Notes to Accounts of Mirza International Ltd.

Mar 31, 2018

Note A:- Notes to first-time adoption Re-measurements of post-employment benefit obligations

Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability, also effective gain & losses of hedging instruments in a cash flow hedge are recognized in other comprehensive income. Under the previous GAAP, these re-measurements were forming part of the profit or loss for the year and part of reserve and surplus as hedging reserve respectively. As a result of this change, the profit for the year ended March 31, 2016 increased by Rs, 54 Lakh and reserve and surplus decreased by 459 lakh. However due to tax effect on effective gain & losses of hedging instruments in a cash flow hedge the total equity is reduced by 160 lakh as at 31.03.2017.

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Mar 31, 2017

Note 1. TERMS / RIGHTS ATTACHED TO SHARES

a. Equity Shares

The Company has only one class of equity shares having a par value of '' 2 per share. Each holder of Equity Shares is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing general meeting.

I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts.

The distribution will be in proportion to the number of equity shares held by the shareholders.

b. Preference shares

Pursuant to the Scheme of Amalgamation of Genesis footwear Enterprises Private Limited and Mirza International Limited as approved by Hon’ble Allahabad High Court vide its order dated 15.12.2015, 12000000 0% Compulsory Convertible Preference Shares (“CCPS”) of '' 2/- each fully paid up converted into Equity shares on 01.04.2016 which rank pari passu with the existing equity shares of the Company.

Note 1.4 INFORMATION REGARDING ISSUE OF SHARES IN THE LAST FIVE YEARS

a. shares allotted as fully paid up pursuant to scheme without payment being received in cash

1 Pursuant to the Scheme of Amalgamation of Genesis footwear Enterprises Private Limited with Mirza International Limited as approved by Hon’ble Allahabad High Court order dated 15.12.2015 12000000, 0% Compulsory Convertible Preference Shares (“CCPS”) of '' 2 each fully paid converted into equity shares on 01.04.2016 which rank pari passu with the existing equity shares of the Company.

2 15600000 equity shares of '' 2 each fully paid were allotted on 18.02.2016 pursuant to the Scheme of amalgamation as approved by Hon’ble Allahabad High Court vide its order dated 15.12.2015. 12000000, 0% Compulsory Convertible Preference Shares (“CCPS”) of '' 2 each fully paid were allotted on 18.02.2016 pursuant to the Scheme of amalgamation as approved by Hon’ble Allahabad High Court vide its order dated 15.12.2015.

b. The Company has not issued any bonus shares

c. The Company has not undertaken any buy back of shares.

* Secured by 1st Charge on Fixed Assets, created out of various Term Loans and block of assets charged to the bank from time to time for Term Loans and extension of charge on all current assets. Equitable mortgage of Land, Building, Plant & Machinery at Co’s Unit No.1 & 2, Kanpur Unnao Link Road, Unnao, Unit No.3 (Plot No. C-4,5, 36 & 37) Sector 59, NOIDA, Unit No.6 at Plot No.1A Sector Ecotech-1, Greater NOIDA Industrial Area, Gautam Budh Nagar, U.P.

All the above secured Loans are guaranteed by some of the Directors.

# Secured against the assets purchased under the arrangements.

* Secured By 1st Charge by way of Hypothecation on entire current assets, present & future including entire stocks of raw materials, stock in process, finished goods, stock-in-transit, domestic Book Debts , Loans and advances or any other security required for the purpose of execution of export orders received, lying in the company’s godowns, warehouses or shipping agents’ custody waiting dispatch / shipment / and / or in transit etc.

All the above secured Loans are guaranteed by some of the Directors.

* These Figures do not include any amounts due and outstanding, to be credited to Investor Education & Protection Fund

# Outstanding Liabilities include Employee Benefits payable of Rs, 70.29 Lakh (Previous Year Rs, 40.59 Lakh), Export Expenses payable Rs, 39.01 Lakh ( Previous Year Rs, 19.02 Lakh) & Power & Electricity charges of Rs, 114.17 Lakh (Previous Year Rs, 126.41 Lakh).

* The Company’s major leasing arrangements are in respective of commercial premises (including furniture and fittings therein wherever applicable). These leasing arrangements which are cancellable, range 11 months to 3 years, or longer and are usually renewable by mutually agreed terms and conditions

* Includes Export incentive received on Export Notes :

(i) The Company is organized into two main business segments, namely:

Tannery Division - Manufacturing Finished Leather from Raw Hides, Wet Blue & Crust.

