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Notes to Accounts of Pearl Global Industries Ltd.

Mar 31, 2016

b) In the earlier years, the company had initiated the process of converting its leasehold land (situated at Plot A-3, Naraina, New Delhi) into freehold land. However, the deed is yet to be transferred in the name of the Company as at March 31, 2016.

c) The Opening balance of land includes Rs.45,229,131 on account of revaluation done on 31.03.2002.

d) The Opening balance of building includes Rs.5,932,276 on account of reduction in revaluation done on 31.03.2002.

e) The Cost of CWIP-Building Include Rs.993,055 (March 31, 2015 : Nil) being borrowing cost capitalized in accordance with Accounting Standard 16 (AS-16) on “Borrowing Cost”

f) The above assets includes Gross Block of Land of Rs.15,954,319 (March 31, 2015 : Rs.15,954,319) & Gross Block of Building of Rs.23,434,599 (March 31, 2015 : Rs.23,434,599) situated at Narshingpur, Tehsil District Gurgaon (Haryana) for which the Company has executed a construction project agreement with DLF Retail Developers Limited on November 30th 2007. However, as certified by the Management, the work has not started during the financial year 2015-16 due to pending receipt of license from the concerned authority.

NOTE 1: CONTINGENT LIABILITIES AND COMMITMENTS i) Corporate Guarantee given by the Company (as per Section 186(4) of the Companies Act 2013)

- To Canara Bank, Hong Kong Branch, for securing various credit facilities to its subsidiary Norwest Industries Limited for Nil (March 31,2015: USD 15,000,000 equivalent to INR 938,850,000)

- To ICICI Bank Limited, Hong Kong Branch, for securing the derivative limits to its step down subsidiary Norwest Industries Limited for Nil (March 31, 2015: USD 3,000,000 equivalent to INR 187,770,000)

- To Standard Chartered Bank, Hongkong Branch for securing credit facilities to its wholly owned subsidiary Pearl Global (HK) Limited, Hong Kong for USD 12,000,000 equivalent to INR 795,960,000 (March 31,2015 USD 12,000,000 equivalent to INR 751,080,000)

- To Standard Chartered Bank, Bangladesh Branch for securing credit facilities to its subsidiary Norp Knit Industries Limited, Bangladesh for BDT 775,000,000 equivalent to INR 643,250,000 (March 31,2015: BDT 560,000,000 equivalent to INR 442,400,000)

- Counter guarantee given by the Company to Axis Bank, Gurgaon for issue of Standby Letter of Credit to HSBC, Bangladesh for securing credit facilities to its subsidiary Norp Knit Industries Limited, Bangladesh for Nil (March 31,2015:USD 400,000 equivalent to INR 25,036,000)

ii) Export Bills Discounted with banks Rs.452,059,126 (March 31, 2015: Rs.442,187,091)

iii) Irrevocable letter of credit (net of margin) outstanding with banks Rs.620,416,450 (March 31, 2015: Rs.917,280,249)

iv) Bank Guarantee given to government authorities Rs.42,738,000 (March 31, 2015: Rs.60,355,500)

v) Counter Guarantees given by the Company to the Sales Tax Department for the enterprise over which Key Managerial

Personnel have Significant influence amounting to Rs.100,000 (March 31, 2015: Rs.100,000), for others Rs.50,000 (March 31, 2015: Rs.50,000).

vi) Claims against the Company not acknowledged as debts corresponding to:

- Case pending before ITAT (with respect to tax demand for A.Y. 2009-10) for which the Company has filed appeal amounting to Rs.7,347,870 (March 31, 2015: Nil)

- Tax Demand as per Sec 143(1) of Income Tax act , 1961 (with respect to Assessment Year 2014-15) amounting to Rs.2,786,040. (March 31, 2015: Nil)

- Several Legal Cases of labour pending at Labour Court, Civil Court and High Court.

NOTE 2:

In view of the management, the current assets, loans and advances have a value on realization in the ordinary courses of business at least equal to the amount, at which they are stated in the Balance Sheet as at March 31, 2016.

NOTE 3:

“There is no reportable segment of the company in view of the Accounting Standard -17 ‘Segment Reporting’ as issued under the Companies (Accounts) Rules,2014.“

NOTE 4:

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company regularly updates the documentation for the International transactions entered into with the associated enterprises during the period as required under law. The Management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation for the year ended March 31, 2016.

NOTE 5:

The balances of trade receivables and trade payables are subject to reconciliation and confirmation as on March 31, 2016. NOTE 37:

Previous year figures have been regrouped & reclassified wherever considered necessary.

NOTE 6:

Figures have been rounded off to the nearest rupee.


Mar 31, 2015

NOTE 1: CONTINGENT LIABILITIES AND COMMITMENTS

i) Corporate Guarantee Given By The Company (as per Section 186(4) of the Companies Act 2013)

- To HSBC Limited, Indonesia for securing credit facilities to its step down subsidiary PT Pinnacle Industry, Indonesia for Nil (March 31, 2014: USD 2,500,000 equivalent to Rs. 150,250,000)

- To Standard Chartered Bank, Hong Kong for securing credit facilities to its step down subsidiary Norwest Industries Limited for Nil (March 31, 2014: :USD 21,052,840 equivalent to Rs. 1,265,275,684)

- To BNP Paribas, Hong Kong for letter of credit facility to its step down subsidiary Norwest Industries Limited for Nil (March 31,2014: USD 10,000,000 equivalent to Rs. 601,000,000)

- To Canara Bank, Hong Kong Branch, for securing various credit facilities to its subsidiary Norwest Industries Limited for USD 15,000,000 equivalent to Rs. 938,850,000 (March 31,2014: USD 15,000,000 equivalent to Rs. 901,500,000)

- To ICICI Bank Limited, Hong Kong Branch, for securing the derivative limits to its step down subsidiary Norwest Industries Limited for USD 3,000,000 equivalent to Rs.187,770,000 (March 31, 2014: USD 3,000,000 equivalent to Rs.180,300,000)

- To ICICI Bank Limited, Hong Kong Branch, for securing the credit limits to its step down subsidiary Norwest Industries Limited and Nor Lanka Manufacturing Limited for Nil (March 31,2014: USD 15,000,000 equivalent to Rs.901,500,000).

- To Punjab National Bank, Hong Kong Branch, for securing the credit limits to its step down subsidiary Norwest Industries Lim- ited Nil (March 31,2014: USD 30,000,000 equivalent to Rs. 1,803,000,000).

- To Standard Chartered Bank, Hongkong Branch for securing credit facilities to its wholly owned subsidiary Pearl Global (HK) Limited, Hong Kong for USD 12,000,000 equivalent to Rs. 751,080,000 ( March 31,2014: USD 8,200,000 equivalent to Rs.492,820,000)

- To Standard Chartered Bank, Bangladesh Branch for securing credit facilities to its subsidiary Norp Knit Industries Limited, Bangladesh for BDT 560,000,000 equivalent to Rs. 442,400,000 (March 31,2014: BDT 560,000,000 equivalent to Rs. 425,600,000)

- HSBC Bank Plc. UK for securing credit facilities to its subsidiary Poeticgem Limited, UK NIl (March 31,2014: GBP 12,050,000 equivalent to Rs.1,203,192,500)

- HSBC Invoice Finance (UK) Limited UK for securing credit facilities to its subsidiary Poeticgem Limited, UK Nil (March 31, 2014: GBP 5,000,000 equivalent to Rs. 499,250,000)

- Counter guarantee given by the Company to Axis Bank, Gurgaon for issue of Standby Letter of Credit to HSBC, Bangladesh for securing credit facilities to its subsidiary Norp Knit Industries Limited, Bangladesh for USD 400,000 equivalent to Rs. 25,036,000 (March 31, 2014: USD 400,000 equivalent to Rs. 24,040,000)

- To Intesa Sanpaolo S.P.A. Hongkong Branch for securing credit facilities to its step down subsidiary Norlanka Manufacturing Company Limited for USD Nil Equivalent to Nil (March 31, 2014: USD 10.00 Million equivalent to Rs.601,000,000)

- To Intesa Sanpaolo S.P.A. Hongkong Branch for securing credit facilities to its step down subsidiary Norwest Industries Limited with sublimit to Simple Approach Limited, Zamira Fashion Limited and /or spring near East Manufacturing Limited for USD Nil equivalent to Nil (March 31, 2014: USD 22.00 Million equivalent to Rs.1,322,200,000)

ii) Export Bills Discounted with banks Rs.442,187,091 (March 31,2014: Rs. 359,780,763)

iii) Irrevocable letter of credit outstanding with banks Rs. 917,280,249 (March 31,2014: Rs.919,723,355)

iv) Bank Guarantee given to government authorities Rs.60,355,500 (March 31,2014: Rs.86,081,000)

v) Counter Guarantees given by the company to the Sales Tax Department for its associate company Rs.100,000 (March 31, 2014: Rs.100,000), for others Rs.50,000 (March 31, 2014:Rs.50,000)

vi) Contingenet Liability: Claims against the Company not acknowledged as debts:

Case pending before ITAT (with respect to tax demand for AY 2009-10) for which the Company has fled appeal amounting to Rs.7,347,870.

