Notes to Accounts of Zodiac Clothing Company Ltd.

Mar 31, 2023

Notes:

(i) Refer Note 40(ii)(a) for disclosure of contractual commitments for acquisition of property, plant and equipment.

(ii) Refer Note 39 for information on property, plant and equipment pledged as security by the Company.

(iii) Refer note 49 (n) for immovable properties not held in name of the Company.

(iv) Actual cost of capital projects in progress has not exceeded the estimated cost and the actual timelines for completion of projects has not exceeded the estimated timelines in respect of the amounts reported in 4(b), as at end of each reporting period. Accordingly, completion schedule is not presented. CWIP as at March 31, 2023 and March 31, 2022 majorly comprises of costs directly attributable to a building. There are no projects which are suspended as on March 31, 2022 and March 31, 2023.

(v) During the previous year, a residential flat having carrying value of R30.36 Lakhs has been transferred to investment properties.

The total cash outflow for leases for the year ended March 31, 2023 was R2,037.55 Lakhs (March 31, 2022 R1,533.56 Lakhs) (including short term and variable lease payments).

*Covid-19-Related Rent Concessions:

As described in Note No 2(f) Accounting Policy on Leases, the Ministry of Corporate Affairs vide notification dated July 24, 2020 issued an amendment to Ind AS 116- Leases, by inserting a practical expedient w.r.t. Covid-19 Related Rent Concessions and vide notification dated June 18, 2021, extended such practical expedient upto June 30, 2022.

Certain lessors have provided rent concessions to the Company as a result of the Covid-19 pandemic. Rent concession include rent holidays, rent reduction and/or variable rent as % of sales for a certain period but not beyond June 30, 2022.

Pursuant to the above amendment, the Company has applied the practical expedient in respect of leases which satisfies all the three conditions mentioned therein, and recognized unconditional rent concessions in the Statement of Profit and Loss as Other Income.

(iii) Variable Lease Payments

Certain property leases contain variable payment terms that are linked to sales generated from a store. For individual stores, up to 100% of lease payments are on the basis of variable payment terms with percentages ranging from 10% to 30% of sales. Variable payment terms are used for a variety of reasons, including minimising the fixed costs base for newly established stores, re-evaluation done post Covid-19 etc.. Variable lease payments that depend on sales are recognised in statement of profit or loss in the period in which the condition that triggers those payments occurs.

A 50% increase in sales across all stores in the company with such variable lease contracts would increase total lease payments by approximately R137.12 Lakhs (March 31, 2022 R82.06 Lakhs).

(iv) Extension and termination options

Extension and termination options are included in a number of property leases across the Company. These are used to maximise operational flexibility in terms of managing the assets used in the Company’s operations. The majority of extension and termination options held are exercisable only by the Company and not by the respective lessor.

(v) Critical judgments in determining the lease term

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended.

For leases of retail stores, the Company considers factors such as historical lease durations, the costs and business disruption required to replace the leased asset.

(ii) Premises given on operating lease:

The Company has given certain investment properties on operating lease. These lease arrangements range for a period between 1 years to 9 years and include both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms.

Significant Estimates:

Estimation of fair value

The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in active market for similar properties.

The fair valuation of investment properties has been determined by registered independent valuers as defined under Companies Act, 2013. The main inputs used are the prevailing market rates and recent sale of similar properties, etc. The fair value measurement is categorised in level 3 fair value hierarchy.

(iv) Refer note 49 (n) for immovable properties not held in name of the Company._

Inventory writedowns are accounted, considering the nature of inventory, ageing, liquidation plan and net realisable value. Write-downs of inventories amounted to R371.70 Lakhs for the year ended March 31, 2023 (R 130.83 Lakhs for year ended March 31, 2022). These writedowns were recognised as an expense and included in ‘Cost of material consumed’, ‘changes in inventories of finished goods, stock-in-trade and work-in-progress’, and ‘consumption of stores and spares’ in the Statement of Profit and Loss.

The management has carried out an assessment of carrying value of the inventories and basis such assessment which includes nature, condition, margins and liquidation plan, no further provision, over and above those already provided, is considered necessary.

Purpose of Significant Reserves:

Retained Earnings

Retained Earnings are the Profits that the Company has earned till date, less any transfer to general reserve, dividends or other distribution paid to shareholders Securities Premium

Securities premium is used to record the premium on issue of shares, which is to be utilised in accordance with the provisions of the Act.

Capital Redemption Reserve

Represent reserve created during redemption of Preference Shares and it is a non-distributable reserve, which is to be utilised in accordance with provision of the Act.

General Reserve

The general reserve is a free reserve, retained from Company’s profits. The reserves can be utilised as per the provisions of the Companies Act, 2013.

FVOCI - Equity Instruments

The Company has elected to recognise changes in the fair value of investments in certain equity securities as other comprehensive income. These changes are accumulated within the FVOCI equity instruments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are sold.

Cash Flow Hedging Reserve

The cumulative effective portion of gain or losses arising on changes in the fair value of hedging instruments designated as cash flow hedges are recognised in the other comprehensive income in the cash flow hedging reserve. Such changes recognised are reclassified to the statement of profit and loss when the hedged item affects the profit or loss.

Notes:

Nature of Security and terms of repayment:

(i) The loan is secured by way of second charge on all current assets of the Company.

(ii) The loan carries an interest rate ranging from 8.25 % p.a./ 9.25 % p.a. (March 31, 2022: 8.25 % p.a. / 9.25% p.a.).

(iii) The loan is repayable in 36 equated monthly instalments starting from the 13th month of their respective drawdown dates. Last installment in due on March 20, 2025.

Nature of Security and terms of repayment:

Current borrowings are secured against hypothecation of all current assets of the Company.

RPC is repayable within 180 days. Effective Interest rate ranging from 3.10% to 6.10% p.a. (March 31, 2022: 3.10% to 6.10% p.a.)

Bank Overdraft carries rate of interest ranging from 9.10 % p.a. to 9.50 % p.a. (March 31, 2022: 9.10 % to 9.50% p.a.) Loans from Directors carries rate of interest of 8% p.a.

Refer Note 46 for liquidity risk.

The carrying amounts of financial and non financial assets as security for secured borrowings are disclosed in Note 39.

* Contract liabilities reflect advance payments from customers. These are amounts received prior to transferring goods and services to the customer. The balance as at the beginning of the year is recognised as revenue during the year while the amount recognised as at the end of the year represents advance payments received during the respective year.

# Where a customer has a right to return a product within a given period, the Company recognises a refund liability for the amount of consideration received for which the entity does not expect to be entitled R62 Lakhs (March 31, 2022 - R62 Lakhs). The Company also recognises a right to recover the returned goods measured by reference to the former carrying amount of the goods R31 Lakhs (March 31, 2022 - R31 Lakhs) (Refer Note 19). The costs to recover the products are not material because the customers usually return them in a saleable condition.

Significant Estimates: Based on the future business plans and the underlying assumptions such as fair value of immovable properties, as also assessed by an external registered valuer, the company has estimated that the future taxable income will be sufficient to absorb carried forward unabsorbed depreciation, which management believes is probable, accordingly the Company has recognized deferred tax asset on aforesaid unabsorbed depreciation. However, deferred tax on carried forward unabsorbed depreciation and business losses as detailed below has not been considered for recognition of deferred tax asset. Further, deferred tax asset on business losses has been recognised to the extent of deferred tax liabilities.

b) The Company has leasehold land (perpetual lease) and building thereon at Mumbai which was transfered to Company through amalgamation of Zodiac Finsec Holdings Limited (then wholly owned subsidiary of the Company) with the Company in Financial Year 2017- 18. Zodiac Finsec Holdings Limited was previously known as Multiplex Collapsible Tubes Limited. The Company have during the year initiated the process for transfer of its proportionate share in leasehold land which is situated at Mumbai in the Company’s name as lessee. The amount of transfer fees, if any, is presently not ascertainable and cannot be reliably estimated and which will be known on completion of diligence exercise and determination by local authorities.

“The amounts shown in respect of above items represent the best possible estimates arrived at on the basis of available information. The uncertainties are dependent upon the outcome of the different legal processes. The timing of future cash flows will be determinable only on receipt of judgements/decision pending with various forums/authorities.

The Company does not expect any reimbursements in respect of above contingent liabilities.”

Significant Estimates: The Company has litigations in respect of certain Income tax matters. The management does assessment of all outstanding matters and wherever required, further obtains legal advices including those relating to interpretation of law. Based on such assessment, it concludes whether a provision should be recognised or a disclosure should be made.

Investment commitment: contribution is to be made on “as needed” basis pursuant to drawdown notices issued by the respective funds over commitment period.

Mirage Marketing Company LLP (MMLP) vide Deed of Adherence (DOA) dated October 31, 2020 and January 30, 2021 executed in favour of Faering Capital India Evolving Fund II and the Company, has acquired Investment Commitment of class A units of Faering Capital India Evolving Fund amounting to R298.80 Lakhs from the Company and pursuant to which the Company is no longer committed for investment commitment to the extent of R298.80 lakhs.

42 Post retirement benefit plans I I Defined Benefit Plan - Gratuity:

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, subject to a ceiling of R20 Lakhs. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.

As per Actuarial Valuation as on March 31, 2023 and March 31, 2022, amounts recognised in the Standalone financial statements in respect of Employee Benefits Scheme:

The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the balance sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

H. Risk Exposure - Asset Volatility

The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. Most of the plan asset investments is in fixed income securities with high grades and in government securities. These are subject to interest rate risk and the fund manages interest rate risk derivatives to minimize risk to an acceptable level.

II. Compensated absences

The compensated absences obligations cover the Company’s liability for leave, which is actuarially valued at each year end by applying the assumptions referred in ‘E’ above.

The amount of the provision of R52.79 lakhs (as at March 31, 2022: R95.95 lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement of these obligations.

IH. Details of Defined Contribution Plan

The The Company also has certain defined contribution plans. Contributions are made to provident and other funds in India for employees as per regulations. The contributions are made to registered provident fund, ESIC, etc. which are administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the year towards defined contribution plan are R316.33 lakhs (Previous year R272.53 lakhs) in the Standalone Statement of Profit and Loss.

43 In accordance with Accounting Standard Ind AS 108 ‘Operating Segment’, segment information has been given in the consolidated financial statements of Zodiac Clothing Company Limited, and therefore, no separate disclosure on segment information is given in these standalone financial statements.

Zodiac Clothing Co. Ltd. EMPL GGCA Scheme

* The shareholders of the company are Mrs. Muna Mahmood Mohd. Mahmoud (51%) and M/s. Zodiac Clothing Co S.A. (49%). As per the mutual agreement between the shareholders, Mrs. Muna Mahmood Mohd. Mahmoud is holding 51% shares for and on behalf of M/s. Zodiac Clothing Co S.A. who is the beneficial owner.

Terms and Conditions:

“Transactions were done in ordinary course of business and on normal terms and conditions.

Outstanding balances are unsecured and repayable in cash.

Refer Note 40(ii)(b) in respect of transfer of Investment commitment by the Company to a related party.”

