Notes to Accounts of S Kumars Nationwide Ltd.

Mar 31, 2012

Note 1.1 - Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The Dividend proposed by the Board of directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2012, the amount per share dividend recognised as distribution to equity share holder was Rs. 1 (31st March, 2011 : Rs. 1 )

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the Shareholders.

Note 1.2 - Equity Shares allotted during the year

During the year the Company has received Rs. 4,763.39 lacs from Sansar Exim Pvt. Ltd., a promoter group company, being the balance 59% of the subscription amount towards 1,24,25,000 Number of warrants of Rs. 64.53 each aggregating Rs. 8,017.85 lacs with an option to convert into equal nos. of Equity shares of Rs. 10/- each at a premium of Rs. 54.53 per share within 18 months from the date of allotment, which was issued on preferential basis and allotted, in its meeting held on 15th June, 2010. The investor has opted for the conversion of above Equity warrants and the Company has allotted 1,24,25,000 nos. of Equity Shares of Rs. 10/- each at a premium of Rs. 54.53 per share on 13th December, 2011 against receipt of full amount.

Note 1.3 - Terms of Redemption of Preference shares

6% Cumulative Redeemable Preference Shares redeemable by 1st October, 2013.

0.01% Redeemable Preference Shares amounting to Rs. 79.50 lacs is to be redeemed @ 25% in each year between Oct'16 to Sep'20.

0.01% Redeemable Preference Shares amounting to Rs. 4,626.43 lacs has been fully settled by the Company as per the Corporate Debt Restructuring exit approval, by keeping in Fixed Deposit with the Preference Shareholders an amount equivalent to the Net Present Value of such Preference Shares. However, these Preference Shares are continued to be shown as Preference Shares not redeemed and the amount of such Fixed Deposits which are Rs. 2,693.29 lacs (Previous Year Rs. 2,453.93 lacs), assigned to the Preference Shareholders, continue to be shown on the assets side in Note No 14 - other non-current Asset.

2.1 a) Out of the total Loan ofRs. 33,659.66 lacs under Technology Upgradation Fund scheme (TUFs), Loans ofRs. 19,970.22 lacs with Current Maturities of Rs. 4,828.73 lacs are secured by ^pari passu charge on the Fixed Assets of existing Jhagadia Unit, second pari passu charge on all other Fixed Assets and Current Assets of the Company, both present and future, personal guarantee of Chairman & Managing Director and corporate guarantee of Anjaneya Holdings Pvt. Ltd.

These Loans are repayable in 32 Equal Quarterly Installment (EQI) starting from April 2010 to January 2018 and applicable interest rate is in the range of 13.5%-15.0% p.a.

b) The balance Loan ofRs. 13,689.44 lacs under Technology Upgradation Fund scheme (TUFs), with Current Maturities of Rs. 2,000.00 lacs is secured by specific charge on the Fixed Assets of proposed project, first pari passu charge on all other Fixed Assets (excluding Fixed Assets of existing Jhagadia Unit), second pari passu charge on Current Assets of the Company, both present and future, personal guarantee of Chairman & Managing Director and corporate guarantee of Anjaneya Holdings Pvt. Ltd.

These Loans are repayable in 32 EQI starting from June 2012 to March 2020 and applicable interest rate is 15.0% p.a. There is delay in repayment of loan amounting to Rs. 672.92 lacs for a period of one to five months, out of which Rs. 513.95 lacs have since been repaid.

2.2 a) Out of the total Loan of Rs. 13,085.56 lacs under Overseas Investment Finance Programme (OIFP), Loan of Rs. 9,125.00 lacs with Current Maturities ofRs. 3,437.50 lacs is secured by first pari passu charge on the Fixed Assets (excluding Fixed Assets of existing Jhagadia Unit) of the Company, both present and future, specific charge on Debt Service Reserve Account

(DSRA) opened for this Loan, pledge of promoter's shares held in the Company, pledge of shares of acquired/ subsidiary Company and personal guarantee of Chairman & Managing Director.

This Loan is repayable in 24 EQI starting from December 2010 to September 2016 and applicable interest rate is 13.5% p.a.

b) The balance Loan of Rs. 3,960.56 lacs under Overseas Investment Finance Programme (OIFP), with Current Maturities of Rs. 3,714.36 lacs is secured by first pari passu charge on the Fixed Assets (excluding Fixed Assets of existing Jhagadia Unit) of the Company, second pari passu charge on the Fixed Assets of existing Jhagadia Unit, second pari passu charge on Current Assets of the Company, both present and future, pledge of promoter's shares held in the Company, pledge of shares of acquired/ subsidiary Company and personal guarantee of Chairman & Managing Director. This Loan is repayable in 42 Equal Monthly Installment (EMI) starting from January 2011 to May 2014 and applicable interest rate is 15.25% p.a. There is delay in repayment of loan amounting to Rs. 973.22 lacs for a period of one month, out of which Rs. 285.72 lacs have since been repaid.

