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Notes to Accounts of Celebrity Fashions Ltd.

Mar 31, 2016

NOTES TO THE ACCOUNTS AS AT 31ST MARCH 2016

1 Significant Accounting Policies

1 Basis of Preparation of Financial Statements

These financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention on accrual basis. GAAP comprises of mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The financial statements are presented in Indian rupees rounded of to the nearest rupee in crores.

2 Use of Estimates

The preparation of the financial statements in conformity of the GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of financial statements and reported amounts of income and expenses during the period. Although these estimates are based upon the management best knowledge of current events and actions, actual results could differ from those estimates. Appropriate changes in estimates are made as the management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and if material their effects are disclosed in the notes to the financial statements.

3 Revenue Recognition

Revenue is recognized only when risks and rewards incidental to ownership are transferred to the customer, it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes Sales (net of trade discounts and rebates) which are recorded when the significant risks and rewards of ownership are transferred. Export Sales are accounted on the basis of the dates of Bill of Lading and other delivery documents as per the contract. Domestic Sales excludes Sales Tax and Value Added Tax. Export Incentives are accounted for on export of goods if the entitlements can be estimated with reasonable accuracy and conditions precedent to claim are fulfilled.

Other Operating Income represents conversion charges received by the Company from contract manufacturing activities and the same is accounted when the significant risks and rewards of ownership are transferred.

Rental Income on properties leased are accounted on accrual basis.

Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

Dividend income is recognized when the Company’s right to receive dividend is established.

4 Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where no reliable estimate can be made, a disclosure is made as a contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are neither recognized nor disclosed in the financial statements.

5 Fixed Assets Tangible Assets

Tangible assets are stated at cost of acquisition, less accumulated depreciation and impairment losses if any, net of grants received, where applicable and subsequent improvements thereto including taxes, duties, freight, and other incidental expenses related to acquisition. Any trade discounts and rebates are deducted in arriving at the purchase price. Direct costs are capitalized until such assets are ready for use.

Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Intangible Assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization / depletion and impairment loss, if any. The cost comprises purchase price, borrowing costs and any cost directly attributable in bringing the asset to its working condition for the intended use.

6 Depreciation and Amortization

Depreciation on tangible assets is provided on the straight-line method over the useful lives of assets estimated by the Management. Depreciation for assets purchased / sold during a period is proportionately charged.

Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.

Additional depreciation is being provided to the extent required during the year of sale of assets. Assets, for which the estimated useful life is completed, have been removed from gross block and accumulated depreciation.

* For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers the management believes that useful lives as given above best represent the period over which management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

7 Impairment

The Company assesses at each Balance Sheet date whether there is any indication due to internal or external factors that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognized in the profit and loss account. If at any subsequent balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount subject to maximum of depreciated historical cost and is accordingly reversed in the profit and loss account.

8 Borrowing Costs

Borrowing costs attributable to acquisition and construction of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are incurred.

9 Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that which approximates the actual rate at the date of the transaction.

Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent on the date of transaction. Monetary items denominated in foreign currencies at the yearend are restated at year end rates. Any income or expense on account of exchange differences either on settlement or on translation is recognized in the Statement of Profit and Loss.

The Company uses forward contracts to mitigate its risks associated with foreign currency exchange rates. The Company does not use the foreign exchange forward contracts of options for trading or speculating purpose. The premium

or discount on foreign exchange forward contracts is amortized as income or expense over the life of the contract. The exchange difference is calculated and recorded in accordance with AS-11 - ‘The Effects of Changes in Foreign Exchange Rates’ (revised) in the Statement of Profit and Loss.

10 Investments

Trade investments are the investments made to enhance the Company’s business interests. Investments are either classified as current or non-current (long term) based on Management’s intention at the time of purchase. Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments.

Long term investments are carried at cost less provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment. Current investments are carried at the lower of cost and fair value of each investment individually.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.

11 Inventories

Raw Materials and Components are valued at lower of Cost or Net Realizable Value. Cost of the said is computed by applying Specific Identification Method. Work in Progress and Finished Goods are valued at lower of Cost or Net Realizable Value. Cost of these inventories includes Costs of Conversion and Other costs incurred in bringing them to the present location and condition.

