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Notes to Accounts of Monte Carlo Fashions Ltd.

Mar 31, 2018

1. i) Corporate Information

Monte Carlo Fashions Limited (the “Company”) incorporated is a public company incorporated under the provisions of the Companies Act, 1956 on 1 July 2008. Its shares are listed on both BSE Limited and National Stock Exchange of India Limited. The company is engaged in manufacturing of designer woollen/cotton ready made apparels under its brand “MONTE CARLO” which has also been recognised as a “SUPER BRAND”.

ii) Basis of Preparation

The financial results of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended.

For all periods up to and including the year ended 31 March 2017, the Company prepared its financial results in accordance accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

The Company had prepared the Opening Ind AS balance sheet as at 1 April 2016 using the exemption and exceptions provided under Indian Accounting Standards, Ind AS 101, First time adoption of Indian Accounting Standards.The exemptions availed by the Company are presented with the respective accounting policies.

The financial results have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:

- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments),

- Property, plant and equipment and intangible assets have been carried at deemed cost on the date of transition using the optional exemption allowed under Ind AS 101.

Notes :

i) Capital commitments

Refer note 28 for disclosure of capital commitments for the acquisition of property, plant and equipment.

ii) Property plant and equipment pledged as security

Refer note 30 for information on property, plant and equipment pledged as security by the Company.

iii) The Company has availed the deemed cost exemption under Ind AS 101- First time adoption of Indian Accounting Standards in relation to the property, plant and equipment on the date of transition. Consequently, the net block carrying amount as on 1 April 2016 under Ind AS has been considered to be same as the net block carrying amount under previous GAAP as on that date. Refer the below note for the gross block value and the accumulated depreciation on 1 April 2016 under the previous GAAP.

Note:

i) The Company has availed the deemed cost exemption under Ind AS 101- First time adoption of Indian Accounting Standards in relation to the intangible assets on the date of transition. Consequently, the net block carrying amount as on 1 April 2016 under IndAS has been considered to be same as the net block carrying amount under previous GAAP as on that date. Refer the below note for the gross block value and the accumulated amoritsation on 1 April 2016 under the previous GAAP

*Non-current bank balances includes nil (as at 31 March 2017 Rs. 1 lakhs and as at 1 April 2016 Rs. 1 lakhs) pledged against bank guarantees given to excise authorities and Nil (as at 31 March 2017 Rs. 1,650 lakhs and as at 1 April 2016 Rs. 2,500 lakhs) taken from DCB Bank are pledged against overdraft facility.

Note:

i) Refer note 34 for disclosure of fair values in respect of financial assets measured at amortised cost.

Note:

i) Deposits with original maturity more than three months but remaining maturity of less than twelve months includes nil (as at 31 March 2017 Nil and as at 1 April, 2016 Rs. 5,500 lakhs) taken from Yes Bank, Rs. 1,650 lakhs (as at 31 March 2017 Rs. 2,500 lakhs and as at 1 April 2016 Rs. 1,500 lakhs) taken from DCB Bank are pledged against overdraft facility and Rs. 3.37 lakhs (as at 31 March 2017 Rs. 23.79 lakhs and as at 1 April 2016 nil) taken from State Bank of India against the utilisation of non fund based limits.

ii) Other bank balances include Rs. 6.43 lakhs (as at 31 March 2017 Rs. 4.08 lakhs and as at 1 April 2016 Rs. 2.22 lakhs) held in dividend accounts which is not available for use by the Company.

ii) The Company has only one class of equity shares having a par value of Rs. 10 each. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

iv) The Company does not have any holding or subsidiary Company.

v) The Company has not issued any share pursuant to a contract without payment being received in cash in the current year and preceding five years. The Company has not issued any bonus shares nor has there been any buy-back of shares in the current year and preceding five years.

*The Company has transferred Rs. 1791.64 Lakhs (as at 31 March, 2017 Rs. 1,269.68 lakhs and as at 1 April, 2016 Rs. 1768.15 lakhs) to special reserve for the purpose of future acquisitions of any brand or business in line with the existing business of the Company to facilitate the expansion of its operations.

* Board of Directors have recommended dividend @ 120% (as at 31 March 2017 100% and as at 1 April 2016 100%) amounting to Rs. 12 per share (as at 31 March 2017 Rs. 10 per share and as at 1 April 2016 Rs. 10 per share). The dividend recommended by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting. In accordance with the revised Indian Accounting Standard -10 ‘Events after the Reporting Period’ proposed dividend for the current year and Corporate Dividend Tax thereon has not been recognised as a distribution of profit in the current year’s accounts.

Nature and purpose of reserves Capital reserve

The reserve comprises of profits/gains of capital nature earned by the Company and credited directly to such reserve. The reserve is utilised in accordance with the specific provision of the Companies Act, 2013.

Securities premium account

Securities premium account comprises of the premium on issue of shares. The reserve is utilised in accordance with the specific provision of the Companies Act, 2013.

Corporate social responsibility reserve

Corporate social responsibility reserve comprises of the amount set aside to contribute towards its corporate social responsibility obligations. The reserve would be utilised as and when the Company is ready to go ahead for the project.

Special reserve

This reserve represents appropriation of certain percentage of profits for the purpose of future acquisitions of any brand or business in line with the existing business of the Company to facilitate the expansion of its operations.