2.3 a) Out of the total Rupee Term Loan of Rs. 14,674.13 lacs, Loan ofRs. 10,336.00 lacs with Current Maturities ofRs. 5,510.42 lacs is secured by first pari passu charge on the Fixed Assets (excluding Fixed Assets of existing Jhagadia Unit) of the Company, second pari passu charge on the Fixed Assets of existing Jhagadia Unit, second pari passu charge on Current Assets of the Company, both present and future, personal guarantee of Chairman & Managing Director and corporate guarantee of Reid & Taylor (India) Ltd., first pari passu charge on the Fixed Assets of the guarantor Company, second pari passu charge on Current Assets of the guarantor Company and pledge of promoter's shares held in guarantor Company. This Loan is repayable in 20 unequal quarterly instalments starting from December 2009 to September 2014 and applicable interest rate is 13.5% p.a.

b) Term Loan ofRs. 500.87 lacs with Current Maturities ofRs. 590.00 lacs is secured by specific first charge on Registered Office property, second pari passu charge on Current Assets of the Company, both present and future, and personal guarantee of Chairman & Managing Director and corporate guarantee of Anjaneya Holdings Pvt. Ltd.

This Loan is repayable in 20 EQI starting from January 2010 to October 2014 and applicable interest rate is 15.0% p.a.

c) Term Loan ofRs. 3,750.00 lacs with Current Maturities ofRs. 6,250.00 lacs is secured by first pari passu charge on the Fixed Assets (excluding assets having specific charge) of the Company, and second pari passu charge on Current Assets of the Company, both present and future.

This Loan is repayable in 8 EQI starting from March 2012 to December 2013 and applicable interest rate is 14.4% p.a.

d) Term Loan of Rs. 87.26 lacs with Current Maturities of Rs. 30.00 lacs is secured by first pari passu charge on the Fixed Assets of the Company and second pari passu charge on Current Assets of the Company, both present and future.

This Loan is repayable in 101 EMI starting from November 2005 to March 2014 and applicable interest rate is 10.0% p.a. There is delay in repayment of loan amounting to Rs. 1,302.42 lacs for a period of one month, out of which Rs. 52.42 lacs have since been repaid.

2.4 Equipment Finance Loans ofRs. 100.31 lacs with Current Maturities ofRs. 94.62 lacs are secured by hypothecation of specific equipments / assets.

These Loans are repayable in 36 EMI starting from commencement of every new Loan and applicable interest rate is in the range of 6.75%-15.0% p.a.

2.5 Loan ofRs. 13,750.00 lacs with Current Maturities ofRs. 5,500.00 lacs from Company's Indian Subsidiary is secured by second pari passu charge on the Fixed Assets of the Company, both present and future.

This Loan is repayable in 16 EQI starting from September 2009 to June 2013, further extended to June 2014 and applicable interest rate is 12.0% p.a.

2.6 Unsecured Term Loan ofRs. 289.59 lacs with Current Maturities ofRs. 1,256.78 lacs is repayable in 20 EQI starting from January 2009 to October 2013 and applicable interest rate is 4.5% p.a. There is delay in repayment of loan amounting to Rs. 751.98 lacs for a period of one to six months.

2.7 Unsecured Funded Interest Term Loan ofRs. 573.42 lacs is repayable in 5 EQI starting from October 2013 to October 2014 and applicable interest rate is 2% p.a.

2.8 Unsecured Interest Free Loan of Rs. 4,000 lacs from Company's Indian Subsidiary is repayable after complete repayment of Secured Loan from Subsidiary mentioned in point 3.5 above i.e. after June 2014.

2.9 Non-Convertible Debentures (NCDs) issued to India Debt Management Pvt. Ltd. with Current Maturities ofRs. 15,078.81 lacs are secured by first pari passu charge on the all the Fixed Assets of the Company and on all the Fixed Assets of Company's Indian Subsidiary, simple mortgage on the property situated at Mehsana, Gujarat, pledge of major promoter's shares held in the Company, pledge on entire shareholding (present and future) held by the Company in Sansar Holding Inc., pledge and guarantee in respect of shares held by Company in Brandhouse Retails Ltd., non-disposal undertaking for "Reid & Taylor" trade mark andfirst pari passu charge on brands held by Company except "S.Kumars" brand. Balance NCDs are due for redemption on 30th September, 2012 and having effective rate of interest of 19.0% p.a.

Note 3.1

Working Capital loans from bank amounting to Rs. 1,48,328.14 lacs are secured primarily by first pari passu charge on current assets and collateral second pari passu charge on Company's all movable and immovable properties. In addition to above, corporate guarantee from Anjaneya Holding Pvt. Ltd. and personal guarantee of Chairman & Managing Director has also been provided. Average Interest rate on above Working Capital loans is in the range of 12% p.a. to 16.75% p.a.