12 Employee Benefits

All employee benefits payable within twelve months of rendering the service are classified as short term employee benefits. Short term employee benefits in the nature of salary, wages, bonus, leave encashment and the expected cost of ex-gratia are recognized and accounted for on accrual basis in the period in which the employee renders the related service


Mar 31, 2015

1. Rights, Preferences and Restrictions attached to each Class of Shares

The Company has two classes of shares:

Equity Shares having a par value of Rs.10/- each with voting rights. Each holder of Equity Shares is entitled to one vote per share. 1% Cumulative Redeemable Preference Shares of Rs.10/- each. The Cumulative Redeemable Preference Shares carry a dividend of 1% p.a. and will be redeemed in 6 equal annual installments starting with the financial year 2022.

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive any of the remaining assets of the Company in proportion to the number of Equity Shares held by the shareholders, after distribution of all preferential amounts.

2. During the year under review, the Company had arrived at an out of court settlement with its tenant In this connection, the Company has recognized an income of Rs.1.26 crs pertaining to previous years under rental income. Further the Company has entered into a fresh lease deed and Memorandum of Understanding, whereby the tenant has agreed to pay Rs.2.25 crs towards settlement of old dues outstanding till 31st March, 2014 in installments. As at 31st March, 2015 service tax amounting to Rs.0.30 crs (Previous Year Rs.0.04 crs) on account of renting of immovable property is yet to be remitted to Government Account. Provision has been made in the accounts for the service tax payable.

3. EROSION OF NETWORTH, DECLARATION AS SICK UNIT AND STATUS OF DEBT REHABILITATION SCHEME

The Company’s networth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company filed reference with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR appointed State Bank of India as the Operating Agency (OA) and issued directions to submit a Rehabilitation Scheme for the revival of the Company as per Section 18 of SICA.

State Bank of India (SBI), the OA has sanctioned a re-structuring package for the Company vide its letter dated 16th November 2012. The OA has submitted the same for approval before Hon’ble BIFR.

The package includes interest concessions, re-schedulement of Term loans and Conversion of portion of Term loans into Equity and 1% Cumulative Redeemable Preference Shares (CRPS). The Company has settled the dues of HDFC Bank under One-Time Settlement Scheme. The gain on settlement of HDFC Bank’s dues was recognized as Extra-Ordinary Item during the year ended 31st March 2014 in the Profit and Loss Account. The Rehabilitation Scheme was as of 31st March 2014 pending for approval before Hon’ble BIFR.

The Company’s networth turned positive under provisions of Sick Industries Companies Act (SICA) as on 31st March 2014. Accordingly, the Company filed for discharge under the purview of SICA before BIFR. BIFR vide its order dated 4th August 2014 has discharged the Company from the purview of BIFR.

The Accounts of the Company has been prepared on "Going Concern" basis.

Rs. In Crores

Particulars As at As at 31-Mar-15 31-Mar-14

4. CONTINGENT LIABILITIES (TO THE ExTENT NOT PROVIDED FOR)

a Guarantees given by Banks and counter Guaranteed by the Company - -

b On account of Letters of Credit issued by Bankers on behalf of the Company 1.64 0.96

c Claims against Company not acknowledged as debts being petition/ appeals pending before the Assessing Officer/ Commissioner of Income Tax (Appeals). 0.29 0.29

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the opinion that the demands are likely to be deleted and consequently no provision has been made for such demands. The Management believes that the ultimate outcome of these proceedings will not have a material averse effect on the Company’s financial position and results of operations.

d The Banks have extended concessional interest rate for the credit facilities sanctioned to the Company for the period upto 31st March 2015. As per the terms of the Sanction letter, Banks have the right to be recompensated in future for the sacrifice extended.

5. RELATED PARTY TRANSACTIONS a Key Managerial Personnel:

Mr. V.Rajagopal

Mrs. Rama Rajagopal

Mr. Charath Ram Narsimhan

Mr. Vidyuth Rajagopal

b Enterprises under Control or Significant Influence of Key Managerial Personnel:

M/s Indian Terrain Fashions Limited

M/s Celebrity Clothing Limited

M/s Celebrity Connections

6. disclosure AS PER clause 32 OF THE LISTING AGREEMENTS WITH THE STOCK ExCHANGES

Loans and advances in the nature of loans given to Subsidiaries, Associates and Others - -

7. EMPLOYEE BENEFIT PLAN - GRATUITY

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

8. Previous year figures have been regrouped, reworked and reclassified wherever necessary to conform to current year classification.

