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Notes to Accounts of Bombay Dyeing & Manufacturing Company Ltd.

Mar 31, 2022

b. In December, 2018 the Shareholders of the PT Five Star Textile Indonesia(PTFS) passed the resolution for its voluntary liquidation. Subsequently, as per the procedure, in the year 2019, PTFS surrendered most of business and operating licenses and by August, 2019, also obtained the de-registration of its 3 Branch Tax Identification numbers. Thereafter, on August 7, 2019, PTFS applied for the de-registration of the main Tax identification number with Tax Office Jakarta and the process of liquidation is yet not complete.

c. The Company has carried its investments in equity instruments of Subsidiary and Associates at cost, less provision for impairment, if any. For other investments in equity instruments, the Company has elected an irrevocable option to designate it through FVOCI, as the said investments are not held for trading. During the year ended March 31, 2022, the Company did not sell any equity instrument, however, during the year ended March 31, 2021, the Company sold equity instruments of The Bombay Burmah Trading Corporation Limited and National Peroxide Limited on which gain of '' 53.62 crores was recorded through OCI and the cumulative realised gain of '' 115.35 crores was transferred to retained earnings. The fair value of the investments sold at the date of derecognition was '' 119.25 crores. The above shares form part of non-core assets and were sold to reduce total debt and consequently, the interest cost.

i. In terms of Ind AS 12 on ""Income Taxes"", the Company has recognised Deferred Tax Assets of '' 614.84 crores (March 31, 2021: '' 577.25 crores) arising from unabsorbed depreciation and brought forward business losses, based on the steps taken by the Company to achieve its projected profitability. It is probable that the Company will have future taxable profits against which the unabsorned depreciation and brought forward business losses can be utilised.The deferred tax assets for the year is arrived at after considering the view in respect of matters which would result in lower amount of carry forward losses [Refer Note 10 (d) below].

ii. Section 115BAA in the Income-tax Act, 1961 provides an option to the Company for paying Income Tax at reduced rates as per the provisions/conditions defined in the said section. While the Company is continuing to provide and consider the payment of income tax at the old rates, deferred tax assets and liabilities are measured at the reduced rates at which such deferred tax assets/liabilities are expected to be realised or settled.

a. The cost of inventories [Aggregrate of amounts of Cost of Materials Consumed (Note 31), Purchases of Stock-in-Trade (Note 32) and Changes in inventories of Finished goods, Stock-in-Trade and Work-in-progress (Note 33)] recognised as an expense during the year is '' 1352.08 crores (March 31, 2021 : '' 854.21 crores)

b. The value of inventories above is stated after impairment of '' 1.81 crores (March 31, 2021 : '' 30.02 crores) for write down to net realisable value and provision for slow moving and obsolete items - includes impairment of Floor Space Index Rights '' 1.43 crores (March 31, 2021 : '' Nil ) and impairment of Transferable Develpoment Rights '' Nil (March 31, 2021 : '' 19.41 crores) and others '' 0.38 crores (March 31, 2021 : '' 10.61 crores)

c. Certain Inventories are hypothecated against borrowings, details of which have been described in Notes - 21 , 24 and 40.

d For mode of valuation of inventories -Refer Note 2 (j)

e. In the opinion of the management, the net realisable value of the construction Work-in- progress will not be lower than the costs so included therein.

a. In determining the allowances for credit losses of Trade Receivables, the Company has used a practical expedient by computing the Expected Credit Loss Allowance for Trade Receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The Expected Credit Loss allowance is based on the ageing of the receivables that are due and the rates used in the provision matrix.

b. Since the Company calculates impairment under the simplified approach for Trade Receivables, it is not required to separately track changes in credit risk of Trade Receivables as the impairment amount represents Lifetime Expected Credit Loss. Accordingly, based on

a. Balances with banks in escrow accounts represent amounts held in escrow in accordance with the directions of the Monitoring Committee for redevelopment of land of Cotton Textile Mill.

b. Deposits held in escrow accounts represent amounts held in escrow in accordance with the directions of the Monitoring Committee for redevelopment of land of Cotton Textile Mill.

c. Deposits under lien towards Margin Money for Letter of Credit, Secuity for guarantees issued on behalf of the Company and security against matured Public Deposits '' 23.86 crores (March 31, 2021 : '' 31.26 crores). [Refer Note 40 and 41].

d. Restated amounts as on March 31, 2021 by including the amount under Balances with Banks in Current Accounts from Escrow Accounts '' 12.87 crores.

b. The Company has entered into foreign exchange forward contracts with the intention of hedging foreign exchange risk of expected sales and purchases, these contracts are not designated as hedge and are measured at fair value through profit or loss. Derivative instruments at fair value through profit or loss reflect the negative change in fair value of those foreign exchange forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for expected sales and purchases.

b. Rights, preferences and restrictions attached to Equity shares

The Company has issued and subscribed one class of equity shares having a par value of '' 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Nature and purpose of reserves

a. Capital Reserve

Capital Reserve represents amounts forfeited on warrants not exercised '' 28.60 crores and and '' 0.91 crores due to demerger of Real Estate Business Undertaking of Scal Services Limited vested in the Company. There is no movement in Capital Reserve during the current and previous year.

b. Securities Premium

Securities Premium represents premium on issue of shares on conversion of warrants. Securities Premium amounting to '' 7.80 crores is adjusted in accordance with the Scheme for Amalgamation of subsidiary with the Company, which was effected on April 1, 2016. There is no movement in securities premium during the current and previous year.

c. Investment Reserve

Investment Reserve represents gain or loss on sale of investments. There is no movement in Investment Reserve during the current and previous year.

d. General Reserve

The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. There is no movement in General Reserve during the current and previous year.

e. Equity Component of Compound Financial Instruments

Equity Component of Compound Financial Instruments represent residual amount after deducting liability component from the fair value of the compound financial instrument.

f. Retained Earnings

Retained Earnings are the profits that the Company has earned till date, less any transfer to General Reserve, dividends or other distributions paid to shareholders.

g. Equity instruments through Other Comprehensive Income

The fair value change of the equity instruments measured at fair value through Other Comprehensive Income is recognised and reflected under Equity Instruments through Other Comprehensive Income. On disposal of equity instruments, the cumulative fair value changes on the said instruments are reclassified to Retained Earnings.

a. Nature of Security and terms of repayment of secured borrowing:From Banks :

i. Term loan amounting to '' 58.86 crores (March 31, 2021 : '' 63.54 crores) is secured by First charge by way of Registered Mortgage of NBW Building along with 1839.53 sq. mtrs of land on which the building is constructed. Repayable in 120 equated monthly instalments commencing from September 2019 to November 2029.

ii. Term loan amounting to '' 1370.00 crores (March 31, 2021 : '' Nil) is secured by Exclusive First charge by way of Mortgage on plot of land at Pandurang Budhkar Marg, Worli, together with the structures standing thereon (Present and future) alongwith Receivables attached to the said land. The said loan is further backed by Stand by Letter of Credit issued by Related Party [Refer Note 56(A)(v.b)] as security for the loan. Repayable at the end of 36 Months from the date of Disbursement, in December 2024.

From Other Parties :

i. Term loan amounting to '' 1345.00 crores (March 31, 2021 : '' 1,700.00 crores) is secured by way of registered mortgage of land underlying the project One ICC and Two ICC at Mumbai - along with the present and future specific unregistered flats thereon and exclusive charge by way of hypothecation on receivables arising out of specific units identified from the project. The loan is further secured by way of registered mortgage on part of land admeasuring approx. 3 acres bearing C.S. 223 of Dadar Naigaum Division, Mumbai. Repayable in 24 equated monthly instalments commencing from November 2021.

ii. Term loan amounting to '' 78.13 crores (March 31, 2021 : '' Nil) is secured by First pari passu charge by way of Registered Mortgage on the immovable property being the entire commercial building at C-1, Wadia International Centre at Worli together with the FSI consumed alongwith the land on which the said building stands. Repayable in 8 equated quarterly instalments commencing from September 2021 onwards.

iii. Term loan amounting to '' 75.00 crores (March 31, 2021 : '' Nil) is secured by First pari passu charge by way of Registered Mortgage on the immovable property being the entire commercial building at C-1, Wadia International Centre and First and Exclusive charge on Texturising Building at Worli, together with the FSI consumed alongwith the land on which the building stands. Repayable in 8 equated quarterly instalments commencing from June 2022 onwards.

iv. Term Loan amounting to '' Nil (March 31, 2021 : '' 1372.06 crores) is secured by way of mortgage of plot of land at Pandurang Budhkar Marg, Worli, alongwith the present and future development. The loan has been fully repaid during the year.

v. Term loan amounting to '' Nil (March 31, 2021 : '' 137.38 crores) are secured by way of exclusive registered mortgage of land at G.D.Ambekar Marg, Wadala, Mumbai and exclusive charge by way of hypothecation on receivables arising from the future constructions. The loan has been fully repaid during the year.

b. Terms of repayment of unsecured borrowing:From Banks:

i Unsecured Term Loans aggregating to '' 929.00 crore (March 31, 2021 : '' Nil) are availed from Banks for a period of 36 months from the date of its disbursement, and repayable in the month of September 2024 and March 2025. The said loans are backed by Stand by Letter of Credit issued by Related Party [Refer Note 56(A)(v.b)] as security for the loan.

ii. Rights, preferences and restrictions attached to Preference shares

These shares shall confer the holders thereof, the right to a fixed preferential dividend (Non-cumulative in nature) at a rate of 8%, on the capital being paid up. These preference shares were to be redeemed any time within 36 months from the date of allotment, that is, May 1, 2019. However, unlisted 3,88,800, 8% Redeemable Non-Convertible Non-Cumulative Preference Shares of '' 100/- each which were due for redemption on May 1, 2022 have now been extended for redemption anytime within seven years from May 1, 2022 with the consent of the preference shareholders. There is no change in any other terms and conditions of the said Non-Convertible NonCumulative Preference Shares.

Nature of Security for short-term borrowings

a. Unsecured Short Term Loan of '' Nil (March 31, 2021 : '' 350.00 crores) is availed from Bank for a period of 6 months from the date of its disbursement, and repayable in the month of September 2021. The said loan is backed by Stand by Letter of Credit issued by Third Party as security for the loan.

a. During the year, the Company has transferred an amount of '' 0.19 crores (March 31, 2021 : '' 0.21 crores) to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013. There is no amount due for payment to the Fund as at the year end.

The lease agreement between the lessor Mumbai Port Trust and the Company for the Leasehold Land on which the Building is erected has expired in 2019 and the renewal is under process. Since the renewal of the agreement is under process the Leasehold Land value is not recognised in the books of account till March 31, 2022. Further the situation of pendency of the renewal of agreement is also faced by many other lessees in the same area.

*During the year 2000-01, pursuant to the Scheme of Amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on April 20, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from October 1, 2000.

c. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

d. The Company has a Working Capital limit of '' 500 Crore for its Polyester Staple Fibre and Retail division from Bank of Baroda, comprising of Fund-based limits of '' 50 Crore and non-fund-based limits of '' 450 Crore. For the said facility, the Company has submitted Stock and debtors statement to the bank on monthly basis as also the Quarterly Information Statements. The average difference is not material and is

less than 1% of amount of stock and debtors, which is on account of valuation, provisions, etc. Further, the Company has not availed its fund based Cash Credit limit against such stock and debtors at any time during the year.

e. The Company has not been declared as a willful defaulter by any lender who has powers to declare a company as a willful defaulter at any time during the financial year or after the end of reporting period but before the date when the financial statements are approved.

f. The Company does not have any transactions with struck-off companies.

g. The Company does not have any charges or satisfaction which is yet to be registered with the Registrar of Companies (ROC) beyond the statutory period.

h. The Company has compiled with the number of layers prescribed under clause (87) of section 2 of the Companies Act 2013 read with Companies (Restrictions on number of Layers) Rules, 2017.

i. The company has not advanced or loaned or invested funds to any other person(s) or entity(is), including foreign entities(intermediaries), with the understanding that the intermediary shall;

i. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries), or

ii. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

j. The Company has not received any funds from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall;

i. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate beneficiaries), or

ii. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

k. The Company does not have any transactions which is not recorded in the books of accounts but has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 ( such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

l. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

Contingent Liabilities			'' in Crores
Particulars		As at	As at
		March 31, 2022	March 31, 2021
A.	Claims against the Company not acknowledged as debt.
	a. Income-tax matters in respect of earlier years under dispute (including interest) March 31, 2022 - '' 11.76 crores [March 31, 2021 - '' 8.09 crores] as follows:
	Pending in appeal - matters decided against the Company	28.85	22.57
	b. Sales Tax, Service Tax and Excise Duties	7.84	18.67
	c. Custom Duty	0.95	0.95
	d. Other Matters (Including claims related to real estate, employees and other matters)	21.56	89.02
	In respect of items (a) to (d) above, it is not possible for the Company to estimate the timings of cash outflows which would be determinable only on receipt of judgments pending at various forums/ authorities. The Company does not expect any reimbursements in respect of the above contingent liabilities.
	The Company''s pending litigations comprise of claims against the Company by certain real estate customers and disputed by the Company, of which the significant ones are matters of arbitration, and pertaining to proceedings pending with Income Tax, Excise, Custom, Sales Tax / VAT and other authorities.
B.	Guarantees
	a. Bank Guarantees	25.72	32.80
	Guarantees issued by banks Secured by bank deposits under lien with the bank '' 14.33 crores (March 31, 2021: '' 12.14 crores) and by first charge on inventories and book debts of Retail and Polyester Divisions together with entire Property, Plant and Equipment aggregating of Polyester Division (including Factory Land and building).
C.	Commitments
	a. Estimated amount of contracts remaining to be executed on capital account and	0.16	0.63
	not provided for
	b. Other Commitments not provided for related to construction under development	132.40	152.68
	(net of advances) March 31, 2022 : '' Nil, [March 31, 2021 : '' 3.26 crores]
D.	Other money for which the Company is contingently liable Though a review petition filed against the decision of the Hon''ble Supreme Court of India of February 2019 on Provident Fund (PF) on inclusion of allowances for the purpose of PF Contribution has been set aside, there are interpretative challenges, mainly for estimating the amount and applicability of the decision retrospectively. Pending any direction in this regard from the Employees Provident Fund Organisation, the impact for past periods, if any, is considered to the effect that it is only possible but not probable that outflow of economic resources will be required. The Company will continue to monitor and evaluate its position and act, as clarity emerges.

42 Litigations

a. The Bombay High Court vide its order dated November 20, 2013 permitted the Company to surrender land at one location, that is, Wadala, as per the application made by the Company under Integrated Development Scheme. As per this order, the total of 66,651 sq. metres of land has been surrendered to MCGM and MHADA at Island City Centre, Wadala. During the year 2013-14, the Union had filed a writ petition requiring the Company to surrender non textile mill land. The Bombay High Court has directed the Company to reserve additional 10,000 sq. metres of land adjacent to the land to be surrendered. The Company believes that the above said writ petition filed before the Bombay High Court has no impact on the development of the two towers at ICC since the reserved land of 10,000 sq. metres is different from the one where construction of the two towers is in progress and Occupancy Certificates (OC''s) have been received for same.

b. The Company had during the year 2010-11 sold the building known as ''Wadia Tower A to Axis Bank Limited for a consideration of '' 782.62 crores. The purchaser has till date paid a sum of '' 753.69 crores and the balance '' 28.93 crores is still outstanding, out of which '' 4.35 crores (As on March 31, 2021 : '' 2.71 crores) is provided. Axis Bank Limited has claimed damages and interest for delayed handover, non-completion of essential and basic amenities, failure to provide prominent signage, etc. and has not paid the common area maintenance charges amounting '' 13.69 crores (As on March 31, 2021 : '' 13.69 crores), which is already provided. Since the matter could not be amicably resolved, the same was referred to arbitration. Claims from the Bank regarding costs for work completed by the Bank on behalf of the Company and by the Company on behalf of Axis Bank were also matters under arbitration. The Company has received the award in its favour but pending to honour the Order by Axis Bank Limited, effect of the Order for '' 69.39 crores is yet to be given in the books of account.

43 During the year 2000-01, pursuant to the Scheme of Amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on April 20, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from October 1, 2000. The titles in respect of lease hold building having gross block of '' 1.94 crores as on March 31, 2022 (March 31, 2021: '' 1.94 crores) amalgamated into the Company are still in the process of transfer. [Refer also note 39 (b)]

44 The Company vide notice dated January 8, 2013 notified the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the Company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid / provided to such workers the terminal dues, closure compensation and ex-gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier. At the time of the previous voluntary retirement schemes, the initial cost relating to ex-gratia compensation was added to the development cost of land. The liability in respect of the monthly payments as actuarially determined is as under:

'' in Crores
Particulars	As at	As at
	March 31, 2022	March 31, 2021
a. The liability in respect of the monthly payments that has been actuarially determined	5.97	6.68
as on the Balance sheet date by the independent actuary
b. The actuarial (gain)/loss for the year recorded in the Statement of Profit and Loss	(0.71)	(0.71)

45 The total managerial remuneration paid to Manager of the Company is '' 2.12 crores since his appointment as a Manager for the year ended March 31, 2022 (March 31, 2021: '' 5.47 Crores paid to Managing Director) and it does not include any bonus, which is within the overall limits of the special resolution passed by the shareholders at the Annual General Meeting of the Company held on September 9, 2021.

46 Pursuant to the Order of the Supreme Court dated August 2, 2013 and the Order of the Bombay High Court dated November 20, 2013 permitting the Company to surrender land at one location, that is, Spring Mills, Wadala, under the Integrated Development Scheme for consolidating handover obligation, the Company had in December 2014 given advance possession of 32,829.02 square metres of land to MCGM and 33,822.89 square metres of land to MHADA at Spring Mills, Wadala after completion of necessary boundary wall, and internal filling/ levelling, SWD, etc. as per the provisions of DCR 58 (6) read with DCR 58 (1) (a) and (b).

As per the provisions of DCR 54, the Company has entered into agreement with MHADA in September, 2018 for entitlement for TDR of 84,557.22 square metres in lieu of surrender of land to MHADA as aforesaid. Such TDR forms part of the inventory and reflected as such (Refer Note 12). The net gain/(loss) of '' 2.25 crores (March 31, 2021 : '' 0.12 crores) on sale of TDR is reflected under Revenue from Operations-Real Estate Development activity.

As per the provisions of DCR 54, the Company has entered into an agreement with MCGM on March 28, 2019 for entitlement of FSI. The FSI received from MCGM forms part of the inventory and reflected as such and is valued at '' 696.15 crores as at March 31, 2022 (March 31, 2021 '' 697.58 crores) based on Valuation Report of a Registered Valuer. Such FSI forms part of the inventory and accordingly carried as such in terms of the provisions of Ind AS 2 [Refer Note 12].

i. Amounts received before the related performance obligation is satisfied are included in the balance sheet (Contract liability) as "Advances received from Customers" in (Refer Note 27) Other Current Liabilities. Amounts billed for development milestone achieved but not yet paid by the customer are included in the balance sheet under Trade Receivables (Refer Note 13).

ii. There were no significant changes in the composition of the contract liabilities and Trade Receivables during the reporting period other than on account of periodic invoicing and revenue recognition.

iii Amounts previously recorded as contract liabilities increased due to further milestone based invoices raised during the year and decreased due to revenue recognised during the year on receipt of Occupancy Certificate.

iv Amounts previously recorded as Trade Receivables increased due to further milestone based invoices raised during the year and decreased due to collections during the year.

v There has been no material impact on the Cash flows Statement as the Company continues to collects from its Customers based on payment plans. Additionally there is no material impact on Other Comprehensive Income on account of Ind AS 115.

48 Employee BenefitsA. Defined Contribution Plan Provident Fund and pension

In accordance with the Employee''s Provident Fund and Miscellaneous Provisions Act, 1952 eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary.

The contributions, as specified under the law, are made to the provident fund set up as an irrevocable trust by the Company, post contribution of amount specified under the law to Employee Provident Fund Organisation on account of employee pension scheme.

Superannuation Fund

The Company has a superannuation plan for the benefit of some of its employees. Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn. Separate irrevocable trusts are maintained for employees covered and entitled to benefits. The contributions are recognised as an expense as and when incurred and the Company does not have any further obligations beyond this contribution.

B Defined benefit Plan Retirement Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity funds established as trusts or insurance companies. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation.

The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognised in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Qualitative Disclosures - Characteristics of defined benefit plan

The Company has a defined benefit gratuity plan in India (funded). The Company''s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.

- Risks associated with defined benefit plan

- Gratuity is a defined benefit plan and Company is exposed to the following Risks:

Interest rate risk: A fall in the discount rate which is linked to the Government Securities Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan''s liability.

Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

- During the year, there were no plan amendments, curtailments and settlements.

- A separate trust fund is created to manage the Gratuity plan and the contributions towards the trust fund is done as guided by rule 103 of Income Tax Rules, 1962.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Qualitative Disclosures- Characteristics of defined benefit plan

The Company has a defined benefit Long Service Benefit plan in India (unfunded). The company''s defined benefit Long Service Benefit plan is a final salary plan for employees.

Long Service Benefit is paid from company as and when it becomes due and is paid as per company scheme for Long Service Benefit.

- Risks associated with defined benefit plan

Long Service Benefit is a defined benefit plan and company is exposed to the Following Risks:

Interest rate risk: A fall in the discount rate which is linked to the Government Securities Rate will increase the present value of the liability requiring higher provision.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Company has to manage pay-out based on pay as you go basis from own funds.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

- During the year, there were no plan amendments, curtailments and settlements.

- Long Service Benefit plan is unfunded.

C. Other long term benefits-

Amount recognised as a liability in respect of compensated leave absences as per the actuarial valuation / management estimate as at March 31, 2022 is '' 5.24 crores [As at March 31, 2021 : '' 5.43 crores].

49 Disclosure Under Micro, Small and Medium Enterprises Development Act, 2006

The amount of dues owed to Micro, Small and Medium Enterprises as on March 31, 2022 amounted to '' 17.68 crores (March 31, 2021 : '' 23.96 crores). The information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

51 Disclosures under Ind AS 116 - Leases a. Company as a Lessee

The Company has recognised and measured the Right-of-Use (ROU) asset and the lease liability over the lease period and payments discounted using the incremental borrowing rate. Segment results have been arrived after considering interest expense on lease liabilities.

53 Financial Instruments

A. Accounting classification and fair values

Carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy, are presented below. Financial assets and financial liabilities such as cash and cash equivalents, other bank balances, trade receivables, loans, trade payables and unpaid dividends of which the carrying amount is a reasonable approximation of fair value due to their short term nature , are disclosed at carrying value.

The fair value of financial instruments as referred to in Note (A) above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

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

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

Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs)

Valuation techniques and significant unobservable inputs

The following tables show the valuation techniques used in measuring Level 1 and Level 2 fair values, as well as the significant unobservable inputs used.

54 Financial Risk Management

The Company''s activities expose it to market risk, credit risk and liquidity risk. The Company''s Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements. i. Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the market prices. The Company is exposed in the ordinary course of its business to risks related to changes in foreign currency exchange rates and interest rates.

a. Foreign Currency Exchange Risk

The Company''s functional currency is Indian Rupees (INR). The Company has exposure to foreign currency by way of trade payables, receivables and Borrowings in the nature of Buyers Credit and is therefore exposed to foreign exchange risk. Volatility in exchange rates affects the Company''s revenue from exports markets and the costs of imports, primarily in relation to raw materials with respect to the US-dollar.

Adverse movements in the exchange rate between the Rupee and the relevant foreign currency results in increase in the Company''s overall debt position in Rupee terms without the Company having incurred additional debt.

In order to minimize adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge foreign currency exchange risk. All hedging activities are carried out in accordance with the Company''s internal Risk Management Policy, as approved by the management, and in accordance with the applicable regulations where the Company operates.

The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

b. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Sensitivity

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of changes in interest rates. If, the interest rates had been 100 basis points higher/ lower and all other variables were held constant on the Variable rate borrowings, the Company''s profit before tax for the year ended March 31, 2022 would (decrease)/ increase by '' 38.56 crores (for the year ended March 31, 2021 : (decrease)/ increase by '' 32.73 crores).

c. Price risk Exposure

The Company is exposed to equity price risks arising from equity investments. Equity investments were held for strategic rather than trading purposes. However, the company aims to monetize this investment to reduce its overall leverage. Any adverse movement in the share price has an impact on its profitability and vice versa.

Sensitivity

Following is the sensitivity analysis as a result of the changes in fair value of equity investments measured at FVTOCI, determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 5% higher/ lower, other comprehensive income would increase/ (decrease) as follows for:

The year ended March 31, 2022 : by '' 18.27 crores The year ended March 31, 2021 : by '' 23.59 crores ii. Credit Risk Management

Credit risk refers to the risk that a counterparty will default on its contractual and performance obligations resulting in financial loss to the Company. Credit risk encompasses both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral viz security deposit or bank guarantee, where appropriate, as a means of mitigating the risk of financial loss from defaults.

Company''s credit risk arises principally from the trade receivables, loans, investments, cash & cash equivalents, derivative financial instruments and financial guarantees.

a. Trade Receivables:

Customer credit risk is managed by the Company and is subject to established policy, procedures and controls relating to customer credit risk management by establishing credit limits, credit approvals and monitoring the credit worthiness of the customers to which the Company extends the credit in the normal course of the business. Credit risk on receivables is also mitigated by securing the same against letters of credit and guarantees of reputed nationalised and private sector banks. The outstanding trade receivables are regularly monitored and appropriate action is taken for collection of overdue receivables.

In determining the allowances for credit losses of trade receivables, the company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix.

b. Loans and Investments:

The Company''s centralised treasury function manages the financial risks relating to the Business. The treasury function focuses on capital protection, liquidity and yield maximisation. Investments of surplus funds are made only in the form of Fixed Deposits with reputed Private and Public sector banks. Further there are no material loans given or any investment made during the year.

c. Cash and Cash Equivalents, Derivative Financial Instruments and Financial Guarantees:

Credit risks from balances with banks and financial institutions are managed in accordance with the Company policy. For derivative financial instruments, the Company attempts to limit the credit risk by only dealing with reputable banks and financial institutions having high credit-ratings assigned by credit-rating agencies. Surplus funds are invested in fixed deposits of short term nature with reputed Private and Public sector banks only.

In addition, the Company is exposed to credit risk in relation to financial guarantees given to banks and other counterparties. The Company''s maximum exposure in this respect is the maximum amount the Company would have to pay if the guarantee is called upon.

iii. Liquidity Risk Management

Liquidity risk refers to the risk of financial distress or extraordinary high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and requiring financing. The Company requires funds for short term operational needs as well as for long term capital expenditure growth projects. The Company generates sufficient cash flow for operations, which together with the available cash and cash equivalents, marketable securities and short term and long term borrowings provide liquidity. The Company has established an appropriate liquidity risk management framework for the management of the Company''s short, medium and long term funding and liquidity risk management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.

55 The Company is engaged in the business of Real Estate, Polyester and Retail / Textile. In accordance with Ind AS 108 "Operating Segments", the Company has presented segment information in the consolidated financial statements, which form part of this report and therefore, no separate disclosure on segment information is given in these financial statements.

58 COVID-19 has impacted business operations of the Company, its manufacturing, sales, as also revenue of real estate operations, cashflows, etc. The Company has taken into account the possible impact of COVID-19 in preparation of the financial statements, including its assessment of going concern assumption and the recoverability of the carrying value of the assets, if any. The Company is continuously monitoring the situation and does nor foresee any significant impact on the operations and the financial position of the Company as at March 31, 2022.

59 Subsequent Events Proposed Dividend

Considering the financial results of the Company for FY 2021-22, the Company is unable to propose any dividend for the year. (March 31, 2021: '' Nil per equity share of '' 2 each) amounting '' Nil and prorata 8% dividend on preference shares of '' 100 each amounting '' Nil).

60 General

a. All amounts disclosed in the financial statements and notes have been rounded off to the nearest crore upto two decimals as per the requirements of Schedule III, unless otherwise stated.

b. Figures for the previous year have been regrouped and / or rearranged and / or reclassified wherever necessary to make them comparable with those of current periods.

Mar 31, 2018

GENERAL INFORMATION ABOUT THE COMPANY

The Bombay Dyeing and Manufacturing Company Limited (the Company) was incorporated on August 23, 1879. It originated as an integrated textile mill however; it is currently engaged primarily in the business of Real Estate Development, Polyester Staple Fibre and Retail. The Company is a public company limited by shares, incorporated and domiciled in India and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).The Companyâs registered office is at Neville House, J.N. Heredia Marg, Ballard Estate, Mumbai -400001.

1 First Time Adoption of Ind AS Transition to Ind AS

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from April 1, 2017, with a transition date of 1^st April, 2016.These are the Companyâs first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at April 1, 2016 (the Companyâs date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards specified under section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 7 of the Companies (Accounts) Rules, 2014 as amended and the provisions of the Act. (Previous GAAP) .

The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. The Company has prepared the opening balance sheet as per lnd AS as of April 1, 2016 by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and Previous GAAP have been recognised directly in equity (retained earnings or another appropriate category of equity). This note explains the adjustments made by the Company in restating its financial statements prepared under previous GAAP, including the Balance Sheet as at April 1, 2016 and the financial statements as at and for the year ended March 31, 2017.

The exceptions and certain optional exemptions availed by the Company in accordance with the guidance provided in Ind AS 101, First Time Adoption of Indian Accounting Standards , and reconciliation of equity and total comprehensive income from previously reported GAAP to Ind AS are detailed below :

A. Exceptions and Exemptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A.1 Ind AS Mandatory Exceptions

A.1.1 Estimates

Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in equity instruments carried at FVTPL or FVOCI; and

- Impairment of financial assets based on expected credit loss model.

A.1.2 De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entityâs choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

A.1.3 Impairment of financial assets

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to lnd AS, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.

A.2 Ind AS Optional Exemptions

A.2.1 Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties. Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their previous GAAP carrying value.

A.2.2 Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investment in equity instruments other than investments in subsidiaries, associates and joint ventures.

A.2.3 Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated. The Company has applied same exemption for investment in associates and joint ventures.

A.2.4 Deemed Cost for Investments in associates and joint ventures

Ind AS 101 permits a first time adopter to continue previous GAAP carrying value for investment in equity instruments of subsidiaries, associates and joint venture. Accordingly, the Company has elected to apply the said exemption.

B Reconciliations between previous GAAP and Ind AS.

Ind AS requires an entity to reconcile equity, total comprehensive income and cash flows for the period before the reporting period. The following tables represents the reconciliation from previous GAAP to Ind AS

I. Reconciliation of Total Equity as at March 31, 2017 and April 1, 2016

II. Reconciliation of Total Comprehensive income for the year ended March 31, 2017

III. Adjustments to Statement of Cash Flows for the year ended March 31, 2017

The Ind AS adjustments are either non cash adjustments or are regrouping in the cash flows between operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended March 31, 2017 as compared with the previous GAAP.

Notes to the above reconciliations

a) Under previous GAAP, revenue from real estate development was recognized in accordance with Guidance note on Recognition of Revenue by Real Estate Developers [GN(A)23 (Issued 2006)] issued by ICAI as the project had commenced before April 1, 2012. The Company had converted freehold land for its ONE & TWO ICC Projects from Property, plant and equipment to Stock in trade at market value and the difference between the market value and cost had been credited to Revaluation Reserve. The revalued cost of the land was considered as part of the Budgeted & Actual cost incurred for calculation of Percentage Completion. Under Ind AS, the stock in trade needs to be carried at cost and hence, revaluation included in the stock in trade (cost of land) has been reversed resulting in changes to the Percentage of Completion of the project.

b) Under previous GAAP, the premium charged by the Company on sale of apartments under the deferred payment scheme (Subvention Scheme) compared to the price charged under the normal sales scheme was also considered as part of sales consideration and was recognised as revenue under the percentage of completion method. Under Ind AS, the Company is required to record any significant financing element in the sale price as separate interest income. Hence, the premium charged under deferred payment scheme has been recognised separately and is not considered for calculation of revenue based on Percentage Of Completion Method (POCM).

c) Under previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of financial statements were considered as adjusting events. Accordingly provision for proposed dividend was recognised as a liability. Under Ind AS such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend has been reversed with corresponding adjustment to retained earnings. Consequently the total equity increased by an equivalent amount.

d) Under previous GAAP, long term investments were measured at cost less diminution in value which is other than temporary diminution. Under Ind AS certain financial assets (equity investments in BBTCL, NPL and DB Realty Limited) are measured at fair value through Other Comprehensive Income which has resulted into an increase of equity by Rs.441.24 crores as at transition date.

Since the gain on sale of such shares was considered under previous GAAP in statement of profit and loss in 2016-17 ,the same has been reversed.

e) The Company has discontinued Hedge Accounting under Ind AS. Hence, Hedging Reserve created under Indian GAAP has been reversed in the reserves as on transition date.

f) Under previous GAAP, the provision was made when the receivable turned doubtful based on management assessment on case to case basis. Under Ind AS 109, the Company is required to apply âexpected credit lossâ model for recognizing the allowance for credit loss against trade receivables.

g) The Company has recognised costs related to its post-employment defined benefit plan on an actuarial basis, both under Ind AS and as per previous GAAP. Under previous GAAP, the entire cost, including actuarial gains and losses, are charged to statement of profit and loss. Under Ind AS 19, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset) and the return on plan assets excluding amounts included in net interest on the net defined benefit liability (asset)] and their corresponding income tax effects are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income.

h) Under Indian GAAP, there are certain security deposits (refundable) taken which are carried at nominal value. Ind AS requires to measure these liabilities at fair value at inception and subsequently these assets are measured at amortized cost. At inception date, Company recognises the difference between deposit fair value and nominal value as Advance rent received and same is being recognised as rent income on straight line basis over the lease period. Further, Company recognises notional interest expense on these deposit over the lease term.

Similarly, in case of deposits given by the Company, difference between deposit fair value and nominal value is recorded as deferred lease expenses and same is being recognised as lease expenses on straight line basis over the lease period and the Company recognises notional interest income on these deposit over the lease term.

i) Under previous GAAP, there was no accounting for fair value of financial guarantees given. Financial guarantee given was disclosed under contingent liability and commitments. Under Ind AS the financial guarantees given on behalf of Joint ventures are fair valued on the date of giving the guarantee and subsequently unwound over the period of guarantee given.

a) The Company has given commercial premises on operating lease which form part of its premises at Neville House,Ballard Estate and C-1 Wadia International Centre, Worli. Refer note 57 for details of leasing arrangements.

b) The fair value of the investment properties as at March 31, 2018 and March 31, 2017 and April 01, 2016 has been arrived at on the basis of a valuation carried out by independent valuers registered with the authority which governs the valuers in India. All fair value estimates for investment properties are included in Level 2.

a) The value of inventories above is stated after impairment of Rs.9.37 crores (March 31, 2017 Rs.8.37 crores) (April 1, 2016 Rs.8.08 crores) for write down to net realisable value and provision for slow moving and obsolete items.

b) Real Estate development work-in-progress includes expenditure incurred by the Company on projects which are delayed or yet to be commenced. Management expects to commence these projects in the near future and does not expect any loss on this account.

c) Refer Note 42 for information on inventories pledged as security by the Company.

a) In determining the allowances for credit losses of trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix.