Note 3.2

Of the short term Loan amounting to Rs. 13,333, Rs. 3,333 lacs is secured against first pari passu charge on current assets of the Company, collateral second pari passu charge on Fixed Assets of the Company (both present and future) with other working capital loans and personal guarantee of Chairman & Managing Director along with corporate guarantee of Anjaneya Holdings Pvt. Ltd.

Balance Rs. 10,000 lacs short term loan is secured against first pari passu charge on all fixed assets of the Company (excluding exclusively charged fixed assets), second pari passu charge on exclusively charged fixed assets, second pari passu on all current assets (both present and future), Demand Promissory Note, personal guarantee of Chairman & Managing Director along with pledge of shares held by S. Kumars Nationwide Limited in equity holding of Reid and Taylor (India) Ltd.

4. The recompense expense incurred in connection with the CDR and exit thereof was deferred and was to be amortized over a period upto FY 2020 and accordingly the Company charged off such amortized portion to profit and loss account till 31st March, 2011. To conform with Generally Accepted Accounting Principles (GAAP), the balance amount of such Unamortized expense ofRs. 14,310.31 lacs as on 1st April, 2011 has been adjusted against accumulated Surplus. Had there been no such change, the profit for the year 2011-12 would have been reduced by Rs. 14,310.31 lacs.

5. In the opinion of the management the other current & non current assets have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

6. The confirmation, reconciliation and adjustment of balances pertaining to trade receivables & trade payables through the accounts of collecting agents and loans & advances is an ongoing process. Such adjustments made and balances as on 31st March, 2012 have been independently confirmed. As regards outstanding trade receivables and loans & advances, the Company is of the opinion that the same are fully recoverable and hence, no additional provision is required to be made.

7. The Company has issued 3,04,50,000 Non-Convertible Debentures (NCDs) of Rs. 100/- each i.e. aggregating to Rs. 30,450 lacs to India Debt Management Private Limited on 27th June, 2007. During the year Rs. 202.20 lacs (Previous Year Rs. 950.45 lacs) is transferred to Debenture Redemption reserve. The Company has provided Rs. 167.65 lacs (Previous Year Rs. 786.38 lacs) towards the redemption premium on the above NCDs from the Securities Premium Account. The amount of Debenture Redemption Reserve as on 31st March, 2012 is Rs. 4,752.80 Lacs (Previous Year Rs. 4,550.60 lacs) towards the balance NCDs. During the year India Debt Management Pvt. Ltd. has agreed to revise date of redemption of the outstanding NCDs to 30th September, 2012.

8. The Company is engaged in manufacturing (in house and outsourced) fabrics, ready to wear garments and home textiles. Considering the overall nature, the management is of the opinion that the entire operation of the Company falls under one business segment i.e. Textiles and as such there are no separate reportable segments for the purpose of disclosures as required under Accounting Standard-17 "Segment Reporting".

(b) Key Management Personnel

Shri Nitin S. Kasliwal - Chairman & Managing Director Shri Anil Kumar Channa - Deputy Managing Director

41. PARTICULARS OF DERIVATIVE INSTRUMENTS.

a. No derivative instruments are acquired for hedging purposes

b. No derivative instruments are acquired for speculation purposes

9. The Company has adopted the Accounting Standard -15 (Revised 2005) "Employee Benefits" effective from 1st April, 2007. The Company has classified the various benefits provided to employees as under:

I. Defined Contribution Plans:

a. Provident Fund & Employees' Pension Scheme 1995

b. Employers' Contribution to Employees' State Insurance

10. Contingent Liabilities:

a. Guarantees: (Rs. in Lacs)

Particulars As at 31.03.2012 As at 31.03.2011

i) In respect of concessional custom duty availed under EPCG Scheme 22.50 632.31 (Covered by Bank Guarantee)

ii) Guarantees extended by the banks based on the Company's counter 2,836.74 3,449.78 guarantees

iii) Corporate Guarantee extended by the Company to the lenders of Shree 28,294.00 27,032.00 Maheshwar Hydel Power Corporation Limited

iv) Corporate Guarantees given to the lenders of Reid & Taylor (India) 96,681.69 71,217.05 Ltd. & SKNL International B.V. - Subsidiary Company

v) Corporate Guarantees given to the lenders of Brandhouse Retails Ltd. 18,627.40 18,045.00

c. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance), as certified by the management is Rs. 1,367.09 lacs (Previous Year Rs. 2,298.95 lacs).

11 'As notified by Ministry of Corporate Affairs, Revised Schedule VI under the Companies Act, 1956 is applicable to the Financial Statements for the financial year commencing on or after 1st April, 2011. Accordingly, the financial Statements for the year ended 31st March, 2012 are prepared in accordance with the Revised Schedule VI. The amounts and disclosure included in the financial statements of the previous year have been reclassified to conform to the requirement of the Revised Schedule VI'.