Shoe Division - Manufacturing Finished Leather & PU Shoes.

Segments have been identified and reported considering the distinct nature of products and differing risks and returns accruing there from, the organization structure, and the internal financial reporting systems.

(ii) Segmental Revenue in each of the above business segments primarily include domestic and export sales, export incentives and other miscellaneous income and also includes inter Segment transfers, priced at cost plus a predetermined rate of profit.

(iii) The Segmental Revenue in the geographical segments considered for disclosure are as follows:

(a) Revenue within India includes sales to customers located within India and earnings in India.

(b) Revenue outside India includes sales to customers located outside India and earnings outside India.

(iv) Segmental Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

Note 3 INCOME TAX

A) The Company has recognized and accounted for cumulative net deferred tax liability in accordance with Accounting Standard (AS-22) issued by the Institute of Chartered Accountants of India, “Accounting for Taxes on Income” in respect of net aggregate timing differences as on 31st Mar, 2017.

Note 4 FORWARD CONTRACTS

Forward Exchange Contracts enetred into by the Company and outstanding as at Balance Sheet date Forward contracts EURO INR 16.46 lakhs (19.14 lakhs) Sell Hedging Forward contracts GBP INR 94.77 lakhs (98.68 lakhs) Sell Hedging Forward contracts USD INR 62.93 lakhs (82.38 lakhs) Sell Hedging

(1) For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated November 8, 2016.

Note 5 Figures of previous year have been regrouped/rearranged wherever necessary to make them comparable with the figures of current year.

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Mar 31, 2016

* Includes Export incentive received on Export Notes :

(i) The Company is organized into two main business segments, namely:

Tannery Division - Manufacturing Finished Leather from Raw Hides, Wet Blue & Crust.

Shoe Division - Manufacturing Finished Leather Shoes.

Segments have been identified and reported considering the distinct nature of products and differing risks and returns accruing there from, the organization structure, and the internal financial reporting systems.

(ii) Segmental Revenue in each of the above business segments primarily include domestic and export sales, export incentives and other miscellaneous income and also includes inter Segment transfers, priced at cost plus a predetermined rate of profit.

(iii) The Segmental Revenue in the geographical segments considered for disclosure are as follows:

(a) Revenue within India includes sales to customers located within India and earnings in India.

(b) Revenue outside India includes sales to customers located outside India and earnings outside India.

(iv) Segmental Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

Note 1 COMPANIES UNDER AMALGAMATION

Mirza International Limited (“MIL” or “the Company”) a Company incorporated under the provisions of Companies Act, 1956 and is engaged in the business of manufacturing of leather and leather footwear and dealing in Apparels. MIL’s equity shares are listed on National Stock Exchange of India Ltd. and BSE Ltd. in India. Apart from supplying products to global retailers, MIL also has global in-house brands - Red Tape and Oaktrak - in its portfolio.

Genesis footwear Enterprises Private Limited (“GEPL”) was engaged in the manufacturing and marketing of high-end leather footwear and other related activities. The Company had an in-house Design Studio and Research & Development facilities in the state of Uttarakhand.

AMALGAMATION SCHEME:

As per the Scheme of Amalgamation of Genesis footwear Enterprises Private Limited (“GEPL”) with the Company as approved by the Hon’ble Allahabad High Court vide its order dated December 15, 2015, the provisions of the Scheme became applicable and came into operation from Appointed Date i.e. April 01, 2015. The Scheme has been given effect to in the financial statements for the year ended March 31, 2016

The other Features are

(i) All assets, debts and liabilities of GEPL have been deemed transferred to and vested in the Company with effect from appointed date i.e. April 01, 2015.

(ii) GEPL stands dissolved without winding up with effect from February 04, 2016, on the effective date.

(iii) GEPL carried on the business for and on behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme.

(iv) In accordance with the Scheme, MIL has issued and allotted to the shareholders of GEPL as follows

(a) 52 (fifty two) Equity Shares of '' 2 each, credited as fully paid up, for every 100 (One Hundred) Equity Shares of '' 2 each held in GEPL; and

(b) 40 (forty) 0% Compulsory Convertible Preference Shares (hereinafter referred to as “CCPS”) of '' 2 each, credited as fully paid up, for every 100 (One Hundred) Equity Shares of '' 2 each held in transferor company. One CCPS of '' 2 each will convert into Equity Shares of '' 2 each on 01.04.2016.

