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A Oneindia Venture

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Notes to Accounts of Pioneer Embroideries Ltd.

Mar 31, 2025

Issue of Shares:

The Company has allotted 13,40,000 equity shares of ''10 each at a premium of ''33 each during the year to the promoter on 12^th August, 2024 on conversion of share warrants on receipt of balance 75% of the issue price. There is no outstanding share warrants pending for conversion at the year end.

Rights, preferences and restrictions attached to Equity Shares:

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

Nature and purpose of other reserves/ other equity Securities Premium

This Reserve represents premium received on issue of shares and can be utilized in accordance with the provisions of the Companies Act, 2013.

Share Based Payment Reserve:

This reserve relates to stock options granted to employees under âEmployee Stock Option Plan 2018 Scheme (ESOP)âand shall be transferred to securities premium account/retained earnings on exercise/cancellation of options.

Retained Earnings

Retained earnings are profits earned by the Company after transfer to general reserve and payment of dividend to shareholders.

Share Warrants

The Company had issued and allotted share warrants, each convertible into one equity share of ''10 each at a premium of ''33 each, on preferential allotment basis to the Promoter of the Company and certain identified non-promoter persons upon receipt of 25% of the issue price as warrant subscription money. Balance 75% of the issue price was payable within 18 months from the date of allotment at the time of exercising the option to apply for fully paid-up equity share of ''10 each of the Company, against each share warrant held by the warrant holder. On conversion of such share warrants into equity shares, the Company transfers the amount therefrom to securities premium and share capital.

18.1 Term Loan from bank of ''3,688.16 are secured by first pari passu charge over fixed assets of the Company both present & future and are further secured by second charge over current assets of the Company, by personal guarantee of Chairman of the Company and pledge of company''s certain shares by promoter and promoter group firms. This loan is repayable in monthly instalments ending October 2028 and presently carries interest @11.80% p.a..

18.2 Term Loans from bank of ''88.56 are secured by first pari passu charge over current assets of the Company and further secured by second pari passu charge over fixed assets of the Company both present & future with other term lenders, by personal guarantee of the Chairman of the Company. This loan is repayable in monthly instalments ending March 2027 and carries interest @7.5% p.a..

18.3 Term Loan from Banks of ''123.16 are secured by hypothecation of respective vehicles financed.

18.4 Term Loan from Oerlikon Barmag of ''505.86 of Foreign Currency Term Loan is secured by exclusive charge on certain imported machineries. This loan is repayable in half yearly instalments ending February 2026 and carries interest @4.50% p.a.

18.5 Term Loan from Tata Capital of ''765.80 is secured by exclusive charge on certain machineries financed by them. This loan is repayable in monthly instalments ending September 2028 and presently carries interest @12.2% p.a.

18.6 Term Loan from Orix Leasing & Financial Services India Limited of ''88.90 is secured by exclusive charge on certain machineries financed by them. This loan is repayable in monthly instalments ending February, 2030 and presently carries interest @12.5% p.a.

39 ''20.36 (''528.50) accounted as Deferred Government Grants for duty saved on import/purchase of capital goods and spares under the Export

Promotion Capital Goods (EPCG) scheme. EPCG scheme allows import of certain capital goods including spares at concessional duty subject to an export obligation for the duty saved on capital goods imported under EPCG scheme. Under the scheme, the company is committed to export goods at the prescribed times of duty saved on import of capital goods over a specified period of time. In case such commitments are not met, the company would be required to pay the duty saved along with interest to the regulatory authorities. Such grants recognised are released to the Statement of Profit & Loss based on fulfillment of related export obligations.

41 Employee benefits

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

(i) Defined Contribution Plans:

The Company makes contributions towards provident fund to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits. During the year the Company has contributed to Government Provident Fund ''165.81 (''136.80).

(ii) Defined Benefit Plan:

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at March 31, 2025. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

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

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

F. Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risks as follow -

A) Salary Increases- Higher than expected increase in salary will increase the defined benefit obligation.

B) Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan''s liability.

43 Pioneer Embroideries Limited Employee Stock Option Plan 2018 Scheme (ESOP)

The Company has granted stock options under the Pioneer Embroideries Limited Employee Stock Option Plan 2018 Scheme (ESOP) to the eligible employees of the Company. Under ESOP, the company has granted 3,99,864 options on August 12, 2024. 100% of total options granted would vest in after one year from the date of grant subject to fulfilment of vesting conditions. The maximum period for exercise of options is three year from the date of vesting. Each option when exercised would be converted into one fully paid-up equity share of ''10 each of the Company. The options granted under ESOP carry no rights to dividends and voting rights till the date of exercise.

B. 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.

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

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.

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.

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

The carrying amounts of the abovementioned financial assets and financial liabilities are considered to be the same as their fair values, due to their short-term nature.

II. Financial risk management

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

- credit risk;

- liquidity risk; and

- market risk

i. Risk management framework

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

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

The Company''s Audit Committee oversees compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

ii. Credit risk

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

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

Trade and other receivables

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

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

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

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

The carrying amount net of credit loss allowances of trade receivables is ''2,803.92 (March 31, 2024 - ''2,762.04).

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

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

(a) Financing arrangements

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in indian rupee and have an average maturity within a year.

(b) Maturities of financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and exclude contractual interest payments and the impact of netting agreements.

The inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to financial liabilities held for liquidity / credit management purposes and which are not usually closed out before contractual maturity.

The interest payments on variable interest rate loans in the table above reflect market forward interest rates at the reporting date and these amounts may change as market interest rates change.

iv. Market risk

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

The Company uses derivatives like forward contracts to manage market risks on account of foreign exchange. All such transactions are carried out within the guidelines set by the Board of Directors.

v. Currency risk

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

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

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

Interest rate risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During March 31, 2025 and March 31, 2024, the Company''s borrowings at variable rate were denominated in Indian Rupees.

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

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 50 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

Fair value sensitivity analysis for fixed-rate instruments

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

45 a. Balances of certain trade receivables, advances, trade payables and other liabilities are in the process of confirmation and/or reconciliation.

b. Realisable value of current assets, deposits, loans and advances in the ordinary course of business will be at least equal to the amount at which they have been stated in the financial statements.

47 Segment Reporting

According to Ind AS 108, identification of operating segments is based on Chief Operating Decision Maker (CODM) approach for making decisions about allocating resources to the segment and assessing its performance. The business activity of the company falls within one broad business segment viz. âTextileâ and substantially sale of the product is within the country. The Gross income and profit from the other segment is below the norms prescribed in Ind AS 108. Hence, the disclosure requirement of Ind AS 108 of ''Segment Reporting'' is not considered applicable.

48 Capital Management

The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The following table summarises the capital of the Company :

52 Additional Regulatory Information

(i) The Company has not been declared willful defaulter by any bank or financial institution or any other lender.

(ii) The Company does not have any transactions with the companies struck off under Companies Act 2013 or Companies Act 1956.

(iii) 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.

(iv) 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 financial year.

(v) The Company has complied with the number of Layers prescribed under the Companies Act, 2013.

(vi) There is no undisclosed income under the Income Tax Act, 1961 for the current year or previous year which needs to be recorded in the books of account.

(vii) The Company has not traded or invested in crypto currency or virtual currency during the current or previous financial year.

(viii) The Company do not have charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.

(ix) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entitity(ies) including foreign entities (''"âIntermediariesââ) with the understanding that the intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

The Company has not received any funds from any other person(s) or entitity(ies) including foreign entities with the understanding that the company shall directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (ââUltimate Beneficiariesââ) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

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

53 Previous year figure have been regrouped / reclassified to conform to current years classifications.

Mar 31, 2024

Issue of Shares:

The Company has issued 25,00,000 equity shares of ''10 each at a premium of ''33 each during the year on preferential basis on 2^nd February, 2024 on conversion of share Warrants issued on 28^th September, 2023.

The Company has also issued 3,84,500 equity shares of ''10 each to the employees of the Company under PEL ESOP Scheme. Rights, preferences and restrictions attached to Equity Shares:

Nature and purpose of other reserves/ other equity Securities Premium

This Reserve represents premium received on issue of shares and can be utilized in accordance with the provisions of the Companies Act, 2013.

Share Based Payment Reserve:

This reserve relates to stock options granted to employees under "Employee Stock Option Plan 2018 Scheme (ESOP)"and shall be transferred to securities premium account/retained earnings on exercise/cancellation of options.

Retained Earnings

Retained earnings are profits earned by the Company after transfer to general reserve and payment of dividend to shareholders. Share Warrants

The Company has issued and alloted 38,40,000 share warrants of ''10 each at a premium of ''33 each during the year on preferential basis on 28^th September, 2023 pursuant to shareholders'' approval dated 12^th September, 2023. Out of this, 25,00,000 share warrants has been converted into equity shares on 2^nd February, 2024 after receipt of full payment.

18.1 Term Loan from bank of ''4,504.24 are secured by first pari passu charge over fixed assets of the Company both present & future and are further secured by second charge over current assets of the Company, by personal guarantee of Chairman of the Company and pledge of company''s certain shares by promoter and promoter group firms. This loan is repayable in monthly instalments ending October 2028 and presently carries interest @11.80% p.a..

18.2 Term Loans from banks of ''253.99 are secured by first pari passu charge over current assets of the Company and further secured by second pari passu charge over fixed assets of the Company both present & future with other term lenders, by personal guarantee of the Chairman of the Company.

Out of these loan, i) ''72.59 is repayable in monthly instalments ending October 2024 and carries interest @9.25% p.a..; ii) ''48.55 is repayable in monthly instalments ending October 2024 and carries interest @7.5% p.a.. & iii) ''132.85 is repayable in monthly instalments ending March 2027 and carries interest @6.8% p.a.

18.3 Term Loan from bank of ''65.14 is secured by exclusive charge on certain plant & machinery purchased under ATUFS. This loan is repayable in monthly instalments ending November 2024 and carries interest @5.60% p.a..

18.4 Term Loan from Banks of ''104.38 are secured by hypothecation of respective vehicles financed.

18.5 Term Loan from Oerlikon Barmag of ''988.64 of Foreign Currency Term Loan is secured by exclusive charge on certain imported machineries. This loan is repayable in half yearly instalments ending February 2026 and presently carries interest @4.50% p.a.

18.6 Term Loan from Tata Capital of ''931.40 is secured by exclusive charge on certain machineries. This loan is repayable in monthly instalments ending September 2028 and presently carries interest @12% p.a.

18.7 Term Loan from others of ''231.69 is secured by assignment of Keyman Insurance Policy and carries interest @9.5%.

23.1 Cash Credit Loans are secured by first pari passu charge by hypothecation of stocks, book debts and second pari passu charge on all fixed assets, both present and future and further secured by personal guarantee of the Chairman of the Company.

25.1 Trade Payables include outstanding to a related enterprise of ''3.86 (''21.40).

25.2 Based on the information available, there are certain vendors who have confirmed that they are covered under the Micro, Small and Medium Enterprises Development Act, 2006. Disclosures relating to dues of Micro and Small enterprises under section 22 of The Micro, Small and Medium Enterprises Development Act, 2006, are given below:

40 ''528.50 (''1,042.44] accounted as Deferred Government Grants for duty saved on import/purchase of capital goods and spares

under the Export Promotion Capital Goods (EPCG) scheme. EPCG scheme allows import of certain capital goods including spares at concessional duty subject to an export obligation for the duty saved on capital goods imported under EPCG scheme. Under the scheme, the company is committed to export goods at the prescribed times of duty saved on import of capital goods over a specified period of time. In case such commitments are not met, the company would be required to pay the duty saved along with interest to the regulatory authorities. Such grants recognised are released to the Statement of Profit & Loss based on fulfillment of related export obligations.

42 Employee benefits

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

(i) Defined Contribution Plans:

(ii) Defined Benefit Plan:

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at March 31, 2024. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

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

F. Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risks as follow -

A) Salary Increases- Higher than expected increase in salary will increase the defined benefit obligation.

B) Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan''s liability.

C) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumption in the valuation can impact the liabilities

44 Pioneer Embroideries Limited Employee Stock Option Plan 2018 Scheme (ESOP)

The Company has granted stock options under the Pioneer Embroideries Limited Employee Stock Option Plan 2018 Scheme (ESOP) to the eligible employees of the Company. Under ESOP, the company has granted 4,31,000 options on August 03, 2021. 100% of total options granted would vest in after one year from the date of grant subject to fulfilment of vesting conditions. The maximum period for exercise of options is three year from the date of vesting. Each option when exercised would be converted into one fully paid-up equity share of ''10 each of the Company. The options granted under ESOP carry no rights to dividends and voting rights till the date of exercise.

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

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

The carrying amounts of the abovementioned financial assets and financial liabilities are considered to be the same as their fair values, due to their short-term nature.

II. Financial risk management

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

- credit risk;

- liquidity risk; and

- market risk

i. Risk management framework

ii. Credit risk

Trade and other receivables

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

The carrying amount net of credit loss allowances of trade receivables is ''2,762.04 (March 31, 2023 - ''2,409.55).

iii. Liquidity risk

(a) Financing arrangements

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

The interest payments on variable interest rate loans in the table above reflect market forward interest rates at the reporting date and these amounts may change as market interest rates change.

iv. Market risk

The Company uses derivatives like forward contracts to manage market risks on account of foreign exchange. All such transactions are carried out within the guidelines set by the Board of Directors.

v. Currency risk

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

Interest rate risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During March 31, 2024 and March 31,2023, the Company''s borrowings at variable rate were denominated in Indian Rupees.

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

Exposure to interest rate risk

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

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 50 basis points In Interest rates at the reporting date would have Increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

48 Segment Reporting

According to Ind AS 108, identification of operating segments is based on Chief Operating Decision Maker (CODM) approach for making decisions about allocating resources to the segment and assessing its performance. The business activity of the company falls within one broad business segment viz. "Textile" and substantially sale of the product is within the country. The Gross income and profit from the other segment is below the norms prescribed in Ind AS 108. Hence, the disclosure requirement of Ind AS 108 of ''Segment Reporting'' is not considered applicable.

49 Capital Management

Fair value sensitivity analysis for fixed-rate instruments

46 a. Balances of certain trade receivables, advances, trade payables and other liabilities are in the process of confirmation and/

or reconciliation.

b. Realisable value of current assets, deposits, loans and advances in the ordinary course of business will be at least equal to the amount at which they have been stated in the financial statements.

c. Some of the fixed deposits and bank accounts are subject to confirmations though reconciled with available bank statements.

47 Corporate Social Responsibility (CSR)

As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed. The Group has incurred ''23.09 (''25.44) expenditure on CSR during the year.

53 Previous year figure have been regrouped / reclassified to conform to current years classifications.

Mar 31, 2023

2.15 Provisions, Contingent Liabilities and Contingent Assets

Based on the best estimate provisions are recognized when there is a present obligation

(Legal or constructive) as a result of a past event and it is probable (âmore likely than notâ) that it is required to settle the obligation, and a reliable estimate can be made of the amount of the obligation at reporting date.

A contingent liability is a possible obligation that arises from a past event, with the resolution of the contingency dependent on uncertain future events, or a present obligation where no outflow is probable. Major contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of economic resources is remote.

Contingent assets are not recognized in the financial statements but disclosed, where an inflow of economic benefit is probable.

2.16 Measurement of Fair Value

a) Financial instruments

The estimated fair value of the Companyâs financial instruments is based on market prices and valuation techniques. Valuations are made with the objective to include relevant factors that market participants would consider in setting a price, and to apply accepted economic and financial methodologies for the pricing of financial instruments. References for less active markets are carefully reviewed to establish relevant and comparable data.

b) Marketable and non-marketable equity securities

Fair value for quoted securities is based on quoted market prices as of the reporting date. Fair value for unquoted securities is calculated based on commonly accepted valuation techniques utilizing significant unobservable data, primarily cash flow based models. If fair value cannot be measured reliably unlisted shares are recognized at cost.

2.17 Financial Instruments a. Financial Assets

Initial recognition and measurement

ALL financial assets are recognised initially at fair value, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Classifications

The Company classifies its financial assets as subsequently measured at either amortised cost or fair value depending on the companyâs business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.

Financial assets at amortised cost

A financial asset is measured at amortised cost only if both of the following conditions are met:

- it is held within a business model whose objective is to hold assets in order to collect contractual cash flows.

- the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.

After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (âEIRâ) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss.

Financial assets at fair value through Other Comprehensive Income (FVOCI)

Financial assets with contractual cash flow characteristics that are solely payments of principal and interest and held in a business model whose objective is achieved by both

collecting contractual cash flows and selling financial assets are classified to be measured at FVOCI.

Financial assets at fair value through profit and loss (FVTPL)

Any Financial assets, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as at FVTPL.

In addition, the company may elect to classify a Financial assets, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ).

Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.

Equity Instruments

All equity instruments in scope of Ind AS 109 are measured at fair value. On initial recognition an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.

All other Financial Instruments are classified as measured at FVTPL.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the companyâs balance sheet) when:

- The rights to receive cash flows from the asset have expired, or

- The company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received

cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the company continues to recognize the transferred asset to the extent of the companyâs continuing involvement. In that case, the company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in the Statement of Profit and Loss.

Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

With regard to trade receivable, the Company applies the simplified approach as permitted by Ind AS 109, Financial Instruments, which requires expected lifetime losses to be recognised from the initial recognition of the trade receivables.

b. Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, amortised cost, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of amortised cost, net of directly attributable transaction costs.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial Liabilities measured at amortised cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit and loss include financial liabilities designated upon initial recognition as at fair value through profit and loss.

Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.

Financial Liabilities designated upon initial recognition at fair value through profit and Loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to the Statement of Profit and Loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the Statement of Profit and Loss.

Derecognition of financial liabilities

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expired.

2.18 Income Tax

Income tax expense comprises current and deferred tax. It is recognised in the Statement of Profit and Loss except to the extent that it relates to items recognised directly in Equity or in Other Comprehensive Income.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if, the Company:

a) Has a legally enforceable right to set off the recognised amounts; and

b) Intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Deferred tax

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities

in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.

2.19 Leases

The Company as lessor

Leases for which the Company is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as finance lease. All other leases are classified as operating leases.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

The Company as lessee

The Company assesses whether a contract is or contains a Lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding Lease Liability with respect to aLL Lease arrangements in which it is the Lessee, except for short-term Leases (defined as Leases with a Lease term of 12 months or Less) and Leases of Low vaLue assets. For these Leases, the Company recognises the Lease payments as an operating expense on a straight-line basis over the Lease term, unLess another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent and variabLe rentaLs are recognized as expense in the periods in which they are incurred.

Lease Liability

The Lease payments that are not paid at the commencement date are discounted using the interest rate impLicit in the Lease. If that rate cannot be readiLy determined, which is generaLLy the case for Leases in the Company, the Lesseeâs incrementaL borrowing rate is used, being the rate that the individuaL Lessee wouLd have to pay to borrow the funds necessary to obtain an asset of simiLar vaLue to the right-of-use asset in a simiLar economic environment with simiLar terms, security and conditions.

Lease payments incLuded in the measurement of the Lease LiabiLity comprise:

â¢ Fixed lease payments (including in-substance fixed payments) payable during the lease term and under reasonabLy certain extension options, Less any Lease incentives;

â¢ VariabLe Lease payments that depend on an index or rate, initiaLLy measured using the index or rate at the commencement date;

â¢ The amount expected to be payabLe by the Lessee under residuaL vaLue guarantees;

â¢ The exercise price of purchase options, if the Lessee is reasonabLy certain to exercise the options; and

â¢ Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the Lease.

The Lease LiabiLity is presented as a separate Line in the BaLance Sheet.

The Lease LiabiLity is subsequentLy measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Company remeasures the Lease LiabiLity (and makes a corresponding adjustment to the reLated right-of-use asset) whenever:

â¢ The Lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the Lease LiabiLity is remeasured by discounting the revised Lease payments using a revised discount rate.

â¢ A lease contract is modified and the lease modification is not accounted for as a separate Lease, in which case the Lease LiabiLity is remeasured by discounting the revised Lease payments using a revised discount rate.

Right of Use (ROU) Assets

The ROU assets comprise the initial measurement of the corresponding Lease LiabiLity, Lease payments made at or before the commencement day and any initiaL direct costs. They are subsequentLy measured at cost Less accumuLated depreciation and impairment Losses.

Whenever the company incurs an obLigation for costs to dismantLe and remove a Leased asset, restore the site on which it is Located or restore

the underlying asset to the condition required by the terms and conditions of the Lease, a provision is recognised and measured under Ind AS 37-Provisions, Contingent LiabiLities and Contingent Assets. The costs are incLuded in the reLated right-of-use asset.

ROU assets are depreciated over the shorter period of the Lease term and usefuL Life of the underLying asset. If the company is reasonabLy certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying assetâs useful life. The depreciation starts at the commencement date of the Lease.

The ROU assets are not presented as a separate Line in the Balance Sheet but presented below similar owned assets as a separate line in the PPE note under âNotes forming part of the Financial Statementâ.

The Company applies Ind AS 36- Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as per its accounting policy on âproperty, plant and equipmentâ.

As a practical expedient, Ind AS 116 permits a lessee not to separate non-lease components when bifurcation of the payments is not available between the two components, and instead account for any lease and associated nonlease components as a single arrangement. The Company has used this practical expedient.

Extension and termination options are included in many of the leases. In determining the lease term the management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.

2.20 Earning per share

The basic EPS is computed by dividing the profit after tax for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year

For the purpose of calculating diluted EPS, profit after tax for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date. In computing the dilutive earnings per share, only potential equity shares that are dilutive and that either reduces the earnings per share or increases loss per share are included.

2.21 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Cash Flow Statement, cash and cash equivalents is as defined above, net of outstanding bank overdrafts. In the balance sheet, bank overdrafts are shown within borrowings in current liabilities.

2.22 Government grants

Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to the purchase of property, plant and equipment are included in non current liabilities as deferred income and are credited to the statement of Profit and Loss on a straight - line basis over the expected lives of related assets and presented within other income.

2.23 Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company has been identified as being the chief operating decision maker by the Management of the Company. The Business activity of the company falls within one business segment viz âTextileâ.

2.24 Standards issued but not effective

The Ministry of Corporate Affairs (âMCAâ) through a notification of March 31, 2023, notified the Companies (Indian Accounting Standards) Amendment Rules, 2023 which amends certain Accounting Standards, and are effective from April 1, 2023. The following are the amendments:

Ind AS 1 - Presentation of Financial Statements: -

The amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies.

Ind AS 8 - Accounting Policies, Changes in Accounting

Estimates and Errors:- The amendment specifies definition of âchange in accounting estimatesâ replaced with the definition of âaccounting estimatesâ.

Ind AS 12 - Income Taxes: - The amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.

The Company does not expect the above amendment to have any significant impact in its financial statements.

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

The Companyâs Audit Committee oversees compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

ii. Credit risk

Trade and other receivables

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

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

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its Liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

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

(a) Financing arrangements

(b) Maturities of financial liabilities

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

The Company uses derivatives like forward contracts to manage market risks on account of foreign exchange. All such transactions are carried out within the guidelines set by the Board of Directors.

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

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

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

48 Events Occurring after Balance Sheet Date Proposed Dividend

The Board of Directors has recommended final dividend of ''NIL (''0.30) per share on the face value of ''10 each, aggregating to ''NIL (''79.77), subject to approval by the Members at the forthcoming Annual General Meeting of the Company.

49 Segment Reporting

According to Ind AS 108, identification of operating segments is based on Chief Operating Decision Maker (CODM) approach for making decisions about allocating resources to the segment and assessing its performance. The business activity of the company falls within one broad business segment viz. âTextileâ and substantially sale of the product is within the country. The Gross income and profit from the other segment is below the norms prescribed in Ind AS 108. Hence, the disclosure requirement of Ind AS 108 of âSegment Reportingâ is not considered applicable.

54 The Board of Directors of the Company at its meeting held on 21st October, 2022, had considered and approved the Draft Scheme of Arrangement between Pioneer Embroideries Limited (âDemerged Companyâ or âPELâ) and Pioneer Realty Limited (âResulting Companyâ or âPRLâ) which is 100% subsidiary of PEL, under applicable provisions of Companies Act, 2013, Rules and Regulations thereunder. The demerger is progressing, necessary fillings have been made and the Company is awaiting various regulatory and other approvals. The Appointed Date was proposed as 01 April 2022. Pending receipt of statutory approvals as required including that of Mumbai Bench of the National Company Law Tribunal (âNCLTâ), no adjustments are made in the books of account and in the standalone financial statement upto all periods ending with 31 March 2023.

55 Previous year figure have been regrouped / reclassified to conform to current years classifications.

As per our Report of even date

For M B A H & CO For & on behalf of Board of Directors

Chartered Accountants

(Firmâs Registration No.: 121426W)

HARSH VARDHAN BASSI RAJ KUMAR SEKHANI

Mahesh Bhageria Managing Director Chairman

Partner DIN 00102941 DIN 00102843

Membership Number: 034499

Place: Mumbai DEEPAK SIPANI AMI THAKKAR

Date: 25^th May, 2023 Chief Financial Officer Company Secretary

Mar 31, 2018

1 Reporting Entity

Pioneer Embroideries Limited referred to as âthe Companyâ is domiciled in India. The Companyâs registered office is at Unit 101B, 1st Floor, Abhishek Premises, Plot No. C5-6, Dalia Industrial Estate, Off. New Link Road, Andheri (West), Mumbai-400 058. The Company is a manufacturer of Dope Dyed Polyester Yarn (DDPY), Embroidery & Lace Products. It has four manufacturing units located at Kala-amb (Himachal Pradesh) for DDPY and Sarigam (Gujarat), Naroli (Daman & Nagar Haveli), Coimbatore (Tamilnadu) for Embroidery and Laces.

2.1 a) Depreciation is provided on fixed assets over the remaining useful life in accordance with the provisions of Schedule II of the Act.

b) Leasehold Land and building acquired, pursuant to scheme of merger in an earlier year, are pending registration in the name of the Company.

c) Capital Work in progress includes a sum of Rs.297.95 spent for ongoing expansion at Kala-amb unit and Sarigam unit.

2.2 a) Depreciation is provided on fixed assets over the remaining useful life in accordance with the provisions of Schedule II of the Act.

b) Leasehold Land and building acquired, pursuant to scheme of merger in an earlier year, are pending registration in the name of the Company.

c) Capital Work in progress includes a sum of Rs.35.88 spent for ongoing expansion at Kala-amb unit.

3.1 Capital advance of Rs.96.28 (Rs.199.80) has been given to building contractors and to suppliers of plant & machineries at Dope Dyed Yarn unit at Kala-amb and Embroidery unit at Sarigam.

4.1 Trade receivables include outstanding from related party enterprise of Rs.56.66 (Rs.76.51), subsidiaries of Rs.2.17 (Rs.Nil) & associates concern of Rs.8.46 (Rs.15.87).

4.2 Trade Receivables are hypothecated to secure short-term borrowings.

5.1 Advances to Arcot Textile Mills Limited (ATML) (then a BIFR Company) was given for purchase of movable and immovable assets situated at Kallakurichi, Tamilnadu for a total consideration of Rs.1,105.00 on lump sum sale basis pursuant to MOU dated 20th December, 2007. The transfer of assets in favour of the Company was subject to deregistration of ATML from BIFR. Due to inordinate delay in deregistration from BIFR, it had been agreed that ATML will return the above advance vide their confirmation letter dated 5th October, 2012. Accordingly, Rs.207.00 has been returned by ATML till March 31, 2018.

Issue of Shares:

During the year, the Optionally Convertible Cumulative Redeemable Preference Share (OCCRPS) holders have exercised their right and opted to convert OCCRPS of â 972.53 and accordingly, 23,72,113 equity shares of Rs.10 each are issued at an average price of Rs.41 per share to them. During the year, the Company has also issued to 1,96,078 equity shares of Rs.10 each at the premium of Rs.41 per share on preferential basis to Kotak Mahindra Bank Ltd.

Rights, preferences and restrictions attached to Equity Shares:

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

Rights, preferences and restrictions attached to Preference Shares:

The Company has one class of Optionally Convertible Cumulative Redeemable Preference Shares having a par value of Rs.10 fully paid up per share. The preference shares do not carry voting rights, but carry right to a preference dividend at 9% p.a. effective October 2008. The preference shares are redeemable in 4 annual instalments from September 30, 2015. Preference shares are convertible, as per the terms of issue, at a price to be computed as per SEBI guidelines.

6.1 Term Loans from banks/institutions of Rs.3,467.91 are secured by first pari passu charge over fixed assets of the Company both present & future with other term lenders, except certain machinery under exclusive charge to Landes Bank Baden Wurttemberg, and is further secured by second charge over current assets of the Company, by personal guarantee of Chairman of the Company, pledge of companyâs share holding in all subsidiaries and pledge of companyâs certain shares by promoter and promoter group firms.

Out of these loan, I) Rs.1,035.00 is repayable quarterly instalments ending March 2020 and carries no interest; ii) Rs.65.53 is repayable in quarterly instalments ending September 2018 and carries interest @13.05% p.a. presently; iii) Rs.620.00 is repayable in monthly instalments ending February 2021 and carries interest @13% p.a.; iv) Rs.1,747.38 is repayable in monthly instalments ending July 2022 and carries interest @13% p.a.

6.2 Term Loans from bank of Rs.1,045.70 are secured by first pari passu charge over all fixed assets and current assets of the Company both present & future with other term lenders, except certain machinery under exclusive charge to Landes Bank Baden Wurttemberg, and by personal guarantee of the Chairman of the Company. The loan is further secured by pledge of companyâs certain shares by promoter and promoter group firms. This loan is repayable in monthly instalments ending September 2019 and carries interest @13% p.a.

6.3 Term Loans from bank of Rs.273.50 of Foreign Currency Term Loan is secured by exclusive charge on certain imported machineries. This loan is repayable in half yearly instalments ending September 2018 and presently carries interest @0.50% p.a.

6.4 Term Loan from Banks of Rs.34.54 are secured by hypothecation of respective vehicles.

6.5 Term Loan from others of Rs.95.56 is secured by assignment of Keyman Insurance Policy and carries interest @10%.

7.1 Cash Credit Loans are secured by first pari passu charge by hypothecation of stocks, book debts and second charge on all fixed assets, both present and future and further secured by corporate guarantee of Hakoba Lifestyle Limited, a subsidiary of the Company and Pioneer E-com Fashions LLP, a promoter group firm, and personal guarantee of the Chairman of the Company.

8.1 Trade Payables include outstanding to a related enterprise of Rs.7.39 (Rs.24.93 ).

8.2 The Company has not received any intimation from its suppliers being registered under Micro, Small and Medium Enterprises Development Act, 2006 (MSME). Hence the necessary disclosure required under MSME Act, 2006 can not be made.

9.1 Advance from customers includes advance received from related enterprise of Rs.130.27 (Rs.15.58 ) and subsidiaries of Rs.Nil (Rs.13.53)

10 Leases

Operating lease

The Companyâs significant leasing arrangements are in respect of operating leases of premises for office and warehouse. These leasing arrangements, which are cancellable, are typically for a period of 11 months and are usually renewable on mutually agreeable terms. The Company has recognised expense amounting to Rs.60.15 (Rs.63.41).

11 Defined Contribution Plans:

(i) The Company makes contributions towards provident fund to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits. During the year the Company has contributed to Government Provident Fund Rs.86.50 ( Rs.96.88).

(ii) Defined Benefit Plan:

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

A. Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Companyâs financial statements as at balance sheet date:

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

F. Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risks as follow -

A) Salary Increases- Higher than expected increase in salary will increase the defined benefit obligation.

B) Discount Rate: Reduction in discount rate in subsequent valuations can increase the planâs liability.

C) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumption in the valuation can impact the liabilities.

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

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

The carrying amounts of the abovementioned financial assets and financial liabilities are considered to be the same as their fair values, due to their short-term nature.

II. Financial risk management

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

- credit risk;

- liquidity risk; and

- market risk

i. Risk management framework

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

ii. Credit risk

Trade and other receivables

The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate. The Company Management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Companyâs standard payment and delivery terms and conditions are offered. The Companyâs review includes market check, industry feedback, past financials and external ratings, if they are available. Sale limits are established for each customer and reviewed periodically. Any sales exceeding those limits require approval from the President of the Company.More than 60 % of the Companyâs customers have been transacting with the Company for over four years, and no impairment loss has been recognized against these customers. In monitoring customer credit risk, customers are reviewed according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties.

The carrying amount net of credit loss allowances of trade receivables is Rs.2,500.80 (March 31,2017-Rs.2158.20, April 1,2016â 2,333.29).

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

A default on a financial asset is when counterparty fails to make payments within 60 days when they fall due.

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

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

(a) Financing arrangements

The interest payments on variable interest rate loans in the table above reflect market forward interest rates at the reporting date and these amounts may change as market interest rates change.

iv. Market risk

The Company uses derivatives like forward contracts to manage market riskson account of foreign exchange. All such transactions are carried out within the guidelines set by the Board of Directors.

v. Currency risk

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

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

Exposure to currency risk

The summary quantitative data about the Companyâs exposure to currency risk as reported to the management of the Company is as follows:

Interest rate risk

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

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

Exposure to interest rate risk

The interest rate profile of the Companyâs interest-bearing financial instruments as reported to the management of the Company is as follows:

Cash flow sensitivity analysis for variable-rate instruments

Fair value sensitivity analysis for fixed-rate instruments

12 First Time Adoption of Ind AS

As stated in note 2, these are the Companyâs first financial statements prepared in accordance with Ind AS.The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening I nd AS statement of financial position at April 1, 2016 (the Companyâs date of transition). In preparing its opening Ind AS statement of financial position, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Previous GAAP. An explanation of how the transition from Previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.

A. Ind AS optional exemptions

(i) 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. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.

