at Spring Mills, Dadar and first parsi passu charge over part of land of the Company at Textile Mills at Mumbai and buildings and structures thereon. Repayable in quarterly instalments over a period of 4 to 5 years after initial moratorium of 18 months.

3. SHORT-TERM BORROWINGS

a) Nature of Security for Short term borrowings

(i) Working Capital loans of Rs. 158.80 crores (2013-14 Rs. 152.81 crores) and Buyer's Credit amounting to Rs. 23.81 crores (2013-14 Rs.158.92 crores) from banks under consortium arrangement is secured by hypothecation of present and future stocks, book debts and other current assets on pari passu basis and a second charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant and machinery and buildings thereon on pari passu basis.

(ii) Packing credit from bank of Rs. 95 crores (2013-14 Rs. 50 crores) is secured by way of registered mortgage on the immovable properties in Wadia International Centre (Texturising Building and Hemming Building) located at Worli, Mumbai.

(Rs. in crores) 4. CONTINGENT LIABILITIES 2014-15 2013-14 A. Claims against the company not acknowledged as debt.

(a) Income-tax matters in respect of earlier years under dispute (including interest of Rs. 5.12 crores)[31.03.2014. Rs.4.91 crores] as follows: 24.11 23.72

(i) Decided in Companybfavour by appellate authorities and department in further appeal 0.18 0.18

(ii) Pending in appeal - matters decided against the Company 23.93 23.54

(b) Sales Tax, Service Tax and Excise Duties 1.85 11.70

(c) Customs duty 0.95 0.95

(d) Others (Claims against the Company not acknowledged as debts) (with interest thereon) 14.75 45.04

In respect of items (a) to (d) above, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums/ authorities.

B. Guarantees

1. Counter indemnity for an amount of Rs. 182.82 crores (31.3.2014 Rs. 166.53 crores) issued in favour of IDBI Bank Limited which in turn has guaranteed loans granted by Punjab National Bank International London and Bank of India, Jersey to PTFS secured by first pari-passu charge on 36,617.13 square metres of land at Company's Spring Mill Dadar, Naigaon together with all buildings, structures and erections there on.

2. Corporate guarantee for an amount of Rs. 20.76 crores (31.03.2014 Rs. 19.94 crores) issued in favour of Bank of Bahrain & Kuwait, Bahrain for loans granted to PTFS.

The Company has a pari passu charge on PTFS's assets, which would cover the aforesaid indemnity amount.

C. Other money for which the company is contingently liable

Bills discounted 3.72 22.63

5.During the year 2000-01, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The titles in respect of certain immovable properties amalgamated into the Company are still in the process of transfer.

6.The Company has subsequent to the Balance Sheet date signed a Binding Term Sheet agreeing to enter into a transaction with a proposed purchaser for the sale and transfer of the entire Undertaking consisting of the Textile factory/ plant of the Company situated at Ranjangaon, together with all specified tangible assets including land, personnel/ employees and other assets in relation to the said Undertaking on a slump sale basis as a going concern and on "as is where is" basis for a total consideration of Rs. 230 crores. The net realizable value of the assets covered under the term sheet for disposal being lower than the carrying value thereof, the Company has made a provision for impairment of the said assets amounting to Rs. 13.26 crores as at March 31, 2015.

7.Based on the advice obtained by the Company, the premium charged by the Company on sale of apartments under the deferred payment scheme compared to the price charged under the normal sales scheme is also considered as part of sales consideration and is recognised as revenue under the percentage of completion method.

8.The Company vide notice dated 8th January 2013 notified the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid / provided to such employees the terminal dues, closure compensation and ex- gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier. The liability in respect of the monthly payments has been actuarially determined as on the Balance sheet date at Rs. 7.26 crores (2013-14 - Rs. 6.40 crores) by the independent actuary. As at the time of the previous voluntary retirement schemes, the initial cost relating to ex-gratia compensation was added to the development cost of land. The actuarial loss for the year amounting to Rs. 1.40 crores (2013-14 - Rs. 0.27 crore) has been recorded in the Statement of Profit & Loss.

9.The Company has agreed to sell several apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd, a Group company,in terms of various Memorandum of Understanding (MOUs) entered between the companies till March 31, 2015. Based on the method of accounting (percentage of completion) followed by the company, net revenue of Rs. 301.11 crores (2013-14 Rs. 670.13 crores) and the resultant profit before tax of Rs. 224.49 crores (2013-14 Rs.355.45 crores) has been recognised during the year ended March 31,2015 on sales to SCAL.

10.Recognition of income and expenses on on-going real estate project under long term contracts is based on actual sales; estimated costs and work completion status. Determination of profits/ losses, the percentage of completion, costs to completion and realisability of the construction work in progress & unbilled revenues necesssarily involves making estimates by the Company, some of which being of a technical nature, are being relied upon by auditors. Profit from these contracts and valuation of construction work in progress / unbilled revenue is based on such estimates.

