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Notes to Accounts of Vardhman Polytex Ltd.

Mar 31, 2015

1. LEGAL STATUS & ACTIVITIES

a) Vardhman Polytex Limited (the Company) is a public limited listed company registered under the erstwhile Companies Act 1956. The Company's principal activity is manufacturing of yarn, garments and to develop residential & commercial colony or project.

b) The company's principal place of business is located at 'Vardhman Park, Chandigarh Road, Ludhiana-141123' & factories/units are located at the following premises:

* Badal Road, Bathinda, Punjab - 151005.

* D295/1, Phase VIII, focal point, Ludhiana, Punjab - 141010 (Unit - Vinayak Textiles Mills -Spinning & Dye house, Amkryon International).

* Village Nangal Nihla/Upperla, Swarghat Road, Nalagarh, Himachal Pradesh - 174101.

c) The company is developing residential and commercial colony/project named as 'Vardhman Park' situated at Chandigarh Road, Ludhiana-141123' during the current year.

d) These financial statements are presented in Indian Rupees (Rs.).

2. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of ' 10 per share. Each shareholder is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. During the year ended 31st March, 2015, the amount of dividend recognized as distribution to equity shareholder was Rs. Nil (Previous year Rs. Nil).

As per records of the company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares

3. Aggregate number of shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date : Nil (Previous year Nil).

Terms and conditions

a) The holders of each warrant will be entitled and having option to apply for and obtain allotment of one equity share of face value of Rs. 10/- each of the Company against each warrant at any time after the date of allotment but on or before the expiry of 18months from the date of allotment, in one or more tranches. At the time of exercise of entitlement, the warrant holders shall pay the balance of the consideration towards the subscription to each equity share. The amount so paid will be adjusted/ set-off against the issue price of the resultant equity shares.

If the entitlement against the warrants to apply for the equity shares is not exercised within the aforesaid period, the entitlement of the warrant holders to apply for equity shares of the Company along with rights attached thereto shall expire and any amount paid on such warrants shall stand forfeited.

b) The warrant holders shall hold equal rights in respect of future bonus and right issue, if any declared by the company in the same proportion and manner with any other shareholder of the Company.

c) The equity shares issued upon the conversion of warrants shall rank pari passu in all respects including with respect to dividend, with the then fully paid up equity shares of the Company, subject however to the provisions of the Memorandum and Articles of Association of the Company.

d) The warrant(s) by itself until converted into equity shares, does not give to the holder hereof any rights with respect to that of a shareholder of the Company except as specified above.

e) The warrants and equity shares shall be subject to lock-in for a period as prescribed under SEBI (ICDR) Regulations, 2009 (including any amendments thereto or re- enactment thereof)

Number of shares proposed to be issued

24,73,000 warrants optionally convertible into equal numbers of equity shares face value of Rs. 10/- at a premium of Rs. 45/- per share.

Amount of Premium

Rs. 1,112.85 lac

The Period before which shares to be allotted

The allotment of the warrants shall be completed within the prescribed period of 15 days from date of the passing of the resolution by the shareholders provided that in case, the allotment of warrants is pending on account of the pendency of any approval of such allotment by any regulatory authority or the Central Government, the allotment shall be completed within 15 days from the date of the receipt of such approval.

Whether the company has sufficient authorized share capital to cover the share capital amount on allotment of shares out of share application money

Yes

Interest accrued on amount due for refund

NIL

The period for which the share application money has been pending beyond the period for allotment as mentioned in the share application form alongwith the reasons for such share application money being pending

Not applicable

a) Principal and interest accrued on Secured (term loans) have been repaid with in 7 working days of the end of March 31, 2015 which is not a continuing default hence not been considered in default as at March 31, 2015.

b) The company has signed settlement agreement with Foreign Currency Convertible Bond holders of principal value of USD 85,00,000 (Rs. 4,613.80 lacs) worth of bonds and redemption premium of USD 15,64,850 (Rs. 849.40 lacs) aggregating the total of USD 1,00,64,850 (Rs. 5,463.20 lacs) . Under the settlement agreement, the final amount including redemption premium has been settled at USD 51,71,513 which is payable in instalment up to year 2016. Out of the final settled amount of USD 51,71,513 the company had paid an amount of USD 30,57,823 (equivalent value bonds surrendered to the company) out of which an amount of USD 4,50,000 (equivalent value bonds surrendered to the company) has been paid in current financial year and accordingly an amount of USD 32,1 7,939 has been written back in the books of accounts . The Axis Bank bond holders reserves the right to exit the settlement agreement on the balance amount of USD 22,00,000, if there is reasonable ground for it to conclude (at its own discretion) that the company may not fulfil its obligation and retains its rights to recompense.

Profit on write back of bonds has been recognized under the head "Other income".

Detail of securities :

a) Working capital loans from banks are secured by hypothecation of all stocks (except the stock of raw material already pledge with third party), present and future of stores, spare parts, packing materials, raw materials, finished goods, goods in transit/process, book debts, outstanding money receivable, claims, bills etc. and second charge by way of joint equitable mortgage of immovable properties of Company.

b) Personal guarantee given by promoter Director & Mrs. Manju Oswal. (related party).

* Investors Education and Protection Fund under Section 205C of erstwhile Companies Act 1956 will be credited by unclaimed dividend amount expiring on seven years from the dividend declaration, the amount is not due at the year end.

a) The leasehold land includes Rs. 136.77 lac (previous year Rs. 136.77 lac) is forfeited by Maharashtra Industrial Development Corporation (MIDC), due to non compliance of the terms of allotment. Leasehold land was alloted for a period of 95 years.

b) Pursuant to provisions prescribed in Schedule II to the Companies Act, 2013, where the remaining useful life of the asset was determined to be nil as on April 1,2014, the Company has fully depreciated net carrying value as on April 1, 2014 net of residual value and has adjusted an amount of Rs. 500.52 lacs (net of deferred tax ) against the opening retained earnings under the head 'Reserves and surplus'.

However in some of the assets the company has reassessed the estimated useful life of its fixed assets through an independent Chartered Engineers. In such cases the company has not opted for the rates as given by the schedule II of the Companies Act, 2013.

a) Out of total shares held in FM Hammerle Textile Limited (Formerly Known as Oswal F.M. Hammerle Textiles Ltd), 2,28,16,018 shares (Previous year 2,28,16,018 shares) (face value of Rs. 10 each) pledge in favour of State Bank of India (lead banker of FMH) in dematerialisation form.

b) During the year, the company has sold substantial investment in Oswal Industrial Enterprises (P) Ltd. at a consideration of Rs. 915.90 lacs and accounted a loss of Rs. 3,585.01 lacs under the head "Exceptional items" in the Statement of Profit and Loss.

a) Based on legal advice, discussions with the solicitors, etc., the management believes that there are fair chances of decisions in the company's favour in respect of all the items listed above and no value adjustment is considered necessary.

b) Direct taxes refundable represent amounts recoverable from the Income Tax Department for various assessment years. In respect of disputed demands, company has filed appeals which are pending at various levels and the company is hopeful of getting the desired reliefs at various forums. Necessary value adjustments shall be made on final settlement by the department.

c) Provision for Income Tax for earlier years has been made based on the Tax Liability calculated at prevalent rates.

d) Balance with statutory authorities includes Rs. 186.47 lac (Previous year Rs. 188.26 lac) being amount of ESI, Excise Duty, Sales Tax, PSEB deposited under protest. No provision has been made in accounts in respect thereof. The same will be made in the year of settlement.

4. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

Particulars As at As at 31.03.2015 31.03.2014 Rs. lac Rs. lac

a) Claims against the Company not acknowledged as debts 221.25 477.52

b) Bills discounted with bankers. 10,325.02 5,837.41

c) Letter of credit & bank gurantee 187.80 8.53 issued

d) Income Tax demands under appeal 599.40 783.55

e) Demand of PSEB for voltage surcharge 256.24 256.24 and DSA

f) Subordination letter for not to withdraw 237.33 237.33 the loan from foreign subsidiary until negative equity situation reverses

g) Corporate guarantee given on behalf 8,233.00 8,233.00 of subsidiary company "FM Hammerle Textiles Ltd (formerly Known as Oswal F.M. Hammerle Textiles Ltd)" pursuant to scheme of CDR

There are no present obligations requiring provisions in accordance with the guiding principles as enunciated in Accounting Standard (AS)-29 'Provisions, Contingent Liabilities & Contingent Assets as it is not probable that an outflow of resources embodying economic benefits will be required.

34. Inventories, loans & advances, trade receivables and other current / non-current assets are reviewed annually and in the opinion of the Management do not have a value on realization in the ordinary course of business, less than the amount at which they are stated in the Balance Sheet.

Defined Benefit Plan

The Employees' Gratuity Fund scheme managed by a trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations.

5. RELATED PARTY DISCLOSURES:-

i) List of related parties and relationships:-

Particulars 2014-15

a) Subsidiary Company F.M. Hammerle Textiles Ltd (FMH) (Formerly known as

Oswal F.M. Hammerle Textiles Ltd) Oswal Industrial Enterprises (P) Ltd. (Upto 30th March, 2015) F M Hammerle Verwaltung Gmbh, Austria

b) Key management Mr. Ashok Kumar Oswal personnel Mr. Adish Oswal Mr. Ashok Kumar Goyal Mr. Sushil Sharma Mr. Parvinder Singh Mrs. Rakhi Oswal

c) Relative of KMP Mr. Abhinav Oswal Mrs. Manju Oswal Ms. Aketa Oswal

d) Enterprise over which Oswal Industrial Enterprises (P) Limited KMP is able to exercise (wef. 31st March, 2015) significant influence Panchsheel Textile Mfg & Trading Co.Pvt Enakshi Investments (P) Limited. Liberty Mercantile Co.(P)Ltd. Allepy Investment & Trading Co. (P) Ltd. Kent Investments (P) Limited. Ruby Mercantile Co. (P) Limited. Boras Investment & Trading Co. (P) Ltd. Gagan Mercantile Co. (P) Limited. Pioneer Marcantile India (P) Limited. Adesh Investment & Trading Co. (P) Ltd. Calgary Investment & Trading Co. (P) Ltd. Oswal Infratech (P) Ltd. Oswal Tradecom (P) Ltd. Oswal Holding (P) Ltd. Nightangle Dealcom (P) Ltd. Alma Assets Consultancy (P) Ltd Altfort Merchants (P) Ltd

Particulars 2013-14

a) Subsidiary Company Oswal F.M. Hammerle Textiles Ltd (OFMH)

Oswal Industrial Enterprises (P) Ltd.

F M Hammerle Verwaltung Gmbh, Austria

b) Key management Mr. Ashok Kumar Oswal personnel

Mr. Adish Oswal Mr. Ashok Kumar Goyal - - -

c) Relative of KMP Mr. Abhinav Oswal Mrs. Rakhi Oswal Mrs. Manju Oswal

Ms. Aketa Oswal

d) Enterprise over which - KMP is able to exercise significant influence Panchsheel Textile Mfg & Trading Co.Pvt Ltd

Enakshi Investments (P) Limited. Liberty Mercantile Co.(P)Ltd. Allepy Investment & Trading Co. (P) Ltd. Kent Investments (P) Limited. Ruby Mercantile Co. (P) Limited. Boras Investment & Trading Co. (P) Ltd. Gagan Mercantile Co. (P) Limited. Pioneer Marcantile India (P) Limited. Adesh Investment & Trading Co. (P) Ltd. Calgary Investment & Trading Co. (P) Ltd. Oswal Infratech (P) Ltd. Oswal Tradecom (P) Ltd. Oswal Holding (P) Ltd. Nightangle Dealcom (P) Ltd. Alma Assets Consultancy (P) Ltd -

Transactions during the year:-

a) Loan received from KMP Rs. 204.00 lacs (Previous year Rs. NIL) includes, Rs. 32.50 lacs (Previous year Rs. NIL) from Mr. Adish Oswal, Rs. 171.50 lacs (Previous Rs. NIL) from Mr. Ashok Kumar Oswal.

Loan received from enterprise over which KMP has significant influence is Rs. 364.00 lacs includes, Rs. 35.00 lacs loan (Previous year Rs. NIL) from Allepy Investment Private Limited,Rs. 280 lacs loan (Previous year Rs. NIL) from Alfort merchants (P) Ltd., Rs. 29 lacs loan (Previous year Rs. NIL) from Nightangle Dealcom Pvt. Ltd. & Rs. 20 lacs loan (Previous year Rs. NIL) from Panchsheel Textiles Mfg & Trading Co. Pvt Ltd.

b) Loan repaid to KMP Rs. 204.00 lacs (Previous year Rs. NIL) includes, Rs. 32.50 lacs (Previous year Rs. NIL) to Mr. Adish Oswal,Rs. 171.50 lacs (Previous Rs. NIL) to Mr. Ashok Kumar Oswal, Loan repaid to enterprise over KMP Rs. 364.00 lacs includes, Rs. 35.00 lacs (Previous year Rs. NIL) to Allepy Investment Private Limited, Rs. 280 lacs (Previous year Rs. NIL) to Alfort merchants (P) Ltd., Rs. 29 lacs loan (Previous year Rs. NIL) to Nightangle Dealcom Pvt. Ltd. & Rs. 20 lacs (Previous year Rs. NIL) to Panchsheel Textiles Mfg & Trading Co. Pvt Ltd.

c) Sale of goods includes transactions with F.M. Hammerle Textiles Limited Rs. 1.19 lacs & Rs. 0.66 lacs with Oswal Industrial Enterprises (P) Ltd. (Previous year Rs. 3.29 lacs with F.M. Hammerle Textiles Limited & Rs. 1.17 lacs with Oswal Industrial Enterprises (P) Ltd.)

d) Purchase of fabrics/bed sheets includes transactions Rs. 0.33 lacs (Previous year Rs. 129.49 lacs) with Oswal Industrial Enterprises (P) Ltd & Rs. 0.05 lacs (Previous year Rs. NIL lacs) with F.M. Hammerle Textiles Limited.

e) Equity shares issued Rs. 1,360.15 lacs inludes Rs. 1,200.10 lacs (Previous year Rs. NIL) issued to Alfort Merchants (P) Ltd., ' 160.05 lacs (Previous year Rs. NIL) to Mr. Adish Oswal & Rs. NIl to Alma Assets Consultancy (P) Ltd. (Previous year Rs. 1,136.02 lacs).

f) Advance given (net of funds received) includes transactions with F.M. Hammerle Textiles Ltd. Rs. 6.39 lacs (Previous year Rs. 461.66 lacs), with Oswal Industrial Enterprise (P) Ltd Rs. (6.29) (Previous year Rs. 175.14) and with F.M. Hammerle Verwaltung GmbH Rs. Nil (Previous year Rs. Nil).

g) Expenses reimbursement to F.M. Hammerle Textiles Ltd. Rs. 124.26 lacs (Previous year Rs. 87.85 lacs) & Rs. 45.70 lacs to Oswal Industrial Enterprises (P) Ltd. (Previous year Rs. 7.44 lacs).

h) Rent paid to Mr. Ashok Kumar Oswal Rs. 37.21 lacs (Previous year Rs. 27.72 lacs).

i) Job charges paid to Oswal Industrial Enterprises (P) Ltd. Rs. 55.99 lacs (Previous year Rs. 21.75 lacs).

j) Rent Received from Oswal Industrial Enterprises (P) Ltd. Rs. 1.56 lacs (Previous year Rs. 1.64 lacs).