(v) The amalgamation has been accounted under the ‘Pooling of Interests’ method as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations notified under the relevant provisions of the Companies Act 1956/2013

(a) All the assets and liabilities recorded in the books of the GEPL are transferred and vested in the MIL at the respective book values as reflected in the books of GEPL as on April 01, 2015.

(b) Inter-company balances have been cancelled & profit element in inter transfers have been removed.

All the reserves of GEPL under different heads became the corresponding reserves of MIL. Similarly, balance in the Profit & Loss Accounts of GEPL and MIL are also clubbed together. Difference between the amount of share capital of GEPL and Shares of MIL issued to the shareholders of GEPL has been credited/debited to reserves of the Company.

Note 2 INCOME TAX

A) The Company has recognized and accounted for cumulative net deferred tax liability in accordance with Accounting Standard (AS-22) issued by the Institute of Chartered Accountants of India, “Accounting for Taxes on Income” in respect of net aggregate timing differences as on 31^st March, 2016.

Note 3 FORWARD CONTRACTS

Forward Exchange Contracts entered into by the Company and outstanding as at Balance Sheet date Forward Contracts EURO INR 19.14 lakhs (31.33 lakhs) Sell Hedging Forward Contracts GBP INR 98.68 lakhs (107.40 lakhs) Sell Hedging Forward Contracts USD INR 82.38 lakhs (81.69 lakhs) Sell Hedging

Note 4 Figures of previous year have been regrouped/rearranged wherever necessary to make them comparable with the figures of current year.

Note 5 SIGNIFICANT ACCOUNTING POLICIES A) BASIS OF ACCOUNTING:

The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the Generally accepted Accounting Principles in India (Indian GAAP), including Accounting Standards notified under the Companies Act, 2013 and other pronouncements of the Institute of Chartered Accountants of India (ICAI) and the relevant provisions of the Companies Act, 2013.

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Mar 31, 2015

Note 1 : Employee benefits :

The Company is providing the following benefits to their employees :

a) Gratuity

b) Provident Fund

c) Leave encashment

Note 2 : CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

(Rs. in Lacs)

Particulars As at As at 31 March,2015 31 March,2014

A BILLS DISCOUNTED 19124 13093

B IMPORT DUTY PAYABLE 58 882

In case of non-fulfillment of export obligation under EPCG Scheme (not yet due)

C BANK GUARANTEES / LETTER OF CREDITS 282 1092

D Two cases of employees are pending at Indeter Indeter Industrial Tribunal II, Lucknow minate minate

One case of employee is pending at Indeter Indeter Labour Court, Lucknow minate minate

One case of employee is pending at D.L.C. Indeter Indeter office, Lucknow minate minate

One case of employee is pending at Labour Indeter Indeter Court, Noida minate minate

E Deficiency in stamp duty demanded by state revenue authorities for purchase of land at Hapur was Rs. 44 lakhs. Out of this the Company has deposited Rs. 14.67 Lacs as per Interim order of Hon'ble Allahabad High Court. The court 44 44 remanded the case to the Collector Stamps, Ghaziabad with the instruction to re-assess the case. The case is now pending with Asst. Commissioner Stamps, Ghaziabad

F TAXES

(I) ENTRY TAX - Total liability Rs. 28.13 lacs out of which paid under protest Rs. 14.22 balance lying unpaid Rs. 13.91 lacs 28 28

(ii) income tax -

(a) Total liability in various Assessment 582 598 years Rs. 581.85 lacs which has been paid.

(b) Total liability of penalty pertaining 6 to A.Y 2009-10.

(c) Total liability of TDS pertaining to 57 A.Y. 2012-13.

(Ill) SERVICE TAX - Total liability of F.Y 2004-05, 2005-06, F.Y 2007-08 & 2009-10 Rs. 34.33 lacs out of which Rs. 14.52 34 17 lacs already paid and Rs. 19.82 lacs is lying unpaid.

(iv) branch taxes

AHMEDABAD BRANCH : F.Y. 2010-11 Rs.32.68 lacs. 33 Company has preferred appeal against the said Demand.

KOLKATA BRANCH : CST Demand of Rs. 2.48 lacs 2 against which revision appeal has been filed.