11.The Bombay High Court vide its order dated November 20, 2013 permitted the Company to surrender land at one location i.e. Spring Mills, Wadala, as per the application made by the Company under the Integrated Development Scheme for consolidating handover obligation. Pursuant to the Order of the Supreme Court dated August 2, 2013 and the above order of the Bombay High Court, the Company has during the year given advance possession of 32,829.02 sq. mtrs of land to MCGM and 33,822.89 sq. mtrs of land to MHADA at Spring Mills, Wadala after completion of necessary boundary wall, and internal filling/ leveling, SWD, etc. as per the provisions of DCR 58 (6) read with DCR 58 (1) (a) & (b) and both MCGM and MHADA have taken advance possession of the said lands, pending completion of certain administrative formalities, which as per the company's architect are routine.

As per the provisions of DCR 54 and as certified by the Company's Architects, the Company is entitled to Development Rights (FSI) of 43,661.11 sq. mtrs generated in lieu of lands earmarked and handed over to MCGM for utilization by the owners on the said land and to Transferable Development Rights (TDR) of 44,984.44 sq. mtrs. in lieu of lands earmarked and handed over to MHADA under the Integrated Development Scheme as per the provisions of DCR 58.

Since physical possession of the earmarked lands is handed over and Advance Possession Receipts obtained from MCGM and MHADA, the Company has recognized the entitlement of additional Development Rights (FSI) available for its own use and accordingly converted the same into stock in trade at market value (as ascertained by registered valuers). The difference between the market value and cost thereof amounting to Rs. 694.29 crores has been credited to Revaluation Reserve increasing the Revaluation Reserve to Rs. 1687.59 crores. As per the method of accounting followed by the Company, an amount of Rs. 351.24 crores has been released from Revaluation Reserve to the credit of the Statement of Profit and Loss in respect of areas agreed for sale / sold and percentage of work completed. (including higher release of reserve due to increase in percentage completion). The Transferable Development Rights (TDR) will be recognised on receipt of TDR certificates.

Consequent to consolidation of handover obligations and hand over of land at one location, the base FSI available at Spring Mills, Wadala was reduced. Thus the proportionate cost of such land of Rs. 241.04 crores was transferred back to Freehold land for handover and the revaluation reserve relating to be reduced FSI amounting to Rs.238.07 crores has been reversed during the year.

12.Litigations

(a) During the year 2010-11, the Company had agreed to sell certain area in the proposed tower TWO ICC to Shaan Realtors Pvt. Ltd., formerly Accord Holding Pvt. Ltd. ("the claimants"). The area agreed to be sold is under dispute and the matter was referred to arbitration. The arbitrator vide order dated 13th January 2014 passed the final award directing the company to allot to the claimants and/ or its associates, friends, nominees carpet area of 1,00,000 sq. ft. less the carpet area as already allotted to them in the proposed tower TWO ICC, namely additional carpet area of 48,495 sq. ft. The Company has filed an appeal in the Bombay High Court under section 34 of the Arbitration & Conciliation Act, 1996 against the final award. The Company is confident that the final award passed by the learned arbitrator will get reversed in view of the strong merits in the case. Accordingly, the requisite area has been set aside by the Company and the total area to be allotted to the claimants will be accounted on disposal of the appeal filed in the High Court. No adjustment has been made in the accounts for the year ended 31st March 2015 in view of the uncertainty involved.

(b) The Bombay High Court vide its order dated 20th November, 2013 permitted the Company to surrender land at one location i.e. Wadala, as per the application made by the company under integrated development scheme. As per this order the total of 66,651 sq. meter of land has been surrendered to MCGM and MHADA at Island City Centre, Wadala. During the year 2013-14, the Union had filed a writ petition requiring the company to surrender non textile mill land. The Bombay High Court has directed the Company to reserve additional 10,000 sq. meters of land adjacent to the land to be surrendered. The Company believes that abovesaid writ petition filed in Bombay High Court has no impact on the development of the two towers at ICC since the reserved land of 10,000 sq. meters is different from the one where construction of the two towers is in progress.

(c) The company had during the year 2010-11 sold the building known as 'Wadia Tower A to Axis Bank Ltd for a consideration of Rs. 782.62 crores. The purchaser has till date paid a sum of Rs. 753.69 crores and the balance Rs. 28.93 crores is still outstanding. Axis bank has claimed interest for delayed handover for a period of 4 months from October 2010 to January 2011, and has not paid the common area maintenance charges amounting Rs. 7.71 crores. Since the matter could not be amicably resolved, the same was referred to arbitration. Claims from the Bank regarding costs for work completed by the Bank on behalf of the Company and by the Company on behalf of Axis Bank are also matters under arbitration. Pending finalisation of arbitration proceedings the receivables are considered good.

