Notes to Accounts of Celebrity Fashions Ltd.

Mar 31, 2024

The company has accupied the leased building for factory, the lease period, ranges from 2-7 years, lease terms included for workings is the non-cancellable period and expected lease term.

Company has excercised the option of short term leases and low value asset exemption.

Extension and termination options

Extension options has been included in a certain of leases. These are used to maximise operational flexibility in terms of managing the assets used in the Company''s operations.

Critical judgements in determining the lease term

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

For leases of factory building, the following are normally the most relevant:

• If there are significant penalties to terminate or not extend, the Company is typically reasonably certain to extend.

• If the leasehold improvements are expected to have a significant remaining value, the Company is typically reasonably certain to extend.

• Otherwise, the Company considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset.

The lease term is reassessed if an option is actually exercised or not exercised, or the Company becomes obliged to exercise or not exercise. The assessment of reasonable certainty is only revised if

a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

The Company has adopted Ind AS 116 ‘Leases'' with the date of initial application being April 1,2019. Ind AS 116 replaces Ind AS 17 - Leases. The Company has applied Ind AS 116 using the modified retrospective approach with cumulative effect of initial application recognised in retained earnings at April 1,2019. The comparative information in the financial statements would not be restated and would be presented based on the requirements of the previous standard i.e. Ind AS 17.

In adopting Ind AS 116, the Company has applied the below practical expedients:

• The company has not reassessed whether a contract is, or contains, a lease as per the definitions of Ind AS 116 at the date of initial application.

• The company applied a single discount rate to a portfolio of leases with reasonably similar characteristics.

• The company relied on its assessment of whether leases are onerous applying Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets, immediately before the date of initial application as an alternative to performing an impairment review as per Ind AS 36 Impairment of assets.

• The Company has treated the leases with remaining lease term of less than 12 months as “short term leases”.

• The Company has excluded the initial direct costs from measurement of the right-of-use asset at the” date of transition.

• The company used hindsight, such as in determining the lease term if the contract contains options to extend or terminate the lease.

Effective 1st April 2019, the company has adopted Ind AS 116

“Leases” and applied the Standard to its leases retrospectively and

has recognised the effect of the cumulative adjustment (net of taxes) of Rs.3.25 Crores in the opening balance of retained earnings, on the date of initial application (1st April 2019). Accordingly, comparatives for the period prior has not been restated.

The adoption of the Standard has resulted in recognising “Right-of-use asset” of Rs. 20.83 crores and a corresponding “Lease liability” of Rs. 20.83 crores as at the date of initial application. The net impact on retained earnings on 1st April 2019 is Nil.

c Rights, Preferences and Restrictions attached to equity Shares

Equity Shares having a par value of ''10/- each with voting rights. Each holder of Equity Shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive any of the remaining assets of the Company in proportion to the number of Equity Shares held by the shareholders, after distribution of all preferential amounts.

The above facilities in the form of Term Loans, Export Packing Credit, Cash Credit and Export Bills Discounting facility are secured by way of charge on the inventories of the Company in the form of Raw Materials, Stock in Process and Finished Goods, Receivables and Other Current Assets. The Loans are additionally Secured by the following collaterals :

Hypothecation charge of the entire plant & machinery

Equitable mortgage over leasing rights of land (2.306 acres) and building (168050 Sq.ft) at plot no.C-2, Phase - II,

Pledge of 1,41,68,540 shares belonging to the Promoter Directors Personal Guarantee of Promoter Directors & Managing Director

There were no pending obligations on interest and debt repayment to the lender, State Bank of India as on 31st March 2024

The Company had issued 2,51,04,500 1% Cumulative Redeemable Preference Shares of Rs.10/- each to State Bank of India redeemable in five equal instalments between FY22 to FY26 . The second Instalment due on March 31,2023 is redeemed on April 29, 2023. And the third instalment due on March 31,2024 is redeemed on March 26, 2024 out of proceeds from preferential allotment of equity shares made on March 31,2023 and March 20, 2024 respectively.

REVENUE FROM OPERATIONS (GROSS)

Revenue from contracts with customers are disaggregated into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company identifies geography, amongst others to indicate the factors as mentioned above.

The operations of the Company relate to only one segment viz., garment manufacturing. Thus, the information on the relationship between disaggregated revenue under Ind AS 115 and for reportable segment under Ind AS 108 is not required.

Transaction price allocated to the remaining performance obligations

The Company''s contracts with customers are short term contracts with performance obligations that has an original expected duration of one year or less. Therefore, taking the practical expedient, the details on transaction price allocated to the remaining performance obligations are not disclosed.

There is no impact on the retained earnings as on the date of adoption of the standard. There is no effect on any financial statement line item due to application of this standard and there is no requirement to disclose the same.

Auditors'' Remuneration includes ?4.50 lakhs (Previous Year ?4.50 lakhs) against Statutory Audit, ?1.00 lakhs (Previous Year ?1.00 lakhs) against Tax Audit. Secretarial Audit Fee ?1.15 lakhs (Previous year?1.15 lakhs).

An amount of ?0.20 lakhs (Previous Year ?0.30 lakhs) was paid to the Auditors towards certification, out-of-pocket expenses and for representation in taxation matters and Tax Audit and the same is classified under Consultancy Charges.

Provision for Variable Bonus of ?. 24 lakhs to Managing Director has been included Directors Remuneration, (Previous Year ?. 24 lakhs classified under Bonus).

(a) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

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

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

There are no transfers between levels 1 and 2 during the year.

The company''s policy is to recognise transfers in and transfers out of fair value hierarchy levels as at the end of the reporting period.

(b) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include the use of quoted market prices or dealer quotes for similar instruments The carrying amounts of trade receivables, trade payables, cash and cash equivalents and other current financial liabilities are considered to be the same as their fair values, due to their short-term nature.

33. Financial risk management

The company''s activities expose it to market risk, liquidity risk and credit risk.

