Notes to Accounts of Provogue (India) Ltd.

Mar 31, 2018

I. COMPANY OVERVIEW

Provogue (India) Limited (the Company) is a listed public company domiciled in India and incorporated on 17th November 1997. The Company is engaged in the business of manufacturing, trading of garments, fashion accessories, textile products and related materials. The equity shares of the Company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

a) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 1 per share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the Company, the holder 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.

b) Other Information

(i) Rs. 29.00 lakhs Equity Shares (of Rs. 10 each fully paid) have been issued as preferential allotment at a premium of Rs. 440 per share in the financial year 2006-07.

(ii) Rs. 13.34 lakhs Equity Shares (of Rs. 10 each fully paid) have been issued on conversion of the share warrants issued at Rs. 450 in the ratio of one share per warrant in the financial year 2007-08 and 2008-09.

(iii) Rs. 28.50 lakhs Equity Shares (of Rs. 10 each fully paid) have been issued as preferential allotment at a premium of Rs. 1090 per share in the financial year 2008-09.

(iv) The Company has sub divided the equity share of Rs. 10 each (fully paid up) into 5 (five) equity shares of Rs. 2 each (fully paid up) based on the approval of the share holders in the Annual General Meeting held on 15th September 2008.

(v) Rs. 20.50 lakhs Equity Shares of Rs. 2 each have been extinguished under Buy Back Scheme in the financial year 2009-10.

(vi) During the financial year 2011-12, pursuant to The Scheme of Arrangement, 1143.57 lakhs Equity Shares of Rs. 2/- each have been reduced to 1143.57 lakhs Equity Shares of Rs. 1/- each.

(vii) During the Financial year 2015-16, the credit facilities of the company have been classified under SMA - 2 category with banks. On 16th December 2015, Joint Lender’s Forum (JLF) was formed for corrective action plan.As per discussions in JLF meeting held on 25th January 2016, it was decided to invoke Strategic Debt Restructuring (SDR) as per RBI guidelines.Pursuant to SDR Scheme,the Company on August 09,2016 allotted 11,90,24,732 equity shares of Rs. 1/- per share to SDR Lenders at a price of Rs. 7.66 per share entitling them to collectively hold 51% of post allotement paid up share capital of the Company. The said alloted shares are subject to the lock in requirements upto August 25, 2017.

Term Loans from Banks includes :

Rs. 3568.11 lacs (PY Rs. 4372.82 Lacs) term loan from Bank of India carries interest @ Base Rate 2.50% per annum. The loan is repayable in 60 stepped up monthly installments commencing from April 2013. The loan is secured by First exclusive charge on future credit card cash flows through escrow account mechanism; Second pari passu charge on movable & immovable fixed asset of the company and current asset of the company and further secured by personal guarantee of promoter directors.

Working Capital Loans from Banks includes:

Secured :

(a) Cash Credit Loan:

Rs. 11,372.55 Lacs (31.03.2017 : Rs. 14,877.59 Lacs) - Secured by hypothecation of stocks and book debts, the personal guarantee of promoter directors and further collaterally secured by equitable mortgage of office and factory premises (at Daman) of the Company carrying interest @ 12.50% to 14.75% p.a.

(b) Packing Credit Loan and Foreign Bills Purchased:

Rs. 2,590.21 Lacs (31.03.2017 : Rs. 2,649.86 Lacs) - Secured by hypothecation of stocks and book debts of export division and the personal guarantee of promoter directors and further collaterally secured by equitable mortgage of office and factory premises (at Daman) of the Company carrying interest @ 11% to 13% p.a.

(c) Rs. 279.17 Lacs (31.03.2017 : Rs. 279.17 Lacs) suppliers bills discounting limit from SIDBI, secured by residual charge on movable and current assets of the Company carrying interest @ 13% p.a.

Exceptional items represents :

i) Reversal of interest expense provided post SDR amounting to Rs. 5252.34 lacs, since lenders have classified credit facilities as sub standard due to expiry of stipulated time for SDR as per RBI guidelines. (also refer note 42)

ii) Obsolete inventories written off amounting to Rs. 6,974.38 lacs (Consolidated Rs. 7968.61 lacs) which were non moving since significant period of time.

NOTE 2 : EARNINGS PER EQUITY SHARE

In accordance with Indian Accounting Standard 33 - Earning Per Share, the computation of earning per share is set below:

Note:

The Company does not have any dilutive potential equity shares. Consequently the basic and diluted earning per share of the Company remain the same.

NOTE 3 : COMMITMENTS

Operating leases

A. Leases as lessee

The Corporation enters into non-cancellable operating lease arrangements with various parties. The lease rentals paid/ received for the same are charged to the Statement of Profit and Loss.

i. Future minimum lease payments

At 31st March, the future minimum lease payments under non-cancellable leases are NIL

Defined Benefit Plans

The Company has the following Defined Benefit Plans:

Gratuity: In accordance with the applicable laws, the Company provides for gratuity, a defined benefit retirement plan (“The Gratuity Plan”) covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on the reporting date and the Company makes annual contribution to the gratuity fund administered by life Insurance Companies under their respective Group Gratuity Schemes.

Assumptions

With the objective of presenting the plan assets and plan liabilities of the defined benefits plans at their fair value on the balance sheet, assumptions under Ind AS 19 are set by reference to market conditions at the valuation date.

Demographic Assumptions

Mortality in service : Indian Assured Lives Mortality (2006-08)

Sensitivity

The sensitivity of the overall plan liabilities to changes in the weighted key assumptions are:

The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption,the same method used to calculate the liability recognised in the balance sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous period.

NOTE 4 : SEGMENT REPORTING

(i) Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”) of the group. The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director and CEO of the group.

The CODM examine the group performance from a geographic perspective and has identified two of its following business as identifiable segments:

a) Domestic

b) Export

NOTE 5 : RELATED PARTY DISCLOSURES AS REQUIRED UNDER INDIAN ACCOUNTING STANDARD 24, “RELATED PARTY DISCLOSURES” ARE GIVEN BELOW:

List of Related Parties and Relationships:

a) Names of related parties and nature of relationship (to the extent of transactions entered into during the year except for control relationships where all parties are disclosed)

Nature of relationship Nature of the party A) Key Management Personnel (KMP) and their relatives

Mr. Nikhil Chaturvedi Managing Director

Mr. Deep Gupta Whole Time Director & CFO

Mr. Akhil Chaturvedi Whole Time Director

Mr. Salil Chaturvedi Director

Mr. Dinesh Arya Director

Ms. Gauri Pote Director

Mr. Hetal Vasant Hakani Director

Mr. Vishant Shetty Company Secretary

b) Enterprises having common Key Managerial Personnel

Prozone Intu Properties Limited

c) Subsidiaries / Step down Subsidiaries :-

Sporting and Outdoor Ad Agency Private Limited (Upto 17th October 2017)

Pronet Interactive Private limited / Pronet Interactive LLP

Millennium Accessories Limited

Profab Fashions (India) Limited

Provogue Infrastructure Private Limited

Faridabad Festival City Private Limited

Acme Advertisements Private Limited

Brightland Developers Private Limited

Classique Creators Private Limited (formerly known as Classique Creators Limited)

Proflippers India Private Limited (formerly known as Proskins Fashions Private Limited)

Standard Mall Private Limited Elite Team HK Limited (Hongkong)

Provogue Holding Limited (Singapore)

* “Major Parties” denotes who account 10% or more of the aggregate for that category of transaction.

** Loans given to Elite Team HK Limited includes gain on foreign exchange fluctuations Note: Related Parties are as disclosed by the Management and relied upon by the auditors.

NOTE 6 : FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT

A. Accounting classification and fair values

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

B. Measurement of fair values

Valuation techniques and significant unobservable inputs

The Fair Value of the Financial Assets & Liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties,other than in a forced or liquidation sale.

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

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk through the impact of rate changes on interest-bearing liabilities and assets. The Company manages its interest rate risk by monitoring the movements in the market interest rates closely.

Exposure to interest rate risk

Company’s interest rate risk arises primarily from borrowings. The interest rate profile of the Company’s interest-bearing financial instruments is as follows.

Cash flow sensitivity analysis for variable-rate instruments

The sensitivity analysis below have been determined based on the exposure to interest rates for financial instruments at the end of the reporting year and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates :

Other price risk

The Company invests its surplus funds in various Equity and debt instruments . These comprise of mainly liquid schemes of mutual funds (liquid investments), Equity shares, Debentures and fixed deposits. This investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments. However due to the very short tenor of the underlying portfolio in the liquid schemes, these do not pose any significant price risk.

Market risk

Market Risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

Currency risk

The Company is exposed to currency risk on account of its operating and financing activities. The functional currency of the Company is Indian Rupee. Our exposure are mainly denominated in U.S. dollars. The USD exchange rate has changed substantially in recent periods and may continue to fluctuate substantially in the future. The Company’s business model incorporates assumptions on currency risks and ensures any exposure is covered through the normal business operations. This intent has been achieved in all years presented. The Company has put in place a Financial Risk Management Policy to Identify the most effective and efficient ways of managing the currency risks.

Exposure to currency risk

The currency profile of financial assets and financial liabilities as at March 31, 2018 and March 31, 2017 are as below:

Sensitivity analysis

A reasonably possible strengthening / (weakening) of the Indian Rupee against US dollars at 31st March would have affected the measurement of financial instruments denominated in US dollars and affected profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. In cases where the related foreign exchange fluctuation is capitalised to fixed assets or recognised direclty in reserves, the impact indicated below may affect the Company’s income statement over the remaining life of the related fixed assets or the remaining tenure of the borrowing respectively.

Financial Risk Management Risk management framework

A wide range of risks may affect the Company’s business and operational / financial performance. The risks that could have significant influence on the Company are market risk, credit risk and liquidity risk. The Company’s Board of Directors reviews and sets out policies for managing these risks and monitors suitable actions taken by management to minimise potential adverse effects of such risks on the company’s operational and financial performance.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s trade and other receivables, cash and cash equivalents and other bank balances. To manage this, the Company periodically assesses financial reliability of customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of accounts receivable. The maximum exposure to credit risk in case of all the financial instuments covered below is resticted to their respective carrying amount.