General reserve

The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. Retained earnings

Retained earnings refer to net earnings not paid out as dividends, but retained by the Company to be reinvested in its core business. This amount is available for distribution of dividends to its equity shareholders.

Notes:

i) Refer note 34 for disclosure of fair values in respect of financial liabilities measured at amortised cost and analysis of their maturity profiles.

ii) Security for term loans:

a) Security in respect of term loan facility sanctioned of Rs. 4,985 lakhs by State Bank of India:

Primary security:

First pari-passu charge on the Company’s entire present and future movable and immovable fixed assets including equitable mortgage of factory land held in the name of the Company.

Collateral security:

Second pari-passu charge on current assets of the Company (present and future)

b) Security in respect of term loan facility sanctioned of Rs. 8,090 lakhs by State Bank of India:

Hypothecation charge on first pari-passu basis with other term lenders on all the factories, plant and machinery including the proposed machines and equitable mortgage of factories land and building situated at Ludhiana.

Personal guarantee:

Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal

c) Security in respect of term loan facility sanctioned of Rs. 13,086 lakhs by Indian Bank:

Primary security:

1) Fixed assets to be acquired out of bank loan including land and building estimated at Rs. 13,386.00 lakhs. For creation of equitable mortgage on the land to be acquired, 3 month time is permitted and pari-passu charge to be created with term lenders as at point no. 2 below.

2) 1st charge on fixed assets of the Company both present and future on pari-passu basis with the existing term loan lenders.

Collateral security:

2nd pari-passu charge on current assets of the Company both present and future. 1st charge being with the banks meeting working capital requirements of the Company.

Personal guarantee:

Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal

iii) Terms of repayment

Repayment terms of the loans are as follows:

a) Term loan from State Bank of India amounting to Rs. 1,538.38 lakhs (as at 31 March 2017 Rs. 1,794.77 lakhs and as at 1 April 2016 Rs. 2,326.21 lakhs) [(sanctioned amount Rs. 4,985 lakhs and disbursed amount Rs. 2,326.21 lakhs)] repayment of which commenced from 30 June 2016, carrying interest rate of 0.65% above one year marginal cost of lending rate (MCLR), is repayable in 24 quarterly instalments of Rs. 64.10 lakhs each would be due for repayment on 31 March 2024.

b) Term loan from Indian Bank amounting to nil (as at 31 March 2017 Rs. 1,310.08 lakhs and as at 1 April 2016 Rs. 4,497.15 lakhs) repayment of which commenced from 30 September 2013 carrying interest rate of 1.5% over base rate, has been repaid during the current year.

c) Term loan from State Bank of India amounting to nil (as at 31 March 2017 nil and as at 1 April 2016 Rs. 49.67 lakhs) repayment of which commenced from 1 April 2011, carrying interest rate of 1% over base rate, has been repaid during the previous year.

Notes:

i) Refer note 34 for disclosure of fair values in respect of financial liabilities measured at amortised cost and analysis of their maturity profiles.

ii) Security for working capital loans:

Details of rate of interest, terms of repayment and security for working capital borrowings from banks:

Working capital borrowings from State Bank of India is carrying interest rate of 0.15% (As at 31 March 2017 0.35% and As at 1 April 2016 1.25%) over base rate.

Working capital borrowings from Allahabad Bank is carrying interest rate of nil (As at 31 March 2017 0.80% and As at 1 April 2016 0.80%) over base rate.

Terms of repayment:

Working capital borrowings are repayable on demand.

Security in respect of working capital borrowings availed from State Bank of India (As at 31 March 2017 and As at 1 April 2016 through consortium arrangement of Allahabad Bank, Federal Bank and State Bank of India)

Primary security:

First pari-passu charge on the all current assets of the Company (present and future).

Collateral security:

Second pari-passu charge on the Company’s entire present and future block of assets of the Company including equitable mortgage of factory land held in the name of the Company.

(1) Plot No. 231, measuring 4,880 sq. yards at Industrial Area A, Ludhiana. (Sale deed no. 2640 dated 20 September 1956)

(2) Plot No. 232, measuring 4,095 sq. yards at Industrial Area A, Ludhiana (Sale deed no. 2135 dated 07 September 1964)

(3) Land measuring 14,278 sq. yards at Sherpur Kalan, GT Road, Ludhiana (Sale deed no. 14397 dated 13 October 2011)

(4) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 117.50 sq. yards (Sale deed no. 14721 dated 14 January 1986)

(5) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 117.50 sq. yards (Sale deed no. 15516 dated 27 January 1986)

(6) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 125 sq. yards (Sale deed no. 14722 dated 14 January 1986)

(7) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 125 sq. yards (Sale deed no. 15517 dated 27 January 1986)

Personal guarantee:

Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal

Details of rate of interest, terms of repayment and security for overdraft borrowings from banks:

Overdraft borrowings from DCB Bank is carrying interest rate of 0.35% (As at 31 March 2017 0.35% and As at 1 April 2016 0.35%) over fixed deposit rate, Overdraft borrowing from Federal Bank is at 7.85% (As at 31 March 2017 nil and As at 1 April 2016 nil) and Overdraft borrowings from Yes Bank is carrying interest rate of nil (As at 31 March 2017 0.40% and As at 1 April 2016 0.40%) over fixed deposit rate.

