Notes to Accounts of Garden Silk Mills Ltd.

Mar 31, 2018

A. Corporate Information

Garden Silk Mills Limited (the ‘Company’) is domiciled in India.The Company’s registered office is at Tulsi Krupa Arcade, Puna-Kumbharia Road, Dumbhal, Surat-395010. Garden Silk Mills Ltd. is one of India’s leading man-made fibre-based textile companies. It is a vertically integrated manufacturer of a wide range of Polyester Chips, Polyester Filament Yarns (PFY), Preparatory Yarns, Woven (Grey) Fabric as well as Dyed and Printed Sarees and Dress Materials.

B. Critical Accounting Judgements and Key Sources of Estimation Uncertainty

In the application of the Company’s accounting policies, which are described in Note “B”, the Management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

b.1. Impairment of Property, Plant and Equipment

Determining whether property, plant and equipment is impaired requires an estimation of the value in use of the cash-generating unit. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. When the actual future cash flows are less than expected, a material impairment loss may arise.

B.2. Useful Lives of Property, Plant and Equipment

The Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. During the current year, the directors have determined that no changes are required to the useful lives of assets.

B.3. Discount Rate - Defined Benefit Obligation

The Company’s defined benefit obligation is discounted at a rate set by reference to market yields at the end of the reporting period on high quality corporate bonds. Significant judgement is required when setting the criteria for bonds to be included in the population from which the yield curve is derived. The most significant criteria considered for the selection of bonds include the issue size of the corporate bonds, quality of the bonds and the identification of outliers which are excluded.

B.4. Provision for Litigations and Contingencies

The provision for litigations and contingencies are determined based on evaluation made by the management of the present obligation arising from past events the settlement of which is expected to result in outflow of resources embodying economic benefits, which involves judgements around estimating the ultimate outcome of such past events and measurement of the obligation amount. Due to the judgements involved in such estimations the provisions are sensitive to the actual outcome in future periods.

C. Recent Indian Accounting Standards (Ind AS)

Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs which the Group has not applied as they are effectivefor annual periods beginning on or after April 1, 2018:

Ind AS 115 Revenue from Contracts with Customers Ind AS 21 The Effect of Changes in Foreign Exchange Rates Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising fromcontracts with customers.

Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 - Revenue,

Ind AS 11 - Construction Contracts when it becomes effective.

The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goodsor services to customers in an amount that reflects the consideration to which the entity expects to be entitled inexchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:

Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligation in contract Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’of the goods or services underlying the particular performance obligation is transferred to the customer.

The Company is currently evaluating the requirements of Ind AS 115 and its impact on the financial statements.

Ind AS 21 - The Effect of Changes in Foreign Exchange Rates

The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose ofdetermining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferredincome liability. If there are multiple payments or receipts in advance, a date of transaction is established for eachpayment or receipt. The Group is evaluating the impact of this amendment on its financial statements.

D. First Time Adoption of Ind AS - Mandatory Exceptions and Optional Exemptions:

The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets and liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to certain exceptions and certain optional exemptions availed by the company as detailed below:

D.1. De-recognition of Financial Assets and Financial Liabilities

The Company has applied the de-recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 1, 2016 (the transition date).

D.2. Classification of Debt Instruments

The Company has determined that classification of debt instruments in terms of whether they meet the amortized cost criteria or the fair value through profit or loss criteria based on facts and circumstances that existed as of the transition date.

D.3. Deemed Cost for Property, Plant and Equipment and Intangible Assets

The Company has elected to continue with the carrying value of all its plant and equipment assets recognized as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

D.4. Impairment of Financial Assets

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there has been significant increase in credit risk since the initial recognition, as permitted by Ind AS 101.

Additional Information to Financial Statements and Disclosures under Accounting Standards:

1. Contingent Liabilities:

(i) Disputed liabilities for Excise Duty not acknowledged as debts Rs. 8646.06Lakhs. (31 March 2017 : Rs. 7217.84, 01 April 2016 : Rs. 3470.23 Lakhs)

(ii) Disputed liabilities for Income - Tax not acknowledged as debts Rs. NIL (31 March 2017 : Rs. NIL, 01 April 2016 : Rs. 133.13 Lakhs)

(iii) Disputed liabilities for Gujarat Sales Tax not acknowledged as debts Rs. NIL (31 March 2017 : Rs. 58.18, 01 April 2016 : Rs. 70.51 Lakhs)

(iv) Unpaid dividend on 0.001% Optionally Convertible Cumulative Preference shares(now converted into equity shares) not acknowledged as debts Rs.0.01 Lakhs. (31 March 2017 : Rs.0.01, 01 April 2016 : Rs.0.01 Lakhs)

(v) Counter-guarantees to Banks against guarantees issued to third parties Rs.0.50 Lakhs. (31 March 2017 : Rs.0.50, 01 April 2016 : Rs.0.50 Lakhs)

(vi) Custom Duty on Raw materials Imported under advance license againt which export obligation is to be fulfilled is Rs. NIL (31 March 2017 : Rs. 3.72, 01 April 2016 : Rs. 143.69 Lakhs)

2. Capital Management:

The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may issue new shares or sell assets to reduce debt. The capital structure of the Company consists of debt and total equity of the Company.

The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, External-commercial borrowings and short-term borrowings. The Company’s policy is aimed at combination of short-term and long-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

The Company is not subject to any externally imposed capital requirements.

Total debt includes all long and short term debts as disclosed in notes 12 to the financial statements.

The Gearing Ratio at the end of the reporting period was as follows:

3. Financial Instruments:

3.1 Categories of Financial Instruments and Fair Value Measurement:

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the Ind AS 113 - Fair Value Measurement. An explanation of each level is as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs for the asset or liability.

