Notes to Accounts of Sutlej Textiles & Industries Ltd.

Mar 31, 2018

1 Segment information

A. Description of segments and principal activities

Segment information is presented in respect of the Company''s key operating segments. The operating segments are based on the Company''s internal reporting structure. The Board of Directors have been identified as the chief operating decision maker (''CODM''), since they are responsible for all major decision w.r.t. the preparation and execution of business plan, preparation of budget, planning, expansion, alliance, joint venture, merger and acquisition, and expansion of any facility. The Company''s board examines the Company''s performance both from a product and geographic perspective and have identified two reportable segments of its business:

a) Yarn: It comprises of cotton and man-made fibres yarn;

b) Home textiles : It comprises of home furnishing and fabric processing.

The Company''s board reviews the results of each segment on a quarterly basis. The Company''s board of directors uses segment result to assess the performance of the operating segments.

B. Information about reportable segments

Information related to each reportable segment is set out below. Segment EBITDA is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries.

C. Geographic information

The Yarn and Home Textile segments are managed on a worldwide basis, but operate manufacturing facilities and sales offices primarily in India. The geographic information analyses the Company''s revenue by the Company''s country of domicile and other countries. In presenting the geographic information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets.

2 Leases

Operating lease

The Company''s significant leasing arrangements are in respect of operating leases of premises for offices and guesthouses. These leasing arrangements, which are cancellable, are typically for a period of 11 months and are usually renewable on mutually agreeable terms. The Company has recognised expense amounting to RS, 1.32 crore (31 March 2017 RS, 0.99 crore)

The Company has entered into agreement to take office on operating lease from a third party. The lease arrangement is for 6 years, including a non-cancellable term of 36 months.

The future minimum lease payments and payment profile of non-cancellable operating leases are as under:-

3 Borrowing cost

During the year, Company has capitalized borrowing cost amounting to RS, 0.50 crore (31 March 2017 RS, 12.85 crore) under head plant and equipment and building. The capitalized rate used to determine the amount of borrowing cost to be capitalized is weighted average interest rate applicable to the entities general borrowing during including term loan and working capital the year is ~6.55 % (31 March 2017 ~6.75%).

4 Employee benefits

The Company contributes to the following post-employment defined benefit plans in India.

(i) Defined contribution plans:

The Company makes contributions towards provident fund and superannuation fund to a defined contribution benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage

of payroll cost to the benefit plan to fund the benefits.

(ii) Defined benefit plan:

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. Gratuity liability (other than for Baddi unit) is being contributed to the gratuity fund formed by the Company and in case of Baddi unit makes contributions to Group Gratuity cum Life Assurance Schemes administered by the LIC of India.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2018. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

A. Movement in net defined benefit (asset) liability

The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset) liability and its components:

Assumptions regarding future mortality have been based on published statistics and mortality tables.

The Company expects to pay RS, 6.32 crore (Previous year RS, 6.42 crore) in contribution to its defined benefit plans in the next year.

D. Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

Sensitivities due to mortality and withdrawals are insignificant hence ignored. Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement and life expectancy are not applicable being a lump sum benefit on retirement. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

E. Description of risk exposures:

Defined benefit plans expose the Company to actuarial risks such as: Interest rate risk, salary risk and demographic risk.

i. Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the bond yield falls, the defined benefits obligation will tended to increase.

ii. Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.

iii. Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawals, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the employee benefit of a short career employee typically costs less per year as compared to a long service employee.

*The total amount of investments in absolute value is RS, 5,000, but for reporting purpose rounded up to RS, 0.0 crore

The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents and other bank balances are considered to be the same as their fair values, due to their short-term nature.

The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

There are no transfers between level 1 and level 2 during the year Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments

- the fair value of forward foreign exchange contracts is determined as per valuation provided by the bank

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

All of the resulting fair value estimates are included in level 2 except for unlisted equity securities and preference shares, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.

B. Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are:

(a) recognised and measured at fair value and

(b) measured at amortised cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

*The total amount of investments in absolute value is RS, 5,000, but for reporting purpose rounded up to RS, 0.0 crore

There are no transfers between level 1 and level 2 during the year Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments

- the fair value of forward foreign exchange contracts is determined as per valuation provided by the bank

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

All of the resulting fair value estimates are included in level 2 except for unlisted equity securities and preference shares, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.

Valuation process

The Company gets the valuations performed from an independent valuer, required for financial reporting purposes, including level 3 fair values.

The main level 3 inputs for unlisted preference shares used by the Company are derived and evaluated as follows:

- Risk adjusted discount rates are estimated based on expected cash inflows arising from the instrument and the entity''s knowledge of the business and how the current economic environment is likely to impact it.

Changes in level 2 and 3 fair values are analysed at the end of each reporting year.

II. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk;

- Liquidity risk and

- Market risk

i. Risk management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the mechanism of property defined framework.

The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market

conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

ii. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investments in debt securities. The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The Management impact analysis shows credit risk and impact assessment as low.

Trade and other receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Company management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the President of the Company.

About 40% of the Company''s customers have been transacting with the Company for over four years, and no significant impairment loss has been recognized against these customers. In monitoring customer credit risk, customers are reviewed according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties

The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables.

The carrying amount net of loss allowances of trade receivables is RS, 325.32 (31 March 2017 RS, 242.09).

During the year, the Company has made no write-offs of trade receivables, it does not expect to receive future cash flows or recoveries from collection of cash flows previously written off. The Company management also pursue all legal option for recovery of dues wherever necessary based on its internal assessment.

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. This is generally carried out at unit level and monitored through corporate office of the Company in accordance with practice and limits set by the Company. These limits vary by location to take into account requirement, future cash flow and the liquidity in which the entity operates. In addition, the Company''s liquidity management strategy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

(a) Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting

period:

The credit limit facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in INR and have an average maturity of 4 years 2 months as at 31 March 2018 (as at 31 March 2017 - 4 years).

iv. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates

- will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Company uses derivatives like forward contracts to manage market risks on account of foreign exchange and various debt instruments on account of interest rates. All such transactions are carried out as per guidelines of the Management.

a. Currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and small exposure in EUR and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions by hedging the foreign exchange inflows on regular basis. The Company also take help from external consultants who for views on the currency rates in volatile foreign exchange markets.

Currency risks related to the principal amounts of the Company''s foreign currency receivables and payables, have been partially hedged using forward contracts taken by the Company.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

(i) Exposure to currency risk

The summary quantitative data about the Company''s exposure to currency risk as reported by the management of the Company is as follows

Sensitivity analysis

A reasonably possible strengthening (weakening) of the INR. against USD at 31 March would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

b. Interest rate risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31 March 2018 and 31 March 2017, the Company''s borrowings at variable rate were denominated in INR.

