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Notes to Accounts of GHCL Ltd.

Mar 31, 2017

* The Board of Directors of the Company, at its meeting held on January 31, 2017, has approved a proposal to buy back up to 32,00,000 equity shares of the Company for an aggregate amount not exceeding Rs. 80 crore, being 3.2% of the total paid up equity share capital at amount per share not exceeding Rs. 315. During the year, the Company has bought back 5,73,438 equity share out of which 5,46,550 equity shares have been extinguished at 31.03.2017. The balance 26,888 shares has been cancelled post 31st March 2017.

In earlier years, Certain Fixed assets of the Company were revalued at their respective fair value as determined by government approved competent valuer appointed by the Company. The amount of such revaluation was transferred to Business development reserve, as per scheme of arrangement as approved by Hon''ble Gujarat High Court on 30th November, 2008. During the current year, the Company has adjusted the written down book value of revalued assets under business development reserve upon sale/write-off.

The Company had issued 10,000,000/- 10.75% Cumulative Redeemable Preference Shares (CRPS) of Rs. 10/- each, to IDBI Bank Limited during financial year 1999-2000 which was subsequently redeemed by the Company in the financial year 2001 02, pursuant to the provisions of Section 80 of the Companies Act, 1956 and the article 7 of the Article of Association of the Company. Accordingly, the Capital Redemption Reserve account to the extent of 100% of the value of CRPS redeemed (i.e. Rs. 10 Crore), was created out of profit of the Company available for payment of dividend.

An amount of Rs. 0.55 Crore (equivalent to nominal value of the equity shares bought back & cancelled by the Company during the year) has been transferred to Capital Redemption Reserve from General Reserves pursuant to the provisions of Section 69 of the Companies Act, 2013 and the article 7 of the Article of Association of the Company. (Refer Note No. 14) 16.1 Rupee Term Loans from Banks / Institutions have been secured against: -

a) Loan aggregating to Rs.102.45 crores is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company''s Soda Ash Division situated at village Sutrapada, Veraval in Gujarat. The remaining tenure of the loans is 2 to 8 years.

b) Loan aggregating to Rs 202.58 crores is secured by way of first pari passu charge on movable fixed assets of Soda Ash Division situated at village Sutrapada, Veraval, Gujarat excluding assets exclusively charged to other lenders both present and future. The remaining tenure of the loans is 9 years.

c) Loan aggregating to Rs 161.81 crores is secured by way of first pari passu charge on movable fixed assets of Soda Ash Division situated at village Sutrapada, Veraval in Gujarat. The remaining tenure of the loans is 2 to 3 years.

d) Loan aggregating to Rs. 51.85 crores is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company''s Home Textile Division situated at Vapi in Gujarat. The remaining tenure of the loans is to 10 years.

e) Loan aggregating to Rs. 8.69 crores is secured by an exclusive first charge over movable fixed assets situated at Jodia, Jamnagar District, Gujarat, both present and future, created out of the proceeds of the loan. The remaining tenure of the loan is 10 years.

f) Loan aggregating to Rs. 12.96 crores is secured by way of first pari passu charge on movable fixed assets of Home Textile Division situated at Vapi in Gujarat. The remaining tenure of the loans is 1 year.

g) Loan aggregating to Rs.107.86 crores is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company''s Textile Division situated at Madurai, Tamil Nadu. The remaining tenure of the loans is to 10 years.

h) Loan aggregating to Rs. 74.88 crores is secured by extension of first charge on pari passu basis on Factory Land & Building of Textile Division situated at Paravai and Manaparai, Tamil Nadu with other term lenders of the said project. The remaining tenure of the loans is 1 to 3 years.

i) Loan aggregating to Rs. 69.94 crores is secured by first exclusive charge on movable fixed assets of Textile Division situated at Paravai and Manaparai, Tamil Nadu, both present and future, excluding assets exclusively charged to other lenders. The remaining tenure of the loan is 4 years.

j) Loan aggregating to Rs. 47.66 crores is secured by an exclusive first charge on movable fixed assets situated at Tirunelveli District, Tamilnadu, both present and future, created out of the proceeds of the loan. The remaining tenure of the loan is 8 years.

k) Loan aggregating to Rs. 30.22 crores is secured by an exclusive first charge on movable and immovable fixed assets situated at Tirunelveli District, Tamilnadu, both present and future, created out of the proceeds of the loan. The remaining tenure of the loan is 9 years.

l) Loan aggregating to Rs. 45.77 crores is secured by extension of first charge on movable fixed assets of Consumer Product division situated at Chennai and Industrial Salt Division situated at Bhavnagar and exclusive first charge on the factory land and building situated at Thiruporur village, Chengalpattu Taluka, Kancheepuram District, Chennai. The remaining tenure of the loan is 3 years.

m) Out of all the aforesaid secured Loans appearing in note 16 (a) to16 (l) totaling Rs. 916.67 crores, an amount of Rs. 218.71 crores is due for payment in next 12 months and accordingly reported under note no 19 under the head “ Other Current financial liabilities” as ‘current maturities of long term borrowing''.

16.2 Short Term Borrowings: This facility is secured by way of hypothecation on inventory & trade receivables & borrowed as under:

(a) Credit Facilities in Indian Rupees: The facilities availed by way of Cash Credit, Working capital demand loan, Export Packing Credit and Bill Discounting are repayable on demand and carries an average interest rate of 7.66% p.a on the amount outstanding.

(b) Credit Facilities in Foreign Currency : The facilities availed by way of Foreign currency nonresident borrowing, Packing Credit in foreign currency and Buyer''s Credit are repayable as per maturity dates being not more than 1 year and carries an average interest rate of 2.19% p.a on the amount outstanding.

* Provision for mines restoration

The Company provides for the estimated expenditure required to restore quarries and mines. The total estimate of restoration expenses is apportioned over the period of estimated mineral reserves and a provision is made based on minerals extracted during the year. The total estimate of restoration expenses is reviewed periodically, on the basis of technical estimates.

Information as required to be furnished as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) for the year ended March 31, 2017 is given below. This information has been determined to the extent such parties have been identified on the basis of information available with the Company32 Segment information

The Company is primarily engaged in the business of manufacture of Inorganic Chemicals and Textiles and based on this it has two reportable segments:

Inorganic Chemicals segment majorly includes manufacture of Soda Ash which is an important raw material for detergent and glass industry. Major raw materials to manufacture Soda Ash are Salt, limestone, coke, briquette, coal and lignite. The total Inorganic Chemical Segment contributes approx. 60 % of total Indian Standalone revenue.

Textiles segment manufactures cotton yarn and polyester yarn and home textile products. GHCL Limited is one of the largest integrated textile manufacturers own spinning, weaving and processing & dyeing and cutting & sewing manufacturing facility.

The management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Income taxes are managed on Company basis and are not allocated to Operating segments.

Defined Benefit Plan Gratuity (Funded)

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

1.elated Party Transactions

a) The following table provides the list of related parties and total amount of transactions that have been entered into with related parties for the relevant financial years.

A) Wholly owned subsidiaries

Dan River Properties LLC Grace Home Fashions LLC

B) Key Managerial Personnel

Mr. R. S. Jalan, Managing Director

Mr. Raman Chopra, CFO & Executive Director (Finance)

Mr. Bhuwneshwar Mishra, General Manager & Company Secretary

C) Non-whole-time directors Mr. Sanjay Dalmia

Mr. Anurag Dalmia

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

2. Hedging activities and derivatives

Derivatives not designated as hedging instruments

The Company uses foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of expected sales and purchases, generally from one to 24 months.

These contracts are not designated in hedge relationships and are measured at fair value through profit or loss. (Refer Note 38(b))

3 Fair Values

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

The management assessed that cash and cash equivalents, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The following methods and assumptions were used to estimate the fair values:

i The fair value of the financial assets and liabilities is included at the amount at which the instrument is exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

ii The fair values of the FVTOCI financial assets are derived from quoted market prices in active markets.

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

Quantitative disclosures fair value measurement hierarchy for assets as at 31 March 2017:

4.inancial risk management objectives and policies

The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management overseas the management of these risks. The Company''s senior management is supported by a Banking and Operations committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by expert list teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below.

Market Risk

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

The sensitivity analyses in the following sections relate to the position as at 31 March 2017. The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt are all constant.

a) 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 long-term debt obligations with floating interest rates.

In order to optimize the Company''s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

The Company is not exposed the significant interest rate as at a respective reporting date.

b) Foreign currency risk

Foreign Currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to its operating activities. The Company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 12 month periods for hedges of forecasted sales and purchases in foreign currency. The hedging is done through foreign currency forward contracts.

c) Equity price risk

The Company''s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.

At the reporting date, the exposure to unlisted equity securities at fair value was INR 0.10 crores.

At the reporting date, the exposure to listed equity securities at fair value was INR 8.68 Crore. A decrease of 10% on the NSE/ BSE market index could have an impact of approximately INR 0.86 Crore on the OCI or equity attributable to the Company. An increase of 10% in the value of the listed securities would also impact OCI and equity. These changes would not have an effect on profit or loss.

d) Commodity Risk

The Company is impacted by the price volatility of coal. Its operating activities require continuous manufacture of soda ash, and therefore require a regular supply of coal. Due to the significant volatility of the price of coal in international market, the Company has entered into purchase contract for coal with its designated vendor(s). The price in the purchase contract is linked to the certain indices. The Company''s Commercial Department has developed and enacted a risk management strategy regarding commodity price risk and its mitigation.

e) Credit risk

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

Trade Receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on customer profiling, credit worthiness and market intelligence. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.

