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Notes to Accounts of Suditi Industries Ltd.

Mar 31, 2015

1. Employees' Stock Option Plan 2011

"The Company instituted the Employee Stock Option Plan – ESOP 2011 to grant equity based incentives to its eligible employees in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The ESOP-2011 ("The Scheme") had been approved by the Board of Directors of the Company at their meeting held on 30th Sept, 2011 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on 2nd Sept 2011, to grant 9,60,000 options, representing one share at par for each option upon exercise by the employee of the Company determined by the Board/Compensation Committee. The Scheme covers grant of options to the specified permanent eligible employees of the Company and also to non-executive directors of the Company including independent directors. Pursuant to the Scheme, the Compensation Committee had on 31st December, 2012 given its approval to grant 278700 options at par to specified eligible employees of the Company. Out of this, 59200 options were not accepted."The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, the total options are divided on certain prescribed basis spread over a period of 5 years and accordingly the same will vest in the employee every year. The Option grantee must exercise all vested options within a period of five years from the date of granting. Once the options vest as per the Scheme, they would be exercisable by the Option Grantee at any time within the said period of five years and the shares arising on exercise of such options shall be subject to a lock-in period of 1 year from the date of allotment. There has been no exercise of the options vested in the employees as at year end.

2. Forward Contracts and Unhedged Foreign Currency Outstanding Balances

The company has not executed any forward contract for hedging exchange rate risk; the outstanding unhedged foreign currency balances as on 31st March, 2015 are as under:

NOTE:

i. Leave Encashment liability is determined by an independent actuary and relevant provisions are made in the books of account. The payment towards the liabilty is made by the company as and when the employee becomes eligible to claim the encashment.

ii. The liability towards gratuity is determined by an independent actuary and the relevant amounts towards gratuity liability is paid by the company to the "Suditi Employees Group Gratuity Trust". The said Trust administers the scheme.

Notes:

(a) The primary reporting of the company is based on the business segment. The company has no substantial amount of business in other segment except manufacturing of knitted hosiery fabrics and readymade garments.

(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of financial statements as disclosed in Note 2.

(d) In the opinion of the Company it is not practicable to provide segmentwise disclosure relating to the Capital Employed as it cannot be bifurcated between segments considering the nature of production facilities which are common and combined for all the segments.

3. Related Party Disclosures

Related parties with whom the company had transactions during the year

a) Key Management Personnel

1. Mr. Pawan Agarwal - Chairman and Managing Director

2. Relatives of Key Management Personnel:

1. Mr. Kishorilal Agarwal (Father - Late)

2. Mr. Anand Agarwal (Brother)

3. Mr. Rajendra Agarwal (Brother)

4. Mrs. Pramila Agarwal (Wife of Anand Agarwal)

5. Mrs. Shalini Agarwal (Wife of Pawan Agarwal)

b) Enterprises under Common control of the Promoters

1. BLR Knits Pvt. Ltd.

2. Intime Knits Pvt. Ltd.

3. Black Gold Leasing Pvt. Ltd.

4. R. Piyarellal Pvt. Ltd.

Disclosure of transactions between the company and related parties

Note:

(i) Future cash outflows in respect of (a)(i) above is determinable only on receipt of judgments/decisions pending with various authorities/forums and/or final outcome of the matters. Accordingly, no provision in the accounts has been made as management is confident that these matters would be decided in the company's favour.

Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. Nil (Previous year Rs. Nil).

4. The previous period figures have been regrouped / reclassified, wherever necessary to conform to the current period presentation.

Complied by: Dion Global Solutions Limited

SUDITI INDUSTRIES LTD

FACTORY & ADMK OFF. : C-253/254, M.I.D.C., T.T.C.