(a) Trade and other receivables from customers

Credit risk in respect of trade and other receivables is managed through credit approvals, establishing credit limits and monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

The Company considers the probablity of default upon initial recognition of asset and whether there has been a significant increase in the credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occuring on assets as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:

i) Actual or expected significant adverse changes in business

ii) Actual or expected significant changes in the operating results of the counterparty

iii) Financial or economic conditions that are expected to cause a significant change to the counterparties ability to meet its obligation

iv) Significant imcrease in credit risk on other financial instruments of the same counterparty

v) Significant changes in the value of the collateral supporting the obligation or in the quality of third party guarantees or credit enhancements

Financial assets are written off when there is a no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the Company. When loans or receivables have been written off, the Company continues to engage in enforcement activity to attemp to recover the receivable due, When recoverables are made, these are recognised as incone in the statement of profit and loss.

The Company measures the expected credit loss of trade receivebles and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

Liquidity risk

Liquidity is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a 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 forecasts on the basis of expected cash flows.

The table below provides details regarding the contractual maturities of significant financial liabilities :

NOTE 7 : CAPITAL MANAGEMENT

For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The Company strives to safeguard its ability to continue as a going concern so that they can maximise returns for the shareholders and benefits for other stake holders. The aim to maintain an optimal capital structure and minimise cost of capital.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may return capital to shareholders, issue new shares or adjust the dividend payment to shareholders (if permitted). Consistent with others in the industry, the Company monitors its capital using the gearing ratio which is total debt divided by total capital plus total debt.

NOTE 8 : During the financial year 2015-16, the credit facilities of the Company have been classified under SMA- 2 category with banks. On December 16, 2015, Joint Lender’s Forum (JLF) was formed for corrective action plan. As per the discussions in JLF meeting held on 25th January, 2016, it was decided to invoke Strategic Debt Restructuring (SDR) as per RBI guidelines. Pursuant to SDR Scheme, the Company on August 09, 2016 allotted 11,90,24,732 equity shares of Rs. 1/- per share to SDR Lenders at a price of Rs. 7.66 per share entitling them to collectively hold 51% of post allotment paid up share capital of the Company. The said allotted shares were subject to the lock-in requirement up to August 25, 2017. The investors proposal under SDR was not approved by lenders. Accordingly, the Company has reversed interest expense provided post SDR amounting to Rs. 5252.34 lacs, since lenders have classified credit facilities as sub standard due to expiry of stipulated time for SDR as per RBI guidelines.

NOTE 9 : DISCLOSURE WITH REGARDS TO SECTION 186 (4) OF THE COMPANIES ACT, 2013 :

i) For Investment refer note no. 14

ii) For Corporate Guarantees given refer note no. 31(A)(c)

iii) During the year, the Company had given the unsecured loans to certain parties for the General Corporate purpose. The full particulars of the loans given is as below :

Notes :

a) Loans given to Wholly Owned Subsidiaries, Subsidiaries and Joint Ventures were considered as good and fully recoverable by the management. The terms and conditions of loans are not prejudicial to the Interest of the company.

NOTE 10 : The Company has regrouped, reclassified and / or rearranged previous year figures, wherever necessary to conform to current year classification

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Mar 31, 2016

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.1 per share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the Company, the holder 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.

d) Other Information

(i) 29.00 Lacs Equity Shares (of Rs.10 each fully paid) have been issued as preferential allotment at a premium of Rs.440 per share in the financial year 2006-07.

(ii) 13.34 Lacs Equity Shares (of Rs.10 each fully paid) have been issued on conversion of the share warrants issued at Rs.450 in the ratio of one share per warrant in the financial year 2007-08 and 2008-09.

(iii) 28.50 Lacs Equity Shares (of Rs.10 each fully paid) have been issued as preferential allotment at a premium of Rs.1090 per share in the financial year 2008-09.

(iv) The Company has sub divided the equity share of Rs.10 each (fully paid up) into 5 (five) equity shares of Rs.2 each (fully paid up) based on the approval of the share holders in the Annual General Meeting held on 15th September 2008.

(v) 20.50 Lacs Equity Shares of Rs.2 each have been extinguished under Buy Back Scheme in the financial year 2009-10.

(vi) During the financial year 2011-12, pursuant to The Composite Scheme of Arrangement and Amalgamation, the paid up share capital of the Company of Rs.2287.14 Lacs divided into 1143.57 Lacs Equity Shares of Rs.2/- each have been reduced to Rs.1143.57 Lacs divided into 1143.57 Lacs Equity Shares of Rs.1/- each.

Term Loans from Banks includes :

Rs.5,333.05 Lacs (PY Rs.5868.51 Lacs) term loan from Bank of India carries interest @ Base Rate 2.50% per annum. The loan is repayable in 60 stepped up monthly installments commencing from April 2013. The loan is secured by First exclusive charge on future credit card cash flows through escrow account mechanism; Second pari passu charge on movable & immovable fixed asset of the company and current asset of the company and further secured by personal guarantee of promoter directors.

Working Capital Loans from Banks includes:

Secured :

(a) Cash Credit Loan:

Rs.18,721.46 Lacs (PY Rs.15,730.99 Lacs) - Secured by hypothecation of stocks and book debts, the personal guarantee of promoter directors and further collaterally secured by equitable mortgage of office and factory premises (at Daman) of the Company carrying interest @ 12.50% to 14.75% p.a.

(b) Packing Credit Loan and Foreign Bills Purchased:

Rs.3,542.18 Lacs (PY Rs.5,423.59 Lacs) - Secured by hypothecation of stocks and book debts of export division and the personal guarantee of promoter directors and further collaterally secured by equitable mortgage of office and factory premises (at Daman) of the Company carrying interest @ 11% to 13% p.a.

(c) Rs.397.74 Lacs (PY Nil) suppliers bills discounting limit from SIDBI, secured by residual charge on movable and current assets of the Company carrying interest @ 13% p.a.

Unsecured :

Nil (PY Rs.331.51 Lacs) suppliers bills discounting limit from SIDBI carries interest rate @ 13% p.a. Devolved Letter of Credit from banks :

Overdue Devolved Letter of Credit from Bank (Secured) represents inland letter of credit, the tenure of which is in the range of 60 - 90 days and the rate of interest at base rate 3.00% presently @ 13.25 % p.a. These are secured by usance documents covering purchase of raw material and further secured by inventory and receivables of the Company.

* Represents amount funded to Provogue Personal Care Private Limited (PPCPL), Subsidiary Company (51%). As per Convertible Debenture Subscription Agreement (CDSA) dated September 18, 2013, the Company is required to infuse the fund into PPCPL to the extent of upto Rs.50 Crores within a period of 5 years from 18th October 2013, against which PPCPL shall be issuing 0% fully convertible debentures having face value equivalent to the amount infused by the Company.

Note :

a) The Company has financial involvement in a subsidiary Company, Sporting & Outdoor Ad-Agency Private Limited (‘SOAPL'') amounting to Rs.194.48 Lacs. SOAPL continues to make losses till March 31, 2016. Hence, considering possibility of non recovery, the Company has made provision for diminution in the value of investments and doubtful advances.

b) During the year, the company has sold it''s wholly owned subsidiary, Flowers, Plants & Fruits Private Limited on March 30, 2016 and there by it ceased to be a subsidiary company w.e.f. that date.

c) During the previous year, the Company has received part of insurance claim amounting to Rs.1042.83 Lacs against loss due to a major fire occurred in February 2014 at one of the Company’s Plant located at Daman. Fixed assets having written down value of Rs.14.35 Lacs and stocks valuing Rs.1549.18 Lacs aggregating to Rs.1563.53 Lacs were destroyed in the fire.

Note:

The Company does not have any dilutive potential equity shares. Consequently the basic and diluted earning per share of the Company remain the same.

NOTE 1 : ACCOMPANYING NOTES TO ACCOUNTS

A) Contingent Liabilities not provided for :

a) Letters of Credit outstanding Rs. Nil (PY Rs.61.59 Lacs).

b) Guarantee given by Banks on behalf of the Company Rs.609.98 Lacs. (PY Rs.545.98 Lacs).

c) Corporate Guarantee given on behalf of a Subsidiary Company Rs.4968.75 Lacs (PY Rs.5762.04 Lacs).

d) Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs.970.00 Lacs (PY Rs.970.00 Lacs)

e) Uncalled liability on investments in preference shares partly paid Rs.212.50 Lacs (PY Rs.212.50 Lacs)

f) Sales Tax Liability contested in appeals Rs.100.48 Lacs (PY Rs.87.87 Lacs)

g) Stamp Duty Liability not acknowledged as debt Rs.10.00 Lacs. (PY Rs.10.00 Lacs)

h) Pending the final disposal of the matter, which is presently before the Supreme Court in respect of levy of service tax on renting of immovable properties given for commercial use, retrospectively w.e.f. June 01, 2007, the Company continues not to provide for the retrospective levy aggregating to Rs.279.47 Lacs for the period June 01, 2007 to September 30, 2011. (The Company has paid Rs.139.73 Lacs under protest and has furnished solvency surety for the balance Rs.139.74 Lacs pursuant to the Interim Order dated October 14, 2011 passed by the Hon’ble Supreme Court of India).

i) Disputed demand of income Tax Rs.600.96 Lacs (PY Rs.1798.88 Lacs) (interest thereon not ascertainable at present).

j) Claims against the Company, not acknowledged as debts Rs.158.88 Lacs.

B) In the opinion of the Board the Current Assets, Loans & Advances are approximately of the value stated and are realisable in the ordinary course of business except for those which are considered doubtful and provided for. The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

C) Loans and advances in the nature of loans given to subsidiaries and joint ventures as required to be disclosed in the annual accounts of the Company pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015:

G) Segment information:

The Segment Reporting of the Company had been prepared in accordance with Accounting Standard - 17 on “Segment Reporting”.

The Company, based on business activities during this financial year has identified the geographic segments as its primary segment.

The primary segment reporting format is determined to be geographic segment as the company''s risks and rates of returns are affected predominantly by the geographic distribution of activities.

The Company''s business consists of one reportable business segment i.e., “Manufacturing & Trading of Textile Products”, hence no separate disclosures pertaining to attributable Revenues and Assets are given.

Note:

Related Parties are as disclosed by the Management and relied upon by the auditors.

I) The Company has taken premises on operating lease and entered in to non-cancellable Leave and License Agreements with various parties. The agreements have been entered for a period ranging from 11 to 36 months. The disclosure required to be made in accordance with Accounting Standard 19 on “Leases” is as under;

a) Future minimum lease payments receivable under non-cancellable operating leases in aggregate for the following periods:

b) Initial direct costs incurred on these leasing transactions have been recognized in the Profit and Loss Account.