(i) Reconciliation of credit loss allowance :

(ii) Ageing of trade receivables and credit risk arising there from is as below:

(b) Trade receivables includes Rs.42.01 crores (March 31, 2017 Rs.40.19 crores) (April 1, 2016 Rs.38.41 crores) due from a customer towards part compensation for sale of property, common area maintenance charges and project related costs. The receivables are under dispute and the matter has been referred to arbitration. Pending finalisation of arbitration proceedings, the receivables are considered good.

(a) Balances with banks in escrow accounts represents amounts held in escrow in accordance with the directions of the Monitoring Committee for redevelopment of land of Cotton Textile Mills.

(b) Bank deposits include restricted deposits as under :

- Fixed deposits under lien towards security for guarantees issued on behalf of the Company Rs.67.82 crores (March 31, 2017 Rs.38.05 crores) (April 1, 2016 Rs.4.76 crores).

- Short term deposits held in escrow accounts relate to amounts held under Escrow in accordance with the directions of the Monitoring Committee for redevelopment of land of Cotton Textile Mills Rs.33.81 crores (March 31, 2017 Rs.13.27 crores) (April 1, 2016 Rs.6.48 crores)

(c) Bank deposits with maturity less than twelve months is maintained with scheduled bank to be utilised for the repayment of public deposits.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income in which the relevant entity operates and the period over which deferred income tax assets will be recovered.

As on March 31, 2018 the tax liability with respect to the dividends proposed is Rs.4.21 crores (March 31, 2017 : Rs.2.94 crores, April 1, 2016 : Rs.2.11 crores)

During the year, the Company has not accounted for tax credits in respect of Minimum Alternative Tax (MAT credit) of Rs. Nil (2016-17 : Rs.28.69 crores).The Company is not reasonably certain of availing the said MAT credit in future years against the normal tax expected to be paid in those years and accordingly has not recognised a deferred tax asset for the same.

Ranjangaon MIDC Leasehold Land and Building:

The Company had entered into an Agreement for Sale of the leasehold land and building at Ranjangaon in 2016-17 for total consideration of Rs.168.85 crores and had received advance of Rs.90.60 crores till 31^st March, 2017. The Company received balance amount of Rs.78.25 crores and the transaction was completed during the year.

Ranjangaon Factory Plant and Machinery and Residual Spare Parts:

The Company had agreed to sell plant and machinery and spares of Ranjangaon for Rs.41.85 crores out of which the Company had received advance of Rs.21.14 crores in 2016-17. The balance amount of Rs.20.71 crore was received during the year and sale of assets was recorded.

Ranjangaon Freehold Land:

During the year, the Company had sold the Freehold Land at Ranjangaon to a party for total consideration of Rs.13.57 crores.

(b) Rights, preferences and restrictions attached to Equity shares

The Company has one class of equity shares having a par value of Rs.2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(d) Shares reserved for issue under options

Pursuant to the Employee Stock Option Scheme (ESOS) approved by the shareholders on 13^th August, 2002 and as further amended by the shareholders on 07^th August, 2012, the Company has granted 14,000 options, (70,000 options post sub-division) to the Ex-Joint Managing Director of the Company at an exercise price of Rs.528.25 (Rs.105.65 post sub-division) per share. As per the terms of the ESOS, the outstanding options have lapsed during the year ended 31^st March 2017 and no options were outstanding as at 31^st March 2017.

(e) Information regarding issue of shares during last five years

(i) No shares were allotted pursuant to contracts without payment being received in cash.

(ii) No bonus shares have been issued.

(iii) No shares have been bought back.

(f) Shares held in Abeyance

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment of 4640 shares (201617- 4640 shares) (2015-16- 4640 shares) of face value of Rs.2/- each against warrants carrying rights of conversion into equity shares of the Company has been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonafide owner is certified by the concerned Stock Exchanges.

Nature and purpose of reserves

a) Capital Reserve

Capital Reserves represents amounts forfeited on warrants not exercised. There is no movement in Capital Reserve during the current and previous year.

b) Capital Redemption Reserve

The same was created in accordance with provisions of the Companies Act, 1956 on the buy back of equity shares from the market. As on April 1, 2016, Capital redemption reserve amounting to Rs.2.55 crores is adjusted in accordance with the scheme for amalgamation of subsidiary.

c) Securities premium reserve

Securities premium reserve represent premium on issue of shares on conversion of warrants. As on April 1, 2016, Securities premium reserve amounting to Rs.7.80 crores is adjusted in accordance with the scheme for amalgamation of subsidiary. There is no movement in securities premium reserve during the current and previous year.

d) Investment Reserve

Investment Reserve represents gain or loss on sale of investments. There is no movement in Investment Reserve during the current and previous year.

e) General Reserve

The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. There is no movement in General Reserve during the current and previous year.

f) Equity instruments through Other comprehensive income

The fair value change of the equity instruments measured at fair value through other comprehensive income is recognised in Equity instruments through Other Comprehensive Income. On disposal, the cumulative fair value changes on the said instruments are reclassified to Retained Earnings.

g) Retained Earning

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.

h) Dividends

The final dividend is recommended by the Board of Directors and is recorded in the books of account upon its approval by the shareholders. For the year ended March 31, 2017 dividend per share of Rs.0.70/- per Equity share of Rs.2/-each was declared and for the year ended March 31, 2018 dividend per share of Rs.1.00/- per Equity share of Rs.2/-each has been proposed by the Board of Directors.

a) Nature of Security and terms of repayment of secured borrowing:

From Banks :

i) Term loans aggregating Rs. Nil (March 31, 2017 Rs.185.22 crores) (April 1, 2016 Rs.403.85 crores) were secured by first / secondary pari-passu charge over the part of land of the Company at Textile Mills at Mumbai and plant & machinery, buildings and structure thereon. Repaid during the current year.

ii) Term loan amounting to Rs. Nil (March 31, 2017 Rs.59.16 crores) (April 1, 2016 Rs.105.39 crores) was secured by first pari-passu charge on Companyâs plant and machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga and first pari-passu charge of portion of Spring Mills land & buildings and structure thereon. Repaid during the current year.

iii) Term loan amounting to Rs. Nil (March 31, 2017 Rs.16.90 crores) (April 1, 2016 Rs.26.10 crores) was secured by first pari-passu charge of rent receivables from premises given on lease by the Company and second charge of portion of Spring Mills land and buildings and structures thereon. Repaid during the current year.

iv) Term loan amounting to Rs. Nil (March 31, 2017 Rs.360.00 crores) (April 1, 2016 Rs.340.36 crores) were secured by first pari passu charge over part of land of the Company at Worli. Repaid during the current year.

v) Term loans amounting to Rs. Nil (March 31, 2017 Rs.627.15 crores) (April 1, 2016 Rs.567.14 crores) were secured by first pari-passu charge / escrow of receivables of One ICC and Two ICC Tower at Spring Mills, Dadar and first parsi passu charge over part of land of the Company at Textile Mills at Mumbai and buildings and structures thereon. Repaid during the current year.

vi) Term Loans aggregating Rs Nil (March 31, 2017 Rs. Nil) (April 1, 2016 Rs.7.80 crores) were secured by first pari passu charge on the Companyâs existing as well as future fixed assets at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga other than fixed assets charge exclusively to term lender.

vii) Term loan amounting to Rs. Nil (March 31, 2017 Rs. Nil) (April 1, 2016 Rs.66.53 crores) was secured by first pari-passu charge on Companyâs plant & machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga.

From Other Parties :

i) Term loans aggregating Rs.829.54 crores (March 31, 2017 Rs. Nil) (April 1, 2016 Rs. Nil) are secured by way of registered mortgage of land underlying the project One ICC and Two ICC at Mumbai - along with the present and future unregistered flats thereon & exclusive charge by way of hypothecation on receivables arising out of all units from the project. Repayable in 24 equated monthly instalments commencing from November 2021.

ii) Term loans aggregating Rs.1400.47 crores (March 31,2017 Rs. Nil) (April 1,2016 Rs. Nil) are secured by way of mortgage of plot of land at Pandhurang Budhkar Marg, Worli along with the present and future development. The term loan has not been fully drawn as on March 31,2018. The repayment terms of the said loan are as under :-

b) Terms of repayment of unsecured borrowing:

Fixed Deposits from shareholders and public are repayable over a period of two years from the date of deposit, maturing between September 2018 and September 2019.

c) There is no default in terms of repayment of principal and interest.

d) Fixed Deposits include Rs.0.20 crores (March 31, 2017 : Rs.0.20 crores) (April 1, 2016 : Rs.0.10 crores) received from director.

e) The carrying amounts of financial and non financial assets covered as security for borrowings are disclosed in Note 42.

Nature of Security for Short term borrowings

i) Loans repayable on demand from banks is secured by first charge on entire current assets and fixed assets and by first charge over the Companyâs land, building and structures at C-1,Wadia International Centre and Texturising Building at Worli. As on March 31, 2017 and as on April 1, 2016, loans repayable on demand from banks were under consortium arrangement and were secured by hypothecation of present and future stocks, book debts and other current assets on pari passu basis and a second charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant and machinery and buildings thereon on pari passu basis.

ii) Packing credit from bank as on March 31, 2017 and as on April 1, 2016 was secured by way of registerd mortgage on the immovable properties in Wadia International Centre (Texturising Building and Hemming Building) located at Worli, Mumbai. Additionally, as on April 1, 2016 Packing credit from bank was secured by way of current assets of the Company (excluding the real estate division) and on the Textile mill land at Worli admeasuring 89,819.85 square metres and plant and building on pari passu basis with other lenders and was secured by first pari-passu charge over part of the land of the Company at Textile Mills at Mumbai and plant and machinery, buildings and structures thereon.

iii) Short term loans from banks is secured by first charge over the Companyâs land, building and structures at C-1, Wadia International Centre and Texturising Building at Worli. As on March 31,2017 Short term loans from bank was secured by mortgage of the Companyâs property âJorbaghâ and first pari-passu charge over part of the Companyâs land, building and structures at Worli.

iv) Buyerâs Credit as on March 31, 2017 and as on April 1, 2016 was secured by hypothecation of present and future stocks, book debts and other current assets on pari passu basis and a second charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant and machinery and buildings thereon on pari passu basis and was secured by first pari-passu charge on land of the Company at Spring Mills at Mumbai admeasuring 36,617.13 square metres.

v) Inter corporate deposits were secured by pledge of 7,538,600 equity shares of Bombay Burmah Trading Company Limited as at March 31, 2017.

vi) Inter corporate deposits from related party :

vii) The carrying amounts of financial and non financial assets as security for secured borrowings are disclosed in Note 42.

a) The Company has a joint venture (JV) in P. T. Five Star Textile, Indonesia (PTFS). Over the last few years, the Joint venture operations are running into losses and the Company has been making efforts to revive and make it a profitable operations. Despite all the efforts by the Company, the operations are not yielding desired results due to heavy competition and low cost imports from China and other parts, resulting into regular operating losses. Considering the financial risk, the chances of recovery of advances are doubtful, therefore the Company has assessed the overall exposure and has made necessary provision for its exposure in the JV. The Company has reported the provision as an exceptional items of Rs.153.25 crores (2016-17 : Rs.56.42 crores). The Company is taking strategic steps to mitigate any further losses from Joint Venture.

2 LITIGATIONS

(a) During the year 2010-11, the Company had agreed to sell certain area in the proposed tower TWO ICC to Shaan Realtors Pvt. Ltd., (formerly Accord Holding Pvt. Ltd.) (âthe claimantsâ). The area agreed to be sold is under dispute and the matter was referred to arbitration. The arbitrator vide order dated January 13, 2014 passed the final award directing the company to allot to the claimants and/ or its associates, friends, nominees carpet area of 1,00,000 sq. ft. less the carpet area as already allotted to them in the proposed tower TWO ICC, namely additional carpet area of 48,495 sq. ft. The Company has filed an appeal in the Bombay High Court under section 34 of the Arbitration & Conciliation Act, 1996 against the said award, for which the hearings are in progress. The Company is confident that the final award passed by the learned arbitrator will get reversed in view of the strong merits in the case. However, the requisite area has been set aside by the Company and the total area to be allotted to the claimants will be accounted on disposal of the appeal filed in the High Court. No adjustment has been made in the financial statements in view of the uncertainty involved.

(b) The Bombay High Court vide its order dated November 20, 2013 permitted the Company to surrender land at one location i.e. Wadala, as per the application made by the company under integrated development scheme. As per this order, the total of 66,651 sq. metres of land has been surrendered to MCGM and MHADA at Island City Centre, Wadala. During the year 2013-14, the Union had filed a writ petition requiring the company to surrender non textile mill land. The Bombay High Court has directed the Company to reserve additional 10,000 sq. metres of land adjacent to the land to be surrendered. The Company believes that above said writ petition filed in Bombay High Court has no impact on the development of the two towers at ICC since the reserved land of 10,000 sq. metres is different from the one where construction of the two towers is in progress.

(c) The company had during the year 2010-11 sold the building known as âWadia Tower Aâ to Axis Bank Ltd for a consideration of Rs.782.62 crores. The purchaser has till date paid a sum of Rs.753.69 crores and the balance Rs.28.93 crores is still outstanding. Axis bank has claimed damages and interest for delayed handover, non completion of essential and basic amenities, failure to provide prominent signage, etc. and has not paid the common area maintenance charges amounting Rs.13.08 crores (As on March 31, 2017: Rs.11.26 crores) (As on April 1, 2016: Rs.9.48 crores). Since the matter could not be amicably resolved, the same was referred to arbitration. Claims from the Bank regarding costs for work completed by the Bank on behalf of the Company and by the Company on behalf of Axis Bank are also matters under arbitration. Pending finalisation of arbitration proceedings, the receivables are considered good.

3 Merger of Archway Investments Company Limited.

The Companyâs wholly owned subsidiary Archway Investments Company Limited (âArchwayâ), a Non Banking Finance Company, has been amalgamated with the Company with effect from April 1, 2016 (âthe appointed dateâ) in terms of the scheme of amalgamation (âSchemeâ) sanctioned by the National Company Law Tribunal (NCLT) vide its Order dated June 20, 2017. The Scheme became effective on June 28, 2017 when the sanction of the NCLT was received and certified copy of the same filed with the Registrar of Companies. Pursuant thereto all assets, investments, debts and liabilities of Archway have been transferred to and vested in the Company retrospectively from April 1, 2016. The Scheme has been accounted for under the âPooling of Interests Methodâ as prescribed under the scheme and in Appendix C of Ind AS 103 for business combinations of entities under common control. Since the subsidiary amalgamated was a wholly owned subsidiary of the Company, there was no exchange of shares to effect the amalgamation. The difference between the amounts recorded as investments of the Company and the amount of share capital and reserves of the aforesaid amalgamating subsidiary of Rs.10.35 crores has been adjusted in the reserves.

4 During the year 2000-01, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on April 20 , 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from October 1, 2000. The titles in respect of certain immovable properties amalgamated into the Company are still in the process of transfer.

5 The Company vide notice dated January 8, 2013 notified the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid / provided to such employees the terminal dues, closure compensation and ex-gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier. As at the time of the previous voluntary retirement schemes, the initial cost relating to ex-gratia compensation was added to the development cost of land. The liability in respect of the monthly payments as actuarially determined is as under:

6 Recognition of income and expenses on on-going real estate project under long term contracts is based on actual sales; estimated costs and work completion status. Determination of profits/ losses, the percentage of completion, costs to completion and realisability of the construction work in progress & unbilled revenues necessarily involves making estimates by the Company, some of which being of a technical nature. The effect of changes to such estimates is recognised in the period such estimates are determined. Profit from these contracts and valuation of construction work in progress / unbilled revenue is based on such estimates.

7 The company has agreed to sell several apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd, in terms of various Memorandum of Understanding (MOUs) entered between the companies till March 31, 2018. Based on the method of accounting (percentage of completion) followed by company, net revenue of Rs.445.58 crores (2016-17: Rs.209.49 crores) and resultant profit before tax of Rs.257.04 crores (2016-17: Rs.223.26 crores) has been recognised during the year ended March 31, 2018 in respect of sales to SCAL. The company, had pursuant to SCALs request and considering the facts and circumstances including delays in construction, that led to SCALs inability to sell the flats, had granted SCAL deferment of milestone payments till June 2017 or till the sale of all unsold flats and also considering that SCAL was bulk customer who had purchased large number of flats and had not received the discounts given to other bulk purchaser, the Company reduced the advance consideration payable by SCAL to 10% (2016-17: 10%). Accordingly, progress payments have not been billed to SCAL during the year.

8 Pursuant to the Order of the Supreme Court dated August 2, 2013 and the Order of the Bombay High Court dated November 20, 2013 permitting the Company to surrender land at one location i.e. Spring Mills, Wadala, under the Integrated Development Scheme for consolidating handover obligation, the Company had in December 2014 given advance possession of 32,829.02 square metres of land to MCGM and 33,822.89 square metres of land to MHADA at Spring Mills, Wadala after completion of necessary boundary wall, and internal filling/ levelling, SWD, etc. as per the provisions of DCR 58 (6) read with DCR 58 (1) (a) & (b). Both MCGM and MHADA have taken advance possession of the said lands, pending completion of certain administrative formalities, which as per the companyâs architect are routine.

As per the provisions of DCR 54 and as certified by the Companyâs Architects, the Company is entitled to Development Rights (FSI) of 43,661.11 square metres generated in lieu of lands earmarked and handed over to MCGM for utilization by the owners on the said land and to Transferable Development Rights (TDR) of 44,984.44 square metres in lieu of lands earmarked and handed over to MHADA under the Integrated Development Scheme as per the provisions of DCR 58.

Since physical possession of the earmarked lands is handed over and Advance Possession Receipts obtained from MCGM and MHADA, the Company had during 2014-15 recognized the entitlement of additional Development Rights (FSI) available for its own use and accordingly converted the same into stock in trade at cost. The Transferable Development Rights (TDR) will be recognised on receipt of TDR certificates.

9 Disclosure in respect of Guidance note issued by Institute of Chartered Accountant of India on âAccounting for Real Estate Transaction (Ind AS)â

10 a) The remuneration paid to Managing Director amounting to Rs.6.81 crores for the year ended March 31, 2018 is within the limits laid down in section 197 of the Companies Act, 2013.

b) The remuneration paid to the Managing Director for the year ended March 31, 2017 is in excess of the limits laid down in section 197 of the Companies Act, 2013 by Rs.4.29 crore. The Company had applied to the Central Government under sections 196, 197, 198 & 200 read with Schedule V to the Companies Act, 2013 for permission to pay remuneration in excess of the prescribed limits. The Company has received an approval from the Central Government dated June 21, 2017, for payment of remuneration amounting to Rs.2.12 crores only as against Rs.6.41 crore applied for. The Company has made a fresh application to the Central Government with a request to reconsider the amount approved. Pending such representation, the excess amount is held by the Managing Director in trust for the Company.

11 Employee Benefits

A Defined Contribution Plan Provident Fund and pension

In accordance with the Employeeâs Provident Fund and Miscellaneous Provisions Act, 1952 eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employeesâ salary.

Superannuation Fund

The Company has recognized the following amounts in the statement of profit and loss under contribution to provident and other funds as under:

B Defined benefit Plan Retirement Gratuity

The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Qualitative Disclosures - Characteristics of defined benefit plan

The Company has a defined benefit gratuity plan in India (funded). The Companyâs defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund.

The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.â

- Risks associated with defined benefit plan

- Gratuity is a defined benefit plan and Company is exposed to the Following Risks:

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.â

- During the year, there were no plan amendments, curtailments and settlements.

- A separate trust fund is created to manage the Gratuity plan and the contributions towards the trust fund is done as guided by rule 103 of Income Tax Rules, 1962.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Qualitative Disclosures

- Characteristics of defined benefit plan

The Company has a defined benefit Long Service Benefit plan in India (unfunded). The companyâs defined benefit Long Service Benefit plan is a final salary plan for employees.

Long Service Benefit is paid from company as and when it becomes due and is paid as per company scheme for Long Service Benefit.

- Risks associated with defined benefit plan

Long Service Benefit is a defined benefit plan and company is exposed to the Following Risks:

Interest rate risk: A fall in the discount rate which is linked to the Government Securities Rate will increase the present value of the liability requiring higher provision.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Company has to manage pay-out based on pay as you go basis from own funds.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

- During the year, there were no plan amendments, curtailments and settlements.

- Long Service Benefit plan is unfunded.

C Other long term benefits-

Amount recognised as a liability in respect of compensated leave absences as per the actuarial valuation / management estimate as on March 31, 2018 is Rs.8.23 crores [As on March 31, 2017 - Rs.8.91 crores] [As on April 1, 2016: Rs.8.54 crores].

12 CURRENT LIABILITIES

The amount of dues owed to Micro, Small and Medium Enterprises as on March 31, 2018 amounted to Rs.2.02 crores (March 31, 2017- Rs.0.11 crores). This amount has been outstanding for more than 45 days at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises 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.

DISCLOSURE UNDER MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Company has sought confirmation from vendors whether they fall in the category of Micro, Small and Medium Enterprises. Based on the information available the required disclosure under Micro, Small and Medium Enterprises Development Act, 2006 is given below:

13 The Company had introduced the Employee Stock Option Scheme (ESOS) as approved by the shareholders at the Annual General Meeting held on August 13, 2002. The scheme was amended by the shareholders at the Annual General Meeting held on July 23, 2004 to incorporate the amendments under The Stock Option Guidelines vide SEBI circular dated June 30, 2003. The scheme was further amended by the shareholders at the Annual General Meeting held on August 7, 2012 wherein the exercise price shall be based on the market price as defined in the SEBI (Employee Stock Option Scheme) Guidelines 1999 i.e. at the latest available closing market price on the stock exchange having highest trading volume prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted.

As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Whole-time Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Vesting of an option is subject to continued employment.

On August 7, 2012, the Board of Directors had granted 14,000 stock options (70,000 stock options post sub-division) to the Ex - Joint Managing Director of the Company at an exercise price of Rs.528.25 (Rs.105.65 post subdivision) per share for the years 2011-12 and 2012-13 which options have vested on August 7, 2013. Consequent upon the sub-division of shares on and from October 31, 2012, the number of options and the exercise price have been appropriately adjusted. The said options have lapsed on August 7, 2016.

Method used for accounting of share based payment plan:

Options have been valued based on Fair Value Method of accounting as described under Guidance Note on Accounting for Employee Share-based Payments using Black-Scholes valuation option-pricing model, using the market values of the Companyâs shares as quoted on the National Stock Exchange. On the basis of the calculation of the stock based compensation as per the Fair Value method prescribed by Securities and Exchange Board of India, the total cost to be recognised in the financial statements as on April 1, 2016 and for the period April 1, 2016 to August 7, 2016 is Nil.

14 OPERATING LEASE

(a) The Company has taken certain motor vehicles, retail shops and godown on operating lease. The particulars in respect of such leases are as follows:

(iii) The lease agreements are for a period of four years for vehicles, for a period of one to nine years for retail shops including further periods for which the Company has the option to continue the lease of retail shops with the condition of increase in rent and for a period of five years for godowns.

(b) The Company has given commercial space on operating lease. The lease agreements are for a period of one to four years. The particulars in respect of such leases are as follows:-

15 CORPORATE SOCIAL RESPONSIBILITY STATEMENT (CSR)

The Company was required to spend Rs. Nil (2016-17 Rs.0.04 crores) towards CSR during the year in accordance with the provisions of Section 135 of the Companies Act, 2013. The Company has spent Rs.0.04 crores (2016-17: Rs. Nil) on CSR activities during the year.

16 FINANCIAL INSTRUMENTS

A. Accounting classification and fair values

B. Fair Value Hierarchy

The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

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

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

Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs)

C. Measurement of Fair Values

Valuation techniques and significant unobservable inputs

The following tables show the valuation techniques used in measuring Level 1 and Level 2 fair values, as well as the significant unobservable inputs used.

Financial instruments are measured at fair value

17 FINANCIAL RISK MANAGEMENT

The Companyâs activities expose it to market risk, credit risk and liquidity risk. The Companyâs Board of Directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

i) Market Risk

(a) Foreign Currency Exchange Risk

The Companyâs functional currency is Indian Rupees (INR). The Company has foreign currency trade payables and receivables and is therefore exposed to foreign exchange risk. Volatility in exchange rates affects the Companyâs revenue from exports markets and the costs of imports, primarily in relation to raw materials with respect to the US-dollar.

Adverse movements in the exchange rate between the Rupee and the relevant foreign currency results in increase in the Companyâs overall debt position in Rupee terms without the Company having incurred additional debt.

In order to minimize adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge foreign currency exchange risk. All hedging activities are carried out in accordance with the Companyâs internal Forex Risk Management Policy, as approved by the management, and in accordance with the applicable regulations where the Company operates.

The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Foreign currency risk exposure:

The Companyâs exposure to foreign currency risk at the end of the reporting period expressed in INR (âin crores) are as follows

(b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. The Companyâs fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Interest rate risk exposure

The Companyâs variable rate borrowing is subject to interest rate. Below is the overall exposure of the borrowing:

Sensitivity

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of changes in interest rates. If, the interest rates had been 100 basis points higher/ lower and all other variables were held constant, the Companyâs profit for the year ended March 31, 2018 would (decrease)/ increase by Rs.27.22 crores (for the year ended 31 March 2017: (decrease)/ increase by Rs.25.42 crores).

Exposure

The Company is exposed to equity price risks arising from equity investments. Equity investments were held for strategic rather than trading purposes. The Company does not actively trade in these investments.

Sensitivity

If equity prices had been 5% higher/ lower, other comprehensive income would increase/ (decrease) as follows for:

The year ended March 31, 2018 : by Rs.47.47 crores The year ended March 31, 2017 : by Rs.38.61 crores

ii) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral viz security deposit or bank guarantee, where appropriate, as a means of mitigating the risk of financial loss from defaults.

Companyâs credit risk arises principally from the trade receivables, loans, investments, cash & cash equivalents, derivative financial instruments and financial guarantees.

a) Trade receivables:

b) Loans and investments:

The Companyâs centralised treasury function manages the financial risks relating to the Business. The treasury function focuses on capital protection, liquidity and yield maximisation. Investments of surplus funds are made only in approved counterparties within credit limits assigned for each of the counterparty. Counterparty credit limits are reviewed and approved by the Finance Committee of the Company. The limits are set to minimise the concentration of risks and therefore mitigate the financial loss through counterpartyâs potential failure to make payments.

c) Cash and cash equivalents, derivative financial instruments and financial guarantees:

In addition, the Company is exposed to credit risk in relation to financial guarantees given to banks and other counterparties. The Companyâs maximum exposure in this respect is the maximum amount the Company would have to pay if the guarantee is called upon.

iii) Liquidity risk management

Liquidity risk refers to the risk of financial distress or extraordinary high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and requiring financing. The Company requires funds for short term operational needs as well as for long term capital expenditure growth projects. The Company generates sufficient cash flow for operations, which together with the available cash and cash equivalents, marketable securities and short term and long term borrowings provide liquidity. The Company has established an appropriate liquidity risk management framework for the management of the Companyâs short, medium and long term funding and liquidity risk management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.

To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

18 The Company is engaged in the business of Real Estate, Polyester and Retail / Textile. In accordance with Ind AS 108 âOperating Segmentsâ, the Company has presented segment information in the consolidated financial statements, which form part of this report and therefore no seperate disclosure on segment information is given in these financial statements.

19 Dividend

The Board of Directors of the Company have recommended a dividend of 50% (Rs.1.00/- per equity share of Rs.2 each) for the financial year ended March 31, 2018.

20 Subsequent Events

There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the balance sheet date.

21 The financial statements were authorised for issue by the Board of Directors on May 14, 2018.

21 General

a) All amounts disclosed in the financial statements and notes have been rounded off to the nearest crore upto two decimals as per the requirements of Schedule III, unless otherwise stated.

b) Figures for the previous year have been regrouped / restated wherever necessary to conform to current yearâs presentation.

Mar 31, 2017

1. During the year, the Company''s wholly owned subsidiary Archway Investments Company Limited, a Non Banking Finance Company, has been amalgamated with the Company in terms of the scheme of amalgamation (âScheme'') sanctioned by the National Company Law Tribunal (NCLT) vide its Order dated 20^th June, 2017. the Scheme became effective on 28^th June, 2017 with appointed date of 1^st April, 2016 when the sanction of the NCLT was received and certified copy of the same filed with the Registrar of Companies, the Scheme has been accounted for under the âpooling of interest method'' as prescribed under AS 14 âAccounting for Amalgamations" as per the terms of the Tribunal Order. Since the subsidiary amalgamated was a wholly owned subsidiary of the Company, there was no exchange of shares to effect the amalgamation, the difference between the amounts recorded as investments of the Company and the amount of share capital and reserves of the aforesaid amalgamating subsidiary of'' 10.35 Crore has been adjusted in the reserves.

2. During the year 2000-01, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20^th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1^st October, 2000. the titles in respect of certain immovable properties amalgamated into the Company are still in the process of transfer.

3. The proposed sale and transfer of the entire Undertaking consisting of the Textile factory/ plant of the Company situated at Ranjangaon, on a slump sale basis as a going concern and on as is where is basis for a total consideration of Rs, 230 crore, as stated in the previous year, could not be consummated. Consequently, the Company has during the year, entered into a fresh Term Sheet with new purchaser, to sell the plant & machinery & spares at Ranjangaon for'' 36.25 crore. the Company has received Earnest money deposit / Security deposit ofRs, 3.76 crore and advances of Rs, 21.14 crore up to 31^st March, 2017 and the party has lifted plant and machinery amounting to Rs, 9.32 crore against the same.

The Company has also entered into an Agreement for Sale of the leasehold land and building at Ranjangaon for total consideration of Rs, 168.85 crore and deposits of Rs, 90.60 crore has been received against the same, the balance amount shall be receivable on transfer of the property, free from all encumbrances, after obtaining of NOC from MIDC.

Consequent to the above committed plans to sell the assets of Ranjangaon, the said assets have been reclassified from fixed assets and disclosed under Assets Held for Sale under Current Assets at their net realizable value and an Impairment provision ofRs, 15.69 crore including Rs, 2.43 crore during the current year has been made."

4 Based on the advice obtained by the Company, the premium charged by the Company on sale of apartments under the deferred payment scheme compared to the price charged under the normal sales scheme is also considered as part of sales consideration and is recognized as revenue under the percentage of completion method.

5. The Company vide notice dated 8^th January, 2013 notified the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid / provided to such employees the terminal dues, closure compensation and ex-gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier, the liability in respect of the monthly payments has been actuarially determined as on the Balance sheet date at Rs, 7.53 crores (2015-16 - Rs,7.17 crores) by the independent actuary. As at the time of the previous voluntary retirement schemes, the initial cost relating to ex-gratia compensation was added to the development cost of land, the actuarial loss for the year amounting toRs, 0.93 crore (2015-16 - Rs, 0.48 crore) has been recorded in the Statement of Profit & Loss.

6. The Company has agreed to sell several apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd, a Group company, in terms of various Memorandum of Understanding (MOUs) entered between the companies till 31^st March, 2017. Based on the method of accounting (percentage of completion) followed by the company, net revenue ofRs, 156.07 crores (2015-16 : Rs, 239.26 crores) and resultant profit before tax ofRs, 102.63 crores (2015-16 : Rs,158.63 crores) has been recognized during the year ended 31^st March, 2017 in respect of the sales to SCAL. the Company, had pursuant to SCAL''s request and considering the facts and circumstances including delays in construction, that led to SCAL''s inability to sell the flats, had granted SCAL deferment of milestone payments till June 2017 or till the sale of all unsold flats and also considering that SCAL was a bulk customer who had purchased a large number of flats and had not received the discounts given to other bulk purchaser, the Company reduced the advance consideration payable by SCAL to 10 % (2015-16 : 7.5%). Accordingly, progress payments have not been billed to SCAL during the year.

7. Recognition of income and expenses on on-going real estate project under long term contracts is based on actual sales; estimated costs and work completion status. Determination of profits/ losses, the percentage of completion, costs to completion and readability of the construction work in progress & unbilled revenues necessarily involves making estimates by the Company, some of which being of a technical nature, are being relied upon by auditors. Profit from these contracts and valuation of construction work in progress / unbilled revenue is based on such estimates.

8. Pursuant to the Order of the Supreme Court dated 2^nd August, 2013 and the Order of the Bombay High Court dated 20^th November, 2013 permitting the Company to surrender land at one location i.e. Spring Mills, Wadala, under the Integrated Development Scheme for consolidating handover obligation, the Company had in December 2014 given advance possession of 32,829.02 square metres of land to MCGM and 33,822.89 square metres of land to MHADA at Spring Mills, Wadala after completion of necessary boundary wall, and internal filling/ leveling, SWD, etc., as per the provisions of DCR 58 (6) read with DCR 58 (1) (a) & (b). Both MCGM and MHADA have taken advance possession of the said lands, pending completion of certain administrative formalities, which as perthe company''s architect are routine.

As per the provisions of DCR 54 and as certified by the Company''s Architects, the Company is entitled to Development Rights (FSI) of 43,661.11 square metres generated in lieu of lands earmarked and handed over to MCGM for utilization by the owners on the said land and to Transferable Development Rights (TDR) of 44,984.44 square metres in lieu of lands earmarked and handed over to MHADA under the Integrated Development Scheme as per the provisions ofDCR 58.

Since physical possession of the earmarked lands is handed over and Advance Possession Receipts obtained from MCGM and MHADA, the Company has during 2014-15 recognized the entitlement of additional Development Rights (FSI) available for its own use and accordingly converted the same into stock in trade at market value (as ascertained by registered valuers). TCie Transferable Development Rights (TDR) will be recognized on receipt ofTDR certificates

9. LITIGATIONS

(a) During the year 2010-11, the Company had agreed to sell certain area in the proposed tower TWO ICC to Shaan Realtors Pvt. Ltd., formerly Accord Holding Pvt. Ltd. (âthe claimants"), the area agreed to be sold is under dispute and the matter was referred to arbitration, the arbitrator vide order dated 13^th January, 2014 passed the final award directing the company to allot to the claimants and/ or its associates, friends, nominees carpet area of 1,00,000 sq. ft. less the carpet area as already allotted to them in the proposed tower TWO ICC, namely additional carpet area of 48,495 sq. ft. the Company has filed an appeal in the Bombay High Court under section 34 of the Arbitration & Conciliation Act, 1996 against the said award, for which the hearings are in progress, the Company is confident that the final award passed by the learned arbitrator will get reversed in view of the strong merits in the case. However, the requisite area has been set aside by the Company and the total area to be allotted to the claimants will be accounted on disposal of the appeal filed in the High Court. No adjustment has been made in the financial statements in view of the uncertainty involved.

