Notes to Accounts of PBM Polytex Ltd.

Mar 31, 2018

1A - CORPORATE INFORMATION

PBM Polytex Limited is a public company incorporated in India. Its shares are listed on the BSE Limited. The company is engaged in manufacture and processing of yarn.

The financial statements were authorized for issue in accordance with a resolution of the directors on May 30, 2018.

2.1 The Company has only one class of shares i.e. equity shares. All equity shares carry equal rights with respect to voting and dividend.

2.2 In the event of liquidation of the Company, the equity shareholders shall be entitled to proportionate share of their holding in the assets remaining after distribution of all preferential amounts.

2.3 Subsequent to Balance Sheet date, the Board of Director has recommended a dividend of Rs. 3.50 per share to be paid on fully paid equity shares in respect of the Financial year ended on March 31, 2018. This equity dividend is subject to approval by shareholders at the ensuing Annual General Meeting and has not been included as a liability in these financial statements. The total estimated equity dividend to be paid is Rs. 284.52 lakhs and the dividend distribution tax thereon amounts to Rs. 58.47 Lakhs.

3.1 Details of Security & Repayment Terms

Term loan of Rs. 1100 Lakhs from IDBI Bank Ltd. is secured by hypothecation of movable current assets (subject to prior charge of SBI and IDBI Bank for working capital facilities) and also secured by first charge pari passu with EXIM Bank by way of mortgage of immovable properties (excluding assets of windmills). The same is repayable in 6 quarterly installments ending by 23rd September, 2019.

Term loan of Rs. 560 Lakhs from EXIM Bank is secured by hypothecation of movable fixed assets (excluding assets of windmills) and also secured by first charge pari passu with IDBI Bank by way of mortgage of immovable properties. The same is repayable in 7 quarterly installments ending by 20th December, 2019.

4. Segment Information

The company manufactures and deals mainly in single major product, i.e. manufacturing of cotton yarn. Therefore no separate disclosure as per Ind AS 108 - "Operating Segments" is given.

i) Sensitivity Analysis:

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and employee turnover. The sensitivity analysis below, have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The result of sensitivity analysis on defined benefit obligation is given below (Rs. In Lakhs):

No financial instruments have been routed through Other Comprehensive Income and hence separate reconciliation disclosure relating to the same is not applicable.

5. Financial Risk Management

The company’s Board of Directors has overall responsibility for the establishment and oversight of the company’s risk management framework. The company’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the company’s activities.

5.1 Credit Risk Management

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and ageing of accounts receivable. Individual risk limits are set accordingly.

The ageing analysis trade receivables from the date the invoice falls due is given below (Rs. In Lakhs) :

Based on historic default rates and overall credit worthiness of customers, management believes that no impairment allowance is necessary in respect of outstanding trade receivables as on 31st March 2018.

5.2 Liquidity Risk

Liquidity Risk is defined as the risk that the company will not be able to settle or meet its obligations on time or at reasonable price. The company’s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the company’s net liquidity position through rolling forecast on the basis of expected cash flows.

Maturity profile of financial liabilities

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments (Rs. in lakhs) :

5.3 Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loan borrowings.

The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.

5.4 Interest rate risk

Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to optimize the company’s position with regards to the interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in it total portfolio.

With all other variables held constant, the following table demonstrates the impact of the borrowing cost on floating rate portion of loans and borrowings and excluding loans on which interest rate swaps are taken (Rs. in lakhs).

5.5 Foreign currency risk

The company operates internationally and is exposed to currency risk on account of its receivables in foreign currency. The functional currency of the company is Indian Rupee. The company uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date.

The company does not use derivative financial instruments for trading or speculative purposes.

5.6 Price Risk

- Investment Price Risk

The company’s exposure to price risk arises from investments in equity and mutual fund held by the company and classified in the balance sheet at fair value through profit or loss. To manage its price risk arising from investments, the company diversifies its portfolio.

Sensitivity Analysis

The table below summarises the impact of increase/decrease of the index on the company’s equity and profit for the period. The analysis is based on the assumption that the price of the instrument has increased by 3% or decreased by 3% with all other variables held constant (Rs. in lakhs):

- Commodity Price Risk

Principal Raw Material for company’s products is cotton. Company sources its raw material requirements from domestic markets. Company effectively manages availability of material as well as price volatility through well planned procurement and inventory strategy and also through appropriate contracts and commitments.

6. Capital management

For the purposes of the Company’s capital management, capital includes issued capital and all other equity reserves. The primary objective of the Company’s Capital Management is to maximise shareholder value. The company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirement of the financial covenants.

The company monitors capital using gearing ratio, which is net debt divided by total equity plus debt (Rs. in lakhs) :

7 In the opinion of the Board, the current assets, loans and advances are approximately of the value stated in the balance sheet, if realised in the ordinary course of the business. Provision for depreciation and all known liabilities have been made in accounts.