An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous group''s and assessed for impairment collectively. The calculation is based on exchange losses historical data. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

Financial instruments and cash deposits

Credit risk from balances with banks is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Banking & Operations Committee. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

The Company''s maximum exposure to credit risk for the components of the balance sheet at 31st March 2017,March 2016 and

1 April 2015 is the carrying amounts as illustrated in Note 9 except for financial guarantees and derivative financial instruments. The Company''s maximum exposure relating to financial guarantees and financial derivative instruments is noted in note on commitments and contingencies and the liquidity table below.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The approach of the Company to manage liquidity is to ensure , as far as possible, that these will have sufficient liquidity to meet their respective liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risk damage to their reputation.

The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.

The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.

5.apital Management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio of less than 75%. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2017.

6.ignificant accounting judgments, estimates and assumptions

The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and the accompanying disclosures. Uncertainty about the assumptions and estimates could result in outcomes that require a material adjustment to the carrying value of assets or liabilities affected in future periods

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes:

(i) Judgments

In the process of applying the accounting policies, management has made the following judgments, which have significant effect on the amounts recognized in the Company''s financial statements:

Provisions and contingencies

The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Ind AS 37, ‘Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss.

Assessment of lease contracts

Classification of leases under finance lease or operating lease requires judgment with regard to the estimated economic life and estimated cost of the asset. The Company has analyzed each lease contract on a case to case basis to classify the arrangement as operating or finance lease, based on an evaluation of the terms and conditions of the arrangements.

Assessment of Equity instruments

The Company has designated investments in equity instruments as FVTOCI investments since the Company expects to hold these investment with no intention to sale. The difference between the instrument''s fair value and Indian GAAP carrying amount has been recognized in retained earnings.

(ii) Estimates and assumptions

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

Taxes

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

Useful lives of property, plant and equipment

The estimated useful lives of property, plant and equipment are based on a number of factors including the effects of obsolescence, demand, competition, internal assessment of user experience and other economic factors (such as the stability of the industry, and known technological advances) and the level of maintenance expenditure required to obtain the expected future cash flows from the asset. The Company reviews the useful life of property, plant and equipment at the end of each reporting date. Post-retirement benefit plans

Employee benefit obligations (gratuity obligation) are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date

7. ESOS Trust owns total 20,46,195 shares, out of which 15,79,922 shares were illegally sold by a party against which ESOS Trust has initiated legal proceedings and 4,66,273 shares are held by Stock Exchange based on an arbitration award. Pending final decision on these shares held by Trust, the Trust will continue for the limited purpose of litigation.

8. Share Based Compensation

In accordance with the Securities and Exchange Board of India (Share Based Employee benefits) Regulations, 2014 and the Guidance Note on Accounting for ''Employees Share-based Payments, the scheme detailed below is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the Company. To have an understanding of the scheme, relevant disclosures are given below.

a) As approved by the shareholders at their Annual General Meeting held on 23rd July 2015, the Company has got 50,00,000 number of Options under the employee stock option scheme "GHCL ESOS 2015". The following details show the actual status of ESOS granted during the financial year ended on 31st March 2017.

Note: The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note.

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

1 Fair Valuation of Investments

Under Indian GAAP, investments in equity instruments were classified as long term investments based on the intended holding period and reliability. Long term investments were carried at cost less provision for other than temporary diminution in the value of investments.

Accordingly, the Company has designated investments in equity instruments as FVTOCI investments. The difference between the instrument''s fair value and Indian GAAP carrying amount has been recognized in retained earnings.

2 Derivative Instruments

The fair value of derivative instruments (i.e. forward contracts and options) is recognized under Ind AS whereas the same was not recognized under Indian GAAP. The Company has not designated these derivative instruments as hedging instruments under Indian GAAP as well as under Ind AS. Accordingly, difference on account of fair valuation of these instruments has been adjusted in retained earnings.

3 Borrowings

Under Indian GAAP, transaction costs incurred in connection with borrowings are amortized upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method.

4 Proposed Dividend

Under Indian GAAP, proposed dividend (including DDT) is recognized as a liability in the period to which it relates, irrespective of when it is declared. Under Ind AS, proposed dividend is recognized as a liability in the period in which it is declared by the Company (usually when approved by shareholders in a general meeting) or paid.

In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability for the year ended 31st March 2015 recorded for the proposed dividend for the year along with dividend distribution tax is de-recognized and provided in the financial year in which it is declared or paid under IND AS.

5 Defined benefit obligation

Both under Indian GAAP and Ind AS, the Company recognizes costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, re-measurements comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus the employee benefit cost is increased by INR 0.89 crore (net of Tax) and re-measurement gains/ losses on defined benefit plans has been recognized in the OCI net of tax.

6 Sale of goods

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of statement of profit and loss. Thus sale of goods under Ind AS has increased by INR 176.56 Crore for the period ended 31 March 2016 with a corresponding increase in other expense.

7 Deferred tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS has resulted in recognition of deferred tax on temporary differences which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies adopted by the Company it has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.

8 Statement of cash flows

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.

9 Other comprehensive income

Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

9.irst Time Adoption Of Indian Accounting Standards

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

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

Exemptions Applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

1 Mandatory exemptions :

I Estimates

An entity estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP

2 Optional exemptions:

I Deemed Cost for Property Plant & equipment

Ind AS 101 permits a first time adopter to elect to fair value its property, plant and equipment as recognized in financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition or apply principles of Ind AS retrospectively. Ind AS 101 also permits the first time adopter to elect to continue with the carrying value for all of its property plant and equipment as recognized in the financial statements as at the date of transition to Ind AS. This exemption can be also used for intangible assets covered by Ind-AS 38.

Accordingly, as per Ind AS 101, the Company has elected to consider fair value of its property, plant and equipment, capital work in progress and intangibles as its deemed cost on the date of transition to Ind AS.

II Leases

Appendix C to Ind AS 17-" Leases" requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 allows a first-time adopter to determine whether an arrangement existing at the date of transition to Ind AS contains a lease on the basis of facts and circumstances existing at that date. except where the effect is expected to be not material.

The Company has elected to apply this exemption for such contracts/arrangements.

3 Fair value measurement of financial assets and liabilities

Under IGAAP the financial assets and liabilities were being carried at the transaction value.

First-time adopters may apply Ind AS 109 to day one gain or loss provisions prospectively to transactions occurring on or after the date of transition to Ind AS. Therefore, unless a first-time adopter elects to apply Ind AS 109 retrospectively to day one gain or loss transaction, transactions that occurred prior to the date of transition to Ind AS do not need to be retrospectively restated.

The Company has measured its financial assets and liabilities at amortized cost or fair value.

4 Investments in subsidiaries

Ind AS 101 permits the first time adopter to measure investment in subsidiaries in accordance with Ind AS 27 at one of the following:

a) Cost determined in accordance with Ind AS 27 or

b) Deemed cost:

(i) fair value at date of transition

(ii) previous GAAP carrying amount at that date.

The Company has elected to consider previous GAAP carrying amount of its investments in subsidiaries on the date of transition to Ind AS its deemed cost for the purpose of determining cost in accordance with principles of IND AS 27- "Separate financial statements".

5 Embedded Derivatives

As per Ind AS 101 a first-time adopter shall assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date of reassessment. The Company has evaluated all its agreements on the basis of conditions that existed at the later of the date it first became a party to the contract and the date of reassessment.

10.andards issued but not yet effective up to the date of Financial Statements

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the group''s financial statements are disclosed below. The group intends to adopt these standards, if applicable, when they become effective.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and has amended the following standard:

I) Amendment to Ind AS 7 Statement of Cash Flows

The amendments to Ind AS 7 requires an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

On initial application of the amendment, entities are not required to provide comparative information for preceding periods. These amendments are effective for annual periods beginning on or after 1 April 2017. Application of this amendments will not have any recognition and measurement impact. However, it will require additional disclosure in the financial statements.

II) Amendment to Ind AS 102 Share-based Payment

The MCA has issued amendments to Ind AS 102 that address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction, the classification of a share-based payment transaction with net settlement features for withholding tax obligations, and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. The amendments are effective for annual periods beginning on or after 1 April 2017. Application of this amendments will not have any recognition and measurement impact.

The group will adopt these amendments from their applicability date.

11. The financial statements for the previous year ended March 31, 2016 prepared in accordance with accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) were audited by one of the predecessor joint auditor and continuing joint auditor.

12. revious period figures have been regrouped / reclassified, wherever considered necessary.


Mar 31, 2016

1. In Accordance with the Scheme of Arrangement duly approved by Hon''ble High Court of Gujarat vide its order dated 30th November 2009, the Company has not taken any effect in the current financial statements for the year ended 31 March 2016. Consequently there is no change in Business Development Reserve.

2. Exceptional items represent one time employees'' separation cost incurred during the year on account of Voluntary Retirement Scheme (VRS) given to employees of Soda Ash division. The benefits of VRS would be accruing over a period of time

3. The following changes have taken place during the year with regard to Subsidiary Companies

4. Prior Period Item of Rs..0.01 Cr. (Previous year Rs. 0.09 Cr.) is on account of short provision for consultancy services of earlier year.

5. As per Accounting Standard-15 "Employee Benefits", the disclosures of Employee Benefits as defined in the Accounting Standard are given below :

6. Impairment of Assets

In pursuance of Accounting Standard - 28, the Company has reviewed its carrying cost of assets with value in use (determined based on future earnings) / net selling price (determined based on valuation). Based on such review, management is of the view that in the current financial year impairment of assets is not considered necessary.