(b) The Bombay High Court vide its order dated 20^th November, 2013 permitted the Company to surrender land at one location i.e. Wadala, as per the application made by the company under integrated development scheme. As per this order, the total of 66,651 sq. meter of land has been surrendered to MCGM and MHADA at Island City Centre, Wadala. During the year 2013-14, the Union had filed a writ petition requiring the company to surrender non textile mill land, the Bombay High Court has directed the Company to reserve additional 10,000 sq. meters of land adjacent to the land to be surrendered, the Company believes that above said writ petition filed in Bombay High Court has no impact on the development of the two towers at ICC since the reserved land of 10,000 sq. meters is different from the one where construction of the two towers is in progress.

(c) The company had during the year 2010-11 sold the building known as âWadia TowerA'' to Axis Bank Ltd for a consideration of'' 782.62 crores. the purchaser has till date paid a sum of Rs, 753.69 crores and the balance Rs, 28.93 crores is still outstanding. Axis bank has claimed damages and interest for delayed handover, non completion of essential and basic amenities, failure to provide prominent signage, etc. and has not paid the common area maintenance charges amounting Rs, 11.26 crores (2015-16 : Rs, 9.48 crores). Since the matter could not be amicably resolved, the same was referred to arbitration. Claims from the Bank regarding costs for work completed by the Bank on behalf of the Company and by the Company on behalf of Axis Bank are also matters under arbitration. Pending finalization of arbitration proceedings, the receivables are considered good.

10. The remuneration paid to the Managing Director for the year ended 31^st March, 2017 is in excess of the limits laid down in section 197 of the Companies Act, 2013, by Rs, 4.29 crore. the Company had applied to the Central Government under section 196,197,198 and 200 read with Schedule V to the Companies Act, 2013 for permission to pay remuneration in excess of the prescribed limits, the Company has received an approval from the Central Government dated 21^st June, 2017, for payment of remuneration amounting to Rs, 2.12 crores only, âftie Company is proposing to make a representation to the Central Government with a request to reconsider the amount approved. Pending such representation, no adjustments have been made in the accounts for the year ended 31^st March, 2017 and the excess amount is held by the Managing Director in trust for the Company.

The remuneration payable to the Managing Director for the year ended 31^st March, 2016 which was in excess of the limits prescribed under sections 197 and 198 of the Companies Act, 2013 has been approved by the Central Government under section 196,197,198 & 200 read with schedule V to the Companies Act, 2013 vide approval dated 16^th November, 2016.

11. EMPLOYEE BENEFITS

A. Defined Contribution Plan

The Company has recognized the following amounts in the statement of profit and loss under contribution to provident and other funds as under:

vii a. The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risk, historical results of return on plan assets and the Company''s policy for plan assets management.

viii The above information is certified by the actuary.

C. Other long term benefits-

i Amount recognized as a liability in respect of compensated leave absences as per the actuarial valuation / management estimate as on 31^st March, 2017 is Rs, 8.91 crores [2015-16-Rs, 8.54 crores]

ii Amount recognized as a liability in respect of long service awards as per the actuarial valuation / management estimate as on 31^st March, 2017 is Rs, 2.60 crores. [2015-16 -Rs, 2.43 crores]

In the absence of virtual certainty regarding future taxable income, deferred tax assets relating to unabsorbed depreciation under the Income Tax Act is recognized only to the extent of deferred tax liability.

12.CURRENT LIABILITIES

The amount of dues owed to Micro, Small and Medium Enterprises as on 31^st March, 2017 amounted to Rs, 0.11 Crore (31^st March, 2016- NIL). TOs amount has been outstanding for more than 45 days at the Balance Sheet date, the information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. TOs has been relied upon by the auditors.

13. The Company had introduced the Employee Stock Option Scheme (ESOS) as approved by the shareholders at the Annual General Meeting held on 13^th August, 2002. the scheme was amended by the shareholders at the Annual General Meeting held on 23^rd July, 2004 to incorporate the amendments under the Stock Option Guidelines vide SEBI circular dated 30^th June, 2003. the scheme has been further amended by the shareholders at the Annual General Meeting held on 7^th August, 2012 wherein the exercise price shall be based on the market price as defined in the SEBI (Employee Stock Option Scheme) Guidelines 1999 i.e. at the latest available closing market price on the stock exchange having highest trading volume prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted.

As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Whole-time Directors of the Company, the vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Vesting of an option is subject to continued employment.

On 7^th August, 2012, the Board of Directors had granted 14,000 stock options (70,000 stock options post sub-division) to the Ex - Joint Managing Director of the Company at an exercise price of'' 528.25 (''105.65 post subdivision) per share for the years 2011-12 and 2012-13 which options have vested on 7^th August, 2013. Consequent upon the sub-division of shares on and from 31^st October, 2012, the number of options and the exercise price have been appropriately adjusted, the said options have lapsed on 7^th August, 2016.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to the Whole-time Director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Rs, Nil. Consequently the accounting value of the option (compensation cost) is also Rs, Nil.

Fair Value Methodology:

Options have been valued based on Fair Value Method of accounting as described under Guidance Note on Accounting for Employee Share-based Payments using Black-Scholes valuation option-pricing model, using the market values of the Company''s shares as quoted on the National Stock Exchange. If the stock based compensation cost was calculated as per the Fair Value method prescribed by Securities and Exchange Board of India, the total cost to be recognized in the financial statements for the period 1^st April, 2016 - to 31^st March, 2017 would also be nil.

Weighted Average share price of Options exercised during the year - No options exercised during the year

(iii) The Company had adopted the principles of hedge accounting as set out in Accounting Standard 30,âFinancial Instruments: Recognition and Measurement'', issued by the Institute of Chartered Accountants of India up to the previous year. Accordingly, the foreign exchange (gain)/loss of NIL (2015-16 Rs, (0.92) crores) as on 31^st March, 2017 on forward foreign exchange contracts entered into to hedge firm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognized in the profit and loss account when the forecasted transactions arise. TCiere were no contracts which qualified for hedge accounting as on 31^st March, 2017, consequently the mark-to-market gain/(loss) on such contracts has been recorded in the statement of profit and loss.

(iii) The lease agreements are for a period of four years for vehicles and for a period of one to nine years for retail shops including further periods for which the Company has the option to continue the lease of retail shop with the condition of increase in rent, for a period of five year for god owns and for a period of3 years for retail shops

(ii) The details such as gross carrying amount, accumulated depreciation and depreciation for the current year, are not available separately in respect of the properties given on lease.

14. RELATED PARTY DISCLOSURES

(A) Names of related parties and nature of relationship:

1. Enterprises controlled bythecompany

Subsidiary Company: Archway Investment Company Limited (upto 31^st March, 2016)

2. Related parties with whom Company had transaction during the year

Associate Companies: Pentafil Textile Dealers Limited

Bombay Dyeing Real Estate Company Limited JointVenture Company: P. T. Five Star Textile, Indonesia

Key Management Personnel: Mr. Jehangir N. Wadia - Managing Director

Mr. Pushpamitra Das - Chief Financial Officer (w.e.f. 4^th Apr, 2016)

Mr. Sanjive Arora - Company Secretary (w.e.f. 11^th July, 2016)

Mr. K. Subharaman - Company Secretary & Compliance Officer (upto 30^th Apr, 2016) Mr. Jairaj C. Bham - Company Secretary (upto 31^st May, 2015)

Mr. Vinod Hiran -Chief Financial Officer (19^th May, 2015 to 2^nd Nov, 2015) Relatives ofKey Management Personnel: Mr. Nusli N. Wadia - Chairman - Father ofManaging Director

Mr. Ness N. Wadia - Director - Brother ofManaging Director

Mrs. Saroj Jairaj Bham - Spouse of the Company Secretary (upto 31^st May, 2015)

Entities overwhich key management

personnel and relatives exercise significant influence : Go Airlines (India) Limited

Gladrags Media Ltd.

the Bombay Burmah Trading Corporation Ltd.

15. CORPORATE SOCIAL RESPONSIBILITY STATEMENT (CSR)

The company was required to spend Rs, 0.04 crore (2015-16 Rs, 1.30 crores) towards CSR during the year in accordance with the provisions of Section 135 of the Companies Act, 2013. However, the company has spent sum of Rs, NIL (2015-16:Rs, 0.30 crores towards Chennai Flood Relief). Accordingly, there is a shortfall in CSR spend by Rs, 0.04 crore (Rs, 1 crores during 2015-16).

16. Figures in Brackets indicate corresponding figures for the previous year.

17. Previous year figures have been regrouped where necessary.

Mar 31, 2016

(a) Rights, preferences and restrictions attached to Equity shares

The company has one class of equity shares having a par value ofRs, 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(b) Shares reserved for issue under options

Pursuant to the Employee Stock Option Scheme (ESOS) approved by the shareholders on 13th August, 2002 and as further amended by the shareholders on 07th August, 2012, the Company had granted 14,000 options, (70,000 options post sub-division) to the Ex-Joint Managing Director of the Company at an exercise price ofRs, 528.25 (Rs, 105.65 post sub-division) per share. As per the terms of the ESOS, each option is exercisable for conversion into one equity share of the Company (Refer Note 45).

(c) Information regarding issue of shares during last five years

(i) No shares were allotted pursuant to contracts without payment being received in cash. (ii) No bonus shares have been issued. (iii) No shares have been bought back.

(f) Shares held in Abeyance

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment of 4,640 shares (2014-15- 4,640 shares) of face value ofRs,2/- each against warrants carrying rights of conversion into equity shares of the Company has been kept in abeyance in accordance with section 126 of the Companies Act, 2013, till such time as the title of the bonfire owner is certified by the concerned Stock Exchanges.

a) Nature of Security and terms of repayment of secured borrowing:

i) Term Loans (TUFS) aggregating Rs, 7.80 crores (2014-15 Rs, 27.04 croresjare secured by first pari passu charge on the Company''s existing as well as future fixed assets at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga other than fixed assets charged exclusively to term lenders. Repayable in quarterly installments over the remaining period of 1 to 2 years.

ii) Term loan amounting to Rs, 66.64 crores (2014-15 Rs, 100.00 crores) is secured by first pari-passu charge on Company''s plant & machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga. Repayable in half yearly installments in the next year.

iii) Term loan amounting to Rs, Nil (2014-15 Rs, 90.00 crores) is secured by first pari-passu charge on Company''s plant and machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga and second charge of portion of Spring Mills land & buildings and structure thereon.

iv) Term loans aggregating to Rs, 407.20 crores (2014-15 Rs, 529.50 crores) are secured by first / secondary pari-passu charge over part of the land of the Company at Textile Mills at Mumbai and plant and machinery, buildings and structures thereon. Repayable in quarterly installments over the next 2 to 3 years.

v) Term loan amounting to Rs, 26.40 crores (2014-15 Rs, 36.30 crores) is secured by first pari-passu charge of rent receivables from premises given on lease by the Company and second charge of portion of Spring Mills land and buildings and structures thereon. Repayable in monthly installments over the remaining 3 years.

vi) Term loans under consortium arrangement aggregating to Rs, 571.87 crores (2014-15 Rs, 417.82 crores) are secured by first pari-passu charge/Escrow of receivables of One ICC and Two ICC Tower at Spring Mills, Dadar and first parsi passu charge over part of land of the Company at Textile Mills at Mumbai and buildings and structures thereon. Repayable in quarterly installments over a period of 4 to 5 years.

vii) Term loan amounting to Rs, 342.32 crores (2014-15 Rs, Nil) are secured by first pari passu charge over part of land of the Company at Worli and building. Repayable over 2 to 4 years.

viii) Term loan amounting to Rs, 108 crores (2014-15 Rs, Nil) is secured by first pari-passu charge on Company''s plant and machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga and second charge of portion of Spring Mills land & buildings and structure thereon. Repayable in ten monthly installments after initial moratorium of one year.

b) Terms of repayment of unsecured borrowing:

Fixed Deposits from shareholders and public are repayable over a period of 3 years from the date of deposit, maturing between July 2016 and March 2019.

a) Nature of Security for Short term borrowings

(i) Working Capital loans ofRs, 237.58 crores (2014-15 Rs, 158.80 crores) and Buyer''s Credit amounting to Rs, 29.83 crores (2014-15 Rs, 23.81 crores) from banks under consortium arrangement is secured by hypothecation of present and future stocks, book debts and other current assets on pari passu basis and a second charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant and machinery and buildings thereon on pari passu basis.

(ii) Packing credit from bank ofRs, 110.84 crores (2014-15Rs, 95 crores) is secured by way of registered mortgage on the immovable properties in Wadia International Centre (Text rising Building and Hemming Building) located at Worli, Mumbai.

(iii) Packing credit from bank ofRs, 20.50 crores (2014-15Rs, Nil) is secured by way of current assets of the company (excluding real estate) on a pari passu basis with other member banks in consortium lead by SBI and second charge on the Textile mill land at Worli admeasuring 89,819.85 sq.m. and plant and machinery and Building on pari passu basis with other lenders in consortium.

(iv) Packing credit from bank of Rs, 35.00 crores (2014-15 Rs, Nil) is secured by first pari-passu charge over part of the land of the Company at Textile Mills at Mumbai and plant and machinery, buildings and structures thereon.

(v) Buyer''s Credit aggregating Rs,46.61 crores (2014-15Rs, 96.45 crores) is secured by first pari-passu charge on land of the Company at Spring Mills at Mumbai admeasuring 36,617.13 square metres.

a)* During the year, the Company has transferred an amount ofRs, 0.12 crore (2014-15 Rs, 0.14 crore) to the Investor Education & Protection Fund under section 125 of the Companies Act,2013. There is no amount due for payment to the Fund as at the year end.

b) Interest accrued and due on borrowings represents interest due as on Balance Sheet date but debited by the bank after the Balance Sheet date.

a) Loans and advances to related parties include a deposit ofRs, 15.22 crores (2014-15Rs, 15.22 crores) and amounts recoverable ofRs, 4.85 crores (net of provisions) (2014-15 Rs, 6.86 crores) from PT. Five Star Textile Indonesia (PTFS), a jointly controlled entity. PTFS has been incurring continuous losses. The Company has proposed disposal of surplus lands / assets of the undertaking for recovery of the deposits and advances. In the opinion of the management the advances and deposits are considered good and fully recoverable.

Note: Real Estate development work-in-progress includes expenditure amounting toRs, 39.12 crore (2014-15Rs, 50.70 crore) incurred by the Company on projects which are delayed or yet to be commenced. Management expects to commence these projects in the near future and does not expect any loss on this account.

(a) Trade receivables includes Rs, 38.41 crores (2014-15 Rs, 36.64 crores) due from a customer towards part compensation for sale of property, common area maintenance charges and project related costs. The receivables are under dispute and the matter has been referred to the arbitration. Pending finalization of arbitration proceedings, the receivables are considered good.

(a) Balances with banks in escrow accounts represents amounts held in escrow in accordance with the directions of the Monitoring Committee for redevelopment of land of Cotton Textile Mills.

a) Advances recoverable in cash or in kind or for value to be received includesRs, 0.73 crore (2014-15 Rs, 0.73 crore) on account of remuneration recoverable from Mr. M.K.Singh, Executive Director, whose services were terminated on 6th July, 2008 consequent to detection of irregular conduct. A suit has been filed by the Company in the High Court of Judicature of Mumbai alleging fraudulent misconduct. The matter is pending before the Court.

(b) Bank deposits include restricted deposits as under :

Fixed deposits under lean towards security for guarantees issued on behalf of the Company and as security against a claim on the Company - Rs, 19.31 crores (2014-15 Rs, 25.19 crores).

Fixed deposits held in trust out of funds received as corpus fund and maintenance deposits from flat owners Rs, Nil (2014-15 Rs, 3.80 crores).

Short term deposits relating to amounts held under Escrow in accordance with the loan arrangements with a consortium of bankers Rs, 6.32 crores (2014-15 Rs, 29.78 crores)

The Company is committed to a plan to sell the assets of the Ranjangaon Unit and for this purpose has entered into a term sheet with a proposed purchaser to sell the entire assets including land, building, machineries etc.on slump sale basis. Accordingly the carrying amount of the Ranjangaon assets have been reclassified as held for sale.

1. During the year 2000-01, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The titles in respect of certain immovable properties amalgamated into the Company are still in the process of transfer.

2. The proposed sale and transfer of the entire Undertaking consisting of the Textile factory/ plant of the Company situated at Ranjangaon, Maharashtra, on a slump sale basis as a going concern and on as is where is basis for a total consideration ofRs, 230 crore under the Term Sheet signed by the Company on May 13, 2015 could not be consummated and accordingly the Company had forfeited the deposit ofRs, 25 lac paid by the proposed purchaser. The proposed purchaser has again revived the offer and the Company has signed another Term Sheet dated March 28, 2016 with the same proposed purchaser for sale of the textile processing unit at Ranjangaon, on a slump sale basis for the same total consideration ofRs, 230 crores. The proposed purchaser is required to deposit earnest money deposit ofRs, 23 crore in an escrow account before the expiry of 60 days from the date of execution of the Term Sheet. The Company is also considering offers for sale of vacant land separately as well as making efforts to sell the land, building and machinery separately under the "assets sale" route.

3. Based on the advice obtained by the Company, the premium charged by the Company on sale of apartments under the deferred payment scheme compared to the price charged under the normal sales scheme is also considered as part of sales consideration and is recognized as revenue under the percentage of completion method

4. The Company vide notice dated 8th January 2013 notified the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid / provided to such employees the terminal dues, closure compensation and ex-gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier. The liability in respect of the monthly payments has been actuarially determined as on the Balance sheet date atRs, 7.17 crores (2014-15 -Rs,7.26 crores) by the independent actuary. As at the time of the previous voluntary retirement schemes, the initial cost relating to ex-gratia compensation was added to the development cost of land. The actuarial loss for the year amounting to Rs, 0.48 crore (2014-15 -Rs, 1.40 crore) has been recorded in the Statement of Profit & Loss.

5. The Company has agreed to sell several apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd, a Group company, in terms of various Memorandum of Understanding (MOUs) entered between the companies till March 31, 2016. Based on the method of accounting (percentage of completion) followed by the company, net revenue ofRs,239.26 crores (March 2015 Rs, 301.11 crores) and the resultant profit before tax of Rs, 158.63 crores (March 2015 Rs, 224.49 crores) has been recognized during the year ended March 31, 2016 in respect of the sales to SCAL During the year, SCAL has requested the Company for certain concessions on grounds that due to the huge delays in construction by the Company, it had incurred substantial interest costs on account of its borrowings against the unsold inventory of flats, which could not be sold due to the delays in the project. Pursuant to the request, the Company, considering the facts and circumstances that led to SCALs inability to sell the flats, has granted SCAL deferment of milestone payments till June 2017 or till the sale of all unsold flats, and also considering that SCAL was a bulk customer who had purchased a large number of flats and had not received the discounts given to other bulk purchasers, the Company reduced the advance payment made by SCAL to 7.5% resulting in refund of about Rs, 270.35 crore to SCAL.

6.Recognition of income and expenses on on-going real estate project under long term contracts is based on actual sales; estimated costs and work completion status. Determination of profits/ losses, the percentage of completion, costs to completion and readability of the construction work in progress & unbilled revenues necessarily involves making estimates by the Company, some of which being of a technical nature, are being relied upon by auditors. Profit from these contracts and valuation of construction work in progress / unbilled revenue is based on such estimates.

7. Pursuant to the Order of the Supreme Court dated August 2, 2013 and the Order of the Bombay High Court dated November 20, 2013 permitting the Company to surrender land at one location i.e. Spring Mills, Wadala, under the Integrated Development Scheme for consolidating handover obligation, the Company had in December 2014 given advance possession of 32,829.02 sq. mtrs of land to MCGM and 33,822.89 sq. mtrs of land to MHADA at Spring Mills, Wadala after completion of necessary boundary wall, and internal filling/ leveling, SWD, etc. as per the provisions of DCR 58 (6) read with DCR 58 (1) (a) & (b). Both MCGM and MHADA have taken advance possession of the said lands, pending completion of certain administrative formalities, which as per the company''s architect are routine.

As per the provisions of DCR 54 and as certified by the Company''s Architects, the Company is entitled to Development Rights (FSI) of 43,661.11 sq. mtrs generated in lieu of lands earmarked and handed over to MCGM for utilization by the owners on the said land and to Transferable Development Rights (TDR) of 44,984.44 sq. mtrs. in lieu of lands earmarked and handed over to MHADA under the Integrated Development Scheme as per the provisions of DCR 58.

Since physical possession of the earmarked lands is handed over and Advance Possession Receipts obtained from MCGM and MHADA, the Company has during 2014-15 recognized the entitlement of additional Development Rights (FSI) available for its own use and accordingly converted the same into stock in trade at market value (as ascertained by registered valuers). The Transferable Development Rights (TDR) will be recognized on receipt of TDR certificates

8. Litigations

(a) During the year 2010-11, the Company had agreed to sell certain area in the proposed tower TWO ICC to Shaan Realtors Pvt. Ltd., formerly Accord Holding Pvt. Ltd. ("the claimants"). The area agreed to be sold is under dispute and the matter was referred to arbitration. The arbitrator vide order dated 13th January 2014 passed the final award directing the company to allot to the claimants and/ or its associates, friends, nominees carpet area of 1,00,000 sq. ft. less the carpet area as already allotted to them in the proposed tower TWO ICC, namely additional carpet area of 48,495 sq. ft. The Company has filed an appeal in the Bombay High Court under section 34 of the Arbitration & Conciliation Act, 1996 against the said award, for which the hearings are in progress. The Company is confident that the final award passed by the learned arbitrator will get reversed in view of the strong merits in the case. However, the requisite area has been set aside by the Company and the total area to be allotted to the claimants will be accounted on disposal of the appeal filed in the High Court. No adjustment has been made in the financial statements in view of the uncertainty involved.

(b) The Bombay High Court vide its order dated November 20,2013 permitted the Company to surrender land at one location i.e. Wadala, as per the application made by the company under integrated development scheme. As per this order the total of 66,651 sq. meter of land has been surrendered to MCGM and MHADA at Island City Centre, Wadala. During the year 2013-14, the Union had filed a writ petition requiring the company to surrender non textile mill land. The Bombay High Court has directed the Company to reserve additional 10,000 sq. meters of land adjacent to the land to be surrendered. The Company believes that above said writ petition filed in Bombay High Court has no impact on the development of the two towers at ICC since the reserved land of 10,000 sq. meters is different from the one where construction of the two towers is in progress.

(c) The company had during the year 2010-11 sold the building known as ''Wadia Tower A to Axis Bank Ltd for a consideration of ^ 782.62 crores. The purchaser has till date paid a sum of Rs, 753.69 crores and the balanceRs, 28.93 crores is still outstanding. Axis bank has claimed interest for delayed handover for a period of 4 months from October 2010 to January 2011, and has not paid the common area maintenance charges amountingRs, 9.48 crores (31.3.2015 : Rs,7.71 crores). Since the matter could not be amicably resolved, the same was referred to arbitration. Claims from the Bank regarding costs for work completed by the Bank on behalf of the Company and by the Company on behalf of Axis Bank are also matters under arbitration. Pending finalization of arbitration proceedings, the receivables are considered good.

9. The remuneration paid to Managing Director for the year ended March 31, 2016 is in excess of the limits laid down in section 197 of the Companies Act, 2013 read with Schedule V of the said Act. The excess remuneration of Rs, 4.40 crore is subject to the approval of the Central Government, in respect of which the Company has made an application and the approval is awaited. The remuneration payable to the Managing Director for the year ended March 31, 2015 which was in excess of the limits prescribed under sections 197 and 198 of the Companies Act, 2013 has been approved by the Central Government under section 196,197,198 & 200 read with schedule V to the Companies Act, 2013 vide approval dated December 17, 2015.

vii a. The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risk, historical results of return on plan assets and the Company''s policy for plan assets management.

viii The above information is certified by the actuary.

C. Other long term benefits-

i Amount recognized as a liability in respect of compensated leave absences as per the actuarial valuation as on March 31, 2016 is Rs, 8.54 crores [2014-15- Rs, 5.69 crores]

ii Amount recognized as a liability in respect of long service awards as per the actuarial valuation as on March 31, 2016 is Rs, 2.43 crores [2014-15-Rs, Nil]

In the absence of virtual certainty regarding future taxable income, deferred tax assets relating to unabsorbed depreciation under the Income Tax Act is recognized only to the extent of deferred tax liability.

10 Current Liabilities

The amount of dues owed to Micro, Small and Medium Enterprises as on 31st March, 2016 amounted to Rs, Nil (31st March, 2015- Rs, 0.16 crore). This amount has been outstanding for more than 45 days at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises 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.

11. The Company had introduced the Employee Stock Option Scheme (ESOS) as approved by the shareholders at the Annual General Meeting held on 13th August 2002. The scheme was amended by the shareholders at the Annual General Meeting held on 23rd July 2004 to incorporate the amendments under The Stock Option Guidelines vide SEBI circular dated 30th June 2003. The scheme has been further amended by the shareholders at the Annual General Meeting held on 7th August 2012 wherein the exercise price shall be based on the market price as defined in the SEBI (Employee Stock Option Scheme) Guidelines 1999 i.e. at the latest available closing market price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted.

As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Whole-time Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Vesting of an option is subject to continued employment.

Under the Scheme, during the financial years from 2002-03 to 2006-07 the Company granted 1,64,410 options, each option representing one equity share ofRs, 10/- each. Out of these 1,57,910 options were exercised into equity shares and balance 6,500 options lapsed.

On 7th August 2012, the Board of Directors had granted 14000 stock options (70,000 stock options post sub - division) to the Ex - Joint Managing Director of the Company at an exercise price ofRs, 528.25 (Rs, 105.65 post subdivision) per share for the years 2011-12 and 2012-13 which options have vested on 7th August 2013. Consequent upon the sub-division of shares on and from 31st October, 2012, the number of options and the exercise price have been appropriately adjusted.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to the Whole-time Director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option isRs, Nil. Consequently the accounting value of the option (compensation cost) is also Rs, Nil.

Fair Value Methodology:

Options have been valued based on Fair Value Method of accounting as described under Guidance Note on Accounting for Employee Share- based Payments using Black-Scholes valuation option-pricing model, using the market values of the Company''s shares as quoted on the National Stock Exchange. If the stock based compensation cost was calculated as per the Fair Value method prescribed by Securities and Exchange Board of India, the total cost to be recognized in the financial statements for the period April 1,2015 - to March 31,2016 would also be nil.

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, ''Financial Instruments: Recognition and Measurement'', issued by The Institute of Chartered Accountants of I ndia. Accordingly, the foreign exchange (gain)/loss of Rs, (0.92) crores (2014-15 Rs, 0.45 crores) as on 31st March, 2016 on forward foreign exchange contracts entered into to hedge firm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognized in the profit and loss account when the forecasted transactions arise.

(iii) The lease agreements are for a period of four years for vehicles and for a period of one to nine years for retail shops including further periods for which the Company has the option to continue the lease of retail shop with the condition of increase in rent, for a period of one year for god owns and for a period of 3 years for Retail Shops

(b) The Company has given commercial space on operating lease. The particulars in respect of such leases are as follows:-

12. Related party disclosures

(a) Names of related parties and nature of relationship:

1. Enterprise controlled by the Company

Subsidiary Company: Archway Investment Company Limited (w.e.f. 23rd Oct 2014)

2. Other related parties with whom Company had transaction during the year

Associate Companies: Archway Investment Company Limited (up to 22nd Oct 2014)

Pintail Textile Dealers Limited

Bombay Dyeing Real Estate Company Limited

Joint Venture Company: PT.Five Star Textile Indonesia

Key Management Personnel: Mr. Jehangir N Wadia - Managing Director

Mr. Vinod Hiran-Chief Financial Officer (19th May 2015 to 02nd Nov 2015)

Mr. K. Subharaman - Company Secretary & Compliance Officer (w.e.f. 1st June 2015)

Mr. Jairaj C Bham - Company Secretary (up to 31st May 2015)

Mr. Raghuraj Balkrishna -Chief Financial Officer (up to 08th Aug 2014)

Relative of Key Management Personnel : Mr. Nusli N. Wadia - Chairman - Father of Managing Director

Mr. Ness N Wadia - Director- Brother of Managing Director

Mrs. Saroj Jairaj Bham - Spouse of the Company Secretary (up to 31st May 2015)

Entities over which key management

personnel and relatives exercise significant influence: Go Airlines (India) Limited

Gladrags Media Ltd.

The Bombay Burmah Trading Corporation Ltd.

13. Corporate Social Responsibility Statement (CSR)

The company was required to spent Rs, 1.30 crores towards CSR during the year in accordance with the provisions of Section 135 of the Companies Act, 2013. However, the company has spent sum ofRs, 0.30 crores towards Chennai Flood Relief. Accordingly, there is a shortfall in CSR spent byRs,1 crores during 2015-16.

14. The financial statements have not been signed by the Company Secretary as required under the provision of Section 134 of the Companies Act, 2013 consequent to his resignation with effect from 30-April-2016.

15. Figures in Brackets indicate corresponding figures for the previous year.

16. Previous year figures have been regrouped where necessary.

Mar 31, 2015

1.Share Capital

(a) Rights, preferences and restrictions attached to Equity shares

The company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(b) Shares reserved for issue under options

Pursuant to the Employee Stock Option Scheme (ESOS) approved by the shareholders on 13th August, 2002 and as further amended by the shareholders on 07th August, 2012, the Company has granted 14,000 options, (70,000 options post sub-division) to the Joint Managing Director of the Company at an exercise price of Rs. 528.25 (Rs. 105.65 post sub-division) per share. As per the terms of the ESOS, each option is exercisable for conversion into one equity share of the Company (Refer Note 45).

(c) Information regarding issue of shares during last five years

(i) No shares were allotted pursuant to contracts without payment being received in cash.

(ii) No bonus shares have been issued.

(ii) No shares have been bought back.

(d) Shares held in Abeyance

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment of 4,640 shares (2013- 14-4,640shares) of face value of Rs. 2/- each against warrants carrying rights of conversion into equity shares of the Company has been kept in abeyance in accordance with section 126 of the Companies Act, 2013, till such time as the title of the bonafide owner is certified by the concerned Stock Exchanges.

2.RESERVES AND SURPLUS

a) Nature of Security and terms of repayment of secured borrowing:

i) Term Loans (TUFS) aggregating Rs. 27.04 crores (2013-14'' 47.26 crores) are secured by first pari passu charge on the Company''s existing as well as future fixed assets at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga other than fixed assets charged exclusively to term lenders. Repayable in quarterly instalments over a period of 2 to 3 years.

ii) Term loan amounting to Rs. Nil (2013-14 Rs. 3.37 crores) was secured by first pari-passu charge on the fixed assets of the Company at Polyester Division at Patalganga.

iii) Term loans aggregating Rs. Nil (2013-14 Rs. 41.66 crores) were secured by first pari-passu charge over part of the land of the Company at Textile Mills at Mumbai admeasuring upto 89,819.85 square metres and plant and machinery, buildings and structures thereon.

iv) Term loans aggregating Rs. 100.00 crores (2013-14 Rs. 250.00 crores) are secured by first pari passu charge on Company''s plant & machinery at Textile Processing unit at Ranjangaon and the Polyester Division at Patalganga. Repayable in half yearly instalments over 1 to 2 years.

v) Term loan aggregating Rs. 90.00 crores (2013-14 Rs. Nil) is secured by first pari passu charge on Company''s plant & machinery at Textile Processing unit at Ranjangaon and the Polyester Division at Patalganga and second charge of portion of Spring Mills land and buildings and structures thereon. Repayable in the next year.

vi) Term loans aggregating Rs. 529.50 crores (2013-14 Rs. 406.25 crores) are secured by first / secondary pari-passu charge over part of the land of the Company at Textile Mills at Mumbai and plant and machinery, buildings and structures thereon. Repayable in quarterly instalments over a period of 3 to 4 years.

vii) Term loan amounting to Rs. 36.30 crores (2013-14 Rs. 45.00 crores) is secured by first pari-passu charge of rent receivables from premises given on lease by the Company and second charge of portion of Spring Mills land and buildings and structures thereon. Repayable in monthly instalments over 4 years.

viii) Term loans under consortium arrangement amounting to Rs. 417.82 crores (2013-14 Rs. Nil) is secured by first pari-passu charge / Escrow of receivables of One ICC and Two ICC at Spring Mills, Dadar and first parsi passu charge over part of land of the Company at Textile Mills at Mumbai and buildings and structures thereon. Repayable in quarterly instalments over a period of 4 to 5 years after initial moratorium of 18 months.

3. SHORT-TERM BORROWINGS

a) Nature of Security for Short term borrowings

(i) Working Capital loans of Rs. 158.80 crores (2013-14 Rs. 152.81 crores) and Buyer''s Credit amounting to Rs. 23.81 crores (2013-14 Rs.158.92 crores) from banks under consortium arrangement is secured by hypothecation of present and future stocks, book debts and other current assets on pari passu basis and a second charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant and machinery and buildings thereon on pari passu basis.

(ii) Packing credit from bank of Rs. 95 crores (2013-14 Rs. 50 crores) is secured by way of registered mortgage on the immovable properties in Wadia International Centre (Texturising Building and Hemming Building) located at Worli, Mumbai.

(Rs. in crores) 4. CONTINGENT LIABILITIES 2014-15 2013-14 A. Claims against the company not acknowledged as debt.

(a) Income-tax matters in respect of earlier years under dispute (including interest of Rs. 5.12 crores)[31.03.2014. Rs.4.91 crores] as follows: 24.11 23.72

(i) Decided in Companybfavour by appellate authorities and department in further appeal 0.18 0.18

(ii) Pending in appeal - matters decided against the Company 23.93 23.54

(b) Sales Tax, Service Tax and Excise Duties 1.85 11.70

(c) Customs duty 0.95 0.95

(d) Others (Claims against the Company not acknowledged as debts) (with interest thereon) 14.75 45.04

In respect of items (a) to (d) above, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums/ authorities.

B. Guarantees

1. Counter indemnity for an amount of Rs. 182.82 crores (31.3.2014 Rs. 166.53 crores) issued in favour of IDBI Bank Limited which in turn has guaranteed loans granted by Punjab National Bank International London and Bank of India, Jersey to PTFS secured by first pari-passu charge on 36,617.13 square metres of land at Company''s Spring Mill Dadar, Naigaon together with all buildings, structures and erections there on.

2. Corporate guarantee for an amount of Rs. 20.76 crores (31.03.2014 Rs. 19.94 crores) issued in favour of Bank of Bahrain & Kuwait, Bahrain for loans granted to PTFS.

The Company has a pari passu charge on PTFS''s assets, which would cover the aforesaid indemnity amount.

C. Other money for which the company is contingently liable

Bills discounted 3.72 22.63

5.During the year 2000-01, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The titles in respect of certain immovable properties amalgamated into the Company are still in the process of transfer.

6.The Company has subsequent to the Balance Sheet date signed a Binding Term Sheet agreeing to enter into a transaction with a proposed purchaser for the sale and transfer of the entire Undertaking consisting of the Textile factory/ plant of the Company situated at Ranjangaon, together with all specified tangible assets including land, personnel/ employees and other assets in relation to the said Undertaking on a slump sale basis as a going concern and on "as is where is" basis for a total consideration of Rs. 230 crores. The net realizable value of the assets covered under the term sheet for disposal being lower than the carrying value thereof, the Company has made a provision for impairment of the said assets amounting to Rs. 13.26 crores as at March 31, 2015.