k) Interest received from subsidiary includes Rs. 79.19 lacs (Previous year Rs. NIL) from F.M. Hammerle Textiles Limited.

l) Interest paid to enterprises over which KMP has significant influence Rs. 7.28 lacs (Previous year NIL) which includes 0.88 lacs paid to Allepy Investment and Trading Co. (P) Ltd. (Previous year NIL), Rs. 5.07 lacs to Alfort merchants (P) Ltd (Previous year NIL), Rs. 0.73 lacs to Nightangle Dealcom Pvt. Ltd. (Previous year NIL) and Rs. 0.60 lacs to Panchsheel Textile Mfg & Trading Co. Pvt Ltd. (Previous year NIL).

m) Remuneration includes transaction with Mr. Abhinav Oswal Rs. 11.71 lacs (Previous year Rs. 11.21 lacs), Mr. Parvinder Singh Rs. 26.32 lacs(Previous year Nil) & Mr. Sushil Sharma Rs. 11.41 lacs(Previous year Nil).

n) Managerial Remuneration includes transactions with Mr.Ashok Kumar Oswal Rs. 47.90 lacs (Previous year Rs. 47.90 lacs) & arrear Rs. NIL lacs (Previous year Rs. 29.03 lacs), Mr. Adish Oswal Rs. 50.77 lacs (Previous year Rs. 50.72 lacs) & arrear Rs. NIL lacs (Previous year Rs. 30.47 lacs) ,Mr. Ashok Goyal Rs. 41.97 lacs (Previous year Rs. 21.89 lacs).

o) Amount received of Rs. 239.19 lacs includes Rs. 42.77 lacs (Previous year NIL) on behalf of Mr. Adish Oswal and Rs. 196.42 lacs (Previous year NIL) on behalf of Mr. Abhinav Oswal on sale of plots.

p) Development cost recoverable of Rs. 45.25 lacs includes Rs. 23.13 lacs (Previous year Nil) recoverable on account of Mr. Adish Oswal and Rs. 22.12 lacs (Previous year Nil) recoverable on account of Mr. Abhinav Oswal on real estate transaction.

q) Amount received on sale of shares of Oswal Industrial Enterprise Pvt Ltd. includes Rs. 915.89 lacs (pevious year Nil) received from Mr. Adish Oswal.

r) Cheques received against advance includes cheques received from F.M. Hammerle Textiles Ltd. Rs. 350.00 lacs (Previous year Rs. 300.00 lacs).

s) During the year the Company had received Corporate Guarantee from F.M Hammerle Textiles Limited of Rs. 1,000 Lacs (Previous year Rs. 600 lacs).

Closing balance at the year end:-

a) Corporate Guarantee to subsidiary company: Gurantee outstanding given to lenders of F.M. Hammerle Textiles Ltd. Rs. 8,233.00 lacs (Previous year Rs. 8,233.00 lacs).

b) Corporate Guarantee by subsidiary company: Gurantee outstanding received from F.M. Hammerle Textiles Ltd. Rs. 1,600.00 lacs (Previous year Rs. 600 lacs).

c) Loan payable/ fixed deposits includes Rs. NIL lacs payable to Ms. Aketa Oswal (Previous year Rs. 3.00 lacs).

d) Investment of Rs. 9,149.12 lacs includes investment in F.M. Hammerle Textiles Ltd. Rs. 9,126.41 lacs (Previous year Rs. 9,126.41 lacs), in Oswal Industrial Enterprise (P) Ltd. Rs. 0.09 lacs (Previous year Rs. 4,501.00 lacs), in F.M. Hammerle Verwaltung GmbH, Austria Rs. 22.54 lacs (Previous year Rs. 22.54 lacs).

e) Amount payable includes Rs. 1 74.30 lacs (Previous year Rs. NIL) to Mr. Abhinav Oswal and Rs. 19.64 lacs payable to Mr. Adish Oswal (Previous year Nil) on account of real estate transactions.

f) Advance of Rs. 3,293.98 lacs includes, F.M. Hammerle Textiles Ltd. (Previously known as Oswal F.M. Hammerle Textiles Ltd.) Rs. 3,065.01 lacs (Previous year Rs. 2,864.81 lacs), in Oswal Industrial Enterprise (P) Ltd. Rs. 0.07 lacs (Previous year Rs. 2.13 lacs), in F.M. Hammerle Verwaltung GmbH, Austria Rs. 228.90 lacs (Previous year Rs. 285.01 lacs) and Rs. 5.00 lacs includes advance to Mr. Ashok Kumar Oswal (Previous year Rs. 5.00 lacs).

b) During the current year, the company has converted a fixed asset (consisting of land) into stock in trade at rate as assessed by the Management of the Company. The surplus (collector's rate less original cost) arising on such conversion was credited to Capital Reserve of Rs. 4,076.02 lacs and transferred Rs. 1,025.85 lacs to statement of profit and loss.

6. CORPORATE DEBT RESTRUCTURING

i) The Debt Restructuring Scheme (the 'Scheme') under CDR Mechanism had been approved and Letter of Approval issued on 28th Dec'2012. The Scheme inter-alia included restructuring of repayment schedule, interest funding, reduction in interest rates and additional security in favour of CDR lenders by pledge of shares of promoters stipulated. Master Restructuring Agreement ("MRA") had been executed on March 15, 2013 with the lenders. The impact in terms of the approved Scheme has been given effect in financial statements with effect from the cut-off date being January 1, 2012.

ii) Interest has been accounted for based upon terms of package/confirmations received from the banks.

iii) The Funded Interest Term Loan (FITL) has been created on certain credit facilities.

iv) The credit facilities/loans under CDR are further secured by unconditional & irrevocable personal guarantee of promoter director & Mrs. Manju Oswal (related party) and corporate guarantee of M/s FM Hammerle Textiles Ltd., subsidiary company.

v) Other conditions as stipulated under the scheme are being complied with.

7. During the earlier years, the Company had Issued 2% Unsecured Foreign Currency Convertible Bonds (FCCBs) in the aggregate principal amount of United State Dollars 12 (Twelve) Millions in the course of International Offerings. The expenses incurred & premium payable on the redemption of such bonds has been adjusted with share premium reserves in accordance with the provisions of Section 78 of the erstwhile Companies Act, 1956.

43. The company had received a letter from F.M Hammerle Textile Limited, Subsidiary Company, dated 26.03.2013 for considering option for conversion of advance given of Rs. 2,236 lac in different trenches into Preference Shares. The Board of the directors had approved subject to bankers and shareholders for the same.

8. The Central Government vide its letter dated: 30/08/2013 under section 198,309 (3), 310 r/w Section 637A & 637AA of the erstwhile Companies Act,1956 has approved the increase in remuneration of Mr. Ashok Oswal,Managing Director and Mr. Adish Oswal, Executive Director w.e.f 01/04/2012 till 31st March 2015. The remuneration during the current year has been paid considering this approval.

9. The Company is paying rentals for office premises taken on rent which are not in the nature of lease agreements. Therefore, disclosure requirements of Accounting Standard AS-19 are not applicable.

10. In accordance with the provisions of Accounting Standard on impairment of Assets, ( AS-28), the management has made assessment of assets in use & considering the business prospects related thereto, no provision is considered necessary in these accounts on account of impairment of assets.

11. Details of loans and advances in nature of loans to subsidiaries, parties in which Directors are interested and investments by the loanee in the shares of the company (as required by clause 31 of listing agreement)

12. Previous year figures have been regrouped /reclassified wherever necessary to conform to current year classification.


Mar 31, 2014

1. LEGAL STATUS & ACTIVITIES

a) Vardhman Polytex Limited is a Public Limited Listed Company registered under the Companies Act,1956. The Company''s Principal activity is manufacturing of yarn, garments and to develop residential & commercial colony or project.

b) The Company''s Principal Place of business is located at 341 K-1, Mundian Khurd, Chandigarh Road, Ludhiana & Factories/Units are located at the following premises:

* Badal Road, Bathinda, Punjab - 151005.