9. In the opinion of the Management , Current Assets, Loans and Advances have a value of at least equal to the amounts shown in the Balance Sheet, if realized in the due course of the business. The provision for all liabilities is adequate and not in excess of the amount reasonably necessary.


Mar 31, 2014

1 Rights, Preferences and Restrictions attached to each Class of Shares

The Company has two classes of shares:

Equity Shares having a par value of Rs.10/- each with Voting Rights. Each holder of equity shares is entitled to one vote per share 1% Cumulative Redeemable Preference Shares of Rs.10/- each. The cummulative redeemable preference shares carry a dividend of 1% p.a. and will be redeemed in 6 equal annual instalments starting with the financial year 2022.

Charge on Inventories in the form of Raw Materials, Stock In Process and Finished Goods, Receivables and other current assets of the Company both present and future for the loans in the form of Export Packing Credit, Cash Credit, Export Bills Discounting facility extended by State Bank of India.

Loans from State Bank of India is further secured by Pledge of Promoters Shares in the Company to an extent of 53,52,516 Equity Shares and Personal Guarantee by Promoters.

The Company has not received any Memorandum (as required to be filed by the Supplier with the notified authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status as on 31st March 2014 as Micro, Small or Medium Enterprises (MSME). Consequenty the amount payable to these enterprises during the year is Rs. NIL.

Duty Drawback and Service Tax receivable amounting to Rs. 0.09 crores and 0.43 crores respectively have been outstanding for a period exceeding 12 months and accrodingly has been grouped under Other Non Current Assets.

The Company had let out one of it''s properties on lease to Deepam Hospital Ltd with effect from April 01, 2010. The Lessee has since then been in continuous default on it''s Lease rental obligations. The gross receivables pending from Deepam Hospitals Limited as at March 31, 2014 amounted to Rs. 2.33 Crores.

The Lease agreement entered into with Deepam Hospital Limited expired on January 31, 2013 and the Company has not renewed the lease with Deepam Hospitals Limited. A termination notice was served on Deepam Hospitals Limited and the Company has also taken legal recoures to recover it''s dues from Deepam Hospitals Private Limited.

Deepam Hospitals Limited is currently occupying the Company''s premises in an unauthorised manner. The Security Deposit of Rs. 1.50 crs received from Deepam Hospitals at the time of entering into lease agreement has been adjusted against the receivables outstanding and the net receivable of Rs. 0.83 crores has been included under "Others".

Auditors'' Remuneration includes Rs. 4.50 lakhs (PY-Rs. 4.50 lakhs) against Statutory Audit, Rs. 0.70 lakhs (PY-Rs. 0.70 lakhs) against Tax Audit and Rs. 1.24 lakhs (PY - Rs. NIL) against Cost Audit An amount of Rs. 5,72,593/- (PY - Rs. 223,571/-) was paid to the Auditors towards Certification, Out-of-Pocket Expenses and for representation in Taxation matters and the same is classified under Consultancy Charges

Directors Sitting Fee of Rs. 0.40 lakhs (PY - Rs. 0.35 lakhs) is grouped under Other Miscellaneous Expenses

**nterest on Term loans is net off TUF Interest subsidy of Rs. 0.53 crs (Previous Year Rs. NIL) received during the year During the Financial Year 2012-13, the excess interest charged to Profit and Loss Account for the period April 2011-March 2012 of Rs. 4.71 crs on SBI Term loans was reversed in accordance with the Sanction letter dated 16th November 2012

2 EROSION OF NETWORTH, DECLARATION AS SICK UNIT AND STATUS OF DEBT REHABILITATION SCHEME

The Company''s networth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company filed reference with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR appointed State Bank of India as the Operating Agency (OA) and issued directions to submit a Rehabilitation Scheme for the revival of the Company as per Section 18 of SICA. State Bank of India (SBI), the OA has sanctioned a re-structuring package for the Company vide its letter dated 16th November 2012. The OA has submitted the same for approval before Hon''ble BIFR.