7.Based on the advice obtained by the Company, the premium charged by the Company on sale of apartments under the deferred payment scheme compared to the price charged under the normal sales scheme is also considered as part of sales consideration and is recognised as revenue under the percentage of completion method.

8.The Company vide notice dated 8th January 2013 notified the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid / provided to such employees the terminal dues, closure compensation and ex- gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier. The liability in respect of the monthly payments has been actuarially determined as on the Balance sheet date at Rs. 7.26 crores (2013-14 - Rs. 6.40 crores) by the independent actuary. As at the time of the previous voluntary retirement schemes, the initial cost relating to ex-gratia compensation was added to the development cost of land. The actuarial loss for the year amounting to Rs. 1.40 crores (2013-14 - Rs. 0.27 crore) has been recorded in the Statement of Profit & Loss.

9.The Company has agreed to sell several apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd, a Group company,in terms of various Memorandum of Understanding (MOUs) entered between the companies till March 31, 2015. Based on the method of accounting (percentage of completion) followed by the company, net revenue of Rs. 301.11 crores (2013-14 Rs. 670.13 crores) and the resultant profit before tax of Rs. 224.49 crores (2013-14 Rs.355.45 crores) has been recognised during the year ended March 31,2015 on sales to SCAL.

10.Recognition of income and expenses on on-going real estate project under long term contracts is based on actual sales; estimated costs and work completion status. Determination of profits/ losses, the percentage of completion, costs to completion and realisability of the construction work in progress & unbilled revenues necesssarily involves making estimates by the Company, some of which being of a technical nature, are being relied upon by auditors. Profit from these contracts and valuation of construction work in progress / unbilled revenue is based on such estimates.

11.The Bombay High Court vide its order dated November 20, 2013 permitted the Company to surrender land at one location i.e. Spring Mills, Wadala, as per the application made by the Company under the Integrated Development Scheme for consolidating handover obligation. Pursuant to the Order of the Supreme Court dated August 2, 2013 and the above order of the Bombay High Court, the Company has during the year given advance possession of 32,829.02 sq. mtrs of land to MCGM and 33,822.89 sq. mtrs of land to MHADA at Spring Mills, Wadala after completion of necessary boundary wall, and internal filling/ leveling, SWD, etc. as per the provisions of DCR 58 (6) read with DCR 58 (1) (a) & (b) and both MCGM and MHADA have taken advance possession of the said lands, pending completion of certain administrative formalities, which as per the company''s architect are routine.

As per the provisions of DCR 54 and as certified by the Company''s Architects, the Company is entitled to Development Rights (FSI) of 43,661.11 sq. mtrs generated in lieu of lands earmarked and handed over to MCGM for utilization by the owners on the said land and to Transferable Development Rights (TDR) of 44,984.44 sq. mtrs. in lieu of lands earmarked and handed over to MHADA under the Integrated Development Scheme as per the provisions of DCR 58.

Since physical possession of the earmarked lands is handed over and Advance Possession Receipts obtained from MCGM and MHADA, the Company has recognized the entitlement of additional Development Rights (FSI) available for its own use and accordingly converted the same into stock in trade at market value (as ascertained by registered valuers). The difference between the market value and cost thereof amounting to Rs. 694.29 crores has been credited to Revaluation Reserve increasing the Revaluation Reserve to Rs. 1687.59 crores. As per the method of accounting followed by the Company, an amount of Rs. 351.24 crores has been released from Revaluation Reserve to the credit of the Statement of Profit and Loss in respect of areas agreed for sale / sold and percentage of work completed. (including higher release of reserve due to increase in percentage completion). The Transferable Development Rights (TDR) will be recognised on receipt of TDR certificates.

Consequent to consolidation of handover obligations and hand over of land at one location, the base FSI available at Spring Mills, Wadala was reduced. Thus the proportionate cost of such land of Rs. 241.04 crores was transferred back to Freehold land for handover and the revaluation reserve relating to be reduced FSI amounting to Rs.238.07 crores has been reversed during the year.

12.Litigations

(a) During the year 2010-11, the Company had agreed to sell certain area in the proposed tower TWO ICC to Shaan Realtors Pvt. Ltd., formerly Accord Holding Pvt. Ltd. ("the claimants"). The area agreed to be sold is under dispute and the matter was referred to arbitration. The arbitrator vide order dated 13th January 2014 passed the final award directing the company to allot to the claimants and/ or its associates, friends, nominees carpet area of 1,00,000 sq. ft. less the carpet area as already allotted to them in the proposed tower TWO ICC, namely additional carpet area of 48,495 sq. ft. The Company has filed an appeal in the Bombay High Court under section 34 of the Arbitration & Conciliation Act, 1996 against the final award. The Company is confident that the final award passed by the learned arbitrator will get reversed in view of the strong merits in the case. Accordingly, the requisite area has been set aside by the Company and the total area to be allotted to the claimants will be accounted on disposal of the appeal filed in the High Court. No adjustment has been made in the accounts for the year ended 31st March 2015 in view of the uncertainty involved.

(b) The Bombay High Court vide its order dated 20th November, 2013 permitted the Company to surrender land at one location i.e. Wadala, as per the application made by the company under integrated development scheme. As per this order the total of 66,651 sq. meter of land has been surrendered to MCGM and MHADA at Island City Centre, Wadala. During the year 2013-14, the Union had filed a writ petition requiring the company to surrender non textile mill land. The Bombay High Court has directed the Company to reserve additional 10,000 sq. meters of land adjacent to the land to be surrendered. The Company believes that abovesaid writ petition filed in Bombay High Court has no impact on the development of the two towers at ICC since the reserved land of 10,000 sq. meters is different from the one where construction of the two towers is in progress.

(c) The company had during the year 2010-11 sold the building known as ''Wadia Tower A to Axis Bank Ltd for a consideration of Rs. 782.62 crores. The purchaser has till date paid a sum of Rs. 753.69 crores and the balance Rs. 28.93 crores is still outstanding. Axis bank has claimed interest for delayed handover for a period of 4 months from October 2010 to January 2011, and has not paid the common area maintenance charges amounting Rs. 7.71 crores. Since the matter could not be amicably resolved, the same was referred to arbitration. Claims from the Bank regarding costs for work completed by the Bank on behalf of the Company and by the Company on behalf of Axis Bank are also matters under arbitration. Pending finalisation of arbitration proceedings the receivables are considered good.

13.The remuneration paid to Managing Director for the year ended March 31, 2015 is in excess of the limits laid down in section 197 of the Companies Act, 2013 read with Schedule V of the said Act. The excess remuneration of Rs. 3.26 crores is subject to the approval of the Central Government, in respect of which the Company has made an application and the approval is awaited. The excess of remuneration of the Managing Director over the limits prescribed under section 198 and 309 of the Companies Act, 1956 for the year ended March 31, 2014 has been approved by Central Government vide approval dated 18th September, 2014.

14. Current Liabilities

The amount of dues owed to Micro, Small and Medium Enterprises as on 31st March, 2015 amounted to Rs. 0.16 crore (31st March, 2014- Rs. 0.11 crore). This amount has been outstanding for more than 45 days at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises 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.

15. The Company had introduced the Employee Stock Option Scheme (ESOS) as approved by the shareholders at the Annual General Meeting held on 13th August 2002. The scheme was amended by the shareholders at the Annual General Meeting held on 23rd July 2004 to incorporate the amendments under The Stock Option Guidelines vide SEBI circular dated 30th June 2003. The scheme has been further amended by the shareholders at the Annual General Meeting held on 7th August 2012 wherein the exercise price shall be based on the market price as defined in the SEBI (Employee Stock Option Scheme) Guidelines 1999 i.e. at the latest available closing market price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted, on the stock exchange having highest trading volume.

As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Whole-time Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Vesting of an option is subject to continued employment.

Under the Scheme, during the financial years from 2002-03 to 2006-07 the Company granted 1,64,410 options, each option representing one equity share of Rs. 10/- each. Out of these 1,57,910 options were excercised into equity shares and balance 6,500 options lapsed.

On 7th August 2012, the Board of Directors had granted 14000 stock options (70,000 stock options post sub -division) to the Joint Managing Director of the Company at an exercise price of Rs. 528.25 (Rs. 105.65 post subdivision) per share for the years 2011-12 and 2012-13 which options have vested on 7th August 2013. Further 50,000 stock options of equity shares of Rs. 2 each were granted for the year 2013-14 on 28th May, 2013 at an exercise price of Rs. 79.50 per share to the Joint Managing Director which were due for vesting on 28th May, 2014. However, these options have lapsed as the grantee has resigned from the Company before the vesting date. Consequent upon the sub-division of shares on and from 31st October, 2012, the number of options and the exercise price have been appropriately adjusted.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to the Whole-time Director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Rs. Nil. Consequently the accounting value of the option (compensation cost) is also Rs. Nil.

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, ''Financial Instruments: Recognition and Measurement'', issued by The Institute of Chartered Accountants of India. Accordingly, the foreign exchange loss of Rs. 0.45 crores (2013-14 Rs.1.07 crores) as on 31st March, 2015 on forward foreign exchange contracts entered into to hedge firm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognised in the profit and loss account when the forecasted transactions arise.

16. Related party disclosures

(a) Names of related parties and nature of relationship

Subsidiary Company:

Archway Investment Company Limited (w.e.f. 23 rd Oct 2014) (95.69% holding)

Associate Companies:

Archway Investment Company Limited (upto 22nd Oct 2014)

Pentafil Textile Dealers Limited

Bombay Dyeing Real Estate Company Limited

Joint Venture Company:

PT.Five Star Textile, Indonesia

Key Management Personnel:

Mr. Jehangir N Wadia - Managing Director

Mr. Ness N Wadia - Director- Brother of Managing Director

Mr. Jairaj C Bham -Company Secretary

Mr. Raghuraj Balkrishna -Chief Financial Officer (upto 08th Aug 2014) Mr. Durgesh Mehta -Joint Managing Director (upto 15th Feb 2014)

Relatives of Key Management Personnel:

Mrs. Saroj Jairaj Bham - Spouse of the Company Secretary

Entities over which key management

personnel and relatives exercise significant influence :

Go Airlines (India) Limited

The Bombay Burmah Trading Corporation Ltd.

17. Figures in Brackets indicate corresponding figures for the previous year.

18. Previous year figures have been regrouped where necessary.

Mar 31, 2014

(Rs. in crores)

1. Contingent Liabilities 2013-14 2012-13

A. Claims against the company not acknowledged as debt.

(a) Income-tax matters in respect of earlier years under dispute (including interest of Rs. 4.91 crores) [31.03.2013. Rs. 5.85 crores] as follows: 23.72 25.77

i Decided in Company''s favour by appellate authorities and department in further appeal 0.18 0.74

ii Pending in appeal - matters decided against the Company 23.54 25.03

(b) Sales Tax, Service Tax and Excise Duties 11.70 1.86

(c) Custom Duty 0.95 0.95

(d) Others (Claims against the company not acknowledged as debts) (with interest 45.04 34.59 thereon)

In respect of items (a) to (d) above, future cash outflows in respect of contingent I liabilities are determinable only on receipt of judgments pending at various I forums/authorities.

B. Guarantees

1. Counter indemnity for an amount ofRs. 166.53 crores (31.3.2013 Rs. 116.67 crores) I issued in favour of IDBI Bank Limited which in turn has guaranteed loans granted I by Punjab National Bank International London and Bank of India, Jersey to I PTFS secured by first pari-passu charge on 36,617.13 square meters of land at I Company''s Spring Mill Dadar, Naigaon together with all buildings, structures and I erections there on.

2. Corporate guarantee for an amount ofRs. 19.94 crores (31.03.2013Rs. 17.45 crores) issued in favour of Bank of Bahrain & Kuwait, Bahrain for loans granted to PTFS.

The Company has a pari passu charge on PTFS''s assets, which would cover the I aforesaid indemnity amount.

C. Other money for which the company is contingently liable

Bills Discounted 22.63 30.58

2. During the year 2000-01, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The titles in respect of certain immovable properties amalgamated into the Company are still in the process of transfer.

3. Based on the advice obtained by the Company, the premium charged by the Company on sale of apartments under the deferred payment scheme compared to the price charged under the normal sales scheme is also considered as part of sales consideration and is recognised as revenue under the percentage of completion method.

4. T e Company vide notice dated 08th January, 2013 notifi ed the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid/provided to such employees the terminal dues, closure compensation and ex-gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier. The liability in respect of the monthly payments has been actuarially determined as on the Balance sheet date at Rs. 6.40 crores (2012-13- Rs. 6.67 crores) by the independent actuary. As at the time of the previous voluntary retirement schemes, the cost relating to ex-gratia compensation aggregating to Rs. 0.76 crores (2012-13- Rs. 10.07 crores) has been added to the development cost of land as the said land is freed for real estate development.

5. During the year, the Company has agreed to sell certain apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd., an associate company for a net consideration of Rs. 1505.64 crores (2012-13: Rs. 667.07 crores) in accordance with the Memorandum of Understanding (MOUs) entered between the companies. Based on the method of accounting followed by the company (percentage of completion), the Company has during the year recognized net revenue of Rs. 670.13 crores (2012-13: Rs. 323.11 crores) and resultant profit before tax of Rs. 355.45 crores (2012-13: Rs. 203.96 crores) from sale of apartments to SCAL, including an amount of Rs. 188.53 crores (2012-13: Rs. 87.31 crore) released from Revaluation Reserve.

6. Recognition of income and expenses on on-going real estate project under long term contracts is based on actual sales; estimated costs and work completion status. Determination of profi ts/losses, the percentage of completion, costs to completion and realisability of the construction work in progress & unbilled revenues necessarily involves making estimates by the Company, some of which being of a technical nature, are being relied upon by auditors. Profi t from these contracts and valuation of construction work in progress/unbilled revenue is based on such estimates.

7. During the year 2010-11, the Company had agreed to sell certain area of in the proposed tower TWO ICC to Shaan Realtors Pvt. Ltd. (Formerly known as Accord Holding Pvt. Ltd.). The area agreed to be sold is under dispute and the matter has been referred to arbitration. The arbitrator vide order dated 13th January, 2014 passed the final award directing the company to allot to the claimants and/or its associates, friends, nominees carpet area of 1,00,000 sq. ft. less the carpet area as already allotted to them in the proposed tower TWO ICC. The Company has filled an appeal in the Bombay High Court under section 34 of the Arbitration & Conciliation Act, 1996 against the final award. The Company is confi dent that the final award passed by the learned arbitrator will get reversed in view of the strong merits in the case. Accordingly, the requisite area has been set aside by the Company and the total area allotted to Shaan Realtors Pvt. Ltd. (Formerly known as Accord Holding Pvt. Ltd.) will be accounted on disposal of the appeal fi led in the High Court. No adjustment has been made in the accounts for the year ended 31st March, 2014 in view of the uncertainty involved.

8. The Bombay High Court vide its order dated 20th November, 2013 permitted the company to surrender land at one location i.e. Wadala, as per the application made by the company under integrated development scheme. As per this order the total of 66,651 sq. meter of land would be surrendered at Island City Centre, Wadala. The company has almost completed all the formalities required for surrendering the abovesaid land and land would be surrendered at the earliest. However, a Union filled another writ petition requiring the company to surrender non textile mill land. The Bombay High Court has directed the company to reserve additional 10,000 sq. meters of land adjacent to the land to be surrendered. The company believes that abovesaid writ petition fi led in Bombay High Court has no impact on the development of two towers at ICC since the reserved land of 10,000 sq. meters is different from the one where construction of the two towers is coming up.

9. The remuneration paid to Managing Director is in excess of the limits laid down in section 198 of the Companies Act, 1956 read with Schedule XIII of the said Act. The excess remuneration of Rs. 2.92 crore is subject to the approval of the Central Government, in respect of which the Company has made an application and the approval is awaited.

vii a. The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risk, historical results of return on plan assets and the Company''s policy for plan assets management.

viii The above information is certified by the actuary.

C. Other long term benefits- Amount recognised as a liability in respect of compensated leave absences is Rs. 6.07 crores [2012-13- Rs. 5.71 crores]

D. Termination Benefits

Liability recognised in respect of termination benefits payable on monthly basis up to age 63 or demise whichever is earlier, as per actuarial valuation Rs. 6.40 crores (2012-13- Rs. 6.67 crores). The said amount together with other lump-sum payments aggregating to Rs. 0.76 crores (2012-13 - Rs. 10.07 crores) is added to the development cost of land (Refer note 34)

10. Current Liabilities

The amount of dues owed to Micro, Small and Medium Enterprises as on 31st March, 2014 amounted to Rs. 0.11 crore (31st March, 2013- Rs. 0.17 crore). This amount has been outstanding for more than 45 days at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises 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.

11. The Company had introduced the Employee Stock Option Scheme (ESOS) as approved by the shareholders at the Annual General Meeting held on 13th August 2002. The scheme was amended by the shareholders at the Annual General Meeting held on 23rd July 2004 to incorporate the amendments under The Stock Option Guidelines vide SEBI circular dated 30th June 2003. The scheme has been further amended by the shareholders at the Annual General Meeting held on 7th August 2012 wherein the exercise price shall be based on the market price as defined in the SEBI (Employee Stock Option Scheme) Guidelines 1999 i.e. at the latest available closing market price, prior to the date of the meeting of the Board of Directors or Remuneration/Compensation Committee in which options were granted, on the stock exchange having highest trading volume.

As per the Scheme, the Remuneration/Compensation Committee grants options to the employees and Whole-time Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Vesting of an option is subject to continued employment.

Under the Scheme, during the financial years from 2002-03 to 2006-07 the Company granted 1,64,410 options, each option representing one equity share of Rs. 10/- each. Out of these 1,57,910 options were exercised into equity shares and balance 6,500 options lapsed.

The Company has further granted 50,000 on 28th May, 2013 at an exercise price of Rs. 79.50 per share to the Joint Managing Director of the Company. 50,000 options which were granted on 28th May, 2013 were due for vesting on 28th May, 2014. However, these options have lapsed as the grantee has resigned from the Company before the vesting date. Consequent upon the sub-division of shares on and from 31st October, 2012, the number of options and the exercise price have been appropriately adjusted.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to the Whole-time Director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Rs. Nil. Consequently the accounting value of the option (compensation cost) is also Rs. Nil.

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, ''Financial Instruments: Recognition and Measurement'', issued by The Institute of Chartered Accountants of India. Accordingly, the foreign exchange (gain)/loss of Rs. 1.07 crores (2012-13 Rs. 0.18 crores) as on 31st March, 2014 on forward foreign exchange contracts entered into to hedge fi rm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognised in the Statement of Profit and Loss when the forecasted transactions arise.

Notes:

(a) The Company''s operating facilities are located in India. Some of the assets are not identifiable separately to any reportable segment as these are used interchangeably between segments.

(b) Corporate expenses have been apportioned between the segments on a reasonable basis.

12. Related party disclosures

(a) Names of related parties and nature of relationship:

Associate Companies: Archway Investment Company Limited

Pentafil Textile Dealers Limited Scal Services Limited Bombay Dyeing Real Estate Company Limited

Joint Venture Companies: PT.Five Star Textile Indonesia

Key Management Personnel: Mr.Jeh N Wadia - Managing Director

Mr.Durgesh Mehta - Joint Managing Director (Up to 15.02.2014) Mr.Ness N Wadia - Director- Brother of Managing Director

Entities over which key management

personnel and relatives exercise significant influence: Go Airlines (India) Limited

The Bombay Burmah Trading Corporation Ltd.

13. Figures in Brackets indicate corresponding figures for the previous year.

14. Previous year figures have been regrouped where necessary.

Mar 31, 2013

1. During the year 2000-2001, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

2. Based on the advice sought by the Company, the premium charged by the Company on sale of apartments under the 20:80 scheme, where 80% of the consideration is payable at the time of handing over of possession, compared to the price charged under the normal sales scheme is also considered as part of sales consideration and is recognised as revenue under the percentage of completion method.

3. The Company vide notice dated 08th January, 2013 notified the closure of its textile mills manufacturing undertaking at Worli, pursuant to which some of the textile workers accepted alternate employment in the company and the remaining workers accepted closure of the undertaking and consequent termination of services under the memorandum of agreement signed by the Company with the workers union. In accordance with the agreement, the Company has paid / provided to such employees the terminal dues, closure compensation and ex-gratia compensation. Whilst some workers have accepted lump sum compensation, others have opted for a monthly payment up to age 63 or till demise, whichever is earlier. The liability in respect of the monthly payments has been actuarially determined at Rs. 6.67 crores by the independent actuary. As at the time of the previous voluntary retirement schemes, the cost relating to ex-gratia compensation aggregating to Rs. 10.07 crores has been added to the development cost of land as the said land is freed for real estate development.

4. During the year, the Company has agreed to sell certain apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd., an associate Company for a consideration of Rs. 701.81 crores (31.03.2012: Rs. 743.83 crores) in accordance with the Memorandum of Understanding (MOUs) entered between the companies. Based on the method of accounting followed by the company (percentage of completion), the Company has recognized net revenue of Rs. 339.47 crores (31.03.2012: Rs. 341.32 crores) from the said transactions, including an amount of Rs. 89.38 crores (31.03.2012:Rs. 103.67crores) released from Revaluation Reserve.

5. During the year 2010-11, the Company had agreed to sell certain area of in the proposed tower TWO ICC to Accord Holding Pvt. Ltd. The area agreed to be sold is under dispute and the matter has been referred to arbitration. The arbitrator vide order dated 27th August, 2012 has restrained the Company from selling, transferring or alienating right, title or interest in respect of 1,00,000 sq.ft. carpet area in favour of any third party. The Company has filed an appeal against the order in the Bombay High Court. The arbitration proceedings have been posted for arguments and final hearing.

6. Prior Period expenses/(income) included under "Statement of Profit and Loss" for the year.

7. Employee Benefits

A. Defined Contribution Plan

The Company has recognized the following amounts in the Statement of Profit and Loss under contribution to provident and other funds as under:

B. Defined Benefit Plan

Gratuity - as per actuarial valuation as on 31st March, 2013

C. Other long term benefits-

Amount recognised as a liability in respect of compensated leave absences is Rs. 5.71 crores [2011-12- Rs. 4.61 crores]

D. Termination Benefits

Liability recognised in respect of termination benefits payable on monthly basis upto age 63 or demise whichever is earlier, as per actuarial valuation Rs. 6.67 crores. The said amount together with other lump-sum payments aggregating to Rs. 10.07 crores is added to the development cost of land (Refer note 33)

8. Current Liabilities

The amount of dues owed to Micro, Small and Medium Enterprises as on 31st March, 2013 amounted to Rs. 0.17 crore (31st March, 2012- Rs. Nil). This amount has been outstanding for more than 45 days at the Balance Sheet date. The information regarding Micro, Small and Medium Enterprises 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. disclosure under MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 Company has sought confirmation from vendors whether they fall in the category of Micro, Small and Medium Enterprises. Based on the information available the required disclosure under Micro, Small and Medium Enterprises Development Act, 2006 is given below:

9. The Company had introduced the Employee Stock Option Scheme (ESOS) as approved by the shareholders at the Annual General Meeting held on 13th August 2002. The scheme was amended by the shareholders at the Annual General Meeting held on 23rd July 2004 to incorporate the amendments under The Stock Option Guidelines vide SEBI circular dated 30th June 2003. The scheme has been further amended by the shareholders at the Annual General Meeting held on 7th August 2012 wherein the exercise price shall be based on the market price as defined in the SEBI (Employee Stock Option Scheme) Guidelines 1999 i.e. at the latest available closing market price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted, on the stock exchange having highest trading volume.

As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Whole-time Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Exercise of an option is subject to continued employment.

Under the Scheme, during the financial years from 2002-03 to 2006-07 the Company granted 1,64,410 options, each option representing one equity share of Rs. 10/- each. Out of these 1,57,910 options were exercised into equity shares and balance 6,500 options lapsed.

The Company has further granted 14,000 options (i.e. 70,000 options post sub-division) on 7th August, 2012 at an exercise price of Rs. 528.25 (i.e. Rs. 105.65 post sub-division) per share to the Joint Managing Director of the Company. Consequent upon the sub-division of shares on and from 31st October, 2012, the number of options and the exercise price have been appropriately adjusted.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to the Whole-time Director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Rs. Nil. Consequently the accounting value of the option (compensation cost) is also Rs. Nil.

Fair Value Methodology:

Options have been valued based on Fair Value Method of accounting as described under guidance note on Accounting for Employee Share-based Payments using Black-Scholes valuation option-pricing model, using the market values of the Company''s shares as quoted on the National Stock Exchange.

10. Related party disclosures

(a) Names of related parties and nature of relationship:

Associate Companies: Archway Investment Company Limited

Pentafil Textile Dealers Limited Scal Services Limited (upto 28.03.2012)

Bombay Dyeing Real Estate Company Limited Co-venturer: Batra Group (Upto 27.03.2012)

Joint Venture Companies: PT.Five Star Textile Indonesia

Proline India Limited (upto 27.03.2012)

Key Management Personnel and Mr.Jeh N Wadia - Managing Director

Mr.Durgesh Mehta - Joint Managing Director

Mr.Ness N Wadia - Director- Brother of Managing Director

Entities over which key management

personnel and relatives exercise significant influence : Go Airlines (India) Limited

The Bombay Burmah Trading Corporation Ltd.

11. Figures in Brackets indicate corresponding figures for the previous year.

12. Previous year figures have been regrouped where necessary.

Mar 31, 2012

(a) Rights, preferences and restrictions attached to Equity shares

The company has one class of equity shares having a par value of Rs 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(b) Shares held in Abeyance

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment against 928 (2010-11- 928) warrants carrying rights of conversion into equity shares of the Company has been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonfire owner is certified by the concerned Stock Exchanges.

(c) Shares allotted on exercise of warrants

The Company had on 21st July, 2010 allotted 39,57,000 warrants on preferential basis to a Company in the promoter group. In accordance with the terms of issue, 19,30,000 warrants were subscribed for conversion in March 2011, and equivalent equity shares issued. Further, 20,27,000 warrants were exercisable with option to subscribe to equivalent number of equity shares of Rs 10 each, on or after 1st April, 2011 but not later than 18 months from the date of issue of the warrants, in terms of Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("the Regulations").

In January, 2012, 7,60,000 warrants were exercised for conversion into equity shares as per the terms of the allotment of the warrants and 7,60,000 equity shares were allotted on 30th January, 2012 to the promoter group company. The balance 12,67,000 warrants lapsed due to non-exercise of the conversion into equity shares and the amount aggregating Rs 16.71 crores was forfeited in terms of the SEBI(DIP) Guidelines and conditions attached to the warrants. The forfeited amount of Rs16.71 crores has been credited to Capital Reserve.

a) Nature of Security and terms of repayment of secured borrowing:

i) Term Loans aggregating Rs 111.92 crores (2010-2011 Rs 250.02 crores) are secured by first pari passu charge on the Company''s existing as well as future fixed assets at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga other than fixed assets charged exclusively to term lenders. Repayable in quarterly installments over a period of 2 to 7 years.

ii) Term loan amounting to Rs 13.00 crores (2010-2011 Rs 26.00crores) is secured by first pari passu charge on the Company''s existing as well as future assets of Polyester Division at Patalganga [excluding assets on lease basis, vehicles, furnitures and fixed assets charged exclusively to term lenders]. Repayable in one year.

iii) Term loan amounting to Rs 16.69 crores (2010-2011 Rs 23.35 crores) is secured by first pari passu charge on the fixed assets of the Company at Polyester Division at Patalganga. Repayable in half yearly instalments over 3 years.

iv) Term loans aggregating Rs 375.00 crores (2010-2011 Rs 125.00 crores) is secured by first pari passu charge over part of the land of the Company at Textile Mills at Mumbai admeasuring upto 89,941.07 square metres and plant and machinery, buildings and structures thereon. Repayable in quarterly instalments over a period of 1 to 3 years.

v) Term loan of Rs 125.00 crores (2010-2011 Rs 250.00crores) is secured by first pari passu charge over part of the land of the Company at Spring Mills at Mumbai admeasuring 46,442.13 square metres and buildings and structures thereon. Repayable in one year.

vi) Term loan amounting to Rs150.00 crores (2010-2011 Nil) is to be secured by first pari passu charge on Company''s plant & machinery at Textile Processing unit at Ranjangaon and the Polyester Division at Patalganga. Repayable in annual instalments over 3 years.

vii) Term loan amounting to Rs100.00 crores (2010-2011Rs Nil) is to be secured by first pari passu charge over part of the land of the Company at Textile Mills at Mumbai. Repayable in quarterly instalments over 3 years.

viii) Term Loans aggregating RsNIL (2010-2011 Rs161.05 crores) were secured by first pari passu charge over part of the land of the Company at Mumbai admeasuring 30,006.90 square metres and buildings and structures thereon.

ix) Term Loan amounting to RsNIL (2010-2011 Rs0.19crores) was secured by exclusive charge on the specific fixed assets of the Company at Textile Processing Unit at Ranjangaon.

b) Terms of repayment of unsecured borrowing:

Fixed Deposits from shareholders and public are repayable from January to March 2015.

a) Nature of Security for Short term borrowings

(i) Working Capital loans of Rs 92.66 crores (2010-2011 Rs 123.11 crores) and Buyer''s Credit amounting to Rs 192.94 crores (2010-11 Rs 91.24 crores) from banks under consortium arrangement is secured by hypothecation of present and future stocks, book debts and other current assets on pari passu basis and a second charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant and machinery and buildings thereon on pari passu basis.

(ii) BuyerRss Credit aggregating Rs 49.82 crores (2010-11 - Rs Nil) is secured by first pari passu charge on land of the Company at Spring Mills at Mumbai admeasuring 46,442.13 square metres and aggregating Rs 23.55 crores (2010-11 Rs Nil) is secured by first pari passu charge on land of the Company at Spring Mills at Mumbai admeasuring 30,006.90 square metres and buildings and erections thereon.

(iii) Short term loan from bank amounting to Rs Nil (2010-11 Rs 100 crores) was secured by first pari passu charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and Plant & Machinery and buildings and structures thereon.

1. LONG-TERM LOANS AND ADVANCES (CONTD.)

a) Deposit of Rs 15.22 crores (2010-2011 Rs 15.22 crores) with a joint venture company is a "shareholders" deposit with PT. Five Star ''Textile Indonesia (PTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April, 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioner''s of PTFS. This deposit which was earlier repayable by 2010 is now repayable by PTFS after repayment of its other borrowings or by the year 2015, whichever is earlier, as permitted by Reserve Bank of India.

b) Loans and advances to related parties also includes Rs 15.65 crores (2010-11Rs 15.89 crores) recoverable from PTFS on account of royalty and expenses incurred on their behalf. The Company has stopped accrual of royalty and other expenses in the account since April, 2009. The management is considering various options including the restructuring of the operations of PTFS, for recovery of the same.

a) Balances with banks in deposit accounts includes fixed deposits aggregating to Rs13.28 crores (2010-2011Rs 16.05 crores) against which lien has been marked by the banks as security for guarantees issued on behalf of the Company. It also includes fixed deposits aggregating to Rs 9.06 crores (2010 - 2011Rs Nil) placed out of the funds received as corpus fund and maintenance deposits from flat owners.

a) Advances recoverable in cash or in kind or for value to be received includes Rs 0.71 crore on account of remuneration recoverable from Mr. M.K.Singh, Executive Director, whose services were terminated on 6th July, 2008 consequent to detection of irregular conduct. A suit has been filed by the company in the High Court of Judicature of Mumbai alleging fraudulent misconduct. The matter is pending before the Court.

(Rs.in crores)

2. Contingent Liabilities 2011-12 2010-11

A. Claims against the company not acknowledged as debt.

(a) Income-tax matters in respect of earlier years under dispute (including interest of Rs 5.85 crores) [31.03.2011. Rs5.86 crores] as follows:

(i) Decided in Company''s favour by appellate authorities and department in further appeal 5.11 5.11

(ii) Pending in appeal - matters decided against the Company 28.57 36.07

(b) Sales Tax, Service Tax and Excise Duties 1.86 14.12

(c) Customs duty 0.25 0.25

(d) Others (Claims against the Company not acknowledged as debts) (with interest thereon) 36.42 6.99 In respect of items (a) to (d) above, future cash outflows, if any in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums/ authorities.

B. Counter indemnity for an amount of Rs 113.47 crores (31.3.2011 Rs96.22crores) issued in favour of banks which in turn have guaranteed loans granted by other banks abroad to PT Five Star Textile, Indonesia, (PTFS), a joint venture company as under:-

(i) Rs 84.08 crores (31.03.2011 Rs 84.16 crores) in favour of IDBI Bank Limited against guarantees issued to Punjab National Bank International London for loans granted to PTFS secured by first pari passu charge over part of the land of the Company at Spring Mills at Mumbai admeasuring 46,442.13 square meters and buildings and structures thereon.

(ii) Rs 12.00 crores (31.03.2011 Rs 12.06 crores) in favour of IDBI Bank Limited against guarantees issued to Punjab National Bank International London for loans granted to PTFS secured by fixed deposit of Rs 12.51 crores earmarked in favour of IDBI Bank Limited.

(iii) Rs 17.39 crores (31.03.2011 Rs Nil) in favour of Bank of Bahrain & Kuwait, Bahrain for loans granted to PTFS secured by first pari passu charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant & machinery, buildings and structures thereon.

The Company has a pari passu charge on PTFS''s assets, which would cover the aforesaid indemnity amount.

C. Other money for which the company is contingently liable Bills discounted 37.94 41.44 30. During the year 2000-2001, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

3. The Company has during the year ended March 31, 2012 converted a part of the freehold land under real estate development from Fixed Assets to Stock in trade at market value and the difference between the market value and cost amounting to Rs 764.30 crores (2010-11 Rs 853.96 crores) has been credited to Revaluation Reserve. An amount of Rs 165.27 crores (2010-11Rs 70.57 crores) has been released from revaluation reserve to Statement of Profit and Loss in proportion of revenue recognized on the area sold in accordance with the accounting policy.

4. The Company has with effect from April 1, 2011 changed the accounting policy for recognition of revenue from Real Estate activity. Up to the previous year, revenue arising from sale of undivided interest in the underlying freehold land relating to flats / office premises under construction was accounted when the agreement for sale of such flats / office premises was entered into and the revenue from construction activity in relation to the areas sold was recognized on the percentage of completion method. Effective April 1, 2011 entire revenue from real estate activity is recognised on the percentage of completion method. Had the Company continued to follow the earlier accounting policy, revenue from real estate activity and construction costs would have been lower by Rs 146.22 crores and Rs13.92 crores respectively, the release from Revaluation Reserve would have been higher by Rs 205.81 crores and the net profit before tax would have been higher by Rs 73.51 crores.