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Mar 31, 2011

1. Contingent Liabilities:

a. Guarantees:

( Rs. in lacs)

Particulars As at 31.03.2011 As at 31.03.2010

i) In respect of concessional custom duty availed under EPCG Scheme 632.31 1,431.16 (Covered by bank guarantee)

ii) Guarantees extended by the banks based on the Company's counter 3,449.78 2,488.77 guarantees

iii) Corporate Guarantee extended by the Company to the lenders of Shree 27,032.00 27,218.00 Maheshwar Hydel Power Corporation Limited

iv) Corporate Guarantees given to the Lenders of Reid & Taylor (India) 71,217.05 47,891.42 Ltd. & SKNL International B.V.

v) Corporate Guarantees given to the Lenders of Brandhouse Retails Ltd. 18,045.00 18,045.00

c. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance), as certified by the management is Rs. 2,298.95 lacs (Previous Year Rs. 4,212.20 lacs).

2. (a) In terms of the approval of the CDR EG, as per their letter dated 12th September 2008, for the exit of the Company from the Corporate Debt restructuring, the Company has made full and final payments to all the lenders and there is no outstanding on this account as at the balance sheet date.

(b) The financial costs incurred by the Company for the period up to the year 2008-09, during the Restructuring period and the costs incurred in connection with the exit of the Company from the CDR are carried under the head "Restructured Financial Costs" and amortized over the repayment period till the year 2020. Such "Restructured Financial Costs" net of amortization, is Rs. 14,310.31 lacs (Previous Year Rs. 15,906.57 lacs) are shown in Schedule 'F' under "Loans and Advances" and Rs. 1,596.27 lacs charged to Profit & loss account during the year.

(c) Zero Coupon Redeemable Preference Shares amounting to Rs. 4,626.43 lacs though fully settled by the Company as per the Corporate Debt Restructuring exit approval by keeping in Fixed Deposit with the lenders an amount equivalent to the Net Present Value of such Preference Shares continued to be shown as Preference Shares not redeemed and the amount of such Fixed Deposits which are Rs. 2,453.93 lacs (Previous Year Rs. 2,241.44 lacs), assigned to the lenders, continue on the assets side.

3. Investment held in the shares of Subsidiary companies being long term and strategic in nature is stated at cost of acquisition and no adjustment in respect of appreciation / depreciation of such investments has been made in the accounts.

4. In the opinion of the management the current assets and loans and advances have a value on realisation in the ordinary course of business at least, equal to the amount at which they are stated.

5. Sundry debtors, loans and advances including capital advances and sundry creditors are subject to confrmations, reconciliation and consequential adjustment, if any.

6. The Company has issued 2% Foreign Currency Convertible Bonds in April, 2006, amounting to US$ 50 million ( Rs. 22,335 lacs) due in April 2011. Out of this, FCCB of US $ 41 million has been converted in to equity shares in earlier years and during the year the Company has converted the balance FCCBs of US $ 9 million into 70,95,789 equity shares of Rs. 10/- each at a price of Rs. 57/- per share (including premium of Rs. 47/- per equity share) on 11th March 2011.

7. (a) The Company has placed with Qualified Institutional Buyers (QIBs) 2,89,43,750 equity shares of Rs. 10/- each at a price of Rs. 80/- per share (including premium of Rs. 70/- per equity share) aggregating to Rs. 23,155 lacs in 20th September, 2010.

(b) The Company has incurred Rs. 1,031.80 lacs towards legal fees, professional fees, merchant bankers fees and other related expenses towards issue of equity shares to QIBs. This shares issue expenses has been written off against Securities Premium.

8. During the year the Company has received Rs. 4,021.04 lacs from N'Essence Holdings Ltd., a promoter group Company, being the balance 75% of the subscription amount towards 1,24,25,000 nos. of warrants of Rs. 43.15 each aggregating Rs. 5,361 lacs with an option to convert into equal number of Equity shares of Rs. 10/- each at a premium of Rs. 33.15 per share within 18 months from the date of allotment, which was issued on preferential basis and allotted, in its meeting held on 31st October, 2009. The investor has opted for the conversion of above Equity warrants and the Company has allotted 1,24,25,000 nos. of Equity Shares of Rs. 10/- each at a premium of Rs. 33.15 per share on 3rd March, 2011 against receipt of full amount.

9. The Board of Directors has issued and allotted, in its meeting held on 15th June,2010, 1,24,25,000 nos. of warrants of Rs. 64.53 each aggregating Rs. 8,017.85 lacs to Sansar Exim Pvt. Ltd., a promoter group Company on a preferential basis, with an option to convert into equal number of Equity shares of Rs. 10/- each at a premium of Rs. 54.53 per share within 18 months from the date of allotment. The Company has received Rs. 3,254.46 lacs being the subscription amount.

10. During the year , the Company has redeemed preference shares aggregating to Rs. 2,404.84 lacs (Previous year Rs. 1,056.08 lacs). Further, the Company has allotted equity shares aggregating to Rs. 4,846.46 lacs, hence provision for Capital Redemption Reserve (CRR) on account of redemption of preference shares not made.