13.The remuneration paid to Managing Director for the year ended March 31, 2015 is in excess of the limits laid down in section 197 of the Companies Act, 2013 read with Schedule V of the said Act. The excess remuneration of Rs. 3.26 crores is subject to the approval of the Central Government, in respect of which the Company has made an application and the approval is awaited. The excess of remuneration of the Managing Director over the limits prescribed under section 198 and 309 of the Companies Act, 1956 for the year ended March 31, 2014 has been approved by Central Government vide approval dated 18th September, 2014.

14. Current Liabilities

The amount of dues owed to Micro, Small and Medium Enterprises as on 31st March, 2015 amounted to Rs. 0.16 crore (31st March, 2014- Rs. 0.11 crore). This amount has been outstanding for more than 45 days at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

15. The Company had introduced the Employee Stock Option Scheme (ESOS) as approved by the shareholders at the Annual General Meeting held on 13th August 2002. The scheme was amended by the shareholders at the Annual General Meeting held on 23rd July 2004 to incorporate the amendments under The Stock Option Guidelines vide SEBI circular dated 30th June 2003. The scheme has been further amended by the shareholders at the Annual General Meeting held on 7th August 2012 wherein the exercise price shall be based on the market price as defined in the SEBI (Employee Stock Option Scheme) Guidelines 1999 i.e. at the latest available closing market price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted, on the stock exchange having highest trading volume.

As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Whole-time Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Vesting of an option is subject to continued employment.

Under the Scheme, during the financial years from 2002-03 to 2006-07 the Company granted 1,64,410 options, each option representing one equity share of Rs. 10/- each. Out of these 1,57,910 options were excercised into equity shares and balance 6,500 options lapsed.

On 7th August 2012, the Board of Directors had granted 14000 stock options (70,000 stock options post sub -division) to the Joint Managing Director of the Company at an exercise price of Rs. 528.25 (Rs. 105.65 post subdivision) per share for the years 2011-12 and 2012-13 which options have vested on 7th August 2013. Further 50,000 stock options of equity shares of Rs. 2 each were granted for the year 2013-14 on 28th May, 2013 at an exercise price of Rs. 79.50 per share to the Joint Managing Director which were due for vesting on 28th May, 2014. However, these options have lapsed as the grantee has resigned from the Company before the vesting date. Consequent upon the sub-division of shares on and from 31st October, 2012, the number of options and the exercise price have been appropriately adjusted.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to the Whole-time Director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Rs. Nil. Consequently the accounting value of the option (compensation cost) is also Rs. Nil.

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, 'Financial Instruments: Recognition and Measurement', issued by The Institute of Chartered Accountants of India. Accordingly, the foreign exchange loss of Rs. 0.45 crores (2013-14 Rs.1.07 crores) as on 31st March, 2015 on forward foreign exchange contracts entered into to hedge firm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognised in the profit and loss account when the forecasted transactions arise.

16. Related party disclosures

(a) Names of related parties and nature of relationship

Subsidiary Company:

Archway Investment Company Limited (w.e.f. 23 rd Oct 2014) (95.69% holding)

Associate Companies:

Archway Investment Company Limited (upto 22nd Oct 2014)

Pentafil Textile Dealers Limited

Bombay Dyeing Real Estate Company Limited

Joint Venture Company:

PT.Five Star Textile, Indonesia

Key Management Personnel:

Mr. Jehangir N Wadia - Managing Director

Mr. Ness N Wadia - Director- Brother of Managing Director

Mr. Jairaj C Bham -Company Secretary

Mr. Raghuraj Balkrishna -Chief Financial Officer (upto 08th Aug 2014) Mr. Durgesh Mehta -Joint Managing Director (upto 15th Feb 2014)

Relatives of Key Management Personnel:

Mrs. Saroj Jairaj Bham - Spouse of the Company Secretary

Entities over which key management

personnel and relatives exercise significant influence :

Go Airlines (India) Limited

The Bombay Burmah Trading Corporation Ltd.

17. Figures in Brackets indicate corresponding figures for the previous year.

18. Previous year figures have been regrouped where necessary.


Mar 31, 2013

1. During the year 2000-2001, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

2. Based on the advice sought by the Company, the premium charged by the Company on sale of apartments under the 20:80 scheme, where 80% of the consideration is payable at the time of handing over of possession, compared to the price charged under the normal sales scheme is also considered as part of sales consideration and is recognised as revenue under the percentage of completion method.

3. The Company vide notice dated 08th January, 2013 notified the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid / provided to such employees the terminal dues, closure compensation and ex-gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier. The liability in respect of the monthly payments has been actuarially determined at Rs. 6.67 crores by the independent actuary. As at the time of the previous voluntary retirement schemes, the cost relating to ex-gratia compensation aggregating to Rs. 10.07 crores has been added to the development cost of land as the said land is freed for real estate development.