8 Letters of balance confirmation have been sent to various parties which are subject to confirmation and reconciliation, if any.

9 In terms of Ind As 36 - Impairment of Assets issued by ICAI, the management has reviewed its fixed assets and arrived at the conclusion that impairment loss which is difference between the carrying amount and recoverable value of assets, was not material and hence no provision is required to be made.

10 Previous year’s figures have been regrouped/re-arranged/recasted, wherever necessary, so as to make them comparable with current year’s figures.

11 First time adoption of IND AS

The company has prepared its first Financial Statements in accordance with Ind AS for the year ended March 31, 2018. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with Indian GAAP, including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended). The effective date for Company’s Ind AS Opening Balance Sheet is 1 April 2016 (the date of transition to Ind AS).

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS Balance Sheet at April 01, 2016 (the Company’s date of transition). According to Ind AS 101, the first Ind AS Financial Statements must use recognition and measurement principles that are based on standards and interpretations that are effective at March 31, 2018, the date of first-time preparation of Financial Statements according to Ind AS. These accounting principles and measurement principles must be applied retrospectively to the date of transition to Ind AS and for all periods presented within the first Ind AS Financial Statements.

Any resulting differences between carrying amounts of assets and liabilities according to Ind AS 101 as of April 01, 2016 compared with those presented in the Indian GAAP Balance Sheet as of March 31, 2016, were recognized in equity under retained earnings within the Ind AS Balance Sheet.

11.1 Exemption and exceptions availed:

Ind AS optional exemptions

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

IND AS mandatory exceptions:

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 are consistent with the estimates as at the same date made in conformity with previous GAAP.

11.2 Explanatory notes to the transaction from previous GAAP to Ind AS

a) Proposed Dividend

In the financial statements prepared under Previous GAAP, dividend on equity shares recommended by the board of directors after the end of reporting period but before the financial statements were approved for issue, was recognised as a liability in the financial statements in the reporting period relating to which dividend was proposed. Under Ind AS, such dividend is recognised in the reporting period in which the same is approved by the members in a general meeting.

On the date of transition, the above change in accounting treatment of proposed dividend has resulted in increase in Equity with a corresponding decrease in provisions by Rs. 293.52 Lakhs.

b) Fair value measurement of financial assets and financial liabilities

The company has assessed classification of fair valuation impact of financial assets and liabilities under Ind AS 32/ Ind AS 109 on the basis of facts and circumstances at transition date. Impact of fair value changes as on date of transition, is recognised in retained earnings and thereafter recognized in Statement of Profit & Loss or Other Comprehensive Income, as the case may be.

---

Mar 31, 2016

1. Contingent Liabilities:

2. Estimated amount of contracts remaining unexecuted on Capital Accounts not provided for Rs. 4,43,10,644/- (Net of advances) (Previous year Rs. 4,48,24,155/-).

3. Bills discounted under Export / Inland Letter of Credit Rs. 7,93,08,334/- since realized in full (Previous Year Rs. 9,47,46,104/-)

4. Income Tax Demands for the F. Y. 2011 - 12 and 2012 - 13 of Rs. 9,08,480/- against which Company has preferred appeals before appropriate authorities.

5. Bank guarantees amounting to Rs. 2,38,29,224/- and Rs. 2,08,725/- in favour of Madhya Gujarat Viz Company Limited and Gujarat Gas Limited respectively for contract demand of Electricity and PNG.

6. Bonus for employees amounting to Rs. 93,38,000/- for the year 2014 - 15 in accordance with the Notification by the Central Government but stayed by the Order of Gujarat High Court.

7. Civil Suit filed by Director of Industries, Gujarat for non - supply of yarn against which appeal has been preferred - Rs. 1,08,000/-.

8. Foreign Exchange Transactions are recorded in accordance with the Accounting Standard 11 issued by the Institute of Chartered Accountants of India. There has been net gain of Rs. 11,62,517/- (Previous year net gain of Rs. 85,89,114/-) on account of foreign exchange fluctuation pertaining to foreign currency borrowings / transactions, which has been exhibited in Statement of Profit & Loss under the heads “Other Income” and “Other Expenses”.

Power was purchased through approved Power Exchange also under permission of GRC & IERC authorities during part of the current year. Thereby, saving of Rs. 1,31,99,713/- during the year.

9. Disclosure pursuant to Accounting Standard - 15 [Revised] ‘Employee Benefits:

A The Company has, with effect from 1^st April, 2007, adopted Accounting Standard 15, Employee Benefits [Revised 2005] [the ‘Revised AS 15’]. In accordance with the transitional provisions governing gratuity valuation - defined benefit plan and leave encashment liability - long term liability based on actuarial valuation is as follows :

10. Defined benefit plan and long term employment benefit:

11. General description:

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary [last drawn salary] for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

12. Leave wages [Long term employment benefit] :

The leave wages are payable to all eligible employees at the rate of daily salary for each day of accumulated leave on death or on resignation or upon retirement on attaining superannuation age.