INDUSTRIAL AREA, VILLAGE PAWNE, NAVI MUMBA1 - 4U0 703

TEL,: (91) 22 6736 Xf>0<]/I0, FAX : (91) 22 276X 3465

E-MAIL : admm@sudiri.in WEBSITE : www.suditi.inpt


Mar 31, 2014

1. Employees'' Stock Option Plan 2011

The Company instituted the Employee Stock Option Plan - ESOP 2011 to grant equity based incentives to its eligible employees in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The ESOP-2011 ("The Scheme") had been approved by the Board of Directors of the Company at their meeting held on 30th June, 2011 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on 2nd Sept 2011, to grant 9,60,000 options, representing one share at par for each option upon exercise by the employee of the Company determined by the Board/Compensation Committee. The Scheme covers grant of options to the specified permanent eligible employees of the Company and also to non-executive directors of the Company including independent directors. Pursuant to the Scheme, the Compensation Committee had on 31st December, 2012 given its approval to grant 278700 options at par to specified eligible employees of the Company. Out of this, 59200 options were not accepted.

The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, the total options are divided on certain prescribed basis spread over a period of 5 years and accordingly the same will vest in the employee every year. The Option grantee must exercise all vested options within a period of five years from the date of granting. Once the options vest as per the Scheme, they would be exercisable by the Option Grantee at any time within the said period of five years and the shares arising on exercise of such options shall be subject to a lock-in period of 1 year from the date of allotment. There has been no exercise of the options vested in the employees as at year end.

The estimated fair value computed by an independent valuer on the basis of Black Scholes pricing model for each stock option granted is within the range of Rs.10.00 to Rs.15.47 per option. Accordingly, the compensation cost and charge to the profit and loss account for the year ended March 31,2014 would have been higher by Rs.3,39,567/- had the Company followed the fair valuation method for accounting the options issued. On proforma basis the Company''s basic and diluted earnings per share would have been Rs. 0.44 and Rs. 0.44.

Notes:

(a) The above details of consumption consists of Raw materials which are consumed directly for manufacture of finished product and other items which are indirectly related to manufacture of finished products, i.e. stores, spares and packing materials.

2. Forward Contracts and Unhedged Foreign Currency Outstanding Balances

The company has not executed any forward contract for hedging exchange rate risk; the outstanding unhedged foreign currency balances as on 31st March, 2014 are as under:

(a) The foreign currency outstanding balances that have not been hedged by any derivative instrument or otherwise as at the Balance Sheet date are as follows:

NOTE:

i. Leave Encashment liability is determined by an independent actuary and relevant provisions are made in the books of account. The payment towards the liabilty is made by the company as and when the employee becomes eligible to claim the encashment.

ii. The liability towards gratuity is determined by an independent actuary and the relevant amounts towards gratuity liability is paid by the company to the "Suditi Employees Group Gratuity Trust". The said Trust administers the scheme.

(a) The primary reporting of the company is based on the business segment. The company has no substantial amount of business in other segment except manufacturing of knitted hosiery fabrics and readymade garments. During the year the company has provided service through buying house agency and received commission of Rs.129462 only.

(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of financial statements as disclosed in Note 2.

(d) In the opinion of the Company it is not practicable to provide segmentwise disclosure relating to the Capital Employed as it cannot be bifurcated between segments considering the nature of production facilities which are common and combined for all the segments.

3. Related Party Disclosures

Related parties with whom the company had transactions during the year

a) Key Management Personnel

1. Mr.Pawan Agarwal - Chairman and Managing Director

2. Relatives of Key Management Personnel:

1. Mr.Kishorilal Agarwal (Father - Late)

2. Mr.Anand Agarwal (Brother)

3. Mr.Rajendra Agarwal (Brother)

4. Mrs.Pramila Agarwal (Wife of Anand Agarwal)

5. Mrs.Shalini Agarwal (Wife of Pawan Agarwal)

b) Enterprises under Common control of the Promoters

1. BLR Knits Pvt. Ltd.

2. Intime Knits Pvt. Ltd.

3. Black Gold Leasing Pvt. Ltd.

4. R. Piyarellal Pvt. Ltd.

4. Earnings per Share

Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. Diluted earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. Dilutive potential equity shares that have been converted in to equity shares during the year are included in the calculation of diluted earnings per share from the beginning of the year to the date of conversion and from the date of conversion, the resulting equity shares are included in computing both basic and diluted earnings per share. Earnings per Share has been computed as under:

5. Contingent Liabilities

(a) Claims against the company not acknowledged as debts

(i) Sales tax matters 16,029,051 16,029,051

(ii) Excise matters - -

(iii) Income tax matters - 61,516,831

16,029,051 77,545,882

(b) Guarantee given to any Government Department or Corporation (i) Asstt. Commissioner of Customs under EPCG Scheme towards export obligations 16,910,924 16,910,924

16,910,924 16,910,924

Note:

(i) Future cash outflows in respect of (a)(i) above is determinable only on receipt of judgments/decisions pending with various authorities/forums and/or final outcome of the matters.

Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. Nil (Previous year Rs. Nil).

5. Previous year''s figures have been recast / restated, wherever necessary.

1. The above Cash Flow Statement has been prepared under the ''Indirect Method'' as set out in the Accounting Standard - 3 on Cash Flow Statements, notified under sub-section (3C) of Section 211 of the Companies Act, 1956 (the ''Act'') which as per a clarification issued by Ministry of Corporate Affairs continue to apply under section 133 of the Companies Act, 2013 (which has superseded section 211(3C) of the Companies Act, 1956 with effect from September 12, 2013).

2. Previous year figures have been regrouped where necessary.


Mar 31, 2013

1. Corporate information

Suditi Industries Limited (the ''company'') was incorporated on 12th September, 1991 as Suditi Hosiery Processors Limited. The name of the company was subsequently changed to Suditi Industries Limited on 21 st October, 1994. The company is in the business of processing and manufacturing of knitted hosiery fabrics and readymade garments. The company has also started business in retail sector.

2. Employees'' Stock Option Plan 2011

The Company instituted the Employee Stock Option P lan - ESOP2011 to grant equity based incentives to its eligible employees. The ESOP- 2011 (The Scheme") had been approved by the Board of Directors of the Company at their meeting hold on 30lh June 2011 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on 2nd Sept2011, to grant 9,60,000/ - options, representing one share at par for each option upon exercise by the employee of the Companydeterrnined by the BoardCompensation Committee The Scheme covers grant of options to the specified permanent eligible employees of the Company and also to non-executive directors of the Company including independent directors. Pursuant to the Sche m e , the Compensation Committee has on 31 st December, 2012 granted 278700 options at par to specified eligible employees of the Company as per SEBI Guidelines.

The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, the total options are dividend on certain prescribed basis spread over a period of 5 years and accordingly the same will vest in the employee every year. The Option grantee must exercise all vested options within a period of fiveyears from the date of granting. Once the options vest as per the Scheme, they would be exercisable by the Option Grantee at any time and the shares arising on exercise of such options shall be subject to a lock-in period of 1 year from the date of allotment.

3. Forward Contracts and Unhedged Foreign Currency Outstanding Balances

The company has not executed any forward contract for hedging exchange rate risk; the outstanding unhedged foreign currency bal ances as on 31st March, 2013 are as under:

(a) The foreign currency outstanding balances that have not been hedged by any derivative instrument or otherwise as at the Balance Sheet date are as follows:

4. Related Party Disclosures

Related parties with whom the company had transactions during the year

a) Key Management Personnel

1. MrPawan Agarwal - Chairman and Managing Director

2. Relatives of Key Management Personnel:

1. Mr.KishorilalAgarwal (Father)

2. Mr.AnandAgarwal (Brother)

3. Mr.Rajendra Agarwal (Brother)

4. Mrs.Pramila Agarwal (Wife of Anand Agarwal)

5. MrsShalini Agawal (We of Pawan Agawal)

b) Enterprises under Common control of the Promoters

1. BLRKnitsPvt.Ltd.

2. lntimeKnitsPvt.Ltd.

3. Black Gold Leasing Pvt. Ltd.

Disclosure of transactions between the company and related parties

5. Earnings per Share

Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equty snares outstanding during the year. Diluted earnings per share has been calculated by di v i ding profit for the year attributable to equity shareholders, by the weighted average number of equty shares outstanding during the year and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. Dilutive potential equity shares that have been converted in to equity shares during the year are included in the calculation of diluted earnings per share from the beginning of the year to the date of conversion and from the date of conversion, the resulting equity shares are included in computing both basic and diluted earnings per share.