J) The credit facilities of the Company turned in to SMA-2 category (Principal or interest payment overdue between 61-90 days) with banks during the year and accordingly Joint Lender''s Forum (JLF) was formed on December 16, 2015 for corrective action plan. As per the discussions in JLF meeting held on 25th January, 2016 (reference date), it was decided to invoke Strategic Debt Restructuring (SDR) under extant RBI guidelines and a new investor to be inducted to revive the company. Invocation of SDR would provide reasonable timeframe of 18 months for all stakeholders to scout for the potential investor and finalize a long term sustainable revival plan for the company. The asset classification will be ‘stand-still'' from reference date, subject to the targeted conversion of debt into equity shares takes place within 210 days from the review of achievement of milestones/ critical conditions.

K) Disclosure with regards to section 186 (4) of the Companies Act, 2013 :

i) For Investment refer note no. 12

ii) For Corporate Guarantees given refer note no. 31(A)(c)

Notes :

a) Loans given to Wholly Owned Subsidiaries, Subsidiaries and Joint Ventures were considered as good and fully recoverable by the management. The terms and conditions of loans are not prejudicial to the Interest of the company.

b) Loans given to others carries interest between 9% p.a. to 12% p.a.

L) There is no other additional information pursuant to the provisions of Schedule III of the Companies Act, 2013 requiring disclosure for the Company for the year under report.

M) Figures less than Rs.500/- have been shown at actual wherever statutory required to be disclosed since figures stated have been rounded off to the nearest thousands.

N) The Company has re-grouped, reclassified and/or re-arranged previous year''s figures, wherever necessary to conform to current year''s classification.

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Mar 31, 2015

1. CORPORATE INFORMATION:

Provogue (India) Limited (the Company) is a listed public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of manufacturing, trading of garments, fashion accessories, textile products and related materials. The equity shares of the Company are listed on the BSE Limited and National Stock Exchange of India Limited.

2. BASIS OF PREPARATION:

The Financial Statements have been prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis and in compliance with all the mandatory accounting standards as prescribed under Section 133 of the Companies Act 2013 ('Act') read with Rule 7 of the Companies (Accounts) rules, 2014. Financial Statements are based on historical cost convention and are prepared on accrual basis.

3. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of ' 1 per share. Each holder of equity share is entitled to one vote per share. The company declares and pays dividends (if any) in Indian rupees. The dividend if any proposed by the Board of Directors (if any) is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holder 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.

4. LONG-TERM BORROWINGS

a) Term Loans from Banks includes :

Rs. 5868.51 Lacs (PY Rs. 6363.34 Lacs) term loan from Bank of India carries interest @ Base Rate 2.50% per annum. The loan is repayable in 60 stepped up monthly installments commencing from April 2013. The loan is secured by First exclusive charge on future credit card cash flows through escrow account mechanism; Second pari passu charge on movable & immovable fixed asset of the company and current asset of the company and further secured by personal guarantee of promoter directors.

b) Hire Purchase Loans amounts to Nil (PY 6.59 Lacs) were secured by hypothecation of respective vehicles financed. The loan carried interest ranging from 11% to 12.50% p.a. The loan was repayable in 36 to 60 equal monthly instalments starting from the respective date of finance.

Secured :

Cash Credit Loan:

Rs. 15,730.99 Lacs (PY Rs. 15,803.30 Lacs) - Secured by hypothecation of stocks and book debts, the personal guarantee of certain promoters and further collaterally secured by equitable mortgage of office and factory premises (at Daman) of the Company carrying interest @ 12.50% to 13.50% p.a.

Packing Credit Loan and Foreign Bills Purchased:

Rs. 5,423.59 Lacs (PY Rs. 5,197.08 Lacs) - Secured by hypothecation of stocks and book debts of export division and the personal guarantee of certain promoters and further collaterally secured by equitable mortgage of office and factory premises (at Daman) of the Company carrying interest @ 11% to 13% p.a.

Others :

Nil (PY Rs. 544.28 Lacs) - secured by lien of approved mutual funds carrying interest @ 10% to 11% p.a.

Unsecured :

- Rs. 331.51 Lacs (PY Rs. 599.96 lacs) suppliers bills discounting limit from SIDBI carries interest rate @ 13% p.a.

5. ACCOMPANYING NOTES TO ACCOUNTS

A) Contingent Liabilities not provided for :

a) Letters of Credit outstanding Rs. 61.59 Lacs (PY Rs. 61.85 Lacs).

b) Guarantee given by Banks on behalf of the Company Rs. 545.98 Lacs. (PY Rs. 284.98 Lacs).

c) Corporate Guarantee given on behalf of subsidiaries: (Rs. In Lacs)

Name of the Subsidiary As at As at 31.03.2014 31.03.2015

Elite Team HK Limited - (Hongkong)* 5,762.04 7,244.30

Provogue Personal Care Private Limited 500.00 500.00

Total 6,262.04 7,744.30

Loans outstanding against these guarantees are Rs. 3,826.71 Lacs (PY Rs. 6,161.47 Lacs).

d) Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. 970.00 Lacs (PY Rs. 970.00 Lacs).

e) Uncalled liability on investments in preference shares partly paid Rs. 212.50 lacs (PY Rs. 212.50 Lacs).

f) Stamp Duty Liability not acknowledged as debt Rs. 10.00 Lacs. (PY Rs. 10.00 Lacs).

g) Sales Tax Liability contested in appeals Rs. 87.87 Lacs (PY Rs. 64.51 Lacs).

h) Service Tax Liability amounting to Rs. 279.47 lacs on the renting of Immovable Properties from June 01,2007 to September 30,2011 (The Company has deposited Rs. 139.73 lacs and has furnished solvency surety for the balance Rs. 139.74 lacs pursuant to the Interim Order dated October 14,2011 passed by the Hon'ble Supreme Court of India).

i) Disputed demand of income Tax Rs. 1294.55 lacs.

C) In the opinion of the Board the Current Assets, Loans & Advances are approximately of the value stated and are realisable in the ordinary course of business except for those which are considered doubtful and provided for and that mentioned in Note 32(B). The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

D) Loans and advances in the nature of loans given to subsidiaries and joint ventures as required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of Listing Agreement

G) Segment information:

The Segment Reporting of the Company had been prepared in accordance with Accounting Standard - 17 on "Segment Reporting".

The Company, based on business activities during this financial year has identified the geographic segments as its primary segment.

The primary segment reporting format is determined to be geographic segment as the company's risks and rates of returns are affected predominantly by the geographic distribution of activities.

H) Related Party Disclosure:

As required under Accounting Standard 18 "Related Party Disclosure" (AS-18), following are details of transactions during the year with the related parties of the Company as defined in AS 18: i) List of Related Parties and Relationships:

a) Key Management Personnel

Mr. Nikhil Chaturvedi Managing Director

Mr. Akhil Chaturvedi Whole Time Director

Mr. Deep Gupta Whole Time Director & CFO

Mr. Salil Chaturvedi Non Executive Director

Mr. Nigam Patel (Upto November 03, 2014) Non Executive Director

Mr. Rakesh Rawat (Upto February 13, 2015) Non Executive Director

Mr. Ajayendra Jain Company Secretary

b) Enterprises under significant influence

Acme Exports

Prozone Intu Properties Limited (formerly known as Prozone Capital Shopping Centres Limited)

Empire Mall Private Limited

Hagwood Commercial Developers Private Limited

c) Subsidiaries - The Ownership, Directly or Indirectly through Subsidiary/ Subsidiaries

Sporting and Outdoor Ad Agency Private Limited Pronet Interactiv Private limited Millennium Accessories Limited Profab Fashions (India) Limited Provogue Infrastructure Private Limited Flowers Plant & Fruits (India) Private Limited Faridabad Festival City Private Limited Acme Advertisements Private Limited Brightland Developers Private Limited Classique Creators Limited

Proskins Fashions Limited (formerly known as Prozone Infrastructure Limited)

Standard Mall Private Limited Elite Team HK Limited (Hongkong) Provogue Holding Limited (Singapore)

d) Joint Ventures

ProSFL Private Limited

I) The Company has taken premises on operating lease and entered in to non-cancellable Leave and License Agreements with various parties. The agreements have been entered for a period ranging from 11 to 36 months. The disclosure required to be made in accordance with Accounting Standard 19 on "Leases" is as under;

a) Future minimum lease payments receivable under non-cancellable operating leases in aggregate for the following periods:

J) Disclosure with regards to section 186 (4) of the Companies Act, 2013 :

i) For Investment refer note no. 12

ii) For Corporate Guarantees given refer note no. 32(A)(c)

K) There is no other additional information pursuant to the provisions of Schedule III of the Companies Act, 2013 requiring disclosure for the Company for the year under report.

L) Figures less than Rs. 500/- have been shown at actual wherever statutory required to be disclosed since figures stated have been rounded off to the nearest thousands.

M) The Company has re-grouped, reclassified and/or re-arranged previous year's figures, wherever necessary to conform to current year's classification.

---

Mar 31, 2014

1. CORPORATE INFORMATION:

Provogue (India) Limited (the Company) is a listed public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of manufacturing, trading of garments, fashion accessories, textile products and related materials. The equity shares of the Company are listed on the BSE Limited and National Stock Exchange of India Limited.

2. BASIS OF PREPARATION:

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act 2013. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policy adopted in the preparation of the financial statements are consistent with those followed in the previous year.

a) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 1 per share. Each holder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holder 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.

b) Other Information

(i) 29.00 lakhs Equity Shares (of Rs. 10 each fully paid) have been issued as preferential allotment at a premium of Rs. 440 per share in the financial year 2006-07.

(ii) 13.34 lakhs Equity Shares (of Rs. 10 each fully paid) have been issued on conversion of the share warrants issued at Rs. 450 in the ratio of one share per warrant in the financial year 2007-08 and 2008-09

(iii) 28.50 lakhs Equity Shares (of Rs. 10 each fully paid) have been issued as preferential allotment at a premium of Rs. 1090 per share in the financial year 2008-09

(iv) The Company has sub divided the equity share of Rs. 10 each (fully paid up) into 5 (five) equity shares of Rs. 2 each (fully paid up) based on the approval of the share holders in the Annual General Meeting held on 15th September 2008.

(v) 20.50 lakhs Equity Shares of Rs. 2 each have been extinguished under Buy Back Scheme in the financial year 2009-10.