45 Fair Value Measurement:

(i) Financial Instrument by category and hierarchy.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.”

The following methods and assumptions were used to estimate the fair values:

1. Fair value of trade receivables, cash and cash equivalents, other bank balances, other current financial assets, current loans, trade payables and other current financial liabilities approximate their carrying amounts largely due to short term maturities of these instruments.

2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.

The fair values for (security deposits) were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk. The interest rate on term deposits is at the prevailing market rates. Accordingly, fair value of such instrument is not materially different from their carrying amounts.

The interest rate on borrowing is at the prevailing market rates. Accordingly, fair value of such instruments is not materially different from their carrying amounts.

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

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

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

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

(iii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices for quoted shares and mutual funds

- the fair value of forward exchange contracts is determined using forward exchange rates at the balance sheet date

- net asset value (‘NAV’) / fair market value (‘FMV’) are determined based on audited financial statements / valuation reports / NAV / FMV provided by fund manager

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

*The Company has invested in following funds and these funds have been further invested into various companies.

1. Faering Capital India Evolving Fund

2. Paragon Partners Growth Fund - I

3. Faering Capital India Evolving Fund II

4. Tata Capital Growth Fund

5. Tata Capital Healthcare Fund

The Company has considered fair market values based on audited financial statement and/or valuation reports and/or NAV / FMV statements provided by venture capital fund.

Investment commitment in respect of venture capital funds are on “as needed” basis and will be at face value.

[Refer Note 40(ii)(b)]

46 Financial Risk Management:

Financial risk management objectives and policies

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Management.

(A) Market Risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments, future committed transactions, foreign currency receivables, payables, borrowings etc.

The Company manages market risk through its finance department (headed by CFO), which evaluates and exercises independent control over the entire process of market risk management. The finance department recommend risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures like foreign exchange forward contracts, option contracts, borrowing strategies and ensuring compliance with market risk limits and policies.

Market Risk- Interest rate risk.

“Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company’s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio, which could vary on either side based on current inetrest rates scenario.

According to the Company interest rate risk exposure is only for floating rate borrowings. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.” * Sensitivity is calculated based on the assumption that amount outstanding as at reporting dates were utilised for the whole financial year.

Market Risk- Foreign currency risk

“The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales, purchases etc. in various foreign currencies. The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts and option contracts to hedge exposure to foreign currency risk.”

Derivative financial instruments such as foreign exchange forward and option contracts are used for hedging purposes and not as trading or speculative instruments. The Company designates these hedging instruments as cash flow hedges to hedge foreign currency risk in cash flow from firm commitment (sales order/purchase orders).

Market Risk- Price Risk

(a) Exposure

The Company’s exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet at fair value through Other Comprehensive Income. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of portfolio is done in accordance with limits set by the Company.

(b) Sensitivity

(i)The table below summarises the impact of increases/decreases of the BSE index on the Company’s equity and other comprehensive income for the year arising from portfolio of investment in equity shares of listed companies. The analysis is based on the assumption that the index has increased by 10 % or decreased by 10 % with all other variables held constant, and that all the Company’s equity instruments moved in line with the index.

Above referred sensitivity pertains to quoted equity investment (Refer Note 8). Other Comprehensive Income for the year would increase/ (decrease) as a result of gains/losses on equity securities as at fair value through Other Comprehensive Income.

(ii) The table below summarises the impact of increases/decreases in the net asset value (NAV) / fair market value (FMV) of Company’s investment in venture capital fund units and statement of profit and loss for the year arising from portfolio of investment in venture capital funds. The analysis is based on the assumption that the NAV / FMV has increased by 10% or decreased by 10% with all other variables held constant, and that all the Company’s venture capital funds moved in same direction.

*Loss before tax would change as a result of gain/loss on financial instruments classified as at fair value through profit and loss.

(ii) The table below summarises the impact of increases/decreases in the net asset value (NAV) of Company’s investment in mutual fund units and statement of profit and loss for the year arising from portfolio of investment in mutual funds. The analysis is based on the assumption that the NAV has increased by 10% or decreased by 10% with all other variables held constant, and that all the Company’s mutual funds moved in same direction.

(B) Credit risk

Credit risk is the risk of incurring a loss that may arise from a borrower or debtor failing to make required payments. Credit risk arises mainly from trade receivables, cash and cash equivalents, deposit with banks, derivative financial instruments, investments, loan to employee and security deposits. The Company manages and analyses the credit risk for each of its new customers before standard payment and delivery terms and conditions are offered.

Credit risk on cash and cash equivalents, deposit with banks, derivative financial instruments and investment is limited as Company generally deals with banks and financial institutions with high credit ratings assigned by credit rating agencies. Investments primarily include investment in liquid mutual and accredited venture fund.

While loans and security deposits for rental premises are subjected to the impairment requirement of Ind AS 109, the identified impairment loss was immaterial.

(i) Credit risk management:

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instrument, which requires expected lifetime losses to be recognised from initial recognition of the receivables. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward looking information.

“Sale to retail customers are required to be settled in cash or using major cards, mitigating credit risk. There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors or regions.

In respect of sales to export customers, there are no past history of losses, thus the identified expected credit loss was immaterial.

Credit risk for domestic trade receivable is managed by the Company through credit approvals, establishing credit limits and periodic monitoring of the creditworthiness of its customers to which the Company grants credit terms in the normal course of business.”

Significant estimates and judgements:

Impairment of financial assets

The impairment provision for financial assets disclosed above are based on assumptions about the risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

(C) Liquidity Risk

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, Company’s finance department 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 below) and cash and cash equivalents on the basis of expected cash flows.

Amount in bracket represents expense/ loss

* The foreign exchange forward contracts and option contract are denominated in the same currency as the firm commitment (sales order/purchase orders), therefore the hedge ratio is 1:1.

The Company’s hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of hedging instrument match exactly with the terms of the hedged items, and so a qualitative assessment of effectiveness is performed.

47 Capital Management:

The Company aim to manages its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to the shareholders.

The capital structure of the Company is based on management’s judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Company’s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

The Company’s management monitors the return on capital as well as the level of dividends to shareholders.

48 The Code on Social Security, 2020 (‘Code’) relating to employee benefits received Presidential assent in September 2020. However, the date on which the Code will come into effect has not yet been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

b) “Details of benami property held:

No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.”

c) “Borrowing secured against current assets:

The Company has borrowings from banks on the basis of security of current assets. The quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.”

d) “Wilful defaulter:

Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.”

e) “Relationship with struck off companies:

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.”

f) “Compliance with number of layers of companies:

The Company has complied with the number of layers prescribed under the Companies Act, 2013.”

g) “Compliance with approved scheme(s) of arrangements:

The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.”

h) “Utilisation of borrowed funds and share premium:

The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

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

(ii) . provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

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

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

(ii) . provide any guarantee, security or the like on behalf of the ultimate beneficiaries.”

i) “Undisclosed income:

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.”

j) “Details of crypto currency or virtual currency:

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.”

k) “Valuation of PPE, intangible asset and investment property:

The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.”

l) “Registration of charges or satisfaction with Registrar of Companies:

There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.”

m) “Utilisation of borrowings availed from banks and financial institutions:

The borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were taken.”

o) The Company’s international transactions and domestic transactions with related parties are at arm’s length as per the independent accountants report for the year ended 31 March 2022. Management believes that the Group’s international transactions and domestic transactions with related parties for the year ended 31 March 2023 and post 31 March 2023 continue to be at arm’s length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision for taxation.

p) Previous year figures have been regrouped /reclassified to confirm prentation as per Ind As and as required by schedule 111 of the Act.

50 These standalone financial statements were authorised for issue by the directors on May 30, 2023.

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Mar 31, 2018

1. Critical estimates and judgments

The preparation of standalone Ind AS financial statements requires the use of accounting estimates which by definition will seldom equal the actual results.

This note provides an overview of the areas that involved a higher degree of judgment or complexity, and items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the standalone Ind AS financial statements.

The areas involving critical estimates or judgment are:

- Estimation of Defined benefit obligation (Refer Note 41).

- Estimation of current tax expenses and Payable and Recognition of deferred tax assets for carried forward tax losses (Refer Note 36).

- Allowance for doubtful debts and deposits / Expected Credit Loss (Refer Note 9, 14 and 45).

- Fair value of Investment properties (Refer Note 5)

(ii) Premises given on operating lease:

The Company has given certain investment properties on operating lease. These lease arrangements range for a period between

11 months and 5 years and include both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms.

The total future minimum lease rentals receivable at the Balance Sheet date is as under:

Significant Estimates:

Estimation of fair value

The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in active market for similar properties.

This valuation is based on valuations performed by an accredited independent valuer’s assumptions. The fair value measurement is categorized in level 3 fair value hierarchy.

44 Fair Value Measurement:

Financial Instrument by category and hierarchy.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

1. Fair value of cash and cash equivalents, other bank balances, trade receivables, current loans, other current financial assets, trade payables, current borrowings and other current financial liabilities approximate their carrying amounts largely due to short term maturities of these instruments.

2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.

The fair values for security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

The coupon rate on investment in preference shares and bonds is at the prevailing market rates. Accordingly, fair value of such instrument is not materially different from their carrying amounts.

The coupon rate on investment in preference shares and bonds is at the prevailing market rates. Accordingly, fair value of such instrument is not materially different from their carrying amounts.

The interest rate on borrowing is at the prevailing market rates. Accordingly, fair value of such instruments is not materially different from thier carrying amounts.

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

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

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

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

(iii) 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 shares and mutual funds

- the fair value of forward exchange contracts is determined using forward exchange rates at the balance sheet date

- the fair value of venture capital fund is on the basis of the valuation report/ net asset value (‘NAV’) provided by fund manager.

*Company has invested in following funds and these funds have been further invested into various companies.

1. Faering Capital India Evolving Fund

2. Paragon Partners Growth Fund-I

3. Faering Capital India Evolving Fund-II

4. Tata Capital Growth Fund

5. Tata Capital Healthcare Fund

Company has considered the fair value on the basis of the valuation report provided by venture capital fund.

Investment commitment in respect of venture capital funds are on “as needed” basis and will be at face value.

2.Financial Risk Management:

Financial risk management objectives and policies

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Management.

(A) Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments, future committed transactions, foreign currency receivables, payables, borrowings etc.

The Company manages market risk through its finance department (headed by CFO), which evaluates and exercises independent control over the entire process of market risk management. The finance department recommend risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures like foreign exchange forward contracts, option contracts, borrowing strategies and ensuring compliance with market risk limits and policies.

Market Risk- Interest rate risk.

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company’s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

According to the Company interest rate risk exposure is only for floating rate borrowings. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

* Sensitivity is calculated based on the assumption that amount outstanding as at reporting dates were utilized for the whole financial year.

Market Risk- Foreign currency risk

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and purchases in various foreign currencies. Foreign currency exchange rate exposure is partly balanced by purchasing of goods and services in the respective currencies. The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts, option contracts and reshipment credit in foreign currency to hedge exposure to foreign currency risk.