4. During the year, the Company has agreed to sell certain apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd., an associate Company for a consideration of Rs. 701.81 crores (31.03.2012: Rs. 743.83 crores) in accordance with the Memorandum of Understanding (MOUs) entered between the companies. Based on the method of accounting followed by the company (percentage of completion), the Company has recognized net revenue of Rs. 339.47 crores (31.03.2012: Rs. 341.32 crores) from the said transactions, including an amount of Rs. 89.38 crores (31.03.2012:Rs. 103.67crores) released from Revaluation Reserve.

5. During the year 2010-11, the Company had agreed to sell certain area of in the proposed tower TWO ICC to Accord Holding Pvt. Ltd. The area agreed to be sold is under dispute and the matter has been referred to arbitration. The arbitrator vide order dated 27th August, 2012 has restrained the Company from selling, transferring or alienating right, title or interest in respect of 1,00,000 sq.ft. carpet area in favour of any third party. The Company has filed an appeal against the order in the Bombay High Court. The arbitration proceedings have been posted for arguments and final hearing.

6. Prior Period expenses/(income) included under "Statement of Profit and Loss" for the year.

7. Employee Benefits

A. Defined Contribution Plan

The Company has recognized the following amounts in the Statement of Profit and Loss under contribution to provident and other funds as under:

B. Defined Benefit Plan

Gratuity - as per actuarial valuation as on 31st March, 2013

C. Other long term benefits-

Amount recognised as a liability in respect of compensated leave absences is Rs. 5.71 crores [2011-12- Rs. 4.61 crores]

D. Termination Benefits

Liability recognised in respect of termination benefits payable on monthly basis upto age 63 or demise whichever is earlier, as per actuarial valuation Rs. 6.67 crores. The said amount together with other lump-sum payments aggregating to Rs. 10.07 crores is added to the development cost of land (Refer note 33)

8. Current Liabilities

The amount of dues owed to Micro, Small and Medium Enterprises as on 31st March, 2013 amounted to Rs. 0.17 crore (31st March, 2012- Rs. Nil). This amount has been outstanding for more than 45 days at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors. disclosure under MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 Company has sought confirmation from vendors whether they fall in the category of Micro, Small and Medium Enterprises. Based on the information available the required disclosure under Micro, Small and Medium Enterprises Development Act, 2006 is given below:

9. The Company had introduced the Employee Stock Option Scheme (ESOS) as approved by the shareholders at the Annual General Meeting held on 13th August 2002. The scheme was amended by the shareholders at the Annual General Meeting held on 23rd July 2004 to incorporate the amendments under The Stock Option Guidelines vide SEBI circular dated 30th June 2003. The scheme has been further amended by the shareholders at the Annual General Meeting held on 7th August 2012 wherein the exercise price shall be based on the market price as defined in the SEBI (Employee Stock Option Scheme) Guidelines 1999 i.e. at the latest available closing market price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted, on the stock exchange having highest trading volume.

As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Whole-time Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Exercise of an option is subject to continued employment.

Under the Scheme, during the financial years from 2002-03 to 2006-07 the Company granted 1,64,410 options, each option representing one equity share of Rs. 10/- each. Out of these 1,57,910 options were exercised into equity shares and balance 6,500 options lapsed.

The Company has further granted 14,000 options (i.e. 70,000 options post sub-division) on 7th August, 2012 at an exercise price of Rs. 528.25 (i.e. Rs. 105.65 post sub-division) per share to the Joint Managing Director of the Company. Consequent upon the sub-division of shares on and from 31st October, 2012, the number of options and the exercise price have been appropriately adjusted.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to the Whole-time Director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Rs. Nil. Consequently the accounting value of the option (compensation cost) is also Rs. Nil.

Fair Value Methodology:

Options have been valued based on Fair Value Method of accounting as described under guidance note on Accounting for Employee Share-based Payments using Black-Scholes valuation option-pricing model, using the market values of the Company''s shares as quoted on the National Stock Exchange.

10. Related party disclosures

(a) Names of related parties and nature of relationship:

Associate Companies: Archway Investment Company Limited

Pentafil Textile Dealers Limited Scal Services Limited (upto 28.03.2012)

Bombay Dyeing Real Estate Company Limited Co-venturer: Batra Group (Upto 27.03.2012)

Joint Venture Companies: PT.Five Star Textile Indonesia

Proline India Limited (upto 27.03.2012)

Key Management Personnel and Mr.Jeh N Wadia - Managing Director

Mr.Durgesh Mehta - Joint Managing Director

Mr.Ness N Wadia - Director- Brother of Managing Director

Entities over which key management

personnel and relatives exercise significant influence : Go Airlines (India) Limited

The Bombay Burmah Trading Corporation Ltd.

11. Figures in Brackets indicate corresponding figures for the previous year.

12. Previous year figures have been regrouped where necessary.


Mar 31, 2012

(a) Rights, preferences and restrictions attached to Equity shares

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

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment against 928 (2010-11- 928) warrants carrying rights of conversion into equity shares of the Company has been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonfire owner is certified by the concerned Stock Exchanges.

