Notes to Accounts of Vardhman Textiles Ltd.

Mar 31, 2025

2.15 Provisions and contingent liabilities

Provisions are recognised when the Company has a present
obligation (legal or constructive) as a result of a past event,
it is probable that the Company will be required to settle the
obligation, and a reliable estimate can be made of the amount
of the obligation.

The amount recognised as a provision is the best estimate of
the consideration required to settle the present obligation at the
end of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (when the effect of the time value of money is material).

When some or all of economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as on asset if it is virtually certain that
reimbursements will be received and amount of the receivable
can be measured reliably.

A disclosure for a contingent liability is made when there is
a possible obligation or a present obligation that may, but
probably will not, require an outflow of resources. When there
is a possible obligation or a present obligation that the likelihood
of outflow of resources is remote, no provision or disclosure is
made.

2.16 Financial instruments

Financial assets and financial liabilities are recognised when a
Company becomes a party to the contractual provisions of the
instruments.

Financial assets and financial liabilities are initially measured at
fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair
value of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable to
the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately in profit
or loss.

2.16.1 Financial assets

All regular way purchases or sales of financial assets are
recognised and derecognised on a trade date basis. Regular way
purchases or sales are purchases or sales of financial assets
that require delivery of assets within the time frame established
by regulation or convention in the marketplace.

All recognised financial assets are subsequently measured in
their entirety at either amortised cost or fair value, depending
on the classification of the financial assets

2.16.1.1 Classification of financial assets

Financial instruments that meet the following conditions are
subsequently measured at amortised cost (except for debt
instruments that are designated as at fair value through profit
or loss on initial recognition):

a. the asset is held within a business model whose objective is
to hold assets in order to collect contractual cash flows; and

b. the contractual terms of the instrument give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding

Financial instruments that meet the following conditions
are subsequently measured at fair value through other
comprehensive income (except for debt instruments that
are designated as at fair value through profit or loss on initial
recognition):

a. the asset is held within a business model whose objective
is achieved both by collecting contractual cash flows and
selling financial assets; and

b. the contractual terms of the instrument give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.

Interest income is recognised in profit or loss for instruments
measured at Fair value through other comprehensive income
(FVTOCI). All other financial assets are subsequently measured
at fair value.

2.16.1.2 Effective interest method

The effective interest method is a method of calculating the
amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash receipts
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
debt instrument, or, where appropriate, a shorter period, to the
net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt
instruments other than those financial assets classified as at
FVTPL. Interest income is recognised in profit or loss and is
included in the “Other income” line item.

2.16.1.3 Investments in equity instruments measured
at fair value through other comprehensive income
(FVTOCI)

On initial recognition, the Company can make an irrevocable
election (on an instrument-by-instrument basis) to present
the subsequent changes in fair value in other comprehensive
income pertaining to investments in equity instruments.
This election is not permitted if the equity investment is held for
trading. These elected investments are initially measured at fair
value plus transaction costs. Subsequently, they are measured
at fair value with gains and losses arising from changes in
fair value recognised in other comprehensive income and
accumulated in the ‘Reserve for equity instruments through
other comprehensive income''. The cumulative gain or loss is
not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:

a. it has been acquired principally for the purpose of selling it
in the near term; or

b. on initial recognition it is part of a portfolio of identified financial
instruments that the Company manages together and has a
recent actual pattern of short-term profit-taking; or

c. it is a derivative that is not designated and effective as a
hedging instrument or a financial guarantee.

Dividends on these investments in equity instruments are
recognised in profit or loss when the Company''s right to receive
the dividends is established, it is probable that the economic
benefits associated with the dividend will flow to the entity,
the dividend does not represent a recovery of part of cost of
the investment and the amount of dividend can be measured
reliably. Dividends recognised in profit or loss are included in the
‘Other income'' line item.

2.16.1.4 Financial assets at fair value through profit
or loss (FVTPL)

Investments in equity instruments are classified as at FVTPL,
unless the Company irrevocably elects on initial recognition to
present subsequent changes in fair value in other comprehensive
income for investments in equity instruments which are not held
for trading.

Debt instruments that meet the amortised cost criteria or the
FVTOCI criteria but are designated as at FVTPL are measured
at FVTPL.