Derivative financial instruments such as foreign exchange forward and option contracts are used for hedging purposes and not as trading or speculative instruments.

Non-derivative financial liabilities in the form of Pre-shipment export credit in Foreign Currency (PCFC) borrowings have also been designated as hedging instruments to hedge the highly probable forecast sales in foreign currency. The Company designates these hedging instruments as cash flow hedges.

Market Risk- Price Risk

(a) Exposure

The Company’s exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet either at fair value through Other Comprehensive Income. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of portfolio is done in accordance with limits set by the Company.

(b) Sensitivity

The table below summarizes the impact of increases/decreases of the BSE index on the Company’s equity and other comprehensive income for the year arising from portfolio of investment in equity shares of listed companies. The analysis is based on the assumption that the index has increased by 5 % or decreased by 5 % with all other variables held constant, and that all the Company’s equity instruments moved in line with the index.

Above referred sensitivity pertains to quoted equity investment (Refer note 8). Other Comprehensive Income for the year would increase/ (decrease) as a result of gains/losses on equity securities as at fair value through Other Comprehensive Income.

(B) Credit risk

Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assess financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information’s.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis through out each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:

i) Actual or expected significant adverse changes in business,

ii) Actual or expected significant changes in the operating results of the counterparty,

iii) Financial or economic conditions that are expected to cause a significant change to the counterparty’s ability to meet its obligations,

iv) Significant increase in credit risk on other financial instruments of the same counterparty,

v) Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party guarantees or credit enhancements.

Financial assets are written off when there is no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized in profit or loss.

Trade receivables and security deposit:

To measure the expected credit losses, trade receivables relating to domestic and security deposits have been grouped based on the credit risk characteristics and the days past due.

The Company measures the expected credit loss of financial assets other than trade receivables of domestic business and security deposits from individual customers based on historical trend, industry practices and the business environment in which the Company operates. Loss rates are based on actual credit loss experience and past trends.

The Company’s hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of hedging instrument match exactly with the terms of the hedged items, and so a qualitative assessment of effectiveness is performed.

** Amount is below the rounding off norms adopted by the Company.

3.Capital Management

(a) Risk Management

The Company aim to manages its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to our shareholders.

The capital structure of the Company is based on management’s judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Company’s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business.

The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

The Company’s management monitors the return on capital as well as the level of dividends to shareholders.

Specified Bank Notes is defined as Bank Notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees. The disclosure requirement of Specified Bank Note is not applicable to the Company for the period ended 31^st March, 2018.

The disclosures with respect to ‘Permitted receipts’, ‘Permitted payments’, ‘Amounts deposited in Banks’ and ‘Closing cash in hand as on 30.12.2016’ is understood to be applicable in case of SBNs only.

4. Employees Stock Option Scheme:

(i) Under the Zodiac Clothing Company Limited Employees Stock Option Plan 2006 (‘ESOP’), the Company had granted 864,000 (adjusted for bonus issue) options to its eligible employees in two Grants in earlier years.

(ii) ESOP under both grants were vested prior to 1^st April, 2016 being the transition date for adoption of Ind AS and consequently, applying the exemption available under Ind AS 101 - First-time Adoption of Indian Accounting Standards, the Company has not adopted Ind AS 102 - ‘Share Based Payment’.

(iii) During the Financial Year ended 31^st March, 2017, no shares (including bonus entitlement thereon) have been issued under Grant II of Zodiac Employees Stock Option Plan, 2006. Further consequent to the expiry of the Zodiac Employees Stock Option Plan, 2006 on 19^th January, 2017 all pending stock options (including bonus entitlement thereon) have lapsed, no further disclosure has been made in this standalone financial statements.

5. Business Combinations

Pursuant to the scheme of amalgamation (‘the Scheme’) of wholly owned subsidiary Zodiac Finsec and Holdings Limited (‘ZFHL’) with the Company under section 230 to 232 of the Companies Act, 2013 sanctioned by the Hon’ble National Company Law Tribunal (‘NCLT’) on 9^th March, 2018 and filed with Registrar of Companies, Mumbai on 11^th April, 2018, being the effective date of the Scheme. Appointed date for the scheme as approved by the NCLT is 1^st April, 2017, considering this, Business Combination has occurred prior to Balance Sheet date and thus applying Appendix C of Ind AS 103 - ‘Business Combination’, financial statements has been restated from earliest period presented.

The erstwhile ZHFL was engaged in the business of investment in shares and securities and renting of immovable properties.

The amalgamation has been accounted for under the ‘Pooling of Interest Method’ as prescribed by Appendix C of Ind AS 103, the accounting treatment has been given as under:

(i) The assets and liabilities of ZFHL are incorporated in the financial statements of the Company at the book values.

(ii) All reserves of ZFHL are recorded in the financial statements of the Company in the same form.

(iii) 200,000 Equity shares of R 100 each fully paid up in ZFHL, held as investment in the Company stands cancelled.

(iv) Inter-Company balances, loans and borrowings stood cancelled.

Further, in terms of the Scheme, the authorised share capital of the Company stood increased from R 3,000.00 Lakhs consisting of 30,000,000 equity shares of R 10 each to R 3,400.00 Lakhs consisting of 34,000,000 equity shares of R 10 each without any further act, instrument or deed.

As on 1^st April, 2016, being transition date of adoption of Ind AS, following is the Net Assets of ZFHL merged with the Company:

6. First-time adoption of Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The Company has adopted Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate Affairs with effect from 1^st April, 2017, with a transition date of 1^st April, 2016. Ind AS 101-First-time Adoption of Indian Accounting Standards requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements which is for the year ended 31^st March, 2018 for the company, be applied retrospectively and consistently for all financial years presented. In accordance with, in preparing these Ind AS financial statements, the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as explained below. The resulting difference in the carrying values of the assets and liabilities as at the transition date between the Ind AS and Previous GAAP have been recognized directly in equity (retained earnings or another appropriate category of equity).

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

1. Optional Exemptions availed

(a) Deemed Cost

The Company has opted paragraph D7 AA and accordingly considered the carrying value of property, plant and equipments, intangible assets and investment properties as deemed cost as at the transition date.

(b) Investments in subsidiaries:

The Company has opted paragraph D14 and D15 and accordingly considered the Previous GAAP carrying amount of Investments as deemed cost as at the transition date.

(c) Designation of previously recognized financial instruments

Paragraph D19B of Ind AS 101 gives an option to an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS.

The Company has opted to apply this exemption for its investment in equity Investments.

(d) Share - based payment transactions

ESOP under both grants were vested prior to 1^st April, 2016 being the transition date for adoption of Ind AS and consequently, applying the exemption available under Ind AS 101 - ‘First-time Adoption of Indian Accounting Standards’, the Company has opted for exemption in paragraph D2 and D3 of Ind AS 101.

(e) Business Combinations

The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

2. Applicable Mandatory Exceptions

(a) 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).

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

- Investment in equity instruments carried at FVOCI;

- Investment in debt instruments carried at FVPL and

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

(b) Classification and measurement of financial assets

As required under Ind AS 101 the Company has assessed the classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

(c) Hedge accounting

Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, at that date. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as of 1^st April, 2016 are reflected as hedges in the Company’s results under Ind AS.

The Company had designated various hedging relationships as cash flow hedges under the previous GAAP. On date of transition to Ind AS, the entity had assessed that all the designated hedging relationship qualifies for hedge accounting as per Ind AS 109. Consequently, the Company continues to apply hedge accounting on and after the date of transition to Ind AS.

3. Transition to Ind AS - Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS as required under Ind AS 101:

(a) Reconciliation of Equity as at April 1, 2016 and March 31, 2017

(b) Reconciliation of the Total Comprehensive Income for the year ended March 31, 2017

(c) Impact to Statement of Cash Flows

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

Notes to first time adoption

The following explains the material adjustments made while transition from previous accounting standards to IND AS,

A Other Liabilities

As required under Paragraph 17 of IND AS 18 - Revenue recognition, provision has been made for the estimated sales returns of R 120.12 Lakhs as at March 31,2017 (As at April 1, 2016 - R 141.41 Lakhs) and consequently other equity as at transition date and loss for the year ended March 31, 2017 have been increased by the respective amounts.

B 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 and 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 of R 234.94 Lakhs as at 1^st April, 2016 included under provisions has been reversed with corresponding adjustment to other equity. Consequently, the total equity has been increased by an equivalent amount.

C Fair Valuation of Investments

Under the previous GAAP, investments in equity instruments, venture capital funds and mutual funds were classified as long-term investments or current investments based on the intended holding period and reliability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under IND AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in other equity R 175.44 Lakhs as at 31^st March 2017 (R 63.95 Lakhs As at 1 April, 2016).

Fair value changes with respect to investments in equity instruments designated as FVOCI have been recognized in FVOCI - Equity investments reserve as at the date of transition and subsequently in the other comprehensive income for the year ended 31^st March 2017. This increased other reserves by R 3,906.50 Lakhs as at 31^st March 2017 (1^st April 2016 - R 5,398.37 Lakhs).

These fair value changes resulted in gain of R 111.49 Lakhs from investments fair valued through profit & loss for the year ended 31^st March, 2017 and R 1,479.06 for investments routed through OCI.

Consequently, profit on sale of investment to the extent of fair value gain recognized has been reversed.

D Security deposits

Under the previous GAAP, interest free security deposits are recorded at their transaction value. Under IND AS, all financial assets are required to be recognized at fair value. Accordingly, the company has fair valued the security deposits under IND AS. Difference between fair value of security deposits and the carrying value (transaction value) as per Previous GAAP has been recognized as prepaid rent under prepaid expenses. Consequently, the amount of security deposits has been decreased by R 414.42 Lakhs as at 31^st March, 2017 (R 500.36 Lakhs as at 1^st April, 2016). The prepaid expenses increased by R 374.84 Lakhs as at 31^st March,2017 (R 466.85 Lakhs as at 1^st April,2016).Other equity decreased by R 33.51 Lakhs as at 1^st April,2016. The profit for the year and total equity as at 31^st March, 2017 decreased by R 6.07 (net) Lakhs due to amortisation of the prepaid expenses of R 81.36 Lakhs is partially off-set by the notional interest income of R 75.29 Lakhs recognized on these security deposits.

E Fair Valuation of Derivatives

Under the previous GAAP, derivatives were accounted based on the principals set out in the “Guidance Note on Accounting for Derivative Contracts”. Under Ind AS 109, Forward Contracts are carried at fair value and the resultant gains and losses are recorded in the statement of Profit and Loss. Accordingly, the same has been fair valued resulting in decrease in other equity by R 4.75 Lakhs as at 31^st March,

2017 (increase in other equity by R 0.47 Lakhs as at 01^st April, 2016).

F Remeasurements of post employment benefit obligation

Under Ind AS, remeasurements 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 remeasurements were forming part of the profit and loss for the year. As a result of this change, the loss for the year ended March 31, 2017 decreased by R 57.46 Lakhs. There is no impact on the other equity as at 31^st March 2017.