(c) Shares allotted on exercise of warrants

The Company had on 21st July, 2010 allotted 39,57,000 warrants on preferential basis to a Company in the promoter group. In accordance with the terms of issue, 19,30,000 warrants were subscribed for conversion in March 2011, and equivalent equity shares issued. Further, 20,27,000 warrants were exercisable with option to subscribe to equivalent number of equity shares of Rs 10 each, on or after 1st April, 2011 but not later than 18 months from the date of issue of the warrants, in terms of Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("the Regulations").

In January, 2012, 7,60,000 warrants were exercised for conversion into equity shares as per the terms of the allotment of the warrants and 7,60,000 equity shares were allotted on 30th January, 2012 to the promoter group company. The balance 12,67,000 warrants lapsed due to non-exercise of the conversion into equity shares and the amount aggregating Rs 16.71 crores was forfeited in terms of the SEBI(DIP) Guidelines and conditions attached to the warrants. The forfeited amount of Rs16.71 crores has been credited to Capital Reserve.

a) Nature of Security and terms of repayment of secured borrowing:

i) Term Loans aggregating Rs 111.92 crores (2010-2011 Rs 250.02 crores) are secured by first pari passu charge on the Company's existing as well as future fixed assets at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga other than fixed assets charged exclusively to term lenders. Repayable in quarterly installments over a period of 2 to 7 years.

ii) Term loan amounting to Rs 13.00 crores (2010-2011 Rs 26.00crores) is secured by first pari passu charge on the Company's existing as well as future assets of Polyester Division at Patalganga [excluding assets on lease basis, vehicles, furnitures and fixed assets charged exclusively to term lenders]. Repayable in one year.

iii) Term loan amounting to Rs 16.69 crores (2010-2011 Rs 23.35 crores) is secured by first pari passu charge on the fixed assets of the Company at Polyester Division at Patalganga. Repayable in half yearly instalments over 3 years.

iv) Term loans aggregating Rs 375.00 crores (2010-2011 Rs 125.00 crores) is secured by first pari passu charge over part of the land of the Company at Textile Mills at Mumbai admeasuring upto 89,941.07 square metres and plant and machinery, buildings and structures thereon. Repayable in quarterly instalments over a period of 1 to 3 years.

v) Term loan of Rs 125.00 crores (2010-2011 Rs 250.00crores) is secured by first pari passu charge over part of the land of the Company at Spring Mills at Mumbai admeasuring 46,442.13 square metres and buildings and structures thereon. Repayable in one year.

vi) Term loan amounting to Rs150.00 crores (2010-2011 Nil) is to be secured by first pari passu charge on Company's plant & machinery at Textile Processing unit at Ranjangaon and the Polyester Division at Patalganga. Repayable in annual instalments over 3 years.

vii) Term loan amounting to Rs100.00 crores (2010-2011Rs Nil) is to be secured by first pari passu charge over part of the land of the Company at Textile Mills at Mumbai. Repayable in quarterly instalments over 3 years.

viii) Term Loans aggregating RsNIL (2010-2011 Rs161.05 crores) were secured by first pari passu charge over part of the land of the Company at Mumbai admeasuring 30,006.90 square metres and buildings and structures thereon.

ix) Term Loan amounting to RsNIL (2010-2011 Rs0.19crores) was secured by exclusive charge on the specific fixed assets of the Company at Textile Processing Unit at Ranjangaon.

b) Terms of repayment of unsecured borrowing:

Fixed Deposits from shareholders and public are repayable from January to March 2015.

a) Nature of Security for Short term borrowings

(i) Working Capital loans of Rs 92.66 crores (2010-2011 Rs 123.11 crores) and Buyer's Credit amounting to Rs 192.94 crores (2010-11 Rs 91.24 crores) from banks under consortium arrangement is secured by hypothecation of present and future stocks, book debts and other current assets on pari passu basis and a second charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant and machinery and buildings thereon on pari passu basis.

(ii) BuyerRss Credit aggregating Rs 49.82 crores (2010-11 - Rs Nil) is secured by first pari passu charge on land of the Company at Spring Mills at Mumbai admeasuring 46,442.13 square metres and aggregating Rs 23.55 crores (2010-11 Rs Nil) is secured by first pari passu charge on land of the Company at Spring Mills at Mumbai admeasuring 30,006.90 square metres and buildings and erections thereon.

(iii) Short term loan from bank amounting to Rs Nil (2010-11 Rs 100 crores) was secured by first pari passu charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and Plant & Machinery and buildings and structures thereon.