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

(ii) Leases

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

B. Ind AS mandatory exceptions (I) Estimates

An entityâs 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 Impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

(ii) Classification and measurement of financial assets

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

C. Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

D. Notes to first-time adoption:

1 Borrowings

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method.Under previous GAAP, these transaction costs were charged to profit or loss and PPE as and when incurred. Accordingly, borrowings as at March 31, 2017 have been reduced by Rs.445.30 (April 1, 2016- Rs.306.37) with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount of retained earning. The profit for the year ended March 31, 2017 reduced by Rs.138.93 as a result of the additional interest expense.

2 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 statement of profit and loss. Under the previous GAAP, these remeasurements were forming part of the Statement of Profit and Loss for the year. As a result of this change, the profit for the year ended March 31, 2017 increased by Rs.20.65. There is no impact on the total equity as at 31 March 2017.

3 Expected Credit Losses

Ind AS 109 requires to compute expected credit losses on all financial assets, at the time of origination and at the time of every reporting date. These provision are recognised in the Statement of Profit and Loss as lifetime expected credit losses.

Under Previous GAAP, no provision has been made and charged to Statement of Profit and Loss. Accordingly, Trade Receivables as at March 31, 2017 have been reduced by Rs.130.10 (April 1, 2016- Rs.163.32) with a corresponding adjustment to retained earnings. The total equity decreased by an equivalent amount of retained earning. The profit for the year ended March 31, 2017 reduced by Rs.33.22 as a result of the additional expense.

4 Deferred Tax

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

5 Retained earnings

Retained earnings as at April 1, 2016 has been adjusted consequent to the above Ind AS transition adjustments.

6 Other comprehensive income

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

7 Preference shares

Preference shares are Optionally Convertible Cumulative Redeemable Preference Share (OCCRPS) therefore the same has been considered as other equity till conversion.

13 a. Balances of certain trade receivables, advances, trade payables and other liabilities are in the process of confirmation and/or reconciliation.

b. Realisable value of current assets, deposits, loans and advances in the ordinary course of business will be at least equal to the amount at which they have been stated in the financial statements.

c. Some of the fixed deposits and bank accounts are subject to confirmations though reconciled with available bank statements. Some of the secured loans are also subject to confirmations though reconciled with bank statements.

14 The Optionally Convertible Cumulative Redeemable Preference Share (OCCRPS) of â 213.15 held by Kotak Mahindra Bank Ltd were surrendered by them in terms of OTS and same were cancelled and credited to Retained Earnings.

15 As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed. Due to loss in current year and stress on cash flows, the Company has not incurred any expenses on CSR during the year.

16 Segment Reporting

According to Ind AS 108, identification of operating segments is based on Chief Operating Decision Maker (CODM) approach for making decisions about allocating resources to the segment and assessing its performance. The business activity of the company falls within one broad business segment viz. âTextileâ and substantially sale of the product is within the country. The Gross income and profit from the other segment is below the norms prescribed in Ind AS 108. Hence, the disclosure requirement of Ind AS 108 of âSegment Reportingâ is not considered applicable.

17 Capital management

The Companyâs policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The following table summarises the capital of the Company :

Mar 31, 2016

Rights, preferences and restrictions attached to Equity Shares:

Rights, preferences and restrictions attached to Preference Shares:

The Company has one class of Optionally Convertible Cumulative Redeemable Preference Shares having a par value of Rs.10 fully paid up per share issued consequent to Corporate Debt Restructuring. The preference shares do not carry voting rights, but carry right to a preference dividend at 9% p.a. effective October 2008. The preference shares are redeemable in 4 annual installments from September 30, 2015. Preference shares are convertible, as per the terms of issue, at a price to be computed as per SEBI guidelines. However, first installment due on September 30, 2015 could not be redeemed in absence of distributable profit.

The Company has issued 8,50,000 equity shares during the year on preferential basis to Edelweiss Assets Reconstruction Company Ltd. Trustee EARC Trust-SC 23 (assignee EXIM Bank) against unpaid interest of Rs.297.50 lacs, payable on loan from EXIM Bank (since assigned to EARC).

NOTE -1

Term Loans and Funded Interest Term Loans from Kotak Mahindra Bank Ltd (assignee HDFC Bank Ltd.) and Edelweiss ARC (assignee EXIM Bank) (EARC) are secured by first pari passu charge over all fixed assets of the Company both present & future with other term lenders, except machinery under exclusive charge to Landes Bank Baden Wurttemberg, and further secured by second charge over current assets of the Company, by personal guarantee of the Chairman of the Company, pledge of company''s share holding in all subsidiaries and pledge of company''s certain shares by promoter and promoter group of the Company.

The Working Capital Term Loan from Union Bank of India is secured by first pari passu charge over fixed assets of the Company both present & future with other term lenders and is further secured by second charge over current assets of the Company, by personal guarantee of Chairman of the Company, pledge of company''s share holding in all subsidiaries and pledge of company''s certain shares by promoter and promoter group of the Company.

The Working Capital Term Loan from Kotak Mahindra Bank Ltd. is secured by first pari passu charge over fixed assets and current assets of the Company both present & future with other lenders & by personal guarantee of Chairman of the Company. The loan is further secured by pledge of company''s certain shares by promoter and promoter group of the Company.

Foreign Currency Term Loan from Landes Bank Baden Wurttemberg is secured by exclusive charge on machinery imported from Barmag of Germany for Dope Dyed Polyester Yarn Unit.

Terms of Repayment and interest:

i) Loan of EARC is repayable over 5 years from February 2015 to March 2020 and carries no interest.

ii) Term Loan of Kotak Mahindra Bank Ltd. (assignee HDFC Bank Ltd.) of Rs.1702 lacs was settled for Rs.1300 lacs in FY 2014-15 and is repayable over 4 years from September 2015 to February 2019 and carries interest @22% p.a.

iii) Working Capital Term Loan from Union Bank of India is repayable in quarterly installments ending September 2018 and carries interest @16.65% p.a. presently.

iv) Working Capital Term Loan from Kotak Mahindra Bank Ltd. is repayable in monthly installments ending September 2019 and carries interest @22% p.a.

v) Foreign Currency Term Loan from Landes Bank Baden Wurttemberg is repayable in half yearly installments ending September 2018 and presently carries interest @0.50% p.a.

NOTE -2

Cash Credit Loans are secured by first pari passu charge by hypothecation of stocks, book debts and second charge on all fixed assets, both present and future and further secured by corporate guarantee of Hakoba Lifestyle Limited, a subsidiary of the Company and personal guarantee of the Chairman of the Company.

NOTE -3

Trade Payables include outstanding from a related enterprise Kiran Industries Pvt. Ltd. of Rs.0.83 lacs (Rs.22.03 lacs), Kiran Texpro Pvt. Ltd. of Rs.15.43 lacs.

The long term debts were restructured under CDR Scheme and were repayable over a period from October 1, 2010 to December 30, 2018. Consequent to Company''s inability to meet its commitments under CDR package, the CDR Scheme was withdrawn in FY 2013-14.

Save for the banks, where term loans are being paid as per schedule, other term loan balances have been considered as current liabilities and included in Note 8(a) above. However, the interest on such loans is being provided as per CDR terms.

All these Secured Loans are secured by first pari passu charge over fixed assets of the Company both present & future with each other, except machinery under exclusive charge to Landes Bank Baden Wurttemberg and further secured by second charge over current assets of the Company, by the personal guarantee of the Chairman of the Company, pledge of company''s share holding in all subsidiaries and pledge of company''s certain shares by promoter and promoter group of the Company.

NOTE - 4

Advance from customers includes advance from related enterprise of Rs.44.93 lacs (Rs.35.16 lacs) received from Kiran Industries Pvt. Ltd., and advance of Rs.20.76 lacs (Rs.21.23 lacs) from M/s J J Sons.

a) Depreciation is provided on fixed assets over the remaining useful life in accordance with the provisions of Schedule II of the Act.

b) Leasehold Land and building acquired, pursuant to scheme of merger in an earlier year, are pending registration in the name of the Company.

c) Capital Work in progress includes a sum of Rs.335.78 lacs spent for ongoing expansion at Kala-amb unit.

a) Capital advance of Rs.515.18 lacs has been given to building contractors and to suppliers of plant & machineries at Dope Dyed Yarn unit at Kala-amb.

b) Advances to Arcot Textile Mills Limited (ATML) (a BIFR Company) was given for purchase of movable and immovable assets situated at Kallakurichi, Tamilnadu for a total consideration of Rs.1,105.00 lacs on lump sum sale basis pursuant to MOU dated 20th December, 2007. The transfer of assets in favour of the Company was subject to deregistration of ATML from BIFR. Due to inordinate delay in deregistration from BIFR, it had been agreed that ATML will return the above advance vide their confirmation letter dated 5th October, 2012. Accordingly, Rs.143.00 lacs has been returned by ATML.

c) The Company has made provision for doubtful advances of Rs.505.88 lacs during the year in view of non recovery of the same since long.

NOTE -5

Trade receivables include outstanding from:

a) Subsidiary Company Hakoba Lifestyle Ltd. of Rs. Nil (Rs.1,546.97 lacs).

b) Related enterprise Thakurdas & Co. Pvt. Ltd. of Rs.36.30 lacs (Rs.67.78 lacs).

The Company has an investment of Rs.4,768.90 lacs (Rs.1,147.00 lacs) in Hakoba Lifestyle Limited (HLL), a subsidiary of the Company. The Company has increased its shareholding by way of subscription to right issue by HLL. The Company has loans and advances of Rs.0.17 lacs (Rs.1,940.72 lacs) recoverable from HLL. The net worth of HLL as on 31^st March, 2016 is negative of Rs.412.02 lacs. The Company is exploring options to unlock long-term strategic value of the investment in HLL and accordingly no provision has been made.

NOTE - 6

The Company has an investment of Rs.37.88 lacs (Rs.37.88 lacs) in Mas Embroideries Private Limited (MAPL), a wholly owned subsidiary of the Company. It has also given loans and advances of Rs.77.90 lacs (Rs.77.82 lacs) to MAPL. The accumulated losses of MAPL as at 31^st March, 2016 amounting to Rs.329.26 lacs have exceeded the net worth of the said company. Having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

NOTE - 7

a) The Company had invested USD 2.585 mn. (Rs.1,029.66 lacs) in its wholly owned overseas subsidiary S.R Investments Limited (SRIL). The accounting year of SRIL closes on 30^th June every year. Since the Company has decided to liquidate SRIL, the Company has made provision for diminution in value of investment of Rs.1,029.66 lacs during the year and treated the same as non-monetary item & debited the same to Capital Reserve.

b) The Company had advanced an optionally convertible loan of USD 2.20 mn. (Rs.1,322.20 lacs) to SRIL out of FCCBs funds. The Company has written off USD 0.26 mn. (USD 0.65 mn.) as bad debt out of the same as per general permission under FEMA.

NOTE - 8

The Company had invested USD 1.26 mn. (Rs.509.92 lacs) in an overseas Joint Venture with M/s Super Industries DMCC to acquire 10% stake thereof and further advanced an optionally convertible loan of USD 3.70 mn. (Rs.2,315.86 lacs) out of FCCBs funds.

As the Joint Venture has failed completely, the Company has decided to consider the investment made as doubtful of recovery and accordingly, it has made provision for the entire amount of USD 4.96 mn. (Rs.3,290.11 lacs) during the year. The unpaid, accrued service charge of Rs.1,621.23 lacs (USD 2.44 mn.) levied on the investment/advance amount up to FY 2012-13 has also been considered as non recoverable bad debt. The Company has treated the interest reversal as monetary item and debited the same to Statement of Profit & Loss and principal amount as non-monetary item and debited the same to Capital reserve.

Interest free unsecured loans and advances of Rs.1,032.75 lacs (Rs.1,045.47 lacs) to Pioneer E-com Fashions LLP (formerly known as Pioneer E-com Fashions Ltd.), an associate concern is considered good for recovery as per the management of the Company. Pioneer E-com Fashions LLP has pledged 37.98 lacs equity shares of Pioneer Embroideries Ltd. to the lenders of the Company.

NOTE -9

Sales include sales made to related enterprises M/s J J Sons Rs.30.09 lacs (Rs.63.54 lacs), Thakurdas & Co. Pvt. Ltd. Rs.34.86 lacs (Rs.198.40 lacs), Kiran Industries Pvt. Ltd. Rs.644.56 lacs (Rs.445.46 lacs), Kiran Texpro Pvt. Ltd. Rs.5.61 (Rs.8.09 lacs) lacs and associate concern Crystal Lace (I) Ltd. Rs.456.29 lacs.

Purchases include trade purchases from related enterprises M/s J J Sons Rs.0.13 lacs (Rs.21.29 lacs), Kiran Industries Pvt. Ltd. Rs.34.28 lacs (Rs.115.85 lacs), Kiran Texpro Pvt. Ltd. Rs.27.93 lacs, associate concern Crystal Lace (I) Ltd. Rs.1.28 lacs (Rs.Nil).

NOTE -10

a) Doubtful advances written off include

i) Written off of advances to subsidiary S.R Investments Ltd. of Rs.173.29 lacs (Rs.404.49 lacs) as per general permission under FEMA,

ii) Written off of Interest recoverable from M/s Super Industries DMCC of Rs.1,621.23 lacs,

iii) Provision for doubtful other advances of Rs.87.00 lacs, as management find it non recoverable.

b) Company has made provision for doubtful trade receivable related to export receivables of Rs.21.54 lacs (Rs.701.06 lacs) and other domestic receivables of Rs.64.12 lacs during the year.

c) Company has provided for custom duty on capital goods of Rs.57.86 lacs and provision for interest thereon of Rs.82.57 lacs related to earlier year during the year.

NOTE 11 Some of the fixed deposits and bank accounts are subject to confirmations though reconciled with available bank statements. Some of the secured loans are also subject to confirmations though reconciled with bank statements.

NOTE 12 In the opinion of the management, there is no impairment of assets as on Balance Sheet date.

NOTE 13 a) As reported in earlier years, the Company had entered into a Corporate Debt Restructuring scheme (CDR Scheme) with its lenders. As the Company was unable to meet its obligations under CDR Scheme since second quarter of FY 2011-12, the lenders have revoked the CDR package, with approval of CDR-EG in FY 2013-14.

b) The Company has fully paid off dues of State Bank of India in terms of OTS arrived at with the bank. Accordingly, the Company has reversed the interest liability of Rs.1,742.97 lacs and the principal amount of working capital loan of Rs.1,585.38 lacs. The OCCRPS of Rs.632.50 lacs held by the Bank were surrendered by them in terms of OTS and same were cancelled and credited to Capital Reserve. As per the legal expert opinion in the past, the Company has treated the interest and principal reversal as monetary item and credited the same to Statement of Profit and Loss.

c) Loans of HDFC Bank Ltd and EXIM Bank were assigned by these banks to Kotak Mahindra Bank Ltd. (KMBL) and Edelweiss ARC (EARC) respectively during FY 2014-15. The Company has arrived at a settlement with KMBL and EARC. The necessary adjustments in the books will be done after the due compliance of terms and conditions of the settlement.

d) In terms of a OTS with Corporation Bank, another CDR lender, the Company has to pay a sum of Rs.625.51 lacs, in full and final settlement of the Bank''s dues on or before December 31, 2016. The Company has already paid a sum of Rs.225.51 lacs out of the said amount during the year. The necessary adjustment in the books will be done after the compliance of the terms and conditions of OTS.

e) The Company also continues to explore settlement/restructuring options with other lender, Small Industrial and Development Bank of India.

NOTE 14 During the year, the Company has paid a sum of Rs.5.77 lacs (Rs.4.32 lacs) as premium towards the Key man Insurance policy taken for Mr. Raj Kumar Sekhani, Chairman of the Company.

NOTE 15 As per management, realizable value of current assets, deposits, loans and advances in the ordinary course of business will be at least equal to the amount at which they have been stated in the financial statements.

NOTE 16 The sundry debit and credit balances including receivables, payables and advances to suppliers, advances from customers and deposits are subject to confirmation and reconciliations, the effect of which is not known.

NOTE 17 Dues to Small Scale Industries undertakings and dues to Micro Enterprises and Small Enterprises:

The Company is in the process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since, the relevant information is not readily available; no disclosures have been made in the Accounts. However, in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act, is not expected to be material.

NOTE 18 The Company operates in a single segment of Textiles.

NOTE 19 Tax liability is not considered in view of carried forward losses.

NOTE 20 Disclosures pursuant to Accounting Standard-15 "Employee Benefits" :

a) The Company has recognized Rs.55.24 lacs (Rs.108.00 lacs) in the statement of Profit and Loss for the year ended 31st March, 2016 under Defined Contribution Plan.

NOTE 21 The previous yearâs figure have been regrouped and reclassified to confirm to current yearâs classification.

Mar 31, 2015

NOTE -1

1. Rights, preferences and restrictions attached to Equity Shares:

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

2. Rights, preferences and restrictions attached to Preference Shares:

The Company has one class of Optionally Convertible Cumulative Redeemable Preference Shares having a par value of RS.10 fully paid up per share issued consequent to Corporate Debt Restructuring. The preference shares do not carry voting rights, but carry right to a preference dividend at 9% p.a. effective October 2008. The preference shares are redeemable in 4 annual installments from September 30, 2015. Preference shares are convertible, as per the terms of issue, at a price to be competed as per SEBI guidelines.