11. The Company has issued 3,04,50,000 Non-Convertible Debentures (NCDs) of Rs. 100/- each i.e. aggregating to Rs. 30,450 lacs to India Debt Management Private Limited on 27th June, 2007. The Company has redeemed 1,53,71,195 NCDs along with the redemption premium of Rs. 4,008.63 lacs on 1st October, 2009. During the year Rs. 950.45 lacs (Previous Year Rs. 225.15 lacs) is transferred to Debenture Redemption reserve. The Company has provided Rs. 786.38 lacs (Previous Year Rs. 2,978.70 lacs) towards the redemption premium on the above NCDs from the Securities Premium Account. The amount of Debenture Redemption Reserve as on 31st March, 2011 is Rs. 4,550.60 lacs (Previous Year Rs. 3,600.15 lacs) towards the balance NCDs.

12. Payment against supplies from Micro Small and Medium Enterprises (MSME) and ancillary undertakings are made in accordance with the agreed credit terms and to the extent ascertained from available information. The Company does not have any MSME creditors beyond the stipulated credit period during the year.

13. (a) Deferred Tax Liability (Net)

During the year the Company has computed its Deferred Tax Asset / Liability (DTL) in accordance with Accounting Standard-22 "Accounting for Taxes on Income" and accordingly a Deferred Tax (Liability) of Rs. 985.83 lacs as on 31st March, 2011 has been provided. Thereby total DTL aggregating to Rs. 2,692.35 as on 31st March, 2011.

(b) MAT Credit

During the year The Company has accounted the MAT credit of earlier years amounting to Rs. 3,564.55 lacs and from this utilised Rs. 1,191.20 lacs. The balance of Rs. 2,373.35 lacs has been carried forward under MAT Credit entitlement under loans and advances schedule.

14. The Company is engaged in manufacturing (in house and outsourced) fabrics, ready to wear garments and home textiles. Considering the overall nature, the management is of the opinion that the entire operation of the Company falls under one business segment i.e. Textiles and as such there are no separate reportable business segments for the purpose of disclosures as required under Accounting Standard-17 "Segment Reporting."

15. Based on the internal estimates and assessments, the management is of the opinion that there is no impairment in relation to its assets and hence no provision is considered necessary.

16. Related parties Disclosures required under Accounting Standard 18 –"Related Party Transactions" (a) Related Parties

Sr. Name of the Related Party Relationship

No.

1. Reid & Taylor (India) Limited Subsidiary

2. Brandhouse Retails Limited

3. Brandhouse Oviesse Limited

4. S. Kumars Enterprises (Synfabs) Limited

5. S. Kumars Textiles Limited

6. N'Essence Holdings Limited

7. Rosewood Holdings Pvt. Limited

8. Anjaneya Holdings Pvt. Limited (nee Anjani Finvest Pvt. Ltd)

Enterprises over which Key Managerial Personnel are able to exercise significant influence

9. Verve Properties & Investment Pvt. Limited

10. Ingenious Finance & Investment Pvt. Limited

11. Natty Finance & Investment Pvt. Limited

12. S. K. Worsteds Pvt. Limited

13. Tulja Enterprises Pvt. Limited

14. Sansar Exim Pvt. Limited

15. Chamundeshwari Mercantile Pvt Limited

16. Maverick Mercantile Pvt Limited

17. Anjaneya Foundation

18. SKNL Foundation

19. Belmonte Retails Limited Wholly Owned Subsidiary (nee Belmonte Lifestyles Ltd.)

20. SKNL International B.V Wholly Owned Subsidiary

21. SKNL Europe B.V. Wholly Owned Subsidiary

22. SKNL Italy S.p.A. Wholly Owned Subsidiary

23. SKNL Global Holdings B.V Wholly Owned Subsidiary of SKNL International B.V.

24. SKNL North America B.V. Wholly Owned Subsidiary of SKNL Global Holdings B.V.

25. SKNL (U. K.) Ltd. Subsidiary of SKNL Global Holdings B.V.

26. Global Apparel (US) Ltd. Wholly Owned Subsidiary of SKNL (U.K.) Ltd.

27. Global Apparel (France) Ltd. Wholly Owned Subsidiary of SKNL (U.K.) Ltd.

28. 7172931 Canada Ltd. Wholly Owned Subsidiary of SKNL (U.K.) Ltd.