* D295/1, Phase VIII, Focal Point, Ludhiana, Punjab - 141123 (Unit - Vinayak Textiles Mills -Spinning & Dye House).

* HB-22, Phase VI, Focal Point, Ludhiana, Punjab - 141123 (Unit - Amkryon International).

* Village Nangal Nihla/Upperla, Swarghat Road, Nalagarh, Himachal Pradesh - 174101.

c) The Company intends to develop residential and commercial colony/project named as ''Vardhman Park'' situated at 341K-1, Mundian Khurd, Chandigarh Road, Ludhiana-141123. The Board of Directors in its meeting dated 14.02.2014 and the shareholders vide postal ballot dated 31.03.2014 had approved the new activities of business related to real estate and amended the Memorandum of Association of the Company accordingly.

d) These Financial Statements are presented in Indian Rupee (Rs. ).

1.a) Out of total shares held by promoters & promoters group companies 1,09,07,202 equity shares (face value of Rs. 10/- each) pledged with National Securities Depository Limited (NSDL) in favour of Canara Bank (Lead Banker).

b) Equity Shares arising out of conversion of the convertible warrants issued on Preferential basis.

2. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each shareholder is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. During the year ended 31.03.2014, the amount of dividend recognized as distribution to equity shareholder was Rs. Nil (Previous year Rs. Nil).

3. Aggregate number of shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date Rs. Nil (Previous year Rs. Nil).

4. Note:

The company has signed settlement agreement with Foreign Currency Convertible Bond holders of principal value of USD 85,00,000 (Rs. 4,613.80 lac) worth of bonds and redemption premium of USD 15,64,850 (Rs. 849.40 lac) aggregating the total of USD 1,00,64,850 (Rs. 5,463.20 lac) . Under the settlement agreement, the final amount including redemption premium has been settled at USD 51,71,513 which is payable in instalment up to year 2016. Out of the final settled amount of USD 51,71,513 the company in the current financial year has paid an amount of USD 26,07,823 (equivalent value bonds surrendered to the company) and accordingly an amount of USD 27,20,627 has been written back in the books of accounts. The Axis Bank bond holders reserves the right to exit the settlement agreement on the balance amount of USD 32,00,000, if there is reasonable ground for it to conclude (at its own discretion) that the Company may not fulfil its obligation and retains its rights to recompense.

Profit on write back of bonds has recognized under the head "Other income".

Detail of securities :

a) Working Capital Loans from Banks are secured by hypothecation of all stocks (except the stock of raw material already pledge with third party), present and future of stores, spare parts, packing materials, raw materials, finished goods, goods in transit/process, book debts, outstanding money receivable, claims, bills etc. and second charge by way of joint equitable mortgage of immovable properties of Company.

b) Personal Guarantee given by Promoter Director & Mrs. Manju Oswal (related party).

The information as required to be disclosed under The Micro, Small and Medium Enterprises (Development) Act, 2006 ("the Act") has not been received so far, so the disclosure requirement for balance outstanding, interest paid/payable as at the year end as required by the Act has not been given.

Note:

* The payable to related party in the previous year has been converted in the current year to equity share capital.

** Investors Education and Protection Fund under Section 205C of Companies Act, 1956 will be credited by unclaimed dividend amount expiring on seven years from the dividend declaration, the amount is not due at the year end.

a) The Freehold Land cost is net of subsidy Rs. 16.20 lac (Previous year Rs. 16.20 lac) received from the State Government. Land includes Rs. 760.33 lac (Previous year Rs. 760.33 lac) purchased at Nalagarh & Ludhiana, pending transfer of title in favour of the Company.

b) The Leasehold Land includes Rs. 136.77lac (Previous year Rs. 173.07 lac) is forfeited by Maharashtra Industrial Development Corporation (MIDC), due to non compliance of the terms of allotment. Leasehold Land was alloted for a period of 95 years.

c) Building includes Rs. 359.78 lac (Previous year Rs. 359.78 lac) being cost of industrial shed at focal point, Ludhiana pending conveyancing in favour of the Company.

*Out of total shares held in Oswal F.M. Hammerle Textiles Limited (OFMH) 2,28,16,018 shares (face value of Rs. 10/- each) pledge in favour of State Bank of India (Lead banker of OFMH) in dematerialisation form.

a) Based on legal advice, discussions with the solicitors, etc., the management believes that there are fair chances of decisions in the company''s favour in respect of all the items listed above and no value adjustment is considered necessary.

b) Direct taxes refundable represent amounts recoverable from the Income Tax Department for various assessment years. In respect of disputed demands, company has filed appeals which are pending at various levels and the company is hopeful of getting the desired reliefs at various forums. Necessary value adjustments shall be made on final settlement by the department.

c) Provision for Income Tax for earlier years has been made based on the Tax Liability calculated at prevalent rates.

d) Balance with statutory authorities includes Rs. 188.26 lac (Previous year Rs. 198.32 lac) being amount of ESI, Excise Duty, Sales Tax, PSEB deposited under protest. No provision has been made in accounts in respect thereof. The same will be made in the year of settlement.

*Pledged with Bank against Bank Guarantee to Custom Department and others. ** Includes Bank Balance under escrow for land sale.

5. CONTINGENT LIABILITIES Particulars As at As at 31.03.2014 31.03.2013 Rs. lac Rs. lac

a) Claims against the Company not acknowledged as debts 477.52 477.52

b) Bills discounted with bankers 5,837.41 6,206.61

c) Letter of credit & bank gurantee issued 8.53 8.53

d) Income Tax demands under appeal 783.55 196.30

e) Demand of PSEB for voltage surcharge and DSA 256.24 256.24

f) Subordination letter for not to withdraw the loan from foreign 237.33 237.33 subsidiary until negative equity situation reverses

g) Corporate guarantee given on behalf of subsidiary company 8,233.00 8,233.00 "Oswal FM Hammerle Textiles Ltd" spursuant to scheme of CDR

6. Inventories, loans & advances, trade receivables and other current / non-current assets are reviewed annually and in the opinion of the Management do not have a value on realization in the ordinary course of business, less than the amount at which they are stated in the Balance Sheet.

Defined Benefit Plan

The Employees'' Gratuity Fund Scheme managed by a trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations.

Disclosures as required under para 120 (n) in respect of one annual periods in addition to above as required by (AS-15) is not presented as the management considers it impracticable in the absence of requisite information.

The provision up to the end of previous financial year was made on estimate basis. However, this year the same has been done on the basis of actuarial valuation.

Disclosures as required under para 120 (n) in respect of four annual periods in addition to above as required by (AS-15) is not presented as the management considers it impracticable in the absence of requisite information.