Terms of repayment:

Working capital borrowings are repayable on demend.

Primary security:

First pari-passu charge created on fixed deposits with DCB Bank and First pari-passu charge created on mutual funds with Federal Bank

Notes:

i) Refer note 34 for disclosure of fair values in respect of financial liabilities measured at amortised cost and analysis of their maturity profiles.

Notes:

i) There are no amounts due for payment to the Investor Education and Protection Fund under section 125 of the Companies Act, 2013 as at the year end.

ii) Refer note 34 for disclosure of fair values in respect of financial liabilities measured at amortised cost and analysis of their maturity profiles.

* Amount of nil (as at 31 March 2017 Rs. 646.64 lakhs) recognised as an asset in the books of account based on the favorable order received from CESTAT. The amount was charged to the statement of profit and loss in prior periods due to uncertainty associated with the recovery of counter veiling duty levied by authorities on certain goods imported by the Company.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.

3. Earnings per share (EPS) (Ind AS 33)

The Company’s earnings per share (‘EPS’) is determined based on the net profit attributable to the shareholders’ of the Company. Basic earnings per share is computed using the weighted average number of shares outstanding during the year. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the year including share options, except where the result would be anti-dilutive.

4. Employee Benefits

a) Defined contribution plan

The Company make contribution towards employee’s provident fund, employee’s state insurance and labour welfare fund schemes. The Company has recognised Rs. 394.45 lakhs (previous year Rs. 369.81 lakhs) as contributions towards these schemes.

b) Defined benefit plan

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. For the funded plan, the Company makes contributions to recognised funds in India.

These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year-end by reference to government bonds of relevant economic markets and that have terms to maturity approximating to the terms of the related obligation. Other assumptions are based on management’s historical experience.

(xi) Expected Contribution

The expected future employer contributions for defined benefit plan Rs. 413.85 Lakhs as at 31 March, 2018 (as at 31st March, 2017 i.e. Rs. 323.89 Lakhs)

5. Corporate Social Responsibility

The Company for its Corporate Social Responsibility (“CSR”) has joined hands with other group companies and agreed to spent on CSR activities through a recognized charitable organization, M/s. Oswal Foundation. The Company would contribute its CSR contribution from time to time to Oswal Foundation for the CSR activities undertaken by them. The Company has set aside aggregating to Rs. 156.20 lakhs for the current year towards CSR reserve and shall not be used for any purpose (refer note 11).

In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) committee. In terms with the provisions of the said Act, the Company was required to spend a sum of Rs. 164.38 lakhs (as at 31 March 2017 Rs. 177.0 lakhs and as at 1 April 2016 Rs. 161.36 lakhs) towards CSR activities. The details of amount actually spent by the Company are:

6. Dues to micro, small and medium enterprises

On the basis of confirmations obtained from suppliers who have registered themselves under the Micro, Small and Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:

d) Measurement of fair values

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

(i) The management assessed that the fair values of cash and cash equivalents, other bank balances, trade receivables, other current financial assets, trade payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

(ii) The fair value of Company’s fixed interest-bearing loans and receivables that approximate to their carrying amounts as it is based on discounting future cash flows using rates currently available for debts on similar terms, credit risk and remaining maturities. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs.

(iii) All the other long-term borrowing facilities availed by the Company are variable rate facilities which are subject to changes in underlying interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Company’s creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values.

7. Financial risk management objectives and policies

The Company’s principal financial liabilities comprise loans and borrowings, trade payables and other financial liabilities. The main purpose of these financial liabilities is to finance the Company’s operations and to support its operations. The Company’s financial assets include loans, trade and other receivables and cash & cash equivalents that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The company’s senior management oversees the management of these risks. The company’s senior management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Company. This financial risk committee provides assurance to the Company’s senior management that the Company’s financial risk activities are governed by appropriate policies and procedure and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each risk, which are summarised as below:

(A) 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 and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits and payables/receivables in foreign currencies.

a) Market risk- 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 debt obligations with floating interest rates. The Company is carry its borrowings primarily at variable rate.

Interest rate sensitivity

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

b) Market risk- Foreign currency risks

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, EURO and JPY. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company. Considering the low volume of foreign currency transactions, the Company’s exposure to foreign currency risk is limited and the Company hence does not use any derivative instruments to manage its exposure. Also, the Company does not use forward contracts and swaps for speculative purposes

Foreign currency sensitivity

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

c) Market risk- Price risks

The Company’s exposure to equity securities price risk arises from investments in mutual funds held by the Company and classified in the balance sheet at fair value through profit and loss. To manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

(B) 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’s exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.

(a) Credit risk management

The Company assesses and manages credit risk based on internal credit rating system. Internal credit rating is performed for each class of ‘financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.

(i) Low credit risk on financial reporting date

(ii) Moderate credit risk

(iii) High credit risk

The Company provides for expected credit loss based on the following:

Cash & cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.

Trade receivables

Credit risk related to trade receivables are mitigated by taking bank guarantees/letter of credit for export sales, which results in low credit risk. The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become one year past due.

Loans and Other financial assets measured at amortised cost

Loans and other financial assets measured at amortized cost includes Security deposits, term deposits with banks and interest accrued on deposits. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously.