G Trade receivables and Security Deposits

Under the previous GAAP, the Company had provided for doubtful debts and deposits based on the actual assessment of reliability of receivables. The Company has adopted for Expected Credit Loss

method for provision for doubtful debts and security deposits given. This resulted in decrease in other equity by R 301.91 Lakhs as at 31^st March 2017 (1^st April 2016 - R 406.71 Lakhs).

H Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or 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 fair valuation of investment in equity shares, cash flow hedge and remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.

I Deferred Tax

Deferred Tax on aforesaid IND AS adjustments which results in timing difference.

J Deferred Tax on Unabsorbed Depreciation

Based on the future projections, the Company has estimated that the future taxable income will be sufficient to absorb carried forward unabsorbed depreciation, which management believes is probable, accordingly the Company has recognized deferred tax asset on unabsorbed depreciation. Under the previous GAAP, recognition of deferred tax asset on unabsorbed depreciation and losses was based on virtual certainty of reliability of such assets which has been replaced by reasonable certainty under Ind AS.

$$ Includes amount related to erstwhile wholly owned subsidiary Zodiac Finsec and Holdings Limited after adjustments made pursuant to Scheme of amalgamation. (Refer Note 49)

7. The presentation requirements under Previous GAAP differs from Ind AS and hence Previous GAAP figures has been regrouped to align them with requirements of Ind AS.

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Mar 31, 2017

Notes :

(i) Rights, Preferences and Restrictions attached to equity shares:

a) Right to receive dividend as may be approved by the Board of Directors / Annual General Meeting.

b) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provisions of the Companies Act, 2013.

c) Every member of the Company holding equity shares has a right to attend the General Meeting of the Company and has a right to speak and on a show of hands, has one vote if he is present and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the Company. A member can also exercise his vote by electronic means in accordance with section 108 of the Companies Act, 2013.

(iv) During the Financial Year ended 31st March, 2017, no shares (including bonus entitlement thereon) have been issued under Grant II of Zodiac Employees Stock Option Plan, 2006. Further consequent to the expiry of the Zodiac Employees Stock Option Plan, 2006 on 19th January, 2017 all pending stock options(including bonus entitlement thereon) have lapsed. (Refer Note 42)

(v) Aggregate number of equity shares allotted as fully paid up pursuant to contract(s) without payment being received in cash, bonus shares and shares bought back for the period of 5 years immediately preceding the Balance Sheet date:

Notes:

(i) Total investment commitment is Rs. 1500 Lacs, contribution to be made on "as needed" basis pursuant to drawdown notices issued by the Fund Manager over commitment period of 48 months from the date of first closing i.e. Feb 01, 2016. The term of fund is 10 years and can be further extended by upto 2 years on the recommendation of the investment Manager and subject to the consent of 2/3 majority of the contributors.

(ii) Total investment commitment is Rs. 500 lacs, contribution to be made on "as needed" basis pursuant to drawdown notices issued by the Fund Manager over a commitment period of 5 years from the date of first closing i.e. Jan 13, 2016. The term of fund is 10 years and can be further extended by up to 2 years on the recommendation of the investment Manager and subject to the consent of 2/3 majority of the contributors.

e) Claims against the Company not acknowledged as debts: Rs. 129,200/-(Previous Year Rs. 2,662,300/-).

f) Labour disputes not acknowledged as debts: Amount not ascertainable.

Note: In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

g) Significant Capital Commitment in respect of contribution to Venture Capital Funds amounting to Rs. 126,500,000/-(Previous Year: 163,350,000/-).

(ii) Other commitments:-

Contractual arrangement for payment in case of default on corporate credit card facility availed by certain employees from a bank Rs. 4,100,000/- (Previous year Rs. 4,900,000/-).

1) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 11,949,993/- (Previous Year: Rs. 29,253,885/-).

2) Micro, Small and Medium enterprises have been identified by the company on the basis of the information available. Total outstanding dues of Micro, Small and Medium enterprises, which are outstanding for more than the stipulated period are given below.

3) The amount of premium on forward exchange contracts to be recognized in the Statement of Profit and Loss in the next financial year is Rs. 4,594,440/- (Previous Year: Rs. 6,475,969/-).

4) Operating Leases: -

A) Premises taken on Lease

a) The Company has taken various offices / shops under operating lease or leave and license agreements. These are non-cancelable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

b) Lease Payments recognized in the Statement of Profit and Loss under Rent in Note 24 includes Rs. 431,428,789/-(Previous Year: Rs. 404,107,304/-) in respect of premises taken on lease.

c) The future minimum lease payments under non-cancelable operating lease:

(i) Not later than one year is Rs. 20,325,472/- (Previous Year: Rs. 21,249,876/-);

(ii) later than one year and not later than five years is Rs. 1,086,462/- (Previous Year: Rs. 3,238,976/-) and

(iii)Later than five years Nil.

B) Premises Given On Lease

a) The Company has given its premises under operating lease on leave and license basis. These are cancelable lease and the period ranges between 11 months to 3 years under leave and license agreements and renewable by mutual consent on mutually agreed terms.

b) Lease rentals recognized in the Statement of Profit and Loss as Rent income in Note 20 is Rs. 2,349,050/-(Previous Year: Rs. 1,818,329 /-)

c) Premises given on license basis:

Gross Carrying amount Rs. 6,967,650/-(Previous Rs. 6,967,650/-)

Accumulated Depreciation Rs. 1,579,819/- (Previous Year Rs. 1,469,958/-)

Depreciation for the year Rs. 109,861/- (Previous Year Rs. 110,469/-)

b) Except for the above Shareholders, the Company has not made any remittance in foreign currency on account of dividend during the year and does not have information as to the extent to which remittance in foreign currency on account of dividend have been made by or on behalf of non-resident shareholders.

c) The particulars of Non-resident Shareholders and the amount of dividend paid to them are as under: -

The Net Deferred tax credit of Rs. 33,137,483/- (Previous year: Rs. 14,891,628/-) for the year has been recognized in the Statement of Profit and Loss.

The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date.

The timing difference mainly on account of unabsorbed depreciation under the Income Tax Act, 1961 results in a deferred tax asset as per AS-22 on "Accounting for Taxes on Income". The Company has recognized deferred tax asset on unabsorbed depreciation to the extent of corresponding deferred tax liability on the difference between book and tax depreciation under the Income Tax Act, 1961, on the basis that future taxable income will be available from future reversal of any deferred tax liability recognized at balance sheet date; and the excess of such assets has been ignored in the absence of virtual certainty.

5) Related Party Disclosures: -

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

I) Relationships:

a) Subsidiary Companies (including sub-subsidiaries):

Zodiac Finsec and Holdings Ltd.

Zodiac Clothing Company S. A.

Zodiac Clothing Co (U.A.E.) LLC.

Zodiac Clothing Company INC.

Zodiac Properties Ltd. U.A.E. (upto 26th January, 2017)

b) Key Management Personnel:

Mr. M. Y. Noorani -- Chairman

Mr. A. Y. Noorani -- Vice Chairman and Managing Director upto 28th February, 2017 and vice chairman thereafter Mr. S. Y. Noorani -- Managing Director and President

c) Other Related Parties:

i. The enterprises where control of key management personnel and / or their relatives exist and with whom the transactions have taken place:

Zodiac Metropolitan Clothing Gmbh Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mustang Manufacturing Company

Mashal Enterprises

Euro Global Holdings Pte. Ltd.

Onward LLC

Miraj Marketing Company LLP

ii. Relatives of key management personnel with whom the transactions have taken place:

Mr. Awais A. Noorani Mr. Musaed A. Noorani Mrs. Muna A. Noorani Mrs. Zehra S. Noorani Mrs. Saniyya A. Noorani

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

II) The following transactions were carried out with the related parties in the ordinary course of business.

6) Segment Information: -

Business Segment

The Company is exclusively engaged in the business of Clothing and clothing accessories. This in the context of Accounting Standard (AS 17) "Segment Reporting", constitutes single primary segment.

7) Derivative Financial Instruments:-

a) The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts and out of the money option contracts to manage its exposure in foreign exchange rates. The counter parties are banks. These contracts are for a period between one day and twelve months.

(ii) Net Gain on derivative instruments, which have been designated as cash flow hedges, of Rs. 8,753,968/- (Previous Year: Net Gain of Rs. 2,651,260/-) recognized in Hedging Reserve as of March 31, 2017, is expected to be reclassified to the Statement of Profit and Loss as and when the same will mature.

(iii) Net Gain on non-derivative financial liabilities in the form of preshipment export credit in foreign currency (PCFC) borrowings of Rs. 6,334,379/- (Previous Year: Net Gain of Rs. 3,668,027/-) recognized in the Hedging Reserve as of March 31, 2017 is expected to be reclassified to the Statement of Profit and Loss as and when the highly probable sales takes place.

8) Under the Zodiac Clothing Company Limited Employees Stock Option Plan 2006, the Company had granted 864,000 (adjusted for bonus issue) options to its eligible employees in two Grants in earlier years. During the Financial Year ended 31st March, 2017, no shares (including bonus entitlement thereon) have been issued under Grant II of Zodiac Employees Stock Option Plan, 2006. Further consequent to the expiry of the Zodiac Employees Stock Option Plan, 2006 on 19th January, 2017 all pending stock options (including bonus entitlement thereon) have lapsed.

(d) The Company has followed the intrinsic value-based method of accounting for stock options granted based on Guidance Note on Accounting for Employees Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 (now known as SEBI (Share Based Employee Benefits) Regulations, 2014) issued by Securities and Exchange Board of India (SEBI). As the exercise price of the option granted is based on the market price as on the date of the Grant, the intrinsic value of the option is Nil.

(e) Fair Valuation:

The fair value of options used to compute proforma net income and earnings per equity share have been done by an independent firm of Valuers on the date of grant using the Black-Scholes Model.

Notes:

i. Premium is paid to LIC under Group Gratuity Scheme of LIC.

ii. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

(III) The Company makes provident fund contributions to defined contribution plans for the employees. Under the scheme, the company is required to contribute a specified percentage of the salary to fund the benefits. Amount recognized as an expense in the statement of profit and loss in respect of defined contribution plan is Rs. 44,834,474/- (Previous Year: Rs. 44,264,312/-).

9) Excise duty recovered on sales is included in ''Revenue from Operations''. Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced.

10) (a) Gross amount required to be spent by the company during the year for Corporate Social Responsibility (CSR): Rs. 718,349/-

(Previous Year: Rs. 2,327,299/-).

11) The Board of Directors of the Company have proposed a dividend of Re. 1 per equity share for the year ended 31st March, 2017 (Previous Year Re. 1 per equity share). The dividend will be paid after the approval of shareholders at the Annual General Meeting. During the previous year, the Company had made a provision for the dividend declared by the Board of Directors as per the requirements of pre-revised Accounting Standard 4 - ''Contingencies and Events Occurring after the Balance sheet date'' (AS 4). However, as per the requirements of revised AS 4, the Company is not required to provide for dividend proposed/ declared after the balance sheet date. Consequently, no provision has been made in respect of the aforesaid dividend proposed by the Board of Directors for the year ended 31st March, 2017. Had the Company continued with creation of provision for proposed dividend, as at the balance sheet date, its Surplus in Statement of Profit and Loss would have been lower by Rs. 23,493,781/- and Short Term Provision would have been higher by Rs. 23,493,781/- (including dividend distribution tax of Rs. 3,973,807/-).