Transactions during the year:-

a) Nil loan raised (Previous year Rs. 70.00 lac) from Alma Assets Consultancy Pvt Ltd.

b) Loan repaid includes NIL (Previous year Rs. 2.00 lac) of Ms. Aketa Oswal.

c) Share application money received Rs. 160.00 lac (Previous year Rs. Nil) from Mr. Adish Oswal.

d) Sale of goods includes transactions with Oswal F.M. Hammerle Textiles Limited Rs. 3.29 lac & Rs. 1.17 lac with Oswal Industrial Enterprise Pvt Ltd (Previous year Rs. 15.21 lac with Oswal F.M. Hammerle Textiles Limited & Rs. 0.15 lac with Oswal Industrial Enterprise Pvt Ltd).

e) Purchase of fabrics/bed sheets includes transactions Rs. 129.49 lac (Previous year Rs. Nil) with Oswal Industrial Enterprise Pvt. Ltd & Nil (Previous year Rs. 0.49 lac) with Oswal F.M. Hammerle Textiles Limited.

f) Equity Shares issued to Alma Assets Consultancy Pvt Ltd Rs. 1136.02 lac including the securities premium amounting of Rs. 938.52 lac (Previous year Rs. 1,050.72 lac including securities premium amounting of Rs. 890.72 lac).

g) Advance given includes transactions with Oswal F.M. Hammerle Textiles Ltd. Rs. 461.66 lac (Previous Year Rs. 37.08 lac), with Oswal Industrial Enterprise Pvt. Ltd Rs. 175.14 lac (Previous Year Rs. (14.83) lac) and with F.M. Hammerle Verwaltung GmbH Rs. Nil (Previous year Rs. 4.41 lac).

h) Expenses reimbursement to Oswal F.M. Hammerle Textiles Ltd. Rs. 87.85 lac (Previous year Rs. 38.92 lac) & Rs. 7.44 lac to Oswal Industrial Enterprise Pvt. Ltd. (Previous year Rs. 20.03 lac).

i) Rent paid to Mr. Ashok Kumar Oswal Rs. 27.72 lac (Previous year Rs. 28.47 lac).

j) Job charges received from Oswal Industrial Enterprise Pvt. Ltd. Rs. 21.75 lac (Previous year Rs. 38.53 lac).

k) Rent Received from Oswal Industrial Enterprise Pvt. Ltd. Rs. 1.64 lac (Previous year Rs. 0.88 lac) & Rs. Nil (Previous year Rs. 0.14 lac) from Oswal F.M. Hammerle Textiles Ltd.

l) Remuneration includes transaction with Mr. Abhinav Oswal Rs. 11.21 lac (Previous year Rs. 12.44 lac).

m) Managerial Remuneration includes transactions with Mr.Ashok Kumar Oswal Rs. 47.90 lac (Previous year Rs. 18.87 lac) & arrear of Previous year Rs. 29.03 lac, Mr. Adish Oswal Rs. 50.72 lac (Previous year Rs. 18.85 lac) & arrear of Rs. 30.47 lac and Mr. Ashok Kumar Goyal Rs. 21.89 lac (Previous year Rs. Nil)

o) Cheques received against advance not deposited includes cheques received from Oswal F.M. Hammerle Textiles Ltd. Rs. 300.00 lac (Previous Year Rs. 343.48 lac).

Closing balance at the year end:-

a) Corporate Guarantee to Subsidiary Company: Gurantee outstanding given to lenders of Oswal F.M. Hammerle Textiles Ltd. Rs. 8,233.00 lac (Previous year Rs. 8,233.00 lac).

b) Corporate Guarantee by Subsidiary Company: Gurantee outstanding received from Oswal F.M. Hammerle Textiles Ltd. Rs. 600.00 lac (Previous Year Rs. Nil).

c) Loan payable/ fixed deposits includes Rs. Nil payable to Mr. Adish Oswal (Previous year Rs. 6.50 lac to Mr. Adish Oswal), Rs. 3.00 lac includes Rs. Nil payable to Mr. Abhinav Oswal (Previous year Rs. 5.50 lac), Rs. 3.00 lac payable to Ms. Aketa Oswal (Previous year Rs. 4.00 lac), Rs. Nil payable to Mrs. Rakhi Oswal (Previous year Rs. 1.00 lac) and Rs. Nil payable to M/s. Alma Assets Consultancy Pvt. Ltd. (Previous year Rs. 70.00 lac).

d) Investment of Rs. 13,649.94 lac includes, Oswal F.M. Hammerle Textiles Ltd. Rs. 9,126.41 lac (Previous year Rs. 9,126.41 lac), in Oswal Industrial Enterprise Pvt. Ltd. Rs. 4,501.00 lac (Previous year Rs. 4,501.00 lac), in F.M. Hammerle Verwaltung GmbH, Austria Rs. 22.54 lac (Previous year Rs. 22.54 lac).

e) Advance of Rs. 3,151.95 lac includes, Oswal F.M. Hammerle Textiles Ltd. Rs. 2864.81 lac (Previous year Rs. 2,312.39 lac), in Oswal Industrial Enterprise Pvt. Ltd. Rs. 2.13 lac (Previous year Rs. 98.56 lac), in F.M. Hammerle Verwaltung GmbH, Austria Rs. 285.01 lac (Previous year Rs. 237.34 lac) and Rs. 5.00 lac includes advance to Mr. Ashok Kumar Oswal (Previous year Rs. 5.00 lac).

7. The Company has only one segment of Textile and accordingly the disclosure requirement as prescribed in the Accounting Standard (AS-17) on "Segment Reporting" as notified by Companies (Accounting Standard) Rules, 2006 is not applicable.

8. CORPORATE DEBT RESTRUCTURING

i) The debt restructuring scheme (the ''Scheme'') under CDR Mechanism has been approved and Letter of Approval issued on 28th December, 2012. The Scheme inter-alia included restructuring of repayment schedule, interest funding, reduction in interest rates and additional security in favour of CDR lenders by pledge of shares of promoters stipulated.

Master Restructuring Agreement ("MRA") has been executed on March 15, 2013 with the lenders. The impact in terms of the approved Scheme has been given effect in financial statements with effect from the cut-off date being January 1, 2012.

ii) Interest has been accounted for based upon terms of package/confirmations received from the banks.

iii) The Funded Interest Term Loan (FITL) has been created on certain credit facilities.

iv) The credit facilities/loans under CDR are further secured by unconditional & irrevocable personal guarantee of promoter director & Mrs. Manju Oswal (related party) and corporate guarantee of M/s Oswal FM Hammerle Textiles Ltd., subsidiary company.

v) Other conditions as stipulated under the scheme are being complied with.

9. There are no present obligations requiring provisions in accordance with the guiding principles as enunciated in Accounting Standard (AS)-29 ''Provisions, Contingent Liabilities & Contingent Assets'' as it is not probable that an outflow of resources embodying economic benefits will be required.

10. During the earlier years, the Company had Issued 2% Unsecured Foreign Currency Convertible Bonds (FCCBs) in the aggregate principal amount of United State Dollars 12 (Twelve) Millions in the course of International Offerings. The expenses incurred & Premium payable on the redemption of such bonds has been adjusted with Share Premium reserves in accordance with the provisions of Section 78 of the Companies Act, 1956. During the current year, all the FCCB Bonds have been settelled for repayment.

11. The company has received a letter from Oswal F.M Hammerle Textiles Limited (OFMH), Subsidiary Company, dated 26.03.2013 for considering option for conversion of advance given of Rs. 2,236 lac in different trenches into Preference Shares. The Board of the directors has approved subject to bankers and shareholders for the same.

12. The Central Government vide its letter dated: 30.08.2013 under section 198, 309(3), 310 r/w Section 637A & 637AA of the Companies Act,1956 has approved the increase in remuneration of Mr. Ashok Kumar Oswal, Managing Director and Mr. Adish Oswal, Executive Director w.e.f 01.04.2012.

13. The Company is paying rentals for office premises taken on rent which are not in the nature of lease agreements. Therefore, disclosure requirements of Accounting Standard (AS-19) are not applicable.

14. In accordance with the provisions of Accounting Standard on impairment of Assets, (AS-28), the management has made assessment of assets in use & considering the business prospects related thereto, no provision is considered necessary in these accounts on account of impairment of assets.

15. Details of loans and advances in nature of loans to subsidiaries, parties in which Directors are interested and investments by the loanee in the shares of the company (as required by clause 31 of listing agreement).

16. Previous year figures have been regrouped /reclassified wherever necessary to conform to current year classification.