(vi) During the financial year 2011-12, pursuant to The Scheme of Arrangement, 1143.57 lakhs Equity Shares of Rs. 2/- each have been reduced to 1143.57 lakhs Equity Shares of Rs. 1/- each

c) Term Loans from Banks includes :

i) Nil (PY Rs. 121.46 Lacs) term loan from Corporation Bank carries interest @ Base Rate 3.85% p.a.. The loan is repayable in 20 quarterly instalments along with interest starting from 6th May, 2009. The loan is secured by Equitable Mortgage: First charge on factory land & building & Hypothecation: First charge on P&M and other moveable assets acquired or to be acquired out of the loan at the estimated cost of Rs. 8.45 Crores in Baddi, Himachal Pradesh.

ii) Rs. 6363.34 Lacs (PY Rs. 6,477.66 Lacs) term loan from Bank of India carries interest @ Base Rate 2.50% per annum. The loan is repayable in 60 stepped up monthly instalments commencing from April 2013. The loan is secured by First exclusive charge on future credit card cash flows through escrow account mechanism; Second pari passu charge on movable & immovable fixed asset of the company and current asset of the company.

All the above loans are further secured by personal guarantee of promoter directors.

d) Hire Purchase Loans amounts to Rs. 6.59 Lacs (PY 19.34 Lacs) are secured by hypothecation of respective vehicles financed. The loan carries interest ranging from 11% to 12.50% p.a. The loan is repayable in 36 to 60 equal monthly instalments starting from the respective date of finance.

Working Capital Loans from Banks includes:

Secured :

Cash Credit Loan:

Rs. 15,803.30 Lacs (PY Rs. 13,946.89 Lacs) - Secured by hypothecation of stocks and book debts, the personal guarantee of promoter directors and further collaterally secured by equitable mortgage of office and factory premises (at Daman) of the Company carrying interest @ 12.50% to 13.50% p.a.

Packing Credit Loan and Foreign Bills Purchased:

Rs. 5,197.08 Lacs (PY Rs. 6,205.29 Lacs) - Secured by hypothecation of stocks and book debts of export division and the personal guarantee of promoter directors and further collaterally secured by equitable mortgage of office and factory premises (at Daman) of the Company carrying interest @ 10% p.a.

Others :

Rs. 544.28 Lacs (PY Rs. 660.91 Lacs) - secured by lien of approved mutual funds carrying interest @ 10.50% p.a.

Unsecured :

Rs. 599.96 Lacs (PY Rs. 684.24 lacs) suppliers bills discounting limit from SIDBI carries interest rate @ 13% p.a.

a) During the earlier years, the Company had advanced a sum of Rs. 1,100.00 lacs to a Media Company to be utilised against the release of the advertisements of the Company. However the Company could not fully utilize the said amount as stipulated in the terms due to various reasons. In view of the management an amount outstanding Rs. 9,29.80 lacs as on 31.03.2014 in respect of said advance is not recoverable/utilisable and hence the same has been written off during the year.

b) A major fire occurred in February 2014 at one of the Company''s Plant located at Daman. Fixed assets of written down value of Rs. 14.35 lacs and stocks valuing Rs. 1549.18 lacs aggregating to Rs. 1563.53 lacs were destroyed in the fire. The assets were fully insured and claim has been duly lodged by the Company. The Company would account for the claim as and when determined by the insurance company.

c) In terms of the Business Transfer Agreement entered in October 2013 with Provogue Personal Care Private Limited (PPCPL) (Subsidiary Company), the Company has transferred one of its business of manufacturing, branding, distribution of Deodorants as a going concern on a slump sale basis to PPCPL as on the closing date October 15, 2013 for a consideration of Rs. 650 lacs. The profit of Rs. 650.40 lacs on the sale of the Deo business recognised during the year has been disclosed as an exceptional items. The Company has received consideration other than cash by way of one 0% Fully Convertible Debentures of Rs. 650 lacs.

Note:

The Company does not have any dilutive potential equity shares. Consequently the basic and diluted earning per share of the Company remain the same.

NOTE 3 : ACCOMPANYING NOTES TO ACCOUNTS

A) Contingent Liabilities and Commitments (to the extent not provided for) :

a) Letters of Credit outstanding Rs. 61.85 lacs (PY Nil).

b) Guarantee given by Banks on behalf of the Company Rs. 284.98 Lacs. (PY Rs. 254.98 Lacs)

c) Corporate Guarantee given on behalf of a Subsidiary Company Rs. 7,244.30 Lacs (PY Rs. 9332.76 Lacs)

d) Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. 970.00 Lacs (PY Rs. 1240.00 Lacs)

e) Uncalled liability on investments in preference shares partly paid Rs. 212.50 lacs (PY Rs. 212.50 Lacs)

f) Sales Tax Liability contested in appeals Rs. 64.51 Lacs (PY Rs. 64.51 Lacs)

g) Stamp Duty Liability not acknowledged as debt Rs. 10.00 Lacs. (PY Rs. 10.00 Lacs)

h) Service Tax Liability amounting to Rs. 279.47 lacs on the renting of Immovable Properties from June 01, 2007 to September 30,2011 (The Company has deposited Rs. 139.73 lacs and has furnished solvency surety for the balance Rs. 139.74 lacs pursuant to the Interim Order dated October 14,2011 passed by the Hon''ble Supreme Court of India).

i) Disputed demand of income Tax Rs. 1798,88 lacs (interest thereon not ascertainable at present) During the year, Income Tax Authorities have completed block assessment for the assessment years 2006-07 to 2012-13 in respect of the Income Tax Returns filed by the Company consequent to search and seizure operations carried out in the Financial Year 2011-12. The Tax Authorities has raised a demand of Rs. 1798.88 lacs against which the Company has preferred an appeal. The management is of the view that it will be able to obtain substantial relief from the appellate authorities and accordingly this demand is reflected as a contingent liability.

B) The Company has financial involvement in a subsidiary Company (Holding Voting Power of 50% 2 Shares), Sporting & Outdoor Ad-Agency Private Limited (''SOAPL'') as follows:

(Rs. In Lacs) Name of the Company Investment Loans and Total in Equity Advances Involvement Capital

Sporting & Outdoor 132.61 88.15 220.76 Ad-Agency Private Limited

SOAPL continues to make losses and the accumulated losses as at 31st March, 2014 is Rs. 270.72 lacs and has substantially eroded its Net Worth as at the year end. SOAPL has business plans with strategic growth projections, which it is confident of achieving given the business opportunities and a continued financial support from the Company. Based on these plans and the Company considers that there is no loss for which a provision is currently necessary in these financial statements.

C) In the opinion of the Board the Current Assets, Loans & Advances are approximately of the value stated and are realisable in the ordinary course of business except for those which are considered doubtful and provided for. The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

D) Loans and advances in the nature of loans given to subsidiaries and associates as required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of Listing Agreement is under:

E) Segment information:

The Segment Reporting of the Company had been prepared in accordance with Accounting Standard - 17 on "Segment Reporting" issued by the Companies (Accounting Standards) Rules, 2006 The Company, based on business activities during this financial year has identified the geographic segments as its primary segment.

The primary segment reporting format is determined to be geographic segment as the company''s risks and rates of returns are affected predominantly by the geographic distribution of activities.

4) Other transactions :

During the year, the Company purchased the Deo Business on slump sale basis from Millennium Accessories Limited (Subsidiary Company) for a consideration to be received amounting to Rs. 64.00 lacs. [Refer note 11(b)]

During the year, the Company sold the Deo Business on slump sale basis to Provogue Personal Care Private Limited (Subsidiary Company) for a consideration to be received amounting to Rs. 650.00 lacs by way of 0% Fully Convertible Debenture. [Refer note 29(c)II].

5) There is no other additional information pursuant to the provisions of Part II of Revised Schedule VI of the Companies Act, 1956 requiring disclosure for the Company for the year under report.

6) Figures less than Rs. 500/- have been shown at actual wherever statutory required to be disclosed since figures stated have been rounded off to the nearest thousands.

7) The Company has re-grouped, reclassified and/or re-arranged previous year''s figures, wherever necessary to conform to current year''s classification.

---

Mar 31, 2013

CORPORATE INFORMATION:

Provogue (India) Limited (the Company) is a listed public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of manufacturing, trading of garments. The Company is also in the business of import and export of commodities and goods.

BASIS OF PREPARATION:

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policy adopted in the preparation of the financial statements are consistent with those followed in the previous year.

A) Contingent Liabilities not provided for:

a) Letters of Credit outstanding Rs. Nil (PY Rs. 176.41 Lacs).

b) Guarantee given by Banks on behalf of the Company Rs. 254.98 Lacs. (PY Rs. 140.00 Lacs)

c) Corporate Guarantee given on behalf of a Subsidiary Company Rs. 9,332.76 Lacs (PY Rs. 8,088.66 Lacs)

d) Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. 1240.00 Lacs (PYRs. 1240.00 Lacs)

e) Sales Tax Liability contested in appeals Rs. 64.51 Lacs (PY Rs. 64.51 Lacs)

f) Stamp Duty Liability not acknowledged as debt Rs. 10.00 Lacs. (PY Rs. 10.00 Lacs)

g) Pursuant to the Interim Order dated October 14, 2011 passed by The Hon''ble Supreme Court with regard to the levy of service tax on immovable properties rented out for commercial use, the Company has deposited with the concerned department an amount of Rs. 139.73 Lacs in respect of services tax liability upto September 30, 2011. For the balance 50% of the amount, the Company has furnished a solvent surety and has accordingly not provided ( the total amount of) Rs. 279.47 Lacs in the accounts. From October 2011 onwards, the Company is accounting and paying for such service tax regularly.

h) Confirmation letters have been sent in respect of Trade Receivables and Trade Payables. Very few parties have responded to the request, the balances under these heads have been shown as per the books of account and are subject to reconciliation and adjustment, if any. Consequential revenue impact, presently not ascertainable, will be considered as and when determined. However in view of management, effect of the same is not expected to be material.

i) The Income tax authorities had carried out search and seizure operations in January 2012 at the premises of the Company. The Company has filed Income Tax Returns for which notice have been received u/s 153A of The Income Tax Act, 1961.

Tax expenses includes an amount of Rs. 975.41 Lacs representing additional tax liability on income of Rs. 3,006.34 Lacs (not accounted in these financials) offered by the company, during the search & seizure operations relating to earlier year(s) to avoid any protracted litigations.