A. Credit risk

Company faces credit risk from cash and cash equivalents, deposits with banks and financial institutions and unsecured trade receivables. The company doesn''t face any credit risk with other financial assets.

(i) Credit risk management

Credit risk on deposit is mitigated by depositing the funds in reputed private sector bank. For trade receivables, the primary source of credit risk is that these are unsecured.The Company sells the products to customers only when the collection of trade receivables is certain and whether there has been a significant increase in the credit risk on an on-going basis is monitored throughout each reporting period. As at the balance sheet date, based on the credit assessment the historical trend of low default is expected to continue. An impairment analysis is performed at each reporting date on an individual basis for major clients. Any recoverability of receivables is provided for based on the impairment assessment. Historical trends showed as at 31st March 2024 company had no significant credit.

B. Liquidity risk

Objective of liquidity risk management is to maintain sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Management monitors rolling forecasts of the company''s liquidity position and cash and cash equivalents on the basis of expected cash flows.

(i) Maturities of financial liabilities

The tables below analyse the company''s financial liabilities into relevant maturity groupings based on their contractual maturities for:

a) all non-derivative financial liabilities, and

b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

C.Market risk

(i) Foreign currency risk

The company activities exposes it to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and EURO Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The company''s exposure to foreign currency risk at the end of the reporting period expressed in INR, are as follows:

34. Capital management (a) Risk management

The company''s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, The company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

35. Segment Information

(All amounts in ''Crores unless otherwise stated)

The company is primarily in the business of manufacturing and export of garments to reputed multinational brand. Chief Operating Decision Makers (CODM) evaluates the company''s performance and allocate resources based on the analysis of various performance indicators of the company as single unit. Therefore there is only single reportable segment for the Company. Company is domiciled in India.

The Company has identified Geographical Segment as the secondary segment which consists of:

Revenue directly attributable to segments is reported based on items that are individually identifiable to that segment. The Company believes that it is not practical to allocate segment expenses, segment results, assets used, except trade receivables, in the Company''s business or liabilities contracted since the resources / services/ assets are used interchangeably within the segments. All fixed assets are located in India. Accordingly, no secondary segmental information is disclosed.

36 The company has significant accumulated losses. In this connection, the company has implemented various initiatives to improve on the efficiencies and control the losses. In view of the various strategic initiatives that the Company is exploring, it is confident of being able to continue and operate the business on a “Going Concern” basis and accordingly the financial statements have been prepared on the same lines.

37 Some balances of Trade/Other receivables, Trade/Other Payables and Loans and Advances are subject to confirmation/reconciliation. Adjustments (if any) will be accounted for on confirmation/reconciliation of the same. In the opinion of the Board of Directors this will not have a material adverse impact on the Company''s financial position and results of operations.

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the opinion that the demands are likely to be deleted and consequently no provision has been made for such demands. The Management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company''s financial position and results of operations.

d In terms of the “Master Restructuring Agreement dated August 11,2015 (“MRA”) entered into between SBI and CFL, with an effective date of March 31,2011, SBI had extended concessional interest rate for the credit facilities sanctioned and has preferred a recompense claim against CFL vide the above stated agreement. The estimated contingent liability of the Recompense amount, as on 31st Mar''21, has been determined at Rs.56.19 Cr. This amount may be payable in future, based on profits and cash flows, in the manner to be determined between CFL and SBI. The exact modalities shall be detailed once the technical matters related to payment of agreed settlement amount reaches a finality between parties.

The Sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occuring at the end of the reporting period holding all other assumptions constant

The sensitivity analysis presented above may not be representative of the actual change in the Defined Benefit Obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated

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

#1 The Net Equity has increased due to additional equity allotment and Debt has reduced on Redemption of 1%CRPS. #2 Significant reduction in Working Capital Loan and repayment of 2 tranches of CRPS has impacted DSCR.

#3 The equity has gone up by 27% and reduction in revenue has impacted PAT.

#4 Regulated the supply chain process and inventory levels are maintained at optimum level.

#5 Increase in Debtors has impacted net capital turnover.

#6 Decreased revenue and Increase in Rate of Interest & Employee Cost has effected in Net Profit Ratio.

b The Title deeds of the immovable properties (other than properties where the Company is the lessee and the lease agreement with MEPZ - SEZ has expired on 31-12-2022 Approval has been received from The Development Commissioner and Chariperson, MEPZ - SEZ, Chennai - 600045 for renewal of the lease from 01/01/2023 and the lease agreement are executed and registered on 22/06/2023) are held in the name of the Company.

c The Company has not granted Loans or Advances in the nature of loan to any promoters, Directors, KMPs and the related parties (As per Companies Act, 2013), which are repayable on demand or period of repayments.

d In the opinion of the Management , Current Assets, Loans and Advances have a value of at least equal to the amounts shown in the Balance Sheet, if realized in the due course of the business. The provision for all liabilities is adequate and not in excess of the amount reasonably necessary.

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

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

g The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,

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

i The Company has sanctioned facilities from banks on the basis of security of current assets. The periodic returns filed by the Company

with such banks are in agreement with the books of accounts of the Company except for quarter 1and quarter 2. The company has followed the instruction from bank and submitted the stock statement in value to the extent its eligible for Drawing power and however the differential quantities are declared separately under “Stock not Considered for DP” and disclose entire stocks in quantities in stock statement as per books of accounts.

j The Company has adhered to debt repayment and interest service obligations on time. “wilful defaulter” related disclosures required as per Additional Regulatory Information of Schedule III (revised) to the Companies Act, is not applicable.

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

l 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:

(a) 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

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

m 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:

(a) 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

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

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

o The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

50 The figures / percentages / ratios for the previous period have been reclassified / reworked / regrouped wherever necessary including for

amendments relating to Schedule III of the Companies Act, 2013 for better understanding and comparability.