13. The Company has participated in LIC and SBI Life Insurance managed Scheme for gratuity and has made provision of Rs. 26,20,000/- (previous year Rs. 3,60,000/-) for Managing Directors and Rs. 21,02,569/- (previous year Rs. 44,12,825/-) for other employees. The Company has also participated in LIC managed Superannuation Fund for Managerial Personnel and has contributed Rs. 16,08,000/- (Previous year Rs. 13,68,000/-) to the Fund.

14. Leave Encashment Benefits for the year have been provided in the Statement of Profit & Loss on actuarial valuation of the company Rs. 31,50,769/- (Previous Year Rs. 36,28,788/-)

15. (i) In terms of Accounting Standard 28 - Impairment of Assets issued by ICAI the Management has reviewed its fixed assets and the difference between the carrying amount and recoverable value of relevant assets was not material. Hence, provision for impairment loss is not considered necessary to be made in the books.

16. Pursuant to the Companies Act, 2013, the written down value of fixed assets, useful life of which was over on 1st April 2014, were adjusted in the Statement of Profit and Loss amounting to Rs. 62.95 lacs in the year 2014-15.

17. Pursuant to the enactment of the Companies Act, 2013, the Company has applied the estimated useful lives as specified in Schedule

18. Accordingly, the unamortized carrying value is being depreciated / amortized over the revised / remaining useful life of particular assets.

19. RELATED PARTY DISCLOSURE:

20. LIST OF RELATED PARTIES AND RELATIONSHIP:

Associates & Enterprises with whom the Company entered into transactions during the year

M/s Patodia Syntex Limited M/s B. L. Patodia Family Trust

M/s Eurotex Industries and Exports Limited M/s Murarilal Mahendrakumar

M/s Trikon Investments Pvt. Limited M/s Brijlal Purushottamdas

M/s Sambhu Investments Pvt. Limited M/s Dharamchand Keshardeo

21. KEY MANAGERIAL PERSONNEL / DIRECTORS AND RELATIVES:

Shri Gopal Patodia Managing Director

Shri Mohan Kumar Patodia Managing Director cum Chief Financial Officer

Shri Amit Patodia Senior President cum Chief Executive Officer

Shri Mukesh Prajapat Assistant Company Secretary

---

Mar 31, 2015

1. The revised Schedule III of the Companies Act, 2013 has become effective from 1st April 2014 for preparation / presentation of Financial Statements. Accordingly, previous year's figures have been regrouped wherever necessary.

2. Contingent Liabilities:

(a) Estimated amount of contracts remaining unexecuted on Capital Accounts not provided for Rs.4,48,24,155/- (Net of advances) (Previous year Rs. 4,35,76,155/-).

(b) Bills discounted under Export / Inland Letter of Credit Rs. 9,47,46,104/- since realized in full (Previous Year Rs. 11,03,25,048/-)

(c) Income Tax & TDS Demands for the F.Y.2009-2010,2010-2011 & 2011-12 of Rs. 19,72,540/- against which Company has preferred appeals before appropriate authorities.

(d) Bank guarantees amounting to Rs.2,34,74,182/- and Rs.3,53,050/- in favour of Madhya Gujarat Viz Company Limited and Gujarat Gas Limited for contract demand of Electricity and PNG respectively.

3. Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006: Amounts due to such Enterprises are disclosed on the basis of information available with the Company. The status of such suppliers is as follows:

4. (A) Foreign Exchange Transactions are recorded in accordance with the Accounting Standard 11 issued by the Institute of Chartered Accountants of India. There has been net gain of Rs. 85,89,114/- (Previous year net loss of Rs. 1,26,92,575/-) on account of foreign exchange fluctuation pertaining to foreign currency borrowings / transactions, which has been exhibited in Statement of Profit & Loss under the heads "Other Income" and "Other Expenses".

(B) The Company has opted for Notifications No. GSR.225 (E) issued by the Ministry of Corporate Affairs on March 31, 2009 in respect of accounting periods commencing on or after December 07, In accordance with this Notification, net loss of Rs. 2,76,54,084/ - from the year 2007 - 08 to 2014 -15 arising on reporting of long term foreign currency monetary item relating to fixed assets has been added to the cost of Fixed Assets of wind mills.

5. GRC & IERC authorities have not permitted purchase of power through approved power exchange during the current year (in the previous year company had gained Rs.1,66,01,221, on such permission which was reduced from power cost).

6. Disclosure pursuant to Accounting Standard -15 [Revised] 'Employee Benefits:

A The Company has, with effect from 1s1 April, 2007, adopted Accounting Standard 15, Employee Benefits [revised 2005] [the 'revised AS 15']. In accordance with the transitional provisions governing gratuity valuation - defined benefit plan and leave encashment liability - long term liability based on actuarial valuation is as follows :

B Defined benefit plan and long term employment benefit:

A General description:

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary [last drawn salary] for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

B Leave wages (Long term employment benefit]:

The leave wages are payable to all eligible employees at the rate of daily salary for each day of accumulated leave on death or on resignation or upon retirement on attaining superannuation age.