6. Previous year''s figures have been recast / restated, wherever necessary.


Mar 31, 2012

1. Corporate information

Suditi Industries Limited (the 'company') was incorporated on 12th September, 1991 as Suditi Hosiery Processors Limited. The name of the company was subsequently changed to Suditi Industries Limited on 21 st October, 1994.

The company is in the business of processing and manufacturing of knitted hosiery fabrics and readymade garments. The company a Iso has started business in retail sector.

(a) Shares reserved (or issue under options 960000 shares are to be issued under the Employees Stock Option Plan pursuant to a special resolution passed in 20th Annual General Meeting held on 2nd, September, 2011.

(f) The company has decided to implement its proposal for rights issue of equity shares pursuant to a resolution passed in its Board of Directors' meeting held on 19r May, 2011.

(g) Shares allotted as fully paid-up pursuant to contract(s) without payment being received in cash (during 5 years immediately preceding 3111 March, 2012) There has been no allotment of shares pursuant to contract(s) without payment being received in (cash during 5 years immediately preceding 31st March, 2012)

(a) Nature of security and terms of repayment for secured borrowings

(i) Terms Loans from Banks are secured by hypothecation of specific assets purchased under loans. The loan is collaterally secured by Land and Building and Plant and machinery located at Turbhe-Mahape Plant, Navi Mumbai.

(ii) Repayable is in 57 Monthly Installments beginning after three months from the time loan is taken along with interest @ rate of 13.75% P.A.

The total term loan of Rs. 113.00 lakhs is sanctioned by the bank out of which the company has availed the loan amounting to Rs.21.36 lakhs on 29,March, 2012 and bank has debited interest of Rs.0.02 lakhs till 31 st March, 2012.

2. Employees' Stock Option Plan 2011

Pursuant to a special resolution passed by the Shareholders at the 20th Annual General Meeting held on 2nd September, 2011 the company adopted the Employee Stock Option Scheme titled 'SUDITI EMPLOYEES' STOCK OPTION PLAN, 2011(SUDfTI ESOP 2011) for employees and directors of the company. The said Issue has been approved by Bombay Stock Exchange Limited on 13th March, 2012 in pursuance to guidelines issued by SEBI (ESOS and ESPS) Guidelines, 1999 with maximum issue and allotment of 9,60,000 Equity Shares and the company is required to complete and comply with all related terms and conditions stipulated in the sanction letter.

3. Proposed Rights Issue

The proposal of Rights Issue is presented and approved by the Board of Directors of the Company in its meeting held on 19th May, 2011. The said proposal has also been sanctioned by the Bombay Stock Exchange Limited vide their letter dt.17th June, 2011. The draft Offer Document prepared by the Lead Manager to the Rights Issue had been filed with SEBI and their observations are in the process of being responded.

4. Forward Contracts and Unhedged Foreign Currency Outstanding Balances

The company has not executed any forward contract (or hedging exchange rate risk, the outstanding unheeded foreign currency balances as on 31st March, 2012 are as under:

(a) The foreign currency outstanding balances that have not been hedged by any derivative instrument or otherwise as at the Balance Sheet date are as follows:

i. Leave Encashment inability is determined by an independent actuary and relevant provisions are made in the books of account. The payment towards the liability is made by the company as and when the employee becomes eligible to claim the encashment.

ii. The liability towards gratuity is determined by an independent actuary and the relevant amounts towards gratuity liability is paid by the company to the "Suditi Employees Group Gratuity Trust". The said Trust administers the scheme.

Notes:

(a) The primary reporting of the company is based on the business segment. The company has no substantial amount of business in other segment except manufacturing of knitted hosiery fabrics and readymade garments. During the year the company has provided service through buying house agency and received commission of Rs. 32696 only.

(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of Financial statements as disclosed in Note 2.

((} In the opinion of the Company it is not practicable to provide segment wise disclosure relating to the Capital Employed as it cannot be bifurcated between segments considering the nature of production facilities which are common and combined for all the segments.