NOTE -2

The Company has agreed to issue 8,50,000 equity shares on preferential basis to Edelweiss Assets Reconstruction Company Ltd. Trustee EARC Trust-SC 23 (assignee EXIM Bank) against unpaid interest of RS.297.50 lacs, payable on loan from EXIM Bank (since assigned to EARC).

NOTE -3 LONG TERM BORROWINGS

Term Loans and Funded Interest Term Loan from Kotak Mahindra Bank Ltd (assignee HDFC Bank Ltd.) and Edelweiss ARC (assignee EXIM Bank) (EARC) are secured by first pari passu charge over all fixed assets of the Company both present & future with other term lenders, except machinery under exclusive charge to Landes Bank Baden Wurttemberg, and further secured by second charge over current assets of the Company and by personal guarantee of the Chairman of the Company. Term Loan from Kodak Mahindra Bank Ltd. is further secured by personal guarantee of Mrs Bimla Devi Sekhani, wife of the chairman of the Company.

The Working Capital Term Loan from Union Bank of India is secured by first pari passu charge over fixed assets of the Company both present & future with other term lenders and is further secured by second charge over current assets of the Company & by personal guarantee of Chairman of the Company. Foreign Currency Term Loan from Landes Bank Baden Wurttemberg is secured by exclusive charge on machinery imported from Barmag of Germany for Dope Dyed Polyester Yarn Unit.

Terms of Repayment and interest:

I) Loan of EARC (RS.1515 lacs) is repayable over 5 years from February 2015 to March 2020 and carries no interest.

ii) Loan of Kotak Mahindra Bank Ltd (RS.1702 lacs) has been settled for RS.1300 lacs, is repayable over 4 years from September 2015 to February 2019 and carries interest @22% p.a.

iii) Working Capital Term Loan from Union Bank of India is repayable in 14 quarterly installments ending September 2018 and carries interest @16.75% p.a. presently.

iv) Foreign Currency Term Loan from Landes Bank Baden Wurttemberg is repayable in 7 half yearly instalments ending September 2018 and presently carries interest @0.60% p.a. presently.

NOTE -4 SHORT TERM BORROWINGS

Cash Credit Loans are secured by first pari passu charge by hypothecation of stocks, book debts and second charge on all fixed assets, both present and future and further secured by corporate guarantee of Hakoba Lifestyle Limited, a subsidiary of the Company and personal guarantee of the Chairman of the Company.

NOTE -5 TRADE PAYABLES

Trade Payables include outstanding from a related enterprise Kiran Industries Pvt. Limited of RS.22.03 lacs (Nil).

NOTE -6

The long term debt was restructured under CDR Scheme and was repayable over period from October 1,2010 to December 30, 2018. Consequent to Company''s inability to meet its commitments under CDR package, the CDR Scheme was withdrawn.

Save for the banks, where of term loans are being paid as per schedule, other term loans balances have been considered as current liabilities and included in Note 8(a) above. However, the interest on such loans is being provided as per CDR terms.

All these Secured Loans are secured by first pari passu charge over fixed assets of the Company both present & future with each other, except machinery under exclusive charge to Landes Bank Baden Wurttemberg, and further secured by second charge over current assets of the Company and by personal guarantee of the Chairman of the Company.

NOTE -7

Advance from customers includes advance of RS.35.16 lacs (RS.44.18 lacs) received from Kiran Industries Pvt. Limited, a related enterprise.

Depreciation is provided on fixed assets over the remaining useful life in accordance with the provisions of Schedule 11 of the Act.

NOTE -8

Capital Work in progress includes:

a) a sum of RS.22.15 lacs for renovation of machines at Kallakruchi till the assets of Arcot Textile Mill Limited are transferred in favor of the Company.

b) a sum of RS.471.97 lacs spent for ongoing expansion at Kala-amb and Sarigam unit.

a) Capital advance of RS.209.02 lacs has been given to building contractors and to suppliers of plant & machineries at Dope Dyed Yarn unit at Kala-amb.

b) Advances to Arcot Textile Mills Limited (ATML) (a BIFR Company) was given for purchase of movable and immovable assets situated at Kallakurichi, Tamilnadu for a total consideration of RS.1,105.00 lacs on lump sum sale basis out of FCCBs funds pursuant to MOU dated 20th December, 2007. The transfer of assets in favour of the Company was subject to deregistration of ATML from BIFR. Due to inordinate delay in deregistration from BIFR, it had been agreed that ATML will return the above advance vide their confirmation letter dated 5th October, 2012. Accordingly, RS.130.00 lacs has been returned by ATML till previous year.

NOTE -9

Other advances of RS.650.88 lacs (RS.650.88 lacs) given to various parties for purchase of properties. As the agreement are not taking place, the Company is seeking the refund of advances given. As per the management, said amounts are considered good and fully recoverable. These balances are subject to confirmation from the parties.

NOTE -10

Trade receivable include outstanding from:

a) Subsidiary Company Hakoba Lifestyle Ltd of RS.1,546.97 lacs (RS.1,546.97 lacs) since long time.

b) Related enterprise Thakurdas & Co. Pvt. Ltd. of RS.67.78 lacs (RS.46.69 lacs).

The Company has an investment of RS.1,147.00 lacs (RS.1,147.00 lacs) in Hakoba Lifestyle Limited (HLL), a subsidiary of the Company and it also has trade receivable of RS.1,546.97 lacs (RS.1,546.97 lacs) and loans and advances of RS.1,940.72 lacs (RS.1,314.51 lacs) recoverable from HLL. The accumulated losses of HLL as at 31st March, 2015 amounting to RS.7,363.74 lacs have exceeded the net worth of the said Company. Having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

NOTE -11

The Company has an investment of RS.37.88 lacs (RS.37.88 lacs) in Mas Embroideries Private Limited (MAPL), a wholly owned subsidiary of the Company. It has also given loans and advances of RS.77.82 lacs (RS.78.79 lacs) to MAPL. The accumulated losses of MAPL as at 31st March, 2015 amounting to RS.328.70 lacs have exceeded the net worth of the said company. Having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

NOTE -12

a) The Company had invested USD 2.585 mn. (RS.1,029.66 lacs) in its wholly owned overseas subsidiary S.R Investments Limited (SRIL). The accounting year of SRIL closes on 30th June every year.

b) The Company had advanced an optionally convertible loan of USD 2.20 mn. (RS.1,322.20 lacs) to SRIL out of FCCBs funds. The Company has written off USD 0.65 mn. (USD 0.65 mn.) as bad debts out of the same as per general permission under FEMA. The outstanding loan as at the year end is RS.163.52 lacs (RS.545.41 lacs).

NOTE -13

The Company had invested USD 1.26 mn. (RS.509.92 lacs) in an overseas Joint Venture with M/s Super Industries DMCC to acquire 10% stake thereof and further advanced an optionally convertible loan of USD 3.70 mn. (RS.2,315.86 lacs) out of FCCBs funds. As the Joint Venture failed, the said investment was treated as loan by the Company. This outstanding balance is subject to confirmation.

Interest free unsecured loans and advances of RS.1,045.47 lacs (RS.1,075.47 lacs) to Pioneer E-com Fashion Ltd, an associate company is considered good of recovery as per the management of the Company.

NOTE -14

Sales includes Sales made to related enterprises M/s J J Sons RS.63.54 lacs (RS.67.95 lacs), Thakurdas & Co. Pvt. Ltd. RS.280.46 lacs (RS.198.40 lacs) and Kiran Industries Pvt. Ltd RS.445.46 lacs.

i) Company has written off advances to subsidiary S R Investments Ltd of RS.404.49 lacs (RS.388.39 lacs) as per general permission under FEMA, as management find it non recoverable.

ii) Company has made provision for doubtful trade receivable related to export receivables under litigation of RS.701.06 lacs during the year.

NOTE -15 CONTINGENT LIABILITIES RS. in lacs Year Ended Year Ended Particulars 31.03.2015 31.03.2014

a) Bank Guarantees Outstanding. 54.24 52.64

b) Corporate Guarantee on behalf of Subsidiary to Banks. 750.00 3,050.00

c) Estimated amount of contracts remaining to be executed on Capital Accounts (Net of advances). 984.70 17.50

d) Assessment Order of Customs Duty for Import of second hand computerised embroidery machines - 18.40 for which appeal has been filed with Honorable Supreme Court (Net of advances).

e) Demand raised by Excise Department in respect of which appeal has been filed. 46.14 46.14

f) Demand raised by Income-tax Department in Block Assessment order U/s 158A for the period 49.01 49.01 from FY 1998-99 to FY 2003-04 in respect of which appeal has been filed with CIT (Appeal).

g) Other Income Tax matters pending in appeal. 13.33 106.76

h) Unpaid Dividend on 9% Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS). 1,344,96 1,323.68

i) Custom Duty on Capital Goods and Raw Materials imported under Advance Licence / EPCG Scheme,gainst which export 46.00 32.12 obligation is to be fulfilled.

j) Service Tax demand raised by the Service Tax Department. 128.08 128.08

k) Sundry Cases in Labour Court and Industrial Court regarding overtime and backwages being N A* N A* contested by the Company. (*Quantum not ascertainable)

There is no contingent liability other than stated above and adequate provision have been made for all known liabilities, except interest and penalties as may arise.

NOTE 16 Some of the fixed deposits and bank accounts are subject to confirmations though reconciled with available bank statements. Some of the secured loans are also subject to confirmations though reconciled with bank statements.

NOTE 17 In the opinion of the management, there is no impairment of assets as on Balance Sheet date.

NOTE 18 a) As reported in earlier years, the Company had entered into a Corporate Debt Restructuring scheme (CDR Scheme) with its lenders. As the Company was unable to meet its obligations under CDR Scheme since second quarter of FY 2011-12, the lenders have revoked the CDR package, with approval of CDR-EG.

b) State Bank of India (SBI) had issued demand notice for recovery of their outstanding dues under SARFAESI. The Company has, however, arrived at one time settlement (OTS) with SBI.

In terms of a OTS with State Bank of India, the Company has to pay a sum of RS.3,500.00 lacs, in full and final settlement of the Bank''s dues on or before May 25, 2015. The Company has paid a sum of RS.1,881.87 lacs as against RS.2,966.00 lacs as per agreed repayment schedule. The necessary adjustment in the books will be done after the compliance of the terms and conditions of OTS.

c) The Company has fully paid off dues of State Bank of Patiala in terms of OTS arrived at with the bank. Accordingly the Company has reversed the interest liability of RS.397.21 lacs and the principal amount of RS.198.53 lacs. The OCCRPS held by the Bank were surrendered by them in terms of OTS and were cancelled. As per the legal expert opinion in the past, the Company has treated the interest reversal as monetary item and credited the same to Statement of Profit and Loss and the principal amount as non- monetary item and credited the same to Capital Reserve.

d) Loans of HDFC Bank Ltd and EXIM Bank have been assigned by the banks to Kotak Mahindra Bank Ltd (KMBL) and Edelweiss ARC (EARC) respectively, during the year. The Company as arrived at a settlement with KMBL and EARC. The necessary adjustment in the books will be done after the due compliance of the terms and conditions of the settlement.

e) The Company also continues to explore settlement / restructuring options with other individual lenders.

NOTE 20 During the year, the Company has paid a sum of RS.4.32 lacs (RS.7.20 lacs) as premium towards the Key man Insurance policy taken for Mr. Raj Kumar Sekhani, Chairman of the Company.

NOTE 21 As per management, realisable value of current assets, deposits, loans and advances in the ordinary course of business will be at least equal to the amount at which they have been stated in the financial statements.

NOTE 22 The sundry debit and credit balances including receivables, payables and advances to suppliers, advances from customers and deposits are subject to confirmation and reconciliations, the effect of which is not known.

NOTE 23 Dues to Small Scale Industries undertakings and dues to Micro Enterprises and Small Enterprises:

The Company is in the process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since, the relevant information is not readily available; no disclosures have been made in the Accounts. However, in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act, is not expected to be material.

NOTE 24 The Company operates in a single segment of Textiles.

NOTE 25 Disclosures pursuant to Accounting Standard-15 "Employee Benefits"

a) The Company has recognized RS.108.00 lacs (RS.45.52 lacs) in the statement of Profit and Loss for the year ended 31st March, 2015 under Defined Contribution Plan.

b) Details of Defined Benefit Plan:

NOTE 26 Related Party Disclosures :

a) Names of Related Parties and Nature of Relationships

i Subsidiaries Hakoba Lifestyle Ltd.

Mas Embroideries Pvt. Ltd. Pioneer Realty Ltd. S.R Investments Ltd, Mauritius

ii Associate Concerns Pioneer E-Com Fashions Ltd. Reach Industries Pvt. Ltd. Crystal Lace (I) Ltd.

iii Joint Venture M/s Super Industries, DMCC

iv Key Management Personnel Shri Raj Kumar Sekhani Shri Harsh Vardhan Bassi

v Relative of Key Management Personnel & their Enterprises Smt. Bimla Devi Sekhani Shri Aarav Sekhani Shri Vishal Sekhani M/s J J Sons Kiran Industries Pvt. Ltd. & Co. Pvt Ltd.

NOTE -27 The previous year''s figure have been regrouped and reclassified to confirm to current year''s classification.

Mar 31, 2014

NOTE -1

Above Working Capital Term Loan from Union Bank of India is secured by first pari passu charge over fixed assets of the Company both present & future with each other lenders and is further secured by second charge over current assets of the Company & by personal guarantee of Chairman of the Company. Foreign Currency Term Loan from Lands Bank Baden Wurttemberg has exclusive charge on machinery imported from Barmag of Germany for Dope Dyed Polyester Yarn Unit.

Terms of Repayment : These secured loans were restructured under Corporate Debt Restructuring Scheme (CDR Scheme) w.e.f. 01.10.2008. Above Working Capital Term Loans are repayable in 32 quarterly instalments and Foreign Currency Term Loan is repayable in 16 half yearly instalments commenced from 01.10.2010 after a moratorium period of 2 years. Interest at 2% to10% p.a. is charged.

NOTE -2

Cash Credit Loans are secured by first pari passu charge by hypothecation of stocks, book debts and second charge on all fixed assets, both present and future and further secured by corporate guarantee of Subsidiary Hakoba Lifestyle Limited and personal guarantee of Chairman of the Company.

NOTE - 3

The long term debt were restructured under CDR Scheme and were repayable over period from October 1, 2010 to September 30, 2018. Consequent to Company''s inability to meet its commitments under CDR package, the CDR Scheme was withdrawn.

Save for the banks, where of term loans are being paid as per schedule, other term loans balances have been considered as current liabilities and included in Note 7(a) above. However, in absence of correspondence the interest has been continued to be provided as per CDR terms.

All these Secured Loans are secured by first pari passu charge over fixed assets of the Company both present & future with each other, except machinery imported from Barmag of Germany for Dope Dyed Polyester Yarn Unit, which is exclusively charged to Landes Bank Baden Wurttemberg, and further secured by second charge over current assets of the Company & by personal guarantee of Chairman of the Company.

NOTE - 4

Advance from customers includes advance of Rs.44.18 lacs (Rs.62.54 lacs) received from Kiran Industries Limited, a related enterprise.

NOTE 5

Capital Work in progress includes:

a) a sum of Rs.22.15 lacs for renovation of machines at Kallakruchi till the assets of Arcot Textile Mill Limited are transferred in favour of the Company.

b) a sum of Rs.323.70 lacs spent for ongoing expansion at Kala-amb and Sarigam unit.

NOTE - 6

a) Capital advance of Rs.127.43 lacs has been given to building contractors and to suppliers of plant & machineries for expansion project at Dope Dyed Yarn unit at Kala-amb and Embroidery unit at Naroli.

b) Advances to Arcot Textile Mills Limited (ATML) (a BIFR Company) was given for purchase of movable and immovable assets situated at Kallakurichi, Tamilnadu for a total consideration of Rs.1,105.00 lacs on lump sum sale basis out of FCCBs funds pursuant to MOU dated 20th December, 2007. The transfer of assets in favour of the Company was subject to deregistration of ATML from BIFR. Due to inordinate delay in deregistration from BIFR, it had been agreed that ATML will return the above advance within reasonable time period vide their confirmation letter dated 5th October, 2012 and accordingly Rs.105.00 lacs (Rs.25.00 lacs) has been returned by them during the year.

NOTE - 7

Other advances of Rs.650.88 lacs (Rs.855.88 lacs) given to six parties for various properties. As the expected land or properties in all cases may not be conveyanced in favour of the Company, necessary settlements are being made with them. As per the management, said amounts are considered good and fully recoverable. During the year, they have returned Rs.205.00 lacs to the Company. These balances are subject to confirmation from the parties.