KERALA BRANCH : VAT Demand of Rs. 4.91 lacs against which 30% amount of Rs. 1.47 lacs has 5 been paid and for balance Bank Guarantee has been provided. Against which the company has preferred an appeal.

G COMMITMENT

A capital expenditure (Net of fund already 584 2000 deployed)

B UNCLAIMED DIVIDEND 33 28

NOTE 3: Income TAX

A) The Company has recognized and accounted for cumulative net deferred tax liability in accordance with Accounting Standard (AS-22) issued by the Institute of Chartered Accountants of India, "Accounting for Taxes on Income" in respect of net aggregate timing differences as on 31st March, 2015.

B) There were Income Tax demands aggregating to Rs. 581.85 lakhs pertaining to various assessment years, which arose due to Direct Taxes ( Amendment ) Act. 2006, these demands have been adjusted by the department against the refunds due to the Company, pertaining to various assessment years. The department / Company went into Appeals before the Hon'ble Income Tax Appellate Tribunal (ITAT). Hon'ble iTAT has remanded the case back to Assessing officer in view of Hon'ble Supreme Court judgment in Topman Exports which nullifies the demands against the Company. In view of Hon'ble Supreme Court judgment, Company has an stay case in its favor and is expecting to nullify the demand and to get the total amount refunded. However Appeal order effect is yet to be given.

NOTE 4 : forward CONTRACTS

Following are the outstanding forward exchange contracts entered Into by the Company

Forward contracts EURO INR 31.33 lakhs (42.24 lakhs) Sell Hedging

Forward contracts GBP INR 107.40 lakhs (99.61 lakhs) Sell Hedging

Forward contracts USD INR 81.69 lakhs (94.18 lakhs) Sell Hedging

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Mar 31, 2014

Note 1 : CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

(Rs. in Lacs)

Particulars As at 31 March 2014 As at 31 March 2013

A BILLS DISCOUNTED 13093 14656

B IMPORT DUTY PAYABLE 882 350

In case of non-fulfi llment of export obligation under EPCG Scheme (not yet due)

C BANK GUARANTEES / LETTER OF CREDITS 1092 1153

D Two cases of employees are pending at Industrial Tribunal Indeterminate Indeterminate II, Lucknow

One case of employee is pending at Labour Court, Lucknow Indeterminate Indeterminate

One case of employee is pending at D.L.C. office, Lucknow Indeterminate Indeterminate

One case of employee is pending at Labour Court, Noida Indeterminate Indeterminate

One case of employee is pending at A.L.C. offi ce, Unnao Indeterminate Indeterminate

E Deficiency in stamp duty demanded by state revenue authorities for purchase of land at Hapur was Rs. 44 lakhs. Out of this the Company has deposited Rs. 14.67 Lacs as per Interim order of Hon''ble Allahabad High Court. The court 44 44 remanded the case to the Collector Stamps, Ghaziabad with the instruction to re-assess the case. The case is now pending with Asst. Commissioner Stamps, Ghaziabad

F TAXES

(I) ENTRY TAX - Total liability 28.13 lacs out of which paid under protest Rs. 14.22 balance lying unpaid Rs. 13.91 28 20 lacs

(II) INCOME TAX - Total liability in various Assessment years 598.23 lacs out of which Rs. 581.85 lacs is paid and 598 604 balance Rs. 16.38 lacs is still lying unpaid.

(III) SERVICE TAX - Total liability of F.Y. 2004-05, 2005-06 & F. Y. 2007-08 Rs. 17.29 lacs out of which Rs. 14.52 lacs 17 17 already paid and Rs. 2.77 lacs is lying unpaid.

G COMMITMENT

A CAPITAL EXPENDITURE (Net of fund already deployed) 2000 1920

B UNCLAIMED DIVIDEND 28 28

NOTE 2: INCOME TAX

A) The Company has recognized and accounted for cumulative net deferred tax liability in accordance with Accounting Standard (AS-22) issued by the Institute of Chartered Accountants of India, "Accounting for Taxes on Income" in respect of net aggregate timing differences as on 31st March, 2014.