NOTE 2:

In view of the management, the current assets, loans and advances have a value on realization in the ordinary courses of business at least equal to the amount, at which they are stated in the Balance Sheet as at 31st March, 2015.

NOTE 3:

There is no reportable segment of the company in view of the Accounting Standard -17 'Segment Reporting' as issued under the Companies (Accounts) Rules,2014.

NOTE 4:

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company regularly updates the documentation for the International transactions entered into with the associated enterprises during the period as required under law. The Management is of the opinion that its international transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation for the year ended March 31, 2015.

NOTE 5:

The balances of trade receivables and trade payables are subject to reconciliation and confirmation as on March 31, 2015.

NOTE 6:

Previous year figures have been regrouped & reclassified where ever considered necessary.

NOTE 7:

Figures have been rounded off to the nearest rupee.


Mar 31, 2014

1.1 Basis of Preparation

i) The financial statements of the Company have been prepared in compliance with Generally Accepted Accounting Principles in India ("GAAP") and mandatory accounting standard issued by the Companies (Accounting Standard) Rules 2006 (as amanded from time to time) the relevant provisions of the Companies Act, 1956 and other applicable statutes under the historical cost convention and on an accrual basis of accounting exept investment available for sale and held for trading is meausred at for value and land and building which is measure at revalued cost. The company has complied in all matiral respect with Accounting Standard notified under the Companies Act, 1956 read with general circular 8/2014 dated 4 April 2014 issued by the Ministry of Corporate Affair. The acounting policies adopted in the preparation of financial statements are consistent with those of previous year

2.2 Uses of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires making of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets & liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting year. Differences between the actual results and estimates are recognized in the Statement of Profit & Loss in the year in which the results are known /materialized.

Note 3: Employee Benefit Expense

(I) The Company has classified the various benefits provided to employees as under:-

(i) Defined Contribution Plan

The company makes contribution towards provident fund & employee state insurance (ESI) as defined contribution retirement plan for qualifying employees. The provident fund plan is operated by the Regional Provident Fund Commissioner and the company contribute a specified percentage of payroll cost to the said schemes to fund the benefits.

Durint the year, the company recognized Rs. 23,866,590 (March 31,2013: Rs. 23,967,776) for provident fund contributions & Rs. 9,302,594 (March 31, 2013 : Rs. 10,083,333) for ESI in the Statement of Profit and Loss The contributions payable to these plans by the company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plan: It includes:

a) Contribution to Gratuity Fund maintained by Life Insurance Corporation of India in case of Gurgaon Division (Funded)

b) Gratuity in case of Chennai Division (Unfunded)

c) Leave encashment/Compensated absence (Unfunded)

In accordance with Accounting Standard 15 (revised 2005), an acturial valuation is carried out in respect of aforesaid defined benefit plans and other long term benefits based on the assumption given in the table with subheading ''e'' below. The present value of obligation is determine based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

Note 4: Contingent Liabilities and Commitments i) Corporate Guarantee given by the Company

- To UCO Bank, Hong Kong for securing trade finance limits to its step down subsidiary Norwest Industries Ltd, Hong Kong for Rs. NIL (March 31,2013: HKD 300 Million equivalent to Rs. 2,097,000,000 & GBP 40 million equivalent to Rs. 3,292,800,000).

- To HSBC Limited, Indonesia for securing credit facilities to its step down subsidiary PT Pinnacle Industry Indonesia for USD 2,500,000 equivalent to Rs. 150,250,000 (March 31,2013: USD 2,500,000 equivalent to Rs. 135,975,000).

- To HSBC, Hong Kong for securing credit facilities to its step down subsidiaries Norwest Industries Ltd., Simple Approach Ltd. and Zamira Fashion Ltd for Rs. NIL (March 31, 2013: HKD 330 million equivalent to Rs. 2,306,700,000)

- To Standard Chartered Bank, Hong Kong for securing credit facilities to its step down subsidiary Norwest Industries Ltd for USD 21,052,840 equivalent to Rs. 1,265,275,684/ - (March 31, 2013: : USD 21,052,840 equivalent to Rs. 1,145,063,968).

- To HSBC, Bangladesh for securing various credit facilities to its subsidiary Norp Knit Industries Ltd. for Rs. NIL (March 31, 2013: BDT 1,673,367,000 equivalent to Rs. 1,137,889,560).

- To BNP Paribas, Hong Kong for letter of credit facility to its step down subsidiary Norwest Industries Ltd. for USD 10,000,000 equivalent to Rs. 601,000,000 (March 31, 2013: USD 10,000,000 equivalent to Rs. 543,900,000)

- To Canara Bank, Hong Kong Branch, for securing various credit facilities to its subsidiary Norwest Industries Ltd. for USD 15,000,000 equivalent to Rs. 901,500,000 (March 31, 2013: USD 15,000,000 equivalent to Rs. 815,850,000)

- To Bank of Baroda, Hongkong, for securing credit facilities to its step down subsidiary Simple Approach Ltd. for Rs. NIL (March 31, 2013: USD 4,000,000 equivalent to Rs. 217,560,000).

- To Bank of Baroda, Hongkong, for securing credit facilities to its step down subsidiary Norwest Industries Ltd. for Rs. NIL (March 31,2013: USD 15,000,000 equivalent to Rs. 815,850,000).

- To ICICI Bank Limited, Hong Kong Branch, for securing the derivative limits to its step down subsidiary Norwest Industries Ltd. for USD 3,000,000 equivalent to Rs. 180,300,000 (March 31,2013: USD 3,000,000 equivalent to Rs. 163,170,000).

- To ICICI Bank Limited, Hong Kong Branch, for securing the credit limits to its step down subsidiary Norwest Industries Ltd. and Nor Lanka Manufacturing Limited for USD 15,000,000 equivalent to Rs. 901,500,000 (March 31, 2013: USD 15,000,000 equivalent to Rs. 815,850,000).

- To Punjab National Bank, Hong Kong Branch, for securing the credit limits to its step down subsidiary Norwest Industries Ltd. for USD 30,000,000 equivalent to Rs. 1,803,000,000 (March 31,2013: USD 30,000,000 equivalent to Rs. 1,631,700,000)

- To Intesa Sanpaolo S.p.A, Hongkong Branch for securing credit facilities to its step down subsidiary Norwest Industries Ltd. or Simple Approach Ltd. or

Zamira Fashions Ltd, Hong Kong for Rs. NIL (March 31,2013: USD 18,000,000 equivalent to Rs. 979,020,000).

- To Standard Chartered Bank, Hongkong Branch for securing credit facilities to its wholly owned subsidiary Pearl Global (HK) Ltd, Hong Kong for USD 8,200,000 equivalent to Rs. 492,820,000 (March 31,2013: USD 8,200,000 equivalent to Rs. 445,998,000).

- To Standard Chartered Bank, Bangladesh Branch for securing credit facilities to its subsidiary Norp Knit Industries Ltd, Bangladesh for BDT 560,000,000 equivalent to Rs. 425,600,000 (March 31, 2013: BDT 560,000,000 equivalent to Rs. 380,800,000).

- HSBC Bank Plc. UK for securing credit facilities to its subsidiary Poeticgem Ltd., UK for GBP 12,050,000 equivalent to Rs. 1,203,192,500 (March 31,2013: NIL).

- HSBC Invoice Finance (UK) Limited UK for securing credit facilities to its subsidiary Poeticgem Ltd., UK for GBP 5,000,000 equivalent to Rs. 499,250,000 (March 31, 2013: NIL).

- Counter gurantee given by the Company to Axis Bank, Gurgaon for issue of Standby Letter of Credit to HSBC, Bangladesh for securing credit facilities to its subsidiary Norp Knit Industries Ltd Ltd, Bangladesh for USD 400,000 equivalent to Rs. 24,040,000 (March 31,2013: USD 200,000 equivalent to Rs. 10,878,000).

ii) Claims against the Company not acknowledged as debts and other matters Rs.219,281 (March 31, 2013: Rs. 1,061,474).

iii) Export Bills Discounted with banks Rs. 187,899,296 (March 31, 2013: Rs. 301,478,818).

iv) Irrevocable letter of credit outstanding with banks Rs. 919,723,355 (March 31, 2013: Rs. 714,716,962)

v) Bank Guarantee given to government authorities Rs. 86,081,000 (March 31, 2013: Rs. 94,907,000).

vi) Counter Guarantees given by the company to the Sales Tax Department for its associates company Rs. 100,000 (March 31,2013: Rs. 100,000), for others Rs.50,000 (March 31,2013: Rs. 50,000).