(I) The Company has participated in L.I.C and S.B.I Life Insurance managed Scheme for gratuity and has contributed Rs.3,60,000/- for Managing Directors and Rs.44,12,825/- for other employees. The Company has also participated in LIC rpanaged Superannuation Fund for Managerial Personnel and has contributed Rs. 13,68,000/- (Previous year Rs. 12,72,000/-) to the Fund.

(II) Leave Encashment Benefits have been provided in the Statement of Profit & Loss Account on actuarial valuation during the year Rules of the company Rs.36,28,788/- (Previous Year Rs. 28,97,035/-)

7. The Company has appointed all the key Managerial Personnel except Company Secretary. Now the Company has recruited one qualified member of the Institute of Company Secretaries of India.

8. In terms of Accounting Standard 28 - Impairment of Assets issued by ICAI the Management has reviewed its fixed assets and the difference between the carrying amount and recoverable value of relevant assets was not material. Hence, provision for impairment loss is not considered necessary to be made in the books.

9. Pursuant to the enactment of the Companies Act, 2013, the Company has applied the estimated useful lives as specified in Schedule II. Accordingly, the unamortised carrying value is being depreciated / amortised over the revised / remaining useful life of particular assets. The written down value of Fixed Assets, useful life of which was over as on 1st April, 2014, have been adjusted (net of Deferred Tax), in the opening balance of Profit and Loss Account amounting to Rs. 62.95 Lac.

---

Mar 31, 2014

1. Previous year''s figures have been regrouped wherever necessary

2. Contingent Liabilities:

(a) Estimated amount of contracts remaining unexecuted on Capital Accounts not provided for Rs.4,35,76,155/- (Net of advances) (Previous year Rs. 5,40,58,001/-).

(b) Bils discounted under Export / Inland Letter of Credit Rs. 110325048/- since realized in ful (Previous Year Rs. 82763943/-)

(c) Income Tax Demand of Rs. 4,24,640/- for the F.Y.2010-2011 against which company has prefered appeal.

(d) Bank Guarantee for Rs. 2,28,38,600/- favouring Madhya Gujarat Vij Company Limited for contract demand of electricity and Rs. 3,53,050/- favouring Gujarat State Petroleum Corporation for LPG supply.

3. Confirmations of Debit and Credit Balance have not been yet received from certain parties. They are subject to adjustments, if any, on receipt of confirmation.

4. Disclosure under the Micro, Smal and Medium Enterprises Development Act, 2006: Amounts due to such Enterprises are disclosed on the basis of information available with the company. The status of such suppliers is as folows:

5. The company has participated in LIC and SBI Life Insurance approved and managed Superannuation Fund for Managerial Personnel and has contributed Rs. 12,72,000 (Previous year Rs. 11,88,000) to the Fund.

6. (A) Foreign Exchange Transactions are recorded in accordance with the Accounting Standard 11 issued by the Institute of Chartered Accountants of India. There has been net gain of Rs. 1,26,92,575 (Previous year net loss of Rs. 5,65,998) on account of foreign exchange fluctuation pertaining to foreign curency borowings / transactions, which has been exhibited in Statement of Profit & Loss under the heads "Other Income" and "Other Expenses".

(B) The company has opted for Notifications No. GSR.225 (E) issued by the Ministry of Corporate Affairs on March 31, 2009 in respect of accounting periods commencing on or after December 07, In accordance with this Notification, net loss of Rs. 2,76,45,851/- from the year 2007 - 08 to 2013 - 14 arising on reporting of long term foreign curency monetary item relating to fixed assets has been added to the cost of Fixed Assets of wind mils.

7. As permitted by CERC and IERC (Regulatory Authorities) the company has partialy opted for purchase of power through approved power Exchange which has resulted in to reduction of power cost by Rs.1,66,01,221/- (Previous Year - NIL)

8. Disclosure pursuant to Accounting Standard - 15 [Revised] "Employee Benefits'':

A The Company has, with effect from 1st April, 2007, adopted Accounting Standard

9, Employee Benefits [revised 2005] [the ''revised AS 15'']. In accordance with the transitional provisions governing gratuity valuation - defined benefit plan and leave encashment liability - long term liability based on actuarial valuation is as folows : B Defined benefit plan and long term employment benefit:

A General description:

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary [last drawn salary] for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy. B Leave wages (Long term employment benefit] :

The leave wages are payable to al eligible employees at the rate of daily salary for each day of accumulated leave on death or on resignation or upon retirement on attaining superannuation age.