7. ESOS Trust owns total 20,46,195 shares, out of which 15,79,922 shares were illegally sold by a party against which ESOS Trust has initiated legal proceedings and 4,66,273 shares are held by Stock Exchange based on an arbitration award. Pending final decision on these shares held by Trust, the Trust will continue for the limited purpose of litigation.

8. Corporate Social Responsibility ( CSR)

As per Section 135 of the Companies Act 2013 , a CSR committee has been formed by the company. The area for CSR activities are drinking water / sanitation, infrastructure for roof rain water harvesting, coastal area development projects, agriculture, agro based livelihood, irrigation, animal husbandry, healthcare, education/ literacy enhancement, employment enhancing vocational skill etc. The funds were primarily allocated to a corpus and utilised throughout the year on the activities which are specified in Schedule VII of the Companies Act, 2013.

2.47 The previous year''s/corresponding period''s figures have been regrouped / reclassified.


Mar 31, 2015

1) Working Capital Loans are secured by way of hypothecation of stock-in-trade and book debts of Soda Ash / Home Textile Division / Edible Salt / Textile Divisions and second charge on fixed assets of Soda Ash Division / Home Textile Division and Textile Division, both present and future.

2) Specified movable assets referred to in the above notes include all movable assets of Soda Ash Division, Home Textile Division and Textile Division both present and future but subject to prior charge created and / or that may be created in favour of Company''s Bankers on stock-in-trade for securing borrowing for working capital.

1. Building include a sum of Rs. 497.80 Lacs being cost of office premises acquired on ownership basis.

2. Leased mines represent expenditure incurred on development of mines.

3. Cash Subsidy amounting to Rs. 823.35 Lacs (previous year Rs. 823.35 Lacs) relating to Home Textile division at Vapi has been reduced from respective Fixed Assets.

4. As per transitional provision under Schedule-II when the remaining useful life of the assets is nil, the residual of those assets has been charged to Statement of Profit and Loss amounting to Rs. 656.12 Lacs in the year.

5. During the year, the management based on internal and external technical evaluation and due to Schedule II of the Companies Act, 2013 reassessed the remaining useful life of assets with effect from 1st April 2014. Accordingly the useful lives of certain assets required a change from the previous estimate

2.1 Impairment of Assets

In pursuance of Accounting Standard - 28, the Company has reviewed its carrying cost of assets with value in use (determined based on future earnings) / net selling price (determined based on valuation). Based on such review, management is of the view that in the current financial year impairment of assets is not considered necessary.

2.2 ESOS Trust owns total 20,46,195 shares, out of which 15,79,922 shares were illegally sold by a party against which ESOS Trust has initiated legal proceedings and 4,66,273 shares are held by Stock Exchange based on an arbitration award. Pending final decision on these shares held by Trust, the Trust will continue for the limited purpose of litigation.

2.3 Corporate Social Responsibility ( CSR)

As per Section 135 of the Companies Act 2013 , a CSR committee has been formed by the company. The area for CSR activities are drinking water / sanitation, infrastructure for roof rain water harvesting, coastal area development projects, agriculture, agro based livelihood, irrigation, animal husbandry, healthcare, education/ literacy enhancement, employment enhancing vocational skill etc. The funds were primarily allocated to a corpus and utilised throughout the year on the activities which are specified in Schedule VII of the Companies Act, 2013.

2.4 The previous year''s/corresponding period''s figures have been regrouped / reclassified.


Mar 31, 2014

1.1 In Accordance with the Scheme of Arrangement duly approved by Hon''ble High Court of Gujarat vide its order dated 30th November 2009, the Company has taken following effects in the current financial statements :- a) In accordance with the aforesaid Scheme, goodwill arising on amalgamation or acquisition or consolidation of financials statements of subsidiaries and which requires amortisation or impairment, any unrealizable assets whether fixed or current or tangible or intangible of the company, any diminution/write off in the value of the investments in its subsidiaries; whether in India or overseas, interest and other financial charges paid or payable on borrowings for subsidiaries by the company or by its subsidiaries or borrowings guaranteed by the company, mark to market adjustment on derivative instruments, currency swaps expenses, all the expenses / costs incurred in carrying out and implementing this Scheme, Integration expenses like plant shifiting / shutting down, expenses arising on voluntary retirement offered to the employees of acquired companies, expenses for suit for bankruptcy including costs associated with existing projects / subsidiaries / divisions in part and / or whole by the Transferee Company and any additional depreciation on account of any upward revaluation of assets are to be charged to Business Development Reserve Account.

Accordingly Rs. 27,679.47 Lacs (previous year Rs. NIL) has been charged to Business Development Reserve on account of diminution in the value of investments and loans & advances to and receivables from subsidiaries. Any further impairment arising out of such diminution shall be accounted for in subsequent years upon reasonable certainty that the same is non realisable and shall be charged to Business Development Reserve until such reserves exists. Further additional depreciation arising out of revaluation amounting to Rs.1937.65 Lacs (Previous year Rs. 1934.39 Lacs) has been charged to the Business Development Reserve.

1.2 Exceptional items are in respect of :

(a) Crystallized Loss amounting to Rs.1004.40 Lacs on sale of 8,81,191 Shares held by GHCL Employees Stock Option Trust in line with the circulars issued by SEBI on January 17, 2013, May 13, 2013 and November 29, 2013 on Employees Stock

Option Scheme (ESOS) and Employees Stock Purchase Scheme, GHCL ESOS Scheme will cease to be in existence by June 30, 2014 and accordingly all the shares controlled by the trust have been sold before the Balance Sheet date.

(b) Consequent to para (a) above, Rs. 240.85 lacs relating to the provision made in previous years for minimum price appreciation guarantee @ 20% as per the GHCL ESOS has been written back, since none of the employees have exercised the option during the period ended 31st March 2014.

(c) Write off amounting to Rs. 2333.65 Lacs due to permanent diminution in the value of 20,46,195 shares originally held by GHCL ESOS trust based on the difference in the average purchase price and current market value. Of these, 15,79,922 shares were illegally sold by a party against which ESOS trust has initiated legal proceedings and balance 4,66,273 shares are held by Stock exchange based on an arbitration award.

1.3 The following changes have taken place during the year with regard to Subsidiary Companies

a) Liquidation of the company Country Date of Liquidation

ROSEBYS UK LIMITED UK 24th DECEMBER 2013

b) Textile & Design Limited uK and Teliforce Holding India Limited Cyprus, subsidiaries of the company are under Liquidation since 25th September, 2009 & 29th January, 2014 respectively.

c) Subsequent to Balance Sheet date, GHCL Rosebys Limited, a step down subsidiary in uK has been voluntarily dissolved on 6th May 2014.

1.4 unquoted investments in subsidiary companies are of long term strategic value in the opinion of the management. Except as adjusted in the financial statements, the current diminution in the value of these investments is temporary in nature considering the inherent value and nature of investee''s business proposal and hence no provision is required.

1.5 In accordance with the requirements of Accounting Standard - 19 Leases issued by the Institute of Chartered Accountants of India, future obligation/rights as at Balance Sheet date for lease arrangements amount to:

1.6 The value of closing stock of Finished Goods includes excise duty not paid Rs. 85.97 Lacs (previous year Rs. 269.52 Lacs). The value of Lignite at mines includes excise duty, royalty & clean energy cess of Rs. 19.43 Lacs (previous year Rs. 37.66 Lacs) on the closing stock. The Value of Salt at Salt Fields includes Cess & Royalty of Rs. 18.57 Lacs (previous year Rs. 24.27 Lacs) on Closing Stock. This has however, no impact on the profit for the year.

1.7 Prior Period Item of Rs. 16.75 Lacs (Previous year Rs. 3.92 Lacs) is on account of excess provision for expenses of earlier year.

1.8 Loans & Advances includes Rs. 3308.99 Lacs (previous year Rs. 7617.29 Lacs) paid as advance for purchase of materials and services outstanding for more than six months and considered good.

1.9 As per Accounting Standard-15 "Employee benefits", the disclosures of Employee benefits as Defined in the Accounting Standard are given below :

Defined Contribution Plan

Provident Fund and Superannuation Fund are Defined Contribution Plan. Contribution paid for Provident Fund and Superannuation Fund are recognised as expense for the year :

The Company''s Provident Fund is exempt under section 17 of Employees'' Provident Fund and Miscellaneous Provision Act, 1952. Conditions for grant of exemption stipulate that the employer shall make good, defciency if any, in the interest rate declared by the trust vis-à-vis statutory rate

Defined benefit Plan

Gratuity (Funded)

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

Leave encashment (unfunded)

The Company recognises the leave encashment expenses in the Statement of profit & Loss based on actuarial valuation.

The expenses recognised in the Statement of profit & Loss and the Leave encashment liability at the beginning and at the end of the year :

1.10 Related Party Transactions a Subsidiaries & Associate :

Indian England N.V.

Indian Wales N.V.

Dan River Properties LLC

Grace Home Fashions LLC

Rosebys Interiors India Limited

Teliforce Holding India Limited ( under Liquidation since 29th January, 2014)

Textile & Design Limited (under Liquidation since 25th September, 2009)

Rosebys uK Limited (Liquidated as at 24th December 2013)

GHCL Rosebys Limited (Liquidated as at 6th May, 2014)

Indian Britain B.V. (Liquidated as at 30th November, 2012)

Colwell & Salmon Communications Inc. (Liquidated as at 1st April, 2013)

DM Solar Farm Pvt Limited

TCP Limited (w.e.f. 31st January, 2014)

b Key Management Personnel:

Mr. R. S. Jalan, Managing Director

Mr. Raman Chopra, CFO & Executive Director - Finance

Mr. Tej Malhotra, Sr. Executive Director - Operations (upto 4th May 2012)

c Relative of Key Management Personnel:

Mrs. Bharti Chopra, w/o Mr. Raman Chopra Ravi Shanker Jalan, HuF

d significant infuence

Dalmia Centre for Research & Development

1.11 Intangible Assets

Intangible Asset, meeting the defnition as per the provisions of Accounting Standard - 26 Intangible Assets issued by The Institute of Chartered Accountants of India, comprises of Sofitware and Trade mark Expenditure on purchased sofitware, ERP System, IT related expenses and Trade mark is being written off over a period of three years.