D. Scheme of Arrangement

During the year, consequent upon sanction of "Scheme of Arrangement" (the Scheme), for demerger of the Sourcing, Distribution and Marketing Business of the Company (hereinafter referred as ''Demerged Undertaking'') into PDS Multinational Fashions Limited (''Transferee Company''), as approved by the Hon''ble High Court of Delhi vide its Order dated March 10, 2014 u/s 394(2) of the Companies Act, 1956 and subsequent filing of said Order with the Registrar of Companies, NCT of Delhi & Haryana on May 13, 2014 being the ''Effective Date'', the financial statements of the Company have been prepared in accordance with the relevant clauses of the Scheme as under:-

i) The demerger has been accounted for under the "pooling of interest" method as prescribed by the Accounting Standard (AS-14) of the Company (Accounting Standards) Rules, 2006. Accordingly, for the year ended March 31, 2014, all assets and liabilities of the ''Demerged Undertaking'' have been transferred to the Transferee Company at the book values with effect from April 01,2012 being the Appointed Date'' resulting into a reduction in ''Share Premium Account'' by Rs. 10,677.74 Lacs. Further, there is no difference in accounting policies between the Company and the Transferee Company; hence no adjustments have been made.

ii) In effect of scheme above, the financial results of the Company for the current & previous year does not includes the transactions of ''Demergerd Undertaking'' as under:

As a result of above, the figures for the current year are not comparable with those of the previous year ended March 31,2013.

Note 5: Lease a) Asset Given on Lease

(i) Minimum Lease Payments Receivables

The company has given certain assets on operating lease and lease rent (income) amounting to Rs. 73,136,469 (March 31,2013 : Rs. 65,129,536) has been credited in the Statement of Profit & Loss. The future minimum lease payments receivable and detail of assets as at March 31, 2014 are as under:

(iii)In pursuance with Para 23 of AS-19, "Leases" issued by Companies (Accounting Standard) Rules 2006, lease rent under operating leases is recognized under statement of profit and loss on straight line basis over the lease term. Accordingly Lease Equalisation Asset of Rs. 6,727,863 as on March 31, 2014 has been created.

b) Asset Taken on Lease

(i) Minimum Lease Payments Payables

The company has taken certain assets on non-cancelable operating lease and lease rent charged to Statement of Profit & Loss amounts to Rs. 63,279,892 (March 31, 2013: Rs. 54,505,272). The details of future minimum lease payments is as under:

(ii) In pursuance with Para 23 of AS-19, "Leases" issued by Companies Accounting Standard rules 2006, lease rent under operating leases is recognized under statement of profit and loss on a straight line basis over the lease term. Accordingly Lease Equalisation Liability account of Rs. 5,432,810 has on March 31,2014 has been created

Note 6: Currency Derivatives

The company utilizes currency derivatives to hedge significant future transactions and cash flows and is a party to a variety of foreign currency contracts and options in the management of its exchange rate exposures. The Company has no outstanding derivative financial instrument as at the balance sheet date except for forward currency contracts as below:

Forward Currency Contracts

a) As at the balance sheet date, the total amounts (notional) of outstanding forward foreign exchange contracts that the company has committed are as under:

These commitments have been entered into by the Company to hedge against future payments to suppliers and receipts from customers in the ordinary course of business. These arrangements are designed to address significant exchange exposures and are reviewed/ renewed by the Management on a revolving basis as required.

b) The terms of the forward currency contracts has been negotiated to match the terms & commitments of receivables and payables. The cash flow hedges of the expected future receivables/ payables in April 2014 to March 2015 is assessed at a profit of Rs. 25,621,584 (March 31, 2013 : Loss of Rs. 43,978,918) as on reporting date.

Note 7: In view of the management, the current assets, loans and advances have a value on realization in the ordinary courses of business at least equal to the amount, at which they are stated in the Balance Sheet as at 31st March, 2014.

Note 8: There is no reportable segment of the company in view of the Accounting Standard -17 ''Segment Reporting'' as issued by the Companies (Accounting Standards) Rules, 2006

Note 9: The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in process of updating the documentation for the International transactions entered into with the associated enterprises during the period as required under law. The Management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation

Note 10: Previous year figures have been regrouped & reclassified whereever necessary.

Note 11: Figures have been rounded off to the nearest rupee.


Mar 31, 2013

1. Corporate Information

Pearl Global Industries Limited is a public limited company domiciled in India and incorporated under the provisions of the Companies Act,1956. The company is primarily engaged in manufacturing, sourcing and export of ready to wear apparels through its facilities and operations in India and sourcing overseas. It''s shares are listed in India on Bombay Stock Exchange and National Stock Exchange.

Note 2

2.1 Basis of Preparation

The financial statements of the Company have been prepared in compliance with Accounting Standards issued by the Companies (Accounting Standards) Rules,2006, the relevant provisions of the Companies Act, 1956 and other applicable statutes under the historical cost convention and on an accrual basis of accounting in accordance with Generally Accepted Accounting Principles (GAAP) except investment available for sale and held for trading is measured at fair value and land and building which is measured at revalued cost.

2.2 Uses of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires making of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets & liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting year. Differences between the actual results and estimates are recognized in the Statement of Profit & Loss in the year in which the results are known /materialized.

Note 3: In view of the management, the current assets, loans and advances have a value on realization in the ordinary courses of business at least equal to the amount, at which they are stated in the Balance Sheet as at 31st March, 2013.

Note 4: There is no reportable segment of the Company in view of the Accounting Standard -17 ''Segment Reporting'' as issued by the Companies (Accounting Standards) Rules, 2006.

Note 5: Amount rounded off to the nearest rupee.

Note 6: The process of obtaining balance confirmation from trade payables & trade receivables is an ongoing process and as at March 31st, 2013, the Company is in process of receiving the confirmation from the parties.

Note 7: Previous year figures have been regrouped & reclassified whereever considered necessary.


Mar 31, 2012

1. Corporate Information

Pearl Global Industries Limited (Formerly House of Pearl Fashion Limited) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act,1956. The company is primarily engaged in manufacturing, sourcing and export of ready to wear apparels through its facilities and operations in India and sourcing overseas. It's shares are listed on BSE and NSE in India.

2.1 Basis of Preparation

i) The financial statements of the Company have been prepared in compliance with Accounting Standards issued by the Companies (Accounting Standards) Rules,2006, the relevant provisions of the Companies Act, 1956 and guideline issued by the Security Exchange Board of India under the historical cost convention and on an accrual basis of accounting in accordance with Generally Accepted Accounting Principles (GAAP) except investment available for sale and held for trading is measured at fair value and land and building which is measured at revalued cost. However the financial statements of foreign subsidiaries have been prepared in compliance with the local laws and applicable accounting standards. Necessary adjustments for material variances in the accounting policies, wherever applicable, have been made in the consolidated financial statements.

ii) The accounting policies adopted for preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained para 2.3 (a) below.

2.2 Uses of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires making of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets & liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting year. Differences between the actual results and estimates are recognized in the year in which the results are known /materialized.

a. Terms/rights attached to equity shares

The company has only one class of equity shares having per value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the company the holders of equity shares will be entitled to receive 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.

a) Vehicle loans are secured against hypothecation of respective vehicles.

b) Term loan from Axis bank is secured by equitable mortgage on property situated at plot no. 21/13-X, Block-A, Naraina Industrial Area, Phase-II, NewDelhi owned and guaranteed by the promoter directors of the company repayable Rs. 909,600 p.m.byjanuary2016.

c) Rupee term loan from UCO Bank is secured by exclusive first charge on the movable/ immovable assets purchased from proceeds of term loan (including exclusive charge on the superstructure built on land at D-6/III, Phase II, MEPZ, Chennai and first charge on immovable property situated at 446, Phase V, Udyog Vihar, Gurgaon, guaranteed by a promotor director and repayable quarterly Rs. 3,025,000 byjanuary 2013.

d) Rupee term loan from Punjab National Bank is secured by exclusive charge on the movable/ immovable assets purchased from proceeds of term loan (including exclusive charge on the land & building located at Plot No.51, Sector 32, Gurgaon guaranteed by promotor director and repayable Rs. 5,000,000 quarterly by November 2015.

e) Rupee term loan & corporate loan from Yes Bank Ltd. are secured by first charge on movable assets of the company and exclusive charge on immovable property located at Plot No. 10; sector - 5, Growth center, Bawal and at Plot No. 751; sector 37 - II, Pace City Gurgaon. During the year, the company has fully repaid all such loans with Yes Bank.

Working Capital Loans including bill discounting under consortium of Banks which are secured by first pari-passu charge on present and future movable fixed assets comprising vehicle, furniture and fixtures, disposable fixed assets, stocks of raw material, stocks in process, stores & spares, bill receivable & book debts, guaranteed by a promotor director of the company and mortgage of the properties situated at Plot No.H-597-603, RICCO Industrial Area, Bhiwadi, Alwarand Plot No.16-17, Phase-VI, Udyog Vihar, Gurgaon.

* Pursuant to amendments to schedule VI to Companies Act, 1956 vide notification number GSR 719 (E) dated November 16,2007, there is no amount due as of March 31,2012 due to Micro, small & medium enterprises as defined in Industries (Development and Regulation) Act, 1951.