The package includes interest concessions, re-schedulement of Term loans and Conversion of portion of Term loans into Equity and 1% Cumulative Redeemable Preference Shares (CRPS). The Company has settled the dues of HDFC Bank under One-Time Settlement Scheme.

The gain on settlement of HDFC Bank''s dues has been recognised as Extra-Ordinary Item during the year in the Profit and Loss Account. The Rehabilitation Scheme is pending for approval before Hon''ble BIFR.

The Company''s networth has turned positive under provisions of Sick Industries Companies Act (SICA) as on 31st March 2014.

The Accounts of the Company has been prepared on "Going Concern" basis.

The Company is exploring various strategic initiatives and the Management is confident of being able to continue and operate the business and bring positive results in future.

3 CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR)

a Gurantees given by Banks and Counter Guaranteed by the Company - -

b On account of Letters of Credit issued by Bankers on behalf of the Company 0.96 1.05

c Claims against Company not acknowledged as debts, being Income Tax demand pending before Commissioner of Income Tax (Appeals) and Income Tax Appellate tribunal. 0.29 0.69

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the Opinion that the demands are likely to be deleted, and consequently no provision has been made for such demands.

d The Banks have extended concessional interest rate for the Credit facilities sanctioned to the Company for the period upto 31st March 2014. As per the terms of the Sanction letter, Banks have the right of recompense in future for the sacrifice extended.


Mar 31, 2013

1 EROSION OF NETWORTH, DECLARATION AS SICK UNIT AND STATUS OF DEBT REHABILITATION SCHEME The Company''s networth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company fled referencewith the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR appointed State Bank of India as the Operating Agency (OA) and issued directions to submit a Rehabilitation Scheme for the revival of the Company as per Section 18 of SICA. State Bank of India (SBI), the OA has sanctioned a re-structuring package for the Company vide its letter dated 16th November 2012. The OA has submitted the same for approval before Hon''ble BIFR. The package includes interest concessions, re-schedulement of Term loans and Conversion of portion of Term loans into Equity and 1% Cumulative Redeemable Preference Shares (CRPS). The approval from HDFC Bank for the package is pending. SBI is yet to convert the portion of Term loans into Equity and 1% CRPS.

The Accounts of the Company have been prepared on the basis of ''Going Concern Concept'' despite negative net worth as on 31st March 2013 in view of the various strategic initiatives that the company is exploring and also considering the Rehabiliation Scheme submitted to the Banks / BIFR. The Management is confdent of being able to continue and operate the business and bring positive results in future.

2 DISCLOSURE AS PER CLAUSE 32 OF THE LISTING AGREEMENTS WITH THE STOCK EXCHANGES Loans and advances in the nature of Loans given to Subsidiaries, Associates and Others

3. EMPLOYEE BENEFIT PLAN - GRATUITY

The employees'' gratuity fund scheme managed by a Trust is a defned beneft plan. The present value of obligation is determined based on the actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee beneft entitlement and measures each unit separately to build up the fnal obligation.


Mar 31, 2012

Collateral Securities:

First Charge to State Bank of India and Second Charge on to HDFC Bank for Term loans over the following assets:

Entire Plant and Machinery - present and future

Land and building situated at 107-A, GST Road, Chrompet, Chennai

Factory land and building situated at Thiruvanchery, Agaram Road, Tambaram Taluk, Chennai Factory land and building situated at 72/1, Poonamalle Bypass Road, Poonamalle, Chennai

Leasehold rights of land and Factory building situated at plot SDF - IV, 3rd Main Road, MEPZ-SEZ, Tambaram,Chennai - 600045 Leasehold rights of land situated at C2, 3rd Main Road, MEPZ-SEZ, Tambaram, Chennai - 600045 Building situated at C2, 3rd Main Road, MEPZ-SEZ, Tambaram, Chennai - 600 045

Loans from State Bank of India is further secured by Pledge of Promoters Shares in the Company to an extent of 53,52,516 Equity Shares and Personal Guarantee by Promoters. Further the Lease rental receivables from the property let out on lease are assigned to Term loans of State Bank of India (SBI).