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Mar 31, 2018

c Rights, Preferences and Restrictions attached to equity Shares

Equity Shares having a par value of Rs.10/- each with voting rights. Each holder of Equity Shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive any of the remaining assets of the Company in proportion to the number of Equity Shares held by the shareholders, after distribution of all preferential amounts.

Securities Premium: Reserve represent the premium received on issues of securities, the same is available for use as per Companies Act, 2013.

Retained earnings: Company’s cumulative earnings since its formation minus the dividends/capitalisation and earnings transferred to general reserve.

The shareholders of the Company vide resolution dated 12th February 2017 have approved the issue of Convertible Warrants on Preferential basis to the Promoter Directors / Director of the Company.

Accordingly, the Company had issued 5,696,756 (Fifty Six Lakh Ninety Six Thousand Seven Hundred and Fifty Six) Warrants Convertible into Equity Shares, to the Promoter Directors / Director of the Company on preferential basis, Each Warrant is convertible into one equity share at a conversion price of Rs.11.41 per share, including a premium of Rs.1.41 on each share of Face Value of Rs.10/-. The right vested shall be exercised not later than 18 months from the date of allotment in accordance with the SEBI (ICDR) Regulations, 2015. The prospective allottees had paid Rs.16,250,000 towards 25% value of total consideration payable for the Warrants. In case of non exercise of warrants within the period of 18 months, the same shall stand forfeited and the money received against the same shall not be refunded by the Company.

a Rights, Preferences and Restrictions attached to Preference shares

The Cumulative Redeemable Preference Shares carry a dividend of 1% p.a. and will be redeemed in 5 equal annual installments starting with the financial year 2022.

The Company has not received any Memorandum (as required to be filed by the Supplier with the notified authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status as on 31st March 2018 as Micro, Small or Medium Enterprises (MSME).

Consequently the amount payable to these enterprises during the year is Rs.NIL (Previous Year Rs.NIL). There are no interest due or outstanding on the same.

Others include Bills Acceptances of Rs.14.03 crs (Previous Year Rs.7.21 crs)

Auditors'' Remuneration includes Rs.4.50 lakhs (Previous Year Rs.5.10 lakhs) against Statutory Audit, Rs.0.70 lakhs (Previous Year Rs.0.70 lakhs) against Tax Audit. Secretarial Audit Fee Rs.1.00 lakhs (Previous year Rs.1.00 lakhs)

An amount of Rs.0.40 lakhs (Previous Year Rs.5.93 lakhs) was paid to the Auditors towards certification, out-of-pocket expenses and for representation in taxation matters and Tax Audit and the same is classified under Consultancy Charges.

Directors Sitting Fee of Rs.0.65 lakhs (Previous year Rs.0.59 lakhs ) is grouped under Other Miscellaneous expenses.

Expense:

The Minimum Wages revision by the Tamilnadu Government effective December 2014 was upheld by the Hon’ble High Court of Madras and accordingly the Company has paid Rs.5.78 crs as arrears wages during the previous year. The same has been excluded from the above Employee expenses and has been grouped under Exceptional Items in the Statement of Profit and Loss.

Interest rates on Term Loans was reset by Company’s lender during the previous year. This has resulted in the Company being liable for an interest differential amounting to Rs.2.44 crs on Term Loans availed upto March 31, 2016. This was as a consequence of the Bank levying interest above the rates specified in the restructuring package sanctioned to the Company in November 2012.

1. The company has significant accumulated losses. In this connection, the company has implemented various initiatives to improve on the efficiencies and control the losses.

In view of the various strategic initiatives that the Company is exploring, it is confident of being able to continue and operate the business on a “Going Concern” basis and accordingly the financial statements have been prepared on the same lines

2. Some balances of Trade/Other receivables, Trade/Other Payables and Loans and Advances are subject to confirmation/reconciliation. Adjustments (if any) will be accounted for on confirmation/reconciliation of the same. In the opinion of the Board of Directors this will not have a material adverse impact on the Company’s financial position and results of operations.

Note :-

The Company has not received any memorandum from (as required to be filed by the supplier with the notified authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status as on 31st March 2018 as Micro, Small or Medium Enterprises. Consequently, the Company has no amounts payable to Micro and Small enterprises as defined in section 7(1) of the Micro, Small and Medium Enterprises Development Act ,2006, to the extent such parties have been identified on the basis of information collected by the management. This has been relied upon by the auditors.

3. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the opinion that the demands are likely to be deleted and consequently no provision has been made for such demands. The Management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company’s financial position and results of operations.

d The Banks have extended concessional interest rate for the credit facilities sanctioned to the Company for the period upto 31st March 2017. As per the terms of the Sanction letter, Banks have the right to be recompensated in future for the sacrifice extended.

4. In respect of amounts mentioned under section 125 of the Companies Act, 2013 there are no dues that are required to be transferred to Investor Education and Protection Fund as at March 31, 2018 (March 31, 2017 Rs. NIL)

5. EMPLOYEE BENEFIT PLAN - GRATUITY

The employees’ gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on the actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

6. SEGMENT REPORTING

The Company has considered business segment as the primary segment for disclosure. The Company is primarily engaged in a single segment business of manufacture and sale of garments and is managed as one entity for its sale and is governed by a similar set of risks and return. Hence, no additional disclosures are required, other than those already given in the Financial Statements.

The Company has identified Geographical Segment as the secondary segment which consists of:

a) Domestic (Sales to customers located in India)

b) International (Sales to customers located outside India)

Revenue directly attributable to segments is reported based on items that are individually identifiable to that segment. The Company believes that it is not practical to allocate segment expenses, segment results, assets used, except trade receivables, in the Company’s business or liabilities contracted since the resources/ services/ assets are used interchangeably within the segments. All fixed assets are located in India. Accordingly, no secondary segmental information is disclosed.

b Previous year figures have been regrouped, reworked and reclassified wherever necessary to conform to current year classification.

c In the opinion of the Management , Current Assets, Loans and Advances have a value of at least equal to the amounts shown in the Balance Sheet, if realized in the due course of the business. The provision for all liabilities is adequate and not in excess of the amount reasonably necessary.