** It does not include any amount due to be transferred to Investor Education and Protection Fund.

*** Others include Statutory Dues

1. CWIP includes pre-operative expenses of Rs. 4,185,753 (Previousyear: 3,874,753 )

2. During last year, the company had initiated the process of converting its leasehold land into freehold land.

3. Opening balance of land includes Rs.45,229,131 on account of revaluation on 31.03.2002 .

4. Opening balance of building includes Rs.5,932,276 on account of reduction in revaluation on 31.03.2002 .

5. Capital work in progress include Rs. Nil (March 31, 2011 10,104,849 ) being borrowing cost capitalised in accordance with Accounting Standard AS-16 on "Borrowing Cost" as specified in the Companies Accounting Standard Rules 2006.

6. The above includes the amount of Land of Rs, 15,954,319 & Building of Rs. 14,890,483 situated at Narshingpur, Tehsil District gurgaon for which the company has executed an agreement for the construction of commercial project with DLF Retail Developers Ltd. on 30th November,2007. However, as certified by the management.theworkhas notstrarted duringthe financial year 2011-12.

Employee Benefits

The Company has classified the various benefits provided to employees as under:-

(I) Defined Contribution Plan

The company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund plan is operated by the Regional Provident Fund Commissioner and the company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits.

The company recognized Rs. 20,239,167.44 (Previous Year: Rs. 1,041,262) for provident fund contributions in the profit and loss account. The contributions payable to these plans by the company are at rates specified in the rules of the schemes.

(II) Defined Benefit Plan

The present value of obligation is determine based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations. The obligation for leave encashment is recognized in the same manner as gratuity.

Note 3: Contingent Liabilities and Commitments

a) Contingent Liabilities

1 Corporate Guarantee given by the company to UCO Bank, Hong Kong tor securing trade finance limits to its step down subsidiary Norwest Industries Ltd, Hong Kong for HKD 300 million equivalent to Rs. 2,004,000,000/-& GBP 40 Million equivalent to Rs. 3,272,000,000/-( Previous Year: HKD 280 million equivalent to Rs.1,626,800,000 & GBP 30 Million equivalent to Rs.2,157,900,000).

2 Corporate Guarantee given by the company to HSBC Limited, Indonesia for securing credit facilities to its step down subsidiary PT Norwest Industry, Indonesia for USD 2,500,000/- equivalent to Rs. 127,900,000/- (PreviousYear: USD 2,500,000/- equivalent toRs. 111,625,000 ).

3 Corporate Guarantee given by the company to THE CIT GROUP / COMMERCIAL SERVICES INC, New York for working capital and letter of credit facilities to its wholly owned subsidiary M/s House of Pearl Fashions (US) Ltd for USD 400,000 equivalent to Rs. 20,464,000/- (PreviousYear: USD 400,000 equivalent to Rs. 17,860,000).

4 Corporate Guarantee given by the company to HSBC, Hong Kong for HKD 330 Million, equivalent to Rs 2,204,400,000/- for securing credit facilities to its step down subsidiaries Norwest Industries Ltd., Simple Approach Ltd. and Zamira Fashion Ltd (PreviousYear:- HKD 300 Million, equivalent to Rs. 1,743,000,000 ).

5 Corporate Guarantee given by the company to Standard Chartered Bank, Hong Kong for USD 25,800,000 equivalent to Rs. 1,319,928,000/- for securing credit facilities to its step down subsidiary Norwest Industries Ltd(Previous Year: USD 16,928,000 equivalent to Rs. 755,835,200).

6 Corporate guarantee given by the company to HSBC, Bangladesh for BDT 1.673.367.000 equivalent to Rs. 1,037,487,540/- for securing various credit facilities to its subsidiary Norp Knit Industries Ltd (Previous Year: BDT 889,760,000 equivalent to Rs. 542,753,600).

7 Corporate Guarantee given by the company to THE CIT GROUP / COMMERCIAL SERVICES INC, New York for credit facilities to its subsidiary Depa International Inc. merged with House of Pearl Fashions (US) Ltd, a wholly owned subsidiary for USD 1.000.000 equivalent to Rs. 51,160,000/- (Previous Year: 1,000,000 equivalent to Rs.44,650,000).

8 Corporate Guarantee given by the company to BNP Paribas, Hong Kong for letter of credit facility to its step down subsidiary Norwest Industries Ltd. for USD 8,500,000 equivalent to Rs. 43,486,000/- (Previous Year: USD 6,250,000 equivalent to Rs.279,062,500).

9 Corporate Guarantee given by the company to Canara Bank, Hong Kong Branch, for securing various credit facilities to its subsidiary Norwest Industries Ltd. for USD 15.000.000 equivalent to Rs. 767,400,000/-. (PreviousYear: USD 3,000,000 equivalent to Rs. 133,950,000).

10 Corporate Guarantee given by the company to Bank of Baroda, Hongkong, for securing credit facilities to its step down subsidiary Simple Approach Ltd. for Nil (PreviousYear: USD 4,000,000 equivalent to Rs.178,600,000 ). - EXPIRED ON 21.07.2011.

11 Corporate Guarantee given by the company to Bank of Baroda, Hongkong, for securing credit facilities to its step down subsidiary Norwest Industries Ltd. for USD 15.000.000 equivalent to Rs. 767,400,000/-(Previous Year: USD 5,000,000 equivalent to Rs.223,250,000).

12 Corporate Guarantee given by the company to Bank of India, Hongkong Branch for securing credit facilities to its step down subsidiary Simple Approach Ltd. for USD 2.500.000 equivalent to Rs.127,900,000/-(PreviousYear: USD 2,500,000 equivalent to Rs.111,625,000).

13 Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A, Hongkong Branch for securing credit facilities to its step down subsidiary Norwest Industries Ltd. for Nil (Previous year USD 18,000,000 equivalent to Rs.803,700,000 ) -Cancelled during the year.

14 Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A, Hongkong Branch for securing credit facilities to its step down subsidiary Simple Approach Ltd. for Nil (PreviousYear: USD 3,000,000 equivalent to Rs.133,950,000).-Cancelled during the year.

15 Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A, Hongkong Branch for securing credit facilities to its step down subsidiary Zamira Fashion Ltd. for Nil. (PreviousYear: USD 3,000,000 equivalent to Rs.133,950,000 (.-Cancelled during the year.

16 Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A, Hongkong, Branch for securing credit facilities to its step down subsidiary Nor Lanka Manufacturing Ltd. for USD 6,000,000 equivalent to Rs. 306,960,000/- (PreviousYear: USD 6,000,000 equivalent to Rs.267,900,000).

17 Corporate Guarantee given by the company to ICICI Bank Limited, Hong Kong Branch, for securing the derivative limits to its step down subsidiary Norwest Industries Ltd. for USD 3,000,000 equivalent to Rs. 153,480,000 (PreviousYear: NIL).

18 Corporate Guarantee given by the company to ICICI Bank Limited, Hong Kong Branch, for securing the credit limits to its step down subsidiary Norwest Industries Ltd. and Nor Lanka Manufacturing Limited for USD 15,000,000 equivalent to Rs. 767,400,000/- (PreviousYear: NIL).

19 Corporate Guarantee given by the company to Punjab National Bank, Hong Kong Branch, for securing the credit limits to its step down subsidiary Norwest Industries Ltd. forUSD 30,000,000 equivalent to Rs. 1,534,800,000/-. (PreviousYear: NIL).

20 Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A, Hongkong Branch for securing credit facilities to its step down subsidiary Norwest Industries Ltd. or Simple Approach Ltd. or Zamira Fashions Ltd, Hong Kong for USD 18,000,000 equivalent to Rs.920,880,000(Previous Year: Nil).

21 Claims against the Company not acknowledged as debts and other matters Rs. 1,061,474/-(PreviousYear: Rs. NIL).

22 Export Bills Discounted with banks Rs. 380,521,957/- (PreviousYear Rs. NIL/-).

23 Irrevocable letter of credit outstanding with banks Rs. 851,898,710 (Previous Year NIL).

24 Bank Guarantee given to government authorities Rs. 55,002,000 (Previous Year Rs. NIL).

25 Counter Guarantees given by the company to the Sales Tax Department for its associates company Rs.100,000/-(PreviousYear:NIL), for others Rs.50,000/-( Previous Year:Rs.NIL).

b) Commitments

1 Estimated amount of contracts remaining to be executed on capital account (net of advances); Rs. 2,554,365 (March 31,2011: Rs. Nil).

Note 4 Scheme of Arrangement

During the current year, consequent upon sanction of Scheme of Amalgamation of Pearl Global Limited ('Transferor Company') with the Company ('Transferee Company'), as approved by the Hon'ble High Court of Delhi vide its Order dated 11th November, 2011 u/s 394 of the Companies Act, 1956 and necessary filing of said Order with the Registrar of Companies, NCT of Delhi & Haryana on 19th January, 2012 being the 'Effective Date' when the scheme has become effective, the Transferor Company has been merged with the company and the financial statements of the merged company have been prepared in accordance with the relevant clauses of the said scheme as under:-

a) Upon the Scheme became effective, the entire business of Transferor Company including all property, assets and liabilities stand transferred to and vested in the Company with effect from 1st April 2010 being the "Appointed Date.

b) The amalgamation has been accounted for under the "pooling of interest" method as prescribed by the Accounting Standard (AS-14) of the Company (Accounting Standards) Rules, 2006. Accordingly, the assets, liabilities and reserves of transferor companies as at close of business on 31st March 2010 have been recorded in the company at the same values. There is no difference in Accounting Policies between transferor Company and the company; hence no material adjustments have been made.

c) The scheme inter alia provided for issuance of two fully paid up equity shares of face value of Rs. 10 each of Transferee Company to the share holders of Transferor Company for every three equity shares of face value of Rs. 10 each held in Transferor Company.

d) All inter-company balances between the Transferor Company and the company have been eliminated without any further obligations or rights in this behalf.

e. In view of the aforesaid amalgamation became effective during the current year, the previous year's figures of the company represent those of prior to the merger of Transferor Company. Therefore, the figures for the current year are not comparable with those of the previous year.