NOTE -8

Trade receivable includes outstanding from:

a) Subsidiary Hakoba Lifestyle Ltd of Rs.1,546.97 lacs (Rs.1,546.97 lacs) since long time.

b) Related enterprise Kiran Industries Ltd. of Rs.0.35 lacs (Rs.3.87 lacs).

c) Related enterprise Thakurdas & Co. Pvt. Ltd. of Rs.49.69 lacs (Rs.21.88 lacs).

NOTE - 9

The Company has an investment of Rs.1,147.00 lacs (Rs.1,147.00 lacs) in Hakoba Lifestyle Limited (HLL), a subsidiary of the Company and it also has trade receivable of Rs.1,546.97 lacs (Rs.1,546.97 lacs) and loans and advances of Rs.1,314.51 lacs (Rs.1,291.04 lacs) recoverable from HLL. The accumulated losses of HLL as at 31st March, 2014 amounting to Rs.7,379.63 lacs have exceeded the net worth of the said Company. Having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

NOTE - 10

The Company has an investment of Rs.37.88 lacs (Rs.37.88 lacs) in Mas Embroideries Private Limited (MAPL), a wholly owned subsidiary of the Company and it also has given loans and advances of Rs.78.79 lacs (Rs.81.01 lacs) to MAPL. The accumulated losses of MAPL as at 31st March, 2014 amounting to Rs.327.87 lacs have exceeded the net worth of the said company. Having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

NOTE - 11

a) The Company had invested USD 2.585 mn. (Rs.1,029.66 lacs) in its wholly owned overseas subsidiary S.R Investments Limited (SRIL). The accounting year of SRIL closes on 30th June every year.

b) The Company had advanced an optionally convertible loan of USD 2.20 mn. to SRIL out of FCCBs funds. The Company has written off USD 0.65 mn. (USD 0.65 mn.) as bad debts out of the same as per permission given by RBI as SRIL has no resources / income to repay the same. The outstanding loan as at the year end is Rs.545.41 lacs (Rs.845.07 lacs).

NOTE - 12

a) The Company had invested USD 1.26 mn. (Rs.509.92 lacs) in an overseas Joint Venture with M/s Super Industries DMCC to acquire 10% stake thereof and further advanced an optionally convertible loan of USD 3.70 mn. (Rs.2,223.69 lacs) out of FCCBs funds. As the Joint Venture failed, the said investment was treated as loan by the Company.

b) As per the management, the said loan is good for recovery. In view of non receipt of service charges, the Company has not provided service charges during the year. This outstanding balance is subject to confirmation.

NOTE - 13

Interest free unsecured loans and advances of Rs.1,075.47 lacs (Rs.1,075.47 lacs) to Pioneer E-com Fashion Ltd, an associate company is considered good of recovery as per the management of the Company.

NOTE - 14

a) The loans and advances includes Rs.498.78 lacs (Rs.1,139.98 lacs) receivable from Crystal Lace (India) Ltd (CLIL) being the amount outstanding against a loan of Rs.1,534.00 lacs advanced to the said Company against proposed purchase of then Plant & Machineries in the period 2007-08. As the transaction did not materailize, the amount is being repaid by CLIL.

b) The Company has not provided the accumulated interest of Rs.1,012.48 lacs (Rs.883.33 lacs) on the aforesaid loan and income is understated to that extent in the current year.

NOTE -15

Sales includes Sales made to related enterprises M/s J J Sons Rs.67.96 lacs (Rs.111.29 lacs) and Thakurdas & Co. Ltd. Rs.198.40 lacs (Rs.16.25 lacs).

NOTE -16

Trade Purchases includes purchases made from related enterprises M/s J J Sons Rs.22.35 lacs (Rs.1.30 lacs) and Kiran Industries Ltd. Rs.28.81 lacs (Rs.4.04 lacs).

NOTE -17

Company has written off advances to subsidiary S R Investments Ltd of Rs.388.39 lacs (Rs.815.04 lacs) as per permission given by RBI as management find it non recoverable.

NOTE - 18 CONTINGENT LIABILITIES

(Rs. in lacs) Year Ended Year Ended Particulars 31.03.2014 31.03.2013

a) Bank Guarantees Outstanding. 52.64 29.98

b) Corporate Guarantees on behalf of Subsidiary to Banks. 3,050.00 3,050.00

c) Estimated amount of contracts remaining to be executed on Capital Accounts (Net of advances). 17.50 142.34

d) Assessment Order of Customs Duty for Import of second hand computerised embroidery machines 18.40 40.90 for which appeal has been filed with Honorable Supreme Court (Net of advances).

e) Demand raised by Excise Department in respect of which appeal has been filed. 46.14 46.14

f) Demand raised by Income-tax Department in Block Assessment order U/s 158A for the period from 49.01 49.01 FY 1998-99 to FY 2003-04 in respect of which appeal has been filed with CIT (Appeal).

g) Other Income Tax matters pending in appeal. 106.76 13.33

h) Unpaid Dividend on 9% Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS). 1,323.68 1,083.01

i) Custom Duty on Capital Goods and Raw Materials imported under Advance Licence / EPCG Scheme, 32.12 345.24 against which export obligation is to be fulfilled.

j) Service Tax demand raised by the Service Tax Department. 128.08 128.08

k) Demand raised by Bennet Coleman & Co Ltd for converting equity options into debt of subsidiary 1,059.00 1,059.00 for which arbitration proceedings are pending.

l) There are some Labour Cases in Labour Court and Industrial Court regarding overtime, back wages N A N A and reinstatement to which the Company is contesting. Quantum is not ascertainable.

There is no contingent liability other than stated above and adequate provision have been made for all known liabilities, except interests and penalties as may arise.

NOTE 19 Foreign Currency Convertible Bonds (FCCBs) :

The Company has extinguished its balance outstanding FCCB''s of USD 11 million during the year by making payment of USD 0.7 million (Rs.434.14 lacs) being the amount of settlement arrived with the bond holders. The amount of USD 10.3 million (Rs.4,065.16 lacs) being the difference of face value and settlement amount has been waived off and is treated as non-monetary transaction and has been credited to Capital Reserve as per the expert opinion taken by the management in the past.

NOTE 20 An amount of Rs.88.36 lacs waived under OTS with Development Credit Bank Ltd. has been credited to Capital Reserve as per the expert opinion taken by the management in the past.

NOTE 21 A few of the fixed deposits, overdraft balances and bank accounts are subject to confirmations though reconciled with available bank statements. A few of the secured and unsecured loans are subject to confirmations though reconciled with bank statements.

NOTE 22 In the opinion of the management, there is no impairment of assets as on Balance Sheet date.

NOTE 23 a) As reported in earlier years, the Company had entered into a Corporate Debt Restructuring scheme (CDR Scheme) with its lenders. As the Company was unable to meet its obligations under CDR Scheme since second quarter of FY 2011-12, the lenders have revoked the CDR package, with approval of CDR-EG. State Bank of India (SBI) has issued demand notice for recovery of their outstanding dues under SARFAESI. The Company, however, continuous to explore settlement/restructuring options with individual lenders including SBI.

b) The Company has fully paid off dues of ICICI Bank Ltd., one of CDR lender, in terms of OTS arrived with the bank. Accordingly the Company has reversed the interest liability of Rs.171.97 lacs and the principal amount of Rs.517.81 lacs. As per the legal expert opinion in the past, the Company has treated the interest reversal as monetary item and has credited to Statement of Profit and Loss and has treated the principal amount as non- monetary item and has credited to Capital Reserve.

c) In terms of a OTS with State Bank of Patiala, another CDR lender, the Company has to pay a sum of Rs.850.00 lacs, in full and final settlement of the Bank''s dues on or before May 31, 2014. The Company has already paid a sum of Rs.580.00 lacs out of the said amount during the year. The necessary adjustment in the books will be done after the compliance of the terms and conditions of OTS.

NOTE 24 During the year, the Company has paid a sum of Rs.7.20 lacs (Rs.7.20 lacs) as premium towards the Key man Insurance policy taken for Mr. Raj Kumar Sekhani, Chairman of the Company.

NOTE 25 As per management, value of realization of current assets, deposits, loans and advances in the ordinary course of business will be at least equal to the amount at which they have been stated in the financial statements.

NOTE 26 The sundry debit and credit balances including receivables, payables and advances to suppliers, advances from customers either debit or credit and deposits are subject to confirmation and reconciliations, the effect of which is not known.

NOTE 27 Dues to Small Scale Industries undertakings and dues to Micro Enterprises and Small Enterprises:

The Company is in the process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since, the relevant information is not readily available; no disclosures have been made in the Accounts. However, in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act, is not expected to be material.

NOTE 28 The Company operates in a single segment of Textiles.

NOTE 29 Disclosures pursuant to Accounting Standard-15 "Employee Benefits"

a) The Company has recognized Rs.45.52 lacs in the statement of Profit and Loss for the year ended 31st March, 2014 under Defined

Contribution Plan.

NOTE - 30 The previous year''s figure have been regrouped and reclassified to confirm to current year''s classification.

Mar 31, 2013

NOTE -1.1

During the year, the Company has alloted 47,83,929 equity shares to promoters against share application received earlier persuant to Corporate Debt Restructuring Scheme (CDR) vide their letter no CDR/(ABP)/No1072/2008-09 dated 17th February, 2009 in accordance with Chapter VII of the Securities & Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulation, 2009 (ICDR Regulation) on preferential allotment basis at a price of Rs.21.11 per share (including a premium of Rs.11.11 per share) and Rs.19.77 (Including a premium of Rs.9.77 per share) for 16,57,981 and 31,25,948 equity shares respectively as per the guidelines.

NOTE -2.1

All above Secured Loans of except Vehicle and LIC Loans are secured by first pari passu charge over fixed assets of the Company both present & future with each other, except machineries imported from Barmag of Germany for Dope Dyed Polyester Yarn Unit, which has exclusive charge of Landes Bank Baden Wurttemberg, and further secured by second charge over current assets of the Company & by personal guarantee of Chairman of the Company.Loan from LIC is secured by assignment of Keyman Insurance Policy.

Terms of Repayment : These secured loans were restructured under CDR Scheme w.e.f. 01.10.2008. Above Term Loans except loans from Union Bank of India, Corporation Bank, Funded Interest Term Loan are repayable in 32 quarterly/16 half yearly installments and Working Capital Term Loans are repayable in 32 quarterly installments commenced from 01.10.2010 after a moratorium period of 2 years. Term Loans from Union Bank of India and Corporation Bank are payable in 24 and 28 quarterly installments respectively. Interest at 3% to10% p.a. is charged.Funded Interest Term Loans are repayable in 16 quarterly installments commenced from 01.10.2010. Interest at 8% p.a. is charged.Loan from LIC has not stipulated any repayment period.

Unsecured loan from Bank is secured by personal guarantee of Chairman of the Company, post dated cheques and pledge of shares by him in his individual capacity.

NOTE -3.1

Cash Credit is secured by first pari passu charge by hypothecation of stocks, book debts and second charge on all fixed assets, both present and future and further secured by corporate guarantee of Subsidiary Hakoba Lifestyle Limited and personal guarantee of Chairman of the Company.

NOTE - 4.1

Advance from customers includes advance of Rs.62.54 lacs (Rs.153.70 lacs) received from Kiran Industries Limited, a related enterprise.

NOTE 5.1

Capital Work in progress includes:

a) a sum of Rs.297.05 lacs for renovation of machines at Kallakruchi till the assets of Arcot Textile Mill Limited are transferred in favor of the Company.

b) a sum of Rs.298.48 lacs spent for ongoing expansion at Kala-amb and Sarigam unit.

NOTE - 6.1

a) Capital advance of Rs.152 lacs has been given for expansion project of Dope Dyed Yarn unit at Kala-amb, mainly to building contractors and to suppliers of plant & machineries, software etc.

b) Advances to Arcot Textile Mills Limited (BIFR Company) was given for purchase of movable and immovable assets situated at Kallakurichi, Tamilnadu for a total consideration of Rs.1,105.00 lacs on lump sum sale basis out of FCCBs funds pursuant to MOU dated 20th September, 2007. The transfer of assets in favour of the Company is pending for deregistration from BIFR. Subsequently due to inordinate delay for deregistration from BIFR, it has been agreed that Arcot will return the above advance within reasonable time period vide their confirmation letter dated 5th October, 2012 and accordingly Rs.25.00 lacs are returned by them.

NOTE - 6.2

Other advances of Rs.855.88 lacs (Rs.855.88 lacs) given to six parties for various properties for which necessary settlements are being made with them as the expected land or properties in all cases may not be conveyanced in favour of the Company, however as per the management, said amounts are considered good and fully recoverable. These balances are subject to confirmation from the parties.

NOTE -7.1

Trade receivable includes:

a) Outstanding from subsidiary Hakoba Lifestyle Ltd of Rs.1,546.97 lacs (Rs.1,546.97 lacs) since long time.

b) Outstanding from associate company Crystal Lace (I) Ltd of Rs.44.53 lacs (Rs.113.24 lacs) since long time.

c) Outstanding from related enterprise Kiran Industries Ltd. of Rs.3.87 lacs (Rs.7.67 lacs).

d) Outstanding from related enterprise Thakurdas & Co. Pvt. Ltd. of Rs.21.88 lacs (Rs. 13.82 lacs).

NOTE -8.1

The Company has an investment of Rs.1,147.00 lacs (Rs.1,147.00 lacs), a trade receivable of Rs.1,546.97 lacs (Rs.1,546.97 lacs) and loans and advances of Rs.1,291.04 lacs (Rs.1,270.62 lacs) from Hakoba Lifestyle Limited, a subsidiary of the Company. The accumulated losses as at 31st March, 2013 amounting to Rs.7,343.45 lacs has exceeded the net worth of the said Company. However, having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

NOTE - 8.2

The Company has an investment of Rs.37.88 lacs (Rs.37.88 lacs) and has given loans and advances of Rs.81.01 lacs (Rs.84.99 lacs) to Mas Embroideries Private Limited, a wholly owned subsidiary of the Company. The accumulated losses as at 31st March, 2013 amounting to Rs.327.43 lacs has exceeded the net worth of the said company. However, having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

NOTE - 8.3

a) The Company had invested USD 2.585 mn. (Rs.1,029.67 lacs) in its wholly owned overseas subsidiary S.R Investments Limited (SRIL). The accounting year of SRIL closes on 30th June every year. The accounts have been consolidated based on unaudited accounts of SRIL, which is not in compliance with Accounting Standard Â 21.

b) The Company had advanced an optionally convertible loan of USD 2.20 mn. (Rs.1,196.66 lacs) (USD 2.20 mn. (Rs.1,125.44 lacs)) to SRIL out of FCCBs funds. The loan carried a service charge @ 9% p.a. until conversion or repayment. The Company has provided for USD 1.49 mn. including service charge of USD 0.84 mn. as bad debts as per general permision given by RBI as SRIL has no resources / income to repay the same. The outstanding loan as at the year end is Rs.845.07 lacs (Rs.1,556.01 lacs).

NOTE - 8.4

a) The Company had invested USD 1.26 mn. (Rs.509.92 lacs) in overseas Joint Venture M/s Super Industries DMCC, Dubai to acquire 10% stake there of and further advanced an optionally convertible loan of USD 3.70 mn. (Rs.2,012.40 lacs) (USD 3.70 mn. (Rs.1,892.79 lacs)) out of FCCBs funds in the October-November 2007, with a service charge @ 9% p.a. until conversion or repayment. In September, 2008, the said investment given for 10% stake was treated as loan by the Company and the outstanding loan amount including interest/service at the year end is Rs.4,027.02 lacs (Rs.3,559.30 lacs). Since, the Company doesn''t hold any stake in the said Joint Venture and therefore, no consolidation is made except disclosure of loan and service charges in the Joint Venture in compliance with Accounting Standard Â 27 ÂFinancial Reporting of Interest in Joint Venture'' issued by the Institute of Chartered Accountants of India.

b) The loan as aforesaid of Rs.4,027.02 lacs (USD 4.96 mn. plus service charges) advanced to M/s Super Industries, DMCC is considered good and as per

the management the said amount is fully recoverable and good in recovery though neither principal nor service charges are paid yet. This outstanding balance is subject to confirmation.

NOTE - 8.5

Interest free unsecured loans and advances of Rs.1,075.47 lacs (Rs.1,076.37 lacs) to Pioneer E-com Fashion Ltd, an associate company is considered good of recovery as per the management of the Company.

NOTE - 8.6

a) Loans and advances of Rs.1,534.00 lacs to Crystal Lace (India) Ltd in the period 2007-08 against Plant & Machineries, the title of which could not be transferred due to technical reasons and the said advance and obligation to buy Plant & Machineries was converted into loan bearing interest @15% p.a. vide agreement dated 20th March 2009 and has been further secured by charge on the factory Plot No. 27, at TTC Indl Area, MIDC, Mahape, Navi Mumbai, Dist Thane (admeasuring about 10687.32 sq mtrs) in favor of the Company. The front portion of the smaller plot (admeasuring 3167.20 sq mtrs) has been given for development, of which 25% of the proposed constructed area shall belong to Crystal Lace (India) Limited. The Company has registered the charge with ROC.In July 2012, the Company has got converted Rs.440.00 lacs into 44 lacs equity shares of Rs.10 each of Crystal Lace (I) Ltd. Outstanding at year end is Rs.1,139.98 lacs (Rs.1,569.65 lacs).

b) The aforesaid conversion of advance into loan though strictly not in compliance with FCCBs utilization rules of RBI, however the Company shall redeposit the same on repayment by the said Crystal Lace (India) Limited into FCCB account to comply the same.

c) The Company has not provided the accumulated interest of Rs.883.33 lacs (Rs.697.23 lacs) on the aforesaid loan and income is understated to that extent in the current year.

d) Rs.44.53 lacs (Rs.113.24 lacs) amount is recoverable from Crystal Lace (India) Limited as trade receivable since long time, but as per the management the amount is considered as good and recoverable.