Currently the Company''s borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and statement of profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

A change of 50 basis points in interest rates would have increased or decreased equity by RS, 3.41 crore after tax (31 March 2017 RS, 3.12 crore). This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

c. Commodity price risks

The Company is exposed to the risk of price fluctuations of raw materials, dyes and chemicals, work-in-progress and finished goods. The Company manage its commodity price risk by maintaining adequate inventory of raw materials, dyes and chemicals, work-in-progress and finished goods considering future price movement. To counter raw materials risk, the Company worked with varieties of fibres (natural and manmade) with the objective to moderate raw material cost, enhance application flexibility and increase product functionality and also invested product development and innovation.

Note -Figures in brackets represents previous year''s amounts.

# Due to approval of Composite scheme of arrangement by Hon''ble National Company Law Tribunal (NCLT), Bench at Allahabad, on March 2, 2017 exposure''s in ICDS in Upper Ganges Sugar & Inds. Ltd. has swapped to MSEL.

5. In respect of Okara Mills, Pakistan, (Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company) no returns have been received after 31 March 1965. Against net assets of Okara Mills, Pakistan amounting to RS, 2.32 crore, the demerged /transferor Company had received adhoc compensation of RS, 0.25 crore from Government of India in the year 1972-73. These assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India. The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of RS, 2.07 crore (net of compensation received) as on 31 March 1965, valued at pre-devaluation exchange rate, has been provided for.

6. Capital management

The primary objective of the management of the Company''s capital structure is to maintain an efficient mix of debt and equity in order to achieve a low cost of capital, while taking into account the desirability of retaining financial flexibility to pursue The Board of directors regularly review the Company''s capital structure in light of the economic conditions, business strategies and future commitments. For the purpose of the Company''s capital management, capital includes issued share capital and all other equity reserves. Debt includes term loans. During the financial year ended 31 March 2018, no significant changes were made in the objectives, policies or processes relating to the management of the Company''s capital structure.

(iii) The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The weighted-average interest expense on interest-bearing borrowings (excluding liabilities with imputed interest) was 5.79 % (31 March 2017: 5.88%).

7. The disclosures in the financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made since, they do not pertain to the financial year ended 31 March 2018. However, amounts as appearing in the audited financial statements for the year ended 31 March 2017 have been disclosed.

8. Previous year figures have been audited by another firm of chartered accountants.

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Mar 31, 2017

1. Segment information

2. Description of segments and principal activities

Segment information is presented in respect of the company''s key operating segments. The operating segments are based on the company''s internal reporting structure.

The Board of Directors have been identified as the Chief Operating Decision Maker (''CODM''), since they are responsible for all major decision w.r.t. the preparation and execution of business plan, preparation of budget, planning, expansion, alliance, joint venture, merger and acquisition, and expansion of any facility.

The company''s board examines the Company''s performance both from a product and geographical perspective and have identified two reportable segments of its business:

3. Yarn: It comprises of Cotton and Man Made Fibres Yarn

4. Home textiles : It comprises of Home Furnishing and Fabric Processing.

5. Leases Operating lease

The Company''s significant leasing arrangements are in respect of operating leases of premises for offices and guesthouses. These leasing arrangements, which are cancellable, are typically for a period of 11 months and are usually renewable on mutually agreeable terms. The Company has recognized expense amounting to Rs.0.99 crores (Previous year Rs.1.60 crores).

6. Borrowing Cost

During the year, company has capitalized borrowing cost amounting to Rs.12.85 crores ( Previous year Rs.6.75 crores). The capitalized rate used to determine the amount of borrowing cost to be capitalized is weighted average interest rate applicable to the entities general borrowing (including term loan and working capital) during the year is ~ 6.75% (Previous Year~8.25%).

7. Employee benefits

The Company contributes to the following post-employment defined benefit plans in India.

8. Defined Contribution Plans:

The Company makes contributions towards provident fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits.

9. Defined Benefit Plan:

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. Gratuity liability (other than for BTM unit) is being contributed to the gratuity fund formed by the Company and in case of BTM unit makes contributions to Group Gratuity cum Life Assurance Schemes administered by the LIC of India.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2017. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

Sensitivities due to mortality & withdrawals are insignificant & hence ignored. Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable being a lump sum benefit on retirement.

Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

10. Description of Risk Exposures:

Defined benefit plans expose the Company to actuarial risks such as: Interest rate risk, salary risk and Demographic Risk.

11. Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the bond yield falls, the defined benefits obligation will tined to increase.

12. Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.

13. Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawals, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

Level 1: Hierarchy includes financial instruments measured using quoted prices. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.

There are no transfers between level 1 and level 2 during the year

Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments

- the fair value of forward foreign exchange contracts is determined as per valuation provided by the bank

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

All of the resulting fair value estimates are included in level 2 except for unlisted equity securities and preference shares, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.

Valuation process

The Company gets the valuations performed from an independent valuer, required for financial reporting purposes, including level 3 fair values.

The main level 3 inputs for unlisted preference shares used by the Company are derived and evaluated as follows:

- Risk adjusted discount rates are estimated based on expected cash inflows arising from the instrument and the entity''s knowledge of the business and how the current economic environment is likely to impact it.

Changes in level 2 and 3 fair values are analyzed at the end of each reporting period.

The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents and other bank balances are considered to be the same as their fair values, due to their short-term nature.

The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

14. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk;

- Liquidity risk;

- Market risk and

- Commodity price risk

15. Risk management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the mechanism of property defined framework.

The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

16. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investments in debt securities.

The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The Management impact analysis shows credit risk and impact assessment as low.

Trade and other receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Company Management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the President of the Company.

More than 60 % of the Company''s customers have been transacting with the Company for over four years, and no significant impairment loss has been recognized against these customers. In monitoring customer credit risk, customers are reviewed according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties

The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade and other receivables. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables.

The carrying amount net of loss allowances of trade receivables is Rs.242.09 crores (31 March 2016 - Rs.210.90 crores, 1 April 2015 - Rs.192.55 crores).

17. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. This is generally carried out at unit level and monitored through corporate office of the Company in accordance with practice and limits set by the Company. These limits vary by location to take into account requirement, future cash flow and the liquidity in which the entity operates. In addition, the Company''s liquidity management strategy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

18. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Company uses derivatives like forward contracts to manage market risks on account of foreign exchange and various debt instruments on account of interest rates. All such transactions are carried out as per guidelines of the Management.

19. Currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and small exposure in EUR and GBP. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the company''s functional currency (H). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimize the volatility of the H cash flows of highly probable forecast transactions by hedging the foreign exchange inflows on regular basis. The Company also take help from external consultants who for views on the currency rates in volatile foreign exchange markets.

Currency risks related to the principal amounts of the Company''s foreign currency receivables and payables, have been partially hedged using forward contracts taken by the Company.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

20. Interest rate risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31 March 2017 and 31 March 2016, the Company''s borrowings at variable rate were denominated in Rs..

Currently the Company''s borrowings are within acceptable risk levels, as determined by the management, hence the Company has not taken any swaps to hedge the interest rate risk.