Note 6: Currency Derivatives

The company utilizes currency derivatives to hedge significant future transactions and cash flows and is a party to a variety of foreign currency contracts and options in the management of its exchange rate exposures.

The Company has no outstanding derivative financial instrument as at the balance sheet date except for forward currency contracts as below:

Forward Currency Contracts - Cash Flow Hedges

a) As at the balance sheet date, the total notional amounts of outstanding forward foreign exchange contracts that the company has committed to are as below:

These commitments have been entered into to hedge against future payments to suppliers and receipts from customers in the ordinary course of business that will fall due in the period ending 31 March 2014.

b) The terms of the forward currency contracts has been negotiated to match the terms & commitments. The Cash Flow Hedges of the expected future sales in April 2012 to March 2014 value assessed at a loss of Rs. 150,831,448 (P.Y. Rs NIL) as on reporting date and this has been included in the hedging reserve.

These arrangements are designed to address significant exchange exposures and are renewed on a revolving basis as required.

'Extended a working capital loans of Rs. 18,998,125/- on a rolling basis to its subsidiary House of Pearl Fashions (US) Ltd. as an interim use of funds.

'Extended a temporary loan of Rs. 65,651,922/- for working capital to its subsidiary Pearl Global Limited as an interim use of funds.

'Extended a temporary loan of Rs. 17,565,300/- for working capital to its subsidiary Pearl Global (HK) Limited as an interim use of funds.

'Extended a temporary loan of Rs. 83,170,000/- for working capital to its subsidiary Norp Knit Industries Ltd as an interim use of funds.

Note 7: In view of the management, the current assets, loans and advances have a value on realization in the ordinary courses of business at least equal to the amount, at which they are stated in the Balance Sheet as at 31st March, 2012.

Note 8: There is no reportable segment of the company in view of the Accounting Standard -17 'Segment Reporting' as issued by the Companies (Accounting Standards) Rules, 2006

Note 9: The name of the company has been changed to Pearl Global Industries Limited pursuant to a 'Fresh Certificate of Incorporation' dated 20th March 2012 issued by the Registrar of Companies, NCT of Delhi and Haryana.


Mar 31, 2011

1. Contingent Liabilities

(a) Corporate Guarantee given by the company to UCO Bank, Hong Kong for securing trade finance limits to its step down subsidiary Norwest Industries Ltd, Hong Kong for HKD 280 million equivalent to Rs.1,626,800,000 & GBP 30 Million equivalent to Rs.2,157,900,000 (Previous Year: HK$ 200 million equivalent to Rs.1,160,000,000 & GBP 19 Million equivalent to Rs.1,289,530,000).

(b) Corporate Guarantee given by the company to HSBC Limited, Indonesia for securing credit facilities to its step down subsidiary PT Norwest Industry, Indonesia for USD 2,500,000/- equivalent to Rs.111,625,000 (Previous Year: USD 2,500,000/- equivalent to Rs.112,575,000).

(c) Corporate Guarantee given by the company to THE CIT GROUP / COMMERCIAL SERVICES INC, New York for working capital and letter of credit facilities to its wholly owned subsidiary M/s House of Pearl Fashions (US) Ltd for USD 400,000 equivalent to Rs.17,860,000 (Previous Year: USD 400,000 equivalent to Rs.18,012,000).

(d) Corporate Guarantee given by the company to HSBC for HKD 300 Million, equivalent to Rs.1,743,000,000 for securing credit facilities to its step down subsidiaries Norwest Industries Ltd., Simple Approach Ltd. and Zamira Fashion Ltd(Previous Year:- HKD 300 Million, equivalent to Rs.1,740,000,000 ).

(e) Corporate Guarantee given by the company to Standard Chartered Bank, Hong Kong for USD 16,928,000 equivalent to Rs.755,835,200 for securing credit facilities to its step down subsidiary Norwest Industries Ltd(Previous Year :USD 16,928,000 equivalent to Rs.762,267,840).

(f) Corporate guarantee given by the company to HSBC, Bangladesh for BDT 889,760,000 equivalent to Rs.542,753,600 for securing various credit facilities to its subsidiary Norp Knit Industries Ltd (Previous Year: BDT 293,700,000 equivalent to Rs.193,842,000).

(g) Corporate Guarantee given by the company to THE CIT GROUP / COMMERCIAL SERVICES INC, New York for credit facilities to its subsidiary Depa International Inc. merged with House of Pearl Fashions (US) Ltd, a wholly owned subsidiary for USD 1,000,000 equivalent to Rs.44,650,000 (Previous Year: USD 6,000,000 equivalent to Rs. 270,180,000).

(h) Corporate Guarantee given by the company to BNP Paribas, for letter of credit facility to its subsidiary Norwest Industries Ltd. for USD 6,250,000 equivalent to Rs.279,062,500 (Previous Year: USD 4,750,000 equivalent to Rs.213,892,500).

(i) Corporate Guarantee given by the company to Canara Bank, HK Branch, for securing various credit facilities to its subsidiary Norwest Industries Ltd. for USD 3,000,000 equivalent to Rs.133,950,000 (Previous Year: USD 3,000,000 equivalent to Rs.135,090,000).

(j) Corporate Guarantee given by the company to Bank of Baroda, Hongkong, for securing credit facilities to its step down subsidiary Simple Approach Ltd. for USD 4,000,000 equivalent to Rs.178,600,000 (Previous Year: Nil ).

(k) Corporate Guarantee given by the company to Bank of Baroda, Hongkong, for securing credit facilities to its step down subsidiary Norwest Industries Ltd. for USD 5,000,000 equivalent to Rs.223,250,000 (Previous Year: Nil ).

(l) Corporate Guarantee given by the company to Bank of India, Hongkong, for securing credit facilities to its step down subsidiary Simple Approach Ltd. for USD 2,500,000 equivalent to Rs.111,625,000 (Previous Year: Nil).

(m) Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A, Hongkong, Branch for securing credit facilities to its step down subsidiary Norwest Industries Ltd. for USD 18,000,000 equivalent to Rs.803,700,000 (Previous Year: Nil)

(n) Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A, Hongkong, Branch for securing credit facilities to its step down subsidiary Simple Approach Ltd. for USD 3,000,000 equivalent to Rs.133,950,000 (Previous Year: Nil ).

(o) Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A, Hongkong, Branch for securing credit facilities to its step down subsidiary Zamira Fashion Ltd. for USD 3,000,000 equivalent to Rs.133,950,000 (Previous Year: Nil).

(p) Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A, Hongkong, Branch for securing credit facilities to its step down subsidiary Nor Lanka Manufactruing Ltd. for USD 6,000,000 equivalent to Rs.267,900,000 (Previous Year: Nil).

(q) Corporate Guarantee given by the company to ICICI Bank Limited, New Delhi for Rs.100,000,000/- for derivative limits to its subsidiary Pearl Global Limited (Previous Year: Rs.100,000,000/-).

(r) Corporate guarantee given by the company to HSBC for Rs.200,000,000/- for Import documentary credits and import deferred payment credits to its subsidiary Pearl Global Limited. (Previous Year: Rs.200,000,000/-).

(s) Corporate Guarantee given by the company to Development Credit Bank for USD 10,000,000/- equivalent to Rs.446,500,000 for derivatives/FX Forward Contact to its subsidiary Pearl Global Limited (Previous Year: USD 10,000,000/- equivalent to Rs. 450,300,000) .

(t) Corporate Guarantee given by the company to UCO Bank for Rs.50,000,000/- for Term Loan facilities to its Subsidiary Pearl Global Limited( Previous Year: Rs. 50,000,000/- both for Term loan and working capital facilities).

(u) Corporate Guarantee given by the company to UCO Bank for Rs.415,000,000/- for Working Capital Credit facilities to its Subsidiary M/s Pearl Global Limited.( Previous Year: Rs. 415,000,000/- both for Term loan and working capital facilities).

(v) Corporate Guarantee given by the company to Standard Chartered Bank for Rs.960,000,000/- for securing Fund and Non Fund Based credit facilities to its subsidiary Pearl Global Ltd (Previous Year: Rs.556,750,000/-).

(w) Corporate Guarantee given by the company to Standard Chartered Bank to secure derivative limits sanctioned to its subsidiary Pearl Global Ltd. for Rs.300,000,000/- (Previous Year: Rs.300,000,000/-).

(x) Corporate Guarantee given by the company to Ye s Bank for Rs.80,000,000/- for working capital facility to its subsidiary Pearl Global Ltd (Previous Year: Rs.130,000,000/-).