5. The Company has pursuant to a Memorandum of Understanding entered into during the year with SCAL Services Ltd., an associate company, agreed to sell certain apartments in the proposed residential towers being constructed at Island City Centre for a consideration of Rs 743.83 crores. The company has recognized net revenue of Rs 341.32 crores from the said transaction, including an amount of Rs 103.67 crores released from Revaluation Reserve.

vii a. The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risk, historical results of return on plan assets and the Company''s policy for plan assets management.

viii The above information is certified by the actuary.

6. Foreign Currency Transactions

Exchange differences recognized in Statement of Profit and Loss include gain on cancellation of forward exchange contracts Rs1.61 crores (2010-11 loss Rs3.84 crores)

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, ''Financial Instruments: Recognition and Measurement'', issued by The Institute of Chartered Accountants of India. Accordingly, the foreign exchange (gain)/ loss of Rs 0.23 crores (2010-11 Rs (0.01) crores) as on 31st March, 2012 on forward foreign exchange contracts entered into to hedge firm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognized in the Statement of Profit and Loss when the forecasted transactions arise.

(iii) The lease agreements are for a period of four years for vehicles and for a period of one to nine years for retail shops including further periods for which the Company has the option to continue the lease of retail shop with the condition of increase in rent, for a period of one year for godowns and for a period of 3 years for flats.

Notes:

(a) The Company''s operating facilities are located in India. Some of the assets are not identifiable separately to any reportable segment as these are used interchangeably between segments.

(b) Corporate expenses have been apportioned between the segments on a reasonable basis.

Notes:

(a) Dividend paid has not been considered by the Company as a transaction falling under the purview of Accounting Standard 18 "Related Party Disclosures".

(b) Revenue from real estate activity is disclosed based on aggregate value of sales consideration as per agreements.

(c) Secured by a pari passu charge on the assets of the joint venture.

7. Figures in Brackets indicate corresponding figures for the previous year.

8. Previous year figures have been regrouped where necessary.

Mar 31, 2011

2009-2010

Rupees Rupees in

in crores Crores

(1) Contingent liabilities not provided for

(a) Income-tax matters in respect of earlier years under dispute (including interest of Rs. 5.86 crores) [31.03.2010. Rs.5.77 crores] as follows: 41.18 37.10

(i) Decided in Company''s favour by appellate authorities and department in further appeal 5.11 5.11

(ii) Pending in appeal - matters decided against the Company 36.07 31.99

(b) Sales Tax, Service Tax and Excise Duties 14.12 1.47

(c) Customs duty 0.25 0.37

(d) Other claims against the Company not acknowledged as debts (with interest thereon) . 6.99 4.38

In respect of items (a) to (d) above, future cash outfl ows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums/authorities.

(e) Counter indemnity for an amount of Rs. 96.22 crores (31.3.2010 Rs.81.45 crores) issued in favour of banks which in turn have guaranteed loans granted by other banks abroad to PT Five Star Textile, Indonesia, (PTFS), a joint venture company as under:- (i) Rs. 84.16 crores (31.3.2010 Rs. 71.05 crores) in favour of IDBI Bank Limited against guarantees issued to Punjab National Bank International London for loans granted to PTFS.

(ii) Rs. 12.06 crores (31.3.2010 Rs. Nil) in favour of IDBI Bank Limited against guarantees issued to Punjab National Bank International London for loans granted to PTFS.

(iii) Rs. Nil (31.3.2010 Rs. 10.40 crores) in favour of State Bank of India, against guarantees issued to State Bank of India, Indonesia for loans granted to PTFS.

Item No. (i) secured by fi rst Mortgage/charge over part of the land of the Company at Spring Mills at Mumbai admeasuring 46,442.13 square metres and buildings and structures thereon.

Item No. (ii) is secured by fixed deposit of Rs. 12.51 crores earmarked in favour of IDBI Bank Limited.

As confi rmed by PTFS, the Company has a pari passu charge on PTFS''s assets, which would cover the aforesaid indemnity amount.

(f) Bills discounting 41.44 25.89

(g) In accordance with the EPCG Scheme, the company had during 2006-07 and 2007-08 imported capital goods duty free, subject to condition that the Company will fulfi ll, in future, a specifi ed amount of export obligation within eight years. Amount of duty saved on import of the above goods aggregate Rs 29.78 crores (31.03.2010 Rs. 29.78 crores) against which export obligation of Rs 238.26 crores (31.03.2010 Rs. 238.26 crores) needs to be fulfi lled. The company has made an application to the Government for modification of the export obligation. If the Company fails to meet the required export obligation, the company will be required to pay the import duty saved together with interest thereon.

(h) Export obligation under Advance Licence Scheme Rs. 2.81 crores (31.03.2010 Rs. 2.81 crores) and duty saved thereon Rs. 0.71 crore (31.03.2010 Rs. 0.71 crore).

(2) Capital Commitments

Estimated amount of contracts to be executed on capital account and not provided for as at 31st March, 2011 Rs 7.72 crores (31.3.2010 Rs.6.05 crores)

(3) Share Capital

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment against 928 (2009- 10- 928) warrants carrying rights of conversion into equity shares of the Company has been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonafi de owner is certifi ed by the concerned Stock Exchanges.

(4) The Shareholders of the company had approved on 24th March 2010 through postal ballot issue of 39,57,000 Warrants with an option to subscribe equivalent number of shares of Rs.10 each comprising 19,30,000 Warrants to be exercised on or before 31st March, 2011 and further 20,27,000 Warrants to be exercised on or after 1st April, 2011 but not later than 18 months from the date of issue of the Warrants to Promoter(s)/Promoter Group in accordance with the applicable SEBI Regulations. Perman Project Supports Ltd. (PPSL), a company in the Promoter Group had on 19th July, 2010 accepted the above offer and paid an amount of Rs. 52.22 crores, representing 25% of the issue price of Rs. 527.83 per share fixed in accordance with the pricing of equity shares given in SEBI Regulations. PPSL exercised option of conversion of 19,30,000 warrants into equity shares on 28th March, 2011 and paid the subscription money of Rs. 76.40 crores towards the balance amount payable after adjusting the initial payment of 25% of the issue price. The Company has on 29th March, 2011 allotted to PPSL 19,30,000 equity shares of Rs. 10/- each at a premium of Rs. 517.83 per share.

(5) Borrowing costs capitalised during the year as incidental expenditure relating to construction/development is Rs.1.04 crores (2009-2010 Rs.5.25 crores).

(6) During the year 2000-2001, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

(7) The Company has during the year ended 31st March, 2011 converted a part of the freehold land under real estate development from fixed assets to stock in trade at market value and the difference between the market value and cost amounting to Rs. 853.96 crores (2009-2010 Rs.50.76 crores) has been credited to Revaluation Reserve. Further, pursuant to an Agreement for sale, the Company has sold a part of the proposed residential tower being constructed on such land and in accordance with the accounting policy consistently followed by the Company, recognised the revenue arising on sale of the undivided interest in underlying freehold land amounting to Rs. 70.57 Crores (2009-10 Rs. 256.29 Crores) in the Profit & Loss Account, with a corresponding release from revaluation reserve.

(8) Debtors and creditors balances are subject to confi rmation and consequent reconciliation, if any.

(9) Advances recoverable in cash or in kind or for value to be received

(a) Advances recoverable in cash or in kind or value to be received includes an amount of Rs. 0.02 crores recoverable from Mr.Ness Wadia towards excess remuneration paid for the year 2010-11, since recovered.

(b) Advances recoverable in cash or in kind or for value to be received include Rs. 0.71 crore on account of remuneration recoverable from Mr. M.K.Singh, Executive Director, whose services were terminated on 6th July, 2008 consequent to detection of irregular conduct. A suit has been fi led by the company in the High Court of Judicature of Mumbai alleging fraudulent misconduct. The matter is pending before the Court.

(10) Deposit with a joint venture company

Deposit of Rs.15.22 crores (2009-2010 Rs.15.22 crores) with a joint venture company is a "shareholders'' deposit with PT. Five Star Textile Indonesia (PTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioner''s of PTFS. This deposit was earlier repayable by PTFS after it cleared, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in installments spread out between 1996 and 2010. During the year 2000-2001, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings subject to annual review and the aforesaid deposit is now repayable by PTFS after these borrowings are eventually repaid or by the year 2015 (RBI has extended the tenure by 5 years from 2010), whichever is earlier.

(11) Current Liabilities

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

(12) Foreign Currency Transactions

(i) Exchange differences charged to the Profit and loss account includes loss on cancellation of forward exchange contracts Rs. 3.84 crores (net) {2009-2010 Rs. 13.02 crores].

(ii) The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

(a) Amounts receivable in foreign currency Â USD 2,649,836, EURO 205,112, GBP 97,688 (2009-10 USD 2,340,157, EURO 340,093, GBP 114,108)

(b) Amounts payable in foreign currency Â USD 48,008, EURO 11,058, GBP 1,965 (2009-10 USD 33,255, EURO 9137, CHF 2091)

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, ''Financial Instruments: Recognition and Measurement'', issued by The Institute of Chartered Accountants of India. Accordingly, the foreign exchange (gain)/ loss of Rs. (0.01) crores (2009-10 Rs. 5.48 crores) as on 31st March, 2011 on forward foreign exchange contracts entered into to hedge fi rm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognised in the Profit and loss account when the forecasted transactions arise.

(iv) Figures in brackets are the corresponding fi gures in respect of the previous year.

(iii) The lease agreements are for a period of four years for vehicles and for a period of one to nine years for retail shops including further periods for which the Company has the option to continue the lease of retail shop with the condition of increase in rent.

(13) Related party disclosures

(a) Names of related parties and nature of relationship:

Subsidiary Company: BDS Urban Infrastructure Private Limited (From 23rd July, 2010 to 11th March, 2011)

Bombay Dyeing Real Estate Company Limited (erstwhile White Horse Real Estate Private Limited) up to 16th March, 2010 Associate Companies: Archway Investment Company Limited

Pentafil Textile Dealers Limited

Scal Services Limited

Bombay Dyeing Real Estate Company Limited (erstwhile White Horse Real Estate Private Limited) w.e.f. 17th March, 2010 Joint Venture Companies : PT. Five Star Textile Indonesia Proline India Limited L&T Bombay Developers Private Limited (Upto 29th July, 2010) Key Management Personnel: Mr. Ness N. Wadia - Joint Managing Director

Mr. Durgesh Mehta (Joint Managing Director & CFO) w.e.f. 1st April, 2010

Mr. P.V. Kuppuswamy - Joint Managing Director (Upto 31st March, 2010). Entity over which Key Management Personnel exercise significant infl uence: KPH Dream Cricket Private Limited

(14) Previous year''s figures have been regrouped where necessary.

Mar 31, 2010

2008-2009 Rupees Rupees in crores in crores (1) Contingent liabilities not provided for (a) Income-tax matters in respect of earlier years under dispute (including interest of Rs. 5.77 crores) 31.03.2009. Rs.3.46 crores]as follows: 37.10 31.93 (i) Decided in Companys favour by appellate authorities and department in further appeal 5.11 5.66 (ii) Pending in appeal - matters decided against the Company 31.99 26.27 (b) Sales Tax and Excise Duties 1.47 1.47 (c) Customs duty 0.37 0.37 (d) Other claims against the Company not acknowledged as debts (with interest thereon).. 4.38 4.09

In respect of items (a) to (d) above, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums/authorities.

(e) Counter indemnity for an amount of Rs. 81.45 crores (31.3.2009 Rs.85.46 crores) issued in favour of banks which in turn have guaranteed loans granted by other banks abroad to PT Five Star Textile, Indonesia, (PTFS), a joint venture company as under:- (i) Rs. 71.05 crores (31.3.2009 Rs. 2.34 crores) in favour of IDBI Bank Limited against guarantees issued to Punjab National Bank International London for loans granted to PTFS.

(ii) Rs. 10.40 crores (31.3.2009 Rs. Nil) in favour of State Bank of India, against guarantees issued to State Bank of India, Indonesia for loans granted to PTFS.

(iii) Rs. Nil (31.3.2009 Rs.41.07crores) in favour of Standard Chartered Bank, Mumbai, against guarantees issued to Punjab National Bank International London for loans granted to PTFS.

(iv) Rs. Nil (31.3.2009 Rs. 33.77 crores) in favour of IDBI Bank Limited againsi guarantees issued to State Bank of India, Singapore for loans granted to PTFS.

(v) Rs. Nil (31.3.2009 Rs. 8.28 crores) in favour of State Bank of India, against guarantees issued to State Bank of India, Hongkong for loans granted to PTFS.

Item No. i secured by first Mortgage/charge over part of the land of the Company at Spring Mills at Mumbai admeasuring 46,442.13 square metres and buildings and structures thereon. Item No. ii is secured by fixed deposit of Rs. 10.40 crores earmarked in favour of

State Bank of India. As confirmed by PTFS, the Company has a pari passu charge on PTFSs machinery, which would cover the aforesaid indemnity amount.

(f) Bills discounting 25.89 5.48

(g) In accordance with the EPCG Scheme, imports of capital goods are allowed to be made duty free and under Advance License scheme, import of raw material are allowed to be made duty free, subject to condition that the Company will fulfill, in future, a specified amount of export obligation within a specified time. Based on the current operating plan. the Company would fulfill its export obligation within the specified time period. Amount of duty saved on import of the above goods aggregate Rs 29.78 crores (31.03.2009 Rs. 35.62 crores) against which export obligation of Rs 238.26 crores (31.03.2009 Rs 241.01 crores) need to be fulfilled.

(2) Capita! Commitments

Estimated amount of contracts to be executed on capital account and not provided for as at 31st March, 2010 Rs 6.05 cores (31.3.2009 Rs. 6.30 crores)

(3) Share Capital *

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act. 1992, - the allotment against 928 (2008- 09- 928) warrants carrying rights of conversion into equity shares of the Company have been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonafide owner is certified by the concerned Stock Excnarges are issued. During the year Nil (2008-2009- 1,840) equity shares have been allotted out of the shares kept in abeyance.

(4) The Shareholders of the company have approved on 24th March 2010 through postal ballot to create, offer, issue and allot not exceeding 39,57,000 Warrants comprising 19,30,000 Warrants with an option to subscribe to equivalent number of Equity Shares of Rs.10 each, which shall be exercisable not later than 31st March, 2011 in one or more tranches subject to such allotment of Equity Shares not exceeding 5% of the existing paid-up Equity Share capital of the Company and further 20,27,000 Warrants with an option to subscribe to equivalent number of Equity Shares of Rs. 10 each, on or after 1st April, 2011 but not later than 18 months from the date of issue of the Warrants in one or more tranches, subject to such allotment of Equity Shares not exceeding 5% of the then existing paid-up Equity Share capital of the Company to Promoter(s)/Promoter Group whether or not they are members of the Company, on a preferential basis in such manner and on such terms and conditions as may be determined by the Board in its absolute discretion in accordance with the applicable SEBI Regulations. The allotment of warrants will be completed on receipt of relevant approvals from BSE and NSE under the listing agreement.

(5) Borrowing costs capitalised during the year is Rs.5.25 crores (2008-2009 Rs.10.98 crores) of which an amount of Rs.Nil (2008-2009 Rs.4.22 crores) is included in closing stock of real estate under development.

(6) During the year 2000-2001, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

(7) The Company has during the year ended 31st March, 2010 converted a part of the freehold land under real estate development from fixed assets to stock in trade at market value and the difference between the market value and cost amounting to Rs. 50.76 crores (2008-2009 Rs.390.11 crores) has been credited to Revaluation Reserve. The Company has pursuant to the Memorandum of Agreement sold a part of the commercial building being constructed on such land to Bombay Dyeing Real Estate Company Limited (BDRECL), (erstwhile White Horse Real Estate Pvt. Ltd.) and recognized a revenue there against of Rs. 423.54 crores (2008-2009 Rs.235.02 crores) (including revenue from the undivided interest in the underlying free hold land therein amounting to Rs. 256.29 crores (2008-2009 Rs. 193.34 crores) in line with the Companys stated accounting policy) in the Profit and Loss Account. The Company partly divested its investment in BDRECL in March 2010 and since then it has ceased to be a wholly owned subsidiary.

(8) Debtors and creditors balances are subject to confirmation and consequent reconciliation, if any.

(9) Advances recoverable in cash or in kind or for value to be received

(a) Advances recoverable in cash or in kind or for value to be received includes an amount of Rs. 0.08 crores and Rs.0.10 crores recoverable from Mr. P.V. Kuppuswamy and Mr. Ness Wadia respectively towards excess remuneration paid for the year 2009-10.

(b) Advances recoverable in cash or in kind or for value to be received include Rs. 0.71 crore on account of remuneration recoverable from Mr. M.K.Singh, Executive Director, whose services were terminated on 6th July, 2008 consequent to detection of irregular conduct. A suit has been filed by the company in the High Court of Judicature of Mumbai alleging fraudulent misconduct. The matter is pending before the Court.

(10) Deposit with a joint venture company

Deposit of Rs.15.22 crores (2008-2009 Rs. 15.22 crores) with a joint venture company is a "shareholders deposit" with PT. Five Star Textile Indonesia (PTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioners of PTFS. This deposit was earlier repayable by PTFS after it clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in installments spread out between 1996 and 2010. During the year 2000-2001, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings subject to annual review and the aforesaid deposit is now repayable by PTFS after these borrowings are eventually repaid or during the year 2010, whichever is earlier.

(11) Current Liabilities

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

(ii) The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

(a) Amounts receivable in foreign currency- USD 2,340,157, EURO 340,093, GBP 114,108 (2008-09 USD 665,652, EURO 107,355, GBP 762)

(b) Amounts payable in foreign currency - USD 33,255, EURO 9137, CHF 2091 (2008-09 USD 594,053, EURO 379,118, CHF 36,850, GBP 825, SGD 148,702)

(iii) The Company has adopted the principles of hedge accounting as set out in Accounting Standard 30, Financial Instruments: Recognition and Measurement, issued by The Institute of Chartered Accountants of India. Accordingly, the foreign exchange (gain)/ loss of Rs. 5.48 crores (2008-09 Rs. 37.69 crores) as on 31st March, 2010 on forward foreign exchange contracts entered into to hedge firm commitments and highly probable forecast transactions, which qualify for hedge accounting, has been accounted under Hedging Reserve to be ultimately recognised in the profit and loss account when the forecasted transactions arise.

(iv) Figures in brackets are the corresponding figures in respect of the previous year.

(12) Segment Reporting (Contd..)

Notes:

(a) The Companys operating facilities are located in India. Most of the assets are not identifiable separately to any reportable segment as these are used interchangeably between segments.

(b) Corporate expenses have been apportioned between the segments on a reasonable basis.

(c) Figures in italics and in brackets are the corresponding figures in respect of the previous year.

(13) Previous years figures have been regrouped where necessary.

Mar 31, 2009

(1) Capital Commitments

Estimated amount of contracts to be executed on capital account and not provided for as at 31st March, 2009 - Rs 6.30 crores (31.3.2008 Rs. 42.52 crores).

(2) Share Capital

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment against 928 [2007- 2008- 2,768] warrants carrying rights of conversion into equity shares of the Company have been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonafide owner is certified by the concerned Stock Exchanges. During the year 1,840 (2007-2008- 660) equity shares have been allotted out of the shares kept in abeyance.

(3) Share Warrants

The Company had on 7th September, 2007 alloted 19,30,000 warrants on a preferential basis to The Bombay Burmah Trading Corporation Ltd. (BBTCL), a company in the promoter group.The warrants carry an option to apply for and be allotted in one or more tranches, one equity share of Rs. 10/- each per warrant within 18 months from the date of the issue (validity period) at an issue price of Rs. 616 each as determined in accordance with the SEBI prescribed pricing formula as per the provisions of Chapter XIII of the SEBI (Disclosure and Investor Protection) Guidelines, 2000. The Company had received an advance equivalent to 10% of the issue price i.e. Rs. 61.60 per warrant aggeragating Rs. 11.89 crores on allotment of the warrants in terms of the SEBI guidelines. BBTCL did not exercise the option to subscribe to the equity shares of the Company, as attached to the warrants, within the validity period, whereupon the option expired and the amount aggregating Rs. 11.89 crores referred to hereinabove was forfeited in terms of the SEBI (DIP) Guidelines and conditions attached to the warrants. The forfeited amount of Rs. 11.89 crores has been credited to Capital Reserve.

(4) (a) Buildings (see Schedule 5 - Fixed assets) include residential flats at Roha at a cost of Rs. 0.13 crore which is held for disposal, the net book value in respect of which is Rs. 0.03 crore. (b) Borrowing costs capitalised during the year is Rs. 10.98 crores (2007-2008 Rs.59.53 crores) of which an amount of Rs.4.22 crores (2007-2008 Rs. Nil) is included in closing stock of real estate under development.

(5) The Companys Textile Processing Plant at Ranjangaon is required and designed to operate 24 hours a day, as certified by the Chartered Engineers and is thus treated as a Continuous Process Plant (CPP), Consequently, depreciation has been charged 5.28% as applicable to CPP instead of the general rates, applicable to plant and machinery, of 10.34%. The auditors have relied on the Certificate from Chartered Engineers, without any verification being a technical matter.

(6) During the year 2000-2001, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

(7) Inventory

Pursuant to the implementation of SAP during the year, the method of determination of cost of certain raw materials and work-in-progress has undergone a change. Cost of cotton and fibre which was determined on specific identification basis and that of ready finished cloth on a first-in-first-out method upto the previous year, has been determined as on March 31, 2009 on the weighted average method. It has not been possible to ascertain the impact of this change, however in the opinion of the management the same is not expected to materially impact the profit and loss statement.

(8) The Company has during the year ended 31 st March, 2009 converted a part of the freehold land under real estate development from fixed assets to stock in trade at market value and the difference between the market value and cost amounting to Rs. 390.11 crores has been credited to Revaluation Reserve. The Company has pursuant to the Memorandum of Agreement sold a part of the commercial building being constructed on such land to White Horse Real Estate Private Ltd. (WHREPL), a wholly owned subsidiary acquired on 31s" December, 2008 and recognized a revenue there against of Rs. 235.02 crores (including revenue from the undivided interest in the underlying free hold land therein amounting to Rs. 193.34 crores in line with the Companys stated accounting policy) in the Profit and Loss Account. In line with the provisions of Accounting Standard 21 - Consolidation of Financial Statements, the said subsidiary has been excluded from consolidation in view of the intended investment being of temporary nature.

(9) Debtors and creditors balances are subject to confirmation and consequent reconciliation, if any.

(10) Advances recoverable in cash or in kind or for value to be received Advances recoverable in cash or in kind or for value to be received include Rs. 0.88 crore due from directors of the Company of which Rs. 0.71 crore is on account of remuneration recoverable from Mr. M.K.Singh, Executive Director, whose services were terminated on 6th July, 2008 based on certain acts of omission and commission detected. A suit has been filed by the company in the High Court of Judicature of Mumbai. The matter is sub-judice.

(11) Deposit with a joint venture company

Deposit of Rs. 15.22 crores (2007-2008 Rs. 15.22 crores) with a joint venture company is a "shareholders deposit" with PT. Five Star Textile Indonesia (PTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioners of PTFS. This deposit was earlier repayable by PTFS after it clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in installments spread out between 1996 and 2010. During the year 2000-2001, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings subject to annual review and the aforesaid deposit is now repayable by PTFS after these borrowings are eventually repaid or during the year 2010, whichever is earlier.

Mar 31, 2008

(1) Deposit of Rs. 15.22 crores (2006-2007 Rs. 15.22 crores) with a joint venture company is a "shareholders deposit" with PT. Five Star Textile- Indonesia (PTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April, 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioners of PTFS. This deposit was earlier repayable by PTFS after it clears in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in installments spread out between 1996 and 2010. During the year 2000-2001, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings subject to annual review and the aforesaid deposit is now repayable by PTFS after these borrowings are eventually repaid or during the year 2010, whichever is earlier.

(2) Revenue expenditure on research and development charged to the profit and loss account is Rs. 0.38 crore (2006-2007 Rs. 0.46 crore).

(3) Employee Benefits

Effective 1st April, 2007 the Company adopted revised Accounting Standard 15 Employee Benefits. Pursuant to the adoption, no adjustmen was required to be made to general reserve as the impact of revised AS-15 was insignificant.

(4) During the year ended 31st March, 2007, the Company announced Voluntary Retirement Scheme (VRS) for its workers at Textile Mills and New Bleach Works at Worli, with the intention to develop the real estate at Worli. During the year ended 31st March, 2007 and 31st March, 2008, the Company has paid VRS of Rs. 73.40 crores and Rs. 1.03 crores respectively. The said expenditure would have been written off over the period from the date of incurrence up to 31st March, 2010. During the year ended 31st March, 2007, the Company has written off Voluntary Retirement Compensation to the extent of Rs. 10.46 crores. As the said VRS was introduced for the purpose of making the land available for development, the Company has decided to capitalise the VRS payments including the amount incurred during the year ended 31st March, 2007, since the Company is of the opinion that the said treatment is more appropriate in the presentation of financial statements. Accordingly, an amount of Rs. 62.94 crores lying in the "Miscellaneous expenditure to the extent not written off or adjusted being VRS" pertaining to Textile Mills and New Bleach Works and Rs. 1.03 crores of VRS incurred during the year is transferred to incidental expenditure relating to construction / development pending capitalisation. Moreover, an amount of Rs. 10.46 crores being amortisation of VRS expenditure during the previous year to the profit and loss account has been written back to the current year profit and loss account with a corresponding increase to the incidental expenditure relating to construction / development pending capitalisation. The above treatment resulted in VRS reversal of Rs.10.46 crores as shown in the profit and loss account of the current year instead of a charge of Rs. 21.16 crores.

(5) The amount of exchange differences charged to the profit and loss account is Rs. 1.99 crores (net) (2006-2007 Rs. 0.30 crores) [taking into account gain on cancellation of forward foreign exchange contracts Rs. 0.42 crore (net) disclosed separately in Schedule 15 {2006-2007 Rs. 0.20 crore (loss) disclosed separately in Schedule 16}]

(6) (a) Borrowing costs capitalised during the year is Rs. 59.53 crores (2006-2007 Rs. 34.99 crores) of which an amount of Rs. Nil (2006-2007 Rs. 0.59 crore) is included in closing stock of real estate under development.

(b) Buildings (see Schedule 5 - Fixed assets) include residential flats at Roha at a cost of Rs. 0.13 crore which is held for disposal, the net book value in respect of which is Rs. 0.04 crore.

(7) There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose.

(8) (a) In an earlier year, in accordance with the Accounting Standard on Impairment of Assets (AS 28), the Company had recognised impairment losses as at 1st April, 2004 of Rs. 74.28 crores in respect of the DMT Plant, the then cash generating unit and forming part of Polyester Division, a reportable segment; by a corresponding adjustment to general reserve, pursuant to the transitional provisions of the said Standard.

(b) During the year, impairment losses aggregating Rs. 74.28 crores have been reversed consequent to the relevant fixed assets being scrapped/sold/being used in polyester plant.

(9) The Company has started commercial operation of Textile Processing Plant with regard to wider width line on 1 st January, 2008 and narrow width line on 1st March, 2008. As the said plant is required and designed to operate 24 hours a day, as certified by the Chartered Engineers, the Company has treated it as a Continuous Process Plant (CPP) and consequently, applied depreciation rates of 5.28% as applicable to CPP instead of the general rates, applicable to plant and machinery, of 10.34%. The auditors have relied on the Certificate from Chartered Engineers, without any verification being a technical matter.

(10) During the year 2000-2001, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

(11) The Company has allotted on 7th September, 2007 on a preferential basis to The Bombay Burmah Trading Corporation Ltd. (BBTCL), a company in the promoter group, 19,30,000 warrants carrying an option to apply for and be allotted in one or more tranches, one equity share of Rs. 10/- each per warrant within 18 months from the date of the issue at an issue price of Rs. 616 each as determined in accordance with the SEBI prescribed pricing formula as per the provisions of Chapter XIII of the SEBI (Disclosure and Investor Protection) Guidelines, 2000. The monies received from BBTCL in terms of SEBI guidelines equivalent to 10% of the price i.e. Rs.61.60 per warrant aggregating Rs. 11.89 crores on allotment of the warrants, have been utilised for the object of the issue i.e. to augment the long term resources of the Company for meeting the fund requirements of existing and new businesses and for general corporate purposes.

Mar 31, 2007

(1) Estimated amount of contracts to be executed on capital account and not provided for as at 31st March, 2007 - Rs.151.78 crores (31.3.2006 Rs. 140.41 crores).

(2) Contingent liabilities not provided for:

(a) Income-tax matters in respect of earlier years under dispute (including interest of Rs. 2.08 crores) [31.3.2006 Rs. 1.53 crores]

(i) Decided in Company's favour by appellate authorities and department in further appeal

(ii) Pending in appeal - matters decided against the Company

(b) Sales Tax and Excise Duties

(c) Customs duty

(d) Compensation claim by the vendor for cancellation of a contract by the Company

(e) Other claims against the Company not acknowledged as debts (with interest thereon)

In respect of items (a) to (e) above, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgments pending at various forums authorities.

(f) Counter indemnity for an amount of Rs. 54.62 crores (31.3.2006 Rs.47.65 crores), of which Rs. 27.38 crores (31.3.2006 Rs. 19.77 crores) issued in favour Of Standard Chartered Bank, Mumbai, which in turn has guaranteed loans granted by Standard Chartered Bank, Indonesia to PT. Five Star Textile Indonesia, (PTFS), a joint venture company and Rs. 27.24 crores (31.3.2006 Rs. 27.88 crores) issued in favour of Industrial Development Bank of India Limited, which in turn has guaranteed loans granted by ICICI Bank Limited, Singapore to PTFS. As confirmed by PTFS, the Company has a pari-passu charge on PTFS's machinery; which , would cover the aforesaid indemnity amount.

(g) Bills discounting

# excludes Rs. 0.14 crore (2005-2006 Rs. 0.15 crore) paid for other services and Rs. 8,306 (2005-2006 Rs. 7,846) paid as reimbursement of out-of-pocket expenses to a firm of Chartered Accountants where some of the partners are also partners, in that firm.

Remuneration to the Managing Director, Joint Managing Directors and the Executive Directors (collectively referred to as whole-time directors) [inclusive of estimated monetary value of benefits of Rs. 0.25 crore (2005-2006 Rs. 0.17 crore) and commission of Rs. Nil {2005-2006 Rs. 1.34 crores); but excluding contribution to gratuity fund and provision for leave encashment as separate figures are not available]

@ excludes options granted under Employees' Stock Option Scheme (ESOS), vested during the year, the fair value of which as at the date of grant of option was Rs. 0.25 crore (2005-2006 Rs. 0.34 crore). The Company has been legally advised that options granted under ESOS would not constitute managerial remuneration.

Deposit of Rs.15.22 crores (2005-2006 Rs. 15.22 crores) with a joint venture company is a "shareholders' deposit" with PT. Five Star Textile Indonesia (PTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April, 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioner's of PTFS. This deposit was earlier repayable by PTFS after it clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in installments spread out between 1996 and 2010. During the year 2000-2001, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings subject to annual review and the aforesaid deposit is now repayable by PTFS after these borrowings are eventually repaid or during the year 2010, whichever is earlier.

Revenue expenditure on research and development charged to the profit and loss account is Rs. 0.46 crore (2005-2006 Rs. 0.45 crore).

The amount of exchange differences (net):

charged to the profit and loss account is Rs. 0.30 crore (net) (2005-2006 Rs. 3.85 crores) [taking into account loss on cancellation of forward foreign exchange contracts Rs. 0.20 crore (net) (2005-2006 Rs. 0.52 crore) disclosed separately in Schedule 16]

in respect of forward foreign exchange contracts, to be recognised in the profit and loss account in the next accounting period is a gain of Rs. 0.07 crore (2005-2006 Rs.0.04 crore).

Borrowing costs capitalised during the year is Rs. 34.99 crows (2005-2006 Rs. 8.72 crores) of which an amount of 0.59 crore (2005-2006 Rs. 0.17 crore) is included in closing stock of real estate under development.

Names of the small scale industrial undertakings to whom the Company owed any sum which was outstanding for more than 30 days as at the end of the financial year are as under:

Akash Fabrics, Alamac, Anil Mallay Swami, A-Tex India, Darling Pumps Pyt. Ltd., Dyanopack Fine Cloth, Forbes Marshall (P) Ltd., Hytech Engg., Kanodia Silk Mills, N. R. Enterprises, Neveilos Graffiti, Perfect Equipment (P) Ltd., Power Flow Engineers, Saraf Organics. Sharp Batteries, Sonal Industries, Thaker Engineering, Usha Plastics, Vinod Textile and Yogeshwar Chemical.

The Company is in the process of identifying suppliers falling under the Micro, Small and Medium Enterprises Development Act, 2006, However, no confirmation as regards to the status has been received by the Company.

The Company's operating facilities are located in India.

The operating facilities of the Company are commonly employed for both the domestic and export businesses, hence it is not possible to report segment assets/liabilities by geographic segments.

DMT plant operations were suspended during the construction and tying in the PSF Project being implemented at the same location. They were restarted towards the end of December, 2006 for trial run of Polyester Staple Fibre Plant. The PSF product is currently being test marketed. Consequently, DMT sales have been negligible at Rs. 29.62 crores during the year against Rs. 531.76 crores in the previous year

The company completed a Voluntary Retirement Scheme (VRS) to the workers of the Textile mills, majority of whom have accepted. Payment made under the scheme is being written off upto 31st March, 2010, i.e. 3 1/2 years.

Corporate expenses have been apportioned between the segments on a reasonable basis.

Figures in italics and in brackets are the corresponding figures in respect of the previous year.

No amounts pertaining to related parties have been provided for as doubtful debts. Also no amounts have been written off or written back during the year.

Dividend paid has not been considered by the Company as a transaction falling under the purview of Accounting Standard 18 "Related Party Disclosures".

The aggregate value of sales consideration as per agreements for sale of flats to Seal is Rs. 158.24 crores (2005-2006 173.69 Crores).

Secured by a pari-passu-charge on the machinery of the joint venture.

Figures in brackets are the corresponding figures in respect of the previous year.

In an earlier year, in accordance with the Accounting Standard on Impairment of Assets (AS 28), the Company had recognised impairment losses as at 1st April, 2004: (i) of Rs. 74.47 crores in respect of the DMT Plant, the then cash generating unit and forming part of Polyester Division, a reportable segment; and (ii) of Rs. 9.04 crores on an individual assets in the textile division, reportable segment; aggregate Rs.83.51 crores, by a corresponding adjustment to general reserve, pursuant to the transitional provisions of the said Standard.

During the previous year, impairment losses aggregating Rs. 9.23 crores including Rs. 9.04 crores in respect of building in the textile division have been reversed consequent to the relevant fixed assets being scrapped/sold.

Buildings (see Schedule 5 - Fixed assets) include residential flats at Roha at a cost of Rs. 0.13 crore which is held for disposal, the net book value in respect of which is Rs. 0.04 crore.

During the year 2000-2001, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

These Forward Foreign Exchange Contracts are entered into for hedging purposes and not for speculation purposes.