Exposure to interest rate risk

The interest rate profile of the Company''s interest-bearing financial instruments as reported to the management of the Company is as follows.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

A change of 50 basis points in interest rates would have increased or decreased equity by Rs.3.12 crores after tax (Previous year Rs.2.64 crores). This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

21. Commodity price risks

The Company is exposed to the risk of price fluctuations of raw material as well as finished goods. The company manage its commodity price risk by maintaining adequate inventory of raw materials and finished goods considering future price movement. To counter raw materials risk, the Company worked with varieties of fibres (natural and manmade) with the objective to moderate raw material cost, enhance application flexibility and increase product functionality and also invested product development and innovation. To counter finished goods risk, the company address wide range of customers (knitting, weaving, home applications, industrial etc.) and manages these risk through inventory management and proactive vendor development practices.

Inventory sensitivity analysis (Raw Material, Work-in-progress and finished goods)

A reasonably possible change of 10% in prices of inventory at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.

22. Business combinations

The Division with all rights, title and interest have been transferred from Chambal Fertilizers and Chemicals Limited to Sutlej Textiles and Industries Limited from the date of effective control i.e. closure of the business hours on September 30, 2015 as a going concern on a slump sale basis for a fixed consideration of Rs.232.63 crores under the business transfer agreement.

As per para 18 of Ind AS 103 (Business Combinations), all identifiable assets and liabilities were assumed by Sutlej Textiles and Industries Limited at fair values as of October 1, 2015 (i.e. closure of the business hours on September 30, 2015)

23. Acquisition-related costs

The Company incurred acquisition-related costs of Rs.0.46 crores on legal fees and due diligence costs. These costs were included in ''Miscellaneous expenses'' during the year 2015-16.

24. Identifiable assets acquired and liabilities assumed

The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition.

25. First Time Adoption of Ind AS

As stated in note 2, these are the Company''s 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 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS statement of financial position at 1 April 2015 (the Company''s date of transition). In preparing its opening Ind AS statement of financial position, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Indian GAAP (previous GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables. Exemptions and exceptions 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.

26. Ind AS optional exemptions

27. 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 recognized 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 after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

28. Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The Company has elected to apply this exemption for such contracts/arrangements.

29. Ind AS mandatory exceptions

30. Estimates

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for Impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP

31. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

32. Notes to first-time adoption:

33. Fair valuation of investments

Under the previous GAAP, investments in equity shares and preference shares were classified as long-term investments. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Under Ind AS, these investments are required to be measured at fair value through profit and loss. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in the statement of profit and loss for the year ended 31 March 2016. This increase the retained earnings net of tax by Rs.2.29 crores as at 31 March 2016 (1 April 2015 decrease in retained earnings- Rs.17.99 crores).

34. Borrowings

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method.

Under previous GAAP, these transaction costs were charged to profit or loss and PPE as and when incurred. Accordingly, borrowings as at 31 March 2016 have been reduced by Rs.0.41 crores (1 April 2015- Rs.0.44 crores) with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount of retained earnings. The profit for the year ended 31 March 2016 reduced by Rs.0.03 crores as a result of the additional interest expense.

35 Proposed Dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend and tax thereon of Rs.25.63 crores as at 31 March 2016 (1 April 2015- Rs.19.72 crores) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount

36. 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 are recognized in other comprehensive income instead of statement of profit and loss. Under the previous GAAP, these re-measurements were forming part of the statement of profit and loss for the year. As a result of this change, the profit for the year ended March 31, 2016 increased by Rs.1.14 crores. There is no impact on the total equity as at 31 March 2016.

37. Deferred Tax

Under previous GAAP, deferred tax was prepared using income statement approach. Under Ind AS, company has prepared deferred tax using balance sheet approach. Also, deferred tax have been recognized on the adjustments made on transition to Ind AS.

38. Retained earnings

Retained earnings as at April 1, 2015 has been adjusted consequent to the above Ind AS transition adjustments.

39. Excise Duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented under other expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31 March 2016 by Rs.0.44 crores. There is no impact on the total equity and profit.

40. Trade receivables

Under previous GAAP, company had a policy to derecognize the trade receivables upon discounting on the same and the same were presented as contingent liability. Under Ind AS, the said trade receivables do not meet the de-recognition conditions are defined under Ind AS 109, hence the company has re-recognized the trade receivables with the corresponding impact in short term borrowings. This has resulted in increase in trade receivables balance by Rs.38.18 crores as at 31 March 2016 (1 April 2015 Rs.55.75 crores) with corresponding increase in short term borrowings.

41. Business Combinations

The Company has acquired Birla Textile Mills (BTM) from Chambal Fertilizers and Chemicals Ltd as a going concern on slump sale basis effective from 1st April, 2015. However, control as defined in Ind AS 103 (Business Combinations) including various approvals was obtained by the Company and control vests with the Company after closing of Business Hours on 30th September, 2015. Accordingly, accounting for business combination was made and results for the previous year ended 31st March, 2016 includes results of BTM for the period from 01.10.2015 to 31.03.2016 only.

42 Fair valuation of derivatives

The company has taken forward contracts to hedge foreign currency receivables/ payable. Under previous GAAP, AS 11 accounting was followed to account for these contracts. Under Ind AS all these derivatives has been valued at fair value as per Ind AS 109. This has increased retained earnings by Rs.0.19 crores as at 31 March 2016 and by Rs.0.22 crores as at April 2015 respectively.

43 Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in the statement of profit and loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes re-measurements of defined benefit plans and tax thereon. The concept of other comprehensive income did not exist under previous GAAP.

50 In respect of Okara Mills, Pakistan, (Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company) no returns have been received after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting to Rs.2.32 crores, the demerged/transferor Company had received adhoc compensation of Rs.0.25 crores from Government of India in the year 1972-73. These assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India. The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of Rs.2.07 crores (net of compensation received) as on 31.03.1965, valued at pre-devaluation exchange rate, has been provided for.

44 Capital management

The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The weighted-average interest expense on interest-bearing borrowings (excluding liabilities with imputed interest) was 5.88% (Previous year: 6.48%).

45. The Company has acquired Birla Textile Mills (BTM) from Chambal Fertilizers and Chemicals Ltd as a going concern on slump sale basis effective from 1st April, 2015. However, control as defined in Ind AS 103 (Business Combinations) including various approvals was obtained by the Company and control vests with the Company after closure of business hours on 30th September, 2015. Accordingly, accounting for business combination was made and hence previous year figures are excludes figures for the period 01.04.15 to 30.09.15 of BTM, hence not comparable.

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Mar 31, 2016

Note 1.

In respect of Okara Mills, Pakistan, ( Which remained with the Company
as a result of transfer of textiles division of Sutlej Industries
Limited with the Company ) no returns have been received after
31.03.1965. Against net assets of Okara Mills, Pakistan amounting to
H232.35 lakhs, the demerged/transferor Company had received adhoc
compensation of H25 lakhs from Government of India in the year 1972-73.
These assets now vest in the Custodian of Enemy Property, Pakistan for
which claim has been filed with the Custodian of Enemy Property in
India. The Company shall continue to pursue its claim for compensation/
restoration of assets. Hence, further compensation, if any received,
credit for the same will be taken in the year of receipt. In the year
2003-04, net assets of H207.35 lakhs (net of compensation received) as
on 31.03.1965, valued at pre-devaluation exchange rate, has been
provided for.