Leave Encashment Benefits have been provided in the Statement of Profit & Loss on actuarial valuation during the year Rs.28,97,035. (Previous Year Rs. 42,16,931/-)

9. The Registered Office of the Company being situated in mofussil centre, in spite of efforts and advertisements made in this behalf, qualified Company Secretary is not available. However, the Company has a highly educated and experienced person in charge of the Company''s Secretarial Department. He looks after al necessary requirements to be folowed by the Company. In addition thereto, a Practicing Company Secretary has been retained by the company, who has also issued Compliance Certificate regarding necessary compliance of the provisions of the Act which forms part of Directors'' Report.

10. In terms of Accounting Standard 28 - Impairment of Assets issued by ICAI the Management has reviewed its fixed assets and the difference between the carying amount and recoverable value of relevant assets was not material. Hence, provision for impairment loss is not considered necessary to be made in the books.

11. RELATED PARTY DISCLOSURE:

A. LIST OF RELATED PARTIES AND RELATIONSHIP

Associates & Enterprises with whom the Company entered into transactions during the year

Patodia Syntex Limited Trikon Investments Pvt. Limited

Eurotex Industries & Exports Limited Murarilal Mahendra Kumar

B. L. Patodia Family Trust Brijlal Purushottamdas

Sambhu Investments Pvt. Limited Dharamchand Keshardeo

12. DERIVATIVES INSTRUMENT

A) Folowing are the outstanding forward Foreign Exchange Contracts entered into by the Company:

B) Foreign curency exposure that are not hedged by derivative instruments as on 31st March 2014 amount to Rs. 73,53,310/-(Previous Year Rs.2,25,15,000/-)

C) Interest on Foreign Curency Loan covered under swap US$ 477 equivalent to Rs. 28,814/- (Previous year Rs. 13,39,182/-)

---

Mar 31, 2013

1. The revised Schedule VI has become effective from 1st Aprl 2012 for preparaton / presentaton of Fnancial Statements. Accordngly previous year''s fgures have been regrouped wherever necessary

2. Contngent Lablites:

(a) Estmated amount of contracts remanng unexecuted on Captal Accounts not provided for Rs.540.58 Lacs (Net of advances) (Previous year Rs. 438.12 Lacs).

(b) Bls dscounted under Export / Inland Letter of Credt Rs. 827.64 Lac snce realized n ful (Previous Year Rs. 754.52 Lacs)

(c) Income Tax Demand of Rs. 16,56,817/- for dfferent years aganst whch company has preferred appeals.

(d) Bank Guarantee for Rs. 228.39 Lac favourng Madhya Gujarat Vij Company Lmted for contract demand of electrcity and Rs. 3.07 Lac favourng Gujarat State Petroleum Corporaton for LPG supply.

3. Confrmatons of Debit and Credt Balance have not been yet receved from certan partes. They are subject to adjustments, if any, on recept of confrmaton.

4. Dsclosure under the Mcro, Smal and Medum Enterprses Development Act, 2006: Amounts due to such Enterprses are dsclosed on the basis of nformaton avalable with the company. The status of such suppliers s as folows:

5. The company has partcipated n LIC and SBI Lfe Insurance approved and managed Superannuaton Fund for Manageral Personnel and has contrbuted Rs. 11.88 Lacs (Previous year Rs. 11.64 Lacs) to the Fund.

6. (A) Foregn Exchange Transactions are recorded n accordance wth the Accountng Standard 11 ssued by the Insttute of Chartered Accountants of Inda. There has been net loss of Rs. 75.20 Lacs. (Previous year net loss of Rs. 90.63 Lacs) on account of foregn exchange fluctuaton pertanng to foregn currency borrowngs / transactions, whch has been exhbted n Proft & Loss Account under the heads "Other Income" and "Other Expenses".

(B) The company has opted for Notfcatons No. GSR.225 (E) ssued by the Mnstry of Corporate Affars on March 31, 2009 n respect of accountng perods commencing on or after December 07, In accordance wth ths Notfcaton, net loss of Rs. 2,51,28,219/- from the year 2007 - 08 to 2012 - 13 arsng on reportng of long term foregn currency monetary tem relatng to fxed assets has been added to the cost of Fxed Assets of wnd mls.

7. Disclosure pursuant to Accountng Standard - 15 [Revised] "Employee Benefts'':

A The Company has, wth effect from 1st Aprl, 2007, adopted Accountng Standard

8. Employee Benefts [revised 2005] [the ''revised AS 15'']. In accordance wth the transtonal provisons governng gratuty valuaton - defned beneft plan and leave encashment liablity - long term liablity based on actuaral valuaton s as folows : B Defned benefit plan and long term employment beneft:

A General descrpton:

Gratuty [Defned beneft plan]:

The Company has a defned beneft gratuty plan. Every employee who has completed fve years or more of service gets a gratuty on death or resgnaton or retrement at 15 days salary [last drawn salary] for each completed year of service. The scheme s funded wth an nsurance company n the form of a qualifying nsurance policy. B Leave wages (Long term employment beneft] :

The leave wages are payable to al eligible employees at the rate of daly salary for each day of accumulated leave on death or on resgnaton or upon retrement on attanng superannuaton age.