B) There were Income Tax demands aggregating to Rs. 581.85 lakhs pertaining to various assessment years, which arose due to Direct Taxes ( Amendment ) Act. 2006, these demands have been adjusted by the department against the refunds due to the company, pertaining to various assessment years. The department / company went into Appeals before the Hon''ble Income Tax Appellate Tribunal (ITAT). Hon''ble ITAT has remanded the case back to Assessing offi cer in view of Hon''ble Supreme Court judgment in Topman Exports which nullifi es the demands against the company. In view of Hon''ble Supreme Court judgment, Company has an stay case in its favor and is expecting to nullify the demand and to get the total amount refunded. However Appeal order effect is yet to be given. Further Two appeals related to A.Y. 2005-06 and A.Y. 2009-10 involving tax liability of Rs. 10.43 lacs and Rs. 5.95 lacs are pending before hon''ble ITAT and CIT (A) respectively

NOTE 3 : FORWARD CONTRACTS

Following are the outstanding forward exchange contracts entered into by the Company Forward contracts EURO INR 42.24 lakhs (47.16 lakhs) Sell Hedging Forward contracts GBP INR 99.61 lakhs (103.07 lakhs) Sell Hedging Forward contracts USD INR 94.18 lakhs (43.94 lakhs) Sell Hedging

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Mar 31, 2013

Note 1.1 : Employee benefts :

The Company is providing the following benefts to their employees :

a) Gratuity

b) Provident Fund

c) Leave encashment

Actuarial valuation of gratuity has been done with the following assumptions.

NOTE 2: Income Tax

A) The Company has recognized and accounted for cumulative net deferred tax liability in accordance with Accounting Standard (AS-22) issued by the Institute of Chartered Accountants of India, "Accounting for Taxes on Income" in respect of net aggregate timing differences as on 31st March, 2013.

B) There were Income Tax demands aggregating to Rs. 581.85 lakhs pertaining to various assessment years, which arose due to Direct Taxes (Amendment) Act, 2006. These demands have been adjusted by the department against the refunds due to the company, pertaining to various assessment years. The department / company went into Appeals before the Hon''ble Income Tax Appellate Tribunal (ITAT). Hon''ble ITAT has remanded the case back to Assessing offcer in view of Hon''ble Supreme Court judgement in Topman Exports which nullifes the demands against the company. However Appeal order effect is yet to be given. Further, another demand of Rs. 614.67 lakhs relating to assessment year 2008-09 is pending before appellate authorities of the department. Out of Rs. 614.67 lakhs, Rs. 11.06 lakhs has been adjusted by the department against the refunds due to the company pertaining to various assessment years.

NOTE 3 : FORWARD CONTRACTS

Following are the outstanding forward exchange contracts entered into by the Company Forward contracts EURO INR 47.16 lakhs (38.52 lakhs) Sell Hedging. Forward contracts GBP INR 103.07 lakhs (120.45 lakhs) Sell Hedging. Forward contracts USD INR 43.94 lakhs (22.20 lakhs) Sell Hedging.

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Mar 31, 2012

Note 1 : CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

(Rs.in Lacs)

Particulars 2012 2011

A BILLS DISCOUNTED 10614 10708

B IMPORT DUTY PAYBLE 103 293

In case of non' fulfillment of export obligation under EPCG Scheme(not yet due)

C BANK GUARANANTEES/LETTER OF CREDITS 25 140

D Two cases of employees are pending at Industrial Tribunal II,Lucknow Indeterminate Indeterminate

One case of employee is pending at Labour Court,Noida E Deficiency in stamp duty demanded by state revenue authorities

for purchase of land at Hapur. Out of this the Company has 15 15

deposited Rs 14.67 Lacs as per Interim order of Hon'ble Allahabad High Court. The court remanded the case to the Collector Stamps,

Ghaziabad with the instruction to pass fresh order for releasing Rs. 14.66 Lacs deposited by the Company. The case is now pending with Asst. Commissioner Stamps, Ghaziabad F COUNTER GUARANTEE 339 232

Given by the Company to its directors against their guarantee given to bank G DEMANDS RAISED

(I) ENTRY TAX,COMMERCIAL TAX DEPARTMENT 41 41

(II) INCOME TAX, ITAT LUCKNOW 604 644

(III) TRADE TAX,COMMERCIAL TAX DEPARTMENT 25 25

II. COMMITMENT

A CAPITAL EXPENDITURE (Net of fund already deployed) 3506 686

B UNCLAIMED DIVIDEND 27 44

Notes :

(i) The Company is organized into two main business segments, namely:

Tannery Division ' Manufacturing Finished Leather from Raw Hides & Wet Blue.

Shoe Division ' Manufacturing Finished Leather Shoes.