A financial asset that meets the amortised cost criteria or debt
instruments that meet the FVTOCI criteria may be designated
as at FVTPL upon initial recognition if such designation
eliminates or significantly reduces a measurement or recognition
inconsistency that would arise from measuring assets or liabilities
or recognising the gains and losses on them on different bases.
The Company has not designated any debt instrument as at
FVTPL/FVTOCI.

Financial assets at FVTPL are measured at fair value at the
end of each reporting period, with any gains or losses arising
on remeasurement recognised in profit or loss. The net gain
or loss recognised in profit or loss incorporates any dividend
or interest earned on the financial asset and is included in the
‘Other income'' line item. Dividend on financial assets at FVTPL is
recognised when the Company''s right to receive the dividends is
established, it is probable that the economic benefits associated
with the dividend will flow to the entity, the dividend does not
represent a recovery of part of cost of the investment and the
amount of dividend can be measured reliably.

2.16.1.5 Impairment of financial assets

The Company applies the expected credit loss model for
recognising impairment loss on financial assets measured at
amortised cost, debt instruments at FVTOCI, lease receivables,
trade receivables, other contractual rights to receive cash or
other financial asset not designated as at FVTPL.

Expected credit losses are the weighted average of credit losses
with the respective risks of default occurring as the weights.
Credit loss is the difference between all contractual cash flows
that are due to the Company in accordance with the contract
and all the cash flows that the Company expects to receive (i.e.
all cash shortfalls), discounted at the original effective interest
rate (or credit-adjusted effective interest rate for purchased
or originated credit-impaired financial assets). The Company
estimates cash flows by considering all contractual terms of the
financial instrument (for example, prepayment, extension, call
and similar options) through the expected life of that financial
instrument.

When making the assessment of whether there has been a
significant increase in credit risk since initial recognition, the
Company uses the change in the risk of a default occurring
over the expected life of the financial instrument instead of
the change in the amount of expected credit losses. To make
that assessment, the Company compares the risk of a default
occurring on the financial instrument as at the reporting date
with the risk of a default occurring on the financial instrument as
at the date of initial recognition and considers reasonable and
supportable information, that is available without undue cost
or effort, that is indicative of significant increases in credit risk
since initial recognition.

For trade receivables or any contractual right to receive cash
or another financial asset that result from transactions that are
within the scope of Ind AS 115, the Company always measures
the loss allowance at an amount equal to lifetime expected
credit losses.

Further, for the purpose of measuring lifetime expected
credit loss allowance for trade receivables, the Company has
used a practical expedient as permitted under Ind AS 109.
The Company follows simplified approach for recognition of
impairment loss allowance on trade receivables. The application
of simplified approach does not require the Company to track
changes in credit risk. Rather, it recognises impairment loss
allowance based on lifetime ECL''s at each reporting date, right
from its initial recognition.

The impairment requirements for the recognition and
measurement of a loss allowance are equally applied to debt
instruments at FVTOCI except that the loss allowance is
recognised in other comprehensive income and is not reduced
from the carrying amount in the balance sheet.

2.16.1.6 Derecognition of financial assets

The Company derecognises a financial asset when the
contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to another party.
If the Company neither transfers nor retains substantially all the
risks and rewards of ownership and continues to control the
transferred asset, the Company recognises its retained interest
in the asset and an associated liability for amounts it may
have to pay. If the Company retains substantially all the risks
and rewards of ownership of a transferred financial asset, the
Company continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference
between the asset''s carrying amount and the sum of the
consideration received and receivable and the cumulative
gain or loss that had been recognised in other comprehensive
income and accumulated in equity is recognised in profit or loss
if such gain or loss would have otherwise been recognised in
profit or loss on disposal of that financial asset.

On derecognition of a financial asset other than in its entirety
(e.g. when the Company retains an option to repurchase part
of a transferred asset), the Company allocates the previous
carrying amount of the financial asset between the part it
continues to recognise under continuing involvement, and
the part it no longer recognises on the basis of the relative fair
values of those parts on the date of the transfer. The difference
between the carrying amount allocated to the part that is no
longer recognised and the sum of the consideration received for
the part no longer recognised and any cumulative gain or loss
allocated to it that had been recognised in other comprehensive
income is recognised in profit or loss if such gain or loss would
have otherwise been recognised in profit or loss on disposal
of that financial asset. A cumulative gain or loss that had been
recognised in other comprehensive income is allocated between
the part that continues to be recognised and the part that is
no longer recognised on the basis of the relative fair values of
those parts.