9. The Registered Offce of the Company beng stuated n mofussl centre, n spite of efforts and advertsements made n ths behalf, qualified Company Secretary s not avalable. However, the Company has a hghly educated and experenced person n charge of the Company''s Secretaral Department. He looks after al necessary requrements to be folowed by the Company. In addton thereto, a Practcing Company Secretary has been retaned by the company, who has also ssued Compliance Certfcate regardng necessary compliance of the provisons of the Act whch forms part of Drectors'' Report.

10. In terms of Accountng Standard 28 - Imparment of Assets ssued by ICAI the Management has reviewed ts fxed assets and the dfference between the carrying amount and recoverable value of relevant assets was not materal. Hence, provison for mparment loss s not consdered necessary to be made n the books.

---

Mar 31, 2012

1. The revised Schedule VI has become effective from 1st April 2011 for preparation / presentation of Financial Statements. Accordingly previous year's figures have been regrouped wherever necessary

2. Contingent Liabilities:

(a) Estimated amount of contracts remaining unexecuted on Capital Accounts not provided for Rs.438.12 Lacs (Net of advances) (Previous year Rs. 400.91 Lacs).

(b) Bills discounted under Export Letter of Credit Rs. 754.52 Lac since realized in full (Previous Year Rs. 162.66)

(c) Income Tax Demand of Rs.4,61,471/- and Rs. 66,576/- for the Accounting years 2003-04 and 2005-06 respectively against which company has preferred appeals.

(d) Bank Guarantee for Rs. 203.71 Lac favouring Madhya Gujarat Vij Company Limited for contract demand of electricity and Rs. 3.07 Lac favouring Gujarat State Petroleum Corporation for LPG supply.

3. Confirmations of Debit and Credit Balance have not been yet received from certain parties. They are subject to adjustments, if any, on receipt of confirmation.

4. The company has participated in LIC and SBI Life Insurance approved and managed Superannuation Fund for Managerial Personnel and has contributed Rs . 11.64 Lacs (Previous year Rs. 10.67 Lacs) to the Fund.

5. (A) Foreign Exchange Transactions are recorded in accordance with the Accounting Standard 11 issued by the Institute of Chartered Accountants of India. There has been net loss of Rs. 90.63 Lacs. (Previous year net gain of Rs. 4.02 Lacs) on account of foreign exchange fluctuation pertaining to foreign currency borrowings / transactions, which has been exhibited in Profit & Loss Account under the heads "Other Income" and "Other Expenses".

(B) The company has opted for Notifications No. GSR.225 (E) issued by the Ministry of Corporate Affairs on March 31, 2009 in respect of accounting periods commencing on or after December 07, In accordance with this Notification, net loss of Rs. 2,25,93,757/- from the year 2007 - 08 to 2011 - 12 arising on reporting of long term foreign currency monetary item relating to fixed assets has been added to the cost of Fixed Assets of wind mills.

6. In respect of major expenditure incurred by the company for overhauling and maintenance of its captive power plant in 2007 - 08, as per technical advice one-fifth of such expenditure i.e. Rs.20,67,727/- has been accounted in Statement of Profit & Loss. on pro rata basis during the current year.

7. Disclosure pursuant to Accounting Standard - 15 [Revised] 'Employee Benefits':

A The Company has, with effect from 1st April, 2007, adopted Accounting Standard 15, Employee Benefits [revised 2005] [the 'revised AS 15']. In accordance with the transitional provisions governing gratuity valuation t defined benefit plan and leave encashment liability t long term liability based on actuarial valuation is as follows :

B Defined benefit plan and long term employment benefit:

A General description:

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary [last drawn salary] for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

B Leave wages (Long term employment benefit] :

The leave wages are payable to all eligible employees at the rate of daily salary for each day of accumulated leave on death or on resignation or upon retirement on attaining superannuation age.

Leave Encashment Benefits have been provided as per Rules of the company and on actuarial valuation.

Amount charged to Profit & Loss Account during the year is Rs.20,80,939/- (Previous Year Rs. 21,53,701/-)

8. The Registered Office of the Company being situated in mofussil centre, in spite of efforts and advertisements made in this behalf, qualified Company Secretary is not available. However, the Company has a highly educated and experienced person in charge of the Company's Secretarial Department. He looks after all necessary requirements to be followed by the Company. In addition thereto, a Practicing Company Secretary has been retained by the company, who has also issued Compliance Certificate regarding necessary compliance of the provisions of the Act which forms part of Directors' Report.