Ceased to be a Director w.e.f. 18th December, 2016 due to his death.

Mr. A. Y. Noorani was the Vice Chairman & Managing Director till 28^th February, 2017. With effect from 1^st March, 2017 he continues as the Vice- Chairman and Non- Executive Director.

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Mar 31, 2016

Notes:

(i) Rights, Preferences and Restrictions attached to equity shares:

a) Right to receive dividend as may be approved by the Board of Directors / Annual General Meeting

b) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provisions of the Companies Act, 2013

c) Every member of the Company holding equity shares has a right to attend the General Meeting of the Company and has a right to speak and on a show of hands, has one vote if he is present and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the Company A member can also exercise his vote by electronic means in accordance with section 108 of the Companies Act, 2013

(ii) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period:

(i) Refer Note 4 (i) - Long-term borrowings for details of security

(ii) There is no amount due and outstanding as at Balance Sheet date to be credited to Investor Education and Protection Fund

(i) The said shares have been received pursuant to a scheme of demerger of Aditya Birla Nuvo Ltd

(ii) Total investment commitment is Rs, 1500 Lacs, contribution to be made on “as needed” basis pursuant to drawdown notices issued by the Fund Manager over commitment period of 48 months from the date of first closing ie Feb 01, 2016 the term of fund is 10 years and can be further extended by up to 2 years on the recommendation of the investment Manager and subject to the consent of 2/3 majority of the contributors

(iii) Total investment commitment is Rs,500 lacs, contribution to be made on “as needed” basis pursuant to drawdown notices issued by the Fund Manager over a commitment period of 5 years from the date of first closing ie Jan 13, 2016 The term of fund is 10 years and can be further extended by up to 2 years on the recommendation of the investment Manager and subject to the consent of 2/3 majority of the contributors

1) Micro, Small and Medium enterprises have been identified by the company on the basis of the information available Total outstanding dues of Micro, Small and Medium enterprises, which are outstanding for more than the stipulated period, are given below

Note: - In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained

g) Significant Capital Commitment in respect of contribution to Venture Capital Funds amounting to '' 163,350,000/-(Previous Year Nil)

(ii) Other commitments:-

Contractual arrangement for payment in case of default on corporate credit card facility availed by certain employees from a bank Rs, 4,900,000/- (Previous year Rs, 4,900,000/-)

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: '' 29,253,885/- (Previous Year Rs, 23,419,865/-)

3) The amount of premium on forward exchange contracts to be recognized in the Statement of Profit and Loss in the next financial year is Rs, 6,475,969/- (Previous Year Rs, 5,522,584/-)

4) Operating Leases: -

A) Premises taken on Lease

a) The Company has taken various offices / shops under operating lease or leaves and license agreements. These are non-cancelable during a lock in period which ranges between 11 months to 3 years under leave and license agreements and are renewable by mutual consent on mutually agreeable terms

b) Lease Payments recognized in the Statement of Profit and Loss under Rent in Note 24 includes '' 404,107,304/-(Previous Year '' 362,355,322/-) in respect of premises taken on lease

c) The future minimum lease payments under non-cancelable operating lease:

(i) Not later than one year is '' 21,249,876/- (Previous Year '' 43,342,600/-);

(ii) Later than one year and not later than five years is '' 3,238,976/- (Previous Year '' 772,352/-) and

(iii) Later than five years Nil

B) Premises Given On Lease

a) The Company has given its premises under operating lease on leave and license basis .These are cancelable lease and the period ranges between 11 months to 3 years under leave and license agreements and renewable by mutual consent on mutually agreed terms

b) Lease rentals recognized in the Statement of Profit and Loss as Rent income in Note 20 is '' 1,818,329 (Previous Year '' 1,835,067/-)

c) Premises given on license basis:-

Gross Carrying amount '' 6,967,650/- (Previous '' 6,967,650/- )

Accumulated Depreciation '' 1,469,958/- (Previous Year '' 1,359,488/-)

Depreciation for the year '' 110,469/- (Previous Year '' 109,867/-)

The Net Deferred tax (credit) / charge of '' (14,891,628)/- (Previous year '' 1,804,994/-) for the year has been recognized in the Statement of Profit and Loss

The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date

The timing difference mainly on account of unabsorbed depreciation under the Income Tax Act, 1961 results in a deferred tax asset as per AS-22 on “Accounting for Taxes on Income” The Company has recognized deferred tax asset on unabsorbed depreciation to the extent of corresponding deferred tax liability on the difference between book and tax depreciation under the Income Tax Act, 1961, on the basis that future taxable income will be available from future reversal of any deferred tax liability recognized at balance sheet date; and the excess of such assets has been ignored in the absence of virtual certainty

5) Derivative Financial Instruments

a) The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts and out of the money option contracts to manage its exposure in foreign exchange rates The counter parties are banks These contracts are for a period between one day and twelve months

(i) The following are outstanding Foreign Exchange Forward and Option contracts as on 31^st March,2016

(ii) Net Gain on derivative instruments, which have been designated as cash flow hedges, of '' 2,651,260/- (Previous Year Net Gain of '' 2,160,418/-) recognized in Hedging Reserve as of 31^st March, 2016, is expected to be reclassified to the Statement of Profit and Loss as and when the same will mature

(iii) Net gain on non-derivative financial liabilities in the form of reshipment export credit in foreign currency (PCFC) borrowings of '' 3,668,027/- (Previous Year net loss of '' 4,139/-) recognized in the Hedging Reserve as of 31^st March, 2016 is expected to be reclassified to the Statement of Profit and Loss as and when the highly probable sales takes place

(iv) Exchange Loss of '' 13,112,584/- (Previous Year Exchange gain '' 20,518,952/-) has been recognized in the Statement of Profit and Loss for the year ended March 31, 2016

b) (i) No derivative instruments are acquired for speculation purposes

(ii) Foreign currency exposures that is not hedged by derivative instruments or otherwise is '' 11,668,644/-(Previous Year '' 45,621,039/-) as given below:

* (Options outstanding is adjusted for rounding off effect due to bonus options granted to employees for bonus declared on 28^th September 2011)

(d) The Company has followed the intrinsic value-based method of accounting for stock options granted based on Guidance Note on Accounting for Employees Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 Issued by Securities and Exchange Board of India (SEBI) As the exercise price of the option granted is based on the market price as on the date of the Grant, the intrinsic value of the option is Nil

(e) Fair Valuation:

The fair value of options used to compute preformed net income and earnings per equity share have been done by an independent firm of Values on the date of grant using the Black-Schools Model

The Key assumptions in the Black-Schools Model for calculating fair value as on the date of grant are:

i Premium is paid to LIC under Group Gratuity Scheme of LIC

ii The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market

iii The details of experience adjustments on account of Plan Liability and Plan Asset as required by Para 120 (n) (ii) of AS-15 are as under:

iv Contributions expected to be paid to the plan during the annual period beginning after the Balance Sheet date: '' Nil (Previous Year Rs, 20,000,000/-)

v The expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risks of asset management and historical result of the return on plan asset

(III) The Company makes provident fund contributions to defined contribution plans for the employees Under the scheme, the company is required to contribute a specified percentage of the salary to fund the benefits Amount recognized as an expense in the statement of profit and loss in respect of defined contribution plan is Rs, 44,264,312/- (Previous Year Rs, 44,480,269 /-)

- Excise duty recovered on sales is included in ‘Revenue from Operations’ Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced

6). (A) Gross amount required to be spent by the company during the year for Corporate Social Responsibility (CSR): Rs,2,327,299/-

(Previous Year Rs, 2,698,806/-)

(b) Following are the details of amount spent during the year for CSR:-

- Previous year’s figures have been regrouped /reclassified wherever necessary to correspond with the current year’s classification/disclosures

---

Mar 31, 2014

1) (i) Contingent Liabilities: -

a) Guarantee issued by the Banks and counter guaranteed by the Company: Rs. 3,560,494/- (Previous year: Rs. 5,452,239/- ).

b) Foreign letters of Credits opened by Bank and counter guaranteed by the Company: Rs. 26,327,666/- (Previous year: Rs. 33,769,425/-).

c) Foreign bills / Letters of Credit discounted with Bank: Rs. 445,121/- (Previous year Rs. 12,346,148/-)

d) Disputed demand not provided for in respect of: -

current year Previous Year Rs. Rs.

1) Income Tax 90,823,130 128,862,070

2) Sales Tax 11,229,872 11,229,872

3) Apparel Export Promotion Council for non fulfilment of export obligation against duty free imports 424,415 2,190,575

e) Claims against the Company not acknowledged as debts: Rs. 129,200/-(Previous Year Rs. 730,841/-)

f) Labour disputes not acknowledged as debts: Amount not ascertainable.

Note:- In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

(ii) Other commitments :-

Contractual arrangement for payment in case of default on corporate credit card facility availed by certain employees from a bank Rs. 4,900,000/- (previous year Rs. Nil).

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 18,827,465/- (Previous Year Rs. 28,290,352/- )

28) The amount of premium on forward exchange contracts to be recognized in the Statement of Profit and Loss in the next financial year is Rs. 4,910,212/- (Previous Year Rs. 4,010,650/-)

3) Operating Leases: -

A) Premises taken on Lease

a) The Company has taken various Offices / shops under operating lease or leave and licence agreements. These are non- cancellable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

b) Lease Payments recognized in the Statement of Profit and Loss under Rent in Note 23 includes Rs. 297,743,155/- (Previous Year Rs. 279,486,978/-) in respect of premises taken on lease.

c) The future minimum lease payments under non-cancellable operating lease :

(i) not later than one year is Rs. 9,594,719/- (Previous Year Rs. 7,309,130/-);

(ii) later than one year and not later than five years is Rs. 1,273,638/- (Previous Year Rs. 559,930/-) and

(iii) Later than five years Nil

B) Premises Given On Lease

a) The Company has given its premises under operating lease on leave and licence basis. These are cancellable lease and the period ranges between 11 months to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms.

b) Lease rentals recognized in the Statement of Profit and Loss as Rent income in Note 19 is Rs. 550,550/- (Previous Year Rs. 179,200/-)

c) Premises given on licence basis:- Gross Carrying amount Rs. 2,322,550/- (Previous Rs. 4,645,100/-) Accumulated Depreciation Rs. 415,640/- (Previous Year Rs. 757,366/-) Depreciation for the year Rs. 37,858/- (Previous Year Rs. 75,716/-)

4) Related Party Disclosures: -

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

I) Relationships: -

a) Subsidiary Companies (including sub-subsidiaries):-

Zodiac Finsec and Holdings Ltd

Zodiac Clothing Company S. A.