2.16.1.7 Foreign exchange gains and losses

The fair value of financial assets denominated in a foreign
currency is determined in that foreign currency and translated
at the spot rate at the end of each reporting period.

For foreign currency denominated financial assets measured
at amortised cost and FVTPL, the exchange differences are
recognised in profit or loss.

2.16.2 Financial liabilities

All financial liabilities are subsequently measured at amortised
cost using the effective interest method or at FVTPL.

2.16.2.1 Financial liabilities at fair value through
profit or loss (FVTPL)

Financial liabilities are classified as at FVTPL when the financial
liability is either contingent consideration recognised by the
Company as an acquirer in a business combination to which
Ind AS 103 applies or is held for trading or it is designated as
at FVTPL.

A financial liability is classified as held for trading if:

a. it has been incurred principally for the purpose of
repurchasing it in the near term; or

b. on initial recognition it is part of a portfolio of identified financial
instruments that the Company manages together and has a
recent actual pattern of short-term profit-taking; or

c. it is a derivative that is not designated and effective as a
hedging instrument.

A financial liability other than a financial liability held for trading
or contingent consideration recognised by the Company as an
acquirer in a business combination to which Ind AS 103 applies,
may be designated as at FVTPL upon initial recognition if:

a. such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would
otherwise arise;

b. the financial liability forms part of group of financial assets
or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance
with the Company''s documented risk management or
investment strategy, and information about the grouping is
provided internally on that basis; or

c. it forms part of a contract containing one or more embedded
derivatives, and Ind AS 109 permits the entire combined
contract to be designated as at FVTPL in accordance with
Ind AS 109.

Financial liabilities at FVTPL are stated at fair value, with any
gains or losses arising on remeasurement recognised in profit or
loss. The net gain or loss recognised in profit or loss incorporates
any interest paid on the financial liability and is included in the
statement of profit and loss.

2.16.2.2 Financial liabilities subsequently measured
at amortised cost

Financial liabilities that are not held-for-trading and are not
designated as at FVTPL are measured at amortised cost at the
end of subsequent accounting periods. The carrying amounts of
financial liabilities that are subsequently measured at amortised
cost are determined based on the effective interest method.
Interest expense that is not capitalised as part of costs of an
asset is included in the ‘Finance costs'' line item.

The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial liability, or (where appropriate) a shorter period, to the
net carrying amount on initial recognition.

2.16.2.3 Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only
when, the Company''s obligations are discharged, cancelled
or have expired. An exchange between with a lender of debt
instruments with substantially different terms is accounted for
as an extinguishment of the original financial liability and the
recognition of a new financial liability. Similarly, a substantial
modification of the terms of an existing financial liability
(whether or not attributable to the financial difficulty of the
debtor) is accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability.
The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable
is recognised in profit or loss.

2.16.3 Derivative financial instruments

The Company enters into a variety of derivative financial
instruments to manage its exposure to foreign exchange rate
risks and to manage its exposure to imported raw material
price risk including foreign exchange forward contracts and
commodities future contracts. Further details of derivative
financial instruments are disclosed in note 37.

Derivatives are initially recognised at fair value at the date the
derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting
period. The resulting gain or loss is recognised in profit or loss
immediately.

2.16.4 Equity instrument

Equity instrument are any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities.

Debt or equity instruments issued by the Company are classified
as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions
of a financial liability and an equity instrument.

Ordinary shares are classified as equity. Incremental costs
directly attributable to the issuance of new ordinary shares and
share options are recognised as a deduction from equity, net
of any tax effects.

The equity shares of the Company held by it through a trust
are presented as deduction from total equity, until they are
cancelled or sold.