Valuation Technique -

Fair value of forward contract is computed -

i. Spot Reference of original forward deal is compared with Spot Rate by FEDAI as at the reporting date.

ii. Residual Forward Points of original forward deal is compared with prevailing market forward points for the residual tenor as at the reporting date

iii. Gain/Loss (at an undiscounted amount) is computed as at reporting date.

iv. Depending upon the tenor remaining as at the reporting date appropriate discounting factor is used to compute present value of such gain/loss.

v. The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade receivables, current account balances with group companies and joint venture, trade payables and unpaid dividends at carrying value because their carrying amounts are a reasonable approximation of the fair values due to their short term nature.

B. Income, Expense, Gains or Losses on Financial Instruments

Interest income and expesnes, gains or losses recognsied on financial asstes and liabilities in the statement of Profit and Loss are as follows:

3.2 Financial Risk Management Framework:

The Company is exposed primarily to market risk, credit risk and liquidity risk which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates and other market changes. The Company’s exposure to market risk is primarily on account of foreign currency exchange rate risk.

Foreign Currency Risk Management:

The Company undertakes transactions denominated in foreign currencies and consequently, exposures to exchange rate fluctuations arise. Exposure to currency risk relates primarily to the company’s operating activities and borrowings when transactions are denominated in a different currency from the Company’s functional currency.

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using forward contracts in line with its risk management policies.

The following tables demonstrate the sensitivity to a reasonably possible change in USD,Euro and JPY exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities. The Company’s exposure to other foreign currencies is not material.

Foreign Currency Exposure:

The Company uses plain forward contracts for hedging purpose. Foreign currency Loans / ECB which are covered by full currency & interest rate swap. All the contracts are for hedging purpose only and not for any speculative purpose.

The Company has entered into forward contracts to hedge the foreign currency risk of firm commitments / highly probable forecast transactions.

The carrying amount of company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Interest Rate Risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s variable rate short-term debt obligations and external commercial borrowings.

Interest Rate Sensitivity:

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

Credit Risk:

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Outstanding customer receivables are regularly monitored. The Company maintains its cash and cash equivalents and deposits with banks having good reputation and high quality credit ratings.

Liquidity Risk:

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

4. Segment Reporting:

The Company has only one reportable segment viz. ‘Textiles’ as per Ind As 108 operating segments.Further, Sale of Product can be bifurcated between Domestic and Export segment as below:

5. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund (IEPF) as at March 31, 2018.

6. Contribution to political parties during the year 2017-18 is Rs. NIL (previous year Rs. NIL).

7. Figures for the previous year have been regrouped/reclassified wherever necessary.

8.1 Effect of Ind AS Adoption on the Statement of Cash Flows for the year ended March 31, 2017

There was no significant items between cash flow prepared under IGAAP and those prepared under Ind AS.

Notes:

1. Mark to Market of Forward Contracts instead of Amortisation of Premium: As per I-GAAP the premium or discount arising at the inception of the contract was amortised as expense or income over the life of the contract, however as per Ind-AS forward contract is marked to market through statement of profit and loss.

2. Unwinding of Interest for Interest free loan to Subsidiary: As per I-GAAP transaction was recorded at its transaction price, however as per Ind AS interest free loan given to subsidiary is required to be fair valued. Difference between fair value and transaction price is treated as additional investment in a subsidiary.

3. Deferral of Revenue as per Ind AS 18: In line with requirements of Ind AS 18 certain revenue was deferred.

4. Re-measurements of Defined Benefit Obligations: Under previous GAAP, actuarial gains and losses were recognized in statement of profit and loss, however under Ind AS, actuarial gains and losses forming part of remeasurement of the net defined benefit plan asset/obligation are recognized in the Other Comprehensive Income. Being reclassification from statement of profit and loss to other comprehensive income it will not have any impact on total comprehensive income or equity as such.

5. Expected Credit Loss in Trade Receivables: As per I-GAAP provision against trade receivable was made on case-to-case assessment of parties. As per Ind AS 109 provision is made against trade receivables as per expected credit loss model.

6. FV of Equity Investments Classified in OCI: Under I-GAAP current investments were carried at cost less diminution, if any, and long-term investments at cost less permanent diminution, if any. As per Ind AS all investments except investment in group company have been fair valued in accordance with Ind AS 109.

7. Previous year I-GAAP figures have been re-grouped/re-classified to make them comparable with presentation as per Ind AS.

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Mar 31, 2016

1. As per the terms of issue and in accordance with the provisions of SEBI (ICDR) Regulation, 2009 and consequent to the rights of conversion exercised by the OCCPS holders, the Board of Directors of the Company at its meeting held on 18th March, 2015, allotted 1949860 equity shares of Rs. 10/- each at a premium of? 25.90 per share in favour of Praful Amichand Shah, Partner of M/s. Isha Enterprises, the promoter and/or promoter group of the Company, against 1487147, 0.001% OCCPS held by the promoters at the beginning of the year,

2. Rights, Preferences and Restrictions attached to Shares Equity Shares:

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

3. As per the terms of issue and in accordance with the provisions of SEBI (ICDR) Regulation, 2009, consequent to the rights of conversion exercised by the OCCPS holders, the Board of Directors of the Company at its meeting held on 18th March 2015 allotted 1949860 equity shares of Rs.10/- each at a premium of Rs.25.90 per share in favour of Praful Amichand Shah, Partner of M/s. Isha Enterprises, the promoter and/or promoter group of the Company.