(C) Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company’s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt and overdraft from domestic banks at an optimised cost. It also enjoys strong access to domestic capital markets across equity

(ii) Dividends not recognised at the end of the reporting period

In addition to the above dividends, since year end the directors have recommended the payment of a final dividend of Rs. 12 per fully paid equity share. This proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.

8. Capital Management

The Company’s capital management objectives are to ensure the Company’s ability to continue as a going concern as well as to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

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 includes within net debt, interest bearing loans and borrowings, trade payables, less cash and cash equivalents and other bank balances.

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 years ended 31 March 2018 and 31 March 2017.

9. First Time Adoption as per Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS. These financial statements, for the year ended 31 March 2018, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2017, 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 ending on 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, 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 2016, the Company’s date of transition to Ind AS. An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes. Exemptions and exceptions availed Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A. Ind AS Optional exemptions availed.

(a) Deemed Cost

Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and for Investment properties covered by Ind AS 40 Investment Properties.

Accordingly, the Company has elected to measures all of its property, plant and equipment and intangible assets at their previous GAAP carrying values.

(b) Leases

Appendix C to Ind AS 17 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 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.

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

B. Ind AS Mandatory exceptions

(a) Estimates

An entity’s 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 as at 1 April 2016 and 31 March 2017 are consistent with the estimates as at the same date made in the conformity with previous GAAP .The Company has made estimates for following items in accordance with Ind AS at the date of transition as these were not required under IGAAP

(i) Investments in mutual funds carried at FVTPL

(b) Classification and measurement of financial assets

As required under Ind AS 101 the company has assessed the classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

C. Transition to Ind AS - Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS as required under Ind AS 101:

1) Reconciliation of Balance sheet as at 1 April 2016 (Transition date)

2) (a) Reconciliation of Balance sheet as at 31 March 2017

(b) Reconciliation of Total Comprehensive Income for the year ended 31 March 2017

3) Reconciliation of Equity as at 1 April 2016 and as at 31 March 2017

4) Reconciliation of Statement of Profit & Loss account as at 31 March 2017

10. First time adoption as per Ind AS (cont’d)

The presentation requirements under Previous GAAP differs from Ind AS, and hence, Previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped Previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP.

The following explains the material adjustments made while transition from previous accounting standards to Ind AS

(i) Fair valuation of Investments

Under the previous GAAP, investments in equity instruments were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments.

Under Ind AS all investments to be measured at fair value at the reporting date and all changes in the fair value have been recognised in retained earnings as at the date of transition and subsequent to the transition date to be recognised in the profit and loss. The fair value changes of these investments resulting in increase in investments by Rs. 1,006.62 Lakhs as at 31 March 2017 (Rs. 843.79 Lakhs as at 1 April 2016) and correspondingly there is increase in other income by Rs. 1,006.62 Lakhs as at 31 March 2017 and also increase in retained earning by Rs. 843.79 Lakhs As at 1 April 2016.

(ii) Prior period Items

Under previous GAAP, prior period items are included in determination of net profits in which error pertaining to prior period is discovered. Under Ind AS, prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred or if the error occurred before the earliest period presented, by restating the opening balance sheet.

(iii) Remeasurements of post employment benefit obligation

Under the previous GAAP, these re-measurement were forming part of the profit or loss for the year.

Under Previous GAAP, the interest cost on defined benefit liability and expected return on plan assets was recognised as employee benefit expenses in the Statement of Profit and Loss.

Under Ind AS, re-measurement i.e. actuarial gain/loss on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. As a result of this change, the profit for the year ended on 31 March 2017 decreased by Rs. 196.02 Lakhs. There is no impact on retained earning as at 1 April 2016.

(iv) Non Current-Borrowings

Under the previous GAAP, these transaction costs were charged to the profit and loss as and when incurred.

As required under the Ind AS 109 transactions costs incurred towards origination of borrowings have been deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit and loss over the tenure of the borrowing as interest expense, computed using the effective interest rate method corresponding effect being in Long term borrowings.

Consequently, borrowings as at 31 March 2017 have been reduced by Rs. 0.025 Lakhs ( as at 1 April 2016 Rs. 0.46 Lakhs) with a corresponding adjustment to increase in retained earning. The profit under the previous GAAP for the year ended 31 March 2017 has been reduced by Rs. 0.43 Lakhs due to additional interest expense.

(v) Deferred taxes

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 12 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 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.

(vi) Security deposits Received

Under Previous GAAP, the security deposits received are accounted at transaction value.

Under Ind AS, these are carried at amortized cost. The security deposits have been recognised at discounted value and the difference between undiscounted and discounted value has been recognised as ‘Deferred Income’ which has been amortised over respective term as notional interest income under ‘other income’. The discounted value of the security deposits is increased over the period of lease term by recognising the notional expense under ‘Cost of material consumed’. The effect of this change is decrease in security deposits under other financial liabilities by Rs. 29.77 lakhs as at 31 March 2017 (Rs. 19.89 lakhs as at 1 April 2016) and increase in other non current liabilities by Rs. 15.17 lakhs as at 31 March 2017 (Rs. 10.27 lakhs as at 1 April 2016) and increase in other current liabilities by Rs. 14.35 lakhs as at 31 March 2017 (Rs. 9.42 lakhs as at 1 April 2016). There had been increase in other income by Rs. 2.48 lakhs and finance cost by Rs. 2.44 lakhs for the year ended 31 March 2017 and increase in retained earnings by Rs. 0.20 lakhs as at 1 April 2016.