2.17 Earnings per share

Basic earnings per equity share are computed by dividing the
net profit attributable to the equity holders of the Company by
the weighted average number of equity shares outstanding
during the period. Diluted earnings per equity share is computed
by dividing the net profit attributable to the equity holders of the
Company by the weighted average number of equity shares
considered for deriving basic earnings per equity share and
also the weighted average number of equity shares that could
have been issued upon conversion of all dilutive potential equity
shares. The dilutive potential equity shares are adjusted for the
proceeds receivable had the equity shares been actually issued
at fair value (i.e. the average market value of the outstanding
equity shares). Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at
a later date. Dilutive potential equity shares are determined
independently for each period presented.

2.18 Assets held for sale

The Company classifies non current assets as held for sale if their
carrying amounts will be recovered principally through a sale
rather than through continuing use. Current assets classified as
held for sale are measured at the lower of their carrying amount
and fair value less costs to sell. Costs to sell are the incremental
costs directly attributable to the disposal of an asset, excluding
finance costs and income tax expense.

The criteria for held for sale classification is regarded as met
only when the sale is highly probable, and the asset is available
for immediate sale in its present condition. Actions required
to complete the sale/ distribution should indicate that it is

unlikely that significant changes to the sale will be made or that
the decision to sell will be withdrawn. Management must be
committed to the sale and the sale expected within one year
from the date of classification.

For these purposes, sale transactions include exchanges
of non-current assets for other non-current assets when the
exchange has commercial substance. The criteria for held
for sale classification is regarded met only when the assets is
available for immediate sale in its present condition, subject
only to terms that are usual and customary for sales of such
assets, its sale is highly probable; and it will genuinely be sold,
not abandoned. The Company treats sale of the asset to be
highly probable when:

> The appropriate level of management is committed to a plan
to sell the asset,

> An active programme to locate a buyer and complete the
plan has been initiated (if applicable),

> The sale is expected to qualify for recognition as a completed
sale within one year from the date of classification, and

> Actions required to complete the plan indicate that it is
unlikely that significant changes to the plan will be made or
that the plan will be withdrawn.

2.19 Significant accounting judgements, estimates
and assumptions

In the application of the Company''s accounting policies,
which are described as stated above, the Board of Directors
of the Company are required to make judgements, estimates
and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on
historical experience and other factors that are considered to
be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the
revision affects only the period of the revision and future periods
if the revision affects both current and future periods.

2.19.1 Key sources of uncertainty

In the application of the Company accounting policies, the
management of the Company is required to make judgements,
estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based
on historical experience and other factors that are considered
to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision
and future periods if the revision affects both current and future
periods.

The following are the areas of estimation uncertainty and critical
judgements that the management has made in the process of
applying the Company''s accounting policies and that have
the most significant effect on the amounts recognised in the
financial statements:

2.19.1.1 Defined benefit plans

The cost of the defined benefit plan and other post-employment
benefits and the present value of such obligation are determined
using actuarial valuations. An actuarial valuation involves making
various assumptions that may differ from actual developments
in the future. These include the determination of the discount
rate, future, salary increases, mortality rates and future pension
increases. Due to the complexities involved in the valuation
and its long-term nature, a defined benefit obligation is highly
sensitive to changes in these assumptions. All assumptions are
reviewed at each reporting date.

2.19.1.2 Useful lives of depreciable tangible assets
and intangible assets

Management reviews the useful lives of depreciable/amortisable
assets at each reporting date.

As at March 31, 2025 management assessed that the useful
lives represent the expected utility of the assets to the Company.

2.19.1.3 Fair Value measurements and valuation
processes

Some of the Company''s assets and liabilities are measured at
fair value for financial reporting purposes. The board of directors
of the Company approves the fair values determined by the
Chief Financial Officer of the Company including determining
the appropriate valuation techniques and inputs for fair value
measurements.

In estimating the fair value of an asset or liability, the Company
uses market-observable data to the extent is available.
Where Level 1 inputs are not available, the Company engages
third party qualified valuers to perform the valuation. The Chief
Financial Officer works closely with the qualified external valuers
to establish appropriate valuation techniques and inputs to the
model.

Information about the valuation techniques and inputs used in
determining the fair value of various assets and liabilities are
disclosed in notes 37.

2.19.1.4 Contingent Liability

In ordinary course of business, the Company faces claims by
various parties. The Company annually assesses such claims
and monitors the legal environment on an ongoing basis, with
the assistance of external legal counsel, wherever necessary.
The Company records a liability for any claims where a potential
loss is probable and capable of being estimated and discloses
such matters in its financial statements, if material. For potential
losses that are considered possible, but not probable, the
Company provides disclosures in the financial statements but
does not record a liability in its financial statements unless the
loss becomes probable.