(y) Corporate Guarantee given by the company to Ye s Bank for Rs.132,500,000/- for Term Loan and Corporate Loan to its subsidiary Pearl Global Ltd. (Previous Year: Rs.132,500,000/-).

(z) Corporate Guarantee given by the company to Ye s Bank for Rs.100,000,000/- for Corporate Loan –II, to its subsidiary Pearl Global Ltd. (Previous Year: Nil).

(aa) Corporate Guarantee given by the company to DhanLaxmi Bank Limited, New Delhi for Rs.55,000,000/- for derivative limits to its subsidiary Pearl Global Limited (Previous Year: Rs. Nil ).

2. a) Vehicle loans are secured against hypothecation of respective vehicles.

b) Term loan from Axis bank is secured by equitable mortgage on property situated at plot no. 21/13-x, block-A, Naraina Industrial Area, Phase-II, New Delhi owned by promoter directors of the company and personal guarantee by the promoter directors.

4. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account (Net of advances) Rs. NIL/- (Previous Year Rs. NIL)

9. Employee Benefits

The Company has adopted Accounting Standard 15 (revised 2005) 'Employee Benefits' as issued by the Companies (Accounting Standards) Rules,2006. The Company has classified the various benefits provided to employees as under:-

(i) Defined Contribution Plan

The company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund plan is operated by the Regional Provident Fund Commissioner and the company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits. The company recognized Rs. 1,041,262 (Previous Year: Rs348,569) for provident fund contributions in the profit and loss account and Rs. Nil (Previous Year: Rs. 252,250) debited under the head "Capital work-in-progress towards the implementation cost of SAP. The contributions payable to these plans by the company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plan

The present value of obligation is determine based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations. The obligation for leave encashment is recognized in the same manner as gratuity.

10. Related Party Disclosure

(1) Related party disclosure as required under Accounting Standard-"18" as issued by the Companies (Accounting Standards) Rules 2006 is given below:

a) Subsidiary Companies:

Domestic

Pearl Global Limited India

Lerros Fashions India Ltd. India

Overseas

Norp Knit Industries Limited Bangladesh

House of Pearl Fashions (US) Limited, USA

Multinational Textile Group Limited Mauritius

Global Textiles Group Limited Mauritius

Pacific Supply Chain Limited UK

Zamira Fashions ( Europe) Limited UK

Poeticgem Limited UK

Pacific Logistics Limited UK

FX Imports Company Limited UK

Magic Global Fashion Ltd. UK

Poetic Knitwear Limited UK

Norwest Industries Limited Hong Kong

Zamira Fashion Limited Hong Kong

FX Import Hongkong Ltd. Hong Kong

PG Group Limited (formerly known as Pearl Ges Ltd.) Hong Kong

Pearl GES Home Group Limited Hong Kong

Pearl Global Fareast Limited Hong Kong

Simple Approach Limited Hong Kong

Poeticgem (Canada) Limited Canada

PT Norwest Industry Indonesia

Pearl GES Home Group SPA, Chile

Nor Delhi Manufacturing Limited (formerly known as Magic Global Fahions Ltd.) Hong Kong

Nor Lanka Manufacturing Limited (formerly known as Poetic Hongkong) Hong Kong

Grand Pearl Trading Limited China

b) Associates: Domestic

Hopp Fashions India

Pearl Wears India

Vastras India

Little People Education Society India

Pearl Retail Solutions Pvt Ltd India

Deepak Seth & Sons (HUF) India

Pearl Apparels Limited India

Vau Apparels Pvt Ltd India

Nim International Commerce Pvt. Ltd. India

Overseas

Pallas Holdings Limited Mauritius

SACB Holdings Limited Mauritius

JSM Trading (FZE.) Dubai

Lerros Moden GMBH Germany

Premier Pearl Garment Joint Stock Co. Ltd. Vietnam

Superb Mind Holdings Limited Mauritius

Grupo Extremo SUR S.A. Chille

Fru Holdings Ltd. Mauritius

NAFS UK

c) key Management Personnel

Mr. Deepak Seth Chairman

Mr. Pallak Seth Vice Chairman

Mr. Pulkit Seth Managing Director

(II) The Following transactions were carried out with related parties in the ordinary course of business.

15. In view of the management, the current assets, loans and advances have a value on realization in the ordinary courses of business at least equal to the amount, at which they are stated in the Balance Sheet as at 31st March, 2011.

16. The company has not dealt in any derivative financial instrument during the year.

17. There is no reportable segment of the company in view of the Accounting Standard -17 'Segment Reporting' as issued by the Companies (Accounting Standards) Rules,2006.

19. During the current financial year company has disposed off entire investment in its subsidiary Nor Pearl Knitwear Ltd, for a total consideration of Rs.1034.45 Lacs as per RBI approval. This has resulted extra ordinary loss of Rs.292,383,045/- due to written off loans & loss on investment after adjusting the sales consideration of Rs.1034.45 Lacs during the current reported year.

20. Previous year figures have been regrouped/ recasted wherever necessary.


Mar 31, 2010

1. Contingent Liabilities

In case of House of Pearl Fashions Limited (Holding Company)

- Corporate Guarantee given by the company to UCO Bank, Hongkong for securing trade finance limits to its step down subsidiary Norwest Industries Ltd, Hong Kong for HKD 200 million equivalent to Rs. 1,160,000,000 & GBP 19 Million equivalent to Rs. 1,289,530,000 ( Previous Year: HK$ 150 million equivalent to Rs. 1,009,500,000 & GBP 14 Million equivalent to Rs. 1,038,240,000).

- Corporate Guarantee given by the company to MSBC Limited, Indonesia for securing credit facilities to its step down subsidiary PT Norwest Industry, Indonesia for USD 2,500,000 equivalent to Rs.112,575,000 (Previous Year: USD 2,500,000/- equivalent to Rs. 130,425,000).

- Corporate Guarantee given by the company to HSBC Limited, Bangladesh for securing working capital facility to its subsidiary Nor Pearl Knitwear Limited, Bangladesh for USD 4,525,000 equivalent to Rs. 203,760,750 (Previous Year USD 4,525,000/- equivalent to Rs. 236,069,250).

- Corporate Guarantee given by the company to THE CIT GROUP / COMMERCIAL SERVICES INC, New York for working capital and letter of credit facilities to its wholly owned subsidiary M/s House of Pearl Fashions (US) Ltd for USD 400,000 equivalent to Rs.18,012,000 (Previous Year: USD 400,000 equivalent to Rs. 20,868,000).

- Corporate Guarantee given by the company to HSBC for HKD 300 Million, equivalent to Rs. 1,740,000,000 for securing credit facilities to its step down subsidiaries Norwest Industries Ltd., Simple Approach Ltd. and Zamlra Fashion Ltd (Previous Year: Rs. 2,019,000,000).

- Corporate Guarantee given by the company to Standard Chartered Bank, Hongkong for USD 16,928,000 equivalent to Rs. 762,267,840 for securing credit facilities to its step down subsidiary Norwest Industries Ltd (Previous Year :USD 16,928,000 equivalent to Rs. 883,133,760).

- Corporate guarantee given by the company to HSBC, Bangladesh for BDT 293,700,000 equivalent to Rs.193,842,000 for securing various credit facilities to Its subsidiary Norp Knit Industries Ltd (Previous Year: BDT 150,685,000 equivalent to Rs. 116,027,450).

- Corporate Guarantee given by the company to THE CIT GROUP / COMMERCIAL SERVICES INC, New York for credit facilities to its subsidiary Oepa International Inc. for USD 6,000,000 equivalent to Rs. 270,180,000 (Previous Year: NIL).

- Corporate Guarantee given by the company to BNP Paribas, for letter of credit facility to its subsidiary Norwest Industries Ltd. for USD 4,750,000 equivalent to Rs.213,892,500 (Previous Year: NIL).

- Corporate Guarantee given by the company to Canara Bank, HK Branch, for securing various credit facilities to Its subsidiary Norwest Industries Ltd. for USD 3,000,000 equivalent to Rs. 135,090,000 (Previous Year: NIL).

- Corporate Guarantee given by the company to ICICI Bank Limited, New Delhi for Rs. 100,000,000 for derivative limits to its subsidiary Pearl Global Limited (Previous Year: Rs.100,000,000).

- Corporate guarantee given by the company to HSBC for Rs.200,000,000 for Import documentary credits and import deferred payment credits to Its subsidiary Pearl Global Limited. (Previous Year: Rs.200,000,000).

- Corporate Guarantee given by the company to Development Credit Bank for USD 10,000,000/- equivalent to Rs.450,300,000 for derivatlves/FX Forward Contact to Its subsidiary Pearl Global Limited (Previous Year: USD 10,000,000/- equivalent to Rs. 521,700,000).

- Corporate Guarantee given by the company to UCO Bank lor Rs.50,000,000 lor Term Loan facilities to Its Subsidiary Pearl Global Limited (Previous Year: Rs. 150,000,000 both for Term loan and working capital facilities).