Loans from HDFC Bank is further secured by Pledge of Promoters Shares in the Company to an extent of 8,00,000 Equity Shares and Personal Guarantee is limited to an extent of 8,00,000 Equity Shares in the Company.

Both the Term loans obligations and Interest Commitments thereon have been met in full to SBI in accordance with the Terms and Conditions of the Sanction letter. However the Company has defaulted in repayments of Term loans amounting to Rs.0.22 crs (Previous Year - NIL) and Interest commitments amounting to Rs.1.55 crs with respect to HDFC Bank. The term loan repayment is pending since February 2012, while interest remains unpaid The Company has submitted a Draft Rehabilitation Proposal with Cut-off-Date as 31st March 2011 seeking certain reliefs / concessions in since January 2011. Term loans / interest rates and the same is pending for approval from Appropriate Authorities.

The Company is one among the Petitioners challenging the levy of Service Tax on Rent of Immovable Properties. The total Service Tax Liability on renting of Immovable Properties is Rs. 35,09,477/- upto September 30, 2011.The Supreme Court vide its Order dated 4th August 2011 has directed the petitioners to remit 50% of the disputed liability up to September 30,2011 in three installments and to furnish a Bank Guarantee / Solvency Certificate for the balance 50%. Further it ordered for payment of Service Tax on Rentals commencing 1st October 2011.The Company has accordingly paid 50% of the Disputed Service Tax of Rs.17,54,739/- and has given a Bank Guarantee for the balance amount. The Company has provided for the Service Tax Amounts in the books as a matter of prudence and has started remitting Service Tax on lease rentals from 1st October 2011.

1 EROSION OF NETWORTH AND DECLARATION AS SICK UNIT

The Company's net worth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company filed reference with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR issued directions to the lenders and to the Company to submit a Rehabilitation Scheme as per Section 18 of SICA.

The Company has submitted its Draft Rehabilitation Proposal to the Operating Agency, State Bank of India and is awaiting the sanction of the Second Re-structuring Package.

The Accounts of the Company have been prepared on the basis of 'Going Concern Concept' despite negative net worth as on 31st March 2012 in view of the various strategic initiatives that the company is exploring and also considering the Rehabilitation Scheme submitted to the Banks / BIFR. The Management is confident of being able to continue and operate the business and bring positive results in future.

2 CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR)

a Guarantees given by Banks and Counter Guaranteed by the Company 0.18 -

b On account of Letters of Credit issued by Bankers on behalf of the Company 0.49 5.72

c Claims against Company not acknowledged as debts, being Income Tax demand pending before

Commissioner of Income Tax (Appeals) and Income Tax Appellate tribunal. Of this a sum Rs.13.50 0.77 1.24

lakhs has been Paid - categorized under Advance Income Tax.

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the Opinion that the demands are likely to be deleted, and consequently no provision has been made for such demands.

d The Banks have extended concessional interest rate for the Credit facilities sanctioned to the Company for the period upto 31st March 2012. As per the terms of the Sanction letter, Banks have the right of recompense in future for the sacrifice extended.

3 RELATED PARTY TRANSACTIONS a Key Managerial Personnel:

Mr. V.Rajagopal Mrs. Rama Rajagopal Mr.S.Suryanarayanan

b Enterprises under Control or Significant Influence of Key Managerial Personnel:

M/s Indian Terrain Fashions Limited M/s Celebrity Clothing Limited M/s Celebrity Connections

b No amount is paid / payable by the company U/s 441 A of the Companies Act,1956 (cess on turnover) since the rules specifying the manner in which the cess shall be paid has not been notified yet by the Central Government.

c During the Year ended 31st March 2012, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Company for the preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the Current Year.