5. Related Party Disclosures

Related parties with whom the company had transactions during the year

a) Key Management Personnel

1. Mr.Pawan Agarwal Chairman and Managing Director

2. Relatives of Key Management Personnel:

1. Mr.Kishorilal Agarwal (Father)

2. Mr .Anand Agarwal (Brother)

3. Mr.Rajendra Agarwal (Brother)

4. Mrs.Pramila Agarwal (Wife of Anand Agarwal)

5. Mrs.Shalini Agarwal (Wife of Pawan Agarwal)

b) Enterprises under Common control ol the Promoters

1. BLR Knits Pvt. Ltd.

2. Intime Knits Pvt. Ltd.

3. Black Gold Leasing Pvt. Ltd.

6. Earnings per Share

Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. Diluted earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, un less they have been issued at a later date. Dilutive potential equity shares that have been converted in to equity shares during the year are included in the calculation of diluted earnings per share from the beginning of the year to the date of conversion and from the date of conversion, the resulting equity shares are included in computing both basic and diluted earnings per share. Earnings per Share has been computed as under:

7. The financial statements for the year ended 31st March, 2011 were prepared as per the applicable, pre-revised Schedule VI to the Act. Consequent to the notification of Revised Schedule VI under the Act, the financial statements for the year ended 31a March, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

1) I) Contingent Liabilities not provided for:

a) In respect of Bonds executed in favour of:

i Asst. Commissioner of Customs under EPCG scheme towards export obligation-Rs. 169.07 lacs. (Previous Year Rs. 169.07 lacs)

b) Disputed matters in appeal

Contested in Current year Previous year respect of 31.03.2011 31.03.2010 (Rs. in lacs) (Rs. in lacs)

Excise Duty 40.85 40.85 including penalties

Sales Tax 156.25 156.25

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.Nil (Previous year Rs.2.50 lakhs)

2) The Company's Sales Tax assessment is completed upto the accounting year 2004-2005 and the disputed demand outstanding upto the said assessment year is Rs.156.25 lacs. Based on the opinion received by the company, the demands made are likely to be either deleted or substantially reduced and accordingly no provision has been made in the accounts.

3) Some of the Balances in the customers and suppliers, deposit accounts are taken as per books and are subject to confirmation/reconciliation and consequent adjustments.

4) In terms of Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the Company has computed Net Deferred Tax Asset for the F.Y. 2010-2011 amounting to Rs.327.39 lakhs (previous year Rs.579.17 lakhs). The Management does not consider it appropriate to account for the Net Deferred Tax Asset due to uncertainty of future profits.

5) a) The Company makes contribution towards Provident Fund administered by the Central Government. The contribution towards the Fund are made as per the Provident Fund Act and Rules amended from time to time. The amount of contribution is directly charged to the Profit and Loss account as revenue expense. Since the contribution is paid to the Provident Fund authorities of the Central Government as per rules & regulations, there are no further liabilities on the Company towards this obligation.

b) The Company makes annual contribution to the Employees Group Gratuity cum Life Assurance Scheme of Life Insurance Corporation of India, a funded "Defined Benefit Plan" for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment as per the Gratuity Scheme. Vesting occurs upon completion of five years of service. There are no other schemes, apart from the above, that are administrated by the company for the benefit of employees.

c) The Company has also computed and made necessary provisions on account of leave encashment benefits based on actuarial valuation as per Accounting Standard-15(Revised) "Employee Benefits". The total service eligibility as per the Company's leave rules are estimated and provided in the books as a revenue expenditure after making adjustment towards the benefit paid on this account. The actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out at 31 st March, 2011. The following tables setout the funded status and amounts recognized in the Company's financial statement as at 31st March, 2011 for the defined benefit plans.

i) Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

ii) Expected rate of return on plan assets is based on the average long-term rate of return expected on Investments of the fund during the estimated term of the obligations.

iii)The estimates of future salary increases, considered in actuarial valuation, take account the inflation, seniority, promotion and other relevant factors.

6) There are no Micro, Small and Medium Enterprises, to whom the Companies owes dues, which are outstanding for more than 45 days as at the Balance Sheet date. Further, the company has neither paid nor is any interest payable to any Micro, Small and Medium Enterprises on the Balance Sheet date. The above information has been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors.