1. LONG-TERM LOANS AND ADVANCES (CONTD.)

a) Deposit of Rs 15.22 crores (2010-2011 Rs 15.22 crores) with a joint venture company is a "shareholders" deposit with PT. Five Star 'Textile Indonesia (PTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April, 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioner's of PTFS. This deposit which was earlier repayable by 2010 is now repayable by PTFS after repayment of its other borrowings or by the year 2015, whichever is earlier, as permitted by Reserve Bank of India.

b) Loans and advances to related parties also includes Rs 15.65 crores (2010-11Rs 15.89 crores) recoverable from PTFS on account of royalty and expenses incurred on their behalf. The Company has stopped accrual of royalty and other expenses in the account since April, 2009. The management is considering various options including the restructuring of the operations of PTFS, for recovery of the same.

a) Balances with banks in deposit accounts includes fixed deposits aggregating to Rs13.28 crores (2010-2011Rs 16.05 crores) against which lien has been marked by the banks as security for guarantees issued on behalf of the Company. It also includes fixed deposits aggregating to Rs 9.06 crores (2010 - 2011Rs Nil) placed out of the funds received as corpus fund and maintenance deposits from flat owners.

a) Advances recoverable in cash or in kind or for value to be received includes Rs 0.71 crore on account of remuneration recoverable from Mr. M.K.Singh, Executive Director, whose services were terminated on 6th July, 2008 consequent to detection of irregular conduct. A suit has been filed by the company in the High Court of Judicature of Mumbai alleging fraudulent misconduct. The matter is pending before the Court.

(Rs.in crores)

2. Contingent Liabilities 2011-12 2010-11

A. Claims against the company not acknowledged as debt.

(a) Income-tax matters in respect of earlier years under dispute (including interest of Rs 5.85 crores) [31.03.2011. Rs5.86 crores] as follows:

(i) Decided in Company's favour by appellate authorities and department in further appeal 5.11 5.11

(ii) Pending in appeal - matters decided against the Company 28.57 36.07

(b) Sales Tax, Service Tax and Excise Duties 1.86 14.12

(c) Customs duty 0.25 0.25

(d) Others (Claims against the Company not acknowledged as debts) (with interest thereon) 36.42 6.99 In respect of items (a) to (d) above, future cash outflows, if any in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums/ authorities.

B. Counter indemnity for an amount of Rs 113.47 crores (31.3.2011 Rs96.22crores) issued in favour of banks which in turn have guaranteed loans granted by other banks abroad to PT Five Star Textile, Indonesia, (PTFS), a joint venture company as under:-

(i) Rs 84.08 crores (31.03.2011 Rs 84.16 crores) in favour of IDBI Bank Limited against guarantees issued to Punjab National Bank International London for loans granted to PTFS secured by first pari passu charge over part of the land of the Company at Spring Mills at Mumbai admeasuring 46,442.13 square meters and buildings and structures thereon.

(ii) Rs 12.00 crores (31.03.2011 Rs 12.06 crores) in favour of IDBI Bank Limited against guarantees issued to Punjab National Bank International London for loans granted to PTFS secured by fixed deposit of Rs 12.51 crores earmarked in favour of IDBI Bank Limited.

(iii) Rs 17.39 crores (31.03.2011 Rs Nil) in favour of Bank of Bahrain & Kuwait, Bahrain for loans granted to PTFS secured by first pari passu charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant & machinery, buildings and structures thereon.

The Company has a pari passu charge on PTFS's assets, which would cover the aforesaid indemnity amount.

C. Other money for which the company is contingently liable Bills discounted 37.94 41.44 30. During the year 2000-2001, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

3. The Company has during the year ended March 31, 2012 converted a part of the freehold land under real estate development from Fixed Assets to Stock in trade at market value and the difference between the market value and cost amounting to Rs 764.30 crores (2010-11 Rs 853.96 crores) has been credited to Revaluation Reserve. An amount of Rs 165.27 crores (2010-11Rs 70.57 crores) has been released from revaluation reserve to Statement of Profit and Loss in proportion of revenue recognized on the area sold in accordance with the accounting policy.

4. The Company has with effect from April 1, 2011 changed the accounting policy for recognition of revenue from Real Estate activity. Up to the previous year, revenue arising from sale of undivided interest in the underlying freehold land relating to flats / office premises under construction was accounted when the agreement for sale of such flats / office premises was entered into and the revenue from construction activity in relation to the areas sold was recognized on the percentage of completion method. Effective April 1, 2011 entire revenue from real estate activity is recognised on the percentage of completion method. Had the Company continued to follow the earlier accounting policy, revenue from real estate activity and construction costs would have been lower by Rs 146.22 crores and Rs13.92 crores respectively, the release from Revaluation Reserve would have been higher by Rs 205.81 crores and the net profit before tax would have been higher by Rs 73.51 crores.

5. The Company has pursuant to a Memorandum of Understanding entered into during the year with SCAL Services Ltd., an associate company, agreed to sell certain apartments in the proposed residential towers being constructed at Island City Centre for a consideration of Rs 743.83 crores. The company has recognized net revenue of Rs 341.32 crores from the said transaction, including an amount of Rs 103.67 crores released from Revaluation Reserve.

vii a. The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risk, historical results of return on plan assets and the Company's policy for plan assets management.

viii The above information is certified by the actuary.