- Corporate Guarantee given by the company to UCO Bank for Rs.415,000,000 for Working Capital Credit facilities to Its Subsidiary M/s Pearl Global Limited. (Previous Year: Rs. 150,000,000 both for Term loan and working capital facilities).

- Corporate Guarantee given by the company to Standard Chartered Bank for Rs.556,750,000/- for securing Fund and Non Fund Based credit facilities to Its subsidiary Pearl Global Ltd (Previous Year: Rs. 410,000,000).

- Corporate Guarantee given by the company to Standard Chartered Bank to secure derivative limits sanctioned to its subsidiary Pearl Global Ltd. for Rs.300,000,000 (Previous Year: Rs.150,518,093).

- Corporate Guarantee given by the company to Yes Bank for Rs.100,000,000 for securing term loan facility to Its subsidiary Pearl Global Ltd (Previous Year: Rs. 100,000,000).

- Corporate Guarantee given by the company to Yes Bank for Rs.130,000,000/- for working capital facility to its subsidiary Pearl Global Ltd (Previous Year: NIL).

- Corporate Guarantee given by the company to Yes Bank for Rs.132,500,000/- for Term Loan to its subsidiary Pearl Global Ltd. (Previous Year: NIL).

- Corporate Guarantee given by the Company to Carat Media Services India Pvt. Ltd NIL in the current year (Previous Year Rs. 50,00,000)

- Counter Guarantee given by the company to Standard Chartered Bank, New Delhi for stand by Letter of Credit (SBLC) in favour of Geoffrey Beene, USA on behalf of wholly owned subsidiary House of Pearl Fashions (US) Ltd Is NIL in the current year (Previous Year: USD 285,000 equivalent to Rs. 14,868,450).

- Export bills discounted with banks Rs. NIL (Previous Year: Rs. 10,301,946) In case of Pearl Global Limited (Indian Subsidiary)

(a) Claims against the Company not acknowledged as debts and other matters Rs. 19,44,752 (Previous Year: Rs.3,413,854).

(b) Export Bills Discounted with banks Rs.377,250,832 (Previous Year Rs. 212,561,243).

(c) Counter Guarantees given by the company to the Sales Tax Department for Its associates company Rs.100,000 (Previous Year:Rs.100,000), for others Rs.50,000 (Previous YearRs.50,000).

(d) Guarantee given to government authorities in respect of facilities availed by holding co. & other parties Rs.200,000 (Previous Year Rs.200,000).

(e) Corporate Guarantee given by the company to Axis Bank for securing credit facility & term loan to Little People Education Society for Rs.111,254,000 (Previous Year 111,254,000).

In case of Lerros Fashions India Limited (Indian Subsidiary) Unexpired Letter of Credit Rs. 427,894 (Previous Year: 2,204,648)

In case of Norp Knit Industries Limited (Foreign Subsidiary) The contingent liability of Norp Knit Industries Limited is Rs. 100,584,000 (Previous year Rs. 88,642,400) in respect of letters of credit outstanding and Rs.1,244,100 (Previous Year: NIL) in respect of bank guarantee.

In case of Nor Pearl Knitwear Limited (Foreign Subsidiary)

The contingent liability of Nor Pearl Knitwear Limited Is Rs. NIL (Previous year Rs. 5,289,900) In respect of letters of credit outstanding and Rs 3,564,000 (Previous year 4,158,000) in respect of bank guarantee.

In case of Multinational Textile Group Limited and Its subsidiaries (Foreign subsidiary)

At 31 March 2010, the sub-subsidiaries have the following Contingent Liabilities: Poeticgem Limited

(a) The Sub-Subsidiarys banker, Royal Bank of Scotland pic have given a guarantee to H M Revenue & Customs amounting to Rs. 40,721,530 (Previous Year 31,302,000) on behalf of the Sub-subsidiary. The maximum liability of Poeticgem Limited to the bankers is 81,443,059 (Previous Year: 62,604,000).

(b) The Sub Subsidiarys bank has issued a letter of credit for Rs. 541,903,313 (Previous Year Rs. 423,829,706).

(c) The sub-subsidiary has extended an unlimited guarantee on the banking facilities of Its subsidiary company Pacific Logistics Limited. This guarantee Is supported by a debenture dated 17th August 2005. The Sub-subsidiarys maximum contingent liability under the guarantee as at 31st March 2010 Is Rs. 3,933,686 (Previous Year Rs. 4,682,988)

Norwest Industries Limited

Guarantee given to banks in connection with facilities granted to third parties Rs.68,119,403 (Previous Year Rs. 232,350,833).

FX Import Company Limited

Royal Bank of Scotland pic, has provided a guarantee on behalf of company to H M Revenue and Customs amounting to Rs.10,180,382 (Previous Year: NIL). Under this guarantee the maximum liability as at 31st March 2010 Is Rs.10,180,382 (Previous Year:

NIL).

Pacific Logistics Limited

Royal Bank ol Scotland pic, has provided a guarantee on behalf of company to H M

Revenue and Customs amounting to Rs.5,090,191 (Previous Year: NIL). Under this guarantee the maximum liability as at 31st March 2010 Is Rs. 5,090,191 (Previous Year:

NIL).

Company has also extended an unlimited guarantee on the banking facilities of Its parent company Poeticgem Limited.This guarantee Is supported by a debenture dated 17

August 2005.The Sub-subsidiarys maximum contingent liability under the guarantee as at 31 March 2010 is Rs.285,599,443 (Previous Year: NIL). Depa International Inc.

At 31 March 2010, Depa International Inc. had outstanding letters of credit amounting to a total of Rs. 47,716,175 (Previous Year 63,297,183). Simple Approach Limited

Contingent Liabilities related to Irrevocable letters of credit is Rs.246,451,442(Previous Year:Rs.251,538,333) and shipping guarantee is Rs.NIL (Previous Year Rs. 1,499,679). Zamira Fashion Limited

Contingent Liabilities related to Irrevocable letters of credit is Rs.57,656,457 (Previous Year:Rs.NIL). 2. Capital Commitments In case of Indian companies

Estimated amount of contracts remaining to be executed on capital account (Net of advances) Rs. 23,096,437 (Previous Year: Rs. 101,836.680) In case ot Foreign companies License Agreement (HOPFL US Limited)

Effective February 1,2009, the company has entered into a license agreement with Geoffrey Beene, LLC to design,manufacture and sell certain mens apparel.This agreement expires on December 31,2011 with an option to renew for an additional term of three years. The agreement requires the company to make royalty payments based on specified percentages of net sales, as defined. In addition, the company is required to expend a specified percentage of net sales.as defined.for advertising. For the years ended March 31,2010 and 2009, the license and advertising fees amounted to approximately Rs.32,081,280 and Rs.4,879,350 respectively. At March 31,2010 and 2009, the future minimum payments required under this agreement were as follows:

3. securea Loans

In case of House of Peart Fashions Limited (Holding Subsidiary)

a) Vehicle loans are secured against hypothecation of respective vehicles.

b) Term loan from Axis bank is secured by equitable mortgage on property situated at plot no. 21/13-X, block-A, Naraina Industrial Area, Phase-ll, New Delhi owned by promoter directors of the company and personal guarantee by the promoter directors.

In case of Pearl Global Limited (Indian Subsidiary)

(i) Rupees Term Loan and Working Capital From the Hongkong & Shanghai Banking Corporation is secured by:

- First charge over stocks and receivables pari passu with consortium banks. - First pari passu charge over the companys movable fixed assets (present and future)

- Exclusive first charge over the Fixed Assets of the Chennai unit at D-6/II, Phase II at MEPZ, SEZ Chennai financed from the proceeds of the term loan.

- Pari-Passu charge with UCO by way of mortgage of the Property situated at 446, Udyog Vihar Phase-V, Gurgaon to secure term loan.

(ii) Rupee term loan from UCO Bank is secured by

- Exclusive first charge on the movable/immovable assets purchased from proceeds of term loan (including exclusive charge on the superstructure being built on the land at D-6/III, Phase II at MEPZ, SEZ Chennai).

- Second charge on immovable property at 446, Udyog Vihar Phase -V, Gurgaon. After liquidation of HSBC charge, UCO Bank will have 1" charge.

(iii) Rupee term loan from Yes Bank Ltd is secured by exclusive charge on movable fixed assets of the Company including plant & machinery located at Plot No. 751; sector 3711 , Pace City Gurgaon.

(iv) Rupee term loan & corporate loan from Yes Bank are secured by first charge on moveable fixed assets of the Company and exclusive charge on Immovable property located at Plot No. 10, Sector-5, Growth Centre, Bawal (Documentation in progress).

(v) Rupee term loan from Punjab National Bank is secured by exclusive charge on the movable/immovable assets purchased from proceeds of term loan (including exclusive charge on the land & building located at Plot No.51, Sector- 32,Gurgaon).

(vi) Rupee short term loan from Punjab National Bank is secured by sub-servient charge on current assets of the Company.

(vii) Vehicle loans are secured against hypothecation of respective vehicles.