1.12 Impairment of Assets

In pursuance of Accounting Standard - 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India, the Company has reviewed its carrying cost of assets with value in use (determined based on future earnings) / net selling price (determined based on valuation). Based on such review, management is of the view that in the current financial year impairment of assets is not considered necessary.

1.13 The GHCL ESOS Scheme, approved by the shareholders in their Extra Ordinary General Meeting held on 19th March, 2008 will cease to be in existence by 30th June 2014. The Consequential accounting entries have been passed as exceptional item in the Statement of profit and Loss during the year.

1.14 The previous year''s/corresponding period''s figures have been regrouped / reclassified.


Mar 31, 2013

1.1 In Accordance with the Scheme of Arrangement duly approved by Hon''ble High Court of Gujarat vide its order dated 30th November 2009'' the Company has taken following effects in the current fi nancial statements :- a) In accordance with the aforesaid Scheme'' goodwill arising on amalgamation or acquisition or consolidation of fi nancials statements of subsidiaries and which requires amortisation or impairment'' any unrealizable assets whether fi xed or current or tangible or intangible of the company'' any diminution/write off in the value of the investments in its subsidiaries; whether in India or overseas'' interest and other fi nancial charges paid or payable on borrowings for subsidiaries by the company or by its subsidiaries or borrowings guaranteed by the company'' mark to market adjustment on derivative instruments'' currency swaps expenses'' all the expenses / costs incurred in carrying out and implementing this Scheme'' Integration expenses like plant shifting / shutting down'' expenses arising on voluntary retirement offered to the employees of acquired companies'' expenses for suit for bankruptcy including costs associated with existing projects / subsidiaries / divisions in part and / or whole by the Transferee Company and any additional depreciation on account of any upward revaluation of assets are to be charged to Business Development Reserve Account.

Accordingly NIL (previous year Rs. 10330.51 Lacs) has been charged to Business Development Reserve on account of diminution in the value of investments in and loans & advances to and receivables from subsidiaries. Any further impairment arising out of such diminution shall be accounted for in subsequent years upon reasonable certainty that the same is non realisable and shall be charged to Business Development Reserve until such reserves exists. Further additional depreciation arising out of revaluation amounting to Rs. 1934.39 Lacs (Previous year Rs. 1936.31 Lacs) has been charged to the Business Development Reserve.

b) As per the Scheme'' NIL (Previous year Rs. 9989.96 Lacs) pertaining to investment in subsidiary has been written off and adjusted against General Reserve.

1.2 Exceptional items are in respect of write off of investment of Rs.1934.53 Lacs in Indian Britain B. V. (subsidiary company liquidated on 30th November'' 2012) and Rs. 2023.79 Lacs on account of arbitration settlement entered into by GHCL Employees Stock Option Trust for loss on investment in company shares held by the ESOS Trust.

1.3 Provision for taxation has been made during the year under the Minimum Alternate Tax (MAT) as per the provision of the Income tax Act''1961 which can be set off in subsequent years based on the provisions of Section 115JB.

1.4 The Company has received draft assessment order from the Income tax Department for the Assessment Year 2009-10 (relevant to Accounting Year 2008-09) showing addition of Rs. 3339.66 Lacs in the total income on account of various disallowances. The Company is disputing and denying additions proposed in draft assessment order based on legal opinion available with it and has approached the Dispute Resolution Panel (DRP) for adjudication. Hence no provision is considered necessary in the books of accounts.

1.5 The value of closing stock of Finished Goods includes excise duty not paid Rs. 269.52 Lacs (previous year Rs.62.70 Lacs). The value of Lignite at mines includes excise duty'' royalty & clean energy cess of Rs. 37.66 Lacs (previous year Rs. 22.16 Lacs) on the closing stock. The Value of Salt at Salt Fields includes Cess & Royalty of Rs. 24.27 Lacs (previous year Rs. 19.11 Lacs) on Closing Stock.

This has however'' no impact on the profi t for the year.

1.6 Prior Period Item of Rs. 3.92 Lacs (Previous year Rs. 18.89 Lacs) is on account of excess provision for expenses of earlier year.

1.7 Loans & Advances includes Rs. 7''617.29 Lacs (previous year Rs. 7650.18 Lacs) paid as advance for purchase of materials and services outstanding for more than six months and considered good.

1.8 As per Accounting Standard-15 "Employee Benefi ts"'' the disclosures of Employee Benefi ts as defi ned in the Accounting Standard are given below :

Defi ned Contribution Plan

Provident Fund and Superannuation Fund are Defi ned Contribution Plan. Contribution paid for Provident Fund and Superannuation Fund are recognised as expense for the year :

1.9 Related Party Transactions a Subsidiaries & Associate :

Indian England N.V. Indian Wales N.V.

Dan River Properties LLC

Grace Home Fashions LLC

GHCL Rosebys Limited

Rosebys Interiors India Limited

Teliforce Holding India Limited

Rosebys UK Limited (under Liquidation since12th November'' 2012)

Textile & Design Limited (under Liquidation since 25th September'' 2009)

GHCL Inc. (Dissolved as at 14th May'' 2012)

Indian Britain B.V. (Liquidated as at 30th November'' 2012)

S C GHCL Upsom SA (ownership upto 12th November'' 2012)

Colwell & Salmon Communications Inc. (Liquidated as at 1st April'' 2013)

Fabient Textile Limited (Dissolved as at 31st January 2012)

Rosebys International Limited (Dissolved as at 31st January 2012)

DM Solar Farm Pvt Limited ( w. e. f. 04th June'' 2012)

b Key Management Personnel:

Mr. R. S. Jalan'' Managing Director

Mr. Tej Malhotra'' Sr. Executive Director - Operations (upto 4th May 2012)

Mr. Raman Chopra'' Executive Director - Finance

c Relative of Key Management Personnel:

Mrs. Bharti Chopra'' w/o Mr. Raman Chopra Ravi Shanker Jalan'' HUF

d Signifi cant infl uence

Dalmia Centre for Research & Development ( w. e. f. 1st August'' 2012)

1.10 Intangible Assets

Intangible Asset'' meeting the defi nition as per the provisions of Accounting Standard - 26 Intangible Assets issued by The Institute of Chartered Accountants of India'' comprises of Software and Trade mark Expenditure on purchased software'' ERP System'' IT related expenses and Trade mark is being written off over a period of three years.

1.11 Impairment of Assets

In pursuance of Accounting Standard - 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India'' the Company has reviewed its carrying cost of assets with value in use (determined based on future earnings) / net selling price (determined based on valuation). Based on such review'' management is of the view that in the current fi nancial year impairment of assets is not considered necessary.

1.12 The details of amounts outstanding to Micro'' Small and Medium Enterprises under the "Micro'' Small and Medium Enterprises Development Act'' 2006 (MSMED Act)'' based on the available information with the Company are as under''

1.13 Category-wise quantitative data about derivative instruments that are outstanding are disclosed as per the requirement of Accounting Standard - 30 issued by the Institute of Chartered Accountants of India.

1.14 The shareholders in their Extra Ordinary General Meeting held on 19th March'' 2008 had approved the Employees Stock Option Scheme (ESOS 2008). Accordingly'' the Employees Stock Option granted pursuant to ESOS 2006 (Series - 1) had been cancelled and equivalent number of options were granted by the compensation committee meeting held on 24th March'' 2008. Under ESOS 2008 the compensation committee has assured a minimum price appreciation guarantee @ 20% on the Exercise Price i.e. Rs. 76.95 per share i.e. the latest available closing price prior to the date of grant of options i.e. 24th March'' 2008.

As per SEBI (ESOS & ESPS) Guidelines 1999 the Employees Stock Option Scheme is administered by the registered Trust named GHCL Employees Stock Option Trust (ESOS Trust). The balance amount of interest free loan that the Company has advanced for the year for the purpose of purchase of shares from the open market for allotment of shares to the eligible employees upon exercising their option from time to time is of Rs. 4''353.57 Lacs (Previous year 6''377.36 Lacs).

The current market value of the shares held by ESOS Trust is lower than the cost of acquisition of these shares by Rs. 3''274 Lacs which is on account of market volatility. The impact of fall in market value'' if any would be appropriately considered by the company in its Statement of Profi t and Loss at the time of exercise of Options by the eligible employees. As per ESOS scheme'' 15'' 65''000 option have been vested with the eligible employees as on March 24th 2010 with an exercise period of 4 years ending on 24th March 2014. However'' in line with the circulars issued by SEBI on January 17'' 2013 and May 13'' 2013 on Employees Stock option Scheme and Employees Stock Purchase Scheme'' GHCL ESOS Scheme will cease to be in existence by December 31'' 2013 and accordingly all the shares held by the trust will be disposed off on or before December 31'' 2013. None of the employees have exercised the option during the period ended 31 March 2013.

The total number of shares purchased by ESOS Trust was 4''995''386 shares. Of these'' 1''579''922 shares were illegally sold by a party against which ESOS trust has initiated legal proceedings. Pursuant to arbitration award dated February 14'' 2013'' ESOS trust has set off Rs.1''057.00 Lacs Loan taken from various companies against 2''068''000 shares pledged on their behalf to third parties.