Note 2.

Proportionate expenses reimbursed for utilizing services of
establishments maintained by other entities have been included in
respective

heads of expenses.

Note 3.

The Company had acquired Birla Textile Mills (BTM), a textile unit from
Chambal Fertilizers and Chemicals Limited along with all rights, title
and interest relating thereto as a going concern on a slump sale basis
w.e.f. 1st April, 2015 for a fixed consideration of H23263.18 lakhs
under the business transfer agreement. The consideration has been
settled by the Company in cash. All the acquired assets and liabilities
have been accounted at fair value on the date of acquisition. The fair
value has been allocated to the net assets acquired as below

# Deposited in Indian Rupees in the Bank Accounts maintained by the
shareholders in India.

Note 4.

Figures for the year ended includes figures of Birla Textile Mills
acquired w.e.f. 1st April 2015 and hence not comparable with
corresponding previous period. Previous year figures have been
regrouped/rearranged wherever necessary.

Note:1. The above Cash Flow Statement has been prepared under the
"Indirect Method" as set out in Accounting Standard- 3 on "Cash Flow
Statement".

Note: 2. Cash Flow Statement has been prepared after giving the effect
of the Business Transfer Agreement (BTA) for purchase of BTM on slum
purchase to the opening balance sheet from appointed date i.e. 01st
April 2015.

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Mar 31, 2015

1 NATURE OF OPERATIONS

The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile Mills, Kathua (J & K), one weaving unit (upto 01.10.2014) & processing unit viz. Damanganga Fabrics, and one Home Textiles unit viz. Damanganga Home Textiles at Village Daheli, near Bhilad (Gujarat).

2 In respect of Okara Mills, Pakistan, (Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company ) no returns have been received after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting to `232.35 lakhs, the demerged/transferor Company had received adhoc compensation of `25.00 lakhs from Government of India in the year 1972-73. These assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India .The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of ` 207.35 lakhs (net of compensation received) as on 31.03.1965, valued at pre-devaluation exchange rate, has been provided for.

3 Proportionate expenses reimbursed for utilising services of establishments maintained by other entities have been included in respective heads of expenses.

4 During the first quarter of the financial year 2014-15, some stocks of finished goods in a godown were totally gutted by fire. In a separate incident, there was damage to some factory buildings & machinery and stocks due to a severe hailstorm. The Company has already filed claims for the above damages with the Insurance Companies and the Surveyors have also filed their reports with the respective Insurance Companies. To reflect true and fair results for the year ended, the Company had accounted for insurance claims of `1333.63 lakhs towards cost of finished goods damaged by fire and expenses incurred for replacement of the damaged assets, instead of accounting on receipt basis as per earlier policy. The Management is hopeful of recovery of the entire insurance claim. If earlier accounting policy would have been followed, other operating income would have decreased by ` 930.99 lakhs, other expenses would have increased by ` 402.64 lakhs and Income Tax & Profit after Tax for the year would have been reduced by ` 453.30 lakhs & ` 880.33 lakhs respectively

5 The Company has closed its weaving unit (Part of fabric division) w.e.f. 01.10.2014 situated at Daheli as per decision taken by its Board of Directors in their meeting held on 17.09.2014. As it is not a major line of business hence no separate disclosure for discontinuing operation has made in the financial statement

6 CONTINGENT LIABILITIES AND COMMITMENTS (Rs. in lakhs)

Particulars As at As at 31st March, 31st March, 2015 2014 A. Contingent Liabilities (Not provided for) in respect of:

1 Claim against the Company not acknowledged as debts:

a) Labour Matters, except for which the liability is unascertainable 69.31 69.45

2 Other matters for which the Company is contingently liable:

a) Demand raised by Excise Department for various matters 216.08 220.95

b) Demand for Service Tax 23.91 23.91

c) Demand for Entry Tax (penalty & interest on penalty) 555.50 483.05

(Net of Rs. 582.59 lakhs provided in accounts/ paid)

The Company has a strong chance of success in the above cases, therefore no provision is considered necessary.

3 Bills Discounted with Bankers 3831.08 4683.58

(Since Realised upto 30.04.2015 Rs. 1530.62 lakhs, Previous year Rs. 1907.33 lakhs)

4 The Company has discharged its export obligation under EPCG Scheme for procurement of certain capital goods at concessional rate of duty. Therefore, the Company is not liable to pay any differential custom duty (Previous year Rs. 354.50 lakhs).

B. Commitments :

a) Estimated amount of Contracts remaining to be executed on Capital Account [Net of 4360.43 9463.00 Advances] and not provided for

b) The Company has availed certain government subsidies/ grants. As per the terms and conditions, the Company has to continue production for specified number of years failing which amount of subsidies availed alongwith interest, penalty etc. will have to be refunded.

c) The Board of Directors at their meeting held on 14th March 2015, has approved the purchase of Birla Textile Mills (BTM) a unit of Chambal Fertilisers and Chemicals Limited as a going concern on 'slump sale' basis effective from 1st April 2015, subject to necessary approvals. BTM is located at Baddi (Himachal Pradesh) and is having 83,376 Spindles and manufactures Cotton, Synthetic and Blended Yarn in Grey and Dyed forms.

7 NATURE OF OPERATIONS

The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile Mills, Kathua (J & K), one weaving unit (upto 01.10.2014) & processing unit viz. Damanganga Fabrics, and one Home Textiles unit viz. Damanganga Home Textiles at Village Daheli, near Bhilad (Gujarat). 31.03 In respect of Okara Mills, Pakistan, (Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company ) no returns have been received after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting to Rs. 232.35 lakhs, the demerged/transferor Company had received adhoc compensation of Rs. 25.00 lakhs from Government of India in the year 1972-73. These assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India .The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of Rs. 207.35 lakhs (net of compensation received) as on 31.03.1965, valued at pre-devaluation exchange rate, has been provided for.

8 Proportionate expenses reimbursed for utilising services of establishments maintained by other entities have been included in respective heads of expenses.

9 During the first quarter of the financial year 2014-15, some stocks of finished goods in a godown were totally gutted by fire. In a separate incident, there was damage to some factory buildings & machinery and stocks due to a severe hailstorm. The Company has already filed claims for the above damages with the Insurance Companies and the Surveyors have also filed their reports with the respective Insurance Companies. To reflect true and fair results for the year ended, the Company had accounted for insurance claims of Rs. 1333.63 lakhs towards cost of finished goods damaged by fire and expenses incurred for replacement of the damaged assets, instead of accounting on receipt basis as per earlier policy. The Management is hopeful of recovery of the entire insurance claim. If earlier accounting policy would have been followed, other operating income would have decreased by Rs. 930.99 lakhs, other expenses would have increased by Rs. 402.64 lakhs and Income Tax & Profit after Tax for the year would have been reduced by Rs. 453.30 lakhs & Rs. 880.33 lakhs respectively

10 The Company has closed its weaving unit (Part of fabric division) w.e.f. 01.10.2014 situated at Daheli as per decision taken by its Board of Directors in their meeting held on 17.09.2014. As it is not a major line of business hence no separate disclosure for discontinuing operation has made in the financial statement.