(viii) Pre- post shipment advances and working capital facilities from PNB, UCO Bank, HSBC, Chinatrust Commercial Bank, Standard Chartered Bank and Yes Bank which are secured by First pari passu charge on movable fixed assets present & future comprising vehicle, furniture and fixtures, disposable fixed assts, the stocks of raw material, stocks in process, stores & spares, bill receivable & book debts and mortgage of the properties situated at following addresses: Plot No.H-597-603, RICCO Industrial Area, Bhiwadi, Alwar Plot No.16-17, Phase-VI, Udyog Vihar, Gurgaon In case of Multinational Textile Group Limited (Foreign subsidiary) Poetlcgem Limited a) Long term bank loans are secured by a legal mortgage over the Freehold property at Teleflex plot, Burnleys, Kiln Farm, Milton Keynes and over the leasehold property at Rat 16,15 Grosvenor Square, London, fixed and floating charges over the assets of the sub-subsidiary and a cross guarantee between Poeticgem Limited and its subsidiary Pacific Logistics Limited. The Loans carry an average interest rate of 2.31% over the base rate and is determined based on 1.9% plus base rate.

At 31" March 2010, Poeticgem Limited had available Rs.344,761,886 (Previous Year:Rs.192,523,142) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

b) The company also has advances from factors that are secured by a charge on the trade receivables of the company.

c) Bank overdrafts are repayable on demand. The average effective interest rate on bank overdrafts approximates 4.30% per annum (Previous Year 7%) and is determined, based on 1.75% plus base rate.

d) In the case Pacific Logistics Limited, subsidiary of Poeticgem Limited, Bank Overdrafts is repayable on demand. Overdrafts of Rs, 4,682,988 (Previous Year: 11,164,698) have been secured by fixed and floating charges over the sub-subsidiarys assets. The weighted average interest rates on bank overdrafts are determined based on 2% plus the average bank base rate.

a) Norwest Industries Limited has banking the facilities is secured by way of:

- The Companys Pledge time deposit and marketable securities.

- Bank Guarantees issued by HSBC Bank and Standard Chartered Bank forRs. 45,030,000 & Rs.36,024,000 respectively (Previous Year: Rs.52,170,000 and 41,736,000 respectively).

- Guarantee from the ultimate holding company, a fellow subsidiary.

- Guarantee from the director of the Company and a related party.

a) Mortgage loan of subsidiary Norwest Industries Limited which is secured, bears interest at 2.25% over 1 month HIBOR and is repayable by 119 monthly equal instalments of Rs.524,436 plus a final repayment of Rs.522,116 commencing on 10* September 2006.

c) The subsidiary, Norwest Industries limited has also mortgage loan which is secured, bears interest at 2% below the Hongkong and Shanghai Banking Corporation limited best lending rate and is repayable by 120 equal installments of Rs. 551,000 commencing on 30" September 2007.

In case of Nor Pearl Knitwear Limited (Foreign subsidiary) i) First Charge after BEPZA over book debts and receivables for Rs. 215,820,000 (Previous Year 251,790,000) with Registrar of Joint Stock Companies (RJSC). ii) First Charge after BEPZA over stock of raw materials.work in progress and finished goods for Rs. 215,820,000 (Previous Year 251,790,000) with RJSC.

iii) First Charge after BEPZA over Plant & Machinery for Rs. 215,820,000 (Previous Year 251,790,000) with RJSC.

Iv) Personal guarantee executed by the directors of House of Pearl Fashion Ltd. for Rs. 205,291,770 (Previous Year Rs. 237,843,030) supported by personal net worth statements for the credit facility.

v) Corporate guarantee executed by House of Pearl Fashions Ltd. for Rs. 203,760,750 (Previous Year Rs. 236,069,250).

5. Alignment of Accounting Policy for consolidation.

a. In case of Multinational Textile Group Limited and Its subsidiaries (hereinafter referred as foreign subsidiaries), Interest income is recognized on an accrual basis using the effective Interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of financial asset. This is inconsistent with the policy of parent company and its Indian subsidiaries, where interest is recognized on time proportion basis. The Interest income from foreign subsidiaries represents 32.48 % of total interest income (Previous Year: 11.58%) i.e. Rs. 49,528,306.50 (Previous Year: Rs.51,642,420).

b. In case of Nor Pearl Knitwear Limited (foreign subsidiary) dividend is accounted for when it is received. This Is inconsistent with the policy of parent company and its Indian subsidiaries, where dividend Income is recognized when the right to receive is established. However, no dividend income during the year is received by the foreign subsidiary.

c. In the case of Multinational Textile Group Limited and its subsidiaries (hereinafter referred as foreign subsidiaries), cost of fixed assets also Includes transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of fixed assets. This is inconsistent with the policy of parent company and Its Indian subsidiaries, where no such treatment is prescribed under the Indian GAAP. However, during the year, no fixed assets have been purchased by the foreign subsidiaries in foreign currency.

d. In the case of Nor Pearl Knitwear Limited (a foreign subsidiary), investments are stated at cost. This is inconsistent with the policy of parent company and its Indian subsidiaries where investments are classified as held for trading, held to maturity and available for sale on the basis of AS-30.The valuation of investments as per AS-30 is given In Point 9 of significant accounting policies above. The Investment of foreign subsidiaries represents 0.54 % of total investments (Previous Year: 0.11 %) I.e. Rs. 49,149,028 (Previous Year: Rs. 278,671,905).

e. In case of partnership firm Hopp fashions, the WDV method of depreciation (prescribed under Income Tax Act, 1961) was used, this is Inconsistent with the SLM method of depreciation used in case of the parent and other subsidiaries. However as It is Impractical & the amount is immaterial, no adjustment for the same has been made in the consolidated financial statements.

f. In case of foreign subsidiaries, sales made in foreign currency are translated at the rate ruling at the date of transaction, this is inconsistent with the policy of parent company and Its Indian subsidiaries, where sales are recognized at monthly average exchange rate. The sales from foreign subsidiaries represents 69.99% (Previous Year: 73.63%) i.e. Rs 12,822,969,505 (Previous Year: Rs. 10,660,505,823) of total sales of Rs.18,320,485,571 (Previous Year: Rs. 14,479,092,981)

g. In case of foreign subsidiaries Inventories of Manufactured Finished Goods, WIP and Raw Material are valued on FIFO basis, this is inconsistent with the policy of parent company and its Indian subsidiaries, where It Is valued on weighted average method.

6. The House of Pearl Fashions Limited has raised Rs. 2,854,335,000 lacs through a public issue of shares during the year 2006-07, the proceeds of which are deployed as follows:

7. Currency Derivative

The company utilizes currency derivatives to hedge significant future transactions and cash flows and is a party to a variety of foreign currency contracts and options in the management of its exchange rate exposures.

At the balance sheet date, the total notional amounts of outstanding forward foreign exchange contracts that the company has committed to are as below:

These arrangements are designed to address significant exchange exposures and are renewed on a revolving basis as required. 15. Lease

In the case of House of Pearl Fashions (US) Ltd.

The company has entered into a long term operation lease agreement for the rental of showroom space which expires on September 30, 2015. For the years ended March 31, 2010 and 2009, rent expenses amounted to Rs. 12,985,280 and Rs. 9,526,539, respectively.

6. Employees Benefits (In the case of Indian Companies)

(I) Defined Contribution Plan

The company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund plan is operated by the Regional Provident fund commissioner and the company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits. The company recognized Rs. 21,440,939 (Previous Year: Rs. 20,067,354) for provident fund contributions in the profit and loss account. The contribution payable to these plans by the company are at rates specified in the rules of the schemes.

(II) Defined Benefit Plan

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations. In the case of Pearl Global Limited (except Chennai Unit), the employees gratuity scheme is managed by Life insurance Corporation. The obligation for leave encashment is recognized in the same manner as gratuity.

7. In case of Pearl Global Limited, The Company has initiated for delisting of shares during the previous year ending 31st March 2009 and the equity shares of the Company were delisted from Bombay Stock Exchange and National Stock Exchange w.e.f. August 21,2009. The Final Exit Option for six months following delisting of shares for public shareholding expired on February 20,2010 and out of total public holding of 2,082,345 shares as on 31st March 2009, shareholders holding 1,101,696 shares have availed the option at the exit price of Rs.47.50 per share.

8. Lerros Fashions India Private Limited (subsidiary of House of Pearl Fashions Ltd.) was originally incorporated as a Private Limited company on 30.03.2007 under the Companies Act, 1956 (No. 1 of 1956) as Wear International Retail Private Limited and became a subsidiary of Public company namely House of Pearl Fashions Limited with effect from 31st March, 2009. However, during the current year, the company has changed its status from private limited company to public limited company w.e.f. 02nd December 2009.

9. During the year ended 31.03.2010, Nor Pearl Knitwear Ltd incurred a loss before tax of Rs.61,152,571 and as at 31" March 2010,its current liabilities exceeds its current assets by 132,620,168.The operation of the factory has remained closed since February 2009. The management is however, confident that the company will resume its operation soon and it will remain operative for the foreseeable future through continued support from its parent company, House of Pearl Fashions Ltd.

10. In view of the management, the current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated as on balance sheet date.

11. Previous Years figures have been regrouped/ recast wherever considered necessary.