1.15 The previous years/corresponding period fi gures have been regrouped/reclassifi ed.


Mar 31, 2012

Rupee Term Loans from Banks / Institutions have been secured against :-

a) Loan aggregating to Rs. 17432.16 Lacs is secured by extension of first charge on pari passu basis, by way of equitable mortgage on immovable properties of the Soda Ash Division situated at Sutrapada, Veraval, Gujarat and extension of hypothecation charge on movable assets, both present and future of the company's Soda Ash division situated at village - Sutrapada, Veraval in Gujarat with other term lenders of the said project. The remaining tenure of the loans is 4 to 6 years.

b) Loan aggregating to Rs. 6878.49 Lacs is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company's Soda Ash Division situated at village Sutrapada, Veraval in Gujarat. The remaining tenure of the loans is 7 to 9 years.

c) Loan aggregating to Rs. 16435.14 Lacs is secured by way of first pari passu charge on movable fixed assets of Soda Ash Division situated at village Sutrapada, Veraval in Gujarat. The remaining tenure of the loans is 1 to 5 years.

d) Loan aggregating to Rs. 8130.50 Lacs is secured by first charge on pari passu basis by way of equitable mortgage on fixed assets of the Textile Division situated at Vapi, Gujarat and hypothecation of movable assets both present and future of the Company's Textile Division at Vapi, Gujarat with other term lenders of the said project. The said loan is availed under Technology upgradation Fund Scheme for Textile. The remaining tenure of the loans is 3 to 4 years.

e) Loan aggregating to Rs. 1317.35 Lacs is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company's Home Textile Division situated at Vapi in Gujarat. The remaining tenure of the loans is 7 to 10 years.

f) Loan aggregating to Rs. 3600.00 Lacs is secured by first charge on pari passu basis by way of equitable mortgage on Factory Land & Building of Textile Division situated at Paravai and Manaparai, Tamil Nadu and hypothecation of specified movable assets, both present and future of the Company's Textile Division. The said loan is availed under Technology upgradation Fund Scheme for Textile. The remaining tenure of the loans is 3 to 5 years.

g) Loan aggregating to Rs. 2452.62 Lacs is secured by exclusive charge on the specific fixed assets created out of the proceeds of the loan for Company's Textile Division situated at Madurai, Tamil Nadu. The remaining tenure of the loans is 7 to 10 years.

h) Loan aggregating to Rs. 10748.18 Lacs is secured by extension of first charge on pari passu basis on Factory Land & Building of Textile Division situated at Paravai and Manaparai, Tamil Nadu with other term lenders of the said project. The remaining tenure of the loans is 1 to 4 years.

i) Loan aggregating to Rs. 346.95 Lacs is secured by an exclusive first charge by way of equitable mortgage on immovable properties pertaining to Wind Mill Division - I situated at Irukkandurai village, Tirunelveli District in the state of Tamil Nadu and hypothecation of all present and future movable assets of Wind Mill Division - I. The said loan is availed under Technology upgradation Fund Scheme for Textile. The remaining tenure of the loan is 3 years.

j) Loan aggregating to Rs. 503.55 Lacs is secured by an exclusive first charge on all present and future movable assets of Wind Mill Division - II situated at Chinnaputhur, near Poolavadi in the state of Tamil Nadu. The said loan is availed under Technology upgradation Fund Scheme for Textile. The remaining tenure of the loan is 3 years.

k) Loan aggregating to Rs. 1750.00 Lacs is secured by extension of first charge on all present movable assets of Edible Salt division situated at Thiruporur, Vedaranyam and Industrial Salt Division and exclusive first charge on the factory land and building situated at Thiruporur village, Chengalpattu Taluka, Kancheepuram District. The remaining tenure of the loan is 2 years.

l) Loan aggregating to Rs. 4583.33 Lacs is secured by an exclusive charge on immovable property situated at Plot No.B-38, Section-I, New Okhla Industrial Area (Noida), Dist.-Gautam Budh Nagar, uttar Pradesh. The remaining tenure of the loan is 4 years

m) Loan aggregating to Rs. 3000.00 Lacs is secured by an exclusive charge on immovable property situated at GHCL House, Swastik Society, Navrangpura, Ahmedabad, Gujarat. The remaining tenure of the loan is 5 years.

n) Out of all the aforesaid secured Loans appearing in note 2.3 (a) to 2.3 (m) totalling Rs. 77178.27 lacs, an amount of Rs. 7960.83 lacs is due for payment in next 12 months and accordingly reported under note no 2.9 under the head " others Current Liabilities" as Rs.current maturities of Long Term Debt'.

1) Working Capital Loans are secured by way of hypothecation of stock-in-trade and book debts of Soda Ash / Home Textile Division / Edible Salt / Textile Divisions and second charge on fixed assets of Soda Ash Division / Home Textile Division and Textile Division, both present and future.

2) Specified movable assets referred to in the above notes include all movable assets of Soda Ash Division, Home Textile Division and Textile Division both present and future but subject to prior charge created and / or that may be created in favour of Company's Bankers on stock-in-trade for securing borrowing for working capital.

1. Deletion of Building include a sum of Rs. 91.40 Lacs being cost of office premises acquired on ownership basis sold during the year.

2. Leased mines represent expenditure incurred on development of mines.

3. Cash Subsidy amounting to Rs. 855.70 Lacs (previous year Rs. 823.35 Lacs) relating to Home Textile division at Vapi has been reduced from respective Fixed Assets.

4. Some of the fixed assets have been revalued as on 1st April 2008 as per Scheme of Arrangement duly approved by Hon'ble High Court of Gujarat vide its order dated 30th November 2009 by Rs. 1,01,184.68 lacs (refer note no. 2.28).

5. Deletion of Free Hold Land includes Rs. 548.97 lacs being revaluation amount of land of Sree Meenakshi Mills Division at Madurai and Plant & Machinery of Rs. 9.04 Lacs of Soda Ash Division sold during the year.

*During the year the company has been impacted due to highly volatile forex market and huge devaluation of Rupee. The total impact of this fluctuation resulted into an exchange loss of Rs. 5101.11 Lakh for the year. The Company had some borrowings in foreign currency instruments which carry lower interest rate as compared to Indian Rupee borrowing rate, resulting into to lower interest cost of Rs. 3919.84 lakh. Therefore, out of total exchange loss of Rs. 5101.11 lakh, a sum of Rs. 3919.84 has been recognized under finance cost as "Applicable loss on foreign currency transactions and translation" and balance Rs. 1181.27 Lakh has been shown as Foreign Exchange Loss.

1.1 In Accordance with the Scheme of Arrangement duly approved by Hon'ble High Court of Gujarat vide its order dated 30th November 2009, the Company has taken following effects in the current financial statements :-

a) In accordance with the aforesaid Scheme, goodwill arising on amalgamation or acquisition or consolidation of financials statements of subsidiaries and which requires amortisation or impairment, any unrealizable assets whether fixed or current or tangible or intangible of the company, any diminution/write off in the value of the investments in its subsidiaries; whether in India or overseas, interest and other financial charges paid or payable on borrowings for subsidiaries by the company or by its subsidiaries or borrowings guaranteed by the company, mark to market adjustment on derivative instruments, currency swaps expenses, all the expenses / costs incurred in carrying out and implementing this Scheme, Integration expenses like plant shifting / shutting down, expenses arising on voluntary retirement offered to the employees of acquired companies, expenses for suit for bankruptcy including costs associated with existing projects / subsidiaries / divisions in part and / or whole by the Transferee Company and any additional depreciation on account of any upward revaluation of assets are to be charged to Business Development Reserve Account.

Accordingly Rs.10,330.51 Lacs (previous year Rs. 2,654.45 Lacs) has been charged to Business Development Reserve on account of diminution in the value of investments in and loans & advances to and receivables from subsidiaries. Any further impairment arising out of such diminution shall be accounted for in subsequent years upon reasonable certainty that the same is non realisable and shall be charged to Business Development Reserve until such reserves exists. Further additional depreciation arising out of revaluation amounting to Rs. 1,936.31 Lacs (Previous year Rs. 1,936.95 Lacs) has been charged to the Business Development Reserve. Also an amount of Rs. 2,958.90 lakhs (Previous year Rs. 151.62 lakh gain and ignored) being marked to market impact on derivatives has been charged to Business Development Reserve. An amount of Rs. 10,000 Lacs charged to Business Development Reserve as provision in earlier year has been written back during the current year.

b) As per the Scheme, a sum of Rs. 9,989.96 Lacs (Previous year Rs.18,475.11 Lacs) pertaining to investment in/receivables from subsidiaries have been written off and adjusted against General Reserve.

1.2 Rates and Taxes includes Rs. 10 Lacs (previous year Rs. 10.00 Lacs) for Wealth Tax

b) During the year, a wholly owned step down subsidary Indian England N.V. (Netherlands) has been converted into a wholly owned direct subsidary of the company on 21st February 2012.

c) Textile & Design Limited uK, subsidiary of the company which had filed for administration during 2008-09 is under Liquidation since 28th September, 2009.

d) During the year GHCL upsom, Romania, a step down subsidiary of the company, the plant of which was lying closed since January 2010 due to impending gas issues, has been put under administration on 21st November 2011. The Company is in dialogue with the Judical Administrator to assess the feasiblity of a re-organization plan.

e) Subsequent to Balance Sheet date, GHCL Inc, a step down subsidiary in uSA has been voluntary dissolved on 14th May 2012.

1.3 unquoted investments in subsidiary companies are of long term strategic value in the opinion of the management. Except for as adjusted in the financial statements (as per Note 2.12 above), the current diminution in the value of these investments is temporary in nature considering the inherent value and nature of investee's business proposal and hence no provision is required.