2.19.1.5 Income Tax

The Company''s tax jurisdiction is India. Significant judgements
are involved in determining the provision for income taxes
including judgement on whether tax positions are probable
of being sustained in tax assessments. A tax assessment
can involve complex issues, which can only be resolved over
extended time periods.

2.19.1.6 Inventory

Management has carefully estimated the net realizable values
of inventories, taking into account the most reliable evidence

available at each reporting date. The future realization of these
inventories may be affected by market driven changes.

2.19.1.7 Applicability of new and revised IND AS

Ministry of Corporate Affairs (“MCA”) notifies new standards
or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to
time. For the year ended March 31, 2025, MCA has notified
Ind AS - 117 Insurance Contracts and amendments to Ind
AS 116 - Leases, relating to sale and leaseback transactions,
applicable to the Company w.e.f. April 1,2024. The Company
has reviewed the new pronouncements and based on its
evaluation has determined that it does not have any significant
impact in its standalone financial statements.

2.19.1.8 Government grant receivables

Government grants are not recognised until there is reasonable
assurance that the Company will comply with the conditions
attaching to them and that the grants will be received.
As government grant falls under the definition of financial
instruments, the Company accounted as a financial assets as
per Ind AS 109. As on March 31,2025, the management, has
re-assessed the recoverability of the subsidy receivable from
the government and accordingly recognized the provision for
expected credit loss (ECL) in view of anticipation of delay in the
receipt of TUFF subsidy basis the past experience and ongoing
follow-ups/interaction with the authorities, is of the view that the
outstanding amount is good and recoverable as on March 31,
2025. Refer Note 6 and 13.

Notes on property, plant and equipment

1 Refer to note 18 (a) for information on property, plant and equipment pledged as security by the Company.

2 Buildings includes H2.48 Crores (March 31,2024: H2.48 Crores) cost of residential flats at Mandideep, the land cost of which
has not been excluded from this cost. The depreciation for the year has been taken on the entire cost.

3 The Company has availed benefit under Export Promotion Capital Goods (EPCG) scheme amounting to H76.62 Crores (FY
23-24 H22.67 Crores Crores) (related to non cenvatable portion of total duty saved) for financial year 2024-25, such benefit is
related to Property, Plant and Equipment and Capital work in progress.

4 Also refer Note 2.10 for option used by the Company to use carrying value of previous GAAP as deemed cost as on April 1,2015.

5 The title deeds of all immovable properties are held in the name of the Company. Where immovable properties are acquired
by the Company consequent to acquisition / merger of companies, the title to the immovable properties of the transferror
companies shall be deemed to have been mutated in the name of the Company as per the scheme of amalgamation approved
by National Company Law Tribunal / Court.

37 Financial Instruments and Risk Management

37.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to
stakeholders through optimization of debt and equity balance. The capital structure of the Company consists of net debt (borrowings
as detailed in note no.18 and 23 and offset by cash and bank balances) and total equity of the Company. The Company is not
subject to any externally exposed capital requirements.

The capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the
Company. The primary objective of the Company''s capital management is to maintain optimum capital structure to reduce cost of
capital and to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements
of the financial covenants which otherwise would permit the banks to immediately call loans and borrowings. In order to maintain
or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or
issue new shares.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital. The Company''s gearing ratio was
as follows:

Level 1:

Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices
in the active market.

Level 2:

Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices
included within Level 1 that are observable for such items, either directly or indirectly.

Level 3:

Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based
on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on
assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based
on available market data.

Sensitivity of Level 3 financial instruments are insignificant

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly
transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV)
for investments in mutual funds declared by mutual fund house.

Investment in preference shares/debentures: Fair value is determined by reference to quotes from fund houses/portfolio management
services companies i.e value of investments.

Derivative contracts: The Company has entered into various foreign currency contracts to manage its exposure to fluctuations in
foreign exchange rates. These financial exposures are managed in accordance with the Company''s risk management policies and
procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived
from observable market data, i.e., mark to market values determined by the Authorised Dealers Banks.