9. In terms of Accounting Standard 28 - Impairment of Assets issued by ICAI the Management has reviewed its fixed assets and the difference between the carrying amount and recoverable value of relevant assets was not material. Hence, provision for impairment loss is not considered necessary to be made in the books.

B) Foreign currency exposure that are not hedged by derivative instruments as on 31st March 2012 amount to Rs. 434.08 Lacs (Previous Year 635.53 Lacs)

C) Interest on Foreign Currency Loan covered under swap US$ 27571.16 equivalent to Rs. 1420742/-

---

Mar 31, 2011

1. Contingent Liabilities:

(a) Estimated amount of contracts remaining unexecuted on Capital Accounts not provided for Rs.400.91 Lacs (Previous year Rs. 220.38 Lacs) (Net of advances).

(b) Bills discounted under Export Letter of Credit Rs. 1,62,65,907/- since realized in full (Previous Year Rs.4, 82, 65,135/-)

(c) Income Tax Demand of Rs.40,000/- for the A/c 2004-05 against which company has preferred appeals.

(d) Bank Guarantee for Rs. 1,41,34,600/- favouring Madhya Gujarat Vij Company Limited for contract demand of electricity.

2. Previous year's figures have been regrouped/rearranged wherever necessary.

3. Confirmations of Debit and Credit Balance have not been yet received from certain parties. They are subject to adjustments, if any, on receipt of confirmation.

4. The company has participated in LIC and SBI Life Insurance approved and managed Superannuation Fund for Managerial Personnel and has contributed Rs. 10.67 Lacs (Previous year Rs. 9.61 Lacs) to the Fund.

5. (A) Foreign Exchange Transactions are recorded in accordance with the Accounting Standard 11 issued by the Institute of Chartered Accountants of India. There has been net gain of Rs. 4.02 Lacs. (Previous year net gain of Rs. 31.91 Lacs) on account of foreign exchange fluctuation pertaining to foreign currency borrowings / transactions, which has been exhibited in Profit & Loss Account under the heads "Other Income" and "Manufacturing & Other Expenses".

(B) The company has opted for Notifications No. GSR.225 (E) issued by the Ministry of Corporate Affairs on March 31, 2009 in respect of accounting periods commencing on or after December 07, 2006 and ending on or before March 31, 2011. In accordance with this Notification, net loss of Rs. 1, 57,25,638/- from the period 2007 - 08 to 2010 – 11 arising on reporting of long term foreign currency monetary item relating to fixed assets has been added to the cost of Fixed Assets of wind mills.

6. In respect of major expenditure incurred by the company for overhauling and maintenance of its captive power plant in previous year, as per technical advice one-fifth of such expenditure i.e. Rs.20,67,727/- has been accounted in Profit & Loss A/c. on pro rata basis during the current year.

7. Pursuant to the revised Accounting Standard 15, the Company had created gratuity provision as on 31st March 2007 on actuarial basis for Rs. 57.24 Lacs which has been fully restored by 31st March 2011.

8. Disclosure pursuant to Accounting Standard – 15 [Revised] 'Employee Benefits':

A The Company has, with effect from 1st April, 2007, adopted Accounting Standard 15, Employee Benefits [revised 2005] [the 'revised AS 15']. In accordance with the transitional provisions governing gratuity valuation – defined benefit plan and leave encashment liability – long term liability based on actuarial valuation is as follows :

B Defined benefit plan and long term employment benefit:

A General description: Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary [last drawn salary] for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

B Leave wages (Long term employment benefit] :

The leave wages are payable to all eligible employees at the rate of daily salary for each day of accumulated leave on death or on resignation or upon retirement on attaining superannuation age.

9. The Registered Office of the Company being situated in mofussil centre, in spite of efforts and advertisements made in this behalf, qualified Company Secretary is not available. However, the Company has a highly educated and experienced person in charge of the Company's Secretarial Department. He looks after all necessary requirements to be followed by the Company. In addition thereto, a Practicing Company Secretary has been retained by the company, who has also issued Compliance Certificate regarding necessary compliance of the provisions of the Act which forms part of Directors' Report.

10. In terms of Accounting Standard 28 - Impairment of Assets issued by ICAI the Management has reviewed its fixed assets and the difference between the carrying amount and recoverable value of relevant assets was not material. Hence, provision for impairment loss is not considered necessary to be made in the books.

11. RELATED PARTY DISCLOSURE:

A. LIST OF RELATED PARTIES AND RELATIONSHIP

Associates & Enterprises with whom the Company entered into transactions during the year

Patodia Syntex Limited Trikon Investments Pvt. Limited

Eurotex Industries & Exports Limited Murarilal Mahendra Kumar

B. L. Patodia Family Trust Brijlal Purushottamdas

Sambhu Investments Pvt. Limited Dharamchand Keshardeo

B. KEY MANAGEMENT PERSONNEL / DIRECTORS AND RELATIVES

Shri Gopal Patodia Managing Director

Shri Mohan Kumar Patodia Managing Director

Shri Vikash Patodia Senior President

Shri Amit Patodia Senior President

---

Mar 31, 2010

1. Contingent Liabilities:

(a) Estimated amount of contracts remaining unexecuted on Capital Accounts not provided for Rs.220.38 lacs (Previous year Rs. 307.98 lacs) (Net of advances).