7) Name of Related Parties and nature of related party relationships

As per AS-18 issued by The Institute of Chartered Accountants of India, the Companies related parties are disclosed below.

a) KEY MANAGEMENT PERSONNEL

1) Mr.Anand Agarwal - Chairman, Mr. Pavan Agarwal - Managing Director

2) Relatives of Key Management Personnel: Mr.Kishorilal Agarwal (Father), Mr. Rajendra Agarwal (Brother), Mrs.Pramila Agarwal (Wife of Anand Agarwal), Mrs.Shalini Agarwal (Wife of Pavan Agarwal)

b) Enterprises under Common Control of the Promoters

1. BLR Knits Pvt. Ltd.

2. Intime Knits Pvt. Ltd.

3. Black Gold Leasing Pvt. Ltd.


Mar 31, 2010

1) I) Contingent Liabilities not provided for:

a) In respect of Bonds executed in favour of:

i Asst. Commissioner of Customs under EPCG scheme towards export obligation-Rs.169.07 lacs. (Previous Year Rs.169.07 lacs)

b) Disputed matters in appeal

Contested in Current year Previous year

respect of 31.03.2010 31.03.2009 (Rs. in lacs) (Rs. in lacs)

Excise Duty 40.85 40.85 including penalties

Sales Tax 156.25 156.25

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 2.50 lakhs (Previous year Rs. Nil)

2) The Companys Sales Tax assessment is completed upto the accounting year 2002-2003 and the disputed demand outstanding upto the said assessment year is Rs.156.25 lacs. Based on the opinion received by the company, the demands made are likely to be either deleted or substantially reduced and accordingly no provision has been made in the accounts.

3) Some of the Balances in the customers and suppliers, deposit accounts are taken as per books and are subject to confirmation/reconciliation and consequent adjustments.

4) The company has computed Net Deferred Tax Asset for the current financial year F.Y. 2009-10. The management does not consider it appropriate to account for the Net Deferred Ta x Asset due to the uncertainty of future profits.

5) a) The Company makes contribution towards Provident

Fund administered by the Central Government. The

contribution towards the Fund are made as per the Provident Fund Act and Rules amended from time to time. The amount of contribution is directly charged to the Profit and Loss account as revenue expense. Since the contribution is paid to the Provident Fund authorities of the Central Government as per rules & regulations, there are no further liabilities on the Company towards this obligation.

b) The Company makes annual contribution to the Employees Group Gratuity cum Life Assurance Scheme of Life Insurance Corporation of India, a funded "Defined Benefit Plan" for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment as per the Gratuity Scheme. Vesting occurs upon completion of five years of service. There are no other schemes, apart from the above, that are administrated by the company for the benefit of employees.

i) Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

ii) Expected rate of return on plan assets is based on the average long-term rate of return expected on Investments of the fund during the estimated term of the obligations.

6) There are no Micro, Small and Medium Enterprises, to whom the Companies owes dues, which are outstanding for more than 45 days as at the Balance Sheet date. Further, the company has neither paid nor is any interest payable to any Micro, Small and Medium Enterprises on the Balance Sheet date. The above information has been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors.

7) Name of Related Parties and nature of related party relationships

As per AS-18 issued by The Institute of Chartered Accountants of India, the Companies related parties are disclosed below.

a) KEY MANAGEMENT PERSONNEL

1) Mr.Anand Agarwal - Chairman, Mr. Pavan Agarwal - Managing Director

2) Relatives of Key Management Personnel : Mr.Kishorilal Agarwal (Father), Mr.Govind Agarwal (Brother), Mr. Rajendra Agarwal (Brother), Mrs.Pramila Agarwal (Wife of Anand Agarwal), Mrs.Shalini Agarwal (Wife of Pavan Agarwal)

b) Enterprises under Common Control of the Promoters

1. BLR Knits Pvt. Ltd.

2. Intime Knits Pvt. Ltd.

3. Black Gold Leasing Pvt. Ltd.

 
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