B) As at 31st March, 2013, the Company has unutilised service tax input credit of Rs. 185.99 Lacs (PY Rs. 229.68 Lacs). The above credit shall be utilised against the taxable service provided by the Company in future.

C) The Company has financial involvement in a subsidiary Company (Holding Voting Power of 50% 2 Shares), Sporting & Outdoor Ad-Agency Private Limited (''SOAPL'') as follows:

SOAPL continues to make losses and accumulated losses of Rs. 270.41 Lacs as at 31st March, 2013 have substantially eroded its Net Worth as at the year end. SOAPL has business plans with strategic growth projections, which it is confident of achieving given the business opportunities and a continued financial support from the Company. Based on these plans and the Company considers that there is no loss for which a provision is currently necessary in these financial statements.

D) In the opinion of the Board the Current Assets, Loans & Advances are approximately of the value stated and are realisable in the ordinary course of business except for those which are considered doubtful and provided for and that mentioned in Note 32(C). The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

E) Loans and advances in the nature of loans given to subsidiaries and joint ventures as required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of Listing Agreement is under:

F) Related Party Disclosure:

As required under Accounting Standard 18 "Related Party Disclosure" (AS-18), following are details of transactions during the year with the related parties of the Company as defined in AS 18:

I) For the year ended 31st March, 2013

i) List of Related Parties and Relationships:

a) Key Management Personnel

Mr. Nikhil Chaturvedi Director

Mr. Akhil Chaturvedi Director

Mr. Salil Chaturvedi Director

Mr. Deep Gupta Director

Mr. Nigam Patel Director

Mr. Rakesh Rawat Director

b) Enterprises under significant influence

Acme Exports

Prozone Capital Shopping Centres Limited Empire Mall Private Limited

c) Subsidiaries - The Ownership, Directly or Indirectly through Subsidiary/ Subsidiaries

Sporting and Outdoor Ad Agency Private Limited

Pronet Interactive Private limited

Millennium Accessories Limited

ProSFL Private Limited (Formerly known as Oasis Fashions Limited)

Profab Fashions (India) Limited

Provogue Infrastructure Private Limited

Flowers, Plant & Fruits (India) Private Limited

Faridabad Festival City Private Limited

Acme Advertisements Private Limited

Brightland Developers Private Limited

Classique Creators Limited

Prozone Infrastructure Limited

Standard Mall Private Limited

Elite Team HK Limited

Provogue Holding Limited (Singapore)

G) The Company has taken premises on operating lease and entered in to non-cancellable Leave and License Agreements with various parties. The agreements have been entered for a period ranging from 11 to 36 months. The disclosure required to be made in accordance with Accounting Standard 19 on "Leases" is as under;

a) Future minimum lease payments receivable under non-cancellable operating leases in aggregate for the following periods:

b) Initial direct costs incurred on these leasing transactions have been recognised in the Profit and Loss Account.

H) During the year 2008-09 the Company has raised an amount of Rs. 32,982 Lacs through preferential issue of shares and allotment of convertible warrants. The Company has fully utilised the said proceeds towards investment in its subsidiaries, other objects and general corporate purposes.

I) There is no other additional information pursuant to the provisions of Part II of Revised Schedule VI of the Companies Act, 1956 requiring disclosure for the Company for the year under report.

J) Figures less than Rs. 500/- have been shown at actual wherever statutory required to be disclosed since figures stated have been rounded off to the nearest thousands.

K) The Company has re-grouped, reclassified and/or re-arranged previous year''s figures, wherever necessary to conform to current year''s classification.

---

Mar 31, 2012

CORPORATE INFORMATION:

Provogue (India) Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of manufacturing, trading of garments. Company is also indulge in the business of import and export of commodities and goods.

BASIS OF PREPARATION:

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

NOTE 1 : THE COMPOSITE SCHEME OF ARRANGEMENT

a) As per the Order dated 10th February 2012, the Hon'ble High Court of Judicature at Bombay approved the Composite Scheme of Arrangement (The Scheme) whereby the Retail Centric Real Estate Development Business (RCREDB) division was demerged and transferred from Provogue (India) Limited (the Company) and vested in Prozone Capital Shopping Centres Limited (the Resulting Company) as a going concern with retrospective effect from 1st April 2011 being the Appointed date.

b) The Scheme became effective from 27th February 2012 (the effective date) upon which the business of RCREDB division including all its assets whether moveable or immoveable, tangible or intangible and liabilities whether present or contingent (as detailed in the Scheme) stands transferred and vested in the Resulting Company

c) The management of Provogue (India) Limited (the Company), Prozone enterprises Private Limited (the Amalgamating Company) and Prozone Capital Shopping Centres Limited (the Resulting Company), in terms of provision contained in para no. 19.1.4 of the Scheme, mutually decided to disregard the investment made by the Company in 'Provogue Infrastructure Private Limited' from the RCREDB division. Accordingly, 'Provogue Infrastructure Private Limited' is deemed to be continued as subsidiary of the Company.

d) From the Appointed Date upto the Effective date, the business of RCREDB Division is deemed to have been carried out by the Company in trust for the Resulting Company and hence, any income or profit accruing or arising and any costs, charges, expenses and losses incurred by the Company in relation to RCREDB Division in accordance with the Scheme shall be treated as of the Resulting Company. The under mentioned assets and liabilities have been accounted for, in the method and manner, as prescribed in the Scheme:

e) In consideration of transfer and vesting of RCREDB division to the Resulting Company, 1(one) fully paid Equity Share of Rs. 2 each at par was issued and allotted by the Resulting Company, to the Shareholders of the Company for every one Equity Share held by them in the Company on 12th March 2012 i.e. record date fixed by the Board of directors of the Company for determining the entitlement of Equity Shares of the Resulting Company.

f) Reduction & Re-organisation of Equity Share Capital :

Authorised Share Capital :

1650.00 Lakhs Equity Shares of Rs. 2 each re-organised into 3,300.00 Lakhs Equity Shares of Rs. 1 each. Issued, Subscribed and Paid up Share Capital :

1,143.57 Lakhs Equity Shares of Rs. 2/- each reduced to 1,143.57 Lakhs Equity Shares of Rs. 1/- each and difference on reduction of capital amounting to Rs. 1,143.57 Lakhs is credited to 'Capital Redemption Reserve'.

g) The Resulting Company is being in the process of listing on the stock exchanges.

a) Pursuant to The Scheme coming into effect,

Authorised Share Capital :

1,650.00 Lakhs Equity Shares of Rs. 2 each re-organised into 3,300.00 Lakhs Equity Shares of Rs. 1 each. Issued, Subscribed and Paid up Share Capital :

1,143.57 Lakhs Equity Shares of Rs. 2/- each reduced to 1,143.57 Lakhs Equity Shares of Rs. 1/- each

c) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 1 (PY Rs. 2) per share. Each holder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holder 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.

e) Other Information

i) 29.00 Lakhs Equity Shares (of Rs. 10 each fully paid) have been issued as preferential allotment at a premium of Rs. 440 per share in the financial year 2006-07.

ii) 13.34 Lakhs Equity Shares (of Rs. 10 each fully paid) have been issued on conversion of the share warrants issued at Rs. 450 in the ratio of one share per warrant in the financial year 2007- 08 and 2008-09

iii) 28.50 Lakhs Equity Shares (of Rs. 10 each fully paid) have been issued as preferential allotment at a premium of Rs. 1090 per share in the financial year 2008-09

iv) The Company has sub divided the equity share of Rs. 10 each (fully paid up) into 5 (five) equity shares of Rs. 2 each (fully paid up) based on the approval of the share holders in the Annual General Meeting held on 15th September 2008.

v) 20.50 Lakhs Equity Shares of Rs. 2 each have been extinguished under Buy Back Scheme in the financial year 2009-10.

vi) during the year, pursuant to The Scheme of Arrangement, 1143.57 Lakhs Equity Shares of Rs. 2/- each have been reduced to 1143.57 Lakhs Equity Shares of Rs. 1/- each

a) Term Loans from Banks includes :

i) Rs. 253.08 Lakhs (PY Rs. 379.41 Lakhs) term loan from Corporation Bank carries interest @ Base Rate 3.85% p.a.. The loan is repayable in 20 quarterly instalments along with interest starting from 6th May 2009. The loan is secured by Equitable Mortgage: First charge on factory land & building & Hypothecation: First charge on P&M and other moveable assets acquired out of the loan at the estimated cost of Rs. 845.00 Lakhs at Baddi, Himachal Pradesh.

ii) Rs. 2894.85 Lakhs (PY Rs. 3959.31 Lakhs) term loan from Axis Bank carries interest @ BPLR - 3.75% p.a.. The loan is repayable in 60 equal monthly instalments along with interest starting from 31st January 2009. The loan is secured by first charge over future credit card receivables of the Company. Second charge on entire fixed assets of Company other than the assets specifically pledge & current assets of Company

iii) Rs. 2798.93 Lakhs (PY Rs. 3184.16 Lakhs) term loan from Axis Bank carries interest @ Base Rate 3.50% p.a.. The loan is repayable in 60 unequal and progressing monthly instalments along with interest starting from 31st August 2010. The loan is secured by first charge over future credit card receivables of the Company. Second charge on entire fixed assets of Company other than the assets specifically pledge & current assets of Company.

All the above loans are further secured by pledge of listed shares held by promoter group and personal guarantee of promoter directors.

b) Hire Purchase Loans amounts to Rs. 34.17 Lakhs (PY Rs. 108.39 Lakhs) are secured by hypothecation of respective vehicles financed. The loan carries interest ranging from 8% to 12% p.a. The loan is repayable in 48 to 60 equal monthly instalments starting from the respective dates of finance.

Working capital loans from banks includes:

Secured :

Cash Credit Loan:

Rs. 12665.97 Lakhs (PY Rs. 10081.08 Lakhs) - Secured by hypothecation of stocks and book debts along with the personal guarantee of promoter directors and further collaterally secured by equitable mortgage of office and factory premise (at daman) of the Company carrying interest @ 14% to 15% p.a.2

Packing Credit Loan and Foreign Bills Purchased:

Rs. 9427.75 Lakhs (PY Rs. 5724.06 Lakhs) - Secured by hypothecation of stocks and book debts of export division and the personal guarantee of promoter directors and further collaterally secured by equitable mortgage of office and factory premise (at daman) of the Company carrying interest @ 11% to 13% p.a.

Others :

Rs. 652.92 Lakhs (PY Rs. 517.46 Lakhs) - secured by lien of approved mutual funds carrying interest @ 10% to 11% p.a.