(i) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

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

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

There are no transfers between levels 1 and 2 during the year.

The company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include the use of quoted market prices or dealer quotes for similar instruments The carrying amounts of trade receivables, trade payables, cash and cash equivalents and other current financial liabilities are considered to be the same as their fair values, due to their short-term nature.

Capital management

(a) Risk management

The company’s objectives when managing capital are to

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

-maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, The company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Financial risk management

The company’s activities expose it to market risk, liquidity risk and credit risk.

A. Credit risk

Company faces credit risk from cash and cash equivalents, deposits with banks and financial institutions and unsecured trade receivables. The company doesn’t face any credit risk with other financial assets.

(i) Credit risk management

Credit risk on deposit is mitigated by depositing the funds in reputed private sector bank. For trade receivables, the primary source of credit risk is that these are unsecured. The Company sells the products to customers only when the collection of trade receivables is certain and whether there has been a significant increase in the credit risk on an on-going basis is monitored throughout each reporting period. As at the balance sheet date, based on the credit assessment the historical trend of low default is expected to continue. An impairment analysis is performed at each reporting date on an individual basis for major clients. Any recoverability of receivables is provided for based on the impairment assessment. Historical trends showed as at the transition date and 31st March 2017 company had no significant credit.

B. Liquidity risk

Objective of liquidity risk management is to maintain sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Management monitors rolling forecasts of The company’s liquidity position and cash and cash equivalents on the basis of expected cash flows.

(ii) Maturities of financial liabilities

The tables below analyse The company’s financial liabilities into relevant maturity groupings based on their contractual maturities for:

a) all non-derivative financial liabilities, and

b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual undiscounted cash flows.

Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

C. Market risk

(i) Foreign currency risk

The company activities exposes it to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and EURO Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company’s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The company’s exposure to foreign currency risk at the end of the reporting period expressed in INR, are as follows:

Segment Information

The company is primarily is in the business of manufacturing and export of garments to reputed multinational brand. Chief Operating Decision Makers (CODM) evaluates the company’s performance and allocate resources based on the analysis of various performance indicators of the company as single unit. Therefore there is only single reportable segment for the Company. Company is domiciled in India.

First-time adoption of Ind AS Transition to Ind AS

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

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (The company’s date of transition). In preparing its opening Ind AS balance sheet, The company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).

An explanation of how the transition from previous GAAP to Ind AS has affected The company’s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

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

A.1 Ind AS optional exemptions A.1.1 Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities.

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

A.1.2 Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS. The company has elected to apply this exemption for its investment in equity investments.

A.2 Ind AS mandatory exceptions

A.2.1 Estimates

An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 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:

Estimation of expected credit loss

A.2.2 De-recognition of financial assets and liabilities

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

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

A.2.3 Classification and measurement of financial assets

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

C: Notes to first-time adoption:

Note 1: Investment Property

Under the previous GAAP, investment properties were presented as part of non-current investments. Under Ind AS, investment properties are required to be separately presented on the face of the balance sheet. There is no impact on the total equity or profit as a result of this adjustment.

Note 2: Preference shares

Under the previous GAAP, Cumulative redeemable preference shares were classified as part of equity, under Ind-AS 109, the same has been classified as borrowings, Consequent to this equity has reduced by Rs.25.10 crores as at April 1, 2016 and March 31, 2017.

Note 3: Interest accounted on EIR basis on Preference shares

Under the previous GAAP, un-declared dividend was shown as contingent liability, consequent change in classification of preference shares interest has been accounted as per effective interest rate method. The above reduced the equity by Rs.0.88 crores as at 31 March 2017 (April 1, 2016 Rs.0.63 crores).

Note 4: Revenue

On adoption offf Ind AS, company has reassessed it revenue recognition and has de-recognised where it had continuing managerial involvement post the sale. Consequently, the total equity as at 31 March 2017 decreased by Rs.32. 29 (1 April 2016 Rs.14.71) and profit for the year ended 31 March 2017 decreased by Rs.19.51.

Note 5: Remeasurements of post-employment benefit obligations

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 recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. There is no impact in overall equity due to above adjustment.

Note 6: Mark to Market of Forward contracts

Under previous GAAP premium on forward contracts were amortised over the tenor, under Ind AS the forward contracts are marked to market, Profit for the year 31 March 2017 decreased by Rs.0.03 and equity reduced by NIL as at 31 March 2017, equity increased by Rs.0.03 as at 1 April, 2016.

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Mar 31, 2016

NOTES TO THE ACCOUNTS AS AT 31ST MARCH 2016

1 Significant Accounting Policies

1 Basis of Preparation of Financial Statements

These financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention on accrual basis. GAAP comprises of mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The financial statements are presented in Indian rupees rounded of to the nearest rupee in crores.

2 Use of Estimates

The preparation of the financial statements in conformity of the GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of financial statements and reported amounts of income and expenses during the period. Although these estimates are based upon the management best knowledge of current events and actions, actual results could differ from those estimates. Appropriate changes in estimates are made as the management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and if material their effects are disclosed in the notes to the financial statements.

3 Revenue Recognition

Revenue is recognized only when risks and rewards incidental to ownership are transferred to the customer, it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes Sales (net of trade discounts and rebates) which are recorded when the significant risks and rewards of ownership are transferred. Export Sales are accounted on the basis of the dates of Bill of Lading and other delivery documents as per the contract. Domestic Sales excludes Sales Tax and Value Added Tax. Export Incentives are accounted for on export of goods if the entitlements can be estimated with reasonable accuracy and conditions precedent to claim are fulfilled.

Other Operating Income represents conversion charges received by the Company from contract manufacturing activities and the same is accounted when the significant risks and rewards of ownership are transferred.