Mar 31, 2013

1. BASIS OF PREPARATION

The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended and as applicable from time to time) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis and under the historical cost convention on going concern basis.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF

(Rs. in lac) Particulars As at As at 31.03.2013 31.03.2012

(a) Claims against the Company not acknowledged as debts 477.61 306.28

(b) Bills discounted with bankers 6,206.61 5,858.35

(c) Income Tax demands under appeal 196.30 144.00

(d) Demand of PSEB for voltage surcharge and DSA 256.24 256.24

(e) Subordination letter for not to withdraw the loan from Foreign Subsidiary until

Negative equity situation reverses 237.33 232.93

(f) Corporate Guarantee given on behalf of Subsidiary Company

"Oswal F.M. Hammerle Textiles Ltd" pursuant to scheme of CDR 8,233.00 8,233.00

3. Inventories, loans & advances, trade receivables and other current / non-current assets are reviewed annually and in the opinion of the Management do not have a value on realization in the ordinary course of business, less than the amount at which they are stated in the Balance Sheet.

4. The Company has only one segment of Textile and accordingly the disclosure requirement as prescribed in the Accounting Standard AS -17 on "Segment Reporting" as notified by Companies (Accounting Standard) Rules, 2006 is not applicable.

5. In view of the current year losses on account of fluctuation in cotton fibre and cotton yarn prices during the year, the Company has faced the stretched liquidity during the period. In order to correct the scenario, the Company has requested its lenders for the overall restructuring of its debts through CDR mechanism with cutoff date as on 31.12.2011. Accordingly, the CDR has been approved by CDR Cell as on 15th Dec, 2012.

6. CORPORATE DEBT RESTRUCTURING

i) The debt restructuring scheme (the ‘Scheme'') under CDR Mechanism has been approved and Letter of Approval issued on 28th Dec, 2012. The Scheme inter-alia included restructuring of repayment schedule, interest funding, reduction in interest rates and additional security in favour of CDR lenders by pledge of shares of promoters stipulated.

Master Restructuring Agreement ("MRA") has been executed on March 15, 2013 with the lenders. The impact in terms of the approved Scheme has been given effect in financial statements with effect from the cut-off date being January 1, 2012.

ii) Interest has been accounted for based upon terms of package/confirmations received from the banks.

iii) The Funded Interest Term Loan (FITL) has been created on certain credit facilities.

iv) The Credit Facilities/loans under CDR are further secured by unconditional & irrevocable personal guarantee of Promoter director & Mrs. Manju Oswal and Corporate guarantee of M/s. Oswal FM Hammerle Textiles Ltd., subsidiary company.

v) Other conditions as stipulated under the scheme are being complied with.

7. There are no present obligations requiring provisions in accordance with the guiding principles as enunciated in Accounting Standard (AS)-29- ‘Provisions, Contingent Liabilities & Contingent Assets'' as it is not probable that an outflow of resources embodying economic benefits will be required.

8. During the earlier years, the Company has issued 2% Unsecured Foreign Currency Convertible Bonds (FCCBs) in the aggregate principal amount of United State Dollars 12 (Twelve) Millions in the course of International Offerings. The expenses incurred & premium payable on the redemption of such bonds has been adjusted with Share Premium reserves in accordance with the provisions of Section 78 of the Companies Act, 1956.

9. The Company is paying rentals for office premises taken on rent which are not in the nature of lease agreements. Therefore, disclosure requirements of Accounting Standard AS-19 are not applicable.

10. In accordance with the provisions of Accounting Standard on impairment of Assets, (AS-28), the management has made assessment of assets in use & considering the business prospects related thereto, no provision is considered necessary in these accounts on account of impairment of assets.

11. Details of loans and advances in nature of loans to subsidiaries, parties in which Directors are interested and investments by the loanee in the shares of the Company (as required by clause 32 of listing agreement).

12. Previous year figures have been regrouped /reclassified wherever necessary to confirm to current year classification.


Mar 31, 2012

1. BASIC OF PREPARATION

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended and as applicable from time to time) 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 on Going Concern basis.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2. SHARE CAPITAL

The Authorised Share Capital of the Company was increased from Rs. 30,00,00,000/- (Rupees Thirty crore only) divided into 2,14,90,000 Equity Shares of Rs. 10/- each, 1,000 Redeemable Cumulative Preference Shares of Rs. 100/- each and 8,50,000 Redeemable Non Cumulative Preference Shares of Rs. 100/- each to Rs. 50,00,00,000/- (Rupees Fifty crore only) divided into 5,00,00,000 Equity Shares of Rs. 10/- each vide shareholders resolution at the Annual General Meeting held on 29.08.2011.

Further, the Authorised Share Capital of the Company was increased from Rs. 50,00,00,000/- (Rupees Fifty Crores only) divided into 5,00,00,000 (Five Crores) Equity Shares of Rs. 10/- (Rupees Ten only) each to Rs. 70,00,00,000/- (Rupees Seventy Crores only) divided into 7,00,00,000 (Seven Crores) Equity Shares of Rs. 10/- (Rupees Ten only) each vide shareholders resolution at the Extraordinary General Meeting held on 07.12.2011.

(b) Terms/rights attached to Equity Shares

Company has only one class of equity shares having a par value of Rs. 10/-. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Details of shareholders holding more than 5% Equity Shares in the company

As per records of the company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

(d) Aggregate number of shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date. Nil

Terms of repayment / details of security are as follows:

(a) Term loans from Financial Institutions and Banks as stated as above are/shall be secured by way of joint equitable mortgage of all the immovable properties (present and future) of the Company ranking on pari- passu basis and hypothecation of all movable assets of the Company (except book debts) subject to prior charge of the company's bankers on specified movable assets in respect of working capital borrowings.

(b) Term Loan from others is guaranteed by promoter company M/s Panchsheel Textile Mfg & Trading Co. Pvt Ltd. along with charge on specific assets.

(c) All the Term Loans & Working Capital Term Loan are guaranteed by Promoter directors.

a) Working Capital Loans from Banks are secured by hypothecation of all stocks, present and future of stores, spare parts, packing materials, raw materials, finished goods, goods in transit / process, book debts, outstanding monies receivable, claims, bills etc. and second charge by way of joint equitable mortgage of immovable properties of the Company.

b) Personal Guarantee has been given by Promoters Mr. Ashok Oswal & Mr. Adish Oswal.

3. TRADE PAYABLES

The information as required to be disclosed under the Micro, Small and Medium Enterprises (Development) Act, 2006 ("the Act") has not been received so far, so the disclosure requirement for balance outstanding, interest paid/payable as at the year end as required by the Act has not been given.

4. OTHER CURRENT LIABILITIES

* Payable on account of default Rs. 459.75 Lacs (Previous Year Nil).

# Investors Education and Protection Fund under Section 205C of Companies Act 1956 will be credited by unclaimed dividend amount expiring on seven years from the dividend declaration, the amount is not due at the year end.

a) The Freehold Land cost is net of subsidy Rs. 16.20 lacs (previous year Rs. 16.20 lacs) received from the State Government freehold land of Rs. 592.59 lacs - (Previous year Rs. 592.59 lacs) pending conveyancing in favour of the company. Lease hold land is on 95 year lease.

b) Land includes Rs. 22.69 lacs (Previous year Rs. 22.69 lacs) purchased at Nalagarh, pending transfer of title in favour of the company.

c) Building includes Nil (Previous year Rs. 85.05 lacs) being cost of flat at Delhi, pending transfer of title in favour of the company and Rs. 359.78 lacs (Previous year Rs. 359.78 lacs) being cost of industrial shed at focal point, Ludhiana pending conveyancing in favour of the company.

5. LOANS & ADVANCES

a) Based on legal advice, discussions with the solicitors, etc., the management believes that there are fair chances of decisions in the Company's favour in respect of all the items listed above and no value adjustment is considered necessary.

b) Direct taxes refundable represent amounts recoverable from the Income Tax Department for various assessment years. In respect of disputed demands, company has filed appeals which are pending at various levels and the company is hopeful of getting the desired reliefs at various forums. Necessary value adjustments shall be made on final settlement by the department.

c) Provision for Income Tax for earlier years has been made based on the Tax Liability calculated at prevalent rates.

d) Balance with Statutory authorities includes Rs. 142.24 Lacs (Previous Year Rs. 163.83 Lacs) being amount of ESI, Excise Duty, Sales Tax, PSEB Deposited under protest. No provision has been made in accounts in respect thereof. The same will be made in the year of settlement.