29. Global Apparel (Hong Kong) Ltd. Wholly Owned Subsidiary of SKNL (U.K.) Ltd.

30. Leggiuno S.p.A. Wholly Owned Subsidiary of SKNL Italy S.p.A.

31. Marling & Evans Ltd. Subsidiary of Leggiuno S.p.A.

32. Remala Trading B.V. Subsidiary of SKNL North America B.V.

33. Coppley Corp. Wholly Owned Subsidiary of Remala Trading B.V.

34. HMX Poland sp. Z.o.o Wholly Owned Subsidiary of Remala Trading B.V.

35. HMX Acquisition Corp. Wholly Owned Subsidiary of HMX Poland sp Z.o.o

36. HMX Des Plaines LLC Wholly Owned Subsidiary of HMX Acquisition Corp.

37. Quartet Real Estate LLC Wholly Owned Subsidiary of HMX Acquisition Corp.

38. HMX LLC Wholly Owned Subsidiary of HMX Acquisition Corp.

39. HMX DTC Co. Wholly Owned Subsidiary of HMX Acquisition Corp.

(b) Key Management Personnel

Shri Nitin S. Kasliwal – Vice Chairman & Managing Director

Shri Anil Kumar Channa – Deputy Managing Director

17. Quantitative Information for the year ended on 31st March, 2011.

a) Licensed capacity: Not applicable

b) Installed capacity:

i) Spinning: 38,564 Spindles (Previous Year 38,564 Spindles)

ii) Weaving: 344.13 Lacs mtrs p.a. (Previous Year 344.13 Lacs mtrs.) (As certified by the Management, being a technical matter)

iii) Apparels: 11.4 Lacs nos. p.a. (Ready-to-wear Garments) (Previous Year 11.4 Lacs nos. p.a.)

18. HVFC Shirtings facility

The processing facilities of HVFC factory at Jhagadia Industrial Estate, GIDC, Ankleshwar, Gujarat has commenced w.e.f 30th September, 2010.

19. During the year the Company has capitalized interest of Rs.. 993.27 Lacs (Previous Year Rs.. 960.43 Lacs) which has been paid to TUFS Lenders and FCCB holders. The borrowing was exclusively used for the HVFC/HT project at Jhagadia.

20. Particulars of Derivative Instruments.

a. No derivative instruments are acquired for hedging purposes

b. No derivative instruments are acquired for speculation purposes

21. During the year Excise Duty is applicable on readymade garments from 1st March, 2011. Excise Duty on sales as of 31st March, 2011 is Nil.

22. Company adopted the Accounting Standard -15 (Revised 2005) "Employee Benefits" effective from 1st April, 2007. The Company has classified the various benefits provided to employees as under:

I. Defined Contribution Plans:

a. Provident Fund & Employees Pension Scheme 1995

b. Employers' Contribution to Employees' State Insurance

II. Defined Benefit Plans:

a. Contribution to Gratuity Fund (Funded Scheme)

b. Leave Encashment (Non - Funded Scheme)

The Company has own managed funds as well as insurer managed funds for certain divisions and hence it is not possible to give a break-up of investments in debt instruments and bank deposits.

The expected rate of return on plan assets is based on market expectations at the beginning of the period. The rate of return on long term government bonds is taken as reference for this purpose.

It is estimated that the contribution during financial year 2011-12 would be Rs. 220.09 lacs (Previous year : Rs. 235.69 lacs) on account of the funded benefits.

23. Previous year's figures have been regrouped / rearranged wherever considered necessary to make them comparable with current year's figure.

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Mar 31, 2010

1. Contingent Liabilities:

a) Guarantees:

(Rs. in lacs)

Particulars As at 31.03.2010 As at 31.03.2009

i) In respect of custom duty availed under EPCG Scheme (Covered by bank guarantee) 1,431.16 1,316.72

ii) Guarantees extended by the banks based on the Companys counter guarantees 2,488.77 469.63

iii) Corporate Guarantee exte nded by the Company to the lenders of Shree Maheshwar Hydel Power Corporation Limited 27,218.00 27,328.31

iv) Corporate Guarantees given to the lenders of Reid & Taylor (India) Ltd., Brandhouse Retails Ltd. and on behalf of subsidiary Companies. 65,936.42 31,958.49

b) Claims not acknowledged as debts:

c) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance), as certified by the management is Rs. 4,212.20 lacs (Previous Year Rs. 3,578.36 lacs).

d) Arrears of of Dividend on 6% Cumulative Redeemable Preference Shares are Rs. 509.11 lacs (Previous Year Rs. 424.75 lacs).

2) As per Accounting Standard - 19 "Leases", the total of future minimum lease payment commitments under operating lease agreements for a period of 2 to 9 years to use offices, warehouses and guest house, are as under:

The above amounts are exclusive of taxes and duties. During the year, the Company has paid Rs.493.45 lacs (Previous Year Rs. 297.41 lacs) as rent in respect of the above leases.

3. (a) In terms of the approval of the CDR EG, as per their letter dated 12th September 2008, for the exit of the Company from the Corporate Debt Restructuring, the company has made full and final settlements with all the lenders except one as at the Balance Sheet date.

(b) The financial costs incurred by the Company during the Restructuring period and the costs incurred in connection with die exit of the Company from the CDR are carried under the head "Restructured Financial Costs" and amortized over die repayment period till the year 2020. Such "Restructured Financial Costs" net of amortization, is Rs. 15,906.57 lacs (Previous Year Rs. 17,503.84 lacs) are shown in Schedule F under "Loans and Advances" and Rs. 1,596.27 lacs charged to profit & loss account during the year.