NOTE -9.1

Trade Purchases includes purchases made from related enterprises M/s J J Sons Rs.1.30 lacs (Rs.2.95 lacs) and Kiran Industries Ltd. Rs.4.04 lacs (Rs.9.47 lacs).

NOTE -10.1

Company has written off advances to subsidiary S R Investments Ltd of Rs.815.04 lacs as per general permission given by RBI as management find it non recoverable.

NOTE - 11 CONTINGENT LIABILITIES

(Rs.in lacs)

Year Ended Year Ended

Particulars 31.03.2013 31.03.2012

a) Bank Guarantees Outstanding. 29.98 39.37

b) Corporate Guarantees on behalf of Subsidiary to Banks. 3,050.00 3,050.00

c) Estimated amount of contracts remaining to be executed on Capital Accounts (Net of advances). 142.34 166.96

d) Assessment Order of Customs Duty for Import of second hand computerised embroidery machines 40.90 46.90 for which appeal has been filed with Honorable Supreme Court (Net of advances)

e) Demand raised by Excise Department in respect of which appeal has been filed. 46.14 46.14

f) Demand raised by Income-tax Department in Block Assessment order U/s 158A for the period from 43.32 43.32 FY 1998-99 to FY 2003-04 in respect of which appeal has been filed with CIT (Appeal).

g) Other Income Tax matters pending in appeal. 13.33 13.33 h) Premium/Interest on Foreign Currency Convertible Bond. 3,465.17 2,588.74 I) Unpaid Dividend on 9% Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS). 1,083.01 867.94 j) Custom Duty on Capital Goods and Raw Materials imported under Advance Licence / EPCG Scheme, 345.24 771.98 against which export obligation is to be fulfilled. k) Service Tax Liability 128.08 -

l) Demand raised by Bennet Coleman & Co Ltd for converting equity options into debt of subsidiary 1,059.00 1,059.00 for which arbitration proceedings are pending. m) There are some Labour Cases in Labour Court and Industrial Court regarding overtime, backwages N A N A and reinstatement to which the Company is contesting. Quantum is not ascertainable.

There is no contingent liability other than stated above and adequate provision have been made for all known liabilities, except interests and penalties as may arise

NOTE 12 Foreign Currency Convertible Bonds (FCCBs) :

a) The outstanding FCCBs as at 31st March, 2013 is US$ 11 million and had matured on 28th April, 2012, the effect of which will be given in the year of maturity. These balance FCCBs of value of US$ 11 million were settled at US$ 2.40 million as per the terms and conditions being agreed upon and the treatment thereof will be given as and when these are extinguished and paid.

b) In view of the above settlement, the Company is no longer liable for interest payable on FCCBs worth USD 11 million.

c) For the balance FCCBs value of USD 11 million, though the Company had entered in to settlement terms but it has exceeded the reasonable time period. The Company is further under re-negotiation for settlement. In view of this no provision has been made for premium/interest aggregating to Rs.3,465.17 lacs (Rs.2,588.74 lacs) on the outstanding FCCBs up to 31st March, 2013 calculated in terms of offer circular dated 27-04-2007 and the same has been considered as contingent liability. Had it not been treated so, current year profit would have been lower by Rs.876.43 lacs (Rs.857.97 lacs).

d) There is a foreign exchange loss of Rs.1,483.52 lacs (Rs.1,127.92 lacs) on outstanding FCCBs as on 31st March, 2013 arising out of revaluation, which has not been accounted for since FCCBs has been considered as Non-Monetary liability by the management.

e) In accordance with Accounting Standard - 11 ÂThe Effect of Changes in Foreign Exchange Rates'' prescribed in the Company (Accounting Standard) Rules, 2006 issued by the Central Government in consultation with the National Advisory Committee on Accounting Standard, the Company should have provided foreign exchange loss on FCCBs and had the said liability been considered as a monetary liability, the accumulated losses would be higher by Rs.1,483.52 lacs (Rs.1,127.92 lacs) on account of exchange difference.

NOTE 13 An amount of Rs.195.59 lacs is payable as on 31st March, 2013 to Development Credit Bank Ltd., an unsecured lender, under a negotiated settlement. The bank has agreed to waive the interest on its outstanding, hence no interest has been provided on its balance in the books.The principal amount will be reversed after the compliance of the terms and conditions.

The bank is holding 705,582 equity shares of the Company pledged by the promoter as security, for the said loan.

NOTE 14 Few of the fixed deposits, overdraft balances and bank accounts are subject to confirmations though reconciled with available bank statements. Few of the secured and unsecured loans are subject to confirmations though reconciled with bank statements.

NOTE 15 The Company has charged exchange difference arising in relation to Fixed Assets, which are purchased out of the Foreign Currency Term Loans, in the carrying cost of the assets which is not in accordance with the Accounting Standard 11. Had the Company followed Accounting Standard 11, loss would have been higher by Rs.34.11 lacs (Rs.131.54 lacs).

NOTE 16 In accordance with the FEMA guidelines and applicable rules and regulations and as supported by the Lawyer''s Certificate in the earlier years for end use of FCCBs proceeds, these have been used towards expansion of business, overseas acquisition and towards other permitted use as per the ECB guidelines except Rs.563.36 lacs, which has been appropriated by Union Bank of India towards irregularity in cash credit account, which is not a permissible end use as per the ECB guidelines, to which the Company has made an objection and represented for reversal of transactions in the period 2007-08 and the matter is still pending. The balance unutilized amount of US$ 1824 has been retained overseas with Axis Bank, Hong Kong.

NOTE 17 In the opinion of the management, there is no impairment of assets as on Balance Sheet date.

NOTE 18 a) As per the Corporate Debt Restructuring scheme (CDR scheme) entered during the earlier years, the Company had after the necessary approvals in extra ordinary general meeting held on 26th June, 2010 and from other authorities and in the board meeting held on 27th August, 2010, the Company had allotted 27,553,610, 9% Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS) of Rs.10/- each aggregating to Rs.2,755.36 lacs to all the secured lenders, except to ICICI Bank Ltd for want of RBI approval to its restructured ECB, redeemable from 30th Sept, 2015 in four annual equal installments.

The dividend will accrue at the end of each year with effect from 1st October, 2008 as per the Appointed Date under the CDR scheme.

b) In the event of any default/ breach/ violation of any of the terms & conditions of the Financial Restructuring Package, the lenders with approval of CDR-EG shall have a right to revoke the CDR package and to reverse the waivers/ sacrifices.

c) In the event of default in compliance with the restructured package, the lenders shall have the right to convert entire/ part of defaulted interest and entire/ part of defaulted principal into equity as per SEBI pricing formula.

d) In case of debt outstanding beyond Seven years from the date of CDR LOA, the CDR lenders shall have a right to convert into equity up to 20% of such outstanding (as on the date of conversion) as per SEBI guidelines / loan covenants, whichever is applicable.

e) CDR Lenders shall have the right to recompense the relief/ sacrifices/ waivers extended by respective CDR lenders (as per CDR guidelines).

f) The Company has been unable to meet its commiitments to lenders under CDR Scheme since second quarter of FY 2011-12. The Company has submitted revised CDR Scheme to the lenders for their consideration.

g) In terms of a One Time Settlement entered into with Axis Bank Ltd., one of the CDR lenders, the Company has paid a sum of Rs.155.00 lacs, in full and final settlement of the Bank''s dues, including the OCCRPS. Accordingly the Company has reversed the interest liability of Rs.49.21 lacs and the principal amount of Rs.17.52 lacs. The OCCRPS allotted to the Bank has, accordingly, been surrendered by them and are cancelled. As per the legal expert opinion the Company has treated the interest reversal as monetary item and has credited to statement of profit and loss and has treated the principal amount including OCCRPS reversal as non- monetary item and has credited to Capital Reserve.

h) In terms of a One Time Settlement entered into with ICICI Bank Ltd., one of the CDR lenders, the Company has to pay a sum of Rs.500.00 lacs, in full and final settlement of the Bank''s dues on or before August 31, 2013. The Compnay has already paid a sum of Rs.125.00 lacs out of the said amount. The necessary adjustment in the books will be done after the compliance of the terms and conditions.

NOTE 19 During the year, the Company has paid a sum of Rs.7.20 lacs (Rs.4.32 lacs) as premium towards the Key man Insurance policy taken for Mr. Raj Kumar Sekhani, Chairman & Managing Director of the Company.

NOTE 20 As per management, value of realization of current assets, deposits, loans and advances in the ordinary course of business will be at least equal to the amount at which they have been stated in the financial statements.

NOTE 21 The sundry debit and credit balances including receivables, payables and advances to suppliers, advances from customers either debit or credit and deposits are subject to confirmation and reconciliations, the effect of which is not known.

NOTE 22 Dues to Small Scale Industries undertakings and dues to Micro Enterprises and Small Enterprises:

The Company is in the process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since, the relevant information is not readily available; no disclosures have been made in the Accounts. However, in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act, is not expected to be material.

NOTE 23 The Company operates in a single segment of Textiles.

NOTE 24 Related Party Disclosures :

a) Names of Related Parties and Nature of Relationships

i Subsidiaries Hakoba Lifestyle Ltd.

Mas Embroideries Pvt. Ltd.

Pioneer Realty Ltd.

S.R Investments Ltd, Mauritius

ii Associate Concerns Pioneer E-Com Fashions Ltd.

Reach Industries Pvt. Ltd. Crystal Lace (I) Ltd

iii Joint Venture M/s Super Industries, DMCC, Dubai

iv Key Management Personnel Shri Raj Kumar Sekhani

Shri Harsh Vardhan Bassi

v Relative of Key Management Personnel & their Enterprises Shri Vishal Sekhani

M/s J J Sons Kiran Industries Ltd. Thakurdas & Co. Pvt Ltd.

NOTE -25 The previous year''s figure have been regrouped and reclassified to confirm to current year''s classification.

Mar 31, 2010

(Rs. in lacs)

As at As at

31-03-2010 30-09-2009

1. Contingent Liabilities not provided for in respect of :

a) Bank Guarantees Outstanding 98.91 62.81

b) Corporate Guarantees on behalf of Subsidiary 3050.00 3050.00

c) Corporate Guarantee on behalf of other Company NIL 109.00

d) Estimated amount of contracts remaining to be executed on Capital Accounts (Net of 27 02 8 26

e) Assessment Order of Customs Duty for Import of second hand computerised embroidery 4, qn 4, qn machines for which appeal has been filed with Honorable Supreme Court 46.90 46.90

f) Demand raised by Excise Department in respect of which appeal has been filed 94.73 94.73

g) Demand raised by Income-tax Department in Block Assessment order U/S158A for the

period from FY 1998 - 99 to FY 2003-04 in respect of which appeal has been filed with 47-87 NIL

CIT (Appeal).

h) Other Income Tax matters pending in appeal 13.33 13.33

1) Premium/Interest on Foreign Currency Convertible Bond 1256.81 2750.93 q3

j) There are some Labour Cases in Labour Court and Industrial Court regarding overtime, backwages and reinstatement to which the Company is contesting. Quantum is not ascertainable. NA NA

In the opinion of the management, there is no contingent liability other than stated above and adequate provision have been made for all known liabilities, except interests and penalties as may arise.

2. a) The Company has entered into an MOU dated 20th September, 2007 with Arcot Mills Limited (BIFR Company) for purchase of movable and immovable assets situated at Kallakurichi, Tamilnadu for a total consideration of Rs.1105 lacs (Rs.1105 lacs) on lump sum sale basis out of FCCBs funds. The transfer of assets in favourof the Company is pending for deregistration from BIFR.

Further, till the assets are transferred in favor of the Company, the Company has entered into a lease agreement dated 18.02.09 for usage of assets for a specific consideration and has also incurred a sum of Rs.69.16 lacs (Rs.69.16 lacs) for renovation of machines pending capitalization.

b) The Company is though Ipso Facto owner of movable and immovable assets of aforesaid factory however, pending deregistration and approval from BIFR, it has not capitalized the assets though full working of the unit is merged in the Companys results.

3. Capital work in progress also includes various advances aggregating to Rs.890.58 lacs (Rs.890.58 lacs) given against various properties for which necessary settlements are being made with parties as the expected land or properties in all cases may not be conveyanced in favour of the Company, however in the opinion of the management said amounts are considered good and fully recoverable.

4. Loans and advances includes an interest free loan of Rs. 1350 lacs (Rs. 1350 lacs) given to Pioneer E Com Fashions Limited, which was initially given as an advance to buy stake in its share in the project of Joint Development of property at Borivali, but now is converted as interest free loan being the said development rights are sold. According to the management of the Company it is considered good of recovery.

5. a) Loans and advances includes a sum of Rs. 1534 lacs (Rs. 1534 lacs) advanced to Crystal Lace (India) Ltd in earlier period against machinery, the title of which could not be transferred due to technical reasons and in the previous year the said advance and obligation to buy machine has been converted to loan bearing interest ÃÂ®15 % p.a. and has been further secured by charge on the factory Plot No. 27, at TTC Indl Area, MIDC, Mahape, Navi Mumbai, Dist Thane (Area 10687.32 sq mtrs) in favor of the Company inclusive of 25 % of constructed area which the said Crystal Lace (India) Limited will be entitled for the development of front portion with a third party out of this total area. The Company has registered the charge with ROC.

b) The aforesaid conversion of advance into loan though strictly not in compliance with FCCBs utilization rules of RBI, however the Company shall redeposit the same on repayment by the said Crystal Lace (India) Limited into FCCB account to comply the same.

c) The Company has not provided the accumulated interest of Rs.237.03 lacs (Rs. 122.30 lacs) on the aforesaid loan and income is understated to this extent of current period.

6. a) The Company has a investment of Rs.1147 lacs (Rs.1147.00 lacs) and has given loans and advances of Rs.1397.35 lacs (Rs.1401.73 lacs) to Hakoba Lifestyle Limited, a subsidiary of the Company. The accumulated losses as at 31st March, 2010 amounting to Rs.5296.64 lacs (Rs.4528.16 lacs) has exceeded the net worth of the said Company. However, having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

b) The Company has a investment of Rs.37.88 lacs (Rs.37.88 lacs) and has given loans and advances of Rs.427.86 lacs (Rs.408.49 lacs) to Mas Embroideries Private Limited, a wholly subsidiary of the Company. The accumulated losses as at 31 st March, 2010 amounting to Rs. 381.45 lacs (Rs.341.27 lacs) has exceeded the net worth of the said Company. However, having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

c) The Company has a investment of Rs.937.72 lacs (Rs.937.72 lacs) and has given loan of Rs.993.08 lacs (Rs.1056.88 lacs) to S.R Investments Limited, Mauritius, a subsidiary of the Company. The accumulated losses as at 30th June, 2010 amounting to Rs.686.17 lacs (Rs.592.50 lacs) has exceeded the net worth of the said Company. However, having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

The above share application money is received since one of the condition of Corporate Debt Restructuring Scheme (CDR) vide their letter no CDR/(ABP)/No1072/2008-09 dated 17th February, 2009 is that the Promoters of the Company has to bringa sum of Rs.3.50crores as contribution towards additional capital. In view of above the Board of Directors at its meeting held on 17th May, 2010 has decided to issue Equity shares to the Promoters of the Company, which was further approved in Extra Ordinary Meeting held on 22nd June, 2010 in accordance with Chapter VII of the Securities a Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulation, 2009 (ICDR Regulation) for preferential issue of share to Promoters of the Company, at a price of Rs. 21.10 per share as per guide lines.

After induction of additional amount since close of the year to make total contribution of Rs. 3.50 crores, the number of shares to be subscribed by Mr. Raj Kumar Sekhani and Pioneer E-com Fashion Limited will be 2,44,168 and 14,14,600 respectively.