4. Note on Secured Long-Term Borrowings:

a) Term Loans from Banks and Financial Institutions are secured by first mortgage on pari passu basis on all immovable properties (except those specifically excluded by lenders, of Rupee Term Loans as per Note (b) below), both present and future and first charge by way of hypothecation of all movables (except book debts) both present and future subject to prior charges created/to be created in favor of Bankers for working capital borrowings.

b) Of the Rupee Term Loans from banks:

i) Loans from Bank of India to the extent of Rs.212.29 Lacs (Previous year Rs.212.50 Lacs) are secured by hypothecation of specific machinery of Fully Drawn Yarn (FDY) Project at Jolwa.

ii) Loans from Bank of India to the extent of Rs.1012.61 Lacs (Previous year Rs.1012.61 Lacs) are secured by hypothecation of specific Building and machinery of Texturising plant and Draw Twisting plant at Jolwa.

iii) Term loans from ICICI Bank, Kotak Mahindra Prime Limited and Axis Bank Ltd aggregating to Rs.111.95 Lacs (Previous year Rs.107.69 Lacs) under vehicle finance scheme are secured by an exclusive charge by way of hypothecation of specific vehicles purchased under the arrangements.

iv) Housing Loan of Rs. 472.97 Lacs (Previous year Rs. 565.14 Lacs) from ICICI Bank is secured by hypothecation of residential fiat at Mumbai.

v) Loans from Corporation Bank to the extent of Rs. 3094.00 Lacs (Previous Year Rs. 3094.00 Lacs) are secured by hypothecation of movable fixed assets of Specific Continuous Polymerization Project at Jolwa.

vi) Loan from Union Bank of India to the extent of Rs.4461.40 Lacs (Previous Year Rs.4461.40 Lacs) is secured by hypothecation of specific machinery of Coal Based Thermal Power Project at Jolwa.

5. The Company has unabsorbed depreciation and carried forward losses under Tax laws. In absence of virtual certainty of sufficient future taxable income, net deferred tax assets have not been recognized considering prudence in accordance with Accounting Standard (AS) 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.

6. The Company has entered into a Long Term Advance Payment and Supply Agreement (ASPA) with one of its export customers (Refer Note 30(i)&(ii)). Under the ASPA, the Company has received Long Term Advances against Exports to the tune of USD 64.91 Million which will be adjusted against exports to that Customer over 9 years.

7. Cash Credit facilities are part of Working Capital facilities availed from Consortium of Banks and are secured with hypothecation by way of first pari passu charge on all company''s current assets and by way of second pari passu charge on immovable and all movable properties (excluding current assets) of the Company. Rate of Interest on Cash Credit facilities ranged between 10.90% to 11.40%

8. Buyers'' Credit is secured by Letter Of Comfort (LOC) / Undertaking (LOU) forming part of Working Capital facilities issued by the banks. Rate of Interest on Buyers'' Credit facility is 3M Libor 45 bps above the Libor at the relevant time.

9. The Company had recognized liability based on substantial degree of estimation for excise duty payable on clearance of goods lying in stock as on 31st March, 2015 of Rs.1101.67 Lacs as per the estimated pattern of dispatches. On the analogy, provision for such liability works out to be Rs.756.06 Lacs as on 31st March, 2016. Actual outflow is expected in next financial year.

Notes:

10. Buildings include Rs.40.59 Lacs (Previous Year Rs.40.59 Lacs) being cost of shares relating to ownership flat in a Co-Operative Society.

11. Plant & Machineries include foreign currency fluctuation capitalized during the year aggregating to Rs.116.56 Lacs (Previous Year Rs.188.07 Lacs) in accordance with para 46A of Accounting Standards 11 relating to ''The effects of changes in Foreign Exchange Rates''.

12. During the year, 72337 Sq. Mtrs Land at Vareli Shown as stock in trade (Property under Development) of Rs.478.36 lacs has been converted into Fixed Assets.

13. Consequent to the applicability of the Companies Act, 2013 with effect from 1st April, 2014, during the year ended 31st March, 2015, the depreciation is required to be provided as per the useful life specified in the Act or as re-assessed by the Company. Consequently, the Company having followed useful life specification as per Schedule II to the Companies Act, 2013, resultant depreciation for the year ended 31st March, 2016, is lower by Rs.2012.20 Lacs . Carrying value of the assets whose useful life is already exhausted as on 1st April, 2014, amounting to Rs.272.93 Lacs has been adjusted in the opening balance of Retained Earnings.

14. During the year, the Central Government vide its letter dated 28th April, 2015, granted its approval for payment of total remuneration @ Rs.1,43,71,000/- (Rupees One Crore Forty-three Lacs Seventy -one Thousand only) per annum to Shri Praful A. Shah for the period from 01/04/2014 to 31/08/2016.

15. Employee Benefits as per AS 15:

Brief description : The type of defined benefit plans is as follows

Gratuity :

The employee gratuity fund is managed by "Garden Silk Mills - Employees Gratuity Fund". The present value of obligation is determined based on actuarial valuation. The liability is fully funded.

Leave Encashment:

The present value of obligation for Leave encashment is determined based on actuarial valuation and is unfunded.

16. Foreign Currency Exposure

The Company uses plain forward contracts for hedging purpose. Foreign currency Loans / ECB which are covered by full currency & interest rate swap. All the contracts are for hedging purpose only and not for any speculative purpose.

Note 17 : Earnings per share (EPS)

Earning Per Share (EPS) computed in accordance with Accounting Standard 20 " Earning per Share" as notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014

17.1 Basic earnings per share is calculated by dividing the net profit / (loss) for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit / (loss) for the year attributable to equity shareholders and the weighted average numbers of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares (i.e. Optionally convertible Cumulative Preference shares)

Since, resultant EPS due to dilution decreased net loss per share as compared to basic earning per share, both basic and diluted EPS are considered at basic earnings.

Note 18: Related Party Disclosures

As per Accounting Standard 18 (AS-18) ''Related Party Disclosures'', as notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014, the disclosures of transactions with the related parties as defined in As -18 are given below:

Note : Figures in bracket represent Previous Year''s amount.