Rental Income on properties leased are accounted on accrual basis.

Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

Dividend income is recognized when the Company’s right to receive dividend is established.

4 Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where no reliable estimate can be made, a disclosure is made as a contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are neither recognized nor disclosed in the financial statements.

5 Fixed Assets Tangible Assets

Tangible assets are stated at cost of acquisition, less accumulated depreciation and impairment losses if any, net of grants received, where applicable and subsequent improvements thereto including taxes, duties, freight, and other incidental expenses related to acquisition. Any trade discounts and rebates are deducted in arriving at the purchase price. Direct costs are capitalized until such assets are ready for use.

Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Intangible Assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization / depletion and impairment loss, if any. The cost comprises purchase price, borrowing costs and any cost directly attributable in bringing the asset to its working condition for the intended use.

6 Depreciation and Amortization

Depreciation on tangible assets is provided on the straight-line method over the useful lives of assets estimated by the Management. Depreciation for assets purchased / sold during a period is proportionately charged.

Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.

Additional depreciation is being provided to the extent required during the year of sale of assets. Assets, for which the estimated useful life is completed, have been removed from gross block and accumulated depreciation.

* For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers the management believes that useful lives as given above best represent the period over which management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

7 Impairment

The Company assesses at each Balance Sheet date whether there is any indication due to internal or external factors that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognized in the profit and loss account. If at any subsequent balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount subject to maximum of depreciated historical cost and is accordingly reversed in the profit and loss account.

8 Borrowing Costs

Borrowing costs attributable to acquisition and construction of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are incurred.

9 Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that which approximates the actual rate at the date of the transaction.

Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent on the date of transaction. Monetary items denominated in foreign currencies at the yearend are restated at year end rates. Any income or expense on account of exchange differences either on settlement or on translation is recognized in the Statement of Profit and Loss.

The Company uses forward contracts to mitigate its risks associated with foreign currency exchange rates. The Company does not use the foreign exchange forward contracts of options for trading or speculating purpose. The premium

or discount on foreign exchange forward contracts is amortized as income or expense over the life of the contract. The exchange difference is calculated and recorded in accordance with AS-11 - ‘The Effects of Changes in Foreign Exchange Rates’ (revised) in the Statement of Profit and Loss.

10 Investments

Trade investments are the investments made to enhance the Company’s business interests. Investments are either classified as current or non-current (long term) based on Management’s intention at the time of purchase. Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments.

Long term investments are carried at cost less provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment. Current investments are carried at the lower of cost and fair value of each investment individually.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.

11 Inventories

Raw Materials and Components are valued at lower of Cost or Net Realizable Value. Cost of the said is computed by applying Specific Identification Method. Work in Progress and Finished Goods are valued at lower of Cost or Net Realizable Value. Cost of these inventories includes Costs of Conversion and Other costs incurred in bringing them to the present location and condition.

12 Employee Benefits

All employee benefits payable within twelve months of rendering the service are classified as short term employee benefits. Short term employee benefits in the nature of salary, wages, bonus, leave encashment and the expected cost of ex-gratia are recognized and accounted for on accrual basis in the period in which the employee renders the related service

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Mar 31, 2015

1. Rights, Preferences and Restrictions attached to each Class of Shares

The Company has two classes of shares:

Equity Shares having a par value of Rs.10/- each with voting rights. Each holder of Equity Shares is entitled to one vote per share. 1% Cumulative Redeemable Preference Shares of Rs.10/- each. The Cumulative Redeemable Preference Shares carry a dividend of 1% p.a. and will be redeemed in 6 equal annual installments starting with the financial year 2022.

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive any of the remaining assets of the Company in proportion to the number of Equity Shares held by the shareholders, after distribution of all preferential amounts.

2. During the year under review, the Company had arrived at an out of court settlement with its tenant In this connection, the Company has recognized an income of Rs.1.26 crs pertaining to previous years under rental income. Further the Company has entered into a fresh lease deed and Memorandum of Understanding, whereby the tenant has agreed to pay Rs.2.25 crs towards settlement of old dues outstanding till 31st March, 2014 in installments. As at 31st March, 2015 service tax amounting to Rs.0.30 crs (Previous Year Rs.0.04 crs) on account of renting of immovable property is yet to be remitted to Government Account. Provision has been made in the accounts for the service tax payable.

3. EROSION OF NETWORTH, DECLARATION AS SICK UNIT AND STATUS OF DEBT REHABILITATION SCHEME

The Company’s networth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company filed reference with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR appointed State Bank of India as the Operating Agency (OA) and issued directions to submit a Rehabilitation Scheme for the revival of the Company as per Section 18 of SICA.

State Bank of India (SBI), the OA has sanctioned a re-structuring package for the Company vide its letter dated 16th November 2012. The OA has submitted the same for approval before Hon’ble BIFR.

The package includes interest concessions, re-schedulement of Term loans and Conversion of portion of Term loans into Equity and 1% Cumulative Redeemable Preference Shares (CRPS). The Company has settled the dues of HDFC Bank under One-Time Settlement Scheme. The gain on settlement of HDFC Bank’s dues was recognized as Extra-Ordinary Item during the year ended 31st March 2014 in the Profit and Loss Account. The Rehabilitation Scheme was as of 31st March 2014 pending for approval before Hon’ble BIFR.

The Company’s networth turned positive under provisions of Sick Industries Companies Act (SICA) as on 31st March 2014. Accordingly, the Company filed for discharge under the purview of SICA before BIFR. BIFR vide its order dated 4th August 2014 has discharged the Company from the purview of BIFR.

The Accounts of the Company has been prepared on "Going Concern" basis.