11 Other Information:

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

* Yarn comprising of Cotton and Man Made Fibres Yarn;

* Fabrics comprising woven of Worsted/ Synthetic Staple Yarn, Fabric Processing and Home Furnishings.

(ii) 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 and export incentives benefits.

(iii) The company has common assets for producing goods for domestic market and overseas market. However, it has export trade receivable Rs. 3671.99 lakhs (Previous year Rs. 3963.06 lakhs).

12 RELATED PARTY DISCLOSURE

(a) Key Management Personnel and Shri S.K. Khandelia [President] their relatives Smt. Manju Khandelia (wife), Smt. Indra Devi Khandelia (mother), & Shri Anurag Khandelia (son) Shri Dilip Kumar Ghorawat (Wholetime Director & CFO) (w.e.f. 28.01.2014) Shri C. Singhania (Wholetime Director & CFO) (upto 20.07.2013)

13 Previous year figures have been regrouped/rearranged wherever necessary.

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Mar 31, 2014

1.01 Nature of Operations

The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile Mills, Kathua (J & K), one weaving & processing unit viz. Damanganga Fabrics, and one Home Textiles unit viz. Damanganga Home Textiles at Village Daheli, near Bhilad (Gujarat).

1.02 In respect of Okara Mills, Pakistan, ( Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company) no returns have been received after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting to Rs.232.35 lakhs, the demerged/transferor Company had received adhoc compensation of Rs.25 lakhs from Government of India in the year 1972-73. These assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of Rs.207.35 lakhs (net of compensation received) as on 31.03.1965, valued at pre-devaluation exchange rate, has been provided for.

1.03 Proportionate expenses reimbursed for utilising services of establishments maintained by other entities have been included in respective heads of expenses.

Other Information:

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

- Yarn comprising of Cotton and Man Made Fibres Yarn;

- Fabrics and apparels comprising woven of Worsted/ Synthetic Staple Yarn, Fabric Processing , Home Furnishings and Garments. However, operations of Garment Division closed w.e.f. 31st January, 2013.

(ii) 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 and export incentives benefits.

(iii) The company has common assets for producing goods for domestic market and overseas market. However, it has export trade receivable Rs.3963.06 lakhs (Previous year Rs.2998.83 lakhs).

Note 1.04: RELATED PARTY DISCLOSURE

(a) Key Management Personnel and their relatives

Shri S.K. Khandelia [President ]

Smt. Manju Khandelia (wife), Smt. Indra Devi Khandelia (mother), & Shri Anurag Khandelia (son)

Shri Dilip Kumar Ghorawat (Wholetime Director) (w.e.f. 28.01.2014) #

Shri C. Singhania (Wholetime Director) (upto 20.07.2013)

Shri K.C. Agarwal (Joint Executive President, Daheli Unit) (upto 11.01.2013;

Smt. Savita Agarwal (wife), Ms. Sweta Agarwal (daughter), Smt. Indra Devi Agarwal (mother), & Radhey Shyam Agarwal (father) HUF

# Subject to approval of Shareholders in the forthcoming Annual General Meeting.

$ Remuneration to Key managerial personnel do not include provision for leave encashment and contribution to the approved gratuity fund of the Company, which are actuarially determined for the Company as a whole. Note : The above information has been identified on the basis of information available with the Company and relied upon by the Auditors.

# Pursuant to the resolution passed by the Shareholders through Postal Ballot Shares of Rs.10/- each as fully paid-up Bonus Shares in the Ratio of 1 (one) Bonus Share for every 2 (two) existing Equity Share held by the Shareholders as on the Record Date i.e., 28th June, 2013 and date of allotment is 1st July, 2013. Consequently, the number of equity shares of the Company has increased from 10921908 to 16382862 and the Earnings per Share (EPS) has been recomputed for the previous year as per AS-20 (Earnings Per Share).

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Mar 31, 2013

1.01 NATURE OF OPERATIONS

The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile Mills, Kathua (] & l<), one weaving & processing unit viz. Damanganga Fabrics, one Garments unit viz. Damanganga Garments and one Home Textiles unit viz. Damanganga Home Textiles at Village Daheli, near Bhilad (Gujarat). The Management has decided to close the operations of Damanganga Garments w.e.f. 31st January, 2013, in view of its un-economic working.

1.02 In respect of Okara Mills, Pakistan, ( Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company ) no returns have been received after 31.03.1965. Against net assets of Okara Mills, Pakistan amounting to Rs.232.35 lakhs, the demerged/transferor Company had received adhoc compensation of Rs.25.00 lakhs from Government of India in the year 1972-73. These assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India .The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04 net assets of Rs. 207.35 lakhs (net of compensation received) as on 31.03.1965, valued at pre-devaluation exchange rate, being diminution in value has been provided for.

1.03 Proportionate expenses reimbursed for utilising services of establishments maintained by other entities have been included in respective heads of expenses.

NOTE 2

(a) Key Management Personnel and their relatives

Shri S.K. Khandelia [President]

Smt. Manju Khandelia (wife), Smt. Indra Devi Khandelia (mother),

Shri Ashish Khandelia (son) & Shri Anurag Khandelia (son)

Shri C. Singhania (Wholetime Director)

Shri K.C. Agarwal (Joint Executive President, Daheli Unit) (upto 11.01.2013)

Smt. Savita Agarwal (wife), Ms. Sweta Agarwal (daughter), Smt. Indra Devi Agarwal (mother), Shri Harsut Agarwal (son) & Radhey Shyam Agarwal (father) HUF

NOTE 3 Previous year figures have been regrouped/rearranged wherever necessary.

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Mar 31, 2012

Terms/ rights attached to Equity shares

Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. There is no restriction on distribution of dividend. However same is subject to the approval of the shareholders in the Annual General Meeting.

@ The Board of Directors has recommended dividend of Rs.5 per Equity Share (Previous year Rs.5 per Equity Share and a one time special dividend of Rs.2.50 per Equity Share ) of Rs.10 each for the year ended 31st March, 2012. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

(a) (i) Securities :

Term Loans are secured/to be secured by first equitable mortgage ranking pari- passu over the Company's Immovable Properties situated at Bhawanimandi (Rajasthan), Kathua (Jammu 8 Kashmir) and Daheli (Gujarat) and moveable assets (save and except book debts) both present and future, subject to prior charges created/to be created in favour of Bankers on moveables including book debts for securing Working Capital Borrowings.

(b) Secured by subservient charge over moveable fixed assets and current assets of the Company, carries rate of Interest @ 11.25% p.a. (Previous year 11% p.a.) and repayable within 1 year from the balance sheet date.