Note 19 : Contingent Liabilities and Commitments

1 Contingent Liabilities

(i) Disputed liabilities for Excise Duty not acknowledged as debts Rs.3470.23 Lacs (Previous Year Rs.18987.14 Lacs).

(ii) Disputed liabilities for Income - Tax not acknowledged as debts Rs.133.13 Lacs (Previous Year Rs. Nil).

(iii) Disputed liabilities for Gujarat Sales Tax not acknowledged as debts Rs.70.51 Lacs (Previous Year'' 70.51 Lacs).

(iv) Counter-guarantees to Banks against guarantees issued to third parties Rs.0.50 Lacs (Previous year Rs.23.75Lacs)

(v) Foreign bills Discounted with Banks Rs.74.82 Lacs (Previous Year Rs.4361.81 Lacs)

(vi) Unpaid dividend on 0.001% Optionally Convertible Cumulative Preference shares (now converted into equity shares) not acknowledged as debts Rs.0.01 Lacs (Previous year Rs. 0.01 Lacs)

(vii) Custom Duty on Raw materials Imported under advance license against which export obligation is to be fulfilled is Rs.143.69 lacs (Previous year Nil)

Note 20:

There being no business activity in Garden Exim Pte. Ltd. since its incorporation, the Company submitted its application for winding up / striking off its name from the records of Accounting and Corporate Regulatory Authority (ACRA), Singapore, the regulator. The said application has been approved by the regulator w.e.f. 22nd March, 2016.

Note 21 :

The Company has only one reportable segment viz. ''Textiles'' as per Accounting Standard (AS) 17 of The Institute of Chartered Accountants of India (ICAI).

Note 22 :

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

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Mar 31, 2015

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

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

The Company had two class of shares referred to as Equity Shares and Optionally Convertible Cumulative Preference Shares (OCCPS) at the begining of the year. During the year, the OCCPs, have been converted in to equity shares as referred in note 2.2 above.

"OCCPS holder had the option to apply for and obtain allotment, from time to time, not later than 18 (eighteen) months from the date of allotment of OCCPS, of such number of fully paid-up equity shares of the face value of Rs. 10 each ("Equity Shares") against conversion ofthe OCCPS in such manner and on such price, terms and conditions as determined by the Board, such that the total issue size ofthe preferential allotment does not exceed an aggregate value ofRs. 7.00 crores (including, premium if any, on such Equity Shares), in accordance with the provisions of Chapter VII ofthe SEBI (ICDR) Regulations or other provisions ofthe law as may be prevailing at that time.

2.1 During the financial year 2013-14, the Company had issued and allotted 0.001% Optionally Convertible Cumulative Preference Shares (OCCPS) of Rs. 10 each aggregating to Rs. 7.00 crores in accordance with the SEBI (ICDR) Regulations, 2009, as amended, in favour of Promoters on preferential basis as part of the arrangement with the lenders to realign debts repayment schedules.

As per the terms of issue and in accordance with the provisions of SEBI (ICDR) Regulation, 2009, consequent to the rights of conversion exercised by the OCCPS holders, the Board of Directors of the Company at its meeting held on 18th March 2015 allotted 1949860 equity shares ofRs. 10/- each at a premium of Rs. 25.90 per share in favour of Praful Amichand Shah, Partner of M/s. Isha Enterprises, the promoter and/or promoter group of the Company.

3.1 Note on Secured Long-Term Borrowings:

a) Term Loans from Banks and Financial Institutions are secured by first mortgage on pari passu basis on all immovable properties (except those specifically excluded by lenders, of Rupee Term Loans as per Note (b) below), both present and future and first charge by way of hypothecation of all movables (except book debts) both present and future subject to prior charges created/to be created in favor of Bankers for working capital borrowings.

b) Of the Rupee Term Loans from banks:

i) Loans from Bank of India to the extent of Rs. 212.50 Lacs (Previous year Rs. 250.00 Lacs) are secured by hypothecation of specific machinery of Fully Drawn Yarn (FDY) Project at Jolwa.

ii) Loans from Bank of India to the extent of Rs. 1012.61 Lacs (Previous yearRs. 1191.11 Lacs) are secured by hypothecation of specific Building and machinery ofTexturising plant and Draw Twisting plant at Jolwa.

iii) Term loans from ICICI Bank, Kotak Mahindra Prime Limited and Axis Bank Ltd aggregating to Rs. 107.69 Lacs (Previous yearRs. 116.03 Lacs) under vehicle finance scheme are secured by an exclusive charge by way of hypothecation of specific vehicles purchased under the arrangements.

iv) Housing Loan ofRs. 565.14 Lacs (Previous yearRs. 643.21 Lacs) from ICICI Bank is secured by hypothecation of residential flat at Mumbai.

v) Loans from Corporation Bank to the extent ofRs. 3094.00 Lacs (Previous YearRs. 3640.00 Lacs) are secured by hypothecation of movable fixed assets of Specific Continuous Polymerisation Project at Jolwa.

vi) Loan from Union Bank of India to the extent ofRs. 4461.40 Lacs (Previous YearRs. 5248.90 Lacs) is secured by hypothecation of specific machinery of Coal Based Thermal Power Project at Jolwa.

c) As on the Balance Sheet date, part of the payment of interest for the quarter January-March, 2015, aggregating to Rs. 777.33 Lacs (Previous YearRs. 1371.77 Lacs) to various lender banks were unpaid.

4.1 The Company has unabsorbed depreciation and carried forward losses under Tax laws. In absence of virtual certanty of sufficient future taxable income,net deferred tax assets have not been recognised considering prudence in accordance with Accounting Standard (AS) 22 "Acounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.

5.1 The Company has entered into a Long Term Advance Payment and Supply Agreement (ASPA) with one of its export customers (Refer Note 30(i)&(ii)). Under the ASPA, the Company has received Long Term Advances against Exports to the tune of USD 66.48 Million which will be adjusted against exports to that Customer over 10 years.