Unsecured Loan:

Rs. 676.04 Lakhs ( PY 660.39 Lakhs) suppliers bills discounting limit from Indusind bank carries interest @ 0.50% over LCBD rate.

Rs. 412.07 Lakhs (PY NIL) suppliers bills discounting limit from SIBDI carries interest rate @ 20% LCBD rate.

There are no amounts due to the suppliers covered under Micro, Small and Medium enterprises development Act, 2006. This information takes into account only those Suppliers who have responded to the enquiries made by the Company for this purpose.

A. Contingent Liabilities not provided for :

a) Letters of Credit outstanding Rs. 176.41 Lakhs. (PY Rs. 168.24 Lakhs)

b) Guarantee given by Banks on behalf of the Company Rs.140.00 Lakhs. (PY Rs. 142.00 Lakhs)

c) Corporate Guarantee given on behalf of a Subsidiary Company Rs. 8088.66 Lakhs (PY Rs. 3190.39 Lakhs)

d) Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. 1240.00 Lakhs. (PY Rs. 1265.00 Lakhs)

e) Sales Tax Liability contested in appeals Rs. 64.51 Lakhs (PY Rs. 68.18 Lakhs)

f) Stamp duty Liability not acknowledged as debt Rs. 10.00 Lakhs (PY Rs. 10.00 Lakhs)

g) Pursuant to the Interim Order dated 14th October 2011 passed by The Hon'ble Supreme Court with regard to the levy of service tax on immovable properties rented out for commercial use, the Company has deposited with the concerned department an amount of Rs. 139.73 Lakhs in respect of services tax liability upto 30th September 2011. For the balance 50% of the amount, the Company has furnished a solvent surety and has accordingly not provided (the total amount of) Rs. 279.47 Lakhs in the accounts. From October 2011 onwards, the Company is accounting and paying for such service tax regularly.

h) Confirmation letters have been sent in respect of Trade Receivables and Trade Payables. Very few parties are have responded to the request, the balances under these heads have been shown as per the books of account and are subject to reconciliation and adjustment if any. Consequential revenue impact, presently not ascertainable, will be considered as and when determined. However in view of management effect of the same is not expected to be material.

i) The Income Tax Authorities carried out a search and seizure operations at certain locations of the Company in January 2012 and have seized certain documents and various statements were recorded during the course of the search. The Company has co-operated with the Tax Authorities and has provided necessary details/information as and when required. Pending conclusion of the search operations as on date, it is not possible to assess the potential tax implication, if any, on the financial statements.

B. As at 31st March 2012, the Company has unutilised service tax input credit of Rs. 229.68 Lakhs (PY Rs. 219.65 Lakhs). The above credit shall be utilised against the taxable service provided by the Company in future.

C. In the opinion of the Board the Current Assets, Loans & Advances are approximately of the value stated and are realisable in the ordinary course of business except for those which are considered doubtful and provided for. The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

D. Loans and advances in the nature of loans given to subsidiaries and associates as required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of Listing Agreement is under:

E. Segment information:

The Segment Reporting of the Company had been prepared in accordance with Accounting Standard - 17 on "Segment Reporting" issued by the ICAI/Companies (Accounting Standards) Rules, 2006

The Company, based on business activities during this financial year has identified the geographic segments as its primary segment.

The primary segment reporting format is determined to be geographic segment as the company's risks and rates of returns are affected predominantly by the geographic distribution of activities.

The Company's business consists of one reportable business segment i.e., "Manufacturing & Trading of Textile Products", hence no separate disclosures pertaining to attributable Revenues and Assets are given

F. Related Party Disclosure:

As required under Accounting Standard 18 "Related Party Disclosure" (AS-18), following are details of transactions during the year with the related parties of the Company as defined in AS 18:

b) Enterprises under significant influence

Acme Exports

Prozone Capital Shopping Centres Limited (Formerly known as Castle Mall Private Limited) Empire Mall Private Limited

c) Subsidiaries - The Ownership, Directly or Indirectly through Subsidiary/ Subsidiaries

Acme Advertisements Private Limited

Sporting and Outdoor Ad Agency Private Limited

Pronet Interactive Private limited

Profab Fashions (India) Limited

Oasis Fashions Limited

Millennium Accessories Limited

Flowers Plant & Fruits (India) Private Limited

Faridabad Festival City Private Limited

Provogue Holding Limited (Singapore)

Elite Team HK Limited

Provogue Infrastructure Private Limited

Brightland Developers Private Limited

Standard Mall Private Limited

Classique Creators Limited

Prozone Infrastructure Limited

b) Enterprises under significant influence

Acme Exports

c) Subsidiaries

Prozone Enterprises Private Limited

Acme Advertisements Private Limited

Sporting and Outdoor Ad Agency Private Limited

Pronet Interactive Private limited

Probrand Enterprises Limited

Profab Fashions (India) Limited

Oasis Fashions Limited

Millennium Accessories Limited

Flowers Plant & Fruits (India) Private Limited

Meerut Festival City Private Limited

Faridabad Festival City Private Limited

Provogue Holding Limited (Singapore)

Elite Team Trading Limited (Hongkong)

Castle Mall Private Limited

Provogue Infrastructure Private Limited

Brightland developers Private Limited

Alliance Mall developers Co Private Limited

Jaipur Festival City Private Limited

Standard Mall Private Limited

Royal Mall Private Limited

Prozone Liberty International Limited (Singapore)

Prozone International Limited (Singapore)

Prozone Overseas Pte Limited (Singapore)

Prozone International Coimbatore Limited (Singapore) empire Mall

Private Limited Omni Infrastructure Private Limited

d) Joint ventures and Coventurers:

emerald Buildhome Private Limited (JV)

Moontown Trading Company Private Limited (JV)

G. The Company has taken premises on operating lease and entered in to non-cancellable Leave and License Agreements with various parties. The agreements have been entered for a period ranging from 11 to 36 months. The disclosure required to be made in accordance with Accounting Standard 19 on "Leases" is as under ;

a) Future minimum lease payments receivable under non-cancellable operating leases in aggregate for the following periods:

b) Initial direct costs incurred on these leasing transactions have been recognised in the Profit and Loss Account.

H. during the year 2008-09 the Company has raised an amount of Rs. 32,982 Lakhs through preferential issue of shares and allotment of convertible warrants. The Company has partially utilized the above proceeds for investment in its subsidiaries, towards other objects and general corporate purposes. Pending utilization, the balance funds as at 31st March 2012 has been invested in Mutual Funds, Bonds, Other Loans and in fixed deposits/current account with Banks.

I. Till the year ended 31st March 2011, the Company was using Pre-Revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. during the year ended 31st March 2012, the revised schedule VI notified under the Companies Act, 1956 has become applicable to the Company. The Company has re-grouped, reclassified and/or re- arranged previous year's figures, wherever necessary to conform to current year's classification. Except accounting for dividend on investments in subsidiary companies, the adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements applicable in the current year.

---

Mar 31, 2011

1. Contingent Liabilities not provided for :

i) Letters of Credit outstanding Rs.1208.26 lacs. (PY Rs. 389.52 lacs)

ii) Guarantee given by Banks on behalf of the Company Rs.142 lacs. (PY Rs. 131.95 lacs)

iii) Corporate Guarantee given on behalf of one Subsidiary Company Rs. 3190.39 lacs (PY Nil)

iv) Estimated amount of contracts remaining to be executed on capital account Rs. 1265.00 lacs. (PY Rs. 1605.00) (Net of advances).

v) Sales Tax Liability contested in appeals Rs.68.18 lacs (PY Rs. 5.11 lacs )

vi) Stamp Duty Liability not acknowledged as debt Rs.10 lacs. (PY Rs. 10 lacs)

vii) (a) The provisions in respect to service tax on renting of immovable properties to be used for com- mercial/ business purpose was amended by the Finance Act, 2010 with retrospective effect from 1st June 2007. However the High Court of Delhi had granted interim relief in relation to the said amendments vide its Order dated 18th May 2010 payable in the case of another petitioner as no value addition is discernible in so far renting of immovable property is concerned. In view of this, the Company has been advised not to pay/provide service tax liability amounting to Rs 285.32 lacs for the year (PY Rs 140.47 lacs) in respect of rent of various immovable properties and the same is reflected as contingent liability.

(b) In view of (a) above , service tax in respect of rent earned on immovable properties rented out during the year by the Company , the Company has not charged service tax on the same. Contingent Liability in case of the same amounts to Rs. 16.95 lacs ( PY Rs 16.95 lacs )

2. As at 31st March 2011, the Company has unutilised service tax input credit of Rs.219.65 lacs (PY Rs. 196.61 lacs). The above credit shall be utilised against the taxable service provided by the Company in future.

3. i) In the opinion of the Board the Current Assets, Loans & Advances are approximately of the value stated and are realisable in the ordinary course of business except for those which are considered doubtful and provided for. The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

ii) The Balances in some of the Sundry Debtors, Sundry Creditors, and Loans and Advances are as per their respective ledger accounts and subject to confirmation and reconciliation. Consequential impact thereof, if any, will be considered as and when determined.

iii) "Loan to Others" under the Schedule 10 "Loan & Advances" denotes loans to various parties amounting to Rs.13,015.23 lacs (PY Rs. 12,514.52 lacs) out of unutilised surplus funds from the preferential issue of equity shares/ warrants and internal accruals. Interest income amounting to Rs 1,194.40 lacs (PY Rs. 1,448.24 lacs) has been earned on such loans. In view of the management the amount as reflected is fully realisable and hence considered good.

4. Sales are inclusive of sales tax and are stated net of discounts, returns and rebates. Purchases are stated net of discounts, returns, VAT and rate differences.

5. Exceptional Items:

a. Loss on discard of certain assets amounting to Rs. 844.99 lacs (PY Rs. Nil) is on account of closure of the Company's large format discount Promart Stores located at Ahmadabad & Indore.

b. Prior Period Items amounting to Rs.6.33 lacs (PY Rs 38.18 lacs) includes prior period expenses of Rs.11.22 (PY Rs Nil ) , prior period income of Rs.0.84 lacs (PY Rs. 18.18) and earlier year depreciation written back Rs. 4.05 lacs (PY Rs. 20.00 lacs).

6. Secured Loans:

i) Term Loans from Banks:

Rs.379.41 lacs (PY Rs. 491.22 lacs) – Secured by charge on factory land and building and hypothecation on Plant & Machinery and other moveable assets acquired at Baddi and personal guarantee of promoter directors.