7. a) The Company had invested Rs.937.72 lacs (USD 2.38mn.) (Rs.937.72 lacs (USD2.38mn.)) inearlier period in then over seasJ oint Venture S.R Investments Limited to acquire 51% Equity thereof and further advanced a loan of Rs.993.08 lacs (USD 2.20 mn.)Rs.1056.88 lacs (USD 2.20 mn.)) (Optionally convertible) out of FCCBs funds, with a service charge ÃÂ® 9% p.a. until conversion or repayment and thus the outstanding loan including interest as on the period end is Rs. 1216.29 lacs (Rs. 1247.01 lacs). The accounting year of the said Joint Venture Company is closed on 30th June every year and pending finalization of audit of the said Subsidiary including opening balances and until as on 31 st March, 2010, the accounts have been consolidated based on unaudited accounts of the said Subsidiary, which is not in compliance with Accounting Standard 21 Consolidated Financial Statement issued by the Institute of Chartered Accountants of India.

b) The option for conversion into Equity as aforesaid in S R Investment Ltd, Mauritius has expired within 18 months of Investments as per agreement and Company has chosen not to convert the same into Equity. The Company though accounted for the annual service charges @9% p.a. on the loan advanced, however, the said amount along with principal though not repaid timely considered good and no devaluation is accounted even though underlying assets held through Equity investment by the said overseas Company in the Indian Company Crystal Lace (India) Limited has been devalued.

8. a) The Company had invested Rs.509.92 lacs (USD 1.26 mn.) (Rs.509.92 lacs USD 1.26 mn.) in earlier period in overseas Joint Venture M/s Super Industries DMCC to acquire 10% stake thereof and further advanced a loan of Rs.1670.18 lacs (USD 3.70 mn.) (Rs.1777.48 lacs (USD 3.70 mn.)) (Optionally convertible) out of FCCBs funds, with a service charge ÃÂ® 9% p.a. until conversion or repayment. Since in the earlier period the said 10% stake was treated as loan and the outstanding loan including interest as on period end is Rs.2737.68 lacs (Rs.2806.63 lacs). Since, the Company doesnt hold any shareholding in the said Joint Venture and therefore, no consolidation is made except disclosure of loan and service charges in the Joint Venture in compliance with Accounting Standard - 27 Financial Reporting of Interest in Joint Venture issued bythe Institute of Chartered Accountants of India.

b) The loan as aforesaid of Rs.2737.68 lacs (USD 4.96 mn. plus service charges) advanced to M/s Super Industries, DMCC is considered good and in the opinion of the management the said loan is fully recoverable and good in recovery though neither principal nor service charges are paid timely.

9. Foreign Currency Convertible Bonds (FCCBs):

a) Out of the total FCCBs of value of USD 30Million issued during the period ended 30th September, 2008, total conversions until previous year amounts to USD 2 million at the conversion price of Rs.223.96 per equity share with face value of Rs. 10 and a premium of Rs.213.96.

b) During the current period, the Company has entered in to agreement of settlement of USD 28 million with FCCB holders as follows:

i) The Company has extinguished the FCCBs of USD 4.75 million by payment of USD 1 million out of funds lying overseas before 31st March, 2010 and balance USD 3.75 million which is waived off is treated as non-monetary transaction and has been credited to Capital Reserve as per the expert opinion taken by the management. Had it been treated as monetary transaction than the profit would have increased by Rs.1506.65 (USD 3.75 million) on account of reversal of principal amount.

ii) Post- period end the Company has made further payment of USD 3.5 million against FCCBs worth USD 11.50 million and USD 8 million has been waived off as per the settlement and has also converted USD 0.75 million FCCBs at the conversion price of Rs.101.50 per equity share with face value of Rs. 10 and a premium of Rs.91.50byissuing 326,305 equity shares.

iii) The balance FCCBs of value of USD 11 million is settled at USD 2.40 million as per the terms and conditions being agreed upon.

The treatment of post period end settlement of FCCBs will be done as and when these are extinguished and paid.

c) In view of the above settlement, the Company is no longer liable for interest payable on FCCBs worth USD 17 million.

d) For the balance FCCBs value of USD 11 million, though the Company has entered in to settlement terms, but would continue to treat as Non- Monetary liability, until the final settlement is done. The Company has considered such balance FCCBs as Non-Monetary liability as the Company reasonably expects that if the settlement is not done on timely basis than these bonds would be converted into equity shares (without transfer of controlling interest) instead of redeeming them for cash at the end of the period of the bond. In view of this no provision has been made for premium/interest aggregating to Rs.1256.81 lacs (Rs.1071.39 lacs) on the outstanding FCCBs upto 31st March, 2010 calculated in terms of offer circular dated 27-04-2007 and the same has been considered as contingent liability. Had it not been treated so, current period loss would have been higher by Rs.185.42 lacs (Rs.476.31 lacs.)

e) There is a foreign exchange loss of Rs. 37.60 lacs and Rs. 141 lacs on account of repayment of FCCBs loan during the period and on account of write back to Capital Reserve respectively, which has not been accounted since FCCBs has been considered as Non- Monetary liability by the management.

f) There is a foreign exchange loss of Rs.951.20 lacs (Rs.1951.30 lacs) on outstanding FCCBs as on 31st March, 2010 arising out of revaluation, which has not been accounted for since FCCBs has been considered as Non-Monetary liability by the management.

g) In accordance with Accounting Standard - 11 The Effect of Changes in Foreign Exchange Rates prescribed in the Company (Accounting Standard) Rules, 2006 issued by the Central Government in consultation with the National Advisory Committee on Accounting Standard, the Company should have provided foreign exchange loss on FCCBs and had the said liability been considered as a monetary liability, the accumulated losses would be higher by Rs.951.20 lacs (Rs. 1951.30 lacs) on account of exchange difference.

10. During the earlier period, the share premium account is applied in writing off the FCCB issue expenses as per Section 78 of the Companies Act, 1956, which was not in accordance with the Accounting Standard- 26. Due to which the accumulated losses would have been higher by Rs.518.08 lacs.

11. The Company is in process of having negotiations / have done negotiations with unsecured lenders as below:

a) Barclays Bank: The total outstanding opening balance of Barclays Bank as on 1 st October, 2009 was Rs. 1186.06 lacs. Out of this the bank has agreed to reverse the interest liability of Rs.181.06 lacs and the principal amount of Rs.450 lacs. As per the legal expert opinion the Company has treated the interest reversal as monetary item and has credited to profit and loss account and has treated the principal amount reversal as non- monetary item and has credited to Capital Reserve. The outstanding balance after the above effects and repayment has become NILas per the confirmation dated 8th July, 2010 received from the bank.

b) DCB Bank: The total outstanding opening balance of DCB Bankas on 1 st October, 2009 was Rs.536.72 lacs. The bank has agreed to waive the interest on amount of Rs.268.36 lacs for the period from 1st October 2008 to 30th June 2012 subject to the compliance of the terms and conditions as per the agreement and therefore the interest has not been provided in the books. For the balance amount of Rs.268.36 lacs the bank has agreed for promoter directly paying the installments as per the agreed terms and conditions, if the repayment is done by the Company on timely manner and therefore the interest is not provided on the balance amount.

Out of above outstanding, the Company has repaid Rs.70.74 lacs during the period as per agreed installments. The bank is holding 705,582 equity shares of the Company pledged by the promoter as security and other terms and conditions as per the agreement .The confirmation as on period-end from the bank is awaited .

c) DBS Bank: As per the settlement terms and conditions dated 14 May, 2010 with the bank the total outstanding balance of the bank was Rs.494.01 lacs including bill discounting. The bank has agreed for the final settlement amount of Rs.175 lacs subject to the full-fillment of the terms and conditions as agreed. Thus accordingly the Company has reversed the interest amount of Rs.100.56 lacs as on period end and accounted in the profit and loss account. The principal amount will be reversed after the compliance of the terms and conditions.

d) All the secured loans, overdraft balances and few of the bank accounts are subject to confirmations, which is majorty due to entries are not effected by the banks though Master Restructuring Agreement of CDR Scheme have been signed.

12. The Company has charged exchange difference arising in relation to Fixed Assets, which are purchased out of the Foreign Currency Term Loans, in the carrying cost of the assets which is not in accordance with the Accounting Standard -11. Had the Company followed Accounting Standard -11, profit would have been higher by Rs.253.18 lacs (loss of Rs.64.08 lacs).

13. a) In accordance with the FEMAguidelines and applicable rules and regulations and as supported by the Lawyers Certificate in the earlier years for end use of FCCBs proceeds, these have been used towards expansion of business, overseas acquisition and towards other permitted use as per the ECB guidelines except Rs.563.36 lacs (Rs.563.36 lacs), which has been appropriated by Union Bank of India towards irregularity in cash credit account, which is not a permissible end use as per the ECB guidelines, to which the Company has made an objection and represented for reversal of transactions in last year and the matter is still pending. The balance unutilized amount has been retained overseas with Axis Bank, Hong Kong.

b) The utilisation of the FCCBs proceeds includes a sum of Rs.900.00 lacs towards acquisition of Yarn Unit of Kiran Industries Limited at Surat on slump sale basis. However, due to non-fulfillment of certain terms and covenants, the said acquisition was cancelled mutually and ultimate use of the same is intended to be within guidelines of ECB rules. The said amount is shown as advance recoverable and considered good and post period end has received a sum of Rs.90 lacs. The Company expects the recovery contingent upon its payment of dues to the said party for supply/ advances.

15. The previous year figures are for twelve months ended 30th September, 2009, while those of current period are for six months ended 31 st March 2010, hence same are not comparable. The previous year figures have been regrouped, wherever necessary, to confirm to the current periods presentation.

16. In the opinion of the management, there is no impairment of assets as on Balance Sheet date.

17. The Company has during the period sold its development rights along with the "Conveyance" of the property at Borivali through a Letter of I ntent for a consideration of Rs.1850 lacs. This consideration is over and above the non-refundable consideration of Rs.650 lacs received as per the development agreement and treated as other income in the previous year.

18. The total outstanding to ING Vysya bank Limited as on 1st October, 2009 was Rs. 1484.16 lacs as working capital loan and Rs.440.95 lacs as term loan. The Company has as per the consent terms dated 11.03.2010 filed before DRT has agreed to pay Rs.1200 lacs as full and final payment. The Company has during the period confirmed to sell the property at Bangalore in consensus with ING Vysya Bank Limited. The agreement is for a consideration of Rs. 16 crores out of which the buyer has directly paid ING Vysya Bank Limited an amount of Rs.4.25 crores.

19 Sundry Debtors includes export bills outstanding for more than 180 days for Rs.706.65 lacs (Rs.678.76 lacs), out of which Rs.638.92 lacs (Rs.652.42 lacs) are recoverable from Calyx International Ltd, Thailand. The recoveries are slow due to adverse economic conditions prevailing in overseas market. However, the same are considered good for recovery.

20 FINANCIAL RESTRUCTURING SCHEME

The Company has entered during the previous year in to Financial Restructuring Scheme under Corporate Debt Restructuring (CDR) mechanism, sanctioned by the CDR Empowered Group has been implemented interalia:.

a) ING Vysya Bank Ltd a Landes Bank Baden Wurttemberg (LBBW), which do not form part of CDR scheme, the former has agreed to the consent terms with the Company, which has been produced before DRT and the latter has agreed to enter in to the consent terms as per the CDR scheme.

b) i) After the necessary approvals in extra ordinary meeting held on 26th June, 2010 and from other authorities and in the board meeting

held on 27th August, 2010, the Company has allotted 2,75,53,610, 9% Optionally Convertible Redeemable Preference Shares (OCCRPS) of Rs 10/- each aggregating to Rs.27.55 crores to all the secured lenders, except to ICICI Bank Ltd for want of RBI approval to its restructured ECB. This amount is carved during the post-period end out of present Term Loan and WCTLand is redeemable from 7th to 10th year equally.

ii) The Company created Funded Interest Term Loan (FITL) of Rs.1409.97 (Rs.1131.27 lacs) towards interest accruing on Term Loans and WCTL from 1 st October, 2008 till 31 st March, 2010 as per the scheme (excluding ING Vysya Bank Ltd.). This loan is to be repaid, with 8% simple interest payable along with installments, over 16 quarters starting from the expiry of 2 years from Cut-off-date (COD), The balances of all the lending banks are subject to reconciliation a confirmations.

c) Promoters have brought Rs.3.50 crores as their contribution towards the Restructuring Scheme as per note No 8.

d) In the event of any default/ breach/ violation of any of the terms a conditions of the Financial Restructuring Package, the lenders with approval of CDR-EG shall have a right to revoke the CDR package and to reverse the waivers/ sacrifices.

e) In the event of default in compliance with the restructured package, the lenders shall have the right to convert entire/ part of defaulted interest and entire/part of defaulted principal into equity as per SEBI pricing formula.

f) In case of debt outstanding beyond Seven years from the date of CDR LOA, the CDR lenders shall have a right to convert into equity upto 20% of such outstanding (as on the date of conversion) as per SEBI guidelines / loan covenants, whichever is applicable.

g) CDR Lenders shall have the right to recompense the relief/ sacrifices/ waivers extended by respective CDR lenders (as per CDR guidelines).

21. During the period, the Company has provided a sum of Rs.5 lacs (Rs.10 lacs) towards gratuity in the Profit a Loss Account on adhoc basis for the Group Gratuity Scheme of Life Insurance Corporation of India, but no provision is done for leave salary in absence of any specific policy of the Company. Both the above provisions are not as per actuarial valuation, which is not in accordance with Accounting Standard -15.

22. During the period, the Company has paid a sum of Rs.2.88 lacs (Rs.4.32 lacs) as premium towards the Key man Insurance policy taken for Mr. Raj Kumar Sekhani, Chairman a Managing Director of the Company.

23. In the opinion of management, value of realization of current assets, deposits, loans and advances in the ordinary course of business will be at least equal to the amount at which they have been stated in the financial statements.

24. The sundry debit and credit balances including debtors, creditors and advances to suppliers, advances from customers either debit or credit and deposits are subject to confirmation and reconciliations, the effect of which not known.

25. Dues to Small Scale Industries undertakings and dues to Micro Enterprises and Small Enterprises:

The Company is in the process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since, the relevant information is not readily available; no disclosures have been made in the Accounts. However, in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act, is not expected to be material.

26. The current accounting period of the Company is for six months i.e from 1st October, 2009 to 31st March, 2010, where as for the tax purpose the accounts will be prepared for a period of twelve months i.e from 1 st April, 2009 to 31 st March, 2010. The necessary tax provision in the six months period of accounting, if any, will be for that relevant period.

27. Related party transactions:

A] Name of related party and nature of relationship.

Subsidiaries

Hakoba Lifestyle Ltd.

Mas Embroideries Pvt. Ltd.

Pioneer Realty Ltd.

S.R Investments Ltd

Associate Concerns

Pioneer E-Com Fashions Ltd.

Reach Industries Pvt. Ltd.

Joint Venture

M/s Super Industries, DMCC, Dubai

Key Management Personnel

Shri Raj Kumar Sekhani

Shri Harsh VardhanBassi

Relative of Key Management Personnel & their Enterprises

M/sJ J Sons

ThakurdasaCo.Pvt.Ltd.

Aarav Sekhani

Quantity:

Management has explained that it is not possible for the Company to get quantitative details prepared and tallied with stock records in respect of embroidery business as its principal items such as laces, fabric and motifs etc. are sold in different units such as in pieces, meters, packets of different sizes etc., whereas purchase of raw materials required viz. yarn, fabric etc. for manufacturing of these items are procured in different units such as meters, kilograms, cones etc.

The above non disclosure of quantity details is not in accordance with Schedule VI, Part II, Para 3 of the Companies Act, 1956.

Sep 30, 2009

As at As at 30-09-2009 30-09-2008

1 Contingent liabilities not provided for in respect of:

a) Bank Guarantees outstanding 62.81 85.14

b) Letter of Credit outstanding. - 152.00

c) Corporate Guarantees on behalf of subsidiary company 3050.00 3050.00

d) Corporate Guarantees on behalf of other company 109.00 109.00

e) Estimated amount of contracts remaining to be executed on Capital 8.26 20.00 accounts. (Net of advances)

f) Assessment order of Customs Duty for Import of second hand computerized 46.90 46.90 embroidery machines for which appeal has been filed with Honorable Supreme Court.

g) Demand raised by excise department in respect of which appeal has been 94.73 83.03 filed.

h) Demand raised by Income-tax Department in Block assessment order u/s - 145.07 158A for the period from FY 1998-99 to FY 2003-04 in respect of which appeal has been filed with CIT (Appeal) .( Net of Advances )

J) Other Income tax matters pending in appeal. 13.33 13.33

j) Claims against the company not acknowledged as debts - 8.66

k) Premium/Interest on Foreign Currency Convertible Bond 2750.93 1527.94

k) There are some Labour Cases in Labour Court and Industrial Court regarding overtime, backwages and reinstatement to which the company is contesting. NA NA Quantum is not ascertainable.

In the opinion of the management, there is no contingent liability other than stated above and adequate provision have been made for all known liabilities, except interests and penalties as may arise.

2. i) The company has entered into an MOU dated 20th September, 2007 with Arcot Mills Limited (BIFR Company) for purchase of movable and immovable assets situated atKaUakurichi, Tamilnadu for a total consideration of Rs. 1105 lacs on lump sum sale basis out of FCCB funds. The transfer of assets in favour of the company is pending for deregistration from BIFR.

Further, till the assets are transferred in favor of the company, the company has entered into a tease agreement dated 18.02.09 for usage of assets for a specific consideration and has also incurred a sum of Rs. 69.16 lacs for renovation of machines pending capitalization.

ii) The company is though Ipso Facto owner of movable and immovable assets of aforesaid factory however, pending deregistration and approval from BIFR, it has not capitalized the assets though full working of the unit is merged in the companys results.