6.1 Cash Credit facilities are part of Working Capital facilities availed from Consortium of Banks and are secured with hypothecation by way of first pari passu charge on all company''s current assets and by way of second pari passu charge on immovable and all movable properties (excluding current assets) of the Company. Rate of Interest on Cash Credit facilities ranged between 11.50% to 12.00%

6.2 Buyers'' Credit is secured by Letter Of Comfort (LOC) / Undertaking (LOU) forming part of Working Capital facilities issued by the banks. Rate of Interest on Buyers'' Credit facility is 3M Libor 41 bps above the Libor at the relevant time.

7.1 During the year, the Central Government vide its letter dated 31st July, 2014, granted its approval for payment of total remuneration @ Rs. 1,46,91,000 (Rupees One Crore Forty-six Lacs Ninety-one Thousand only) per annum to Shri Praful A. Shah for the period from 01/09/2013 to 31/03/2014. Further the Company has already tiled an application with the Central Government seeking their approval for the remaining tenure i.e. from 01/04/2014 to 31/08/2016. The approval of Central Government for the said period is awaited. However, the actual remuneration paid to Shri Praful A. Shah during the year 2014-15 is in accordance with the provisions of Part II Section II of Schedule V to the Companies Act, 2013. The arrears if any, would be paid on receipt of approval of Central Government.

7.2 Employee Benefits as per AS 15:

Brief description : The type of detined benetit plans is as follows Gratuity:

The employee gratuity fund is managed by "Garden Silk Mills - Employees Gratuity Fund". The present value of obligation is determined based on actuarial valuation. The liability is fully funded.

Leave Encashment:

The present value of obligation for Leave encashment is determined based on actuarial valuation and is unfunded.

Note 8 : Earnings per share (EPS)

Earning Per Share (EPS) computed in accordance with Accounting Standard 20 " Earning per Share" as notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014

8.1 Basic earnings per share is calculated by dividing the net profit / (loss) for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit / (loss) for the year attributable to equity shareholders and the weighted average numbers of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares (i.e. Optionally convertible Cumulative Preference shares)

Since, resultant EPS due to dilution decreased net loss per share as compared to basic earning per share, both basic and diluted EPS are considered at basic earnings.

Nature of relationships Names of related parties

Subsidiary Companies :

GAIA International FZE

Garden Exim Pte Ltd

Group Company :

SuratTextile Mills Limited

Key Management Personnel :

Shri Praful A. Shah

Shri Sanjay S. Shah

Shri Alok P. Shah

Shri Suhail P. Shah

Relatives of Key management personnel and their enterprises where transactions have taken place.

Smt. Shilpa P. Shah

Smt. Sujata V. Parsai

Shri V. K. Parsai

Shri Parthiv S. Shah

Armorax Business Centre Pvt. Ltd.

ComoTextile Pvt. Ltd.

SorrentoTextile Pvt. Ltd.

Amalfi Textile Pvt. Ltd.

Note 9: Contingent Liabilities and Commitments 1 Contingent Liabilities

(i) Disputed liabilities for Excise Duty not acknowledged as debts Rs. 18987.14 Lacs (Previous YearRs. 50264.32 Lacs).

(ii) Disputed liabilities for Gujarat Sales Tax not acknowledged as debts Rs. 70.51 Lacs (Previous YearRs. 70.51 Lacs).

(iii) Counter-guarantees to Banks against guarantees issued to third parties Rs. 23.75 Lacs (Previous yearRs. 24.02 Lacs)

(iv) Foreign bills Discounted with Banks Rs. 4361.81 Lacs (Previous YearRs. 2902.43 Lacs )

(v) Unpaid dividend on 0.001% Optionally Convertible Cumulative Preference shares(now converted into equity shares) not acknowledged as debts Rs. 0.01 Lacs (Previous year Nil)

Note 10 :

The Company has only one reportable segment viz. ''Textiles'' as per Accounting Standard (AS) 17 of The Institute of Chartered Accountants of India (ICAI).

Note 11 :

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

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Mar 31, 2014

1.1 During the year, the Central Government granted its approval for payment of remuneration to Shri Suhail P. Shah for an aggregate amount of Rs. 1,43,51,960/- per annum for a period of 3 years with effect from 01/12/2012 to 30/11/2015. Further the Company has already filed an application with the Central Government seeking their approval for payment of remuneration to Shri Praful A. Shah as approved by shareholders for the period from 1st September, 2013 to 31st August, 2016. However, the actual remuneration paid to Shri Praful A. Shah during the year 2013-14 is in accordance with the provisions of Part II Section II of Schedule V to the Companies Act, 2013. The arrears if any, would be paid on receipt of approval of Central Government.

1.2 Employee Benefits as per AS 15:

Brief description :The type of defined benefit plans is as follows:

Gratuity:

The employee gratuity fund is managed by "Garden Silk Mills - Employees Gratuity Fund". The present value of obligation is determined based on actuarial valuation. The liability is fully funded.

Leave Encashment:

The present value of obligation for Leave encashment is determined based on actuarial valuation and is unfunded.

2.1 Share warrants issued during the year (Refer Note: 4.1 ) being priced at fair value, are not considered as dilutive and hence they are ignored in the computation of diluted earning per share.