Zodiac Clothing Co (U.A.E.) LLC.

Zodiac Clothing Company INC

Zodiac Properties Ltd U.A.E.

b) Key Management Personnel: -

Mr. M. Y. Noorani --Chairman

Mr. A. Y. Noorani -- Vice Chairman and Managing Director

Mr. S. Y. Noorani -- Managing Director and President

c) Other Related Parties:-

i. The enterprises where control of key management personnel and / or their relatives exist and with whom the transactions have taken place:

Zodiac Metropolitan Clothing Gmbh

Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mustang Manufacturing Company

Mashal Enterprises

Euro Global Holdings Pte Ltd

Onward LLC

Miraj Marketing Company LLP

ii. Relatives of key management personnel with whom the transactions have taken place :

Mr. Awais A. Noorani

Mr. Musaed A. Noorani

Mrs. Muna A. Noorani

Mrs. Zehra S.Noorani

Mrs. Saniyya A.Noorani

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

5) Segment Information: -

Business Segment

The Company is exclusively engaged in the business of Clothing and clothing accessories. This in the context of Accounting Standard (AS 17) "Segment Reporting", notified under the Companies (Accounting Standard) Rules, 2006, constitutes single primary segment.

6) Derivative Financial Instruments

a) The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts and out of the money option contracts to manage its exposure in foreign exchange rates. The counter parties are banks. These contracts are for a period between one day and twelve months.

(ii) Net Gain on derivative instruments, which have been designated as cash flow hedges, of Rs. 7,228,017/- (Previous Year Net Loss of Rs. 2,593,652/-) recognized in Hedging Reserve as of March 31,2014, is expected to be reclassified to the Statement of Profit and Loss as and when the same will mature.

(iii) Net gain on non derivative financial liabilities in the form of preshipment export credit in foreign currency (PCFC) borrowings of Rs. 8,407,072/- ( previous year Rs. Nil/-) recognized in the Hedging Reserve as of March 31, 2014 is expected to be reclassified to the Statement of Profit and Loss as and when the highly probable sales takes place.

(iv) Exchange Loss of Rs. 41,307,587/- (Previous Year Loss Rs. 12,351,812/-) has been recognised in the Statement of Profit and Loss for the year ended March 31, 2014 b) (i) No derivative instruments are acquired for speculation purposes.

(d) The Company has followed the intrinsic value-based method of accounting for stock options granted based on Guidance Note on Accounting for Employees Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 Issued by Securities and Exchange Board of India (SEBI). As the exercise price of the option granted is based on the market price as on the date of the Grant, the intrinsic value of the option is Nil.

Notes:

i. Premium is paid to LIC under Group Gratuity Scheme of LIC.

ii. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iv. Contributions expected to be paid to the plan during the annual period beginning after the Balance Sheet date: Rs.12,500,000/- (Previous Year Rs. 12,500,000/-).

v. The expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risks of asset management and historical result of the return on plan asset.

(III) The Company makes provident fund contributions to defined contribution plans for the employees. Under the scheme, the company is required to contribute a specified percentage of the salary to fund the benefits. Amount recognized as an expense in the statement of profit and loss in respect of defined contribution plan is Rs. 40,959,338/- (Previous Year Rs.38,464,803/-)

7) Remuneration to Managing Directors aggregating to Rs. 24,800,000/- shown under " Other expenses " in note 23 above includes the following amounts to each of the managerial personnel viz the Vice-Chairman and Managing Director and the Managing Director and President :-

(i) An amount of Rs. 11,369,498/- by way of commission on net profits (pro-rated for the period from April1, 2013 to February 28,2014) in terms of the approval granted by the shareholders by a resolution passed in the meeting held on 26th August, 2009;

(ii) An amount of Rs. 600,000/- by way of salary for the month of March, 2014 in terms of the approval granted by the Board of Directors at their Meeting held on 19th March, 2014; and

(iii) An amount of Rs. 430,502/- by way of performance linked bonus for the year ending March 31, 2014 to be decided by the Board of Directors.

The remuneration of Rs. 600,000/- by way of Salary as shown in (ii) above and Rs. 430,502/- by way of performance linked Bonus as shown in (iii) above and the appointment of the above mentioned managerial personnel for a period of 3 years w.e.f. 1st March 2014 is subject to approval of the shareholders at the ensuing Annual General meeting.

8) Excise duty recovered on sales is included in ''Revenue from Operations''. Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced.

9) Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosures.

---

Mar 31, 2013

1) Contingent Liabilities: -

a) Guarantee issued by the Bank and counter guaranteed by the Company: Rs.5,452,239/- (Previous year: Rs. 4,800,659/-).

b) Foreign letters of Credits opened by Bank and counter guaranteed by the Company: Rs. 33,769,425/- (Previous year: Rs. 30,367,959/-).

c) Foreign bills/Letters of Credit discounted with Bank: Rs. 12,346,148/- (Previous year Rs. 29,787,556/-)

d) Disputed demand not provided for in respect of: -

Current year Previous Year

1) Income Tax 128,862,070 102,540,443

2) Sales Tax 11,229,872 11,229,872

3) Apparel Export 2,190,575 2,980,050

Promotion Council for non fulfillment of export obligation against duty free imports

e) Claims against the Company not acknowledged as debts: Rs. 730,841/- (Previous Year Rs. 1,066,310/-)

f) Labour disputes not acknowledged as debts: Amount not ascertainable.

Note: In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 28,290,352/- (PreviousYear Rs. 62,809,263/-)

3) Micro, Small and Medium enterprises have been identified by the company on the basis of the information available. Total outstanding dues of Micro, Small and Medium enterprises, which are outstanding for more than the stipulated period are given below.

4) The amount of premium on forward exchange contracts to be recognized in the Statement of Profit and Loss in the next financial year is Rs. 4,010,650 /- (Previous Year Rs. 1,457,365/-)

5) Operating Leases: -

(a) Premises taken on Lease

(a) The Company has taken various offices/ shops under operating lease or leave and licence agreements. These are non- cancelable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

(b) Lease Payments recognized in the Statement of Profit and Loss under Rent in Note 24 includes Rs. 279,486,978/- (Previous Year Rs. 257,950,464/-) in respect of premises taken on lease.

(c) The future minimum lease payments under non-cancelable operating lease:

(i) not later than one year is Rs. 7,309,130/- (Previous Year Rs. 37,112,888/-);

(ii) later than one year and not later than five years is Rs. 559,930/- (Previous Year Rs. 15,449,296/-) and

(iii) Later than five years Nil

(b) Premises Given On Lease

(a) The Company has given its premises under operating lease on leave and licence basis. These are cancelable lease and the period ranges between 11 months to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms.

(b) Lease rentals recognized in the Statement of Profit and Loss as Rent income in Note 20 is Rs. 179,200/- (Previous Year Rs. 1,073,100/-)

c) Premises given on licence basis:-

Gross Carrying amount Rs. 4,645,100/- (Previous 4,645,100/-) Accumulated Depreciation Rs. 757,366 /-(Previous Year 681,650 /-) Depreciation for the year Rs. 75,716/- (Previous Year 75,716/-)

The Net Deferred tax charge of Rs. 8,636,105/- (Previous year (credit) Rs. 1,607,299/-) for the year has been recognized in the Statement of Profit and Loss.

The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date.

6) Related Party Disclosures: -

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

(i) Relationships: -

(a) Subsidiary Companies (including sub-subsidiaries): -

Zodiac Finsec and Holdings Ltd.

Zodiac Clothing Company S. A.

Zodiac Clothing Co (U.A.E.) LLC.

Zodiac Clothing Company INC

Zodiac Properties Ltd

(b) Key Management Personnel: -

Mr. M. Y. Noorani

Mr. A. Y. Noorani

Mr. S. Y. Noorani

(c) Other Related Parties:-

i. The enterprises where control of key management personnel and/or their relatives exist and with whom the transactions have taken place :

Zodiac Metropolitan Clothing Gmbh

Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mariambai & Haji Noor Mohamad Noorani Foundation Trust

Mustang Manufacturing Company

Mashal Enterprises

Euro Global Holdings Pte Ltd

Onward LLC

Miraj Marketing Company LLP

ii. Relatives of key management personnel with whom the transactions have taken place :

Mr. Awais A. Noorani

Mr. Musaed A. Noorani

Mrs. Muna A. Noorani

Mrs. Zehra S. Noorani

Mrs. Saniyya A. Noorani

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

7) Derivative Financial Instruments

(a) The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts and out of the money option contracts to manage its exposure in foreign exchange rates. The counter parties are banks. These contracts are for a period between one day and twelve months.

(i) The following are outstanding Foreign Exchange Forward contracts, as on March 31, 2013

(ii) Net Gain on derivative instruments which have been designated as Cash Flow hedges of Rs. 2,593,652/- (Previous Year Net Loss of Rs. 2,020,887/-) recognized in Hedging Reserve as of March 31, 2013, is expected to be reclassified to the Statement of Profit and Loss as and when the same will mature.

(iii) Exchange Loss of Rs. 12,351,812 (Previous Year Loss Rs. 56,904,302/-) has been recognized in the Statement of Profit and Loss for the year ended March 31, 2013.

(b) (i) No derivative instruments are acquired for speculation purposes.

(ii) Foreign currency exposures that are not hedged by derivative instruments or otherwise are Rs. 281,359,801/- (Previous Year Rs. 298,281,546/-) as given below:

8. Excise duty recovered on sales is included in ''Revenue from Operations''. Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced.

9. Previous year''s figures have been regrouped /reclassified wherever necessary to correspond with the current year''s classification/disclosures.

---

Mar 31, 2012

1) Contingent Liabilities: -

a) Guarantee issued by the Bank and counter guaranteed by the Company: Rs. 4,800,659/- (Previous year: Rs. 4,632,913/-).

b) Foreign letters of Credits opened by Bank and counter guaranteed by the Company: Rs. 30,367,959/- (Previous year: Rs. 29,269,060/-).

c) Foreign bills/Letters of Credit discounted with Bank: Rs. 29,787,556./- (Previous year Rs. 4,980,791/-).

d) Disputed demand not provided for in respect of:-

Note: In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 62,809,263/- (Previous Year Rs. 31,636,946/-)

3) Micro, Small and Medium enterprises have been identified by the company on the basis of the information available. Total outstanding dues of Micro, Small and Medium enterprises, which are outstanding for more than the stipulated period are given below.