6. Foreign Currency Transactions

Exchange differences recognized in Statement of Profit and Loss include gain on cancellation of forward exchange contracts Rs1.61 crores (2010-11 loss Rs3.84 crores)

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, 'Financial Instruments: Recognition and Measurement', issued by The Institute of Chartered Accountants of India. Accordingly, the foreign exchange (gain)/ loss of Rs 0.23 crores (2010-11 Rs (0.01) crores) as on 31st March, 2012 on forward foreign exchange contracts entered into to hedge firm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognized in the Statement of Profit and Loss when the forecasted transactions arise.

(iii) The lease agreements are for a period of four years for vehicles and for a period of one to nine years for retail shops including further periods for which the Company has the option to continue the lease of retail shop with the condition of increase in rent, for a period of one year for godowns and for a period of 3 years for flats.

Notes:

(a) The Company's operating facilities are located in India. Some of the assets are not identifiable separately to any reportable segment as these are used interchangeably between segments.

(b) Corporate expenses have been apportioned between the segments on a reasonable basis.

Notes:

(a) Dividend paid has not been considered by the Company as a transaction falling under the purview of Accounting Standard 18 "Related Party Disclosures".

(b) Revenue from real estate activity is disclosed based on aggregate value of sales consideration as per agreements.

(c) Secured by a pari passu charge on the assets of the joint venture.

7. Figures in Brackets indicate corresponding figures for the previous year.

8. Previous year figures have been regrouped where necessary.


Mar 31, 2010

2008-2009 Rupees Rupees in crores in crores (1) Contingent liabilities not provided for (a) Income-tax matters in respect of earlier years under dispute (including interest of Rs. 5.77 crores) 31.03.2009. Rs.3.46 crores]as follows: 37.10 31.93 (i) Decided in Companys favour by appellate authorities and department in further appeal 5.11 5.66 (ii) Pending in appeal - matters decided against the Company 31.99 26.27 (b) Sales Tax and Excise Duties 1.47 1.47 (c) Customs duty 0.37 0.37 (d) Other claims against the Company not acknowledged as debts (with interest thereon).. 4.38 4.09

In respect of items (a) to (d) above, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums/authorities.

(e) Counter indemnity for an amount of Rs. 81.45 crores (31.3.2009 Rs.85.46 crores) issued in favour of banks which in turn have guaranteed loans granted by other banks abroad to PT Five Star Textile, Indonesia, (PTFS), a joint venture company as under:- (i) Rs. 71.05 crores (31.3.2009 Rs. 2.34 crores) in favour of IDBI Bank Limited against guarantees issued to Punjab National Bank International London for loans granted to PTFS.

(ii) Rs. 10.40 crores (31.3.2009 Rs. Nil) in favour of State Bank of India, against guarantees issued to State Bank of India, Indonesia for loans granted to PTFS.

(iii) Rs. Nil (31.3.2009 Rs.41.07crores) in favour of Standard Chartered Bank, Mumbai, against guarantees issued to Punjab National Bank International London for loans granted to PTFS.

(iv) Rs. Nil (31.3.2009 Rs. 33.77 crores) in favour of IDBI Bank Limited againsi guarantees issued to State Bank of India, Singapore for loans granted to PTFS.

(v) Rs. Nil (31.3.2009 Rs. 8.28 crores) in favour of State Bank of India, against guarantees issued to State Bank of India, Hongkong for loans granted to PTFS.

Item No. i secured by first Mortgage/charge over part of the land of the Company at Spring Mills at Mumbai admeasuring 46,442.13 square metres and buildings and structures thereon. Item No. ii is secured by fixed deposit of Rs. 10.40 crores earmarked in favour of

State Bank of India. As confirmed by PTFS, the Company has a pari passu charge on PTFSs machinery, which would cover the aforesaid indemnity amount.

(f) Bills discounting 25.89 5.48

(g) In accordance with the EPCG Scheme, imports of capital goods are allowed to be made duty free and under Advance License scheme, import of raw material are allowed to be made duty free, subject to condition that the Company will fulfill, in future, a specified amount of export obligation within a specified time. Based on the current operating plan. the Company would fulfill its export obligation within the specified time period. Amount of duty saved on import of the above goods aggregate Rs 29.78 crores (31.03.2009 Rs. 35.62 crores) against which export obligation of Rs 238.26 crores (31.03.2009 Rs 241.01 crores) need to be fulfilled.

(2) Capita! Commitments

Estimated amount of contracts to be executed on capital account and not provided for as at 31st March, 2010 Rs 6.05 cores (31.3.2009 Rs. 6.30 crores)

(3) Share Capital *

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act. 1992, - the allotment against 928 (2008- 09- 928) warrants carrying rights of conversion into equity shares of the Company have been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonafide owner is certified by the concerned Stock Excnarges are issued. During the year Nil (2008-2009- 1,840) equity shares have been allotted out of the shares kept in abeyance.