(c) Zero Coupon Redeemable Preference Shares amounting to Rs. 4,626.43 lacs (Previous Year Rs. 4,626.43 lacs) though fully settied by the Company as per the Corporate Debt Restructuring exit approval by keeping in Fixed Deposit with the lenders an amount equivalent to the Net Present Value of such Preference Shares continued to be shown as Preference Shares not redeemed and the amount of such Fixed Deposits which are Rs. 2,241.44 lacs (Previous Year Rs. 1,964.71 lacs), assigned to the lenders, continue on the assets side.

4. Investment held in the shares of companies under the same management being of long term nature is stated at cost of acquisition and no adjustment in respect of appreciation / depreciation of such investments has been made in the accounts.

5. In the opinion of the management the current assets and loans and advances have a value on realisation in the ordinary course of business at least, equal to the amount at which they are stated.

6. Sundry debtors, loans and advances including capital advances and sundry creditors amounting to Rs. 14,068.85 lacs, Rs. 10,805.40 lacs and Rs.7,601.91 lacs respectively, are subject to confirmations, reconciliation and consequential adjustment, if any.

7. At the Extra Ordinary General Meeting dated 26th March, 2007, the Company has passed a resolution to issue on preferential basis upto 1,31,22,400 Fully Convertible Debentures (FCDs) of Rs.82.50 each aggregating Rs. 1,08,25,98,000/-to AnjaniFinvest Private Limited, an entity belonging to the promoter group. Each FCD is compulsorily convertible into one equity share of Rs. 10/- each at a price of Rs.82.50 per share (including premium of Rs.72.50 per equity share). The Company has received the full amount of the FCDs and the FCDs were allotted on 3rd October, 2007. The FCDs are converted to equity shares on 1st April, 2009.

8. The Company has issued 2% Foreign Currency Convertible Bonds in April, 2006, amounting to US$ 50 million (Rs. 22,335 lacs) due in April 2011. The bonds are convertible into fully paid equity shares at a conversion price of Rs. 57/- per share upto March 2011. Out of the above, US$ 41 million have been converted into 3,23,25,259 equity shares of Rs. 10/- each at a price of Rs.57/- per share (including premium of Rs.47/- per equity share) upto March 31, 2010.

9. The Board of Directors has issued and allotted, in its meeting held on 31st October, 2009, 1,24,25,000 nos. of warrants of Rs. 43.15 each aggregating Rs.5,361.39 lacs to a promoter group company, viz., NEssence Holdings Ltd. on a preferential basis, with an option to convert into equal number of Equity shares of Rs. 10/-each at a premium of Rs. 33.15 per share within 18 months from the date of allotment. The Company has received Rs. 1,340.35 lacs being 25% of the subscription amount.

10. During the year, the Company has redeemed preference shares aggregating to Rs. 1,056.08 lacs. The Company has transferred Rs. 5,3 37.13 lacs (including the amount required to be transferred in the previous year of Rs. 4,281.05 lacs) to Capital Redemption Reserve (CRR).

11. The Company has issued stock options to the permanent employees exercisable into 19,11,000 numbers of equity shares of the Company under Employees Stock Option Scheme 2007 - Series A ("ESOP 2007"). Each option when exercised would be convertible into one equity share of a face value of Rs. 10 each fully paid-up. The important features of the ESOP scheme are as follows:

12. The Company has issued 3,04,50,000 Non-Convertible Debentures (NCDs) of Rs.100/- each i.e. aggregating to Rs.3,04,50,00,000/- to India Debt Management Private Limited on 27th June, 2007. During the year the Company has redeemed 1,53,71,195 NCDs along with the redemption premium of Rs.4,008.63 lacs. During the year Rs. 225.15 lacs is transferred to Debenture Redemption reserve. The company has provided Rs. 2,978.70 lacs towards the redemption premium on the above NCDs from the Securities Premium Account. The amount of Debenture Redemption Reserve as on 31st March 2010 is Rs.3,600.15 lacs towards the balance NCDs.

13. The Company has through its 100% subsidiary, SKNL North America B.V., acquired substantially all the assets of Hartmarx Corporation, in the U.S.A. and Canada along with its well established brands, pursuant to an order dated 25th June, 2009 of the U.S. Court. The acquisition was completed on 7th August, 2009.

14. Payment against supplies from Micro Small and Medium Enterprises (MSME) and ancillary undertakings are made in accordance with the agreed credit terms and to the extent ascertained from available information. The Company does not have any MSME creditors beyond the stipulated credit period.

15. Debtors and advances due from firms and companies in which some of the Directors are/were interested:

16. Disclosure as per clause 32 of the Listing agreement:

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

17. Managerial remuneration:

18. During the year the Company has computed its Deferred Tax Asset / Liability in accordance with Accounting Standard-22 "Accounting for Taxes on Income" and accordingly a Deferred Tax (Liability) of Rs. 1,706.52 lacs as on 31st March, 2010 has been provided for.