Rs.7,143.47 lacs*# (PY Rs. 8,078.02 lacs) – Secured by first charge on Credit Card Receivable Escrow account.

*The loans are further secured by pledge of listed shares held by promoter group and personal guarantee of promoter directors.

ii) Working Capital Loans from Banks:

a) Cash Credit Loan**:

Rs.10,081.09 lacs (PY Rs. 8,414.10 lacs) - Secured by hypothecation of stocks and book debts and the personal guarantee of promoter directors.

b) Packing Credit Loan and Foreign Bills Purchased:

Rs.5,724.07 lacs (PY Rs. 3,013.19 lacs) – Secured by hypothecation of stocks and book debts of export division and the personal guarantee of promoter directors.

c) Short Term Loan:

Rs. 517.46 lacs (PY Rs. 1,017.95 lacs) - Secured by lien of approved mutual funds for export working capital requirements.

iii) Hire Purchase Loans:

Rs.108.39 lacs (PY Rs. 175.82 lacs) – Secured by specific assets financed (Vehicles)

** Cash Credit Loans are further collaterally secured by equitable mortgage of office and factory premises of the Company.

#Term Loans are further collaterally secured by second charge on the entire fixed assets of the Company other than the assets which are specifically charged to other lenders.

7. Share Application Money under Schedule "10" Loans and Advances denotes amounts given to the subsidiaries of the Company pending allotment/refund amounting to Rs. 48.45 lacs (PY Rs.48.45 lacs).

8. Subsidiary Companies:-

i. During the year the Company has acquired 100% Equity of Castle Mall Private Limited & Brightland Developers Private Limited whereby these 2 Companies have become wholly owned subsidiaries of the Company.

ii. Sundry Debtors & Advances recoverable in cash or in kind or value to be received includes Rs. 23.23 lacs (PY Rs. 25.30 lacs) & Rs.Nil (PY Rs. 219.79) respectively due from subsidiary companies.

iii. Sundry Creditors & Other Liabilities includes Rs.122.32 lacs (PY 114.88 lacs) & Rs.Nil (PY 25.00 lacs) respectively due to subsidiary Companies.

9. Provision for Doubtful Debts/ Bad-debts written off:-

i) During the year a sum Rs.4.99 lacs out of debtors due for more than six months has been considered doubtful and fully provided for.

10. Rent under Schedule "16" Manufacturing & Other Expenses reflected is net of rent received Rs. 164.55 lacs (PY Rs. 164.55 lacs) including TDS Rs.16.32 lacs (PY Rs. 32.46 lacs).

11. Other Liabilities in Schedule "11" Current Liabilities & Provisions include Unclaimed Dividends amounting to Rs.2.82 lacs (PY Rs. 2.03 lacs).

12. Additional Information Pursuant to the Provisions of Part II of the Schedule VI of the Companies Act 1956

i) Quantitative Information:

a) Installed Capacity : Not Applicable

b) Purchase / Production, Consumption / Sales / Stock: As per Annexure "A" Attached

13. Amounts due to Micro, Small and Medium Enterprises:

As per the requirement of section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 following information have been disclosed. This information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose.

14. Taxation:

i) Provision for taxation for the year has been made in accordance with the provisions of the Income Tax Act, 1961.

ii) In terms of Accounting Standard 22 on "Accounting for Taxes on Income", the Company has recognised Deferred Tax Assets amounting to Rs.397.23 lacs (PY Rs. 31.01 lacs) for the year ended 31st March 2011 in the Profit & Loss Account.

15. The Company has taken premises on operating lease and entered in to non-cancellable Leave and Li- cense Agreements with various parties. The agreements have been entered for a period ranging from 11 to 36 months. The disclosure required to be made in accordance with Accounting Standard 19 on "Leases".

b) Lease payments recognised as an expense in the statement of Profit and Loss for the period Rs. 300.56 Lacs (PY Rs. 42.80 lacs), on a straight line basis over the lease term.

16. Segment Reporting:

For the year ended 31st March, 2011:

The Segment Reporting of the Company had been prepared in accordance with Accounting Standard – 17 on "Segment Reporting" issued by the ICAI / Companies (Accounting Standards) Rules, 2006.

The Company, based on business activities during this financial year has identified the geographic segments as its primary segment which were secondary segment in the earlier years, hence corresponding figures for the previous year have not been furnished.

Fixed Assets and other assets used in the Company's operations or liabilities contracted have not been identified to any of the reportable segments; hence it is not practicable to provide segment disclosures relating to total assets and liabilities.

For the year ended 31st March, 2010:

The Company's business consists of one reportable business segment i.e., "Manufacturing & Trading of Textile Products", hence no separate disclosures pertaining to attributable Revenues and Assets are given.

17. Related Party Disclosures:

I. For the year ended 31st March, 2011

i. List of Related Parties and Relationships

a. Key Management Personnel

Mr. Nikhil Chaturvedi Director

Mr. Akhil Chaturvedi Director

Mr. Salil Chaturvedi Director

Mr. Deep Gupta Director

Mr. Nigam Patel* Director

Mr. Rakesh Rawat Director * Resigned as whole time director of the Company w.e.f. 12th January 2011.

b. Relative of Director and Name of the enterprises having same Key Management Personnel and / or their relatives as the reporting enterprise with whom the Company has entered into transactions during the year.

- Acme Exports

c. Subsidiary – The Ownership, Directly or Indirectly through Subsidiary/ Subsidiaries

- Prozone Enterprises Private Limited

- Acme Advertisements Private Limited

- Sporting and Outdoor Ad Agency Private Limited

- Pronet Interactive Private limited

- Probrand Enterprises Limited

- Profab Fashions (India) Limited

- Oasis Fashions Limited

- Millennium Accessories Limited

- Flowers Plant & Fruits (India) Private Limited

- Meerut Festival City Private Limited

- Faridabad Festival City Private Limited

- Provogue Holding Limited (Singapore)

- Elite Team Trading Limited (Hongkong)

- Castle Mall Private Limited

- Provogue Infrastructure Pvt Ltd

- Brightland Developers Private Limited

- Alliance Mall Developers Co Private Limited

- Jaipur Festival City Private Limited

- Standard Mall Private Limited

- Royal Mall Private Limited

- Prozone Liberty International Limited (Singapore)

- Prozone International Limited (Singapore)

- Prozone Overseas Pte Limited (Singapore)

- Prozone International Coimbatore Limited (Singapore)

- Empire Mall Private Limited

- Omni Infrastructure Private Limited

- Hagwood Commercial Developers Private Limited

d. Joint Venturer

- Emerald Buildhome Private Limited

- Moontown Trading Company Private limited

For the year ended 31st March, 2010

i. List of Related Parties and Relationship :

a. Key Management Personnel

Mr. Nikhil Chaturvedi Director

Mr. Akhil Chaturvedi Director

Mr. Salil Chaturvedi Director

Mr. Deep Gupta Director

Mr. Nigam Patel Director

Mr. Rakesh Rawat Director

b. Relative of Director and Name of the enterprises having same Key Management Per- sonnel and / or their relatives as the reporting enterprise with whom the Company has entered into transactions during the year.

- Floro Mercantile Private Limited

- Topspeed Trading Company Private Limited

- Acme Exports

c. Subsidiary – The Ownership, Directly or Indirectly through Subsidiary/ Subsidiaries

- Prozone Enterprises Private Limited

- Sporting and Outdoor Ad Agency Private Limited

- Pronet Interactive Private limited

- Probrand Enterprises Limited

- Profab Fashions (India) Limited

- Oasis Fashions Limited

- Millennium Accessories Limited

- Flowers Plant & Fruits (India) Private Limited

- Acme Advertisements Private Limited

- Meerut Festival City Private Limited

- Faridabad Festival City Private Limited

- Provogue Holding Limited (Singapore)

- Elite Team Trading Limited (Hongkong)

- Alliance Mall Developers Co Private Limited

- Castle Mall Private Limited

- Jaipur Festival City Private Limited

- Standard Mall Private Limited

- Royal Mall Private Limited

- Prozone Liberty International Limited (Singapore)

- Prozone International Limited (Singapore)

- Prozone Overseas Pte Limited (Singapore)

- Prozone International Coimbatore Limited (Singapore)

- Empire Mall Private Limited

- Omni Infrastructure Private Limited

- Hagwood Commercial Developers Private Limited

d. Joint Venturer

- Emerald Buildhome Private Limited

- Moontown Trading Company Private limited

e. Co- Venturer

- Ajanta Infrastructure Limited (Upto 29th September 2009)

18. The details of purchases, sales and closing stock of investments in Mutual Funds and Bonds during the year are given in Annexure "B" & "C".

19. During the years 2006-07 to 2008-09 the Company has raised an aggregate amount of Rs. 52,244 lacs through preferential issue of shares and allotment of convertible warrants. Out of these, upto 31st March 2011, the Company has utilized Rs. 39,068 lacs towards investment in its subsidiaries, towards other objects and general corporate purposes. Pending utilization of the balance funds as at 31st March 2011, Rs. 13,176 lacs has been invested in Mutual Funds, Bonds, Other Loans and in fixed deposits/current account with Banks.

20. Fixed Deposit of Rs. 512.45 lacs (PY Rs. 474.71 lacs) are pledged with bank as security towards Bank Guarantee / Letter of Credit /Short Term Loans.

21. Figures less than Rs. 500/- have been shown at actual wherever statutory required to be disclosed since figures stated have been rounded off to the nearest thousands.

22. Figures of the previous year have been regrouped, reclassified and/or rearranged wherever necessary.

---

Mar 31, 2010

1. Contingent Liabilities not provided for:

i) Letters of Credit out standing Rs. 389.52 lacs. (PY Rs.Nil)

ii) Guarantee given by Banks on behalf of the Company Rs.131.95lacs. (PYRs.58.95lacs)

iii) Estimated amount of contracts remaining to be executed on capital account Rs. 1405.00 lacs. (PY Rs.1987.50) (Net of advances).

iv) Sales Ta xLiability contested in appeals Rs5.11lacs(PYRs.2.10lacs)

v) Stamp duty liability not acknowledged as debt Rs.10 lacs. (PY Rs. 10 lacs)

vi) a. The provisions in respect to service tax on renting of immovable properties to be used for commercial/ business purpose have been recently amended by the Finance Act, 2010 with retrospective effect from 1st June 2007. However the High Court of Delhi has granted interim relief in relation to the said amendments vide its Order dated 18th May 2010 payable in the case of another petitioner as no value addition is discernible in so far renting of immovable property is concerned. In view of this, the Company has been advised not to pay/provide service tax liability amounting to Rs 140.47 lacs for the year (PY Rs Nil) in respect of rent of various immovable properties and the same is reflected as contingent liability.

b. lnviewof (a)above,service tax inrespect of renteamedon immovale propert iesrentedoutduringtheyear by the Company, the Company has not charged service tax on the same. Contingent Liability in case of the same amounts to Rs 16.95 lacs (PY Rs Nil)

2. As at 31 st March 2010, the Company has unutilised service tax input credit of Rs.196.61 lacs (PY Rs. 196.61 lacs). The above credit shallbe utilised againstthe taxable service provided by the Company in future.