Segments have been identified and reported considering the distinct nature of products and differing risks and returns accruing there from, the organization structure, and the internal financial reporting systems.

(ii) Segment Revenue in each of the above business segments primarily includes domestic and export sales, export incentives and other miscellaneous income. It also includes inter Segment transfers priced at cost plus a predetermined rate of profit.

(iii) The Segment Revenue in the geographical segments considered for disclosure are as follows:

(a) Revenue within India includes sales to customers located within India and earnings in India.

(b) Revenue outside India includes sales to customers located outside India and earnings outside India.

(iv) Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

Note 2 : INCOME TAX

A The Company has recognized and accounted for cumulative net deferred tax liability in accordance with Accounting Standard (AS' 22) issued by the Institute of Chartered Accountants of India, "Accounting for Taxes on Income" in respect of net aggregate timing differences as on 31st March, 2012 .

B There was outstanding Income Tax demand of Rs. 581.85 lakhs pertaining to various assessment years, which arose due to Direct Taxes (Amendment) Act. 2005. Appeals of the cases related to Assessment year 1999' 2000, 2002' 03, 2003' 04 & 2004' 05 have been allowed by the Hon'ble CIT (Appeals) and demands of Rs. 412.79 lakhs are dropped against the Company and due refund orders are passed by the department. A demand of Rs. 604.20 Lakhs relating to Assessment year 2008' 09 is pending before appellate authorities of the department.

Note 3 : FORWARD CONTRACTS

Following are the outstanding forward exchange contracts entered into by the Company Forward contracts EURO INR 38.52 lakhs (54.54 lakhs) Sell Hedging Forward contracts GBP INR 120.45 lakhs (96.74 lakhs) Sell Hedging Forward contracts USD INR 22.20 lakhs (NIL) Sell Hedging

NOTE 4 : Presentation and disclosure of financial statements:

During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

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Mar 31, 2011

I. Contingent Liabilities

a) Bills discounted with the Company's bankers- Rs. 10708 Lacs (Rs. 7760 Lacs).

b) Import duty payable in case of non-fulfillment of export obligation under EPCG Scheme(not yet due) - Rs. 293 Lacs (Rs. 98 Lacs).

c) Bank guarantees / LCs issued by the company's bankers outstanding at the balance sheet date – Rs. 139.5 Lacs (Rs. 110 Lacs).

d) Out of Labour cases of 158 employees pending during last year, 157 has been dropped by the labour department Noida. However one case is still pending - amount indeterminable. 6 (5) cases pending at industrial Tribunal – II Lucknow amount indeterminate. One case pending at labour court Kanpur -Amount indeterminate.

e) Deficiency in stamp duty demanded by state revenue authorities for purchase of land at Hapur - Rs. 44.05 Lacs. Out of this the company has deposited Rs. 14.67 Lacs as per Interim order of Hon'ble Allahabad High Court. The court remanded the case to the collector stamps, Ghaziabad with the instruction to pass fresh order for releasing Rs. 14.67 Lacs deposited by the company. The case is now pending with Asst. Commissioner stamps, Ghaziabad

f) Counter guarantee given by the company to its directors against their guarantee given to bank – Rs. 232 Crores (Rs. 227 Crores).

g) Demands raised by the authorities contested at various levels:- i) Entry tax – Rs. 65.45 Lacs (Rs. 65.45 Lacs)

ii) Income tax – Rs. 644.18 Lacs (Rs. 1118.60 Lacs) (Detail at Note L)

II. Notes

A) Capital Commitments net of funds already deployed – Rs. 686 Lacs (Rs. 720 Lacs).

B) Unclaimed Dividend Rs. 44.47 Lacs (Rs. 42.35 Lacs) includes dividend retained by the Company in exercise of its lien on unpaid calls Rs. 9.10 Lacs (Rs.7.70 Lacs).

C) Amount of Interest capitalized during the year Rs. 14.25 Lacs (Rs. 130.61 Lacs).

D) SEGMENT REPORTING

Segment Information for the Year ended 31st March, 2011 (I) Information about Primary Business Segments

(III) Notes :

(i) The Company is organised into two main business segments, namely:

Tannery Division - Manufacturing Finished Leather from Raw Hides & Wet Blue.

Shoe Division - Manufacturing Finished Leather Shoes.