(c) (i) Fixed deposit from public carries rate of interest @ 9.50% to 10% p.a. ( Previous year 8.50% to 9% p.a.) and are repayable after 2 to 3 years ( Previous year 2 to 3 years) from the date of acceptance of Deposits.

(ii) Current maturities of fixed deposits includes amount accepted from related parties Rs.678.20 lakhs.(Previous year Rs.504.60 lakhs)

(i) Provision of disputed statutory matters are on account of legal matters, where the Company anticipates probable outflow. The amount of provision is based on estimate made by the Company considering the facts and circumstances of each case. The timing and amount of cash flow that will arise from these matters will be determined by the relevant authorities only on settlement of these cases.

(ii) Figures in brackets represents previous year's amounts.

* The Company has not received any intimation from its suppliers being registered under Micro, Small and Medium Enterprises Development Act, 2006 (MSME). Hence the necessary disclosure required under MSME Act, 2006 can not be made. However, the Company generally makes payment to all its suppliers within the agreed credit period (generally less than 45 days) and thus the Management is confident that the liability of interest under this Act, if any, would not be material.

Notes:

1 Land includes Freehold Land of Rs.511.11 lakhs( Previous year Rs.382.43 lakhs ) and Leasehold Land of Rs.409.27 lakhs ( Previous year Rs.404.27 lakhs ). In case of Kathua unit Leasehold Land for Rs.263.37 lakhs ( Previous year Rs.258.37 lakhs) are pending for registration in the name of the unit.

2 Fixed assets includes share of the company in a Holiday Flome at Flaridwar jointly owned with other Bodies Corporates.

3 Additions includes Borrowing Cost Rs.20.28 lakhs ( Previous Year Nil) 8 Employees cost Rs.7.86 lakhs ( Previous Year Nil)

# Represents Amortisation of Lease Rent.

@ The same has been recognised by the Company, represents that portion of MAT liability, which can be recovered and set off in subsequent years based on the provisions of Section 115JAA of the Income Tax Act, 1961. The management based on the present trend of profitability and also the future profitability projections, opines that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilise MAT credit entitlement.

# Includes Rs.108.33 lakhs (Previous year Rs.108.33 lakhs) being not allowed by Excise Department towards simultaneous claim for rebate of duty on input 8 finished goods, hence Company has filed writ petition before the Hon'ble Rajasthan High Court, Jaipur against the order. Pending disposal of appeal by the Hon'ble High Court, above amount has been considered good by the Management. (Rs.in lakhs)

As at

31st March' 2012 31st March' 2011

NOTE NO. 1

Contingent Liabilities and Commitments

(A) Contingent Liabilities (Not provided for) in respect of:

1 Claim against the Company not acknowledged as debts:

a) Labour Matters, except for which the liability is unascertainable 84.31 93.84

b) Demand raised by Excise Department for various matters 66.28 66.28

c) Demand for Service Tax, being contested by the Company 23.91 23.91

d) Demand for Entry Tax (including penalty & interest): 365.25 317.47 (stay granted by the Tribunal)

Note: The management believes that the Company has a strong chance of success in above mentioned cases and hence, no provision their against is considered necessary.

2 Bills Discounted with Bankers 1961.03 5696.09

(Since Realised upto 30.04.2012 Rs.1106.11 lakhs, Previous year Rs.2037.84 lakhs)

3 The Company has procured certain capital goods under EPCG Scheme at concessional rate of duty. As on 31st March, 2012, the Company is contingently liable to pay differential custom duty Rs.3257.92 lakhs (Previous year Rs.4334.58 lakhs) on such import. In view of past export performance and future projections, the management is hopeful of completing the export obligation within stipulated time, and expect no cash outflow on this account.

(B) Commitments:

1 Estimated amount of Contracts remaining to be executed on Capital Account [Net 257.27 1249.06 of Advances Rs.208.81 lakhs (Previous Year Rs.575.20 lakhs)] and not provided for

2 The Kathua unit of the Company has availed certain government subsidies. As per the terms and conditions, the unit has to continue production for specified number of years failing which amount of availed subsidies alongwith interest, penalty etc. will have to be refunded.

@ Amount is net of Nil (Previous year Rs.42.72 lakhs) Insurance Subsidy received under Central Government Scheme.

* Includes excise duty on increase/(decrease) of finished goods stock Nil (Previous year Rs.6.17 lakhs), Wealth Tax Rs.6.49 lakhs (Previous year Rs.6.10 lakhs) and Sales tax Rs.56.82 lakhs (Previous year Rs.8.15 lakhs).

$ Amount is net of credit of Rs.196.40 lakhs ( Previous year Rs.209.46 lakhs) for Sharing of Common Expenses with a body corporate.

# Including service tax wherever applicable.

$$ Previous year includes Stores 8 Spares Consumed Rs.9.57 lakhs , Power, Fuel and Water Charges Rs.44.07 lakhs and Miscellaneous Expenses Rs.8.50 lakhs related to earlier years.

## The Company has complied with the announcement issued by the Institute of Chartered Accountants of India (ICAI) on Accounting for Derivatives' requiring provision for loss on all outstanding derivative contracts by marking them to market rate.

Accordingly Loss on Forward Contracts amounting to Rs.109.70 lakhs included herein above (Previous year Rs.3.90 lakhs is net off with Net Gain on Foreign Currency transactions and translation under Note no. 21-Other income).

# Net of 4% / 5% interest subsidies received/receivable under TUF (Technology Upgradation Fund) scheme amounting to Rs.2353.15 lakhs (Previous year Rs.2634.94 lakhs).

$ Previous year includes Rs.83.64 lakhs related to earlier years .

@ The Minimum Alternate Tax (MAT) provided during the year is as per provisions of section 115 JB of the Income Tax Act, 1961 and same is eligible for set off in the specified assessment years as per the provisions of the Income Tax Act,1961.

2.01 Nature of Operations

The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made Fibres blended yarn 8 Cotton Yarn and Fabrics. It has two spinning units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) 8 Chenab Textile Mills, Kathua (J 8 K), one weaving 8 processing unit viz. Damanganga Fabrics, one Garments unit viz. Damanganga Garments and one Home Textiles unit viz. Damanganga Home Textiles at Village Daheli, near Bhilad (Gujarat) .

2.02 In respect of Okara Mills, Pakistan, ( Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company ) no returns have been received after 31.03.1965. Against Net Assets of Okara Mills, Pakistan amounting to Rs.232.35 lakhs, the demerged/transferor Company had received adhoc compensation of Rs.25 lakhs from Government of India in the year 1972-73. These assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India .The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of Rs. 207.35 lakhs (net of compensation received) as on 31.03.1965, valued at pre-devaluation Exchange Rate, being diminution in value has been provided for.

2.3 Proportionate expenses reimbursed for utilising services of establishments maintained by other entities have been included in respective heads of expenses.

2.4 Segment Reporting

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company.

As part of Secondary reporting, revenues are attributed to geographic areas based on the location of the customers.

The following tables present the revenue, profit, assets and liabilities information relating to the Business/Geographical segment for the year ended 31.03.2012.