Mar 31, 2010

1 Contingent Liabilities not provided for:

Rs. In lakhs 31- Mar-10 31- Mar-09 Guarantees given by Banks and are counter guaranteed by the Company. 2.15 2.00

On account of Letters of credit issued by Bankers on behalf of the Company 2,041.16 1,039.21

Claims against Company not acknowledged as debts, being Income Tax demand pending before Commissioner of Income Tax (Appeals) and Income Tax Appellate tribunal. Of this a sum Rs.34.00 lakhs has been paid / Adjusted - categorized under Advance Income Tax. 169.12 162.12

In Service Tax liability on commercial places taken on lease, in view of the legal opinion that there is no liability to pay Service Tax consequent to Delhi High Court pronouncement on identical issue, Service Tax has not been provided. 103.36

The Delhi High Court vide its judgment dated 18th May 2010 in petition fled by one of the Retailers has restrained the Tax Authorities fromrecovering Service Tax on the act of renting of immovable properties on the basis that there is no value addition in this regard. The Company is in the process of fling a Stay petition for levy of Service Tax on renting of immovable properties.

2 The Company has not received any information/memorandum (as required to be fled by the supplier with the notifed authority under the Micro, Small and Medium Enterprises Development Act,2006) claiming their status as on 31st March 2010 as Micro, Small or Medium Enterprises. Consequently the amount paid / payable to such parties during the year is disclosed as Nil.

3 No amount is paid / payable by the company U/s 441 A of the Companies Act,1956 (cess on turnover) since the rules specifying the manner in which the cess shall be paid has not been notifed yet by the Central Government.

4 Managerial Remuneration:

The Shareholders have approved the payment of minimum remuneration under Section 198(4) read with Section II of Part II of Schedule XIII of the Companies Act, 1956 to the Whole-Time Directors of the Company for a period of three years from 1st April 2006 through Postal Ballot dated 23rd March 2007. The Board of Directors at their meeting held on 13th December 2007 have approved to reduce the remuneration payable to Whole Time Directors with effect from 1st January 2008. Accordingly a Special resolution was made and was approved in the Annual General Meeting held on 28th August, 2008.

5 Business Re-Structuring Proposal

The Company has implemented various initiatives to improve on the effciencies and control the losses. The Company has recorded positive EBITDA for the fnancial year. There are strong signals of revival. The Company has basically two major divisions - "Exports" and "Domestic". "Exports" is further sub-divided into "Tops" and "Bottoms" Divisions and "Domestic" is operating under the brand “Indian Terrain”. The Company has a Business Re-structuring proposal whereby the respective divisions could achieve their full potential and lead to maximization of Enterprise Value. The Market dynamics and key drivers, core competencies required and asset profle of these divisions are quite distinct. The industry outlook for Exports and Domestic Divisions are also different. The Company proposes to demerge the Domestic Division into Indian Terrain Fashions Limited and transfer Bottoms Division to Celebrity Clothing Limited through Slump sale. Indian Terrain Fashions Limited and Celebrity Clothing Limited were incorporated during September 2009 as subsidiaries of the Company. Upon Demerger, Indian Terrain Fashions Limited would be listed in the National Stock Exchange of India Limited and Bombay Stock Exchange of India Limited and Celebrity Clothing Limited will remain unlisted and 100% subsidiary of Celebrity Fashions Limited. Further, the Company proposes to write off the accumulated losses against the existing reserves under section 78 and 100 to 103 of the Companies Act,1956 and revalue the immovable properties. The Company has obtained the in-principal approval from Stock Exchanges For the re-structuring and has fled the Application in High Court of Madras during April 2010.

The Court has ordered for a meeting of the Shareholders of the Company on 9th June 2010. As at the year end, the accumulated losses have resulted in substantial crosion of networth of the Company. However inview of the various strategic initiatives that the company is exploring the Company is confdent of being able to continue and operate the business on a "Going Concern" basis and accordingly the fnancial statements have been prepared on the same lines.

6 Defined Benefit Plan-Gratuity

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

7 Disclosure in respect of Related Parties pursuant to Accounting Standard 18

a Key Managerial Personnel:

Mr. V.Rajagopal Mrs. Rama Rajagopal Mr. S. Surya Narayanan

b Relatives of Key Managerial Personnel:

Mr. Suresh Rajagopal Mr. Vidyuth Rajagopal

c Enterprises under Control or Signifcant Infuence of Key Managerial Personnel:

M/s Celebrity Connections M/s Celebrity Clothing Limited M/s Indian Terrain Fashions Limited

8 Previous Years figures have been regrouped, rearranged and reclassifed whenever necessary.

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