Segments have been identified and reported considering the distinct nature of products and differing risks and returns accruing there from, the organisation structure, and the internal financial reporting systems.

(ii) Segment Revenue in each of the above business segments primarily includes domestic and export sales, export incentives and other miscellaneous income. It also includes inter Segment transfers priced at cost plus a predetermined rate of profit.

(iii) The Segment Revenue in the geographical segments considered for disclosure are as follows:

(a) Revenue within India includes sales to customers located within India and earnings in India.

(b) Revenue outside India includes sales to customers located outside India and earnings outside India.

(iv) Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

E) Related Party Disclosures

Related Party Disclosures, as required by AS-18, "Related Party Discloures", are given below:

1. Relationships:

(i) Associate Company : Mirza (UK) Ltd.

(ii) Key Management personnel & Relatives

: Mr Irshad Mirza (Chairman), Mr Rashid A. Mirza (Managing Director), Mr Shahid A. Mirza, Mr Tauseef A. Mirza, Mr Tasneef A. Mirza, Mr N.P. Upadhyay (Whole Time Directors), Mr Shuja Mirza (Vice President-Marketing), Mr Faraz Mirza (Vice President-Production), Ms. Ramsha Mirza (Manager Garments).

iii) Related Companies : Euro Footwear Ltd, Shoemax Engg. Ltd, Achee Shoes Pvt. Ltd., Emgee Projects Pvt. Ltd. Mirza Holdings Pvt. Ltd., Mirza Agrotech Pvt. Ltd., Genesis Infra Projects Pvt. Ltd.,Gemini Products Limited, Red Tape International Pvt. Ltd., Shoemac Leather Tech Engineers Ltd., Mayfair Leather Exports Ltd., Azad Multispeciality Hospital & Reserch Centre Pvt. Ltd.

iv) Related Parties/Firms : Mrs Jamil Ara Begum, Mrs Sabiha Hussain, Mirza Projects, Genesis International, Mars International, Genesis Developers, Genesis River View Resorts, LLP.

H) Bills discounted include bills of Rs. 8931 Lacs (Rs. 6824 Lacs) drawn on Mirza (UK) Ltd.

I) Sundry Debtors include dues from the following companies under the same management arising under the normal course of business.

K) Income Tax

The Company has recognized and accounted for cumulative net deferred tax liability in accordance with Accounting Standard (AS-22) issued by the Institute of Chartered Accountants of India, "Accounting for Taxes on Income" in respect of net aggregate timing differences as on 31st March, 2011.

L) There was outstanding Income Tax demand of Rs. 1108.85 lakhs pertaining to various assessment years,which arose due to Direct Taxes ( Amendment ) Act. 2006. Appeals of the cases related to Assessment Year 2000–01 & 2001–02 have been allowed by the Hon'ble CIT (Appeals) and demands of Rs. 468.16 Lacs are dropped against the company and due refund orders are passed by the department Balance demand of Rs. 640.68 Lacs relating to various Assessment years are pending before appellate authorities of the department.

M) Exchange fluctuation Difference of Rs.1131.21 Lacs (Rs. 602.92 Lacs) consists of Profit on cancellation of Forward Contracts (net) Rs. 0.60 Lacs (Loss of Rs.782.30 Lacs), and profit on exchange fluctuation on export/import/others Rs.1130.61 Lacs. (Rs. 179.38 Lacs)

N) The Company does not owe any dues outstanding for more than the period specified in Micro Small & Medium Enterprises Development Act, 2006 as at 31st March 2011, to any Micro and Small & Medium Enterprises. This information is based on data available with the company.

O) Following are the outstanding forward exchange contracts entered into by the Company

Forward contracts EURO INR 54.54 lakhs (NIL) Sell Hedging Forward contracts GBP INR 96.74 lakhs (NIL) Sell Hedging Forward contracts USD INR NIL (35.12 lakhs) Sell Hedging Forward contracts GBP USD NIL (6.5 lakhs) Sell Hedging

P) Employee benefits :

The Company is providing the following benefits to their employees :

a) Gratuity

b) Provident Fund

c) Leave encashment

Q) Figures of previous year have been regrouped/rearranged wherever necessary to make them comparable with the figures of current year.