The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

(a) Amounts receivable in foreign currency - USD 13, 57,974 (2005-2006 USD 6,35,659)

(b) Amounts payable in foreign currency - USD 81,68,380, GBP 21,686, Euro 3,51,952 and SGD 2,37,473 (2005-2006 USD 1,69,18,602, GBP 15,340, Euro 1,487, SGD 34,310 and AED 11,997).

Figures in brackets are the corresponding figures in respect of the previous year.

Previous year's figures have been regrouped where necessary.

Mar 31, 2006

A. Security for item Nos.1 to 6

First Mortgage/charge on a pari-passu basis on the immovable properties of the Company at Spring Mills. Textile Mills and the DMT Division at Patalganga.

B. Security for item No.7

Exclusive hypothecation/charge on the specific fixed assets of the Company at Textile Mills.

C. Security for item No.8

First mortgage/charge on a pari-passu basis on the fixed assets of the Company at Spring Mills,Textile Mills and the DMT Division at Patalganga.

D. Security for item No.12

Secured by hypothecation of stocks, book debts and other current assets and a second charge by way of mortgage of the immovable properties of the Company at Spring Mills, Textile Mills and the DMT Division at Patalganga.

(1) Contingent liabilities not provided for:

(a) Income-tax matters in respect of earlier years under dispute (including interest of Rs. 1.53 crores) [31.3.2005 Rs. 1.10 crores]

(i) Decided in Company's favour by appellate authorities and department in further appeal.

(ii) Pending in appeal - matters decided against the Company.

Claims against, the Company not acknowledged as debts (with interest thereon)

Customs duty on imported raw materials in respect of pending export obligations

Counter indemnity for an amount of Rs. 47.65 crores (31.3.2005 Rs.33.62 crores), of which Rs. 19.77 crores (31.3.2005 Rs.33.62 crores) issued in favour of Standard Chartered Bank, Mumbai, which in turn has guaranteed loans granted by Standard Chartered Bank, Indonesia to PT. Five Star Textile Indonesia, (PTFS), a joint venture company and Rs. 27.88 crores (31.3.2005 Rs. Nil) issued in favour of Industrial Development Bank of India Limited, which in turn has guaranteed loans granted by ICICI Bank Limited, Singapore to PTFS. As confirmed by PTFS, the Company has a pari-passu charge on PTFS's machinery, which would cover the aforesaid indemnity-amount.

excludes Rs. 0.17 crore (2004-2005 Rs. Nil) paid for other services and Rs. 7,846 (2004-2005 Rs. Nil) paid as reimbursement of out-of-pocket expenses to a firm of Chartered Accountants where some of the partners are also partners in that firm.

Directors' remuneration

Remuneration to the Managing Director, Joint Managing Director, Deputy Managing Director and the Executive Director (collectively referred to as whole-time directors) [inclusive of estimated monetary value of benefits Rs. 0.17 crore (2004-2005 Rs. 0.07 crore)and commission of Rs.1.34 crores (2004-2005 Rs. 0.15 crore); but excluding contribution to gratuity fund and provision for leave encashment as separate figures are not available].

Computation of net profits in accordance with section 309(5) read with section 349 of the Companies Act, 1956:

Profit before tax as per profit and loss account

Add: Whole-time directors' remuneration and commission to other directors

Loss on sale of investments Provision for diminution in the value of investments Provision for doubtful debts

@ excludes options granted under Employees' Stock Option Scheme (ESOS), vested during the year, the fair value of which as at the date of grant of option was Rs. f/34 crore (2004-2005 Rs. 0.34 crore). The Company has been legally advised that options granted under ESOS would not constitute managerial remuneration. However, even if the fair value of such options were to be includable in managerial remuneration, the aggregate remuneration would be within the overall limits specified in section 198 and. section 309 of the Companies Act, 1956.

# includes Rs. 0.54 crore subject to approval of the members in ensuing General Meeting.

Deposit of Rs. 15.22 crores (2004-2005 Rs. 15.22 crores) with a joint venture company is a "shareholders' deposit" with PT. Five Star Textile Indonesia (RTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April, 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioner's of PTFS. This deposit was earlier repayable by RTFS after it clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in installments spread out between 1996 and 2010. During the year 2000-2001, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings subject to annual review and the aforesaid deposit is now repayable by PTFS after these borrowings are eventually repaid or during the year 2Q10, whichever is earlier.

The approval of members at the extraordinary general meeting of the Company held on 24th April, 2002 and the sanction by the Honourable High Court of Judicature at Bombay vide its Order dated 6th June, 2002, apart from authorising the utilisation out of the balance standing in the securities premium account for adjusting certain balances, also authorised the utilisation of the said account for proposed voluntary separation payments subject to a maximum of Rs. 70.00 crores. Accordingly, a provision of Rs. 70.00 crores was made in the accounts for the year ended 31st March, 2002, with a corresponding reduction in the securities premium account.

Apart from adjusting the amounts payable as voluntary retirement compensation with the provision set up as stated in (a) above, the additional liability on account of gratuity and leave encashment arising as a consequence of early voluntary retirement has also been adjusted from the said provision.

The Company has been legally advised that the term "voluntary" refers to the mode of separation and not the nature of payment and it would be within the terms of the Court Order to adjust such incidental additional liability on account of gratuity and leave encashment from the provision of Rs. 70.00 crores set aside for proposed voluntary separation payments.

The carrying amount of the aforesaid provision as at the end of the year is Rs. Nil (31.3.2005 Rs. 7.30 crores). This provision would not have met the recognition criteria as specified in Accounting Standard 29 - `Provisions, Contingent Liabilities and Contingent Assets', subsequently applicable with effect from 1st April, 2004.

An amount of Rs. 7.30 crores (2004-2005 Rs. 17.20 crores) has been utilised during the year as detailed in Schedule 15 - Manufacturing and other expenses.

As a result of the voluntary retirement compensation now being written off equally over a period of 5 years in the circumstances stated in Note 8(iii) of Schedule 17, the profit after tax is higher by Rs. 3.70 crores.

Revenue expenditure on research and development charged to the profit and loss account is Rs. 0.45 crore (2004-2005 Rs. 0.36 crore).

The amount of exchange differences (net):

charged to the profit and loss account is Rs. 3.85 crores (net) (2004-2005 Rs. 2.93 crores) [taking into account loss on cancellation of forward foreign exchange contracts Rs. 0.52 crore (net) (2004-2005 Rs. 0.48 crore) disclosed separately in Schedule 15]

in respect of forward foreign exchange contracts, to be recognised in the profit and loss account in the next accounting period is a gain of Rs. 0.04 crore (2004-2005 loss of Rs.0.14 crore).

Borrowing costs capitalised during the year is Rs. 7.31 crores (2004-2005 Rs. 0.38 crore) of which an amount of Rs.0.17 crore (20042005 Rs.Nil) is included in closing stock of real estate under development.

Names of the small scale industrial undertakings to whom the Company owed any sum which was outstanding for more than 30 days as at the end of the financial year are as under:

N.R.Enterprises, Imetrex Technologies Limited.

During the previous year, in accordance with the Accounting Standard on Impairment of Assets (AS 28), the Company had recognised impairment losses as at 1a April, 2004: (i) of Rs. 74.47 crores in the DMT division, a cash generating unit and a reportable segment; and (ii) of Rs. 9.04 crores on an individual asset in the textile division, a reportable segment; aggregate Rs. 83.51 crores, by a corresponding adjustment to general reserve, pursuant to the transitional provisions of the said Standard.

During the year, impairment losses aggregating Rs. 9.23 crores including Rs. 9.04 crores in respect of building in the textile division have been reversed consequent to the relevant fixed assets being scrapped/sold.

Buildings (see Schedule 5 - Fixed assets) include residential flats at Roha of a cost of Rs. 0.13 crore held for disposal, the net book value in respect of which is Rs. 0.05 crore.

During the year 2000-2001, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

Amounts receivable in foreign currency - USD 6,35,659.

Amounts payable in foreign currency - USD 1,69,18,602, GBP 15,340, Euro 1,487, SGD 34,310 and AED 11,997.

Previous year's figures have not been disclosed since the above disclosures became mandatory in respect of accounting periods ending on or after 31st March, 2006.

Previous year's figures have been regrouped where necessary.

Mar 31, 2005

A. Security for item No.1

Mortgage/charge on a pari-passu basis on the immovable properties of the Company at Spring Mills.Textile Mills and the DMT Division at Patalganga.

B. Security for item No.2 to 4

First charge on a pari-passu basis on the fixed assets of the Company (excluding leased assets, furniture and fixtures, motor vehicles, residential property and assets specifically charged to term lenders). Creation of security is pending.

C. Security for item No.6

Exclusive hypothecation/charge on the specific fixed assets of the Company at Textile Mills.

D. Security for item No.13 to 15

Secured by creation of third charge on the fixed assets of the Company situated at Textile Mills. Creation of security is pending.

E. Security for item No. 16

Secured by hypothecation of stocks , book debts and other current assets and a second charge by way of mortgage of the immovable properties of the Company at Spring Mills, Textile Mills and the DMT Division at Patalganga.

@ excludes options granted under Employee Stock Option Scheme (ESOS), vested during the year, the fair value of which as at the date of grant of option was Rs. 0.34 crore (2003-2004 Rs. 0.29 crore). The Company has been legally advised that options granted under ESOS would not constitute managerial remuneration. However, even if the fair value of such options were to be includible in managerial remuneration, the aggregate remuneration would be within the overall limits specified in section 198 and section 309 of the Companies Act, 1956.

# includes Rs. 0.35 crore subject to approval of the members in the ensuing General Meeting.

(1) Deposit of Rs.15.22 crores (2003-2004 Rs. 15.22 crores) with a joint venture company is a "shareholders' deposit" with PT. Five Star Textile Indonesia (RTFS). This deposit, originally denominated in U.S. $, was w.e.f. 1st April, 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioner's of RTFS. This deposit was earlier repayable by RTFS after it clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in installments spread out between 1996 and 2010. During the year 2000-2001, RTFS has prepaid the aforesaid term loan by raising funds through other borrowings repayable over a period of three years and the aforesaid deposit is now repayable by RTFS after repayment of these borrowings.

(2) (a) The approval of members at the extraordinary general meeting of the Company held on 24th April, 2002 and the sanction by the Honourable High Court of Judicature at Bombay vide its Order dated 6th June, 2002, were obtained to utilise an amount not exceeding Rs. 186.00 crores out of the balance standing in the securities premium account for adjusting among other balances trade debts due as at 31st March, 2002 the recovery of which is currently doubtful.

(b) In accordance with the foregoing, the share capital (to mean securities premium account) of the Company was reduced by Rs. 184.82 crores in the year ended 31st March, 2002, in accordance with section 100 of the Companies Act, 1956, read with section 78(1) of the Act.

(c) During the previous year, the Board of Directors had resolved and utilised the balance amount of Rs. 1.18 crores, being the difference between the maximum amount at Rs. 186.00 crores and the amount already utilised at Rs. 184.82 crores, for adjusting trade debts (to mean including loans and advances) of Rs. 1.18 crores which were due as at 31st March, 2002, the recovery of which was doubtful. Accordingly, the share capital (to mean securities premium account) of the Company was further reduced by Rs. 1.18 crores during the previous year.

(d) The Company has been legally advised that the further utilisation, as set out in (c) above, made by the Board of Directors is within the authority given by the Members of the Company in this behalf and that it does not affect the substance of the resolution and the approval of the Mumbai High Court.

(3) (a) The approval of Members and the sanction by the Honourable High Court of Judicature at Bombay referred in Note 5 (a) above, apart from authorising the utilisation out of the balance standing in the securities premium account for adjusting certain balances, also authorised the utilisation of the said account for proposed voluntary separation payments subject to a maximum of Rs. 70.00 crores. Accordingly, a provision of Rs. 70.00 crores was made in the accounts for the year ended 31st March, 2002, with a corresponding reduction in the securities premium account.

(b) Apart from adjusting the amounts payable as voluntary retirement compensation with the provision set up as stated in (a) above, the additional liability on account of gratuity and leave encashment arising as a consequence of early voluntary retirement, determined on the basis of an actuarial valuation, has also been adjusted from the said provision.

(c) The Company has been legally advised that the term "voluntary" refers to the mode of separation and not the nature of payment and it would be within the terms of the Court Order to adjust such incidental additional liability on account of gratuity and leave encashment from the provision of Rs. 70.00 crores set aside for proposed voluntary separation payments.

(d) The carrying amount of the aforesaid provision as at the end of the year is Rs. 7.30 crores (31.3.2004 Rs.24.50 crores)and is expected to be utilised in the year 2005-2006. This provision would not have met the recognition criteria as specified in Accounting Standard 29 - `Provisions, Contingent Liabilities and Contingent Assets', now applicable with effect from 1st April, 2004.

An amount of Rs. 17.20 crores (2003-2004 Rs. 30.79 crores) has been utilised during the year as detailed in Schedule 15 - Manufacturing and other expenses.

(4) Revenue expenditure on research and development charged to the profit and loss account is Rs. 0.36 crore (2003-2004 Rs. 0.34 crore).

(5) The amount of exchange differences (net):

(i) charged to the profit and loss account is Rs.2.93 crores (net) (2003-2004 credited to the profit and loss account Rs.2.22 crores) [taking into account loss on cancellation of forward foreign exchange contracts Rs. 0.48 crore (net) (2003-2004 Rs. 2.72 crores) disclosed separately in Schedule 15]

(ii) in respect of forward foreign exchange contracts, to be recognised in the profit and loss account in the next accounting period is a loss of Rs. 0.14 crore (2003-2004 Rs.0.05 crore).

(6) Borrowing costs capitalised during the year is Rs. 0.38 crore (2003-2004 Rs.Nil).

(7) Names of the small scale industrial undertakings to whom the Company owed any sum which was outstanding for more than 30. days as at the end of the financial year are as under:

Britacel Silicones Ltd.; Fineotex Chemical Industries; Global Instruments & Maintenance Services; Indra Agro - Tech Pvt. Ltd.; Neville Dyechem Industries; Nova Transfers Pvt. Ltd; Paresh Chemical Corporation; Saraf Organics Pvt. Ltd.; Sonal Industries; Technomax Engineers; Usha Plastics; Yogeshwar Chemicals Ltd.

(8) The Company has given few equipment on operating lease. The particulars in respect of such lease is as follows:

(a) (i) The gross carrying amount and the accumulated depreciation at the balance sheet date are Rs.Nil (31.3.2004 Rs. 3.50 crores) and Rs. Nil (31.3.2004 Rs. 1.68 crores) respectively.

(ii) Depreciation recognised in the profit and loss account is Rs. 1.81 crores (2003-2004 Rs. 1.68 crores).

(b) The minimum aggregate lease payment to be received in future is as follows:

(i) For a period not later than one year Rs. Nil (2003-2004 Rs. 1.82 crores).

(ii) For a period later than one year and not later than five years Rs. Nil (2003-2004 Rs. Nil).

(iii) For a period later than five years Rs. Nil (2003-2004 Rs. Nil).

(c) All costs incurred for the equipment are capitalised and there are no indirect costs recognised in the profit and loss account.

(9) (a) In accordance with the Accounting Standard on Impairment of Assets (AS 28), the Company has recognised impairment losses as at 1st April, 2004 in the DMT division and on an individual asset in the textile division by a corresponding adjustment to general reserve pursuant to the transitional provisions of the said Standard.

(b) (i) The prospects of the DMT business is expected to be adversely affected in view of the expected increase in demand for an alternative material resulting in a possible loss of market for the product worsened by a phased reduction in import duties.

(ii) The ongoing restructuring of the Textile operations and the venturing into real estate development has fully impaired one of the buildings, which would have to be demolished.

(c) The aggregate amount of impairment loss recognised by a corresponding adjustment to general reserve is Rs. 83.51 crores, the break up of which is as follows:

(i) Cash generating unit (i.e. DMT division); (a) Building Rs. 3.12 crores; (b) Plant and machinery Rs. 71.09 crores; and (c) other assets Rs. 0.26 crore; and

(ii) Individual asset (i.e. Building in Textile division) Rs. 9.04 crores.

(d) (i) The DMT division is cash generating unit and a reportable segment

(ii) The Building referred above is an individual asset in the textile division segment.

(e) (i) The recoverable amount of the DMT division is the expected value in use, discounted at the rate of 14 percent,

(ii) The recoverable amount of the building is its expected scrap value.

(f) As a result of the recognition of impairment losses, the depreciation charge for the year is lower by Rs.7.38 crores.

(10) Buildings (see Schedule 5 - Fixed assets) include residential flats at Roha of a cost of Rs. 0.13 crore held for disposal, the net book value in respect of which is Rs. 0.05 crore.

(11) During the year 2000-2001, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

Mar 31, 2004

A: Security for Item No.5

Secured by creation of lien on units of Mutual Funds as mentioned below:

58,74,010 Units (and 859 fractions) of Rs. 10 each in FT India Monthly Income Plan (Quarterly Dividend -Reinvestment) of Franklin Templeton Mutual Fund

48,43,975 Units (and 548 fractions) of Rs.10 each in Kotak Income Plus Scheme (Growth) of Kotak Mahindra Mutual Fund

15,84,434 Units (and 515 fractions) of Rs. 10 each in Principal Monthly Income Plan (Growth) of Principal Mutual Fund

24,51,280 Units (and 794 fractions) of Rs. 10 each in Tata Monthly Income Plan (Growth) of Tata Mutual Fund

4,437 Units (and 946 fractions) of Rs. 1,000 each in Templeton India Treasury Management Account of Franklin Templeton Fund

B. Security for item No. 7 and 8

Secured by creation of lien on units of Mutual Funds as mentioned below:

50,40,364 Units (and 922 fractions) of Rs. 10 each in FT India Monthly Income Plan (Quarterly Dividend - Reinvestment) of Franklin Templeton Mutual Fund

38,55,025 Units (and 753 fractions) of Rs. 10 each in HDFC Monthly Income Plan (Long Term - Growth) of HDFC Mutual Fund

56,35,443 Units (and 181 fractions) of Rs. 10 each in JM Monthly Income Plan (Annual Dividend) of JM Mutual Fund

2,54,66,809 Units (and 083 fractions) of Rs. 10 each in JM Short Term Fund (Institutional Plan - Dividend) of JM Mutual Fund

1,21,06,537 Units (and 530 fractions) of Rs. 10 each in Principal Monthly Income Plan (Quarterly Dividend -Reinvestment) of Principal Mutual Fund

56,92,275 Units (and 582 fractions) of Rs. 10 each in Tata Liquid High Investment Fund (Growth) of Tata Mutual Fund

1,48,112 Units (and 879 fractions) of Rs. 1,000 each in Templeton India Short Term Income Plan (Quarterly Dividend) of Franklin Templeton Mutual Fund

C. Security for item No. 9 to 12

Secured by creation of third charge on the fixed assets of the Company situated at Spring Mills. Creation of security is pending.

D. Security for item No. 13

Secured by hypothecation of stocks, book debts and other current assets and a second charge by way of mortgage of the immovable properties of the Company at Spring Mills.Textile Mills and the DMT Division at Patalganga.

(1) Estimated amount of contracts to be executed on capital account and not provided for as at 31st March, 2004 - Rs.2.57 crores (31.3.2003 Rs.1.01 crores).

(2) Deposit of Rs.15.22 crores (2002-2003 Rs. 15.22 crores) with a joint venture company is a "shareholders' deposit" with PT. Five Star Textile Indonesia (PTFS). This deposit, originally denominated in U.S.$, was w.e.f. 1st April, 2003 converted to Indian rupees, as approved by the Board of Directors of the Company and by the Board of Commissioners of PTFS. This deposit was earlier repayable by PTFS after it clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in installments spread out between 1996 and 2010. During the year 2000-2001, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings repayable over a period of three years and the aforesaid deposit is now repayable by PTFS after repayment of these borrowings. Consequentially, the repayment of the deposit by PTFS is expected to commence in the year 2005.

(3) (a) The approval of members at the extraordinary general meeting of the Company held on 24th April, 2002 and the sanction by the Honourable High Court of Judicature at Bombay vide its Order dated 6th June, 2002, were obtained to utilise an amount not exceeding Rs. 186.00 crores out of the balance standing in the securities premium account for adjusting among other balances trade debts due as at 31st March, 2002 the recovery of which is currently doubtful.

(b) In accordance with the foregoing, the share capital (to mean securities premium account) of the Company was reduced by Rs. 184.82 crores in the year ended 31st March, 2002, in accordance with section 100 of the Companies Act, 1956, read with section 78(1) of the Act.

(c) During the year, the Board of Directors has resolved to utilise the balance amount of Rs. 1.18 crores, being the difference between the maximum amount at Rs. 186.00 crores and the amount already utilised at Rs. 184.82 crores, for adjusting trade debts (to mean including loans and advances) of Rs. 1.18 crores which were due as at 31st March, 2002, the recovery of which is currently doubtful. Accordingly, the share capital (to mean securities premium account) of the Company is further reduced by Rs. 1.18 crores during the year.

(d) The Company has been legally advised that the further utilisation, as set out in (c) above, made by the Board of Directors is within the authority given by the Members of the Company in this behalf and that it does not affect the substance of the resolution and the approval of the Mumbai High Court.

(4) (a) The approval of Members and the sanction by the Honourable High Court of Judicature at Bombay referred in Note 5 (a) above, apart from authorising the utilisation out of the balance standing in the securities premium account for adjusting certain balances, also authorised the utilisation of the said account for proposed voluntary separation payments subject to a maximum of Rs. 70.00 crores. Accordingly, a provision of Rs. 70.00 crores was made in the accounts for the year ended 31s' March, 2002, with a corresponding reduction in the securities premium account.

(b) During the year, apart from adjusting the amounts payable as voluntary retirement compensation with the provision set up as stated in (a) above, the additional liability on account of gratuity and leave encashment arising as a consequence of early voluntary retirement, determined on the basis of an actuarial valuation, has also been adjusted from the said provision. In the previous year ended 31st March, 2003, such additional liability on account of gratuity and leave encashment was included in the charge to the profit and loss account. As a result of this change, the profit for the year is higher by Rs. 1.93 crores.

(c) The Company has been legally advised that the term "voluntary" refers to the mode of separation and not the nature of payment and it would be within the terms of the Court Order to adjust such incidental additional liability on account of gratuity and leave encashment from the provision of Rs. 70.00 crores set aside for proposed voluntary separation payments.

(5) The Company has applied the securities premium account:

(a) In accordance with section 78(2) of the Companies Act, 1956, in providing for the premium payable on secured premium notes (SPNs) Rs.32,224 (2002-2003 Rs. 0.01 crore).The Company has been legally advised that SPNs being in substance no different from debentures, such charge would qualify under section 78(2)(d) of the Companies Act, 1956, as one of the purposes for which securities premium account may be applied.

(b) In accordance with section 77A of the Companies Act,1956 -

(i) in adjusting the difference between the buy-back price and the face value of equity shares bought back Rs. 2.03 crores (2002-2003 Rs. 0.59 crore);

(ii) in writing off the expenses incurred in connection with the buy-back of equity shares Rs. 0.02 crore (2002-2003 Rs.0.05 crore). The Company has been legally advised that the provisions of section 77A of the Companies Act, 1956 enables the utilisation of the securities premium account to charge the expenses incurred in connection with the buy-back of equity shares and the purposes listed in section 78 of the said Act cannot be construed as the only purposes prescribed for utilisation of securities premium account.

(6) Revenue expenditure on research and development charged to the profit and loss account is Rs.0.34 crore (2002-2003 Rs. 0.26 crore).

(7) The amount of exchange differences (net):

(i) credited to the profit and loss account is Rs.2.22 crores (net) (2002-2003 charged to the profit and loss account Rs.2.85 crores) [taking into account loss on cancellation of forward foreign exchange contracts Rs. 2.72 crores (net) (2002-2003 Rs. 1.89 crores) disclosed separately in Schedule 15]

(ii) in respect of forward foreign exchange contracts, to be recognised in the profit and loss account in the next accounting period is a loss of Rs. 0.05 crore (2002-2003 Rs.0.08 crore).

(8) Borrowing costs capitalised during the year is Rs.Nil (2002-2003 Rs.0.09 crore).

(9) The obligations for future lease rentals in respect of assets taken on lease prior to 1st April, 2001 is Rs. Nil (2002-2003 Rs. Nil). Lease rentals of Rs. Nil (2002-2003 Rs. 0.02 crore) have been charged to the profit and loss account in accordance with the terms and conditions of the respective lease agreements.

(10) Names of the small scale industrial undertakings to whom the Company owed any sum which was outstanding for more than 30 days as at the end of the financial year are as under:

M/s Auxitex; Bhavana Industries; Britacel Silicones Ltd.; Krupa Plastics; Nova Transfers Pvt. Ltd.; RSA Industries Pvt. Ltd.; Saraf Organics Pvt. Ltd.; Super Tex Industries; Technomax Engineers; Vinod Textiles; Yogeshwar Chemicals (P) Ltd.

(11) The Company has given few equipments on operating lease. The particulars in respect of such lease is as follows:

(a) (i) The gross carrying amount and the accumulated depreciation at the balance sheet date are Rs.3.50 crores (31.3.2003 Rs. Nil) and Rs. 1.68 crores (31.3.2003 Rs. Nil) respectively.

(ii) Depreciation recognised in the profit and loss account is Rs. 1.68 crores (2002-2003 Rs. Nil).

(b) The minimum aggregate lease payment to be received in future is as follows:

(i) For a period not later than one year Rs. 1.82 crores (2002-2003 Rs. Nil).

(ii) For a period later than one year and not later than five years Rs. Nil (2002-2003 Rs. Nil).

(iii) For a period later than five years Rs, Nil (2002-2003 Rs. Nil).

(c) All costs incurred for the equipments are capitalised and there are no indirect costs recognised in the profit and loss account.

(12) During the year, the Company's Jamnagar and Roha properties, which were being held for disposal, have been disposed off, apart from residential flats at Roha (see 2nd footnote on Schedule 5 and the particulars thereunder).

(13) During the year 2000-2001, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

(14) Previous year's figures have been regrouped where necessary.

Mar 31, 2003

NOTES: A. Security for Item No. 1:

Mortgage/charge on the immovable properties of the Company at Spring Mills, Textile Mills and the DMT Division at Patalganga and hypothecation/charge on the movable assets of the Company at the aforesaid locations subject to second and subservient to the mortgage/charge in `B and `C.

B. Security for Item No. 2:

Mortgage/charge on a parl-passu basis on the immovable properties of the Company at Spring Mills, Textile Mills and the DMT Division at Patalganga and hypothecation/charge on a pari-passu basis on the movable assets of the Company at the aforesaid locations subject to prior charge in favour of the Companys bankers for working capital limits and other facilities.

C. Security for Item No. 3:

Mortgage/charge on a pari-passu basis on the immovable properties of the Company at Spring Mills, Textile Mills and the DMT Division at Patalganga.

VOTES: D. Security for Item No. 4:

Secured by creation of lien on the Mutual fund units mentioned below:

14,84,688 Units (and 442 fractions) of Rs. 10 each in JM G-Sec Fund (Regular Plan) (Growth) of JM Mutual Fund

57,52,267 Units (and 855 fractions) of Rs. 10 each in JM Income Fund (Growth Plan - Growth Option) of JM Mutual Fund

21,19,357 Units (and 506 fractions) of Rs. 10 each in Birla Gilt Plus (Regular Plan: Growth) of Birla Sun Life Mutual Fund

9,74,010 Units (and 184 fractions) of Rs. 10 each in Birla Income Plus (Plan B: Growth) of Birla Sun Life Mutual Fund

30,00,000 Units of Rs. 10 each in Deutsche Premier Bond Fund (Institutional Plan - Growth) of Deutsche Mutual Fund

31,75,754 Units (and 236 fractions) of Rs. 10 each in K-Bond Unit Scheme 99 (Wholesale Plan) - Growth of Kotak Mahindra Mutual Fund

13,94,113 Units (and 046 fractions) of Rs. 10 each in Reliance Income Fund (Growth Plan - Growth Option) of Reliance Mutual Fund

49,34,952 Units (and 198 fractions) of Rs. 10 each in Tata Income Plus Fund (Option B - Growth) of Tata Mutual Fund

11,58,286 Units (and 848 fractions) of Rs. 10 each in Templeton India Income Builder Account (Plan A-Growth) of Templeton

20,44,668 Units (and 712 fractions) of Rs. 10 each in Templeton India Government Securities Fund (Growth Plan) of Templeton Mutual Fund

E. Security for item No. 5:

Secured by creation of lien on the Mutual fund units mentioned below:

3,89,24,661 Units (and 350 fractions) of Rs. 10 each in JM Income Fund (Dividend Plan) of JM Mutual Fund

31,90,484 Unite (and 698 fractions) of Rs. 10 each in K-Bond Unit Scheme 99 (Wholesale Plan) - Growth of Kotak Mahindra Mutual Fund

48,95,912 Units (and 892 fractions) of Rs. 10 each in Tata Income Plus Fund (Option B - Growth) of Tata Mutual Fund

F. Security for Item No. 6:

Secured by creation of lien on the Mutual fund units mentioned below:

2,75,51,245 Units (and 316 fractions) of Rs. 10 each in HDFC Income Fund (Premium Plan - Dividend) of HDFC Mutual Fund

G. Security for Item No. 7:

Secured by hypothecation of stocks, book debts and other current assets and a second charge by way of mortgage of the immovable properties of the Company at Spring Mills, Textile Mills and the DMT Division at Patalganga.

(1) Estimated amount of contracts to be executed on capital account and not provided for as at 31st March, 2003 Rs. 1.01 crores (31.3.2002 Rs. 1.26 crores).

2001-2002 Rupees Rupees in crores in crores

(2) Contingent liabilities not provided for:

(a) Income-tax matters in respect of earlier years under dispute (including interest of Rs. 2.49 crores) (31.3.2002 Rs. 6.92 crores] as follows: 47.20 80.74

(i) Decided in Companys favour by appellate authorities and department in further appeal 12.36 24.10

(ii) Pending in appeal matters decided against the Company 34.84 56.64

(b) Claims against the Company not acknowledged as debts (with interest thereon) 20.5 55.03

(c) Customs duty on imported raw materials in respect of pending export obligations 0.08 0.11

(d) Counter indemnity for an amount of Rs. 11.17 crores issued in favour of Standard Chartered Bank, Mumbai, which in turn has guaranteed loans granted by Standard Chartered Bank, Indonesia to FT. Five Star Textile Indonesia, (PTFS) (formerly P.T. Five Star Industries Ltd.), a joint venture company (31.3.2002 counter indemnity for Rs. 11.46 crores issued in favour of The Hongkong and Shanghai Banking Corporation Ltd., Mumbai). As confirmed by PTFS, the Company has a pari-passu charge on PTPSs machinery, which would cover the aforesaid indemnity amount.

(3) Expenses appearing in Schedule 15 include:

(a) Auditors remuneration (including service tax where applicable)

(i) Audit fees 0.27 0.24

(ii) Company law matters Rs. 28,350 (2001-2002 Rs. 28,350) - -

(Hi) Other services 0.16* 0.13*

(iv) Reimbursement of out-of-pocket expenses Rs. 21,403 (2001-2002 Rs. 32,289) - -

*excludes Rs. 0.01 crore (2001-2002 Rs. 0.01 crore) included in expenses incurred in connection with buy-back of equity shares referred in Note 7(b)(ii) below.

(b) Directors fees 0.04 0.05

(c) Managerial remuneration [Inclusive of estimated monetary value of benefits Rs. 81,446 (2001-2002 Rs. 91,759); but excluding contribution to gratuity fund and provision for leave encashment as separate figures are not available] 1.35 1.47

(4) Deposit of Rs.15.22 crores (2001-2002 Rs. 15.58 crores) with a joint venture company is a "shareholders" deposit denominated in U.S. $ with PT. Five Star Textile Indonesia, (PTFS) (formerly P.T. Five Star Industries Ltd.). This deposit was earlier repayable by RTFS after It Clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected In instalments spread out between 1996 and 2010. During the year 2000-2001, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings repayable over a period of three years and the aforesaid deposit is now repayable by PTFS after repayment of these borrowings. Consequentially, the repayment of the deposit by PTFS is expected to commence in the year 2005.

(5) The profit for the year Is lower by Rs. 0.89 crore in view of the incremental gratuity liability relating to past services not being withdrawn from general reserve as in the past.

(6) Revenue expenditure on research and development charged to the profit and loss account is Rs. 0.26 crore (2001-2002 Rs. 0.29 crore).

(7) The Company has applied the securities premium account:

(a) In accordance with section 78(2) of the Companies Act, 1956, in providing for the premium payable on secured premium notes (SPNs) Rs. 0.01 crore (2001-2002 Rs. 0.01 crore). The Company has been legally advised that SPNs being In substance no different from debentures, such charge would qualify under section 78(2)(d) of the Companies Act, 1956, as one of the purposes for which securities premium account may be applied.

(b) In accordance with section 77A of the Companies Act, 1956.

(I) In adjusting the difference between the buy-back price and the face value of equity shares bought back Rs. 0.59 crore (2001-2002 Rs. 5.61 crores].

(II) in writing off the expenses incurred in connection with the buy-back of equity shares Rs. 0.05 crore (2001-2002 Rs. 0. 13 crore). The Company has been legally advised that the provisions of section 77A of the Companies Act, 1956 enables the utilisation of the securities premium account to charge the expenses Incurred in connection with the buy-back of equity shares and the purposes listed in section 78 of the said Act cannot be construed as the only purposes prescribed for utilisation of the .securities premium account.

(8) (a) Pursuant to the approval of members at the extraordinary general meeting of the Company held on 24th April, 2002 and as sanctioned by the Honourable High Court of Judicature at Bombay vide its Order dated 6th June, 2002, the share capital (to mean securities premium account) of the Company, in the previous year, was reduced by Rs. 184.82 crores In accordance with section 100 of the Companies Act, 1956, read with section 78(1) of the Act.

(b) In accordance with the aforesaid approval of the members and the sanction of the High Court, the Board of directors had inter alia resolved to apply the securities premium account for adjusting: (I) the balance as at 31st December, 2001 of certain capital and capital related Items and variation, if any, of such balance during the period 1st January, 2002 to 31st March, 2002 - Rs. 26.69 crores; (ii) trade debts due as at 31st March. 2002, the recovery of which Is currently doubtful - Rs. 20.53 crores.

(c) During the year, the Board of directors have reassessed the estimates referred in paragraph (b) above and in amendment to their earlier resolution referred in paragraph (b) above, have resolved that the amount in respect of item (i) above i.e. capital and capital-related items, should be Rs. 19.19 crores and the amount in respect of item (ii) above i.e. trade debts (to mean including loans and advances), should be Rs. 28.03 crores.There is however, no change In the total amount of Rs.184.82 crores reduced from Share Capital (to mean Securities Premium Account).

(d) The Company has been legally advised that the amendment made by the Board of directors is within the authority given by the Members of the Company in this behalf and that the Inter se variation set out in (b) above does not affect the substance of the resolution and the approval of the Mumbai High Court.