Rs. In Crores

Particulars As at As at 31-Mar-15 31-Mar-14

4. CONTINGENT LIABILITIES (TO THE ExTENT NOT PROVIDED FOR)

a Guarantees given by Banks and counter Guaranteed by the Company - -

b On account of Letters of Credit issued by Bankers on behalf of the Company 1.64 0.96

c Claims against Company not acknowledged as debts being petition/ appeals pending before the Assessing Officer/ Commissioner of Income Tax (Appeals). 0.29 0.29

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the opinion that the demands are likely to be deleted and consequently no provision has been made for such demands. The Management believes that the ultimate outcome of these proceedings will not have a material averse effect on the Company’s financial position and results of operations.

d The Banks have extended concessional interest rate for the credit facilities sanctioned to the Company for the period upto 31st March 2015. As per the terms of the Sanction letter, Banks have the right to be recompensated in future for the sacrifice extended.

5. RELATED PARTY TRANSACTIONS a Key Managerial Personnel:

Mr. V.Rajagopal

Mrs. Rama Rajagopal

Mr. Charath Ram Narsimhan

Mr. Vidyuth Rajagopal

b Enterprises under Control or Significant Influence of Key Managerial Personnel:

M/s Indian Terrain Fashions Limited

M/s Celebrity Clothing Limited

M/s Celebrity Connections

6. disclosure AS PER clause 32 OF THE LISTING AGREEMENTS WITH THE STOCK ExCHANGES

Loans and advances in the nature of loans given to Subsidiaries, Associates and Others - -

7. EMPLOYEE BENEFIT PLAN - GRATUITY

The employees’ gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on the actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

8. Previous year figures have been regrouped, reworked and reclassified wherever necessary to conform to current year classification.

9. In the opinion of the Management , Current Assets, Loans and Advances have a value of at least equal to the amounts shown in the Balance Sheet, if realized in the due course of the business. The provision for all liabilities is adequate and not in excess of the amount reasonably necessary.

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Mar 31, 2014

1 Rights, Preferences and Restrictions attached to each Class of Shares

The Company has two classes of shares:

Equity Shares having a par value of Rs.10/- each with Voting Rights. Each holder of equity shares is entitled to one vote per share 1% Cumulative Redeemable Preference Shares of Rs.10/- each. The cummulative redeemable preference shares carry a dividend of 1% p.a. and will be redeemed in 6 equal annual instalments starting with the financial year 2022.

Charge on Inventories in the form of Raw Materials, Stock In Process and Finished Goods, Receivables and other current assets of the Company both present and future for the loans in the form of Export Packing Credit, Cash Credit, Export Bills Discounting facility extended by State Bank of India.

Loans from State Bank of India is further secured by Pledge of Promoters Shares in the Company to an extent of 53,52,516 Equity Shares and Personal Guarantee by Promoters.

The Company has not received any Memorandum (as required to be filed by the Supplier with the notified authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status as on 31st March 2014 as Micro, Small or Medium Enterprises (MSME). Consequenty the amount payable to these enterprises during the year is Rs. NIL.

Duty Drawback and Service Tax receivable amounting to Rs. 0.09 crores and 0.43 crores respectively have been outstanding for a period exceeding 12 months and accrodingly has been grouped under Other Non Current Assets.

The Company had let out one of it''s properties on lease to Deepam Hospital Ltd with effect from April 01, 2010. The Lessee has since then been in continuous default on it''s Lease rental obligations. The gross receivables pending from Deepam Hospitals Limited as at March 31, 2014 amounted to Rs. 2.33 Crores.

The Lease agreement entered into with Deepam Hospital Limited expired on January 31, 2013 and the Company has not renewed the lease with Deepam Hospitals Limited. A termination notice was served on Deepam Hospitals Limited and the Company has also taken legal recoures to recover it''s dues from Deepam Hospitals Private Limited.

Deepam Hospitals Limited is currently occupying the Company''s premises in an unauthorised manner. The Security Deposit of Rs. 1.50 crs received from Deepam Hospitals at the time of entering into lease agreement has been adjusted against the receivables outstanding and the net receivable of Rs. 0.83 crores has been included under "Others".

Auditors'' Remuneration includes Rs. 4.50 lakhs (PY-Rs. 4.50 lakhs) against Statutory Audit, Rs. 0.70 lakhs (PY-Rs. 0.70 lakhs) against Tax Audit and Rs. 1.24 lakhs (PY - Rs. NIL) against Cost Audit An amount of Rs. 5,72,593/- (PY - Rs. 223,571/-) was paid to the Auditors towards Certification, Out-of-Pocket Expenses and for representation in Taxation matters and the same is classified under Consultancy Charges

Directors Sitting Fee of Rs. 0.40 lakhs (PY - Rs. 0.35 lakhs) is grouped under Other Miscellaneous Expenses

**nterest on Term loans is net off TUF Interest subsidy of Rs. 0.53 crs (Previous Year Rs. NIL) received during the year During the Financial Year 2012-13, the excess interest charged to Profit and Loss Account for the period April 2011-March 2012 of Rs. 4.71 crs on SBI Term loans was reversed in accordance with the Sanction letter dated 16th November 2012

2 EROSION OF NETWORTH, DECLARATION AS SICK UNIT AND STATUS OF DEBT REHABILITATION SCHEME

The Company''s networth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company filed reference with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR appointed State Bank of India as the Operating Agency (OA) and issued directions to submit a Rehabilitation Scheme for the revival of the Company as per Section 18 of SICA. State Bank of India (SBI), the OA has sanctioned a re-structuring package for the Company vide its letter dated 16th November 2012. The OA has submitted the same for approval before Hon''ble BIFR.

The package includes interest concessions, re-schedulement of Term loans and Conversion of portion of Term loans into Equity and 1% Cumulative Redeemable Preference Shares (CRPS). The Company has settled the dues of HDFC Bank under One-Time Settlement Scheme.

The gain on settlement of HDFC Bank''s dues has been recognised as Extra-Ordinary Item during the year in the Profit and Loss Account. The Rehabilitation Scheme is pending for approval before Hon''ble BIFR.