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Mar 31, 2010

I. Contingent Liabilities

a) Bills discounted with the Companys bankers- Rs. 7760 Lacs (Rs.7681 Lacs).

b) Import duty payable in case of non-fulfillment of export obligation under EPCG Scheme (not yet due) - Rs. 98 Lacs (Rs. 3 Lacs).

c) Bank guarantees / LCs issued by the Companys bankers outstanding at the balance sheet date - Rs .110 Lacs (Rs. 7 Lacs).

d) Labour cases of 158 employees are pending in various courts - Amount indeterminate. However 5 (3) cases pending at industrial Tribunal - II Lucknow amount indeterminate. One case pending at labour court Kanpur - Amount indeterminate.

e) Deficiency in stamp duty demanded by state revenue authorities for purchase of land at Hapur - Rs. 44.05 Lacs. Out of this the company has deposited Rs 14.67 Lacs as per Interim order of Honble Allahabad High Court. The court remanded the case to the collector stamps, Ghaziabad with the instruction to pass fresh order for releasing Rs. 14.67 Lacs deposited by the company. The case is now pending with Asst. Commissioner stamps, Ghaziabad.

f) Counter guarantee given by the Company to its directors against their guarantee given to bank - Rs.227 Crores (197 Crores).

g) Demands raised by the authorities contested at various levels:- i) Entry tax - Rs. 65.45 Lacs (Rs. 37.55 Lacs)

ii) Income tax - Rs. 1118.60 (Rs. 1082.24 Lacs) (Detail at Note M)

h) Related Party Disclosures

Related Party Disclosures, as required by AS, 18- "Related Party Disclosures", issued by Institute of Chartered Accountants of India are given below:

1. Relationships:

(i) Associate Company Mirza (UK) Ltd.

(ii) Key Management personnel Mr. Irshad Mirza (Chairman), Mr. Rashid Mirza (Managing Director), Mr. Shahid & Relatives Mirza, Mr. Tauseef Mirza, Mr Tasneef Mirza, Mr N.P. Upadhyay (Whole Time Directors), Mr. Shuja Mirza, (Vice President Marketing), Mr. Faraz Mirza (Vice President- Production)

iii) Related Companies Euro Footwear Ltd, ShoemaxEngg. Ltd, Achee Shoes Pvt. Ltd., Emgee Projects Pvt. Ltd. Mirza Holding Pvt. Ltd., Mirza Agrotech Pvt. Ltd., Gemini Products Limited, Red Tape International Pvt. Ltd., Shoemac Leather Tech Engineers Ltd., Mayfair Leather Exports Ltd.

iv) Related Parties/Firms Mrs Jamil Ara Begum, Mrs Sabiha Hussain, Mirza Projects, Genesis International Mars International, Genesis Developers, Genesis River View Resorts, LLP.

i) No provision has been made for interest receivable on allotment money in arrears.

k) Income Tax

The Company has recognised and accounted for cumulative net deferred tax liability in accordance with Accounting Standard (AS-22) issued by the Institute of Chartered Accountants of India, "Accounting for Taxes on Income" in respect of net aggregate timing differences as on 31st March, 2010 .

k) The companys challenge to the constitutional validity of the provisions of Direct Tax laws Amendment Act 2006 is still pending before the Honble Allahabad High Court. The demands raised by the authorities under the provisions of the said Act aggre- gate Rs. 1108.85 Lakhs. The Honble Court has restrained the authorities from recovering the demand. Similar orders have been passed by other High Courts in the country.The Central Government has applied to the Honble Supreme Court to transfer all cases involving similar challenges before itself. The matter is pending with the Honble Supreme Court. In the meanwhile the company has also appealed against each assessment order before the appropriate appellate authority.

l) Exchange Fluctuation Difference of Rs.602.92 Lacs (Rs. 2496.60 Lacs) consists of Loss on cancellation of Forward Con- tracts (net) Rs 782.30 Lacs (Rs. 2095.26 Lacs ), Loss due to Exchange Fluctuation Rs. Nil (Rs. 343.56 Lacs) and Profit on Exchange Fluctuation on Export/ Import/ Others Rs.179.38 Lacs. (Rs. 57.78 Lacs).

m) The company does not owe any dues outstanding for more than the period specified in Micro Small & Medium Enterprises Development Act, 2006 as at 31st March 2010, to any Micro and Small & Medium Enterprises. This information is based on data available with the company.

n) Following are the outstanding forward exchange contracts entered into by the Company

Forward contracts USD INR 35.12 lakhs Sell Hedging

Forward contracts GBP USD 6.50 lakhs Sell Hedging