(vii) Security deposits Paid

Under IGAAP, the security deposits for leases are accounted at transaction value.

Under Ind AS, the security deposits for leases have been recognised at discounted value and the difference between undiscounted and discounted value has been recognised as ‘Prepaid lease rent’ which has been amortised over respective lease term as rent expense under ‘other expenses’. The discounted value of the security deposits is increased over the period of lease term by recognising the notional interest income under ‘other income’. the effect of this change is decrease in security deposits paid under non-current loans under financial assets by Rs. 140.96 lakhs as at 31 March 2017 (Rs. 125.06 lakhs as at 1 April 2016) and increase in other non current assets by Rs. 98.87 lakhs as at 31 March 2017 (Rs. 89.61 lakhs as at 1 April 2016) and increase in other current assets by Rs. 28.43 lakhs as at 31 March 2017 (Rs. 22.79 lakhs as at 1 April 2016). There had been increase in Other income by Rs. 19.62 lakhs and other expenses by Rs. 20.63 lakhs for the year ended 31 March 2017 and decrease in retained earnings by Rs. 12.64 lakhs as at 1 April 2016.

(viii) Deferred Rent straight lining

Under previous GAAP, lease rentals under an operating lease are recognized as an expense/income on a straight line basis over the lease term. Under Ind AS, no straight-lining of lease rental is required, if lease escalations are in line with the expected general inflation to compensate the lessor for expected inflationary cost. the effect of this change is decrease in in other non current liabilities by Rs. 0.74 lakhs as at 31 March 2017 (Rs. 166.76 lakhs as at 1 April 2016) and increase in other current liabilities by Rs. 6.62 lakhs as at 31 March 2017 (Rs. 14.45 lakhs as at 1 April 2016). There had been decrease in other expenses by Rs. 7.37 lakhs for the year ended 31 March 2017 and increase in retained earnings by Rs. 181.22 lakhs as at 1 April 2016.

(ix) Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Item of income and expense that are not recognised in profit or loss but are shown in the Statement of profit and loss as “other comprehensive income” includes fair value gain / loss on FVOCI equity instruments and re-measurement of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.

(x) Retained earnings

Retained earnings as at 1 April 2016 has been adjusted consequent to the above Ind AS transition adjustments.

(xi) Proposed Dividend and tax thereon

Under Previous GAAP, proposed dividends are recognized as liability in the period to which they relate irrespective of the approval by shareholders. Under Ind AS, a proposed dividend is recognised as a liability in the period in which it is declared by the company (on approval of shareholders in a general meeting) or paid. Therefore, the liability recorded under previous GAAP has been derecognised.

(xii) Current Borrowings

Under previous GAAP, renewal/annual charges on cash credit or overdraft facitlities need to be straight lined over the period of the facitlity. In the current practice it was charged to Profit or loss as and when charged by bank not on quarterly basis. Company has adopted the practice to amortise these facility charges over the period of facility in Ind AS and charging to Profit or loss on straight lined basis over the period of the facility. The effect of this change is increase in short term borrowings Rs. 12.87 lakhs as at 31 March 2017. and there is increase in finance cost of Rs. 12.87 lakhs as at 31 March 2017 resulting there is increase in Retained earning by Rs. 12.87 lakhs as at 31 March 2017.

Classification & Presentation

(xiii) Discounts and incentives to customers

Under previous GAAP, discounts and incentives to the customers were shown as a part of other expense. Under Ind AS, revenue from sale of products are recognised at net of discounts and incentives to the customers. Thus, sale of products under Ind AS has decreased by Rs. 247.59 Lakhs for the year ended 31 March 2017, with a corresponding decrease in selling expenses.

(xiv) Excise Duty

Under the previous GAAP, sale of goods was presented as net of excise duty. Under Ind AS, revenue from sale of products is presented inclusive of excise duty. The excise duty paid on sale of products is separately presented on the face of statement of profit and loss as a part of expense. Thus sale of goods under Ind AS has increased by Rs. 692.78 lakhs as at 31 March 2017.

11. Regrouping and restatement

The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31 March 2017 as compared with the previous GAAP


Mar 31, 2017

Notes:

(a) Security for term loans:

1 Security in respect of term loan facility sanctioned of '' 498,500,000 by State Bank of Patiala:

Primary Security:

First pari-passu charge on the Company’s entire present and future movable and immovable fixed assets with other term lenders including equitable mortgage of factory land held in the name of the Company.

Collateral security:

Second pari-passu charge on current assets of the Company (present and future) along with other working capital consortium member bank.

2 Security in respect of term loan facility sanctioned of '' 809,000,000 by State Bank of Patiala:

Hypothecation charge on first pari-passu basis with other term lenders on all the factories, plant and machinery including the proposed machines and equitable mortgage of factories land and building situated at Ludhiana.

Personal guarantee:

Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal

3 Security in respect of term loan facility sanctioned of '' 1,308,600,000 by Indian Bank:

Primary security:

1) Fixed assets to be acquired out of bank loan including land and building estimated at Rs, 1,338,600,000. For creation of equitable mortgage on the land to be acquired, 3 month time is permitted and pari-passu charge to be created with Term lenders as at point no. 2 below.