19. The Company is engaged in manufacturing (in house and outsourced) fabrics, ready-to-wear garments and home textiles. Considering the overall nature, the management is of the opinion that the entire operation of the Company falls under one segment i.e. Textiles and as such there are no separate reportable segments for the purpose of disclosures as required under Accounting Standard-17 "Segment Reporting".

20. Based on the internal estimates and assessments, the management is of the opinion that there is no impairment in relation to its assets and hence no provision is considered necessary.

21. Related parties Disclosures required under Accounting Standard 18 - "Related Party Transactions"

Compiled by : Religare Technova Global Solutions Limited

Notes Forming Part of the Accounts

Schedule "P" (Contd.)

Sr. No. Name of the Related Party Relationship

24. SKNL North America B.V. Wholly Owned Subsidiary of SKNL Global Holdings B.V.

25. SKNL (U. K.) Ltd. Subsidiary of SKNL Global Holdings B.V.

26. Global Apparel (US) Ltd. Wholly Owned Subsidiary of SKNL (U.K.) Ltd.

27. Global Apparel (France) Ltd. Wholly Owned Subsidiary of SKNL (U.K.) Ltd.

28. 7172931 Canada Ltd. Wholly Owned Subsidiary of SKNL (U.K.) Ltd.

29. Global Apparel (Hong Kong) Ltd. Wholly Owned Subsidiary of SKNL (U.K.) Ltd.

30. Leggiuno S.p.A. Wholly Owned Subsidiary of SKNL Italy S.p.A.

31. Marling & Evans Ltd. Subsidiary of Leggiuno S.p.A.

32. Remala Trading B.V Subsidiary of SKNL North America B.V.

33. Coppley Corp Wholly Owned Subsidiary of Remala Trading B.V.

34. HMX Poland sp. Z.o.o Wholly Owned Subsidiary of Remala Trading B.V.

35. HMX Poland sp S.o.o, Luxemburg Wholly Owned Subsidiary of Remala Trading B.V.

36. HMX Acquisition Corp. Wholly Owned Subsidiary of HMX Poland sp Z.o.o

37. HMX Des Plaines LLC Wholly Owned Subsidiary of HMX Acquisition Corp.

38. Quartet Real Estate LLC Wholly Owned Subsidiary of HMX Acquisition Corp.

39. HMX LLC Wholly Owned Subsidiary of HMX Acquisition Corp.

40. HMX, DTC Co. Wholly Owned Subsidiary of HMX Acquisition Corp.

(b) Key Management Personnel

Shri Nitin S. Kasliwal - Vice Chairman & Managing Director Shri Anil Channa - Deputy Managing Director

(c) Details of Transactions

Nature of Transactions Year ended on 31.03.2010 Year ended on 31.03.2009

Purchases Goods Brandhouse Retails Ltd. Leggiuno S.p.A. Nil 36.80 8.04 25.66

Total 36.80 33.70

Services Reid & Taylor (India) Ltd. (Interest on TL of Rs. 440 crs) 5,243.31 2,748.49

Total 5,253.31 2,748.49

Sales Goods Leggiuno S.p.A. Reid & Taylor (India) Ltd. Brandhouse Retails Ltd. 33.69 33.47 22,934.69 Nil 29.41 22,289.56

Total 23,003.85 22,318.97

Services Reid & Taylor (India) Ltd. 10.80 25.44

Total 10.80 25.44

SKNL S. Kumars Nationwide Limited

22. Quantitative Information for the year ended 31st March, 2010.

23. Value of Raw Materials, Spares and Components Consumed:

24. Value of Imports on CIF Basis:

25. Expenditure in foreign currency:

26. Earnings in foreign currency:

27. Computation of Earning Per Share:

28. HVFC Shirtings facility.

The weaving facilities of HVFC factory at Jhagadia Industrial Estate, GIDC, Ankleshwar, Gujarat has commenced production w.e.f 27th March 2009.

29. Capital work-in-progress includes expenditure incurred during the construction of High Value Fine Cotton and Home Textiles as under:

30. During the year the Company has capitalized interest of Rs. 960.43 lacs (Previous Year Rs. 2,760.44 lacs) which has been paid to TUFs lenders and FCCB holders. The borrowing was exclusively used for the HVFC/HT project at Jhagadia.

31. Particulars of Derivative Instruments.

a. No derivative instruments are acquired for hedging purposes.

b. No derivative instruments are acquired for speculation purposes.

c. Foreign Currency exposures that are not hedged by derivative instruments or otherwise are:

32. Company adopted the Accounting Standard -15 (Revised 2005) "Employee Benefits" effective from 1st April, 2007. The Company has classified the various benefits provided to employees as under:

The Company has own managed funds as well as insurer managed funds for certain divisions and hence it is not possible to give a break-up of investments in debt instruments and bank deposits.

The expected rate of return on plan assets is based on market expectations at the beginning of the period. The rate of return on long term government bonds is taken as reference for this purpose.

33. Previous years figures have been regrouped / rearranged wherever considered necessary to make them comparable with current years figure.