The Company''s networth has turned positive under provisions of Sick Industries Companies Act (SICA) as on 31st March 2014.

The Accounts of the Company has been prepared on "Going Concern" basis.

The Company is exploring various strategic initiatives and the Management is confident of being able to continue and operate the business and bring positive results in future.

3 CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR)

a Gurantees given by Banks and Counter Guaranteed by the Company - -

b On account of Letters of Credit issued by Bankers on behalf of the Company 0.96 1.05

c Claims against Company not acknowledged as debts, being Income Tax demand pending before Commissioner of Income Tax (Appeals) and Income Tax Appellate tribunal. 0.29 0.69

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the Opinion that the demands are likely to be deleted, and consequently no provision has been made for such demands.

d The Banks have extended concessional interest rate for the Credit facilities sanctioned to the Company for the period upto 31st March 2014. As per the terms of the Sanction letter, Banks have the right of recompense in future for the sacrifice extended.

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Mar 31, 2013

1 EROSION OF NETWORTH, DECLARATION AS SICK UNIT AND STATUS OF DEBT REHABILITATION SCHEME The Company''s networth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company fled referencewith the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR appointed State Bank of India as the Operating Agency (OA) and issued directions to submit a Rehabilitation Scheme for the revival of the Company as per Section 18 of SICA. State Bank of India (SBI), the OA has sanctioned a re-structuring package for the Company vide its letter dated 16th November 2012. The OA has submitted the same for approval before Hon''ble BIFR. The package includes interest concessions, re-schedulement of Term loans and Conversion of portion of Term loans into Equity and 1% Cumulative Redeemable Preference Shares (CRPS). The approval from HDFC Bank for the package is pending. SBI is yet to convert the portion of Term loans into Equity and 1% CRPS.

The Accounts of the Company have been prepared on the basis of ''Going Concern Concept'' despite negative net worth as on 31st March 2013 in view of the various strategic initiatives that the company is exploring and also considering the Rehabiliation Scheme submitted to the Banks / BIFR. The Management is confdent of being able to continue and operate the business and bring positive results in future.

2 DISCLOSURE AS PER CLAUSE 32 OF THE LISTING AGREEMENTS WITH THE STOCK EXCHANGES Loans and advances in the nature of Loans given to Subsidiaries, Associates and Others

3. EMPLOYEE BENEFIT PLAN - GRATUITY

The employees'' gratuity fund scheme managed by a Trust is a defned beneft plan. The present value of obligation is determined based on the actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee beneft entitlement and measures each unit separately to build up the fnal obligation.

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Mar 31, 2012

Collateral Securities:

First Charge to State Bank of India and Second Charge on to HDFC Bank for Term loans over the following assets:

Entire Plant and Machinery - present and future

Land and building situated at 107-A, GST Road, Chrompet, Chennai

Factory land and building situated at Thiruvanchery, Agaram Road, Tambaram Taluk, Chennai Factory land and building situated at 72/1, Poonamalle Bypass Road, Poonamalle, Chennai

Leasehold rights of land and Factory building situated at plot SDF - IV, 3rd Main Road, MEPZ-SEZ, Tambaram,Chennai - 600045 Leasehold rights of land situated at C2, 3rd Main Road, MEPZ-SEZ, Tambaram, Chennai - 600045 Building situated at C2, 3rd Main Road, MEPZ-SEZ, Tambaram, Chennai - 600 045

Loans from State Bank of India is further secured by Pledge of Promoters Shares in the Company to an extent of 53,52,516 Equity Shares and Personal Guarantee by Promoters. Further the Lease rental receivables from the property let out on lease are assigned to Term loans of State Bank of India (SBI).

Loans from HDFC Bank is further secured by Pledge of Promoters Shares in the Company to an extent of 8,00,000 Equity Shares and Personal Guarantee is limited to an extent of 8,00,000 Equity Shares in the Company.

Both the Term loans obligations and Interest Commitments thereon have been met in full to SBI in accordance with the Terms and Conditions of the Sanction letter. However the Company has defaulted in repayments of Term loans amounting to Rs.0.22 crs (Previous Year - NIL) and Interest commitments amounting to Rs.1.55 crs with respect to HDFC Bank. The term loan repayment is pending since February 2012, while interest remains unpaid The Company has submitted a Draft Rehabilitation Proposal with Cut-off-Date as 31st March 2011 seeking certain reliefs / concessions in since January 2011. Term loans / interest rates and the same is pending for approval from Appropriate Authorities.

The Company is one among the Petitioners challenging the levy of Service Tax on Rent of Immovable Properties. The total Service Tax Liability on renting of Immovable Properties is Rs. 35,09,477/- upto September 30, 2011.The Supreme Court vide its Order dated 4th August 2011 has directed the petitioners to remit 50% of the disputed liability up to September 30,2011 in three installments and to furnish a Bank Guarantee / Solvency Certificate for the balance 50%. Further it ordered for payment of Service Tax on Rentals commencing 1st October 2011.The Company has accordingly paid 50% of the Disputed Service Tax of Rs.17,54,739/- and has given a Bank Guarantee for the balance amount. The Company has provided for the Service Tax Amounts in the books as a matter of prudence and has started remitting Service Tax on lease rentals from 1st October 2011.

1 EROSION OF NETWORTH AND DECLARATION AS SICK UNIT

The Company's net worth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company filed reference with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR issued directions to the lenders and to the Company to submit a Rehabilitation Scheme as per Section 18 of SICA.

The Company has submitted its Draft Rehabilitation Proposal to the Operating Agency, State Bank of India and is awaiting the sanction of the Second Re-structuring Package.

The Accounts of the Company have been prepared on the basis of 'Going Concern Concept' despite negative net worth as on 31st March 2012 in view of the various strategic initiatives that the company is exploring and also considering the Rehabilitation Scheme submitted to the Banks / BIFR. The Management is confident of being able to continue and operate the business and bring positive results in future.