3. i) ln theo pinion of the Board the Current Assets,Loans & Advanees are approx imate lyof the value stated and are realisable in the ordinary course of business except for those which are considered doubtful and provided for. The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

ii) The Balances in some of the Sundry Debtors, Sundry Creditors, and Loans and Advances are as per their respective ledger account sand subje cttocon firmat ionand recon ciliation. Consequential impact there of,if any, will be considered as and when determined.

iii) "Loan Others" under the Schedule 10 "Loan & Advances" includes loans to various parties amounting to Rs. 12,514.52 lacs (PY Rs.12,763.93 lacs) out of unutilised surplus funds from the preferential issue of equity shares/ warrants. Interest income amounting to Rs 1444.06 lacs (PY Rs. 1,650.93 lacs) has been earned on such loans. In view of the management the amountas reflected is fully reali sable and hence considered good.

4. Sales are inclusive of sales tax and are stated net of discounts, returns and rebates. Purchases are stated net of discounts, returns, VATand rate differences.

5. Prior Period Items

Prior Period Items of Rs.38.18 lacs (PY Rs 4.02 lacs) includes prior period expenses of Rs Nil (PY Rs 3.18 lacs), prior period incomeof Rs 18.18 lacs (PY Rs.7.20 lacs) and earlier year depreciation written back Rs 20.00 lacs (PY Rs. Nil)

6. Secured Loans:

i) Term Loans from Banks:

Rs.491.22 lacs (PY Rs. 660.25 lacs) Secured by charge on factory land and building and hypothecation on P&M and other move ableas sets acquired at Baddiand personal guarantee of promoter directors. Rs.Nil (PY Rs.18.37 lacs) Secured by specified assets. Rs.8,078.02 lacs*# (PY Rs. 4,652.82 lacs) Secured by first charge on Credit Card Receivable Escrow account.

*The loans are further secured by pledge of listed shares held by promoter group and personal guarantee of promoterdirectors.

ii) Working Capital Loans from Banks:

a) Cash Credit Loan**:

Rs.8,414.10 lacs (PY Rs. 7,086.78 lacs) - Secured by hypothecation of stocks and book debts and the personal guarantee of promoter directors.

b) Packing Credit Loan and Foreign Bills Purchased:

Rs.3,013.19 lacs (PY Rs. 1,199.58 lacs) Secured by hypothecation of stocks and book debts of export division and the personal guaranteeof promoterdirectors.

c) Short Term Loan

. Rs. Nil lacs (PY Rs. 753.65 lacs) Secured by pledge of fixed deposit receipts and personal guarantee of promoterdirectors.

.Rs.1,017.95 lacs(PYRs.Nil)Secured by lienof approved mutua lf undsfor export working capital requirements.

iii) Hire Purchase Loans:

Rs.175.82lacs (PYRs.131.04lacs) Secured by specific assets financed (Vehicles)

-Cash Credit Loans are further collaterally secured by equitable mortgage of office and factory premises of the Company.

#Term Loans are further collaterally secured by second charge on the entire fixed assets of the Company other than the assets which are specifically charged to other lenders.

7. Share Application Money in Schedule "10" denotes Rs. 48.45 lacs (PY Rs.48.45 lacs) amounts given to the subsidiaries of the Company pending allotment/refund.

8. Buy Backof shares:

During they ear the Company has underSec77Aofthe Companies Act 1956 brought back 20,49,610 equity shares of the Company through open market transactions for an aggregate amount of Rs 1239.39 lacs, by utilising the General Reserve and Profit & Loss A/C of Rs 530.00 lacs & Rs 709.39 lacs respectively. The Capital Redemption Reserve has been created out of General Reserve for Rs 40.99 lacs, being the nominal value of shares bought back in terms of Section 77A of the Companies Act,1956. All the above equity shares bought back have been exting uished.

9. SubsidiaryCompanies

i) During the year the Company has acquired 100% Equity Shares Capital of Acme Advertisements Private Limited, Faridabad Festival City Private Limited (Formerly known as Ahmedabad Festival City Private Limited) &Meerut Festival City Private Limited (Formerly known as Ranchi Festival City Private Limited) and Elite Team Trading Limited. (lncorporated in Hong kong)where by these4 Companies have become wholly owned subsidiaries of the Company.

ii) Sundry Debtors & Advances recoverable in cash or in kind or value to be received includes Rs.25.30 lacs (PY Rs.40.11lacs)&Rs.219.79lacs(PYRs.Nil)respective ly due from subsidiary companies.

iii) Sundry Creditors & Other Liabilities includes Rs. 114.45 lacs (PY 188.23 lacs) & Rs. 25.00 lacs (PY 25.00 lacs) respectively due to subsidiary Companies.

10. Provision for Doubtful Debts/Bad-debts written off:

i) During the year, provisions for doubtful debts amounting to Rs.25.86 lacs created in the earlier years has been reversed due to realisation/write off of the respective debtors and the said amount has been netted off from the Miscellaneous Expenses.

ii) During the year a sum Rs.9.26 lacs out of Rs 61.73 lacs of debtors due for more than six months has been considered doubtful and fully provided for.

iii) Misce llaneous Expense salso includes Rs.78.94lacs being badde bts writtenoff during the year.

11. Rent under Schedule "17" reflected is net of rent received Rs. 164.55 lacs (PY Rs. 152.07 lacs) including TDS Rs.32.46 lacs (PYRs. 37.7

b) Relative of Director and Name of the enterprises having same Key Management Personnel and / or their relatives as the reporting enterprise with whom the Company has entered into transactions during the year.

. Flora Mercantile Private Limited

. TopspeedTrading Company Private Limited

. Acme Exports

c) Subsidiary-TheOwnership,Directlyorlndirectly through Subsidiary/Subsidiaries

. Prozone Enterprises Private Limited

. Sporting and Outdoor Ad Agency Private Limited

. Pronet Interactive Private limited

. Probrand Enterprises Limited

. Profab Fashions (India) Limited

. Oasis Fashions Limited

. Millennium Accessories Limited

. FlowersPlant&Fruits(lndia)PrivateLimited

. Acme Advertisements Private Limited

. Meerut Festival City Private Limited

. Faridabad Festival City Private Limited

. Provogue Holding Limited (Singapore)

. EliteTeamTrading Limited (Hongkong)

. Alliance Mall Developers Co Private Limited

. Castle Mall Private Limited

. Jaipur Festival City Private Limited

. Standard Mall Private Limited

. Royal Mall Private Limited

. Prozone Liberty International Limited (Singapore)

. Prozone International Limited (Singapore)

. Prozone Overseas Pte Limited (Singapore)

. Prozone International Coimbatore Limited (Singapore)

. Empire Mall Private Limited

. Omni Infrastructure Private Limited

. Hagwood Commercial Developers Private Limited

b) Relative of Director and Name of the enter prise shaving same Key Management Personnel and/ortheir relatives as the reporting enterprise with whomthe Company has entered intotransactions during they ear.

. Mrs.Shital Chaturvedi

Flora Mercantile Private Limited

. Topspeed Trading Company Private Limited

c)Subsidiary-The Ownership,Directly o rlndirectly through Subsidiary/Subsidiaries

. Prozone Enterprises Private Limited

. Sporting and Outdoor AdAgency Private Limited

. Pronet Interactive Private limited

. Probrand Enterprises Limited

. Profab Fashions (India) Limited

. Oasis Fashions Limited

. Millennium Accessories Limited

. Empire Mall Private Limited

. Omni Infrastructure Private Limited

. FlowersPlant&Fruits(lndia)PrivateLimited(from5-2-2009

. Provogue Holding Limited (Singapore)

. Meerut Festival City Private Limited

. Faridabad Festival City Private Limited

. Alliance Mall Developers Co Private Limited

. Castle Mall Private Limited

. Jaipur Festival City Private Limited

. Standard Mall Private Limited

. Royal Mall Private Limited

. Prozone Liberty International Limited (Singapore)

. Prozone International Limited (Singapore)

. Prozone Overseas Pte Limited (Singapore)

. Empire Mall Private Limited

. Omni Infrastructure Private Limited

. Hagwood Commercial Developers Private Limited

d) Joint Venturer

. Emerald Buildhome Private Limited

. MoontownTrading Company Private limited

11. The details of purchases, sales and closing stock of investments in Mutual Funds and Bonds during the year are given inAnnexure"B"&"C".

12. During the years 2006-07 to 2008-09 the Company has raised an aggregate amount of Rs. 52,244 lacs through preferential issue of shares and allotment of convertible warrants.Upto 31st March 2010,theCompany has utilized Rs. 35,568 lacs towards investment in its subsidiaries, towards other objects and general corporate purposes. Pending utilization of the balance funds as at 31st March 2010 of Rs. 16,676 lacs has been invested in Mutual Funds, Bonds, Other Loan sand in fixed deposits/current account with Banks.

13.During the year 2008-09,the Company had made a preferential issue of 4.20 lacs Convertible Warrants at a premium of Rs 218 perwarrants in accordance with SEBI guidelines. The above warrants were not convertedinto equity shares on non-exercise of option before the due dates and accordingly, the upfront subscription amount of Rs. 1632.40 lacs on issue of these 74.20 lacs Convertible warrants have been forfeited during the current year and credited to Capital Reserve Account.

14. Fixed Deposit of Rs. 474.71 Lacs(PY832.70Lacs)are pledged with bank as security towards Bank Guarantee/Letterof credit/short term loans.

15. Figures less than Rs. 500/- have been shown at actual wherever statutory required to be disclosed since figures stated have been roun ded off to the nearestthousands.

16. Figures of the previous year have been regrouped,reclassified and/ for rearranged wherever necessary.