2) 1st charge on fixed assets of the Company both present and future on pari-passu basis with the existing term loan lenders.

Collateral security:

2nd pari-passu charge on current assets of the company both present and future. 1st charge being with the banks meeting working capital requirements of the Company.

Personal guarantee:

Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal

(b) Terms of repayment

Repayment terms of the loans are as follows:

(i) Term loan from State Bank of Patiala amounting to Rs, 179,477,127 (previous year Rs, 232,621,400) [(sanctioned amount Rs, 498,500,000 and disbursed amount Rs, 232,621,400)] repayment of which commenced from 30 June 2016, carrying interest rate of 0.65% above one year marginal cost of lending rate (MCLR), is repayable in 28 quarterly installments of Rs, 6,409,898 each would be due for repayment on 31 March 2024 (the loan has been rescheduled during the year, previous year the loan was repayable in 32 quarterly installments of Rs, 15,578,125 each would be due for repayment on 31 December 2019).

(ii) Term loan from Indian Bank amounting to Rs, 131,010,000 (previous year Rs, 449,759,242) repayment of which commenced from 30 September 2013 carrying interest rate of 1.5% over base rate, is repayable in 2 quarterly installments of Rs, 65,430,000 each, last quarterly installment of Rs, 150,000.

(iii) Term loan from State Bank of Patiala amounting to Rs, Nil (previous year Rs, 4,967,288) repayment of which commenced from 1 April 2011, carrying interest rate of 1% over base rate, has been repaid during the current year.

Details of rate of interest, terms of repayment and security for working capital borrowings from banks:

Working capital borrowings from State Bank of India is carrying interest rate of 0.35% (Previous year 1.25%) over base rate.

Working capital borrowings from State Bank of Patiala is carrying interest rate of 0.75% (Previous year 0.75%) over base rate.

Working capital borrowings from Allahabad Bank is carrying interest rate of 0.80% (Previous year 0.80%) over base rate.

Terms of repayment:

Working capital borrowings are repayable on demand.

Security in respect of working capital borrowings availed through consortium arrangement of Allahabad Bank, State Bank of Patiala and State Bank of India.

Primary security:

First pari-passu charge on the all current assets of the Company (present and future).

Collateral security:

Second pari-passu charge on the Company’s entire present and future block of assets of the Company including equitable mortgage of factory land held in the name of the Company.

(1) Plot No. 231, measuring 4,880 sq. yards at Industrial Area A, Ludhiana. (Sale deed no. 2640 dated 20 September 1956)

(2) Plot No. 232, measuring 4,095 sq. yards at Industrial Area A, Ludhiana (Sale deed no. 2135 dated 07 September 1964)

(3) Land measuring 14,278 sq. yards at Sherpur Kalan, GT Road, Ludhiana (Sale deed no. 14397 dated 13 October 2011)

(4) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 117.50 sq. yards (Sale deed no. 14721 dated 14 January 1986)

(5) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 117.50 sq. yards (Sale deed no. 15516 dated 27 January 1986)

(6) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 125 sq. yards (Sale deed no. 14722 dated 14 January 1986)

(7) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 125 sq. yards (Sale deed no. 15517 dated 27 January 1986)

Personal guarantee

Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal

Details of rate of interest, terms of repayment and security for Overdraft borrowings from banks:

Overdraft borrowings from DCB Bank is carrying interest rate of 0.35% over fixed deposit rate and overdraft borrowings from Yes Bank is carrying interest rate of 0.40% over fixed deposit rate.

Primary security:

First pari-passu charge created on fixed deposits with DCB Bank and Yes Bank.

Notes :

(1) The discount rate is based on the prevailing market yield of Indian Government bonds as at the balance sheet date for the estimated terms of obligations.

(2) The expected return is based on the expectation of the average long term rate of return on investments of the fund during the estimated terms of obligations.

(3) The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

(4) Plan assets mainly comprise funds managed by the insurer i.e. Life insurance Corporation of India

(5) The Company makes annual contributions to the Life insurance Corporation of India (‘LIC’) of an amount advised by the LIC.

34 Related party disclosure

a) Disclosure of related parties and relationship between the parties

Nature of relationship Name of related party

Entities in which directors of the Company are able to Oswal Woollen Mills Limited exercise control or have significant influence

Atam Vallabh Financiers Limited Girnar Investment Limited

Nagdevi Trading and Investment Company Limited

Abhilash Growth Fund Private Limited

Ruchika Growth Fund Private Limited

Monica Growth Fund Private Limited

J L Growth Fund Limited

Nahar Growth Fund Private Limited

Vanaik Investors Limited

Vanaik Spinning Mills Limited

Vardhman Investment Limited

Palam Motels Limited

Nahar Spinning Mills Limited

Nahar Industrial Enterprises Limited

Nahar Financial and Investment Limited

Nahar Industrial Infrastructure Corporation Limited

Nahar Capital and Financial Services Limited

Sankheshwar Holding Company Limited

Oswal Leasing Limited

Oswal Foundation

Cotton County Retail Limited

Crown Star Limited (UK)

Nahar Poly Films Limited Hugs Foods (Private) Limited Siddhant and Mannat Company Limited Simran and Shanaya Company Limited Neha Credit and Investment Private Limited Retailer kart E.Venture Private Limited Cabot Trading and Investment Company Private Limited Bermuda Insurance Brokers Private Limited Kovalam Investment and Trading Company Limited Vigil Investment Private Limited Amloh Industries Limited Suvrat Trading Company Limited Key management personnel (KMP) and their relatives Jawahar Lal Oswal (Chairman and Managing Director)

Sandeep Jain (Executive Director)

Monica Oswal (Executive Director)

Ruchika Oswal (Executive Director)

Relatives of KMP’s * Rishabh Oswal

* With respect to the relatives of key management personnel, disclosure has been given for those relatives with whom the Company has made transactions during the year.