6. Inventories, loans & advances, trade receivables and other current / non-current assets are reviewed annually and in the opinion of the Management do not have a value on realization in the ordinary course of business, less than the amount at which they are stated in the Balance Sheet.

Defined Benefit Plan

The Employees' Gratuity Fund Scheme managed by a trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations.

7. RELATED PARTY DISCLOSURES

(i) List of Related Parties and relationships

Particulars

a) Subsidiary Company

b) Key Management Personnel (KMP)

c) Relative of KMP

d) Enterprise over which KMP is able to exercise significant influence

2011-12

Oswal F.M. Hammerle Textiles Ltd.

Oswal Industrial Enterprise Private Limited

F M Hammerle Verwaltung GmbH, Austria

Mr. Ashok Oswal

Mr. Adish Oswal

Mrs. Manju Oswal

Mrs. Rakhi Oswal

Mr. Abhinav Oswal

Ms. Aketa Oswal

Panchsheel Textile Mfg & Trading Co. (P) Ltd.

Enakshi Investments Private Limited

Liberty Mercantile Co.(P)Ltd.

Allepy Investment & Trading Co. (P) Ltd.

Kent Investments Private Limited

Ruby Mercantile Co. Private Limited

Boras Investment & Trading Co. (P) Limited

Gagan Mercantile Co. Private Limite

Pioneer Mercantile India Private Limited

Adesh Investment & Trading Co. (P) Limited

Calgary Investment & Trading Co. (P) Ltd.

Oswal Infratech Pvt. Ltd.

Oswal Tradecom Pvt. Ltd.

Oswal Holding Pvt. Ltd.

Nightangle Dealcom Pvt. Ltd.

Alma Assets Consultancy (P) Ltd.

2010-11

Oswal F.M. Hammerle Textiles Ltd.

Oswal Industrial Enterprise Private Limited

F M Hammerle Verwaltung GmbH, Austria

Mr. Ashok Oswal

Mr. Adish Oswal

Mrs. Manju Oswal

Mrs. Rakhi Oswal

Mr. Abhinav Oswal

Ms. Aketa Oswal

Panchsheel Textile Mfg & Trading Co. (P) Ltd.

Enakshi Investments Private Limited

Liberty Mercantile Co.(P)Ltd.

Allepy Investment & Trading Co. (P) Ltd.

Kent Investments Private Limited

Ruby Mercantile Co. Private Limited

Boras Investment & Trading Co. (P) Limited

Gagan Mercantile Co. Private Limited

Pioneer Mercantile India Private Limited

Adesh Investment & Trading Co. (P) Limited

Calgary Investment & Trading Co. (P) Ltd.

Oswal Infratech Pvt. Ltd.

Oswal Tradecom Pvt. Ltd.

Oswal Holding Pvt. Ltd.

Nightangle Dealcom Pvt. Ltd.

Alma Assets Consultancy (P) Ltd.

Notes :-

a) Loan raised includes transaction with Mr. Ashok Oswal Rs. 100.00 Lacs (Previous Year Rs. 165.00 Lacs & Rs. 20.00 Lacs from Mr. Adish Oswal), Rs. 150.00 Lacs with

Mrs. Manju Oswal (Previous Year Nil), Rs. 100.00 Lacs with Alma Assets Consultancy (P) Ltd. (Previous Year Rs. 130.00 Lacs & from Nightangle Dealcom (P) Ltd., Rs. 50.00 Lacs)

b) Loan repaid includes transaction with Mr. Ashok Oswal Rs. 100.00 Lacs (Previous Year Rs. 165.00 Lacs & Rs. 20.00 Lacs from Mr. Adish Oswal), Rs. 150.00 Lacs with Mrs. Manju Oswal (Previous Year Nil), Rs. 100.00 Lacs with Alma Assets Consultancy (P) Ltd. (Previous Year Rs. 130.00 Lacs & from Nightangle Dealcom (P) Ltd., Rs. 45.00 Lacs)

c) Sale of goods includes transaction with Oswal FM Hammerle Textiles Limited Rs. 17.26 Lacs (Previous Year Rs. 30.71 Lacs)

d) Purchase of fabric/bed sheets includes transaction with Oswal F. M. Hammerle Textiles Limited Rs. 2.89 Lacs (Previous Year Nil)

e) Sale of Real Estate includes transaction with Mrs. Manju Oswal Rs. 1,047.18 Lacs (Previous Year - Nil)

f) Investment in Equity shares includes transactions with Oswal FM Hammerle Textiles Ltd. Rs. 528.00 Lacs (Previous Year Nil)

g) Application money for equity share capital pending allotment includes transaction with Oswal FM Hammerle Textiles Limited Nil (Previous Year Rs. 461.95 Lacs) h) Equity Shares issued includes transactions with Alma Assets Consultancy (P) Ltd. Nil (Previous Year Rs. 320.53 Lacs) and with Nightangle Dealcom (P) Ltd. Nil (Previous Year Rs. 349.30 Lacs)

i) Advance given includes transactions with Oswal FM Hammerle Textiles Ltd. Rs. 338.45 Lacs (Previous Year Rs. (21.15) Lacs), with Oswal Industrial Enterprises (P) Ltd Rs. (48.34) Lacs, (Previous Year Rs. 17.00 Lacs) and with FM Hammerle Verwaltung GmbH Rs. 16.80 Lacs (Previous Year (Rs. 6.61 Lacs)

j) Expenses reimbursement includes transactions with Oswal FM Hammerle Textiles Ltd Rs. 173.30 Lacs (Previous Year Rs. 156.82 Lacs)

k) Rent paid includes transaction with Mr. Ashok Oswal Rs. 25.82 Lacs (Previous Year Rs. 24.36 Lacs)

l) Interest Income includes transaction with Oswal FM Hammerle Textiles Limited Rs. 299.66 Lacs (Previous Year Rs. 338.21 Lacs)

m) Interest paid includes transaction with Mr. Ashok Oswal Rs. 2.26 Lacs (Previous Year Rs. 7.23 Lacs), Mrs. Manju Oswal Rs. 1.37 Lacs (Previous Year Nil) and Nil Previous Year Rs. 5.38 Lacs with Alma Assets Consultancy (P) Ltd. and Rs. 2.47 Lacs with Nightangle Dealcom (P) Ltd.) n) Remuneration includes transaction with Mr. Abhinav Oswal Rs. 11.71 Lacs (Previous Year Rs. 4.60 Lacs) o) Managerial Remuneration includes transaction with Mr. Ashok Oswal Rs. 48.15 Lacs (Previous Year Rs. 43.52 Lacs) and Mr. Adish Oswal Rs. 47.18 Lacs (Previous Year Rs. 27.55 Lacs)

8. The Company has only one segment of Textile and accordingly the disclosure requirement as prescribed in the Accounting Standard AS -17 on "Segment Reporting" as notified by Companies (Accounting Standard) Rules, 2006 is not applicable.

9. In view of the current year losses on account of fluctuation in cotton fibre and cotton yarn prices during the year under audit, the Company has faced the stretched liquidity during the period. In order to correct the scenario, the Company has requested its lenders for the overall restructuring of its debts through CDR mechanism with cutoff date as on 31.12.2011. Accordingly, the Canara Bank has referred the case to CDR cell on 30.04.2012, being the Lead Bank."

10. There are no present obligations requiring provisions in accordance with the guiding principles as enunciated in Accounting Standard (AS)-29 'Provisions, Contingent Liabilities & Contingent Assets' as it is not probable that an outflow of resources embodying economic benefits will be refunded.