2 CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR)

a Guarantees given by Banks and Counter Guaranteed by the Company 0.18 -

b On account of Letters of Credit issued by Bankers on behalf of the Company 0.49 5.72

c Claims against Company not acknowledged as debts, being Income Tax demand pending before

Commissioner of Income Tax (Appeals) and Income Tax Appellate tribunal. Of this a sum Rs.13.50 0.77 1.24

lakhs has been Paid - categorized under Advance Income Tax.

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the Opinion that the demands are likely to be deleted, and consequently no provision has been made for such demands.

d The Banks have extended concessional interest rate for the Credit facilities sanctioned to the Company for the period upto 31st March 2012. As per the terms of the Sanction letter, Banks have the right of recompense in future for the sacrifice extended.

3 RELATED PARTY TRANSACTIONS a Key Managerial Personnel:

Mr. V.Rajagopal Mrs. Rama Rajagopal Mr.S.Suryanarayanan

b Enterprises under Control or Significant Influence of Key Managerial Personnel:

M/s Indian Terrain Fashions Limited M/s Celebrity Clothing Limited M/s Celebrity Connections

b No amount is paid / payable by the company U/s 441 A of the Companies Act,1956 (cess on turnover) since the rules specifying the manner in which the cess shall be paid has not been notified yet by the Central Government.

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

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Mar 31, 2010

1 Contingent Liabilities not provided for:

Rs. In lakhs 31- Mar-10 31- Mar-09 Guarantees given by Banks and are counter guaranteed by the Company. 2.15 2.00

On account of Letters of credit issued by Bankers on behalf of the Company 2,041.16 1,039.21

Claims against Company not acknowledged as debts, being Income Tax demand pending before Commissioner of Income Tax (Appeals) and Income Tax Appellate tribunal. Of this a sum Rs.34.00 lakhs has been paid / Adjusted - categorized under Advance Income Tax. 169.12 162.12

In Service Tax liability on commercial places taken on lease, in view of the legal opinion that there is no liability to pay Service Tax consequent to Delhi High Court pronouncement on identical issue, Service Tax has not been provided. 103.36

The Delhi High Court vide its judgment dated 18th May 2010 in petition fled by one of the Retailers has restrained the Tax Authorities fromrecovering Service Tax on the act of renting of immovable properties on the basis that there is no value addition in this regard. The Company is in the process of fling a Stay petition for levy of Service Tax on renting of immovable properties.

2 The Company has not received any information/memorandum (as required to be fled by the supplier with the notifed authority under the Micro, Small and Medium Enterprises Development Act,2006) claiming their status as on 31st March 2010 as Micro, Small or Medium Enterprises. Consequently the amount paid / payable to such parties during the year is disclosed as Nil.

3 No amount is paid / payable by the company U/s 441 A of the Companies Act,1956 (cess on turnover) since the rules specifying the manner in which the cess shall be paid has not been notifed yet by the Central Government.

4 Managerial Remuneration:

The Shareholders have approved the payment of minimum remuneration under Section 198(4) read with Section II of Part II of Schedule XIII of the Companies Act, 1956 to the Whole-Time Directors of the Company for a period of three years from 1st April 2006 through Postal Ballot dated 23rd March 2007. The Board of Directors at their meeting held on 13th December 2007 have approved to reduce the remuneration payable to Whole Time Directors with effect from 1st January 2008. Accordingly a Special resolution was made and was approved in the Annual General Meeting held on 28th August, 2008.

5 Business Re-Structuring Proposal

The Company has implemented various initiatives to improve on the effciencies and control the losses. The Company has recorded positive EBITDA for the fnancial year. There are strong signals of revival. The Company has basically two major divisions - "Exports" and "Domestic". "Exports" is further sub-divided into "Tops" and "Bottoms" Divisions and "Domestic" is operating under the brand “Indian Terrain”. The Company has a Business Re-structuring proposal whereby the respective divisions could achieve their full potential and lead to maximization of Enterprise Value. The Market dynamics and key drivers, core competencies required and asset profle of these divisions are quite distinct. The industry outlook for Exports and Domestic Divisions are also different. The Company proposes to demerge the Domestic Division into Indian Terrain Fashions Limited and transfer Bottoms Division to Celebrity Clothing Limited through Slump sale. Indian Terrain Fashions Limited and Celebrity Clothing Limited were incorporated during September 2009 as subsidiaries of the Company. Upon Demerger, Indian Terrain Fashions Limited would be listed in the National Stock Exchange of India Limited and Bombay Stock Exchange of India Limited and Celebrity Clothing Limited will remain unlisted and 100% subsidiary of Celebrity Fashions Limited. Further, the Company proposes to write off the accumulated losses against the existing reserves under section 78 and 100 to 103 of the Companies Act,1956 and revalue the immovable properties. The Company has obtained the in-principal approval from Stock Exchanges For the re-structuring and has fled the Application in High Court of Madras during April 2010.

The Court has ordered for a meeting of the Shareholders of the Company on 9th June 2010. As at the year end, the accumulated losses have resulted in substantial crosion of networth of the Company. However inview of the various strategic initiatives that the company is exploring the Company is confdent of being able to continue and operate the business on a "Going Concern" basis and accordingly the fnancial statements have been prepared on the same lines.

6 Defined Benefit Plan-Gratuity

The employees gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

7 Disclosure in respect of Related Parties pursuant to Accounting Standard 18

a Key Managerial Personnel:

Mr. V.Rajagopal Mrs. Rama Rajagopal Mr. S. Surya Narayanan

b Relatives of Key Managerial Personnel:

Mr. Suresh Rajagopal Mr. Vidyuth Rajagopal

c Enterprises under Control or Signifcant Infuence of Key Managerial Personnel:

M/s Celebrity Connections M/s Celebrity Clothing Limited M/s Indian Terrain Fashions Limited

8 Previous Years figures have been regrouped, rearranged and reclassifed whenever necessary.