Mar 31, 2016

The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made where there is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or where reliable estimate of the obligation cannot be made. q) Cash and cash equivalents

Cash and cash equivalents comprise cash and deposit with banks. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

(e) Details of shares issued pursuant to contract without payment being received in cash, allotted as fully paid up by way of bonus issues and bought back during the last 5 years

(i) The Company issued 8,715,000 bonus equity shares in the year 2011-2012 in the ratio of 1:1. There has been no buy-back of shares in the current year and preceding five years.

(ii) The Company had issued 8,665,000 equity shares pursuant to demerger scheme approved by Hon''ble High Court of Punjab and Haryana during the year ended 31 March 2012.

Collateral security:

Second pari-passu charge on current assets of the Company (present and future) along with other working capital consortium member bank.

2 Security in respect of term loan facility availed through State Bank of Patiala:

Primary security:

Hypothecation charge on first pari-passu basis with other term lenders on all the factories plant & machinery including the proposed machines and equitable mortgage of factories land and building situated at Ludhiana. Personal guarantee:

Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal

3 Security in respect of term loan facility availed through Allahabad Bank:

Primary security :

First pari-passu charge on the fixed assets of the company.

Collateral security:

Second pari - passu charge on the current assets of the company.

Personal guarantee:

Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal

4 Security in respect of term loan facility availed through Indian Bank:

Primary security:

1) Fixed assets to be acquired out of bank loan including land and building estimated at Rs. 1,338,600,000. For creation of equitable mortgage on the land to be acquired, 3 month time is permitted and pari-passu charge to be created with Term lenders as at point no. 2 below.

2) 1st charge on fixed assets of the Company both present and future on pari-passu basis with the existing term loan lenders.

Collateral security:

2nd pari-passu charge on current assets of the company both present and future. 1st charge being with the banks meeting working capital requirements of the Company.

Personal guarantee:

Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal (b) Terms of repayment

Repayment terms of the loans are as follows:

(i) Term loan from State Bank of Patiala amounting to Rs. 232,621,400 (previous year Rs. 232,621,400) [(sanctioned amount Rs. 498,500,000)] carrying interest rate of 0.65% above one year marginal cost of lending rate (MCLR), is repayable in 32 quarterly installments of Rs. 15,578,125 each commencing from 30 June 2016 and last installment of Rs. 15,578,125 would be due for repayment on 31 March 2024.

(ii) Term loan from State Bank of Patiala amounting to Rs. 4,967,288 (previous year Rs. 14,903,278) repayment of which commenced from 1 April 2011 carrying interest rate of 1% over base rate, is repayable in 2 quarterly installments first Rs. 2,484,000 and second quarterly installment of Rs. 2,483,288 would be due for repayment on 30 September 2016.

(iii) Term loan from Allahabad Bank amounting to Rs. Nil (previous year Rs. 2,023,863) repayment of which commenced from 1 April 2011 carrying interest rate of 1.5% over base rate, has been re-paid during the current financial year

(iv) Term loan from Indian Bank amounting to Rs. 449,759,242 (previous year Rs. 646,049,242) repayment of which commenced from 30 September 2013 carrying interest rate of 1.5% over base rate, is repayable in 6 quarterly installments of Rs. 65,430,000 each, last quarterly installment of Rs. 57,179,242 would be due for repayment on 31 March 2018.

Details of rate of interest, terms of repayment and security for working capital borrowings from banks:

Working capital borrowings from State Bank of Patiala is carrying interest rate of 0.75% over base rate.

Working capital borrowings from State Bank of India is carrying interest rate of 1.25% over base rate.

Working capital borrowings from Allahabad Bank is carrying interest rate of 0.80% over base rate.

Terms of repayment:

Working capital borrowings are repayable on demand.

Security in respect of working capital borrowings availed through consortium arrangement of Allahabad Bank, State Bank of Patiala and State Bank of India Primary security:

First pari-passu charge on the all current assets of the Company (present and future).

Collateral security:

Second pari-passu charge on the Company''s entire present and future block of assets of the Company including equitable mortgage of factory land held in the name of the Company.