Other Information:

The company has common assets for producing goods for domestic market and overseas market. However, it has Export Trade Receivable Rs.1703.96 lakhs (Previous year Rs.4049.06 lakhs).

Notes:

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

- Yarn comprising of Cotton and Man Made Fibres Yarn;

- Fabrics and Apparels comprising woven of Worsted/ Synthetic Staple Yarn, Fabric Processing, Home Furnishings and Garments.

Segments have been identified and reported taking into account, the nature of products, the differing risks and returns, the organisation structure, and the internal financial reporting systems.

(ii) Segment revenue in each of the above domestic business segment primarily includes sales, other income and export incentives in the respective segments.

(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 and export incentives benefits.

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

(v) Previous year figures has been regrouped to make them comparable with current year figures.

$ Remuneration to Key Managerial personnel do not include provision for leave encashment and contribution to the approved Gratuity Fund of the Company, which are actuarially determined for the Company as a whole.

Note : The above information has been identified on the basis of information available with the Company and relied upon by the Auditors.

# Deposited in Indian Rupees in the Bank Accounts maintained by the shareholders in India.

2.5 The Company has prepared current year account as per presentation and disclosure requirement of Revised Schedule VI to the Companies Act, 1956 applicable with effect from 1st April, 2011. Previous year figures have been reclassified/regrouped to conform current year figures.

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Mar 31, 2011

1) Nature of Operations

The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made Fibres blended yarn & Cotton Yarn and Fabrics. It has two spinning units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Chenab Textile Mills, Kathua (J & K), one weaving & processing unit viz. Damanganga Fabrics, one Garments unit viz. Damanganga Garments and one Home Textiles unit viz. Damanganga Home Textiles at Village Daheli, near Bhilad (Gujarat) .

(Rupees in lakhs) 31.03.2011 31.03.2010

2) Contingent Liabilities (Not provided for) in respect of:

a) Bills Discounted with Bankers 5696.09 4113.29 (Since Realised upto 30.04.2011 Rs. 2037.84 lakhs, Previous year Rs. 1745.72 lakhs)

b) Labour Matters, except for which the liability is unascertainable- 93.84 89.88

c) Demand raised by Excise Department for various matters- 66.28 66.65

d) Demand for Service Tax, being contested by the Company- 23.91 23.91

e) Demand for Entry Tax (including penalty & interest):

– Bhawanimandi unit – 66.34

– Daheli unit (stay granted by the Tribunal)- 317.47 163.73

f) Sales tax Demand under dispute – 64.80

3) The Company has not received any intimation from its suppliers being registered under Micro, Small and Medium Enterprises Development Act, 2006 (MSME). Hence the necessary disclosure required under the schedule VI of the Companies Act,1956 and MSME Act, 2006 can not be made. However, the Company generally makes payment to all its suppliers within the agreed credit period (generally less than 45 days) and thus the Management is confident that the liability of interest under this act, if any, would not be material.

4) In respect of Okara Mills, Pakistan, (Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company) no returns have been received after 31.03.1965. Against Net Assets of Okara Mills, Pakistan amounting to Rs. 232.35 lakhs, the demerged/transferor Company had received adhoc compensation of Rs. 25 lakhs from Government of India in year 1972-73. These Assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India. The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of Rs. 207.35 lakhs (net of compensation received) as on 31.03.1965, valued at pre-devaluation Exchange Rate, being diminution in value has been provided for.

5) Advances includes to the officer Nil (Previous year Nil). Maximum balance during the year Nil (Previous year Rs. 1.00 lakh) of the officer.

6) Proportionate expenses reimbursed for utilising services of establishments maintained by other entities have been included in respective heads of expenses.

7) Sales includes Export Incentives/Benefits Rs. 2602.15 lakhs (Previous year Rs. 2529.56 lakhs).

8) Installments of Term Loans payable within one year Rs. 6901.36 lakhs (Previous year Rs. 4871.89 lakhs).

9) The Excise Department has not allowed simultaneous claim for rebate of duty on input & finished goods for Rs. 108.33 lakhs, hence Company has filed writ petition before the Honble Rajasthan High Court, Jaipur against the order. Pending disposal of appeal by the Honble High Court, above amount has been considered good by the Management and included in Schedule-11 - Other Current Assets.

10) The asset of Rs. 2625.65 lakhs (Previous Year Nil) recognized by the Company as ‘MAT credit entitlement under ‘Loans and Advances represents that portion of MAT liability, which can be recovered and set off in subsequent years based on the provisions of Section 115JAA of the Income Tax Act, 1961. The management based on the present trend of profitability and also the future profitability projections, opines that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets.

11) Previous year Capital work in progress includes pre-operative expenditure during construction period and trial run expenditures related to 12 MW Thermal Power Plant at Bhawanimandi (capitalised during the previous year), 31104 spindles project at Kathua (capitalised during the previous year) and 3 MW Thermal power plant project at Daheli (capitalised during the previous year)

12) The Company has procured certain capital goods under EPCG Scheme at concessional rate of duty. As on 31st March, 2011, the Company is contingently liable to pay differential custom duty Rs. 4334.58 lakhs (Previous year Rs. 6880.12 lakhs) on such import. In view of past export performance and future projections, the management is hopeful of completing the export obligation within stipulated time, and expect no cash outflow on this account.

13) Interest paid on term loan is net of 4% / 5% interest subsidies received/receivable under TUF (Technology Upgradation Fund) scheme amounting to Rs. 2634.94 lakhs (Previous year Rs. 2795.19 lakhs) and Interest paid to banks and others is net of interest subvention on export credit facilities amounting to Nil (Previous year Rs. 168.27 lakhs).

14) Segment Reporting

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company.

As part of Secondary reporting, revenues are attributed to geographic areas based on the location of the customers.

(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 and export incentives/benefits.

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

(v) Previous year figures have been regrouped to make them comparable with current year figures.

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Mar 31, 2010

1) Nature of Operations

The Company is a manufacturer of Synthetic Staple Fibres Yarn, Man made Fibres Blended Yarn & Cotton Yarn and Fabrics. It has two spinning units viz. Rajasthan Textile Mills, Bhawanimandi (Raj) & Textile Mills, Kathua (J & K), one weaving & processing unit viz. Damanganga Fabrics, one Garments unit viz. Damanganga Garments and one Home Textiles unit viz. Damanganga Home Textiles at Village Daheli, near Bhilad (Gujarat).