4) The amount of premium on forward exchange contracts to be recognized in the Statement of Profit and Loss in the next financial year is Rs. 1,457,365/- (Previous Year Rs. 2,781,563/-)

5) Operating Leases: -

A) Premises taken on Lease

a) The Company has taken various offices/shops under operating lease or leave and licence agreements. These are non-cancelable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

b) Lease Payments recognized in the Statement of Profit & Loss under Rent in Note 24 is Rs. 257,950,464/- (Previous Year Rs. 220,418,873/-).

c) The future minimum lease payments under non-cancelable operating lease: (i) not later than one year is Rs. 37,112,888/- (Previous Year Rs. 18,977,662/-); (ii) later than one year and not later than five years is Rs. 15,449,296/- (Previous Year Rs. 1,896,510/-) and

(iii) Later than five years Nil

B) Premises Given On Lease

a) The Company has given its premises under operating lease on leave and licence basis. These are cancelable lease and the period ranges between 11 months to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms.

b) Lease rentals recognized in the Statement of Profit & Loss under Rent in Note 20 is Rs. 1,073,100//- (Previous Year Rs. 916,000/-)

c) Premises given on licence basis:-

Gross Carrying amount Rs. 4,645,100/- (Previous 4,645,100/-) Accumulated Depreciation Rs. 681,650 /- (Previous Year 605,934 /-) Depreciation for the year Rs. 75,716/- (Previous Year 75,716/-)

The Net Deferred tax (Credit)/charge of (Rs. 1,607,299/-) (Previous year Rs. 12,263,460/-) for the year has been recognized in the Statements of Profit and Loss.

The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date.

6) Related Party Disclosures: -

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

I) Relationships: -

a) Subsidiary Companies (including sub-subsidiaries): -

Zodiac Finsec and Holdings Ltd. (previously known as Multiplex Collapsible Tubes Ltd.) Zodiac Clothing Company S. A. Zodiac Clothing Co (U.A.E.) LLC. Zodiac Clothing Company INC Zodiac Properties Ltd

b) Key Management Personnel:- Mr. M. Y. Noorani

Mr. A. Y. Noorani Mr. S. Y Noorani

c) Other Related Parties:-

i. The enterprises where control of key management personnel and/or their relatives exist and with whom the transactions have taken place:

Zodiac Metropolitan Clothing Gmbh

Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mariambai & Haji Noor Mohamad Noorani Foundation Trust

Mustang Manufacturing Company

Mashal Enterprises

Elite Clothing Co.Pvt Ltd

Euro Global Holdings Pte Ltd

Onward LLC

Miraj Marketing Company LLP

(Zodiac Private Limited merged into Miraj Marketing Company Pvt. Ltd. we.f 23.12.2010 and Miraj Marketing Pvt. Ltd. converted into LLP we.f. 24.01.2011)

ii. Relatives of key management personnel with whom the transactions have taken place :

Mr. Awais A. Noorani

Mr. Musaed A. Noorani

Mrs. Muna A. Noorani Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

7) Segment Information: -

Business Segment

The Company is exclusively engaged in the business of Clothing and clothing accessories. This in the context of Accounting Standard (AS 17) "Segment Reporting", notified under the Companies (Accounting Standard) Rules, 2006, constitutes single primary segment.

(ii) Net loss on derivative instruments of Rs. 2,020,887/- (Previous Year Rs. 2,533,663 /-) recognized in Hedging Reserve as of March 31, 2012, is expected to be reclassified to the Statement of Profit and Loss as and when the same will mature.

(iii) Exchange Loss of Rs. 56,904,302/- (Previous Year Gain Rs. 6,247,040/-) on foreign exchange forward contracts has been recognized in the Statement of Profit and Loss for the year ended March 31, 2012.

b) (i) No derivative instruments are acquired for speculation purposes.

(ii) Foreign currency exposures that are not hedged by derivative instruments or otherwise are Rs. 298,281,546/- (Previous Year Rs. 290,006,699) as given below:

(d) The Company has followed the intrinsic value-based method of accounting for stock options granted based on Guidance Note on Accounting for Employees Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 Issued by Securities and Exchange Board of India (SEBI). As the exercise price of the option granted is based on the market price as on the date of the Grant, the intrinsic value of the option is Nil.

(e) Fair Valuation:

The fair value of options used to compute proforma net income and earnings per equity share have been done by an independent firm of Valuers on the date of grant using the BlackScholes Model.

Note: (a) Loans and Advances to employees and investment by such employees in the shares of the company, if any are excluded from the above disclosure.

(b) m respect of the above loans there is no repayment schedule and they are repayable on demand.

(c) No interest is charged in respect of the loan of Rs. - NIL- (Previous Year Rs. 21,560,000).

However, the provisions of Section 372A of the Companies Act, 1956 are not applicable to loans covered under (c) above in view of the loanee being wholly owned subsidiary of the Company.

8. Excise duty recovered on sales is included in 'Revenue from Operations'. Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced.

9. The revised Schedule VI has become effective from 1st April, 2011, for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped /reclassified wherever necessary to correspond with the current year's classification/disclosures.

---

Mar 31, 2011

Current year Previous Year Rupees Rupees

1) Income Tax 36,204,231 27,484,073 (amount paid under protest Rs.21,779,336/-) (Previous Year Rs.26,078,952/-)

2) Sales Tax 10,441,872 10,441,872 (amount paid under protest Rs.6,401,831/-) (Previous Year Rs.6,416,870/-)

3) Apparel Export 2,980,050 2,980,050 Promotion Council for non fulfillment of export obligation against duty free imports

e) Claims against the Company not acknowledged as debts: Rs.1,066,310/- (Previous year Rs.1,066,310/-)

f) Labour disputes not acknowledged as debts: Amount not ascertainable.

Note: In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs.31,636,946/- (Previous Year Rs.20,608,069/-)

3) Micro, Small and Medium enterprises have been identified by the company on the basis of the information available. Total outstanding dues of Micro, Small and Medium enterprises, which are outstanding for more than the stipulated period are given below.

Current year Previous Year Rupees Rupees

(a) Dues Remaining unpaid as on 31st March – Principal 3,164,487 –

Interest – –

(b) Interest paid in terms of section 16 of the Act – –

(c) Amount of interest due and payable for the period of delay on payments made beyond the appointed day during the year – –

(d) Amount of interest accrued and remaining unpaid as on 31st March – –

(e) Further interest due and payable even in the succeeding years until such date when the interest due as above are actually paid to the small enterprises

4) Managerial Remuneration :

a) Managerial Remuneration Under Section 198 of the Companies Act, 1956 paid/payable to the Vice Chairman & Managing Director and The Managing Director & President.

Notes:

1. The Board of Directors has decided to pay commission @ 5% of its net profits as computed under section 349 of the Companies Act, 1956 for the year ended 31st March, 2011 to each of these Managing Directors.

2. Accordingly, provision for commission of Rs.22,500,000/- (Previous year Rs. Nil) has been made in the books which is within the permissible limits under the Companies Act, 1956.

5) The amount of premium on forward exchange contracts to be recognised in the profit and loss account in the next financial year is Rs.2,781,563/- (Previous Year Rs.1,665,087/-)

7) Operating Leases:

A) Premises taken on Lease

a) The Company has taken various offices/shops under operating lease or leave and licence agreements. These are non-cancellable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

b) Lease Payments recognized in the statement of Profit & Loss Account under Rent in Schedule 15 is Rs.220,418,873/- (Previous Year Rs.193,544,934/-).

c) The future minimum lease payments under non-cancellable operating lease :

(i) not later than one year is Rs.18,977,662/- (Previous Year Rs.41,648,201/-);

(ii) later than one year and not later than five years is Rs.1,896,510/- (Previous Year Rs.6,702,612/-) and (iii) Later than five years Nil (Previous Year Rs. Nil)

B) Premises Given On Lease

a) The Company has given its premises under operating lease on leave and licence basis. These are cancellable lease and the period ranges between 11 months to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms.

b) Lease rentals recognized in the statement of Profit & Loss Account under Rent in Schedule 13 is Rs.916,000/- (Previous Year Rs.1,067,150/-)

c) Premises given on licence basis:

Gross Carrying amount Rs.4,645,100/- (Previous Year Rs.6,967,650/-)

Accumulated Depreciation Rs.605,934/- (Previous Year Rs.795,330/-)

Depreciation for the year Rs.75,716/- (Previous Year Rs.113,574/-)

5) Remittance in Foreign Currencies on Account of Dividend:

b) Except for the above Shareholders, the Company has not made any remittance in foreign currency on account of dividend during the year and does not have information as to the extent to which remittance in foreign currency on account of dividend have been made by or on behalf of non-resident shareholders.

6) Deferred Tax:

The Net Deferred tax charge of Rs.12,263,460/- (Previous year Rs.728,768/-) for the year has been recognized in the Profit and Loss Account.

The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date.

7) Related Party Disclosures:

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

I) Relationships:

a) Subsidiary Companies (including sub-subsidiaries):

Multiplex Collapsible Tubes Limited.

Zodiac Clothing Company S. A.

Zodiac Clothing Co. (U.A.E.) LLC.

Zodiac Clothing Company INC

Zodiac Properties Ltd.

b) Key Management Personnel:

Mr. M. Y. Noorani

Mr. A. Y. Noorani

Mr. S. Y. Noorani

c) Other Related Parties:

i. The enterprises where control of key management personnel and/or their relatives exist and with whom the transactions have taken place :

Zodiac Private Limited

Miraj Marketing Company Private Limited

Zodiac Metropolitan Clothing Gmbh

Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mariambai & Haji Noor Mohamad Noorani Foundation Trust

Mustang Manufacturing Company

Mashal Enterprises Elite Clothing Co. Pvt. Ltd.

Euro Global Holdings Pte. Ltd.

Onward LLC

Miraj Marketing Company LLP

ii. Relatives of key management personnel with whom the transactions have taken place :

Mr. Awais A. Noorani

Mr. Musaed A. Noorani

Mrs. Muna A. Noorani

Note: Related party relationship is as identifed by the Company and relied upon by the Auditors.

8) Segment Information:

Business Segment

The Company is exclusively engaged in the business of Clothing and clothing accessories. This in the context of Accounting Standard (AS 17) "Segment Reporting", notified under the Companies (Accounting Standard) Rules, 2006, constitutes one single primary segment.

9) Derivative Financial Instruments

a) The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign exchange rates. The counter party is a bank. These contracts are for a period between one day and thirty eight months.

(ii) Net loss on derivative instruments of Rs.2,533,663/- (Previous Year Rs.433,784/-) recognised in Hedging Reserve as of March 31, 2011 is expected to be reclassified to the profit and loss account as and when the same will mature.

(iii) Exchange Gain of Rs.3,525,659/- (Previous Year Rs.1,418,787/-) on foreign exchange forward contracts has been recognized in the Profit and Loss Account for the year ended March 31, 2011.

b) (i) No derivative instruments are acquired for speculation purposes.

(ii) Foreign currency exposures that are not hedged by derivative instruments or otherwise are Rs.290,006,699/- (Previous Year Rs.180,803,685/-) as given below:

23) Under the Zodiac Clothing Company Limited Employees Stock Option Plan 2006 the Company had granted 668,900 (adjusted for bonus issue) (Previous Year 291,000) options to its eligible employees in two Grants upto the year ended March 31, 2011 the details are as follows:

(d) The Company has followed the intrinsic value-based method of accounting for stock options granted based on Guidance Note on Accounting for Employees Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 Issued by Securities And Exchange Board of India (SEBI). As the exercise price of the option granted is based on the market price as on the date of the Grant, the intrinsic value of the option is Nil.