(9) The amount of exchange differences (net):

(i) charged to the profit and loss account is Rs. 2.85 crores (net) (2001-2002 Rs. 3.48 crores) [taking into account loss on cancellation of forward foreign exchange contracts Rs. 1.89 crores (net) (2001-2002 Rs. 0.98 crore) disefosed separately In Schedule 15].

(ii) in respect of forward foreign exchange contracts, to be recognised In the profit and loss account In the next accounting period is a loss of Rs. 0.08 crore (2001-2002 Rs. 0.17 crore),

(10) Borrowing costs capitalised during the year is Rs. 0.09 crore (2001-2002 Rs. 0.13 crore).

(11) The obligations for future lease rentals in respect of assets taken on lease prior to 1st April, 2001 is Rs. Nil (2001-2002 Rs. 0.02 crore). Lease rentals of Rs. 0.02 crore (2001-2002 Rs. 0.14 crore) have been charged to the profit and loss account in accordance with the terms and conditions of the respective lease agreements.

(12) Names of the small scale industrial undertakings to whom the Company owed any sum which was outstanding for more than 30 days as at the end of the financial year are as under:

AST Packaging Co. (P) Ltd.; AtuI Oil & Chemical Company; M/s Auxitex; Benzsal Corporation; The Bombay Shuttle Manufacturing Co.; Britacel Silicones Ltd.; Kandoi Fabrics Pvt. Ltd.; Koshal Polyplast; Krupa Plastics; Metalreeds & Mlllstores Manufacturers; M.K. Soorenji & Co.; Neville Dyechem Industries; Nova Transfers Pvt. Ltd.; Paresh Chemical Corporation; RSA Industries Pvt. Ltd.; Saraf Organics Pvt. Ltd.; Shree J.K.GIass & Chemicals Pvt. Ltd.; Super Tex Industries; Usha Compressed Wood Manufacturing Co.; Valblanc Chemie Private Limited; Victor Chemi - Colour India Private Limited; Yogeshwar Chemicals Ltd.; A-Tex (India); Kanodia Silk Mills Pvt. Ltd.; and N R Enterprises.

(13) (a) The charge to the profit and loss account consequent to the write down of inventories to Its net realisable value is Rs. 9.97 crores, the break-up of which is as follows:

Rupees Stock-in-trade in crores

(i) Raw materials 6.03

(ii) Work-in-process 0.44

(iii) Finished goods 3.50

Write down in the value of inventories in the previous year was not material.

(b) During the month of March, 2003, the Company had entered into a firm purchase contract for import of a raw material, viz.; paraxylene, at an aggregate cost of Rs. 27.82 crores. On conversion of this raw material into its finished product, viz.; DMT, It is expected that the net realisable value, estimated at Rs. 14.96 crores, will be substantially lower than the cost, compared with reference to the estimated selling price of DMT. Accordingly, a provision for this toss, estimated at Rs. 12.86 crores, has been made in the accounts.

(19) The operations of the Companys Jamnagar and Roha plants were closed during the year 2000-2001. Buildings at Rona and the land at both the locations are held for disposal and carried at their net book values, being lower than the net realisable values, ascertained on the baste of a valuation report (see the 3rd footnote on Schedule 5 and the particulars thereunder).

(20) During the year 2000-2001, pursuant to the scheme of amalgamation between Scal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets liabilities and reserves of SIL had been transferred to and vested in the effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilites in the name of the Company.

(21) Previous years figures have been regrouped where necessary.

Mar 31, 2002

(1) Estimated amount of contracts to be executed on capital account and not provided for as at 31st March, 2002 - Rs. 1.26 crores (31.3.2001 Rs. 2.45 crores).

(2) Contingent liabilities not provided for:

(a) Income-tax matters in respect of earlier years under dispute Rs. 80.74 crores (including interest of Rs. 6.92 crores) [31.3.2001 Rs. 77.31 crores {including interest of Rs. 6.72 crores)] as follows:

Rupees in Crores

(i) Decided in Companys favour by appellate authorities and department in further appeal (31.3.2001 Rs. 24.10 crores) 24.10

(ii) Pending in appeal - matters decided against the Company (31.3.2001 Rs. 53.21 crores) 56.64

(b) Claims against the Company not acknowledged as debts - Rs. 55.03 crores (with interest thereon) (31.3.2001 Rs. 48.46 crores).

(c) Customs duty on imported raw materials in respect of pending export obligations - Rs. 0.11 crore (31.3.2001 Rs. 0.84 crore).

(d) Counter indemnity for an amount of Rs. 11.48 crores (31.3.2001 Rs. 10.98 crores) issued in favour of The Hongkong and Shanghai Banking Corporation Ltd., Mumbai, which in turn has guaranteed loans granted by Standard Chartered Bank, Indonesia to P. T. Five Star Industries Ltd., Indonesia (PTFS), a joint venture company. As confirmed by PTFS, the Company has a pari-passu charge on PTFSs machinery, which would cover the aforesaid indemnity amount.

(3) Deposit of Rs. 15.58 crores (2000-2001 Rs. 14.89 crores) with a joint venture company is a "Shareholders deposit" denominated in U. S. $ with P. T. Five Star Industries Ltd., Indonesia (PTFS). This deposit was earlier repayable by PTFS after it clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which was to be effected in instalments spread out between 1996 and 2010. During the previous year, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings repayable over a period of three years and the aforesaid deposit is now repayable by PTFS after repayment of these borrowings. Consequentially, the repayment of the deposit by PTFS is expected to commence in the year 2005.

(4) In view of a substantial number of employees accepting voluntary retirement under the Companys voluntary retirement schemes during this year and in the previous year, there has been an incremental gratuity liability of Rs. 1.62 crores (2000-2001 Rs. 1.88 crores) in respect of past services, determined on the basis of an actuarial valuation.

The Company has debited the total actuarially determined gratuity liability of Rs. 4.18 crores (2000-2001 Rs. 4.53 crores) to the profit and loss account and has withdrawn a sum of Rs. 1.62 crores (2000-2001 Rs. 1.88 crores) from general reserve, so as to off-set the past years liability.

The Company has been legally advised that the accounting treatment so adopted is in accordance with the applicable provisions of the Companies Act, 1956 and the relevant Accounting Standards of the Institute of Chartered Accountants of India.

(5) The Company surrendered for repurchase to the Unit Trust of India, 13,47,08,666 units (and 752 fractions) (2000-2001 5,92,98,450 units) of Rs. 10 each in Unit Scheme, 1964, for a consideration of Rs. 191.96 crores (2000-2001 Rs. 83.02 crores), in respect of which the average carrying cost was Rs. 240.59 crores (2000-2001 Rs. 105.91 crores).

The loss of Rs. 48.63 crores (2000-2001 Rs. 22.89 crores) on the above sale of long term investments has been charged to the profit and loss account and an equivalent amount has been withdrawn from investment reserve which was appropriated in earlier years out of past years profits specifically to meet such eventualities.

The Company has been legally advised that the accounting treatment so adopted is in accordance with the applicable provisions of the Companies Act, 1956 and the relevant Accounting Standards of the Institute of Chartered Accountants of India.

(6) Revenue expenditure on research and development charged to the profit and loss account is Rs. 0.29 crore (2000-2001 Rs. 0.26 crore).

(7) The Company has applied the securities premium account:

(a) In accordance with section 78(2) of the Companies Act, 1956-

(i) in writing off the issue expenses of shares and non-convertible debentures Rs. Nil (2000-2001 Rs. 0.03 crore);

(ii) in providing for the premium payable on secured premium notes (SPNs) Rs. 0.01 crore (2000-2001 Rs. 3.33 crores). The Company has been legally advised that SPNs being in substance no different from debentures, such charge would qualify under section 78(2)(d) of the Companies Act, 1956, as one of the purposes for which securities premium account may be applied.

(b) In accordance with section 77A of the Companies Act, 1956-

(i) in adjusting the difference between the buy-back price and the face value of equity shares bought back Rs. 5.61 crores (2000-2001 Rs. Nil);

(ii) in writing off the expenses incurred in connection with the buy-back of equity shares Rs. 0.13 crore (2000-2001 Rs. Nil). The Company has been legally advised that the provisions of section 77A of the Companies Act, 1956 enables the utilisation of the securities premium account to charge the expenses incurred in connection with the buy-back of equity shares and the purposes listed in section 78 of the said Act cannot be construed as the only purposes prescribed for utilisation of securities premium account.

(8) During the previous year, pursuant to the scheme of amalgamation between Seal Investments Limited (SIL) and the Company, sanctioned by the jurisdictional court on 20th April, 2001, the assets, liabilities and reserves of SIL had been transferred to and vested in the Company with effect from 1st October, 2000. The Company is taking necessary steps for securing transfer of some of the assets and liabilities in the name of the Company.

(9) The amount of exchange differences (net):

(i) charged to the profit and loss account is Rs. 3.48 crores (net) (2000-2001 Rs. 2.37 crore) [taking into account loss on cancellation of forward foreign exchange contracts Rs. 0.98 crore (net) disclosed separately in Schedule 15 (2000-2001 Rs. 4.51 crores (gain) disclosed separately in Schedule 14)];

(ii) in respect of forward foreign exchange contracts, to be recognised in the profit and loss account in the next accounting period is a loss of Rs. 0.17 crore (2000-2001 Rs. 1.40 crores).

(10) Borrowing costs capitalised during the year is Rs. 0.13 crore (2000-2001 Rs. 0.32 crore).

(11) The obligations for future lease rentals in respect of assets taken on lease prior to 1st April, 2001 is Rs. 0.02 crore (2000-2001 Rs. 0.13 crore). Lease rentals of Rs. 0.14 crore (2000-2001 Rs. 0.26 crore) have been charged to the profit and loss account in accordance with the terms and conditions of the respective lease agreements.

(12) The operations of the Companys Jamnagar and Roha plants were closed during the previous year. Buildings at Roha and the land at both the locations are held for disposal and carried at their net book values, being lower than the net realisable values, ascertained on the basis of a valuation report (see the 3rd footnote on schedule 5 and the particulars thereunder).

(13) Previous years figures have been regrouped where necessary.

Mar 31, 2001

Secured Loans Notes:

1. 18% Secured Redeemable Debentures of Rs.100 each, redeemable in three annual instalments commencing from the end of the 6th, 7th and 8th year from the date of allotment (27/7/1992) with a premium of Rs. 5 per debenture payable at the end of the 7th year. Redeemable during the year.

2. 17% Secured Redeemable Debentures of Rs.100 each, redeemable in three annual instalments commencing from the end of the 6th, 7th and 8th year from the date of allotment (29/3/1993) with a premium of Rs.5 per debenture payable at the end of the 7th year. Redeemed during the year.

3. 17% Secured Redeemable Debentures of Rs.100 each, redeemable in three annual instalments commencing from the end of the 6th, 7th and 8th year from the date of allotment (26/5/1993). Aggregate amount redeemed during the year Rs.7.20 crores.

4. Secured premium Notes (SPNs) of Rs.200 each, repayable in four annual instalments of Rs.50 each together with a premium of Rs.60 each at the end of the 4th, 5th, 6th and 7th year from the date of allotment (initially made on 12/7/1993); the original allotees have he option to sell back the SPNs at par, at the end of the third year from the date of allotment. SPNs amounting to Rs.17.22 crores were redeemed during the year along with a premium of Rs.20.65 crores.

5. 14.50% Secured Redeemable Non-convertible Debentures of Rs.5,00,000 each, redeemable at the end of the 3rd year from the date of allotment (23/2/1998). Redeemed during the year.

6. 12.25% Secured Redeemable Non-Convertible Debenures of Rs.5,00,000 each, redeemable at the end of the 3rd year from the date of one year from the date of allotment (26/4/1999). Redeemed during the year.

7. 11.70% Secured Redeemable Non-Convertible Debentures of Rs.100 each, redeemable at the end of one year from the dates of allotment (Rs.15 crores allotted on 14/7/1999 and Rs.5 crores allotted on 22/7/1999). Redeemed during the year.

8. ICICI Ltd. term loan

9. ICICI Ltd. term loan (repayable in rupee equivalent of foreign currencies at the time of repayment)

10. State Bank of India term loan

11. Cash Credit, demand loans and packing credit from banks secured by hypothecation of stocks, book debts and other current assets.

12.A. Security for item Nos. 1 to 3,5 and 8:

Mortgage/charge on a pari-passu basis on the immovable properties of the Company at Spring Mills, Textile Mills and the DMT Division at Patalganga and hypothecation/charge on a pari-passu basis on the movable assets of the Company at the aforesaid locations subject to prior charge in favour of the Company's bankers for working capital limits and other facilities.

B. Security for item No. 4:

Mortgage/charge on the immovable properties of the Company at Spring Mills, Textile Mills and the DMT Division at Patalganga and hypothecation/ charge on the movable assets of the Company at the aforesaid locations subject to second and subservient to the mortgage/charge in 'A' and 'F'.

C. Security for item No. 6:

Mortgage/charge on a pari-passu basis on the immovable and movable properties of the Company at Spring Mills, Textile Mills and the DMT Division at Patalganga.

D. Security for item No. 7:

Mortgage/charge on a pari-passu basis on the immovable and movable properties of the Company at Spring Mills and Textile Mills.

E. Security for item No. 9:

Secured by pledge of units of Unit Trust of India under the Unit Scheme, 1964.

F. Security for item No. 10:

Mortgage/charge on a pari-passu basis on the immovable properties of the Company at Spring Mills and Textile Mills and the DMT Division at Patalganga. Creation of security is pending.

G. Item No. 4 includes Rs. Nil (1999-2000 Rs. 5,200) from directors.

General Notes:

13) Estimated amount of contracts to be executed on capital account and not provided for as at 31st March, 2001 Â Rs. 2.45 crores 131.3.2000 Rs. 1.83 crores).

14) Contingent liabilities not provided for :

(a) Income-tax matters in respect of earlier years under dispute Rs. 77.31 crores (including interest of Rs. 6.72 crores) [31.3.2000 Rs. 73.02 crores (including interest of Rs. 8.58 crores)] as follows : Rupees in crores

(i) Decided in Company's favour by appellate authorities and department in further appeal (31.3.2000 Rs. 17.94 crores).... 24.10 (ii) Pending in appeal - matters decided against the Company (31.3.2000 Rs. 55.08 crores)* . 53.21*

* Includes matters with regard to (A) exclusion of gain on cancellation of forward foreign exchange contracts from taxable income for the accounting year 1992-93 in respect of which the department has upheld the Company's claim but has disallowed the depreciation to the extent attributable to the aforesaid gain [tax liability Rs. 1.55 crores (31-3-2000 Rs. 1.55 crores)} (B) disallowance of deduction under section 80M for the accounting year 1994-95 [tax liability Rs. 3.99 crores 131.3.2000 Rs. 3.99 crores)] (C) tax not being deducted on payment of commission/ reimbursements to overseas lead managers in connection with the Company's GDR issue during the accounting year 1993-94 [tax liability Rs. 3.53 crores (31.3.2000 Rs. 3.53 crores)]; and (D) disallowance of depreciation on an asset given on lease for the accounting year 1995-96 [tax liability Rs. 21.51 crores 131.3.2000 Rs. 21.51 crores)] [aggregate tax liability Rs. 30.58 crores 131.3.2000 Rs. 30.58 crores)}. On the basis of legal advice obtained by the Company, the Company expects to succeed in appeal and therefore no provision is required to be made in respect of the aforesaid matters.

(b) Claims against the Company not acknowledged as debts - Rs. 48.46 crores (with interest thereon) (31.3.2000 Rs. 53.28 crores).

(c) Customs duty on imported raw materials in respect of pending export obligations-Rs. 0.84 crore (31.3.2000 Rs. 0.64crore).

(d) Counter indemnity for an amount of Rs. 10.98 crores 131.3.2000 Rs. Nil) issued in favour of The Hongkong and Shanghai Banking Corporation Limited, Mumbai, which in turn has guaranteed loans granted by Standard Chartered Bank, Indonesia to P. T. Five Star Industries Ltd., Indonesia, a joint venture company.

15) Deposit of Rs. 14.89 crores 11999-2000 Rs. 13.92 croresj with a joint venture company is a "Shareholders' deposit" denominated in U.S. $ with P. T. Five Star Industries Ltd., Indonesia (RTFS). This deposit was earlier repayable by PTFS after it clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which waste be effected in instalments spread out between 1996 and 2010. During the year, PTFS has prepaid the aforesaid term loan by raising funds through other borrowings repayable over a period of three years and the aforesaid deposit is now repayable by PTFS after repayment of these borrowings. Consequentially, the repayment of the deposit by PTFS is expected to commence in the year 2005.

16) No provision for income-tax has been made for the year as the company does not expect any tax liability either (i) under the normal provisions of the Income-tax Act, 1961 or (ii) under section 115JB of the said Act having regard to the applicable reductions as specified in the explanations to the said section.

17) AMALGAMATION OF SCAL INVESTMENTS LIMITED (SIL) WITH THE COMPANY:

(i) A scheme of amalgamation between Seal Investments Limited (SIL) [a wholly owned subsidiary] and the Company was approved in a court-convened meeting held on 5th February, 2001 and subsequently sanctioned by the jurisdictional court on 20th April, 2001. Accordingly, the scheme has been given effect to in these accounts and the assets, liabilities and reserves of SIL, at the respective book values as appearing in the balance sheet as at 30th September, 2000, audited by M/s. D. R. Kothari & Co., Chartered Accountants, have been transferred to and vested in the Company with effect from 1st October, 2000.

(ii) The operations of SIL included development of and trading in real estate property.

(iii) The amalgamation has been accounted for under the "pooling of interests" method as prescribed by Accounting Standard-14 issued by the Institute of Chartered Accountants of India. Accordingly, the assets, liabilities and reserves of SIL as at 1st October, 2000 have been taken over at their book values subject to adjustments made for differences in the accounting policies between the two companies.

(iv) As provided in the scheme of amalgamation, 24,982 shares of SIL held by the Company stand cancelled.

(v) Since SIL was a wholly owned subsidiary, no shares were issued to effect the amalgamation.

(vi) Pending completion of relevant formalities for transfer of some of the assets and liabilities, acquired pursuant to the scheme, in the name of the Company, such assets and liabilities continue to be in the name of SIL.

(vii) In view of the aforesaid amalgamation with effect from 1st October, 2000, the figures for the current year are not comparable to those of the previous year.

18) The operations at the Company's Jamnagar and Roha plants were closed during the year. The plant and machinery at both the locations and the debris of building on demolition, at Jamnagar, have been sold. Buildings at Roha and the land at both the locations are held for disposal and carried at their net book values, being lower than the net realisable values, ascertained on the basis of a valuation report, (see the 4th footnote on Schedule 5 and particulars thereunder).

19) The amount of exchange differences (net) :

(i) charged to the profit and loss account is Rs. 2.37 crores (net) (1999-2000 Rs. 0.11 crore) [taking into account gain on cancellation of forward foreign exchange contracts Rs. 4.51 crores (net) 11999-2000 Rs. 0.51 crore); disclosed separately in Schedule 13];

(ii) in respect of forward foreign exchange contracts, to be recognised in the profit and loss account in the next accounting period is a loss of Rs. 1.40 crores (1999-2000 Rs. 1.37 crores).

20) Borrowing costs capitalised during the year is Rs. 0.32 crore (1999-2000 Rs. 0.65 crore).

21. The obligations for future lease rentals in respect of assets taken on lease is Rs. 0.13 crore (1999-2000 Rs. 0.40 crore). Lease rentals of Rs. 0.26 crore (1999-2000 Rs. 0.54 crore) have been charged to the profit and loss account in accordance with the terms and conditions of the respective lease agreements.

22) There are no small scale industrial undertakings to whom the Company owed a sum exceeding Rs. 0.01 crore which was outstanding for more than 30 days as at the end of the financial year.

Mar 31, 2000

(1) Contingent liabilities not provided for :

(a) Income-tax matters in respect of earlier years under dispute Rs. 73.02 crores (including interest of Rs. 8.58 crores) [31.3.99 Rs. 57.35 crores (including interest of Rs. 6.22 crores)] as follows :

Rupees in crores

(i) Decided in Company's favour by appellate authorities and department in further appeal (31.3.99 Rs. 11.87 crores) 17.94

(ii) Pending in appeal - matters decided against the Company (31.3,99, Rs. 45.48 crores)* 55.08*

* Includes matters with regard to (A) exclusion of gain on cancellation of forward foreign exchange contracts from taxable income for the accounting year 1992-93; during this year the department has upheld the Company's claim but has disallowed the depreciation to the extent attributable to the aforesaid gain (tax liability Rs. 1.55 crores (31.3.99 Rs. 6.65 crores)] (B) disallowance of deduction under section 80M for the, accounting year 1994-95 [tax liability Rs. 3.99 crores (31.3.99 Rs. 3.99 crores)] (C) tax not being deducted on payment of commission/ reimbursements to overseas lead managers in connection with the Company's GDR issue during the accounting year 1993-94 [tax liability Rs. 3.53 crores (31.3.99 Rs. 5.05 crores)]; and (D) disallowance of depreciation on an asset given on an asset given on lease for the accounting year 1995-96 [tax liability Rs. 21.51 crores (31.3.99 Rs. 21.51 crores)] aggregate tax liability Rs. 30.58 crores (31.3.99 Rs. 37.20 crores)]. On the basis of legal advice obtained by the Company, the Company expects to succeed in appeal and therefore no provision is required to be made in respect of the aforesaid matters.

(b) Claims against the Company not acknowledged as debts - Rs. 53.28 crores (with interest thereon) (31.3.99 Rs. 49.67 crores).

(c) Customs duty on imported raw materials in respect of pending export obligations - Rs. 0.64 crore (31.3.99. Rs. 1.01 crores).

(2) Until the previous year, excise and customs duties were taken into account When items were taken out of bond and were neither charged to the profit and loss account nor included in the valuation of such inventories. This year, excise duty of Rs. 3.84 crores and customs duty of Rs. 0.10 crore payable on such inventories have been charged to the profit and loss account and accordingly included in the valuation of closing inventories as an element of cost. This change has not impact on the profit for the year.

(3) Deposit of Rs. 13.92 crores (1998-99 Rs. 13.51 crores) with a joint venture company is a "Shareholders' denominated in U.S. $ with P. T. Five Star Industries Ltd., Indonesia (PTFS). This deposit is repayable once PTFS clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which is to be effected in instalments spread out between 1996 and 2010. PTFS has paid the instalments due in 1996 and onwards as per schedule.

(4) In view of a substantial increase in the number of employees accepting voluntary retirement under the Company's voluntary retirement schemes during this year and in the previous year, there has been an incremental gratuity liability of Rs. 1.37 crores (1998-99 Rs. 1.83 crores) in respect of past services determined on the basis of an actuarial valuation.

The Company has debited the total actuarially determined gratuity liability of Rs. 5.35 crores (1998-99 Rs. 4.55 crores) to the profit and loss account and has withdrawn a sum of Rs. 1.37 crores (1998-99 Rs. 1.83 crores) from general reserve, so as to off-set the past years' liability.

The Company has been legally advised that the accounting treatment so adopted is in accordance with the applicable provisions of the Companies Act, 1956 and the relevant Accounting Standards of the Institute of Chartered Accountants of India.

(5) (a) During the previous year, outstandings pertaining to two customers had become doubtful consequent to one customer having gone into liquidation and the other customer having been referred to the Board for Industrial and Financial Reconstruction (BIFR), in respect of whom claims were filed with appropriate authorities. Accordingly, provision for doubtful debts aggregating Rs. 5.69 crores in respect of outstanding dues of these customers representing sales effected in past years was debited to the profit and loss account. An equivalent amount was withdrawn from general reserve to off-set this charge, as it pertained to past years.

(b) In respect of the assessment for the accounting year 1990-91, the Income-tax department had not served any assessment order/demand notice in terms of an interim order of the Bombay High Court passed against a writ petition filed by the Company challenging the validity of circular no. 495 dated 22nd September, 1987 issued by the Central Board of Direct Taxes insofar as it relates to the interpretation of sub-section (2) of section 115J of the Income-tax Act, 1961.

During the previous year, the Company had settled the tax liability in respect of the aforesaid assessment year under the Kar Vivad Samadhan Scheme, 1998, resulting in a charge of Rs. 10.29 crores to the profit and loss account. An equivalent amount was withdrawn from general reserve so as to off-set the liability of an earlier year.

(c) The Company had acquired 2,00,000 14.5% preference shares of Rs. 100 each in Western Paques (1) Ltd. at a cost of Rs. 2.17 crores in October 1996. In view of Western Paques (1) Ltd. having subsequently gone into liquidation during the previous year, the entire holding was sold in the previous year for a nominal value.

The loss of Rs. 2.17 crores on the above sale was charged to the profit and loss account and an equivalent amount was withdrawn from investment reserve to off-set this charge.

The Company has been legally advised that the accounting treatments so adopted in (a), (b) and (c) above is in accordance with the applicable provisions of the Companies Act, 1956 and the relevant Accounting Standards of the Institute of Chartered Accountants of India.

(6) Revenue expenditure on research and development charged to the, profit and floss account is Rs. 0.10 crore (1998-99 Rs. 0.17 crore).

(7) In accordance with section 78(2) of the Companies Act, 1956, the Company has applied the share premium account :

(i) in writing off the issue expenses of shares and non-convertible debentures Rs. 0.06 crore (1998-911 Rs. 0.05 crore);

(ii) in providing for the premium payable on redemption of debentures Rs. 0.07 crore (1998-99 Rs. 0.13 crore); and

(iii) in providing for the premium payable on secured premium notes (SPNs)- Rs. 11.79 crores (1998-99 Rs. 11.81 crores). The Company has been legally advised that SPNs being in substance no different from debentures, such charge would qualify under section 78(2)(d) of the Companies Act, 1956, as one of the purposes for which share premium account may be applied.

(8) In arriving at the `book profit' under section; 115JA of the Income-tax Act, 1961 for the purpose of provision for taxation, applicable reductions as specified in the explanations to the said section have been made.

(9) The amount of exchange differences (net)

(i) charged to the profit and loss account is Rs. 0.11 crore (net) (1998-99 Rs. 2.47 crores) [taking into account gain on cancellation of forward foreign exchange contracts (net) Rs. 0.51 crore [1998-99 loss (net) of Rs. 265 crores], disclosed separately, in Schedules 13 and 14 respectively];

(ii) included in the carrying amount of fixed assets is Rs. Nil (1998-99 Rs. 0.03 crore);

(iii) in respect of forward foreign exchange contracts to be recognised in the profit and loss account in the next accounting period is a loss of Rs. 1.37 crores (1998-99 Rs. 0.43 crore).

(10) Addition to fixed assets/capital work-in-progress includes interest and finance charges Rs. 0.65 crore (1998-99 Rs. 0.03 crore) comprising of interest on other loans.

(11) The obligations for future lease rentals in respect of assets taken on lease is Rs. 0.40 crore (1998-99 Rs. 0.93 crore). Lease rentals of Rs. 0.54 crore (1998-99 Rs. 0.80 crore) have, been charged to the profit and loss account in accordance with the terms and conditions of the respective lease agreements.

Mar 31, 1999

1) As in previous years, customs and excise duty are taken into account when items are taken out of bond. This amounted to Rs. 2.71 crores (1997-98 Rs. 1.05 crores) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a cash basis, however, in the current year and in the previous year there is no impact on profits.

2) Deposit of Rs.13.51 crores (1997-98 Rs.12.58 crores) with a joint venture company is a "Shareholders' Deposit" denominated in U.S. $ with P.T. Five Star Industries Ltd., Indonesia (PTFS). This deposit is repayable once PTFS clears, in full, the term loan availed by it from a consortium of Indian nationalised banks, which is to be effected in instalments spread out between 1996 and 2010. PTFS has paid the instalments due in 1996 and onwards as per schedule.

3) (a) During the year, there has been a substantial increase in the number of employees accepting voluntary retirement under the Company's voluntary retirement schemes, and, consequently the emoluments of certain employees continuing in the organisation have been increased under the same schemes. As a result there has been an incremental gratuity liability of Rs. 1.83 crores in respect of past services (i.e. prior to 1998-99), determined on the basis of an actuarial valuation.

The Company has debited the total actuarially determined gratuity liability of Rs. 4.55 crores to the profit and loss account and has withdrawn a sum of Rs. 1.83 crores from general reserve, so as to off-set the past years' liability.

(b) During the year, outstandings pertaining to two customers have become doubtful consequent to one customer having gone into liquidation and the other customer having been referred to the Board for Industrial and Financial Reconstruction (BIFR), in respect of whom claims have been filed with appropriate authorities. Accordingly, provision for doubtful debts aggregating Rs. 5.69 crores in respect of outstanding dues of these customers representing sales effected in past years has been debited to the profit and loss account. An equivalent amount has been withdrawn from general reserve to off-set this charge, as it pertains to past years.

(c) In respect of the assessment for the accounting year 1990-91, the Income-tax department had not served any assessment order/demand notice in terms of an interim order of the Bombay High Court passed against a writ petition filed by the Company challenging the validity of circular no. 495 dated 22nd September, 1987 issued by the Central Board of Direct Taxes insofar as it relates to the interpretation of sub-section (2) of section 115J of the Income-tax Act, 1961.

During the year, the Company has settled the tax liability in respect of the aforesaid assessment year under the Kar Vivad Samadhan Scheme, 1998, resulting in a charge of Rs. 10.29 crores to the profit and loss account. An equivalent amount has been withdrawn from general reserve so as to off-set the liability of the earlier year.

The Company has been legally advised that the accounting treatment so adopted in (a), (b) and (c) above is in accordance with the applicable provisions of the Companies Act, 1956 and the relevant Accounting Standards of the Institute of Chartered Accountants of India.

4) The Company had acquired 2,00,000 14.5% preference shares of Rs. 100 each in Western Paques (I) Ltd. at a cost of Rs. 2.17 crores in October 1996. In view of the Western Paques (I) Ltd. having subsequently gone into liquidation during the year, the entire holding has been sold for a nominal value.

The loss of Rs. 2.17 crores on the above sale has been charged to the profit and loss account and an equivalent amount has been withdrawn from investment reserve to off-set this charge.

The Company has been legally advised that the accounting treatment so adopted is in accordance with the applicable provisions of the Companies Act, 1956 and the relevant Accounting Standards of the Institute of Chartered Accountants of India.

5) In accordance with section 78(2) of the Companies Act, 1956, the Company has applied the share premium account :

(i) in writing off the issue expenses of shares, non-convertible debentures and global depositary receipts Rs. 0.05 crore (1997-98 Rs. 0.93 crore);

(ii) in providing for the premium payable on redemption of debentures Rs. 0.13 crore (1997-98 Rs. 0.28 crore); and

(iii) in providing for the premium payable on secured premium notes (SPNs) Rs. 11.81 crores (1997-98 Rs. 13.26 crores). The Company has been legally advised that SPNs being in substance no different from debentures, such charge would qualify under section 78(2)(d) of the Companies Act, 1956, as one of the purposes for which share premium account may be applied.

6) In arriving at the `book profit' under section 115JA of the Income-tax Act, 1961 for the purpose of provision for taxation, applicable reductions as specified in the explanations to the said section have been made.

7) The amount of exchange differences (net) :

(i) charged to the profit and loss account is Rs. 2.47 crores (net) (1997-98 Rs. 11.79 crores) [taking into account loss on cancellation of forward foreign exchange contracts (net) Rs. 2.65 crores (1997-98 Rs. 5.64 crores); disclosed separately in Schedule 14];

(ii) included in the carrying amount of fixed assets is Rs. 0.03 crore (1997-98 Rs. 5.24 crores);

(iii) in respect of forward foreign exchange contracts, to be recognised in the profit and loss account in the next accounting period is a loss of Rs. 0.43 crore (1997-98 an income of Rs. 0.71 crore).

8) The obligations for future lease rentals in respect of assets taken on lease is Rs. 0.93 crore (1997-98 Rs. 1.71 crores). Lease rentals of Rs. 0.80 crore (1997-98 Rs. 0.99 crore) have been charged to the profit and loss account in accordance with the terms and conditions of the respective lease agreements.

9) (a) As a result of the change in the basis of amortising the voluntary retirement compensation referred to in Note 6 (i) on Schedule 15, the charge for the year on account of voluntary retirement compensation is lower by Rs. 1.12 crores. Consequently, the profit before tax and the profit after tax are higher by Rs. 1.12 crores and Rs. 1.00 crore respectively. This change in the basis of amortising has been made after an assessment of the average period for which the benefits by way of reduced costs would accrue to the Company.

(b) As a result of the change in the accounting policy for advertisement expenditure incurred on promotion of new brands/products referred to in Note 6 (iv) on Schedule 15, such expenditure incurred on two new brands, namely, 'Forest Hill' and 'Princeton', amounting to Rs. 0.54 crore is being written off equally over a period of three years. Accordingly, the charge for the year on account of advertising is lower by Rs. 0.36 crore and consequently, the profit before tax and profit after tax are higher by Rs. 0.36 crore and Rs. 0.32 crore respectively. This change in the accounting policy has been made since the Company is of the view that advertising expenditure on promotion of new brands/products results in a continuing future benefit which may reasonably be expected to ensure over the following two years.

10) Names of the small scale industrial undertaking to whom the Company owed a sum exceeding Rs. 0.01 crore which was outstanding for more than 30 days as at the end of the financial year, are as under :

Alchemie Pvt. Ltd. Allied Silicate Industries Auxitex Britacel Silicones Ltd. Fibrolite Auxiliaries Hy-Tech Engineers Krupa Plastics Metalreeds & Millstore Manufacturers Rathi Dye Chem Ltd. Koshal Poly Plast Sagar Chemicals Saraf Organics Pvt. Ltd. Siva Chemical Industries Valblanc Chemie Private Limited Yogeshwar Chemicals Pvt. Ltd.,

Mar 31, 1998

1) As in previous years, customs and excise duty are taken into account when items are taken out of bond. This amounted to Rs. 1.05 crores (1996-97 Rs. 6.57 crores) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a cash basis, however, in the current year and in the previous year there is no impact on profits.

2) The Company had filed a writ petition in July, 1991 in the Bombay High Court inter alia challenging the validity of Circular No. 495 dated 22nd September, 1987 issued by the Central Board of Direct Taxes (CBDT) insofar as it deals with the carry forward of unabsorbed allowances u/s 115J(2) of the Income-tax Act, 1961 which was admitted by the court. The court had in terms of its interim order permitted the Company to file its return of income for the subsequent years in accordance with one of the interpretations put forward by the Company and pay tax accordingly. Provision for taxation for the accounting year 1990-91 had been made on the basis of the said interpretation. There is no impact of the above writ petition on the provision for taxation for the accounting year 1997-98. However, the reserves and surplus would have been lower by Rs. 9.12 crores, had provision for taxation for the accounting year 1990-91 been made on the basis of the CBDT interpretation.

The assessment for the accounting year 1990-91 has been reportedly completed by the income-tax department in March, 1994. However, in terms of the aforesaid interim order of the high court, the department has not served any assessment order/demand notice on the Company.