Quoted equity investments: Fair value is derived from quoted market prices in active markets.

Unquoted equity investments: Fair value is derived on the basis of net asset value approach, in this approach the net asset value
is used to capture the fair value of these investments.

37.3 Financial Risk Management

The Company''s corporate treasury functions provides services to the business, coordinates access to the financial markets, monitors
and manages the financial risks relating to operations of the Company through internal risk reports which analyse exposure by
degree and magnitude of risk. These risks include market risk (including currency risk, interest rate risk and other price risks, credit
risk and liquidity risk).

The Company seeks to minimize the effects of these risk by using derivate financial instruments to hedge risk exposure. The issue
of financial derivatives is governed by the Company''s policy approved by the board of directors.

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive
directly from its operations. The principal financial liabilities of the Company, include loans and borrowings, trade and other payables
and the main purpose of these financial liabilities is to finance the day to day operations of the Company.

This note explains the risks which the Company is exposed to and policies and framework adopted by the Company to manage
these risks.

37.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market prices comprise three types of risk: foreign currency risk, interest rate risk, investment risk.

A. Foreign Currency Risk Management

The Company operates internationally and business is transacted in several currencies. The export sales of Company comprise
around 43% (2023-24 - 43%) of the total sales of the Company, Further the Company also imports certain assets and material from
outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may
fluctuate substantially in the future. Consequently, the Company is exposed to foreign currency risk and the results of the Company
may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future
probable transactions and recognized assets and liabilities denominated in a currency other than Company''s functional currency.

The Company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency
risk by appropriately hedging the transactions. The Company uses a combination of derivative financial instruments such as foreign
exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

Foreign exchange derivative contracts

The Company uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business
or financing activities. The Company''s Corporate Treasury team measures the risk through a forecast of highly probable foreign
currency cash flows and manages its foreign currency cash flows by appropriately hedging the transactions. When a derivative is
entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the
hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of
the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign
currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

B. Interest Rate Risk Management

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt
obligations with floating interest rates.

As the Company has no significant interest-bearing assets, the income and operating cash flows are substantially independent of
changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the
Company''s debt obligations with floating interest rates, which are included in interest bearing loans and borrowings in these financial
statements. The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk,
since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and
borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on
floating rate borrowings, as follows:

C. Security Price Risk Management
Exposure in equity

The Company is exposed to equity price risks arising from equity investments held by the Company and classified in the balance
sheet as fair value through OCI.

Equity price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to equity price risks at the end of the year.

If the equity prices had been 5% higher / lower:

Other comprehensive income for March 31,2025 would increase / decrease by H0.14 crores (March 31,2024: increase / decrease
by H0.11 crores) as a result of the change in fair value of equity investment measured at FVTOCI.

Exposure in mutual funds

The Company manages the surplus funds majorly through investments in debt based mutual fund schemes. The price of investment
in these mutual fund schemes is reflected though Net Asset Value (NAV) declared by the Asset Management Company on daily
basis as reflected by the movement in the NAV of invested schemes. The Company is exposed to price risk on such Investments.

Mutual fund/debentures/Equity shares/bonds price sensitivity analysis

The sensitivity analysis below have been determined based on Mutual Fund Investment at the end of the year. If NAV has been 1%
higher / lower:

Profit for the year ended March 31,2025 would increase / decrease by H13.64crores (March 31,2024 by H12.50 crores) as a result
of the changes in fair value of mutual fund investments.

D. Commodity Price Risk Management

The Company uses commodity derivative instruments to manage its price risk exposures on inventory of cotton. Commodity derivatives
are used primarily as risk mangement tool to safeguard price risk exposure on inventory of cotton. Company employs specific
financial instruments namely future and option contracts for hedging its price risk related to commodity.

37.3.2 Credit Risk Management

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure
to the credit risk at the reporting date is primarily from trade receivables which are typically unsecured. Credit risk on cash and
bank balances is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings
assigned by credit rating agencies. Investments primarily include investment in liquid mutual fund units, bonds, fixed maturity plan
etc. issued by institutions having proven track record. The Company''s credit risk in case of all other financial instruments is negligible.