1.4 Rosebys Interiors India Limited, a subsidiary of the company has been classified as a Non-current investment during the year.

1.5 In accordance with the requirements of Accounting Standard - 19 Leases issued by the Institute of Chartered Accountants of India, future obligation/rights as at Balance Sheet Date for lease arrangements amount to

1.6 The value of closing stock of Finished Goods includes excise duty not paid Rs. 62.70 Lacs (previous year Rs.75.16 Lacs). The value of Lignite at mines includes excise duty, royalty & clean energy cess of Rs. 22.16 Lacs (previous year Rs. 19.60 Lacs) on the closing stock. The Value of Salt at Salt Fields includes Cess & Royalty of Rs. 19.11 Lacs (previous year Rs. 15.11 Lacs) on Closing Stock. This has however, no impact on the profit for the year.

1.7 Prior Period Item of Rs. 18.89 Lacs is on account of excess provision of legal expenses of earlier year.

1.8 Loans & Advances includes Rs. 7,650.18 Lacs (previous year Rs. 7524.94 Lacs) paid as advance for purchase of materials and services outstanding for more than six months and considered good.

1.9 As per Accounting Standard-15 "Employee Benefits", the disclosures of Employee Benefits as defined in the Accounting Standard are given below :

The Company's Provident Fund is exempt under section 17 of Employees' Provident Fund and Miscellanous Provision Act, 1952. Conditions for grant of exemption stipulate that the employer shall make good, deficiency if any, in the interest rate declared by the trust vis-a-vis statutory rate.

Defined Benefit Plan

Gratuity (Funded)

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

Leave Encashment (Unfunded)

The Company recognises the leave encashment expenses in the Statement of Profit and Loss based on actuarial valuation.

The expenses recognised in the Statement of Profit and Loss and the Leave encashment liability at the beginning and at the end of the year:

1.10 Related Party Transactions a Subsidiaries :

Colwell & Salmon Communications Inc.

Indian Britain B.V.

Indian England N.V.

Indian Wales N.V.

Dan River Properties LLC

Grace Home Fashions LLC

GHCL Rosebys Limited

Rosebys uK Limited

S C GHCL upsom SA (under administration since 21st November, 2011)

Rosebys Interiors India Limited

Teliforce Holding India Limited

GHCL Inc.(Dissolved as at 14th May, 2012)

Textile & Design Limited (under Liquidation since 28th September, 2009) Fabient Textile Limited (Dissolved as at 31st January, 2012)

Rosebys International Limited (Dissolved as at 31st January, 2012) GHCL International Inc. (Dissolved as at 13th September, 2011)

b Key Management Personnel:

Mr. R. S. Jalan, Managing Director

Mr. Tej Malhotra, Sr. Executive Director - Operations

Mr. Raman Chopra, Executive Director - Finance

c Relative of Key Management Personnel:

Mrs. Bharti Chopra, w/o Mr. Raman Chopra

1.11 Intangible Assets

Intangible Asset, meeting the definition as per the provisions of Accounting Standard - 26 Intangible Assets issued by The Institute of Chartered Accountants of India, comprises of :

a Salt Pans

Expenditure on the development of salt pans is being written off over a period of five years

b Software

Expenditure on purchased software, ERP System and IT related expenses is being written off over a period of three years.

1.12 Impairment of Assets

In pursuance of Accounting Standard - 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India, the Company has reviewed its carrying cost of assets with value in use (determined based on future earnings) / net selling price (determined based on valuation). Based on such review, management is of the view that in the current financial year impairment of assets is not considered necessary.

1.13 The Company has exercised the option granted vide notification F.No.17/33/2008/CL.V dated December 29, 2011 issued by the Ministry of Corporate Affairs and accordingly the exchange differences arising on revaluation of long term foreign currency monetary items for the year ended 31st March, 2012 has been recognised over the maturity period. The unamortised balance is presented as "Foreign Currency Monetary item Translation Difference Account" (FCMTDA). Accordingly an amount of Rs. 428. 68 lacs has been chagred to the Statement of Profit and Loss and an aggregate amount of Rs. 996.15 lacs is deferred and recognised as an asset under FCMTDA.

1.14 The Company provides for the estimated expenditure required to restore quarries and mines. The total estimate of restoration expenses is apportioned over the estimate of mineral reserves and a provision is made based on minerals extracted during the year. The total estimate of restoration expenses will be review periodically, on the basis of technical estimates.

1.15 The shareholders in their Extra Ordinary General Meeting held on 19th March, 2008 had approved the Employees Stock Option Scheme (ESOS 2008). Accordingly, the Employees Stock Option granted pursuant to ESOS 2006 (Series - 1) had been cancelled and equivalent number of options were granted by the compensation committee meeting held on 24th March, 2008. under ESOS 2008 the compensation committee has assured a minimum price appreciation guarantee @ 20% on the Exercise Price i.e. Rs. 76.95 per share i.e. the latest available closing price prior to the date of grant of options i.e. 24th March, 2008.

As per SEBI (ESOS & ESPS) Guidelines 1999 the Employees Stock Option Scheme is administered by the registered Trust named GHCL Employees Stock Option Trust (ESOS Trust). The Company has advanced interest free loan of Rs. 6,377.36 Lacs (Previous year 6,403.20 Lacs) to the Trust for the purpose of purchase of shares from the open market for allotment of shares to the eligible employees upon exercising their option from time to time.

The current market value of the shares held by ESOS Trust is lower than the cost of acquisition of these shares by Rs. 5,692 Lacs which is on account of market volatility. The impact of fall in market value, if any would be appropriately considered by the company in its Statement of Profit and Loss at the time of exercise of Options by the eligible employees. As per ESOS scheme, 15, 65,000 option have been vested with the eliglible empolyees as on March 24th 2010 with an exercise period of 4 years ending on 24th March 2014. However none of the employees have exercised the option during the period ended 31 March 2012.

The total number of shares purchased by ESOS Trust was 4,995,386 shares. Of these, 1,579,922 shares were illegally sold by a party against which ESOS trust has initiated legal proceedings and has got a favorable award from the Court. Additionally, ESOS Trust had taken a loan of Rs.1,057.00 Lacs from various companies and had created a third-party pledge of 2,068,000 shares on behalf of these lender companies. The lender companies could not fulfill their obligations toward the aforesaid third parties and consequently the pledge was invoked by these parties. ESOS trust got a favorable arbitration award against the lender companies whereby the lender companies would restore 2,068,000 shares in favour of ESOS Trust upon ESOS trust repaying their loan of Rs. 967.00 Lacs.

The details as per regulation 12 of SEBI (ESOS & ESPS) Guidelines 1999 are as follows:

* The stock options in respect of two employees i.e. Mr. Nikhil Sen (75000 options, resigned on 31-3-2011) and Mr. Jagdish Daral (20000 options, resigned on 3-12-2011) have lapsed as they have not exercised their vested options within 60 days of date of their resignations.

** Mr. P Surlivelu (20000 options, retired on 30-4-2010), Mr. N K Masand (20000 options, retired on 30-9-2010) and Mr. T Malayarasan (20000 options, retired on 30-6-2011) have not exercised their vested options.

1.16 The previous year's /corresponding period's figures have been regrouped / reclassified to be in conformity with the Revised Schedule VI of the Companies Act. 1956.


Mar 31, 2011

1.

As at As at 31st March, 31st March, 2011 2010 (Rs in (Rs in Lacs) lacs)

b) Contingent Liabilities :

(i) Guarantees issued by banks 1,316.07 1,108.84

(ii) Letters of Credit 76.05 526.68

(ii) Bills discounted with banks (since realized) 3,512.80 989.77

(iv) Claims against the Company not acknowledged as debts

- Income Tax & Wealth Tax 140.49 48.66

- Sales Tax / VAT 5.99 3.99

- Excise & Service Tax 2,769.16 2,205.70

- Other claims 620.00 736.91

(v) Corporate guarantee to Bank on behalf of subsidiaries of the Company 45,192.84 63,298.69

(vi) Premium on redemption of Foreign Currency Convertible Bonds - 5,134.80

2. In Accordance with the Scheme of Arrangement duly approved by Hon'ble High Court of Gujarat vide its order dated 30th November 2009, the Company has taken following effects in the current financial statements :-

a) Gains realised /(premium) paid on account of buyback/redemption and cancellation of 2,900 (Previous year 3,900) Foreign Currency Convertible Bonds (FCCBs) of USD 10,000 each at discount /(premium) amounting to (Rs 926.81 Lacs) (Previous year Rs 2357.36 Lacs) has been transferred to Business Development Reserve Account in accordance with the Scheme.

b) In accordance with the aforesaid Scheme, goodwill arising on amalgamation or acquisition or consolidation of financials statements of subsidiaries and which requires amortisation or impairment, any unrealizable assets whether fixed or current or tangible or intangible of the company, any diminution/write off in the value of the investments in its subsidiaries; whether in India or overseas, interest and other financial charges paid or payable on borrowings for subsidiaries by the company or by its subsidiaries or borrowings guaranteed by the company, mark to market adjustment on derivative instruments, currency swaps expenses, all the expenses / costs incurred in carrying out and implementing this Scheme, Integration expenses like plant shifting / shutting down, expenses arising on voluntary retirement offered to the employees of acquired companies, expenses for suit for bankruptcy including costs associated with existing projects / subsidiaries / divisions in part and / or whole by the Transferee Company and any additional depreciation on account of any upward revaluation of assets are to be charged to Business Development Reserve Account.