(b) Disputed Demand of Maintenance Charges (Leasehold Land) NIL (Previous Year 4.58 lacs) and service tax and Cenvat NIL (Previous Year Rs. 4.92 Lacs against which the company has preferred appeal before appropriate authorities.)

(c) Bills discounted under Export Letter of Credit Rs.4,82,65,135/- since realised in full (Previous Year Rs.4,79,24,344/-)

(d) Income Tax Demand of Rs.4.78 lac for the A/c 2004-05 and 2005-06 against which company has preferred appeals.

2. Previous years figures have been regrouped/rearranged wherever necessary.

3. Confirmations of Debit and Credit Balance have not been yet received from certain parties. They are subject to adjustments on receipt of confirmation.

4. The company has participated in LIC and SBI Life Insurance approved and managed Superannuation Fund for Managerial Personnel and has contributed Rs. 9.61 Lacs (Previous year Rs. 8.50 lacs) to the Fund.

5. (a)Foreign Exchange Transactions are recorded in accordance with the Accounting Standard 11 issued by the Institute of Chartered Accountants of India. There has been net gain of Rs. 31.91 lacs. (Previous year net loss of Rs. 356.60 lacs) on account of foreign exchange fluctuation pertaining to foreign currency borrowings / transactions, which has been exhibited in Profit & Loss Account under the heads "Other Income" and "Manufacturing & Other Expenses".

(b) The company has opted for Notifications No. GSR.225(E) issued by the Ministry of Corporate Affairs on March 31,2009 in respect of accounting periods commencing on or after December 07, 2006 and ending on or before March 31, 2011. In accordance with this Notification, exchange gain of Rs.121.51 lacs arising on reporting of long term foreign currency monetary item relating to fixed assets has been reduced from the cost of Fixed Assets in the current year (Previous Year loss of Rs.288.43 lacs was added to the cost of Fixed Assets).

6. In respect of major expenditure incurred by the company for overhauling and maintenance of its captive power plant in previous year, as per technical advice one-fifth of such expenditure i.e. Rs.20,67,728/- has been accounted in P & L A/c. on pro rata basis during the current year.

7. The Company has adopted the Revised Accounting Standard 15 on Employees Benefits issued by the Institute of Chartered Accountants of India. In accordance with the same the additional liability for Gratuity as on 31st March 2007 based on actuarial valuation amounting to Rs.57,23,799 has been accounted by debiting the opening balance of the General Reserve on April 1, 2007.

8. Disclosure pursuant to Accounting Standard – 15 [Revised] Employee Benefits:

A The Company has, with effect from 1st April, 2007, adopted Accounting Standard 15, Employee Benefits [revised 2005] [the revised AS 15]. In accordance with the transitional provisions governing gratuity valuation – defined benefit plan and leave encashment liability – long term liability based on actuarial valuation is as follows :

B Defined benefit plan and long term employment benefit:

a General description:

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary [last drawn salary] for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

Leave wages (Long term employment benefit] :

The leave wages are payable to all eligible employees at the rate of daily salary for each day of accumulated leave on death or on resignation or upon retirement on attaining superannuation age.

9. The Registered Office of the Company being situated in mofussil centre, inspite of efforts and advertisements made in this behalf, qualified Company Secretary is not available. However, the Company has a highly educated and experienced person in charge of the Companys Secretarial Department. He looks after all necessary requirements to be followed by the Company. In addition thereto, a Practising Company Secretary has been retained by the company, who has also issued Compliance Certificate regarding necessary compliance of the provisions of the Act which forms part of Directors Report.

10. In terms of Accounting Standard 28 - Impairment of Assets issued by ICAI the Management has reviewed its fixed assets and the difference between the carrying amount and recoverable value of relevant assets was not material. Hence, provision for impairment loss is not considered necessary to be made in the books.

11. RELATED PARTY DISCLOSURE:

A. LIST OF RELATED PARTIES AND RELATIONSHIP

Associates & Enterprises with whom the Company entered into transactions during the year

Patodia Syntex Limited

Eurotex Industries & Exports Limited

B. L.Patodia Family Trust

Sambhu Investments Pvt. Limited

Trikon Investments Pvt. Limited

Murarilal Mahendra Kumar

Brijlal Purushottamdas

Dharamchand Keshardeo

B. KEY MANAGEMENT PERSONNEL / DIRECTORS AND RELATIVES

Shri Gopal Patodia Shri Mohan Kumar Patodia Shri Vikash Patodia Shri Amit Patodia

Managing Director Managing Director Senior President Senior President