Note 3 : Related Party Disclosures

As per Accounting Standard 18, the disclosures of transactions with the Related Parties are as given below: (i) List of related parties with whom transactions have taken place and relationships:

Sr. No. RelationshipsName of Related Party

1 Group Company SuratTextile Mills Limited

2 Key Management Personnel Shri Praful A. Shah

Smt. Shilpa P. Shah*

Shri Sanjay S. Shah

Shri Alok R Shah

Shri Suhail R Shah

3 Relatives of Key management personnel

Smt. Shilpa P. Shah and their enterprises where transactions Smt. Sujata V. Parsai have taken place. Shri V. K. Parsai

Armorax Business Centre Pvt. Ltd. ComoTextile Pvt. Ltd. Sorrento Textile Pvt. Ltd. Amalfi Textile Pvt. Ltd. _Tissue Textile (India) Pvt. Ltd._

* Resigned as member of the Board w.e.f 1st May, 2012.

Note 33 : Contingent Liabilities and Commitments

1. Contingent Liabilities

(i) Disputed liabilities for Excise Duty not acknowledged as debts Rs. 50264.32 Lacs (Previous Year Rs. 41796.84 Lacs),

ii) Disputed liabilities for Gujarat Sales Tax not acknowledged as debtsRs. 70.51 Lacs (Previous YearRs. 70.51 Lacs),

(iii) Counter-guarantees to Banks against guarantees issued to third partiesRs. 24.02 Lacs (Previous yearRs. 61.75 Lacs),

(iv) Foreign bills Discounted with Banks Rs. 2902.43 Lacs (Previous Year Rs. 5545.04 Lacs).

2. Commitments

Estimated amount of contracts pending on Capital Account and not provided for Rs.Nil (Previous Year Rs.Nil)

Note 4: The Company has only one reportable segment viz. Textiles''as per Accounting Standard (AS) 17 of The Institute of Chartered Accountants of India (ICAI).

Note 5: Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification /disclosure.

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Mar 31, 2013

1.1 In view of the inadequacy of profits during the year 2012-13, the remuneration paid to the Whole time Director Shri Suhai P. Shah is subject to the approval of the Central Government as required in accordance with the provisions of Schedule XIII of the Companies Act, 1956. The Central Government had granted its approval for payment of remuneration in case of Shri Suhail P. Shah upto 30th November, 2012. The Company has already filed an application with the Central Government seeking their approval for payment of remuneration to him for the period from 1st December, 2012 to 30th November, 2015.

1.2 Employee Benefits as per AS 15:

Brief description: The type of defined benefit plans is as follows Gratuity:

The employee gratuity fund is managed by "Garden Silk Mills - Employees Gratuity Fund". The present value of obligation is determined based on actuarial valuation. The liability is fully funded.

Leave Encashment:

The present value of obligation for Leave encashment is determined based on actuarial valuation and is unfunded.

2.1 Foreign Currency Exposure

The Company uses plain forward contracts for hedging purpose. Foreign currency Loans / ECB which are covered by full currency and interest rate swap. All the contracts are for hedging purpose only and not for any speculative purpose.

3.1 Share warrants issued during the year (Refer Note: 4.1) being priced at fair value, are not considered as dilutive and hence they are ignored in the computation of diluted earning per share.

Note 4 : Contingent Liabilities and Commitments

1. Contingent Liabilities

(i) Disputed liabilities for Excise Duty not acknowledged as debts Rs.41796.85 Lacs (Previous YearRs. 11818.33 Lacs).

(ii) Disputed liabilities for Gujarat Sales Tax not acknowledged as debts Rs.70.51 Lacs (Previous Year Rs.70.51 Lacs).

(iii) Customs duty on Capital Goods and Raw Materials imported under Advance License/EPCG Scheme, against which export obligation is to be fulfilled isRs. Nil (Previous year Rs.3083.07 Lacs).

(iv) Counter-guarantees to Banks against guarantees issued to third parties Rs.61.75 Lacs (Previous year Rs.61.75 Lacs)

(v) Foreign bills Discounted with BanksRs.5545.04 Lacs (PreviousYearRs.10250.56 Lacs)

2. Commitments

Estimated amount of contracts pending on Capital Accountand not provided forRs. Nil (Previous Year Rs.2912.98 Lacs).

Note 5:

The Company has only one reportable segment viz. Textiles''as per Accounting Standard (AS) 17 ofThe Institute of Chartered Accountants of India (ICAI).

Note 6:

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

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Mar 31, 2012

(A) The rights attached to equity shares of the Company:

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10 each. The holder of equity shares are entitled to one vote pre share. The dividend as and when declared is subject to the approval of the shareholders at the Annual General Meeting.

1.1 Note on Secured Long Term Borrowings:

a) Term Loans from Banks and Financial Institutions are secured by first mortgage on pari passu basis on all immovable properties (except those specifically excluded by lenders, of Rupee Term Loans as per Note (b) below), both present and future and first charge by way of hypothecation of all movables (except book debts) both present and future subject to prior charges created/to be created in favour of Bankers for working capital borrowings.

b) Of the Rupee Term Loans from banks:

i) Loans from Bank of India to the extent of Rs. 250.00 Lacs (Previous year Rs. 500.38 Lacs) are secured by hypothecation of specific machinery of Fully Drawn Yarn (FDY) Project at Jolwa.

ii) Loans from Bank of India to the extent of Rs. 1101.11 Lacs (Previous year Rs. 1763.73 Lacs) are secured by hypothecation of specific Building and machinery of Texturising plant and Draw Twisting plant at Jolwa.

iii) Term loans from ICICI Bank, Kotak Mahindra Prime Limited and Axis Bank Ltd aggregating to Rs. 162.59 Lacs (Previous year Rs. 210.63 Lacs) under vehicle finance scheme are secured by an exclusive charge by way of hypothecation of specific vehicles purchased under the arrangements.

iv) Housing Loan of Rs. 775.58 Lacs (Previous year Rs. 831.89 Lacs) from ICICI Bank is secured by hypothecation of residential flat at Mumbai.

v) Loans from Corporation Bank to the extent of Rs. 3639.99 Lacs (Previous Year Rs. 3639.99 Lacs) are secured by hypothecation of movable fixed assets of Specific Continuous Polymerisation Project at Jolwa.

vi) Loan from Union Bank of India to the extent of Rs. 5233.63 Lacs (Previous Year Rs. 4720.22 Lacs) is secured by hypothecation of specific machinery of Coal Based Thermal Power Project at Jolwa.

c) Of the Foreign Currency Loans from banks, Loans to the extent of Rs. 1216.88 Lacs (Previous year Rs. 1820.33 Lacs) from Landesbank Baden-Wurttemberg, are secured by hypothecation of specific imported machinery of Direct Spinning Project at Jolwa.

d) During the year, the Company has entered into an arrangement with lenders to realign its principal debt repayment schedule and has secured the consent of lenders to spread its term loan repayment over a period of 8 years, after a moratorium of 2 years.