Accordingly Rs 2654.45 Lacs (previous year Rs 4,242.70 Lacs) has been charged to Business Development Reserve on account of diminution in the value investments in and loans & advances to and receivables from subsidiaries. Any further impairment arising out of such diminution shall be accounted for in subsequent years upon reasonable certainty that the same is non realisable and shall be charged to Business Development Reserve until such reserves exists. Further additional depreciation arising out of revaluation amounting to Rs 1936.95 Lacs (Previous year Rs 1,936.95 Lacs) has been charged to the Business Development Reserve.

c) As per the Scheme, a sum of Rs 18,475.11 Lacs (Previous year Rs 16,622.24 Lacs) pertaining to receivables from subsidiaries have been written off and adjusted against General Reserve.

d) As per the Scheme, the Profit and Loss Account Balance as appearing in the Balance Sheet of the Company as on 31st March 2010 shall be in part or full, without any further act, instrument or deed, stand re-organised and be appropriated to the General Reserve, as may be considered appropriate by the management in the interest of the company. Accordingly Rs 17,500.00 Lacs (Previous year Rs 15,000 Lacs) has been transferred from Profit and Loss Balance to General Reserve Account.

3. Provision for taxation includes Rs 10.00 Lacs (previous year Rs 12.00 Lacs) for Wealth Tax .

4. The following changes have taken place during the year with regard to Subsidiary Companies

b) Textile & Design Limited UK, subsidiary of the company which had filed for administration during 2008-09 is under Liquidation since 28th September, 2009.

5. Unquoted investments in subsidiary companies are of long term strategic value in the opinion of the management. Except for as adjusted in the financial statements, the current diminution in the value of these investments is temporary in nature considering the inherent value and nature of investee's business proposal and hence no provision is required.

6. Rosebys Interiors India Limited, a subsidiary, was incorporated with a view to separately set up home textiles retail segment and with an the intention to divest ownership and control in the near future. Hence such investment is classified as a current investment. Management is actively looking at divestment opportunity and has accordingly engaged a Merchant Banking Firm to achieve its objective of divestment.

8. The value of closing stock of Finished Goods includes excise duty not paid Rs 75.16 Lacs (previous year Rs 36.65 Lacs). The value of Lignite at mines includes excise duty, royalty & clean energy cess of Rs 19.60 Lacs (previous year Rs 0.74 Lacs) on the closing stock. The Value of Salt at Salt Fields includes Cess & Royalty of Rs 15.11 Lacs (previous year Rs 38.95 Lacs) on Closing Stock. This has however, no impact on the profit for the year.

9. Prior Period Item of Rs 64.29 Lacs is on account of reversal of Excess provision for Wealth Tax and expenses.

10. Loans & Advances includes Rs 7,524.94 Lacs (previous year Rs 7348.08 Lacs) paid as advance for purchase of materials and services outstanding for more than six months and considered good.

11. As per Accounting Standard-15 "Employee Benefits", the disclosures of Employee Benefits as defined in the Accounting Standard are given below :

The Company's Provident Fund is exempted under section 17 of Employees' Provident Fund and Miscellaneous Provision Act, 1952. Conditions for grant of exemption stipulate that the employer shall make good, deficiency if any, in the interest rate declared by the trust vis-à-vis statutory rate.

Defined Benefit Plan

Gratuity (Funded)

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

Leave Encashment (Unfunded)

The Company recognises the leave encashment expenses in the Profit & Loss Account based on actuarial valuation.

12. a. Related Party Transactions Subsidiaries :

Colwell & Salmon Communications Inc.

Indian Britain B.V.

Indian England N.V.

Indian Wales N.V.

GHCL Inc.

GHCL International Inc.

Dan River Properties LLC

Grace Home Fashions LLC

GHCL Rosebys Limited

Textile & Design Limited

Rosebys UK Limited

S C GHCL Upsom SA

Rosebys Interiors India Limited

Fabient Textile Limited

Rosebys International Limited

Teliforce Holding India Limited

Old Apparel Inc (Dissolved as at 7th April 2010)

Old Apparel Properties Inc. (Dissolved as at 7th April 2010)

Textile & Design (No.3) (Dissolved as at 22nd June 2010)

Dan River Inc. (Dissolved as at 10th September 2010)

Dan River International Limited (Dissolved as at 10th September 2010)

Dan River Factory Stores Inc. (Dissolved as at 10th September 2010)

The Bibb Company LLC (Dissolved as at 10th September 2010)

Fabient Global Limited (Dissolved as at 31st December 2010)

b. Key Management Personnel:

Mr. R. S. Jalan, Managing Director

Mr. Tej Malhotra, Sr. Executive Director - Operations

Mr. Raman Chopra, Executive Director - Finance

c. Relative of Key Management Personnel:

Mrs. Bharti Chopra, w/o Mr. Raman Chopra

13. Deferred Revenue Expenditure

Deferred Revenue Expenditure comprises of carrying amount as per Accounting Standard - 26 on Intangible Assets issued by The Institute of Chartered Accountants of India.

Voluntary Retirement Scheme Expenses

Compensation under the Company's voluntary retirement scheme paid/provided is being written off equally over a period of three years.

14. Intangible Assets

Intangible Asset, meeting the definition as per the provisions of Accounting Standard - 26 Intangible Assets issued by The Institute of Chartered Accountants of India, comprises of :

a. Salt Pans

Expenditure on the development of salt pans is being written off over a period of five years.

b. Software

Expenditure on purchased software, ERP System and IT related expenses is being written off over a period of three years.

15. Impairment of Assets

In pursuance of Accounting Standard - 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India, the Company has reviewed its carrying cost of assets with value in use (determined based on future earnings) / net selling price (determined based on valuation). Based on such review, management has provided for an appropriate impairment of assets.

16. Category-wise quantitative data about derivative instruments that are outstanding are disclosed as per the requirement of Accounting Standard - 30 issued by the Institute of Chartered Accountants of India.

b) The Company entered the derivative instruments to hedge the foreign currency risk of fluctuation and protect interest rate risk and not for speculation purposes. Mark to Market profit on outstanding derivatives instruments as on 31st March 2011 stood Rs 151.62. lacs (Previous Year loss Rs 511.34 lacs) arising from hedging transactions by the company for its foreign currency related exposures. The company has not taken credit for the profit on mark to market basis during the year.Since the same would considered on maturity of the contracts.

17. The shareholders in their Extra Ordinary General Meeting held on 19th March, 2008 had approved the Employees Stock Option Scheme (ESOS 2008). Accordingly, the Employees Stock Option granted pursuant to ESOS 2006 (Series - 1) had been cancelled and equivalent number of options were granted by the compensation committee meeting held on 24th March, 2008. Under ESOS 2008 the compensation committee has assured a minimum price appreciation guarantee @ 20% on the Exercise Price i.e. Rs 76.95 per share i.e. the latest available closing price prior to the date of grant of options i.e. 24th March, 2008. Company has made a appropriate provison for a same during the year.

As per SEBI (ESOS & ESPS) Guidelines 1999 the Employees Stock Option Scheme is administered by the registered Trust named GHCL Employees Stock Option Trust (ESOS Trust). The Company had advanced interest free loan of Rs 6,403.20 Lacs (Previous year 6,430.10 Lacs) to the Trust for the purpose of purchased of shares from the open market for allotment of shares to the eligible employees upon exercising their option.

The current market value of the shares held by ESOS Trust is lower than the cost of acquisition of these shares by Rs 5,395 Lacs which is on account of market volatility. The impact of fall in market value, if any would be appropriately considered by the company in its profit and loss account at the time of exercise of Options by the eligible employees. As per ESOS scheme, 15, 65,000 option have been vested with the eliglible empolyees March 24th 2010. However none of the employees has exercised the option during the year ended 31 March 2011.

The total number of shares purchased by ESOS Trust was 4,995,386 shares. Of these, 1,579,922 shares were illegally sold by a party against which ESOS trust has initiated legal proceedings and has got a favorable award from the Court. Additionally, ESOS Trust had taken a loan of Rs 1,057.00 Lacs from various companies and had created a third-party pledge of 2,068,000 shares on behalf of these lender companies. The lender companies could not fulfill their obligations toward the aforesaid third parties and consequently the pledge was invoked by these parties. ESOS trust got a favorable arbitration award against the lender companies whereby the lender companies would restore 2,068,000 shares in favour of ESOS Trust upon ESOS trust repaying their loan of Rs 967.00 Lacs.

The details as per regulation 12 of SEBI (ESOS & ESPS) Guidelines 1999 are as follows:

Particulars Details

a) No of Options granted 16,55,000 (Each option is equivalent to one equity share on exercise of option)

b) Pricing Formula Rs 76.95 (Market Price i.e. the latest available closing price prior to the date of grant of options)

c) Options Vested 15,65,000 (Vesting period is two years from the date of grant i.e. March 24, 2008 to March 24, 2010)

d) Options Exercised Nil

e) Total Number of shares arising as a result of exercise of options Nil

f) Option Lapsed Nil

g) Variation of Terms of Options Nil

h) Money realized by exercise of options Nil

i) Total Number of Options 16,55,000

j) Number of options lapsed for 5 employees left/retired during/earlier 90,000 year

k) Total Number of Options in force as at 31st March, 2011 1,565,000

l) Number of employees to whom options are granted 33

(i) Senior Managerial person at the time of grant of option

Name No. of Name No. of Options Options Granted Granted

Mr. R.S. Jalan 200,000 Mr. BRD 75,000 Krishnamoorthy

Mr. Tej Malhotra 125,000 Mr. R S Pandey 75,000

Mr. Raman Chopra 100,000 Mr. N N Radia 75,000

Mr. Sunil Bhatnagar 100,000 Mr. M 75,000 Sivabalasubra maniun Mr. K V Rajendran 100,000 Mr. Neeraj Jalan 75,000

Mr. Nikhil Sen 75,000

(ii) Any other employee who receives a grant in None any one year of options amounting to 5% or more of option granted during that year

(iii) Identified employees who where granted None options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant.

m) Diluted Earning Per Share (EPS) pursuant Not Applicable to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20 "Earning Per Share"

n) Where the Company has calculated the Not Applicable employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed.

o) Weighted Average exercise prices and weighted Not Applicable average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock.

p) A description of the method and significant Options are assumptions used during granted the year to estimate the fair values of options, at Market including the following weighted average price information :

Risk - Free interest Rate Not Applicable

Expected Life Not Applicable

Expected Volatility Not Applicable

Expected Dividends Not Applicable

The price of the underlying share in the market at the time of grant Rs 76.95 per of option share

18. Subsequent to the Balance Sheet date, GHCL Upsom, Romania, a step down subsidiary of the Company, the plant of which was lying closed since January 2010 due to impending gas issues, has been put under administration on 8th June, 2011. The Company is in dialogue with Bankers and government agencies to work out a feasible re-organisation plan.