(Rupees in lakhs) 31.03.2010 31.03.2009 2) Estimated amount of Contracts remaining to be executed on Capital Account 208.00 262.04 [Net of Advances Rs. 175.99 lakhs (Previous Year Rs. 504.12 lakhs)] and not provided for

4) Contingent Liabilities (Not provided for) in respect of:

a) Bills Discounted with Bankers 4113.29 2505.36 (Since Realised Rs. 1745.72 lakhs, Previous year Rs. 990.60 lakhs)

b) Labour Matters, except for which the liability is unascertainable* 89.88 95.75

c) Demand raised by Excise Department for various matters* 66.65 66.28

d) Demand for Service Tax, being contested by the Company* 23.91 23.91

e) Demand for Entry Tax (including penalty & interest): - Bhawanimandi unit # 66.34 34.01

- Daheli unit (stay granted by the Tribunal)* 163.73 -

f) Sales tax Demand under dispute* 64.80 -

g) Demand raised by Electricity Department and contested by the Company - 7.65 [Deposit Nil (Previous year Rs. 3.82 lakhs)]

h) Income Tax Demands against which Company has preferred Appeals - 8.10

(i) Bank Guarantee given to J&K Electricity Board 800.00 -

* The management believes that the Company has a strong chance of success in above mentioned cases and hence, no provision there against is considered necessary.

# The Company has challenged the constitutional validity of Entry of Goods into Local Area Act, 1999 in the Hon’ble Rajasthan High Court, Jodhpur and accordingly Hon’ble Rajasthan High Court, Jodhpur has granted stay against the demand for the year 2006-07. As stay has been granted against payment of Entry Tax, the Company has not accounted for the Entry Tax from accounting year 2007-08 to 2009-10.

3) The Company has not received any intimation from its suppliers being registered under Micro, Small and Medium Enterprises Development Act, 2006 (MSME). Hence the necessary disclosure required under the schedule VI of the Companies Act,1956 and MSME Act, 2006 can not be made. However, the Company generally makes payment to all its suppliers within the agreed credit period (generally less than 45 days) and thus the Management is confident that the liability of interest under this act, if any, would not be material.

4) In respect of Okara Mills, Pakistan, (Which remained with the Company as a result of transfer of textiles division of Sutlej Industries Limited with the Company) no returns have been received after 31.03.1965. Against Net Assets of Okara Mills, Pakistan amounting to Rs. 232.35 lakhs, the demerged/transferor Company had received adhoc compensation of Rs. 25 lakhs from Government of India in year 1972-73. These Assets now vest in the Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in India The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further compensation, if any received, credit for the same will be taken in the year of receipt. In the year 2003-04, net assets of Rs. 207.35 lakhs (net of compensation received) as on 31.03.1965, valued at pre-devaluation Exchange Rate, being diminution in value has been provided for.

5) Advances includes to the officer Nil (Previous year Nil). Maximum balance during the year Rs.1 lakh (Previous year Rs.1 lakh) of the officer.

6) Proportionate expenses reimbursed for utilising services of establishments maintained by other entities have been included in respective heads of expenses.

7) Sales includes Export Incentives/Benefits Rs. 2529.56 lakhs (Previous year Rs. 1948.12 lakhs).

8) Details of Remuneration and Perquisites of the Wholetime Directors are as under: (Rupees in lakhs)

Above remunerations exclude provision for leave encashment and gratuity, which is actuarially determined for the Company as a whole.

9) Installments of Term Loans payable within one year Rs. 4871.89 lakhs (Previous year Rs. 3232.98 lakhs).

10) The Excise Department has not allowed simultaneous claim for rebate of duty on input & finished goods for Rs. 108.33 lakhs, hence Company has filed writ petition before the Hon’ble Rajasthan High Court, Jaipur against the order. Pending disposal of appeal by the Hon’ble High Court, above amount has been considered good by the Management and included in Schedule-11 - Other Current Assets.

11) In respect of Daheli unit of the Company, a fraud was committed in earlier year by employees (by drawing money from the bank account through forged cheques and cash embezzlement), the matter is still under investigation & litigation and outcome is awaited. However, on the basis of the legal advice available with the Company, the Company is hopeful of recovery of the amount involved. Still as a matter of abundant caution, an amount of Rs. 42.49 lakhs (net of recoveries/ credits) was provided for in earlier year.

12) Capital work in progress includes pre-operative expenditure during construction period and trial run expenditures related to 12 MW Thermal Power Plant at Bhawanimandi (capitalised during the year), 31104 spindles project at Kathua (capitalised during the year) and 3 MW Thermal power plant project at Daheli (capitalised during the year), (Previous years figures also includes 12672 spindles project capitalised at Bhawanimandi). (Rupees in lakhs)

13) The Company has procured certain capital goods under EPCG Scheme at concessional rate of duty. As on March 31, 2010, the Company is contingently liable to pay differential custom duty Rs. 6880.12 lakhs (Previous year Rs. 8905.64 lakhs) on such import. In view of past export performance and future projections, the management is hopeful of completing the export obligation within stipulated time, and expect no cash outflow on this account.

14) Interest paid on term loan is net of 4% / 5% interest subsidies received/receivable under TUF (Technology Upgradation Fund) scheme amounting to Rs. 2795.19 lakhs (Previous year Rs. 2590.32 lakhs) and Interest paid to banks and others is net of interest subvention on export credit facilities amounting to Rs. 168.27 lakhs (Previous year Rs. 96.40 lakhs).

15) Segment Reporting

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company.

As part of Secondary reporting, revenues are attributed to geographic areas based on the location of the customers.

Other Information:

The company has common assets for producing goods for domestic market and overseas market.

Notes:

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

- Yarn comprising of Cotton and Man Made Fibres Yarn;

- Fabrics and Apparels comprising woven of Worsted/ Synthetic Staple Yarn, Fabric Processing , Home Furnishings and Garments. Segments have been identified and reported taking into account, the nature of products, the differing risks and returns, the organisation structure, and the internal financial reporting systems.

(ii) Segment revenue in each of the above domestic business segment primarily includes sales, other income and export incentives in the respective segments.

(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 and export incentives/benefits.

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

(v) Previous year figures have been regrouped to make them comparable with current year figures.

* The Company avails services provided by Bank in normal course of banking business.

** Remuneration to Key Managerial personnel do not include provision for leave encashment and contribution to the approved Group Gratuity Fund which are actuarially determined for the Company as a whole.

# Including remuneration paid in the capacity of Wholetime director of Rs. 24.65 lakhs.

Note: 1 The above information has been identified on the basis of information available with the Company and relied upon by the Auditors. 2 Figures in brackets represents previous years amounts.

16) Taxation

a) Provision for Current Tax includes Wealth Tax Rs. 5.00 lakhs (Previous Year Rs. 5.33 lakhs).

b) The Minimum Alternate Tax (MAT) provided during the year is as per provisions of section 115 JB of the Income Tax Act, 1961 and same is eligible for set off in the subsequent ten assessment years as per the provisions of the Income Tax Act,1961.

17) The Company has complied with the announcement issued by the Institute of Chartered Accountants of India (ICAI) on Accounting for Derivatives requiring provision for loss on all outstanding derivative contracts by marking them to market rate. Accordingly Loss on Forward Contracts amounting Rs. 10.59 lakhs is net off with "Foreign exchange fluctuation gain" under Schedule -15-Other Income. (Previous year Rs. 89.13 lakhs has been provided under the head "Foreign Exchange Fluctuation loss" in Schedule-18-Operating and Other Expenses).