3. Capital work in progress also includes various advances aggregating to Rs. 690.58 lacs given against various properties for which necessary settlements are being made with parties as the expected land or properties in all cases may not be conveyanced in favour of the Company, however in the opinion of the management said amounts are considered good and fully recoverable.

4. Loans ana advances includes an advance of Rs. 1350 lacs given to Pioneer E Com Fashions Limited to buy stake in its share in the project of Joint Development of property at Borivali. However, in current year the said development rights are intended to be surrendered and sold and thus this advance is in the nature of loan recoverable from the said company, which is considered good of recovery.

5. The property of erstwhile Royal Embroideries Limited, a company which was amalgamated with the company on which attachment notice is received from the Commercial Taxes Office for the dues of Rs. 18.63 lacs, which is now fully provided for and being paid in installments.

6. i) Loans and advances includes a sum of Rs. 1534 lacs advanced to Crystal Lace (India) Ltd in previous period against machinery, the title of which could not be transferred due to technical reasons and in the current year the said advance and obligation to buy machine has been converted to loan bearing interest at the rate 15 % p.a. and has been further secured by charge on the factory Plot No. 27, at TTC Indl Area, MIDC, Mahape, Navi Mumbai, Dist Thane (Area 10687.32 sq mtrs) in favor of the company inclusive of 25 % of constructed area which the said Crystal Lace (India) Limited wilt be entitled for the development of front portion with a third party out of this total area. The company has registered the charge with ROC.

ii) The aforesaid conversion of advance into loan though strictly not in compliance with FCCB utilisation rules of RBI, however the company shall redeposit the same on repayment by the said Crystal Lace (India) Limited into FCCB account to comply the same.

iii) The company has not provided the interest of Rs.122.30 lacs on the aforesaid loan and income is understated to this extent of current year.

7. a) The Company has a investment of Rs.1147.00 lacs (Rs. 1147.00 lacs) and has given loans and advances of Rs. 1401.73 (Rs.1405.83 lacs) to Hakoba Lifestyle Limited, a subsidiary of the company. The accumulated losses as at 30th September, 2009 amounting to Rs. 4528.16 lacs (Rs. 3881.42 lacs) has exceeded the net worth of the said Company. However, having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

b) The Company has a investment of Rs. 37.88 lacs (Rs. 37.88 lacs) and has given loans and advances of Rs.408.49 lacs (Rs. 445.16 lacs) to Mas Embroideries Private Limited, a wholly subsidiary of the company. The accumulated losses as at 30th September, 2009 amounting to Rs. 341.27 lacs (Rs. 349.30 lacs) has exceeded the net worth of the said company. However, having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

c) The Company has a investment of Rs. 937.72 lacs (Rs. 937.72 lacs) and has given loan of Rs. 1056.88 lacs (Rs.1032.68 lacs) to S.R Investments Limited, Mauritius, a subsidiary of the Company. The accumulated losses as at 30th June, 2009 amounting to Rs.592.50 lacs (Rs. 491.86 lacs) has exceeded the net worth of the said Company. However, having regard to the long term strategic investment, the diminution in the value of investments is considered to be temporary and accordingly no provision has been made.

8. The Company in its extra ordinary General Body Meeting held on 10-12-2007 decided and authorized Board / Committee to issue 5,90,693 Equity Stock Options to the eligible present and future employees and / or Directors of the Company through Employee Stock Option Scheme at a predetermined price formula. However, in view of the non-response, the Board / Committee did not act on said resolution to carry out any Employee Stock Option Scheme and Board of Directors withdrew the said Equity Stock Options which lapsed during the current year and thus no accounting effect has been made.

9. i) The Company had invested Rs.937.72 lacs (USD 2.38 mn.) in previous period in overseas Joint Venture S.R Investments Limited to acquire 51% Equity thereof and further advanced a loan of Rs.1056.88 lacs (USD 2.20 mn.) (Optionally convertible) out of FCCB funds, with a service charge @ 9% p.a. until conversion or repayment and thus the outstanding loan including interest as on the year end is Rs. 1247.01 lacs. The accounting year of the said Joint Venture Company is closed on 30th June every year and pending finalization of audit of the said Joint Venture including opening balances and until as on 30th June, 2009, the accounts have been consolidated based on unaudited accounts of the said Joint Venture which is not in compliance with Accounting Standard 21 Consolidated Financial Statement issued by the Institute of Chartered Accountants of India.

ii) The option for conversion into Equity as aforesaid in S R Investment Ltd, Mauritius has expired within 18 months of Investments as per agreement and Company chose not to convert the same into Equity. The Company though accounted for the annual service charges @9% p.a. on the loan advanced, however, the said amount along with principal though not repaid timely considered good and no devaluation is accounted even though underlying assets held through Equity investment by the said overseas Company in the Indian Company Crystal Lace (India) Limited has been devalued.

10. i) The Company had invested Rs.509.92 lacs (USD 1.26 mn.) in previous period in overseas Joint Venture M/s Super Industries DMCC to acquire 10% stake thereof and further advanced a loan of Rs. 1777.48 lacs (USD 3.70 mn.) (Optionally convertible) out of FCCB funds, with a service charge @ 9% p.a. until conversion or repayment. Since the previous period the said 10% stake is treated as loan and the outstanding loan including interest as on year end is Rs. 2806.63 lacs. Since, the Company doesnt hold any shareholding in the said Joint Venture and therefore, no consolidation is made except disclosure of loan and service charges in the Joint Venture in compliance with Accounting Standard 27 Financial Reporting of Interest in Joint Venture issued by the Institute of Chartered Accountants of India.

ii) The toan as aforesaid of Rs. 2806.63 lacs (USD 4.96 mn. Plus service charges) advanced to M/s Super Industries, DMCC is considered good and in the opinion of the management the said loan is fully recoverable and good in recovery though neither principal nor service charges are paid timely.

11. Foreign Currency Convertible Bonds (FCCB):

Out of the total FCCB of value of USD 30 Million issued during the period ended 30th September, 2008, total conversions until last year amounts to USD 2 Million at the conversion price of Rs. 223.96 per equity share with face value of Rs. 10 and a premium of Rs. 213.96.

There were no conversions of FCCB during the year ended 30th September, 2009.

12. During the period ended 30th September, 2008, FCCB have been treated as issue of Securities (Shares / Debentures of the Company) and accordingly the share premium account is applied in writing off the FCCB issue expenses as per Section 78 of the Companies Act, 1956, which was not in accordance with the Accounting Standard 26. Due to which the accumulated loss would have been higher by Rs 518.08 lacs.

13. The Company has charged exchange difference arising in relation to Fixed Assets, which are purchased out of the Foreign Currency Term Loans, in the carrying cost of the assets which is not in accordance with the Accounting Standard 11. Had the Company followed Accounting Standard 11, loss would have been higher by Rs. 64.08 lacs (Rs. 252.37 lacs).

14. a) During the period ended 30th September, 2008, the Company has floated an issue of FCCB of USD 30 million out of which USD 2 Million was converted into equity shares. The Company has considered such FCCB as Non-Monetary liability as the Company reasonably expects that these bonds would be converted into equity shares (without transfer of controlling interest) instead of redeeming them for cash at the end of the period of the bond. In view of this no provision has been made for premium/interest aggregating to Rs. 2750.93 lacs (Rs. 1527.94 lacs) on the outstanding FCCB upto 30th September, 2009 calculated in terms of offer circular dated 27-04-2007 and the same has been considered as contingent liability. Had it not been treated so, current year loss would have been higher by Rs. 1222.99 lacs (Rs. 1527.94 lacs.) .

b) There was a foreign exchange loss of Rs. 1951.30 lacs (Rs.1643.30 lacs) on outstanding FCCB as on 30th September, 2009 arising out of revaluation which has not been accounted for since FCCB has been considered as Non-Monetary liability by the management.

c) An alternate view exist that the liability towards the FCCB is a monetary liability and should be revalued at the period-end exchange rate in accordance with Accounting Standard -11 The Effect of Changes in Foreign Exchange Rates prescribed in the Company (Accounting Standard) Rules, 2006 issued by the Central Government in consultation with the National Advisory Committee on Accounting Standard. Thus the Company should have provided interest on FCCB if the alternate view regarding FCCB as monetary liability was followed. But since there is no specific guidance of The Institute of Chartered Accountants of India on accounting for foreign currency bonds convertible into equity shares at the option of the holder, had the said liability been considered as a monetary liability as before, the accumulated loss would be higher by Rs. 1951.30 lacs (Rs. 1643.30 lacs) on account of exchange difference.

15. a) In accordance with the FEMA guidelines and applicable rules and regulations and as supported by the Lawyers Certificate in the previous period for end use of FCCB proceeds, these have been used towards expansion of business, overseas acquisition and towards other permitted use as per the ECB guidelines except Rs.563.36 lacs (Rs.563.36 lacs), which has been appropriated by Union Bank of India towards irregularity in cash credit account, which is not a permissible end use as per the ECB guidelines, to which the Company has made an objection and represented for reversal of transactions in last year and the matter is still pending. The balance unutilized amount has been retained overseas with Axis Bank, Hong Kong.

b) The utilisation of the FCCB proceeds includes a sum of Rs.900.00 lacs towards acquisition of Yarn Unit of Kiran Industries Limited at Surat on slump sale basis. However, due to non-fulfillment of certain terms and covenants, the said acquisition was cancelled mutually and ultimate use of the same is intended to be within guidelines of ECB rules. The said amount is shown as advance recoverable and considered good. The Company expects the recovery contingent upon its payment of dues to the said party for supply / advances.

16. The previous period figures are for eighteen months ended 30th September, 2008, while those of current year are for twelve months ended 30th September, 2009, hence same are not comparable. The previous period figures have been regrouped, wherever necessary, to confirm to the current years presentation.

17 The figures in the bracket () are relating to the previous period ended 30th September, 2008.

18. In the opinion of the management, there is no impairment of assets as on Balance Sheet date.

19. a) The company has during the year confirmed to sell its development rights along with the conveyance of the property at Borivali through a letter of intent for a consideration of Rs. 1850 lacs of which Rs. 200 lacs has been received as advance Et balance is receivable on execution of conveyance deed ft other documents. This consideration is over & above the non refundable consideration of Rs. 650 lacs received as per the development agreement 6 treated as other income in previous period.

b) In terms of CDR Package the aforesaid deal has been duly approved by CDR-EG on 30th September 2009.

c) Pending Execution of Conveyance deed & other document & also pending surrender of development rights in favour of buyers, the company has not treated the aforesaid sale as final and advance received is treated as liability in the current year.

d) Pending documentation as aforesaid and finality of the matter, the status quo of the title and companys right of development of 37.50% of FSI in Borivali property remains unchanged as per original development agreement with Sunteck Realty Ltd. with non refundable consideration of Rs. 650 lacs, treated as other income in previous period.

20. Sundry Debtors includes export bills outstanding for more than 180 days for Rs. 678.76 (Rs. 830.55 lacs), out of which Rs. 652.42 (Rs.788.51 lacs) are recoverable from Calyx International Ltd, Thailand. The recoveries are slow due to adverse economic conditions prevailing in overseas market. However, the same are considered good for recovery.

21. FINANCIAL RESTRUCTURING SCHEME

The Financial Restructuring Scheme under Corporate Debt Restructuring (CDR) mechanism, sanctioned by the CDR Empowered Group was implemented during the year.

a) All the secured lenders except ING Vysya bank Ltd & Landes Bank Baden Wurttemberg (LBBW) form part of CDR scheme.

b) In respect of ING Vysya Bank Ltd., who had initiated recovery proceedings before DRT, no effect has been given in the accounts as per the approved scheme and the outstanding dues as on 1 st October, 2008 (being the Cut Off Date) along with interest liability has been provided in accordance with the existing terms ft conditions while preparing the accounts.

c) LBBW Bank who do not form part of CDR group and is yet to agree for restructuring scheme approved by CDR, the outstanding dues as on 1 st October, 2008 has been continued as Term Loan in the accounts.

d) i) In accordance with the CDR Scheme, the Company has Created Working Capital Term Loan (WCTL) of Rs. 34.50 Crores by carving out the irregular portion of Working Capital limits as per the scheme (excluding the share of ING Vysya Bank Ltd.).

ii) As per the CDR scheme, a sum of Rs 32.89 crores is still to be carved out of present Term Loan and WCTL into 9% Optionally Convertible Cumulative Redeemable Preference Shares (0CCRPS) redeemable from 7th to 10th year equally and is pending for want of some clarification from Stock exchange and CDR- EG.

iii) The company created Funded Interest Term Loan (FITL) of Rs. 1131.27 lacs towards interest accruing on Term Loans and WCTL from 1 st October, 2008 till 30th September, 2009 as per the scheme (excluding ING Vysya Bank Ltd. and LBBW Bank). This loan is to be repaid, with 8% simple interest payable alongwith installments, over 16 quarters starting from the expiry of 2 years from Cut- off-date (COD), except in 6th quarter from COD in case of TUFs Loan. The balances of all the lending banks are subject to reconciliation a confirmations and the company has accounted interest as per CDR scheme and the difference of interest as per original Term loan sanction and CDR scheme is not recognized by the company as liability as they have signed the Master Restructuring Agreement of CDR scheme.

e) Promoters shall bring Rs. 3.50 crores as their contribution towards the Restructuring Scheme in the following manner: - Rs. 0.35 Crore : By 30th September, 2009

Rs. 3.15 Crores : By 30th September, 2010

The promoters have brought in a sum of Rs. 55.43 lacs till 30th September, 2009 as unsecured loan.

f) In the event of any default/ breach/ violation ofany of the terms a conditions of the Financial Restructuring Package, the lenders with approval of CDR-EG shall have a right to revoke the CDR package and to reverse the waivers/ sacrifices.

g) In the event of default in compliance with the restructured package, the lenders shall have the right to convert entire/ part of defaulted interest and entire/ part of defaulted principal into equity as per SEBI pricing formula.

h) In case of debt outstanding beyond Seven years from the date of CDR LOA, the CDR lenders shall have a right to convert into equity upto 20% of such outstanding (as on the date of conversion) as per SEBI guidelines / loan covenants, whichever is applicable.

i) CDR Lenders shall have the right to recompense the relief/ sacrifices/ waivers extended by respective CDR lenders (as per CDR guidelines).

j) ING Vysya Bank Limited who has filed recovery suit in DRT at Mumbai for the recovery of amounts due and payable under working capital arrangements against its pari passu charge.

22. During the year, the Company has provided a sum of Rs.10 lacs (Rs.20 lacs) towards gratuity in the Profit a Loss Account on adhoc basis for the Group Gratuity Scheme of Life Insurance Corporation of India, but no provision is done for leave salary in absence of any specific policy of the Company. Both the above provisions are not as per actuarial valuation, which is not in accordance with Accounting Standard 15.

23. During the year the company has changed the policy of Leasehold Land by amortizing it over a period of lease agreement in accordance with the Accounting Standard 6 and amortizing to profit and loss account. Had the company not changed the accounting policy the profit of the company would have been higher by Rs. 1.72 lacs.

24. During the year, the Company has paid a sum of Rs. 4.32 lacs (Rs.10.34 lacs) as premium towards the Key man Insurance policy taken for Mr. Raj KumarSekhani, Chairman a Managing Director of the Company.

25. In the opinion of management, value of realization of current assets, deposits, loans and advances in the ordinary course of business will be at least equal to the amount at which they have been stated in the financial statements.

26. The sundry debit and credit balances including debtors, creditors and advances to suppliers, advances from customers either debit or credit and deposits are subject to confirmation and reconciliations.

27. Dues to Small Scale Industries undertakings and dues to Micro Enterprises and Smalt Enterprises.

The Company is in the process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since, the relevant information is not readily available, no disclosures have been made in the Accounts. However, m the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act, is not expected to be material.

28. In view of Company"s accounting period is different than tax financial year, the provision for income tax has been made for the financial year ended 31 st March, 2009, corresponding to the assessment 2009-10, which is nil, in view of losses. However, current years Fringe Benefit Tax of Rs.4.89 lacs (Rs. 20 lacs) have been provided for the period. The necessary tax provision for the period which falls during the corresponding assessment year 2010-11, will be made next year since likely tax, if any, cannot be ascertained at this stage.

29. Related party transactions:

A] Name of related party and nature of relationship.

Subsidiary Companies

Hakoba Lifestyle Ltd.

Mas Embroideries Pvt. Ltd.

Pioneer Realty Ltd.

S.R Investments Ltd. (also a Joint Venture)

Associate Concerns

Pioneer E-Com Fashions Ltd. Reach Industries Pvt. Ltd.

Joint Venture

M/s Super Industries, DMCC, Dubai

Key Management Personnel

Shri Raj Kumar Sekhani Shri Harsh Vardhan Bassi

Relative of Key Management Personnel 6 their Enterprises

Shri Varun Sekhani M/s J J Sons Thakurdas&Co. Pvt. Ltd.

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