(1) Plot No. 231, measuring 4,880 sq. yards at Industrial Area A, Ludhiana. (Sale deed no. 2640 dated 20 September 1956)

(2) Plot No. 232, measuring 4,095 sq. yards at Industrial Area A, Ludhiana (Sale deed no. 2135 dated 07 September 1964)

(3) Land measuring 14,278 sq. yards at Sherpur Kalan, GT Road, Ludhiana (Sale deed no. 14397 dated 13 October 2011)

(4) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 117.50 sq. yards (Sale deed no. 14721 dated 14 January 1986)

(5) Part of Plot No. 172 bearing M.C. No. B-XXII I-66/1 in Industrial Area-A, Ludhiana measuring 117.50 sq. yards (Sale deed no. 15516 dated 27 January 1986)

(6) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 125 sq. yards (Sale deed no. 14722 dated 14 January 1986)

(7) Part of Plot No. 172 bearing M.C. No. B-XXIII-66/1 in Industrial Area-A, Ludhiana measuring 125 sq. yards (Sale deed no. 15517 dated 27 January 1986)

Personal guarantee Shri. Jawahar Lal Oswal Shri. Kamal Oswal Shri. Dinesh Oswal

Details of rate of interest, terms of repayment and security for Overdraft borrowings from banks:

Overdraft borrowings from Yes Bank is carrying interest rate of 0.40% over fixed deposit rate.

Primary security:

First pari-passu charge created on fixed deposits with Yes Bank.

Notes :

(1) The discount rate is based on the prevailing market yield of Indian Government bonds as at the balance sheet date for the estimated terms of obligations.

(2) The expected return is based on the expectation of the average long term rate of return on investments of the fund during the estimated terms of obligations.

(3) The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

(4) Plan assets mainly comprise funds managed by the insurer i.e. Life insurance corporation of India

(5) The Company makes annual contributions to the Life insurance corporation of India (''LIC'') of an amount advised by the LIC.

5 The Company is primarily engaged in the business of manufacturing/trading of textile garments. Accordingly, the entire operations of the Company are governed by the same set of risk and rewards and thus, it operates in a single primary segment. The Company is mainly operating in India which is considered to be the only reportable geographical segment. The disclosures as per the Accounting Standards (AS) 17 on Segment Reporting are not applicable to the Company.

6 Earnings per share

The calculation of Earnings Per Share (EPS) as disclosed in the Statement of Profit and Loss has been made in accordance with Accounting Standard (AS)-20 on “Earning Per Share”.

7 Leases

The Company has taken a number of office and factory facilities under operating leases. The lease rent expenses recognized during the year amounts to '' 113,254,806 (previous year Rs. 86,533,723). Expected future minimum lease payments under non-cancellable operating leases are as follows:

8 In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms with the provisions of the said Act, the Company was to spend a sum of approx. Rs. 16,136,024 (previous year Rs. 15,162,060 approx.) towards CSR activities during the year ended 31 March 2016. The details of amount actually spent by the Company are:

9 Previous year figures have been regrouped/resisted, wherever considered necessary to make them comparable with those of the current year.


Mar 31, 2015

1. (All amounts in Rs. unless stated otherwise)

As at As at 31 March 2015 31 March 2014

Contingent liabilities

(i) Contingent liabilities:

(a) Claims against the Company not acknowledged as debt

Indirect tax litigations - As against these litigations, the Company has 502,759 502,759

deposited Rs. 230,998 (previous year Rs. 230,998) under protest. The Company is contesting these claims at various levels.

(b) Other money for which the Company is contingently liable 3,150,000

(ii) Capital commitments - Estimated amount of contracts remaining to be 46,007,228 70,663,743

executed on capital account and not provided for (net of advances and deposits)

2. The information required by paragraph 5 of general instructions for preparation of the statement of profit and loss as per revised schedule III of Companies Act, 2013

3. The Company is primarily engaged in the business of manufacturing/trading of textile garments. Accordingly, the entire operations of the Company are governed by the same set of risk and rewards and thus, it operates in a single primary segment. The Company is mainly operating in India which is considered to be the only reportable geographical segment. The disclosures as per the Accounting Standards (AS) 17 on Segment Reporting are not applicable to the Company.

4. As per the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961, the Company is required to use certain specific methods in computing arm's length prices of transactions with associated enterprises and maintain adequate documentation in this respect. Since law requires existence of such information and documentation to be contemporaneous in nature, the Company has appointed independent consultants for conducting a Transfer Pricing Study (the 'Study') to confirm that the transactions with associate enterprises undertaken during the financial year are on an "arms length basis". Management is of the opinion that the Company's transactions are at arm's length and that the results of the proposed study will not have any impact on the financial statements and that they do not expect any transfer pricing adjustments.

5. The Company completed its Initial Public Offering (IPO) pursuant to which 5,433,016 equity shares of the Company of Rs. 10 each were allotted at a price of Rs. 645 per equity share through an offer for sale by the selling shareholders. This being an offer for sale, the IPO proceeds have been received by the selling shareholders and hence requirements to disclose utilisation of proceeds from IPO does not apply to the Company. The equity shares of the Company were listed on the National Stock Exchange Limited (NSE) and Bombay Stock Exchange of India Limited (BSE) on 19 December 2014.

6. In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms with the provisions of the said Act, the Company was to spend a sum of Rs.15,162,060 towards CSR activities during the year ended 31 March 2015. The CSR Committee has been examining and evaluating suitable proposals for deployment of funds towards CSR initiatives. Pending examination and evaluation of such proposal, no amounts have been incurred on CSR initiative during the year. The management expects finalization of the proposals in due course.

7. Previous year figures have been regrouped/recasted, wherever considered necessary to make them comparable with those of the current year.

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