3) Technical know-how fees from P. T. Five Star Industries Ltd., Indonesia (PTFS), a joint venture company, for the period 1st March, 1981 to 31st December, 1995 aggregating U.S. $ 3,200,692.48 equivalent to Rs. 12.58 crores were not accrued in the relevant accounting years in view of the then uncertainty of ultimate collection.

During the year, the Company obtained the approval of the Reserve Bank of India to receive the aforesaid fees and to place, simultaneously, an equivalent amount by way of a "Shareholders' deposit" denominated in U.S. $ with PTFS. This "constructive" receipt of an amount of Rs. 14.36 crores (net of T.D.S. being Rs. 12.58 crores) in respect of the above know-how fees has been credited to the profit and loss account.

The U.S. $ denominated deposit equivalent to Rs. 12.58 crores, placed by the Company with PTFS is repayable once PTFS clears, in full, the term loan availed by it from a consortium of Indian nationalised banks. Repayment of the bank loan is to be effected in annual instalments spread out between 1996 and 2010. PTFS continues to be financially viable and has fully met its repayment commitments to the banks during the year ended 31st December, 1996 and 1997 and has also paid the technical know-how fees due to the Company for these periods.

4) Consequent upon an amendment to the Payment of Gratuity Act, 1972 raising the ceiling for gratuity payable to employees from Rs. 1 lac to Rs. 2.5 lacs, an incremental liability of Rs. 2.26 crores in respect of past services (i.e. prior to 1997-98) has been determined based on an actuarial valuation.

The Company has debited the total actuarially determined gratuity liability of Rs. 3.18 crores to the profit and loss account and has withdrawn a sum of Rs. 2.26 crores from general reserve, so as to offset the past years' liability.

The Company has been legally advised that the accounting treatment so adopted is in accordance with the applicable provisions of the Companies Act, 1956 and the relevant Accounting Standard of the Institute of Chartered Accountants of India.

5) In accordance with section 78(2) of the Companies Act, 1956, the Company has applied the share premium account:

(i) in writing off the issue expenses of shares, non-convertible debentures and global depository receipts Rs. 0.93 crore (1996-97 Rs. 0.03 crore);

(ii) in providing for the premium payable on redemption of debentures Rs. 0.28 crore (1996-97 Rs. 0.32 crore) and

(iii) in providing for the premium payable on secured premium notes (SPNs) Rs. 13.26 crores (1996-97 Rs. 20.51 crores). The Company has been legally advised that SPNs being in substance no different from debentures, such charge would qualify under section 78(2)(d) of the Companies Act, 1956, as one of the purposes for which share premium account may be applied.

6) Additions to fixed assets/capital work-in-progress includes interest and finance charges Rs. 1.37 crores (1996-97 Rs. 1.52 crores) comprising of interest on other loans.

7) The amount of exchange differences (net):

(i) charged to the profit and loss account is Rs. 11.79 crores (1996-97 Rs. 9.86 crores) (includes loss on cancellation of forward foreign exchange contracts (net) Rs. 4.77 crores (1996-97 Rs. 5.84 crores); disclosed separately in Schedule 14];

(ii) included in the carrying amount of fixed assets is Rs. 5.24 crores (1996-97 Rs. 2.30 crores);

(iii) in respect of forward foreign exchange contracts, to be recognised in the profit and loss account in the next accounting period is an income of Rs. 0.71 crore (1996-97 Rs. 0.89 crore).

8) The obligations for future lease rentals in respect of assets taken on lease is Rs. 1.71 crores (1996-97 Rs. 2.41 crores). Lease rentals of Rs. 0.99 crore (1996-97 Rs. 0.96 crore) have been charged to the profit and loss account in accordance with the terms and conditions of the respective lease agreements.

9) (a) As a result of the change in the accounting policy for Modvat credit referred to in Note 6 on Schedule 15, the charge for the year on account of raw materials consumed and the valuation of closing stock of raw materials are lower by Rs. 3.93 crores and Rs. 0.54 crore respectively. Consequently, the "profit before tax" and "profit after tax" are higher by Rs. 3.39 crores and Rs. 3.03 crores respectively. This change in the accounting policy was necessitated in view of the postponement of utilisation of Modvat credit in the months of February and March, 1998 and also to fall in line with the method of accounting followed by the Company's DMT division.

(b) As a result of the change in the accounting policy for certain catalysts referred to in Note 7(ii) on Schedule 15, expenditure incurred on activated carbon amounting to Rs. 0.44 crore and sieves molecular carbon amounting to Rs. 0.56 crore are been written off equally over a period of three and five years respectively, accordingly, the charge for the year on account of stores, spare parts and catalysts consumed is lower by Rs.0.74 crore. Consequently, the "profit before tax" and "profit after tax" are higher by Rs. 0.74 crore and Rs.0.66 crore respectively. This change in the accounting policy has been made since the Company estimates that the useful life of the two items of catalysts are three and five years respectively.

Mar 31, 1997

1) As in previous years, customs and excise duty are taken into account when items are taken out of bond. This amounted to Rs. 6.57 crores (1995-96 Rs. 8.18 crores) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a cash basis, however, in the current year and in the previous year there is no impact on profits.

2) The Company had filed a writ petition in July, 1991 in the Bombay High Court inter alia challenging the validity of Circular No. 495 dated 22nd September, 1987 issued by the central Board of Direct Taxes (CBDT) insofar as it deals with the carry forward of unabsorbed allowances u/s 115J(2) of the Income-tax Act, 1961 which was admitted by the Court. The court had in terms of its interim order permitted the Company to file its Return of Income for the subsequent years in accordance with one of the interpretations put forward by the Company and pay tax accordingly. Provision for taxation for the accounting year 1990-91 had been made on the basis of the said interpretation. There is no impact of the above writ petition on the provision for taxation for the accounting year 1996-97. However, the reserves and surplus would have been lower by Rs. 9.12 crores, had provision for taxation for the accounting year 1990-91 been made on the basis of the CBDT interpretation.

The assessment for the accounting year 1990-91 has been reportedly completed by the Income-tax department in March, 1994. However, in terms of the aforesaid interim order of the High Court, the department has not served any assessment order/demand notice on the Company.

3) in ascertaining the profit on sale of Bonus Units of Unit Trust of India (UTI), bonus declared for the year 1995-96 on the original Units held as long term investments, cost is taken as Nil and the entire sale proceeds of Rs. 27.64 crores have been credited to the Profit and Loss Account of the year. The Company is of the view that this is the appropriate treatment having regard to (i) the communication received from UTI in the context of the bonus declaration of giving the unitholders an option to apply to UTI for the issue of the bonus units or alternatively to offer the bonus units for repurchase to UTI without even receiving them (ii) these bonus units being regarded as current investments in the opinion of the Board (as distinct from the original Units being regarded as long term investments in the opinion of the Board) and (iii) the Accounting Standard 13 issued by the Institute of Chartered Accountants of India not having specifically dealt with the manner of ascertainment of cost of securities received as bonus.

4) (a) Full provision was made for the diminution in value of the Company's investment of Rs. 1.59 crores in the equity capital of P.T. Five Star industries Ltd., Indonesia (PTFS) in the Company's 1989-90 Accounts. Consequent upon the substantial implementation of a Plan involving restructuring of PTFS' loans during this year, the current operations of PTFS are financially viable.

During the year an amount of Rs. 0.90 crore was received from PTFS by the Company in respect of Technical know-how fees due for 1996 and Rs. 0.15 crore accrued for the three months to 31.3.97 is expected to be received shortly.

The Articles of Association of PTFS have been amended in terms of the new Company Law which came into force in March 1996 and are awaiting approval from Indonesian authorities which is expected shortly. PTFS will, under the new Company Law have a two tier Board, with two Directors of the Company being nominated to serve on the Board of Commissioners, which is the apex Board.

With the restructuring of the Boards of PTFS and its attaining financial viability, the Company feels its investment in the shares of PTFS should be restored to its original value and the provision made earlier has accordingly been written back in the current year's accounts.

(b) Technical know-how fees from PTFS for the period 1.4.81 to 31.12.95 have not been accrued since they are remittable to the Company subject to PTFS repaying the restructured loans referred to above in respect of which the terms of repayment could extend upto the year 2010 (with an option to PTFS for pre-payment).

5) (a) in accordance with Section 78(2) of the Companies Act, 1956, the Company has applied the Share Premium account:

(i) in writing off the issue expenses of shares and Global Depositary Receipts Rs. 0.03 crore (1995-96 Rs. 0.28 crore);

(ii) in providing for the premium payable on redemption of debentures Rs. 0.32 crore (1995-96 Rs. 0.32 crore).

(b) An amount of Rs. 42.43 crores (which includes Rs. 21.92 crores referred in Note 9) representing the full proportionate premium on all Secured Premium Notes (SPNs) held at 31st March, 1997 (i.e. including the original allottees since their option to sell back the SPNs at par is expiring on 11th July, 1997, record date 27th June, 1997) has been directly charged against the Share Premium Account, the Company having taken the view that the SPNs being in substance no different from the Debentures, such charge would qualify under Section 78(2)(d) of the Companies Act, 1956 as one of the purposes for which Share Premium Account may be applied.

6) Until last year the Company made provision on a pro-rata basis for the premium payable on redemption of Secured Premium Notes held by other than the original allottees only, such provision being charged to the Profit and Loss Account and aggregating Rs. 21.92 crores in the Balance Sheet at 31st March, 1996 which has this year been written back and credited to the Profit and Loss Account with a consequential increase in the profit for the year (this amount together with the premium accrued to 31st March, 1997 as explained in Note 8(b) having been charged directly against Share Premium Account).

7) As a result of the change this year in the accounting policy referred to in Note 7 on Schedule 15, compensation paid this year under the Company's Voluntary Retirement Scheme (VRS) aggregating Rs. 4.93 crores is to be written off equally over a period of 5 years. Accordingly a sum of Rs. 0.99 crore is written off during this year and the balance of Rs. 3.94 crores is carried forward under 'Miscellaneous Expenditure' to be written off in succeeding 4 years. This change in accounting policy was made as the Company has come to the view that such VRS payments do result in a continuing future benefit which may reasonably be expected to enure over the following 4 years. Had this change in accounting policy not been made the profit for the year would have been lower by Rs. 3.94 crores.

8) Additions to fixed assets/Capital work-in-progress include:

(i) Pre-operative expenses Rs. Nil (1995-96 Rs. 0.76 crore) included in other expenses and (ii) interest and Finance charges Rs. 1.52 crores (1995-96 Rs. 1.47 crores) comprising of interest on other loans.

9) The amount of exchange differences (net):

(i) charged to the Profit and Loss Account is Rs. 9.86 crores (1995-96 Rs. 18.33 crores) (includes Loss on cancellation of Forward Foreign Exchange contracts (net) Rs. 5.84 crores disclosed separately in schedule 14(1995-96.-net of gain on cancellation Rs. 0.69 crore disclosed/in Schedule 13)];

(ii) included in the carrying amount of fixed assets is Rs. 2.30 crores (1995-96 Rs. 5.43 crores);

(iii) in respect of Forward Foreign Exchange contracts to be recognised, in the Profit and Loss Account in the next accounting period is an income of Rs. 0.89 crore (1995-96 Rs. 0.17 crore).

10) Assets aggregating Rs. 4.68 crores (cost) (1995-96 Rs. 4.45 crores) have been acquired on finance lease. The obligations for future lease rentals in respect of such assets amount to Rs. 2.41 crores (1995-96 Rs. 2.48 crores). Lease rentals of Rs. 0.96 crore (1995-96 Rs. 85 crore) have been charged to revenue in accordance with the terms aid conditions of the respective lease agreements.

11) No provision for income-tax has been made for the year as the Company does not expect any tax liability either (i) under the normal provisions of the Income-tax Act, 1961 due to higher quantum of depreciation and other available exemptions/allowances/deductions, or (ii) under the recently introduced Minimum Alternative Tax having regard to the reductions in arriving at the book profit specified in the Explanation under Section 115JA (2) of the Act.

Mar 31, 1996

1) The depreciation rates adopted in respect of Textile Division machinery acquired/purchased during 1982-83 to 1985-87, for the purpose of determining the specified life under Section 205(2)(b) of the Companies Act, 1956 were consistent with the Company's actual claim for depreciation upto 1985-87 under the Income-tax Act, 1961 which was on single shift basis. The unprovided depreciation in respect of the aforesaid years as at 31st March, 1996 amounts to Rs. 0.50 crore. In respect of such machinery depreciation has been provided in the subsequent years inclusive of extra shifts.

The adequacy of depreciation charged by the Company in relation to the normal useful life of its Textile Division machinery has been confirmed by competent independent technical evaluation.

The Company is also advised by Counsel that the depreciation provision by the Company in the relevant years is in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956 and the dividend declared, if any, out of the profits for the year under report would be consistent with the provisions of Section 205 of the Companies Act, 1956.

2) As in previous years, customs and excise duty are taken into account when items are taken out of bond. This amounted to Rs.8.18 crores (1994-95 Rs.2.58 crores) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a cash basis, however, in the current year and in the previous year there is no impact on profits. Technical know-how fees for an overseas project have not been accrued in view of uncertainty of ultimate collection.

3) The Company had filed a writ petition in July, 1991 in the Bombay High Court inter alia challenging the validity of Circular No. 495 dated 22nd September, 1987 issued by the Central Board of Direct Taxes (CBDT) insofar as it deals with the carry forward of unabsorbed allowances u/s 115J(2) of the Income-tax Act, 1961 which was admitted by the Court. The Court had in terms of its interim order permitted the Company to file its Return of Income for the subsequent years in accordance with one of the interpretations put forward by the Company and pay tax accordingly. Provision for taxation for the accounting year 1990-91 had been made on the basis of the said interpretation. There is no impact of the above writ petition on the provision for taxation for the accounting year 1994-95. However, the reserves and surplus would have been lower by Rs. 9.12 crores, had provision for taxation for the accounting year 1990-91 been made on the basis of the CBDT interpretation.

The assessment for the accounting year 1990-91 has been reportedly completed by the Income-tax department in March, 1994. However, in terms of the aforesaid interim order of the High Court, the department has not served any assessment order/demand notice on the Company.

4) The net effect of (a) the changes in accounting policies referred to in Note 7 on Schedule 15 and (b) the leave encashment liability on retirement being accrued this year on the basis stated in Note 6 (ii) on Schedule 15 consequent to the issuance of the revised Accounting Standard 11 and the introduction of Accounting Standard 15 respectively by the Institute of Chartered Accountants of India, is not material.

5) Additions to fixed assets/Capital work-in-progress include:

(i) Pre-operative expenses Rs.0.76 crore (1994-95 Rs. Nil) included in other expenses. and

(ii) Interest and Finance charges Rs.1.47 crores (1994-95 Rs. 1.37 crores) comprising of Interest on fixed loans Rs. Nil (1994-95 Rs. 1.26 crores); Interest on other loan Rs. 1.47 crores (1994-95 Rs.0.09 crore) and other Finance charges Rs. Nil (1994-95 Rs. 0.02 crore).

6) In accordance with Section 78(2) of the Companies Act, 1956, the Company has applied the Share Premium account:

(i) in writing off the issue expenses of shares, debentures and Global Depositary Receipts Rs. 0.28 crore (1994-95 Rs. 0.01 crore) and

(ii) in providing for the premium payable on redemption of debentures Rs.0.32 crore (1994-95 Rs.0.31 crore).

7) No provision has been made for premium payable on the Secured Premium Notes (SPNs) held as at the year end by the original allottees, as such holders have the option to sell back the SPNs at par, at the end of the third year from the date of allotment on 12th July, 1993.

8) The amount of exchange differences:

(i) charged to the profit and loss account is Rs. 18.33 crores (1994-95 not ascertained)

(ii) included in the carrying amount of fixed assets is Rs. 5.44 crores (1994-95 Rs.3.81 crores).

(iii) in respect of forward foreign exchange contracts to be recognised in the profit and loss account in the next accounting period is an income of Rs.0.17 crore (1994-95 not ascertained).

9) Assets aggregating Rs. 7.90 crores (cost) (1994-95 Rs. 7.45 crores) have been acquired on finance lease. The obligations for future lease rentals in respect of such assets amount to Rs. 2.48 crores (1994-95 Rs. 3.30 crores). Lease rentals of Rs. 0.85 crore (1994-95 Rs. 0.95 crore) have been charged to revenue in accordance with the terms and conditions of the respective lease agreements.

10) No provision for income-tax has been made for the year as the Company does not expect any tax liability due to higher quantum of depreciation allowable under the provisions of the Income-tax Act, 1961 and other exemptions/allowances/deductions available under the Act.

11) 14% secured redeemable debentures of Rs 100 each (debentures amounting to Rs 0.23 crores were redeemed in full with 5% premium on 6-5-1990. Out of the balance debentures of Rs 6.76 crores, 20% of each debentures was redeemed with a premium of 5% on 6-5-90 & 80% was extended to be redeemed at the end of 6th, 7th and 8th year from 6-5-90 with a premium of 5% payable at the end of 7th year) (includes pro rata premium accrued Rs 0.23 crore; 1994-95 Rs 0.19 crore). Debentures aggregating Rs 14160 (Rs 13760) repurchased under buyback scheme are kept alive for the purposes of reissue.

12) 18% secured redeemable debentures of Rs 100 each (redeemable in full with a premium of Rs 5 per debenture on 26-3-99) (includes pro rata premium of Rs 0.06 crore; 1994-95 Rs 0.04 crore).

13) 14% secured redeemable debentures of Rs 100 each (redeemable in three annual instalments commencing from the end of 6th, 7th and 8th year from the date of allotment (2-4-90) with a premium of Rs 5 per debenture payable at the end of 7th year) ( includes pra rata premium accrued Rs 0.26 crore; 1994-95 Rs 0.21 crore).

14) 14% secured redeemable debentures of Rs 100 each (redeemable in three annual instalments from the end of 6th, 7th and 8th year from the date of allotment (28-8-91) with a premium of Rs 5 per debenture payable at the end of 7th year) (includes pro rata premium accrued Rs 0.26 crore; 1994-95 Rs 0.41 crore).

15) 18% secured redeemable debentures of Rs 100 each (redeemable in three annual instalments commencing from the end of 6th, 7th and 8th year from the date of allotment (27-7-92) with a premium of Rs 5 per debenture payable at the end of the 7th year) (includes pro rata premium accrued Rs 0.13 crore; 1994-95 Rs 0.10 crore).

16) 17% secured redeemable debentures of Rs 100 each (redeemable in three annual instalments commencing from the end of 6th, 7th and 8th year from the date of allotment (29-3-93) with a premium of Rs 5 per debenture payable at the end of 7th year) (includes pro rata premium accrued Rs 0.21 crore; 1994-95 Rs 0.14 crore).

17) 17% secured redeemable debentures of Rs 100 each redeemable in three annual instalments commencing from the end of 6th, 7th and 8th year from the date of allotment (26-5-93).

18) 15% secured redeemable debentures of Rs 200 each (redeemable at par at the end of 8th year from the date of allotment (12-7-93) or at the option of the company earlier at par, but not before the end of the 5th year from the date of allotment, in part or in full) (net of allotment money in arrears Rs nil; 1994-95 Rs 0.01 crore).

19) Secured premium notes of Rs 200 each (repayable in four equal instalments of Rs 50 each together with a premium of Rs 60 each at the end of 4th, 5th, 6th and 7th year from the date of allotment (12-7-93). The original allottees have the option to sell back the SPNs at par, at the end of third year from the date of allotment on 12-7-93) (net of allotment money in arrears Rs nil; 1994-95 Rs 0.02 crore).

20) 15% secured redeemable debentures of Rs 200 each (redeemable at par at the end of the 8th year from the date of allotment (20-6-94) or at the option of the company earlier at par, but not before the end of the 5th year from the date of allotment.

21) Security for items nos. 1 to 7 and 10 to 15: Mortgage on a pari passu basis on the immovable properties of the company at Spring Mills, Textile Mills, Roha Processing Plant, Jamnagar Spinning Unit and the DMT Division at Patalganga and hypothecation/charge on a pari passu basis on the movable assets of the company at the aforesaid locations subject to prior charge in favour of the company's bankers for working capital requirement and other facilities.

22) Security for items 8 & 9: Mortgage/charge on the immovable properties of the company at Spring Mills, Textile Mills, Roha Processing Plant, Jamnagar Spinning Unit and the DMT Division at Patalganga and hypothecation/charge on the movable assets of the company at the aforesaid locations subject to second and subservient to the mortgage/charge in item nos. 1 to 7 and 10 to 15.

23) Item nos. 8(a) and 8(b) includes Rs 167,600 (Rs 20,400) from Directors.

Mar 31, 1995

Inventories

Stores, spare parts and catalysts are valued at cost. Stock-in-trade is valued at lower of cost and market value (being replacement value for raw materials and work-in-process and realisable value for finished goods).

Retirement Benefits

Contributions for Provident Fund and Superannuation (based on a percentage of salary) and Gratuity (based on actuarial valuation) are made to the respective funds, which are administered by Trustees.

Foreign Currency Transactions

(i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the amounts subsequently realised/paid. Where receipts/payments have not materialised, these assets and liabilities are accounted for at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.

(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liability arising out of the exchange rates on repayment or at the year end is adjusted to the cost of acquisition of the fixed assets.

(iii) Balance in Exchange Earner's Foreign Currency Accounts have been stated at the exchange rates prevailing at the year end.

(iv) Roll over charges on forward foreign exchange contracts in respect of fixed assets are capitalised while gains on cancellation of such contracts have been credited to income.

The Company had filed a writ petition in July, 1991 in the Bombay High Court inter alia challenging the validity of Circular No. 495 dated 22nd September, 1987 issued by the Central Board of Direct Taxes (CBDT) insofar as it deals with the carry forward of unabsorbed allowances u/s 115J (2) of the Income-tax Act, 1961 which was admitted by the Court. The Court had in terms of its interim order permitted the Company to tile its Return of Income for the subsequent years in accordance with one of the interpretations put forward by the Company and pay tax accordingly. Provision for taxation for the accounting year 1990-91 had been made on the basis of the said interpretation. There is no impact of the above writ petition on the provision for taxation for the accounting year 1994-95. However, the reserves and surplus would have been lower by Rs. 9.12 Crores, had provision for taxation for the accounting year 1990-91 been made on the basis of the CBDT interpretation.

The assessment for the accounting year 1990-91 has been reportedly completed by the Income-tax department in March, 1994. However, in terms of the aforesaid interim order of the High Court, the department has not served any assessment order/demand notice on the Company.

Consequent to the realignment of the rupee value in terms of foreign currency values. the rupee liability in respect of foreign currency loans has increased during the year by Rs.3.81 crores (1993-94 decreased by Rs.0.11 crore) which has been adjusted to the cost of fixed assets as at the year end.

Additions to fixed assets/Capital work-in-progress include:

(i) Pre-operative expenses Rs. Nil (1993-94 Rs. 5.47 crores) comprising of Power and Fuel Rs.Nil (1993-94 Rs. 2.38 crores); Employees' emoluments Rs. Nil (1993-94 Rs.1.56 crores) and other expenses Rs. Nil (1993-94 Rs.1.53 crores)

and

(ii) Interest and Finance charges Rs.1.37 crores (1993-94 Rs.16.71 crores) comprising of interest on fixed loans Rs.1.26 crores (1993-94 Rs. 7.38 crores) Interest on other loans Rs. 0.09 crore (1993-94 Rs. 8.38 crores) and other Finance charges Rs.0.02 crore (1993-94 Rs. 0.97 crore).

In accordance with Section 78(2) of the Companies Act, 1956, the Company has applied the Share Premium account :

(i) in writing oft the issue expenses of the Non-Convertible Debentures/Secured Premium Notes and the Global Depositary Receipts Rs.0.01 crore (1993-94 Rs. 8.79 crores)

and

(ii) in providing for the premium payable on redemption of debentures Rs.0.31 crore (1993-94 Rs. 0.36 crore).

No provision has been made for premium payable on the Secured Premium Notes (SPNs) held as at the year end by the original allottees, as such holders have the option to sell back the SPNs at par, at the end of the third year from the date of allotment on 12th July 1993.

Mar 31, 1994

The depreciation rates adopted in respect of Textile Division machinery acquired/purchased during 1982-83 to 1985-87, for the purpose of determining the specified life under Section 205(2)(b) of the Companies Act, 1956 were consistent with the Company's actual claim for depreciation upto 1985-87 under the Income-tax Act, 1961 which was on single shift basis. The unprovided depreciation in respect of the aforesaid years as at 31st March, 1994 amounts to Rs.4.36 crores. In respect of such machinery depreciation has been provided in the subsequent years inclusive of extra shifts. The adequacy of depreciation charged by the Company in relation to the normal useful life of its Textile Division machinery has been confirmed by competent independent technical evaluation. The Company is also advised by Counsel that the depreciation provision by the Company in the relevant years is in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956 and the dividend declared, if any, out of the profits for the year under report would be consistent with the provisions of Section 205(2)(b) of the Companies Act, 1956 and the dividend declared, if any, out of the profits for the year under report would be consistent with the provisions of Section 205 of the Companies Act, 1956.

Consequent to the alterations in Schedule XIV to the Companies Act, 1956, the depreciation charge for the year, provided in accordance with Circular No.14/93 dated 20th December, 1993 issued by the Department of Company, Affairs, is lower by Rs.14.81 crores.

As in previous years, customs and excise duty are taken into account when items out of bond. This amounted to Rs.0.19 crore (1992-93 to Rs.2.62 crores) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a cash basis, however, in the current year and in the previous year there is no impact on profits. Technical know-how fees for an overseas project have not been accrued in view of uncertainty of ultimate collection.

The Company had filed a writ petition in July, 1991 in the Bombay High Court inter alia challenging the validity of Circular No.495 dated 22nd September, 1987 issued by the Central Board of Direct Taxes (CBDT) insofar as it deals with the carry forward of unabsorbed allowances u/s 115J(2) of the Income-Tax Act, 1961 which was admitted by the Court. The Court had in terms of its interim order permitted the Company to file its Return of Income for the subsequent years in accordance with one of the interpretations put forward by the Company and pay tax accordingly. Provision for taxation for the accounting year 1990-91 had been made on the basis of the said interpretation. There is no impact of the above writ petition on the provision for taxation for the accounting year 1993-94. However, the reserves and surplus would have been lower by Rs.9.12 crores, had provision for taxation for the accounting year 1990-91 been made on the basis of the CBDT interpretation. The assessment for the accounting year 1990-91 has been reportedly completed by the Income-tax department in March, 1994. However, in terms of the aforesaid interim order of the High Court, the department has not served any assessment order/demand notice on the Company.

Consequent to the realignment of the rupee value in terms of foreign currency values, the rupee liability in respect of foreign currency loans has decreased during the year by Rs.0.11 crore (1992-93 increase by Rs.2.39 crores) which has been adjusted to the cost of fixed assets as at the year end.

Mar 31, 1993

From 1987-88 in respect of machinery and buildings of the DMT Division acquired/purchased upto 31st March, 1987 as also in respect of machinery and buildings of the Textile Division acquired/purposed from 1974 to 1985-87 depreciation has been provided on the straight line method at the rates corresponding to the rates applicable under the Income-tax Rules as in force at the time of acquisition/purchase of assets pursuant to Circular No. 1/1/86-CL.V No. 15(50)84-CL.VI dated 21st May, 1986 issued by the Department of Company Affairs in accordance with the provision of Section 205(2)(b) of the Companies Act, 1956. The rates adopted in respect of Textile Division machinery acquired/purchased during 1982-83 to 1985-87, for the purpose of determining the specified life under Section 205(2)(b) of the Companies Act, 1956 were consistent with the Company's actual claim for depreciation upto 1985-87 under the Income-tax Act, 1961 which was on single shift basis. In respect of such machinery depreciation has been provided in the current year and in the relevant previous years inclusive of extra shifts.

As in previous years, customs and excise duty are taken into account when item are taken out of bond. This amounted to Rs. 2.62 crores (1991-92 Rs. 9.52 crores) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a cash basis, however, in the current year and in the previous year there is no impact on profits. Technical know-how fees for an overseas project have not been accured in view of uncentainty of ultimate collection.

As per the guidelines issued by the Ministry of Finance on 14th January, 1987 a Debenture Redemption Reserve is to be created by companies raising resources through debebtures. The Company is of the view that these guidelines are not applicable to debentures issued prior to 14th January, 1987 and has therefore not created a Debenture Redemption Reserve on debentures issued prior to that date.

The Company has filed a writ petition in July, 1991 in Bombay High Court inter alia challenging the validity of Circular No. 495 dated 22nd September, 1987 issued by the Central Board of Direct Taxes (CBDT) insofar as it deals with the carry forward of unabsorbed allowances u/s 115J(2) of the Income-tax Act, 1961 which was admitted by the Court. The Court had in terms of its interim order permitted the Company to file its Return of Income for the accounting year 1990-91 in accordance with one of the interpretations put forward by the Company and pay tax accordingly. Provision for taxation for the accounting year 1990-91 had been made on the basis of the said interpretation. There is no impact of the above writ petition on the provision for taxation for the accounting year 1992-93. However, the reserves and surplus would have been lower by Rs. 9.12 crores, had provision for taxation for the accounting year 1990-91 been made on the basis of the CBDT interpretation.

Consequent on the realignment of the rupee value in terms of foreign currency values, the rupee liability in respect of foreign currency loans has increased during the year by Rs. 2.39 crores (1991-92 Rs. 0.83 crore) out of which Rs. 2.39 crores (1991-92 Rs. 0.82 crore) has been added to the cost of fixed assets as at the year end and the balance taken to revenue.

During the year the company has made a refinement in the basis of accounting whereby customs duty on imported raw materials in respect of pending export obligations has been shown as a contingent liability and accordingly excluded as an element of cost in valuation of Stock-in-trade. However, the impact on the profit for the year consequential to this refinement is not significant.

Mar 31, 1992

From 1987-88 in respect of machinery and buildings of the DMT Division acquired/purchased upto 31st March, 1987 as also in respect of machinery and buildings of the Textile Division acquired/purchased from 1974 to 1985-87 depreciation has been provided on the straight line method at the rates corresponding to the rates applicable under the Income-tax Rules as in force at the time of acquisition/purchase of assets pursuant to Circular No. 1/1/86-CL.V No. 15(50)-CL. VI dated 21st May 1986 issued by the Department of Company Affairs in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956. The rates adopted in respect of Textile Division machinery acquired/purchased during 1982-83 to 1985-87, for the purpose of determining the specified life under Section 205(2)(b) of the Companies Act, 1956 were consistent with the Company's actual claim for depreciation upto 1985-87 under the Income-tax Act, 1961 which was on single shift basis. In respect of such machinery depreciation has been provided in the current year and in the relevant previous year inclusive of extra shifts.

As in previous years, customs and excise duty are taken into account when items are taken out of bond. This amounted to Rs. 9.52 crores (1990-91 Rs. 10.28 crores) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a such basis, however, in the current year and in the previous year there is no impact on profits. Technical know-how fees for an overseas project have not been accrued in view of uncertainty of ultimate collection.

As per the guidelines issued by the Ministry of Finance on 14th January, 1987 a Debenture Redemption Reserve is to be created by companies raising resources through debentures. The Company is of the view that these guidelines are not applicable to debentures issued prior to 14th January, 1987 and has therefore not created a Debenture Redemption Reserve on debentures issued prior to that date.

Mar 31, 1991

From 1987-88 in respect of machinery and buildings of the DMT Division acquired/purchased upto 31st March, 1987 as also in respect of machinery and buildings of the Textile Division acquired/purchased from 1974 to 1985-87 depreciation has been provided on the straight line method at the rates corresponding to the rates applicable under the Income-tax Rules as in force at the time of acquisition/purchase of assets pursuant to Circular No. 1/1/86-CL.V No. 15(50)-CL. VI dated 21st May 1986 issued by the Department of Company Affairs in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956. The rates adopted in respect of Textile Division machinery acquired/purchased during 1982-83 to 1985-87, for the purpose of determining the specified life under Section 205(2)(b) of the Companies Act, 1956 were consistent with the Company's actual claim for depreciation upto 1985-87 under the Income-tax Act, 1961 which was on single shift basis. In respect of such machinery depreciation has been provided in the current year and in the relevant previous year inclusive of extra shifts.

As in previous years, customs and excise duty are taken into account when items are taken out of bond. This amounted to Rs. 1027.97 crores (1989-90 Rs. 286.97 crores) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a such basis, however, in the current year and in the previous year there is no impact on profits. Technical know-how fees for an overseas project have not been accrued in view of uncertainty of ultimate collection.

As per the guidelines issued by the Ministry of Finance on 14th January, 1987 a Debenture Redemption Reserve is to be created by companies raising resources through debentures. The Company is of the view that these guidelines are not applicable to debentures issued prior to 14th January, 1987 and has therefore not created a Debenture Redemption Reserve on debentures issued prior to that date.

Mar 31, 1990

From 1987-88 in respect of machinery and buildings of the DMT Division acquired/purchased upto 31st March, 1987 as also in respect of machinery and buildings of the Textile Division acquired/purchased from 1974 to 1985-87 depreciation has been provided on the straight line method at the rates corresponding to the rates applicable under the Income-tax Rules as in force at the time of acquisition/purchase of assets pursuant to Circular No. 1/1/86-CL.V No. 15(50)-CL. VI dated 21st May 1986 issued by the Department of Company Affairs in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956. The rates adopted in respect of Textile Division machinery acquired/purchased during 1982-83 to 1985-87, for the purpose of determining the specified life under Section 205(2)(b) of the Companies Act, 1956 were consistent with the Company's actual claim for depreciation upto 1985-87 under the Income-tax Act, 1961 which was on single shift basis. In respect of such machinery depreciation has been provided in the current year and in the relevant previous year inclusive of extra shifts.

As in previous years, customs and excise duty are taken into account when items are taken out of bond. This amounted to Rs. 286.97 crores (1988-89 Rs. 682.75 crores) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a such basis, however, in the current year and in the previous year there is no impact on profits. Technical know-how fees for an overseas project have not been accrued in view of uncertainty of ultimate collection.

As per the guidelines issued by the Ministry of Finance on 14th January, 1987 a Debenture Redemption Reserve is to be created by companies raising resources through debentures. The Company is of the view that these guidelines are not applicable to debentures issued prior to 14th January, 1987 and has therefore not created a Debenture Redemption Reserve on debentures issued prior to that date. Consequent on the realignment of the rupee value in terms of foreign currency values, the rupee liablity in respect of foreign currency loans has increased during the year by Rs 616.19 lacs out of which Rs 612.46 lacs has been added to the cost of fixed assets as on 31st March 1990 and the balance taken to the revenue.

The Writ Petition filed by the company inter alia challenging the validity of Circular No.495 dated 22nd September, 1987, issued by the Central Board of Direct Taxes insofar as it deals with the carryforward of unabsorbed allowances under Section 115J(2) of the income tax act, 1961 has been admitted by the Bombay High Court. The Court has in terms of its interim order permitted the Company to file their Return of Income for the yar in accordance with one of the interpretations put forward by the Company and pay tax accordingly. Provision for taxation for the year has been made on the basis of the said interpretation. Had provision for taxation been made on the basis of CBDT's circular, it would have been higher by Rs.912 lacs.

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