11. During the earlier years, the Company has Issued 2% Unsecured Foreign Currency Convertible Bonds (FCCBs) in the aggregate principal amount of United State Dollars 12 (Twelve) Millions in the course of International Offerings. The expenses incurred & Premium payable on the redemption of such bonds has been adjusted with Share Premium reserves in accordance with the provisions of Section 78 of the Companies Act, 1956.

12. The Company is paying rentals for office premises taken on rent which are not in the nature of lease agreements. Therefore, disclosure requirements of Accounting Standard AS-19 are not applicable.

13. In accordance with the provisions of Accounting Standard on Impairment of Assets, (AS-28), the management has made assessment of assets in use & considering the business prospects related thereto, no provision is considered necessary in these accounts on account of impairment of assets.

14. Till the year ended 31 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 31 March 2012, the Revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year's classification.


Mar 31, 2010

1. Contingent Liabilities not provided for in respect of:

As at As at 31.3.2010 31.3.2009 (Rs. in lac) (Rs. in lac) i) Claims against the Company not acknowledged as debts 295.59 93.55 ii) Bank Guarantees/Bonds outstanding in favour of President of India & Others 7.20 30.00 iii) Letters of Credit outstanding 1,827.30 1,717.00 iv) Bills discounted with Banks against Irrevocable Letter of Credit 3,184.06 1,717.02 v) Income Tax demands under appeal 209.43 617.93 vi) Demand of PSEB for Voltage surcharge and DSA 258.95 259.81 vi) Corporate Guarantee given to Banks on behalf of third parties - 1,290.00 (Loans & working capital disbursed against this guarantee) - 244.00 vii) Subordination letter for not to withdraw the loan from foreign Subsidiary until 213.14 1,650.44 negative Equity situation

2. Estimated amount of contracts remaining to be executed on Capital Account and not provided - 2.28 for (net of advances). 3. Amount recoverable in cash or kind include:-

i) Rs. 168.99 lac (Previous Year Rs. 211.30 lac) being amount of ESI, Excise Duty, Sales Tax, PSEB deposited under protest. No provision has been made in accounts in respect thereof. The same will be made in the year of settlement.

ii) Rs. 1.86 lac (Previous Year Rs. 3.08 lac) granted as housing loan to Managing Director of the Company. Maximum amount due at any time during this year is Rs. 3.08 lac (Previous Year Rs. 4.23 lac).

iii) Rs. 220 lac (Previous Year Rs. 220 lac) being amount deposited as Income Tax under protest. No provision has been made in respect thereof. The same will be made in the year of settlement.

4. In the opinion of the Board of Directors, the value on realization of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet and provision for all known liabilities has been made.

5. As per Accounting Standard (AS) 15 " Employee Benefits", the disclosures of employee benefits as defined in the Accounting Standard are given below:

Defined Benefit Plan

The Employees Gratuity Fund scheme managed by a trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

6. a) During the previous year, the Company has changed the method of calculation of depreciation in one of its manufacturing plant from written down value to straight line method, to re-align the method along with the other Units. Due to this, recalculation from commissioning of plant upto 31st March, 2008. The accumulated Depreciation got reduced by Rs. 3165.30 lac and the same was credited to Profit & Loss Account. Depreciation for the previous year got reduced by Rs. 864.87 lac.

b) During the previous year, 100% Provision for diminution in Investment value has been made in Oswal Retail Pvt. Ltd. in Preference Share Capital amounting to Rs. 495 lac and Rs. 22.54 lac in Equity Share Capital of F.M. Hammerle Nfg GmbH, Austria, considering the losses in these Companies.

c) During the year, 100% provision for diminution in advance to F.M. Hammerle Nfg GmbH, Austria has been made amounting to Rs. 3574.14 lac considering the losses in the Company. The company has filed an application for liquidation of the subsidiary corresponding opening fluctuation translation reserve is transferred to Profit & Loss Account.

7. The Income Tax Assessment of the Company has been completed upto Assessment Year 2007-08. The Assessing Officer has made certain disallowances in the past resulting in to demands against the Company. The Company has contested these demands in appeals to the relevant authorities. Whereas some appeals have been decided in favour of the Company by the CIT (Appeals), the Department has gone in appeals to the Higher Authorities. For the issues not settled in favour of the Company, it has also filed appeals to Higher Authorities. Pending adjudication at various levels, no provision has been considered in accounts, the Company is hopeful of getting desired relief at appropriate levels.

8. Segment Reporting :

The Company has only one segment of yarn and accordingly, the disclosure requirement as prescribed in the Accounting Standard (AS) - 17 on Segment Reporting issued by Institute of Chartered Accountants of India are not required.

9. During the previous year, the Company has opted for the Notification No. GSR 225(E) dated 31.03.2009 issued by the Ministry of Corporate Affairs. Exchange Differences on long term Foreign Currency denominated monetary items relating to acquisition of depreciable capital assets amounting to Rs. 195.04 lac are decapitalised (Previous Year Rs. 347.29 lac were capitalised) with the relevant capital assets instead of charging/adjusting them to Profit & Loss Account. Similar differences relating to Accounting Year 2007-08 of Rs. 11.10 lac were adjusted to cost of relevant Capital Assets by adjustment in General Reserve. Exchange differences relating to other long term items have been considered for amortisation over a period not beyond 31st March, 2011. On reinstatement of long term foreign currency monetary items as on 31.03.2010, the impact of unamortised amount of Rs. 61.76 lac (Previous Year Rs. 641.29 lac) out standing on 31.03.2010 will be amortised during the year ending 31.03.2011.

10. During the earlier year, the Company has issued 2% Unsecured Foreign Currency Convertible Bonds (FCCBs) in the aggregate principal amount United State Dollars 12 (Twelve) Millions in the course of international offerings. The expenses incurred & premium payable on the redemption of such Bonds has been adjusted with Share Premium Account in accordance with the provision of Section 78 of the Companies Act, 1956. Part of the amount of proceeds invested outside India till the end of Previous Year have been fully utilised during the year in the Companys projects.

11. Related Party Disclosure :

Details of disclosures as required by Accounting Standard (AS) -18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are as under:

12. The Company has issued 25,00,000 Convertible Warrants to the Financial Investors on preferential basis pursuant to SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009. The said Warrants were convertible into equivalent number of Equity Shares at a Conversion Price of Rs. 39.53 per Share (including premium) at option of the Warrantholder within a period of 18 months from the date of allotment. The Company has received an amount equivalent to 25% of the Conversion Price as Share application money at the time of allotment of the Warrants. Out of the said 25,00,000 Convertible Warrants, holders of 20,03,000 Warrants exercised their option for the conversion of the said Warrants by paying the balance amount equivalent to 75% of the Conversion Price and accordingly, they were allotted 20,03,000 Equity Shares of Rs. 10/- each at a premium of Rs. 29.53 per Share. Further, the Company has issued another 6,60,000 Convertible Warrants to a Financial Investor belonging to the Promoter Croup on preferential basis pursuant to SEBIflssue of Capital & Disclosure Requirements) Regulations, 2009. The said Convertible Warrants are convertible into equivalent number of Equity Shares at the Conversion Price of Rs. 60.50 per Share (including premium) at option of the Warrantholder within a period of 18 months from the date of allotment. The Company has received an amount equivalent to 25% of the Conversion Price as Share application money at the time of allotment of these Warrants. The application money received on these Warrants has been shown as Share application money (pending allotment) in the Balance Sheet of the Company. The proceeds from these preferential issues have been used for the purpose of meeting the long term working capital requirements of the Company.

13. Figures for the previous year have been rearranged and/or regrouped wherever considered necessary to facilitate comparison.

14. Figures in bracket indicate deductions.

15. Information required by Part IV of Sechedule-VI of the Companies Act, 1956.

 
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