2.1 Cash Credit facilities are part of Working Capital facilities availed from Consortium of Banks and are secured by hypothecation by way of first pari passu charge on all its current assets and by way of second pari passu charge on immovable and all movable properties (excluding current assets) of the Company. Rate of Interest on Cash Credit facilities ranged between 10.75% to 11.00%

2.2 Buyers' Credit is secured by Letter Of Comfort (LOC) / Undertaking (LOU) which is a part of Working Capital facilities issued by the banks. Rate of Interest on Buyers' Credit facility is ranging between 145-330 bps above Libor.

3.1 The Company had recognised liability based on substantial degree of estimation for excise duty payable on clearance of goods lying in stock as on 31st March, 2011 of Rs. 1456.43 Lacs as per the estimated pattern of dispatches. On the analogy, provision for such liability, works out to be Rs. 1625.63 Lacs as on 31st March, 2012. Resultantly, differential provision of Rs. 167.00 Lacs has been recognised in the Profit and Loss Account.

Notes:

1. Buildings include Rs. 40.59 Lacs (Previous Year Rs. 40.59 Lacs) being cost of shares relating to ownership flat in a Co-Operative Society.

2. Factory Building and Plant & Machineries include borrowing costs capitalised during the year aggregating to Rs. 2047.28 Lacs (Previous Year Rs. 1488.80 Lacs).

3. Plant & Machineries include foreign currency fluctuation capitalised during the year aggregating to Rs. 637.63 Lacs (Previous Year Rs. Nil) in accordance with para 46A of Accounting Standards 11 relating to'The effects of changes in Foreign Exchange Rates'.

4.1 In view of the inadequacy of profits during the year 2011-12, the remuneration paid to Managing / Wholetime Directors is subject to the approval of Central Government as required in accordance with the provisions of Schedule XIII of the Companies Act, 1956. The Company has already filed the necessary Application with the Central Government seeking their approval for payment of remuneration to Managing / Wholetime Directors for the year 2011-12.

4.2 Employee Benefits as per AS 15:

Brief description : The type of defined benefit plans is as follows Gratuity :

The employee gratuity fund is managed by "Garden Silk Mills - Employees Gratuity Fund". The present value of obligation is determined based on actuarial valuation. The liability is fully funded.

Leave Encashment:

The present value of obligation for Leave encashment is determined based on actuarial valuation and is unfunded.

4.3 Foreign Currency Exposure

The Company uses plain forward contracts for hedging purpose except for foreign currency Loans / ECB which are covered by full currency & interest rate swap. All the contracts are for hedging purpose only and not for any speculative purpose.

Note : Figures in bracket represents Previous Year's amount.

Note 5 : Contingent Liabilities and Commitments

1 Contingent Liabilities

(i) Disputed liabilities for Excise Duty not acknowledged as debts Rs. 11818.33 Lacs (Previous Year Rs. 11587.90 Lacs).

(ii) Disputed liabilities for Gujarat Sales Tax not acknowledged as debts Rs. 70.51 Lacs (Previous Year Rs. 70.51 Lacs).

(iii) Customs duty on Capital Goods and Raw Materials imported under Advance License /EPCG Scheme, against which export obligation is to be fulfilled is Rs. 3083.07 Lacs (Previous year Rs. 2443.25 Lacs).

(iv) Counter-guarantees to Banks against guarantees issued to third parties Rs. 61.75 Lacs (Previous year Rs. 61.75 Lacs)

(v) Foreign bills Discounted with Banks Rs. 10250.56 (Previous Year Rs. Nil)

2 Commitments

Estimated amount of contracts pending on Capital Account and not provided for Rs. 2912.98 Lacs (Previous Year Rs. 6678.80 Lacs). Note 33 :

The Company has not made any remittance in foreign currencies on account of dividends during the year. The Company has remitted appropriate amount to the bank accounts in India of non-resident shareholders who have provided Indian bank mandate.

Note 6 :

The Company has only one reportable segment viz. 'Textiles' as per Accounting Standard (AS) 17 of The Institute of Chartered Accountants of India (ICAI).

Note 7 :

The financial statements for the year ended 31st March, 2011 were prepared as per the then applicable, erstwhile Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31st March, 2012 are prepared as per the Revised Schedule VI. This has significantly impacted the disclosure and presentation made in the financial statements. Accordingly, the previous year figures have also been reclassified to conform to current year's classification. The adoption of Revised Schedule VI for the previous year figures does not impact recognition and measurement principles followed in preparation of the financial statements.

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Mar 31, 2011

1. The Previous year's figures have been regrouped / reclassified wherever necessary to make them comparable with the current year's figures.

2. As at the balance sheet date, the Company is Contingently liable in respect of the followings.:

(i) Disputed liabilities for Excise Duty not acknowledged as debts Rs. 11587.90 Lacs. (Previous Year Rs. 11696.54 Lacs).