The Company assesses the credit risk based on external credit ratings assigned by credit rating agencies. The Company also
assesses the creditworthiness of the customers internally to whom goods are sold on credit terms in the normal course of business.
The credit limit of each customer is defined in accordance with this assessment. Outstanding customer receivables are regularly
monitored and any shipments to overseas customers are generally covered by letters of credit.

The impairment analysis is performed on client to client basis for the debtors that are past due at the end of each reporting date.
The Company has not considered an allowance for doubtful debts in case of trade receivables that are past due but there has not
been a significant change in the credit quality and the amounts are still considered recoverable.

37.3.3 Liquidity Risk Management

The financial liabilities of the Company, other than derivatives, include loans and borrowings, trade and other payables. The Company''s
principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company
monitors its risk of shortage of funds to meet the financial liabilities using a liquidity planning tool. The Company plans to maintain
sufficient cash and marketable securities to meet the obligations as and when they fall due. The below is the detail of contractual
maturities of the financial liabilities of the Company at the end of each reporting period:

b. Liability on account of bank guarantees and letter of credit of H658.04 crores (March 31,2024: H200.14 crores)

c. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties
and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the
Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations
that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable
estimate cannot be made. The Company has been advised that it has strong legal positions against such disputes.

d. The Payment of Bonus (Amendment) Act 2015, notified on December 31, 2015, had revised the thresholds for coverage
of employee eligible for Bonus and also enhanced the ceiling limits for computation of bonus retrospectively from April 1,
2014. Based on legal opinion, the Company has filed a writ petition in Hon''ble High Court of Punjab & Haryana contesting its
retrospective applicability and the said jurisdictional High Court has granted stay on its retrospective operation. In view thereof,
the Company has not provided differential bonus pertaining to the period from April 1,2014 to March 31,2015 amounting to
H8.21 crores. However, the Company has provided/paid bonus w.e.f. April 1,2015 according to the amended provisions of
the Payment of Bonus (Amendment) Act 2015.

45 i. Employee Share option plan 2024

(i) Detail of employee share option of the Company: The Company has a share option scheme for senior employees of the
Company. In accordance with the terms of the plan as approved by shareholders, eligible employees may be granted options to
purchase equity shares. Each employee share option convert into one equity share of the Company on exercise. Exercise price
payable by the recipient is determined as per scheme. The options when allotted carry rights to dividend and voting power at
par with other equity shares. Options may be exercised at the time of vesting to the date of their expiry.

(ii) The number of options granted is in accordance with employee stock option scheme approved by the shareholders and is
subject to approval by the remuneration committee. The scheme rewards senior employees to the extent of Company''s and
the individual''s achievement judged against both qualitative and quantitative criteria.

The expenses incurred on account of the above defined contribution plans have been included in Note 33 “Employee Benefits
Expenses” under the head “Contribution to provident and other funds”.

47.2 Defined benefit plans

The Company sponsors funded defined benefit plan for qualifying employees. This defined benefit plan of gratuity is administered by
a separate trust that is legally separate from the entity. The trustees are required by the law to act in the interest of the trust and all
the relevant stakeholders i.e. active employees, inactive employees, retired employees and employers, etc. The trust is responsible
for investment policy with regard to the assets of the trust. The Company has a gratuity plan wherein every employee is entitled to
the benefit equivalent to 15 days salary last drawn for each completed year of service. Gratuity is payable to all eligible employees
of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity
Act, 1972 or as per the Company''s plan, whichever is more beneficial.

(i) These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity
risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future.
Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the
present value of obligation will have a bearing on the plan''s liability.

50 There has been no delay in transferring amount, required to be transferred, to the Investor Education and Protection Fund (IEPF)
by the Company during the year.

51 The Company has identified two accounting softwares that record financial transactions to which the guidance of audit trail
applies. The Company evaluated and noted that in respect of one accounting software the audit trail (edit log) feature was enabled
throughout the year. Further, in respect of other accounting software used for purchase, production and sales management, no audit
trail log was enabled to log any direct data changes made at the database level during the period April 1,2024 to September 28, 2024
and audit trail enabled on the accounting software is not configured to track if it was disabled at any point in time during the year.

The audit trail that was enabled and operated for the year ended March 31, 2024, has been preserved by the Company as per
statutory requirements for record retention.