19 Previous year figures have been regrouped and reclassified wherever necessary.


Mar 31, 2010

1 Provision for taxation includes Rs. 12.00 Lacs (previous year Rs. 15.00 Lacs) for Wealth Tax.

2 During the earlier year the operations of certain subsidiaries have been adversely affected due to the unprecedented Global meltdown. As a result of the meltdown certain operating subsidiaries of the Company have had financial difficulties. Accordingly the Company has not accounted for interest income on loans granted to all its subsidiary companies as a matter of prudence.

3 Sundry Debtors, Creditors and Loans and Advances are subject to confirmation and consequential adjustment, if any.

4 Pursuant to the Guidelines on Buyback of Foreign Currency Convertible Bonds (FCCBs) issued by Reserve Bank of India (RBI) and subsequent approval from the RBI, the Company has bought back and cancelled 3,900 (Previous year 1,100) FCCBs of Face Value of USD 10,000 each at a discount. At the Balance Sheet date FCCBs worth USD 29 Million (Previous year USD 68 Million) were outstanding. Subsequent to the Balance Sheet date, the Company has further bought back 725 bonds of USD 10,000 each.

5 Unquoted investments in subsidiary companies are of long term strategic value in the opinion of the management. Except for as adjusted in the financial statements, the current diminution in the value of these investments is temporary in nature considering the inherent value and nature of investees business proposal and hence no provision is required.

6 Rosebys Interiors India Limited, a wholly owned subsidiary, was incorporated with a view to separately set up home textiles retail segment and with an the intention to divest ownership and control in the near future. Hence such investments are classified as a current investments. Management is actively looking at divestment opportunity and subsequent to the Balance Sheet date, the company has signed a non binding MOU with regard to the divestment of its stake in retail business, for which company expects to have a positive outcome.

7 Provision for doubtful debts includes Rs. 76.07 Lacs for balance receivable from Product Direct Limited due to an unfavorable decree issued . The sundry debtors balance shall be written off after appropriate approval from Reserve Bank of India is granted.

8 In accordance with the requirements of Accounting Standard - 19 Leases issued by the Institute of Chartered Accountants of India, future obligation/rights as at Balance Sheet Date for lease arrangements amount to

9 The value of closing stock of Finished Goods includes excise duty not paid Rs. 36.65 Lacs (previous year Rs.190.99 Lacs). The value of Lignite at mines includes royalty of Rs. 0.74 Lacs (previous year Rs. 7.56 Lacs) on the closing stock. The Value of Salt at Salt Fields includes Cess & Royalty of Rs. 38.95 Lacs (previous year Rs. 23.45 Lacs) on Closing Stock. This has however, no impact on the profit for the year.

10 Prior Period Item of Rs. 11.29 Lacs is on account of provision for repairs and maintenance of machinery due to non receipt of invoice.

11 Loans & Advances includes Rs. 7,348.08 Lacs (previous year Rs. 7,281.59 Lacs) paid as advance for purchase of materials and services outstanding for more than six months and considered good.

12 As per Accounting Standard-15 "Employee Benefits", the disclosures of Employee Benefits as defined in the Accounting Standard are given below :

Defined Contribution Plan

Provident Fund and Superannuation Fund are Defined Contribution Plan. Contribution paid for Provident Fund and Superannuation Fund are recognised as expense for the year :

The Companys Provident Fund has applied for exemption under section 17 of Employees Provident Fund Act, 1952. Conditions for grant of exemptions stipulates that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate.

Defined Benefit Plan

Gratuity (Funded)

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

The Company recognises the leave encashment expenses in the Profit & Loss Account based on actuarial valuation.

The expenses recognised in the Profit & Loss Account and the Leave encashment liability at the beginning and at the end of the year:

13 a Related Party Transactions Subsidiaries :

Colwell & Salmon Communications Inc.

Indian Britain B.V.

Indian England N.V.

Indian Wales N.V.

GHCL Global Sourcing Limited (Dissolved w.e.f. from 3rd June , 2009)

GHCL Inc.

GHCL International Inc.

Dan River Inc. (Upto 20th April, 2008)

Dan River International Limited (Upto 20th April, 2008)

Dan River Factory Stores Inc. (Upto 20th April, 2008)

Dan River Properties LLC

The Bibb Company LLC ((Upto 20th April, 2008)

Old Apparel Inc

Old Apparel Properties Inc.

GHCL Rosebys Limited

Textile and Design Limited

Textile & Design (No.1) Limited (Dissolved as at 23rd Sept, 2009) Textile and Design (No.2) Limited (Dissolved as at 23rd Sept, 2009) Textile & Design (No.3) Rosebys UK Limited S C GHCL Upsom SA Rosebys Interiors India Limited Fabient Global Limited Fabient Textile Limited Grace Home Fashions LLC Rosebys International Limited Teliforce Holding India Limited

b Key Management Personnel:

Mr. R. S. Jalan, Managing Director Mr. Tej Malhotra, Sr. Executive Director - Operations Mr. Raman Chopra, Executive Director - Finance c Relative of Key Management Personnel: Mrs. Bharti Chopra, w/o Mr. Raman Chopra

14 Deferred Revenue Expenditure

Deferred Revenue Expenditure comprises of carrying amount as per Accounting Standard - 26 on Intangible Assets issued by The Institute of Chartered Accountants of India.

a Voluntary Retirement Scheme Expenses

Compensation under the Companys voluntary retirement scheme paid/provided is being written off equally over a period of three years.

b Prepayment Premium

Premium paid on prepayment of Term Loans/Non - Convertible Debenture is charged off over the tenure of the loan in proportion to the principle amount outstanding.

15 Intangible Assets

Intangible Asset, meeting the definition as per the provisions of Accounting Standard - 26 Intangible Assets issued by The Institute of Chartered Accountants of India, comprises of:

a Salt Pans

Expenditure on the development of salt pans is being written off over a period of five years.

b Software

Expenditure on purchased software, ERP System and IT related expenses is being written off over a period of three years.

c Goodwill

Goodwill is amortized over a period of five years.

16 Impairment of Assets

In pursuance of Accounting Standard - 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India, the Company has reviewed its carrying cost of assets with value in use (determined based on future earnings) / net selling price (determined based on valuation). Based on such review, management is of the view that in the current financial year impairment of assets is not considered necessary.

17 The shareholders in their Extra Ordinary General Meeting held on 19th March, 2008 had approved the Employees Stock Option Scheme (ESOS 2008). Accordingly, the Employees Stock Option granted pursuant to ESOS 2006 (Series -1) had been cancelled and equivalent number of options were granted by the compensation committee meeting held on 24th March, 2008. Under ESOS 2008 the compensation committee has assured a minimum price appreciation guarantee @ 20% on the Exercise Price i.e. Rs. 76.95 per share i.e. the latest available closing price prior to the date of grant of options i.e. 24th March, 2008. Company has made an appropriate provison for a same during the year

As per SEBI (ESOS & ESPS) Guidelines 1999 the Employees Stock Option Scheme is administered by the registered Trust named GHCL Employees Stock Option Trust (ESOS Trust). The Company has advanced interest free loan of Rs. 6,430.10 Lacs (Previous year 6,371.10 Lacs) to the Trust for the purpose of purchase of shares from the open market for allotment of shares to the eligible employees upon exercising their option from time to time.

The current market value of the shares held by ESOS Trust is lower than the cost of acquisition of these shares by Rs. 5,288.52 Lacs which is on account of market volatility. The impact of fall in market value, if any would be appropriately considered by the company in its profit and loss account at the time of exercise of Options by the eligible employees. As per ESOS scheme, 15, 65,000 options have been vested with the eliglible empolyees on March 24, 2010. However, none of the employees have exercised the options during the period ended 31 March 2010.

The total number of shares purchased by ESOS Trust was 4,995,386 shares. Of these, 1,579,922 shares were illegally sold by a party against which ESOS trust has initiated legal proceedings and has got a favorable award from the Court. Additionally, ESOS Trust had taken a loan of Rs.1,057.00 Lacs from various companies and had created a third-party pledge of 2,068,000 shares on behalf of these lender companies. The lender companies could not fulfill their obligations toward the aforesaid third parties and consequently the pledge was invoked by these parties. ESOS trust got a favorable arbitration award against the lender companies whereby the lender companies would restore 2,068,000 shares in favour of ESOS Trust upon ESOS trust repaying their loan of Rs. Lacs.

18 Previous year figures have been regrouped and reclassified wherever necessary.

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