(ii) Disputed liabilities for Gujarat Sales Tax & Central Sales Tax not acknowledged as debts Rs. 70.51 Lacs (Previous year Rs. 70.51 Lacs)

(iii) Customs Duty on Capital Goods and Raw Materials imported under Advance Licence / EPCG Scheme, against which export obligation is to be fulfilled is Rs. 2443.25 Lacs (Previous year Rs. 4277.30 Lacs)

(iv) Counter-guarantees to Banks against guarantees issued to third parties Rs. 61.75 Lacs (Previous year Rs. 61.75 Lacs)

3. As at the balance sheet date, estimated amount of contracts pending on Capital Account and not provided for Rs. 6678.80 Lacs (Previous Year Rs. 18759.49 Lacs).

4. Micro and Medium scale business entities:

There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

5. Advance recoverable in cash or in kind or for value to be received includes amount due from partnership firms in which the Company is a partner Rs. 220.23 Lacs (Previous Year Rs. 230.21 Lacs).

6. In view of the recent performance of Surat Textile Mills Limited (STML), the financial position of STML is expected to significantly improve. Therefore the decline in value of investments by the Company in STML is considered to be temporary.

7. Foreign Currency Exposure

The Company uses plain forward contracts for hedging purpose except for foreign currency Loans / ECB which are covered by full currency and interest rate swap. All the contracts are for hedging purpose only and not for any speculative purpose.

8. Related parties disclosures:

As per Accounting Standard 18, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below:

(i) List of related parties with whom transactions have taken place and the relationships:

Sr. No. Relationship Name of the Related Party

1 Associate Company Surat Textile Mills Limited

2 Partnership firms Aloysha Investments Saska Investments

3 Key Managerial Personnel Mr.Praful A.Shah

Mrs.Shilpa P.Shah

Mr.Sanjay S.Shah

Mr.Alok P.Shah

Mr.Suhail P.shah

4 Relatives of Key managerial Mrs.Sujata V.Parsai personnel and their enterprises where Mr.V. K.Parsai transactions have taken place Armorax Business Center Pvt. Ltd. Como Textile Pvt. Ltd. Sorronto Textile Pvt. Ltd.

Amalfi Textile Pvt. Ltd.

Tissue Textile (India) Pvt. Ltd.

Vareli Fabrics Pvt. Ltd.

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

9. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at 31st March, 2011.

10. Employee Benefits as per AS 15:

Brief description: The type of defined benefit plans is as follows

Gratuity:

The employee gratuity fund is managed by "Garden Silk Mills - Employees Gratuity Fund". The present value of obligation is determined based on actuarial valuation. The liability is fully funded.

Leave Encashment:

The present value of obligation for Leave encashment is determined based on actuarial valuation and is unfunded.

Superannuation:

The present value of obligation for Superannuation is determined based on actual liability method and is unfunded.

11. (c) The Company has not made any remittances in foreign currencies on account of dividends during the year.

The Company has remitted appropriate amount to the bank accounts in India of non-resident shareholders who have provided Indian bank mandate.

12. The Company has identifed only one segment viz. 'Textiles' as per Accounting Standard 17 of ICAI, and has not identifed any geographical segment, where risks and returns are materially different.

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Mar 31, 2010

1. The Previous years figures have been regrouped / reclassified wherever necessary to make them comparable with the current years figures. Due to the change in the Companys Financial Year from 30th June to 31 st March, the figures for the current year ended 31st March, 2010 are not strictly comparable with the corresponding previous year as the previous year period pertains to 9 months.

2. As at the balance sheet date, the Company is Contingently liable in respect of the followings:

(i) Disputed liabilities for Excise Duty not acknowledged as debts Rs. 11,696.54 Lacs. (Previous Year Rs.133.64 Lacs).

(ii) Disputed liabilities for Gujarat Sales Tax & Central Sales Tax not acknowledged as debts Rs.70.51 Lacs (Previous year Rs.74.33 Lacs)

(iii) Customs Duty on Capital Goods and Raw Materials imported under Advance Licence / EPCG Scheme, against which export obligation is to be fulfilled is Rs.4,277.30 Lacs (Previous Year Rs.5,218.36 Lacs)

(iv) Counter-guarantees to Banks against guarantees issued to third parties Rs.61.75 Lacs (Previous Year Rs.61.75 Lacs)

3. As at the balance sheet date, estimated amount of contracts pending on Capital Account and not provided for Rs.18,759.49 Lacs (Previous Year Rs.2,464.33 Lacs).

4. Micro and Medium scale business entities:

There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

5. During the previous year ended 31st March, 2009, 72337 Sq. Mtrs. of land at village Vareli.Taluka Palsana, Dist. Surat was converted in to stock-in-trade at the book value out of the fixed assets, as the Company intends to develop the property.

6. Advance recoverable in cash or in kind or for value to be received includes amount due from partnership firms in which the Company is a partner Rs. 230.21 Lacs (Previous Year Rs. 230.24 Lacs).

7. Foreign Currency Exposure

The Company uses plain forward contracts for hedging purpose except for foreign currency Loans / ECB which are covered by full currency and interest rate swap. All the contracts are for hedging purpose only and not for any speculative purpose.

8. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at 31st March, 2010.

13. Employee Benefits as per AS 15:

Brief description: The type of defined benefit plans is as follows:

Gratuity:

The employee gratuity fund is managed by "Garden Silk Mills - Employees Gratuity Fund". The present value of obligation is determined based on actuarial valuation. The liability is fully funded.

Leave Encashment:

The present value of obligation for Leave encashment is determined based on actuarial valuation and is unfunded.

Superannuation:

The present value of obligation for Superannuation is determined based on actual liability method and is unfunded.

9. The Company has identified only one segment viz. Textiles as per Accounting Standard 17 of ICAI, and has not identified any geographical segment, where risks and returns are materially different.

10. Additional information pursuant to Part IV of Schedule VI to the Companies Act,1956 is as per Annexure A.