(4) The Shareholders of the company have approved on 24th March 2010 through postal ballot to create, offer, issue and allot not exceeding 39,57,000 Warrants comprising 19,30,000 Warrants with an option to subscribe to equivalent number of Equity Shares of Rs.10 each, which shall be exercisable not later than 31st March, 2011 in one or more tranches subject to such allotment of Equity Shares not exceeding 5% of the existing paid-up Equity Share capital of the Company and further 20,27,000 Warrants with an option to subscribe to equivalent number of Equity Shares of Rs. 10 each, on or after 1st April, 2011 but not later than 18 months from the date of issue of the Warrants in one or more tranches, subject to such allotment of Equity Shares not exceeding 5% of the then existing paid-up Equity Share capital of the Company to Promoter(s)/Promoter Group whether or not they are members of the Company, on a preferential basis in such manner and on such terms and conditions as may be determined by the Board in its absolute discretion in accordance with the applicable SEBI Regulations. The allotment of warrants will be completed on receipt of relevant approvals from BSE and NSE under the listing agreement.

(5) Borrowing costs capitalised during the year is Rs.5.25 crores (2008-2009 Rs.10.98 crores) of which an amount of Rs.Nil (2008-2009 Rs.4.22 crores) is included in closing stock of real estate under development.

(6) During the year 2000-2001, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

(7) The Company has during the year ended 31st March, 2010 converted a part of the freehold land under real estate development from fixed assets to stock in trade at market value and the difference between the market value and cost amounting to Rs. 50.76 crores (2008-2009 Rs.390.11 crores) has been credited to Revaluation Reserve. The Company has pursuant to the Memorandum of Agreement sold a part of the commercial building being constructed on such land to Bombay Dyeing Real Estate Company Limited (BDRECL), (erstwhile White Horse Real Estate Pvt. Ltd.) and recognized a revenue there against of Rs. 423.54 crores (2008-2009 Rs.235.02 crores) (including revenue from the undivided interest in the underlying free hold land therein amounting to Rs. 256.29 crores (2008-2009 Rs. 193.34 crores) in line with the Companys stated accounting policy) in the Profit and Loss Account. The Company partly divested its investment in BDRECL in March 2010 and since then it has ceased to be a wholly owned subsidiary.

(8) Debtors and creditors balances are subject to confirmation and consequent reconciliation, if any.

(9) Advances recoverable in cash or in kind or for value to be received

(a) Advances recoverable in cash or in kind or for value to be received includes an amount of Rs. 0.08 crores and Rs.0.10 crores recoverable from Mr. P.V. Kuppuswamy and Mr. Ness Wadia respectively towards excess remuneration paid for the year 2009-10.

(b) Advances recoverable in cash or in kind or for value to be received include Rs. 0.71 crore on account of remuneration recoverable from Mr. M.K.Singh, Executive Director, whose services were terminated on 6th July, 2008 consequent to detection of irregular conduct. A suit has been filed by the company in the High Court of Judicature of Mumbai alleging fraudulent misconduct. The matter is pending before the Court.

(10) Deposit with a joint venture company

Deposit of Rs.15.22 crores (2008-2009 Rs. 15.22 crores) with a joint venture company is a "shareholders deposit" with PT. Five Star Textile Indonesia (PTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioners of PTFS. This deposit was earlier repayable by PTFS after it clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in installments spread out between 1996 and 2010. During the year 2000-2001, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings subject to annual review and the aforesaid deposit is now repayable by PTFS after these borrowings are eventually repaid or during the year 2010, whichever is earlier.

(11) Current Liabilities

There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose.

(ii) The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

(a) Amounts receivable in foreign currency- USD 2,340,157, EURO 340,093, GBP 114,108 (2008-09 USD 665,652, EURO 107,355, GBP 762)

(b) Amounts payable in foreign currency - USD 33,255, EURO 9137, CHF 2091 (2008-09 USD 594,053, EURO 379,118, CHF 36,850, GBP 825, SGD 148,702)

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, Financial Instruments: Recognition and Measurement, issued by The Institute of Chartered Accountants of India. Accordingly, the foreign exchange (gain)/ loss of Rs. 5.48 crores (2008-09 Rs. 37.69 crores) as on 31st March, 2010 on forward foreign exchange contracts entered into to hedge firm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognised in the profit and loss account when the forecasted transactions arise.

(iv) Figures in brackets are the corresponding figures in respect of the previous year.

(12) Segment Reporting (Contd..)

Notes:

(a) The Companys operating facilities are located in India. Most of the assets are not identifiable separately to any reportable segment as these are used interchangeably between segments.

(b) Corporate expenses have been apportioned between the segments on a reasonable basis.

(c) Figures in italics and in brackets are the corresponding figures in respect of the previous year.

(13) Previous years figures have been regrouped where necessary.

 
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