(e) Fair value of Options calculated by external valuer using Black Scholes Model is Rs.102.68 (For Grant 1) and Rs.150.44 (For Grant 2) which is lower than the exercise price and hence these options are considered to be anti- dilutive in nature and the effect of this is ignored in calculating diluted earnings per share in accordance with Accounting Standard 20 viz. Earnings Per Share notified under the Companies (Accounting Standard) Rules, 2006

(d) Fair Valuation:

The fair value of options used to compute proforma net income and earnings per equity share have been done by an independent firm of Valuers on the date of grant using the Black Scholes Model.

10) Disclosure as per Clause 32 of the Listing Agreement:

Note: (a) Loans and Advances to employees and investment by such employees in the shares of the company, if any are excluded from the above disclosure.

(b) In respect of the above loans there is no repayment schedule and they are repayable on demand.

(c) In respect of the loan of Rs.21,560,000/- (Previous Year Rs. Nil), no interest is charged.

However, the provisions of Section 372A of the Companies Act, 1956 are not applicable to loans covered under (c) above in view of the loanee being wholly owned subsidiary of the Company.

However, details of experience adjustment for the prior years are not readily available in valuation reports and hence not furnished.

11) (I) Disclosure in respect of gratuity liability

Notes:

i. Premium is paid to LIC under Group Gratuity Scheme of LIC.

ii. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iv. Contributions expected to be paid to the plan during the annual period beginning after the Balance Sheet date: Rs. 9,943,824/- (Previous Year Rs. 10,566,908/-)

v. The expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risks of asset management and historical result of the return on plan asset.

12) Excise duty recovered on sales is included in 'Sales'. Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced.

13) Previous year's figures have been regrouped and reclassified wherever necessary to Confirm to figures of the current year.

---

Mar 31, 2010

1) Contingent Liabilities:

a) Guarantee issued by the Bank and counter guaranteed by the Company: Rs.6,621,567/- (Previous year: Rs.6,421,567/-).

b) Foreign letters of Credits opened by Bank and counter guaranteed by the Company: Rs. 13,073,806/- (Previous year: Rs. 11,164,129/-).

c) Foreign bills/Letters of Credit discounted with Bank: Rs26,689,108./- (Previous year Rs.5,093,714/-)

d) Disputed demand not provided for in resDect of:

Current Previous Year Year Rupees Rupees

1) Income Tax 27,484,073 31,896,473 (amount paid under protest Rs.26,078,952/-) (Previous Year Rs.24,766,099/-

2) Sales Tax (amount 10,441,872 2,626,899 paid under protest Rs.6,416,870/-) (Previous Year Rs.138,709/-)

3) Apparel Export 2,980,050 2,980,050 Promotion Council for non fulfillment of export obligation against duty free imports

e) Claims against the Company not acknowledged as debts: Rs. 1,066,310/- (Previous year Rs.8,204,270/-)

f) Labour disputes not acknowledged as debts: Amount not ascertainable.

ote: In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs 20,608,069/- (Previous Year Rs 7,821,806/-)

3) The Company has requested its suppliers to confirm the status as to whether they are covered under the Micro, Small and Medium Enterprises Development Act, 2006. Few suppliers have confirmed that they are not covered under the said Act . In the absence of confirmation from the suppliers, disclosures relating to amount unpaid as at year end together with interest paid/payable as required under the said Act have not been given.

4) Issue of Warrants to Promoters

A total of 4,40,000 Warrants were allotted on preferential basis on 15th January 2008 to certain promoters of the company which were excercisable within a period of 18 months from the date of allotment into an equal number of paid up equity shares subject to the condition that the promoters holding on conversion is within the prescribed limit under SEBI (Substantial Acquisition & Takeover), Regulation (SAST) 1997. Those promoters could not opt for conversion as this would have made their holding cross the limit prescribed under SAST Act 1997, The amount of Rs 17,600,000/- paid by those promoters therefore stood forfeited on 15th July, 2009 i.e. on the expiry of 18 months.The forfeited amount has been credited to Capital Reserve Account. The funds raised through the Preferential issue of warrants have been utilized for working capital requirements.

5) The amount of premium on forward exchange contracts to be recognised in the profit and loss account in the next financial year is Rs. 1,665,087/- (Previous Year Rs. 1,010,247/-

6) Operating Leases:

A) Premises taken on Lease

a) The Company has taken various offices/shops under operating lease or leave and licence agreements. These are non-cancelable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

b) Lease Payments recognized in the statement of Profit & Loss Account under Rent in Schedule 14 is Rs. 193,544,934/- (Previous Year Rs. 170,245,532/- ).

c) The future minimum lease payments under non-cancellable operating lease : (i) not later than one year is Rs.41,648,201 (Previous Year Rs.28,750,406/-);

(ii) later than one year and not later than five years is Rs.6,702,612/- (Previous Year Rs.9,629,860/-) and (iii) Later than five years Nil.

B) Premises Given On Lease

a) The Company has given its premises under operating lease on leave and licence basis. These are cancelable lease and the period ranges between 11 month to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms.

b) Lease rentals recognized in the statement of Profit & Loss Account under Rent in Schedule 12 is Rs. 1,067,150/-

The Net Deferred tax charge of Rs.728,768/- (Previous year Rs. 1,410,447/-) for the year has been recognized in the Profit and Loss Account.

The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date.

7) Related Party Disclosures:

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

I) Relationships:

a) Subsidiary Companies (including sub-subsidiaries): Multiplex Collapsible Tubes Limited.

Zodiac Clothing Company S. A.

Zodiac Clothing Co. (U.A.E.) LLC.

Zodiac Clothing Company INC

Zodiac Properties Ltd. ( Subsidiary w.e.f 22nd November, 2009)

b) Key Management Personnel: Mr. M. Y. Noorani

Mr. A. Y. Noorani Mr. S. Y Noorani

c) Other Related Parties:-

i. The enterprises where control of key management personnel and/or their relatives exist and with whom the transactions have taken place :

Zodiac Private Limited

Miraj Marketing Company Private Limited

Zodiac Metropolitan Clothing Gmbh

Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mariambai & Haji Noor Mohamad Noorani Foundation Trust

Mustang Manufacturing Company

Mashal Enterprises

Elite Clothing Co.Pvt Ltd.

Euro Global Holdings Pte Ltd.

Onward LLC

ii. Relatives of key management personnel with whom the transactions have taken place : Mr. Awais A. Noorani Mr. Musaed A. Noorani Mrs. Muna A. Noorani

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

8) Segment Information: Business Segment The Compay is exclusively engand in the business of Clothing and clothing.This in the context of Accounting Standard (AS 17) "Segment Reporting" notifield under the Companies (Accouning Standard) Rules,2006, consitutes one single primary segment.

9) Derivative Financial Instruments

a) The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign exchange rates. The counter party is a bank. These contracts are for a period between one day and thirty eight months .

(i) The following are outstanding Foreign Exchange Forward contracts, which have been designated as Cash Flow Hedges, as on March 31, 2010

(ii) Net loss on derivative instruments of Rs.433,784/- (Previous Year Rs.60,979,099/- ) recognised in Hedging Reserve as of March 31, 2010, is expected to be reclassified to the profit and loss account as and when the same will mature.

(iii) Exchange (Gain)/Loss of Rs. (l,418,787/-)/-(Previous Year Rs. 147,824,655/-) on foreign exchange forward contracts have been recognized in the Profit and Loss Account for the year ended March 31, 2010.

b) (i) No derivative instruments are acquired for speculation purposes.

(ii) Foreign currency exposure that are not hedged by derivative instruments or otherwise are Rs. 180,803,685/- (Previous Year Rs.93,657,847/-) as given below:

10) Employee Stock Option Scheme (ESOP)

a) As approved by the Shareholders of the Company in their meeting held on 31.08.2006, during 2006-07, the Company had granted 291,000 options under ESOP 2006 duly approved by the Compensation Committee of the Board of the Company. Details of same are as under:

b) The Company has followed the intrinsic value-based method of accounting for stock options granted based on Guidance Note on Accounting for Employees Share-based Payments, notified under the Companies (Accounting Standard) Rules, 2006. As the exercise price of the option granted is based on the market price as on the date of the Grant, the intrinsic value of the option is Nil.

c) Fair value of Options calculated by external valuer using Black Scholes Model is Rs. 102.68, which is lower than the exercise price and hence these options are considered to be anti-dilutive in nature and the effect of this is ignored in calculating diluted earnings per share in accordance with Accounting Standard 20 viz. Earnings Per share notified under the Companies (Accounting Standard) Rules, 2006.

d) Had the company followed fair value method for accounting the stock option, compensation expenses would have been higher by Rs Nil (Previous Year Rs.87.86 lakhs) and consequently profit after tax would have been lower by Rs Nil (Previous Year Rs.57.60 lakhs) and Basic & Diluted Earning per share would have been lower by Rs.Nil (Previous Year Rs 0.69) per share& Rs Nil(Previous Year Rs 0.65) per share respectively

e) Method and significant assumptions used to estimate the Fair Value of the Options are as under:

The Fair value of Options has been calculated by an independent valuer. The valuation has been done using the Black - Scholes model based on the assumptions given by the management, which are as under:

i. Expected Life of the Options:

These stock options will vest on expiry of one year in the following proportion from the date of grant and can be exercised during a period of three years from the date of vesting.

Year 2 from the date of Grant - 30% of the Options Granted;

Year 3 from the date of Grant - 30% of the Options Granted;

Year 4 from the date of Grant - 40% of the Options Granted

ii. Risk free interest rate:

This rate has been assumed at 7.67% for the first year, 7.62% for the second year and 7.59% for the third year.

iii. Share price:

It is the market price on the National Stock Exchange of India Limited (exchange on which highest volume for the Companys shares was recorded) with reference to the date of options granted .

iv. Volatility:

Volatility is calculated based on the period to represent a consistent trend in the price movement after adjusting abnormal events, if any at 45.22% for the first year, 50.51% for the second year and 51.13% for the third year.

v. Expected dividend yield:

Dividend per share/Market price of the share on the Grant Date is 2.49%.

Note: Loans and Advances to employees and investment by such employees in the shares of the company, if any are excluded from the above disclosure.

Notes:

i. The Fair Value of Plan assets in the above computation includes the funds of the following Companies that merged with the company as per the details given below

However, the above balances have not yet been transferred by Life Insurance Corporation of India (LIC) in favour of the company. ii. ii.Premium is paid to LIC under Group Gratuity Scheme of LIC.

iii. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iv. The details of experience adjustments on account of Plan Liability and Plan Assetas required by Para 120 (n) (ii) of AS-15 is Rs 1,755,002/- (Previous Year Rs.4,209,940/-) and Rs 216,807/- (Previous Year (Rs. 408,244/- )) respectively. However, details of experience adjustment for the prior years are not readily available in valuation reports and hence not furnished.

v. Contributions expected to be paid to the plan during the annual period beginning after the Balance Sheet date: Rs 10,566,908/-(Previous Year Rs.8,946,782/-)

vi. The expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risks of asset management and historical result of the return on plan asset.