52 During the current year, the company has reclassified government grant receivable from “Other Non-Current Assets” to Other

Financials Assets (Non-Current) amounting to H39.52 cr. (March 31,2024 H58.01 cr.)

53 During the current year, the company has reclassified goverment grant receivable from “Other Current Assets” to Other Financials

Assets (Current) amounting to H70.44 crores (March 31,2024 H108.46 crores)

54 Other statutory information

(i) No proceeding have been initiated or pending against the Company for holding any benami property under the Benami
Transactions (Prohibition) Act, 1988 (45 of 1988).

(ii) The Company has not been declared as wilful defaulter by any bank or financial Institution or other lender.

(iii) The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or
section 560 of Companies Act, 1956.

(iv) There are no transactions which are not recorded in the books of accounts that have been surrendered or disclosed as income
during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant
provisions of the Income Tax Act, 1961).

(v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or
kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”) with the
understanding (whether recorded in writing or otherwise) that the Intermediary shall lend or invest in party identified by or on
behalf of the Company (Ultimate Beneficiaries).

(vi) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (“funding party”) with
the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly lend or invest in
other persons or entities in any manner whatsoever by or on behalf of the funding party (“Ultimate beneficiaries”) or provide
any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) During the financial year, the Company has not traded or invested in Crypto currency or Virtual Currency.

(viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(ix) The Company has availed facilities from banks on the basis of security of current assets. The revised returns or statements
filed by the Company are in agreement with the books of accounts and there are no material discrepancies.

(x) The Board of Directors of Company have proposed the final dividend of H5 per fully paid 28,91,74,800 equity shares.
The proposed final dividend is subject to approval of the members at the ensuing Annual General Meeting. The amount of
such dividend proposed is in accordance with section 123 of Companies Act, 2013.

Remarks for more than 25% change in ratios of FY 2024-25 as compared to FY 2023-24:

1. This ratio has increased mainly on account of increase in profits.

2. This ratio has increased due to increased purchase of raw material during the current year.

3. This ratio has increased due to mark to market gains because of changes in yield during the year.

4. This ratio has increased mainly on account of decrease in borrowings.

For and on behalf of the Board of Directors

Sanjay Gupta Rajeev Thapar Suchita Jain S.P. Oswal

Company Secretary Chief Financial Officer Vice Chairperson and Chairman and

Membership No:-4935 Joint Managing Director Managing Director

DIN:00746471 DIN: 00121737

Place : Ludhiana
Date: May 03, 2025

---

Mar 31, 2024

2.15 Provisions and contingent liabilities

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as on asset if it is virtually certain that reimbursements will be received and amount of the receivable can be measured reliably.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

2.16 Financial instruments

Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

2.16.1 Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets

2.16.1.1 Classification of financial assets

Financial instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

a. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

b. the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Financial instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

a. the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and

b. the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Interest income is recognised in profit or loss for instruments measured at Fair value through other comprehensive income (FVTOCI). All other financial assets are subsequently measured at fair value.

2.16.1.2 Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the "Other income" line item.

2.16.1.3 Investments in equity instruments measured at fair value through other comprehensive income (FVTOCI)

On initial recognition, the Company can make an irrevocable election (on an instrument-byinstrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the ''Reserve for equity instruments through other comprehensive income''. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.

A financial asset is held for trading if:

a. it has been acquired principally for the purpose of selling it in the near term; or

b. on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

c. it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.

Dividends on these investments in equity instruments are recognised in profit or loss when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends recognised in profit or loss are included in the ''Other income'' line item.

2.16.1.4 Financial assets at fair value through profit or loss (FVTPL)

Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.

Debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.

A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Company has not designated any debt instrument as at FVTPL/FVTOCI.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.

2.16.1.5 Impairment of financial assets

The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset not designated as at FVTPL.

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.

When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit

losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.

For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.

Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. The Company follows simplified approach for recognition of impairment loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet.

2.16.1.6 Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards

of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.

On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.

For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss.

2.16.2 Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.

2.16.2.1 Financial liabilities at fair value through profit and loss (FVTPL)

Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:

a. it has been incurred principally for the purpose of repurchasing it in the near term; or

b. on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

c. it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading or contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:

a. such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;

b. the financial liability forms part of group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

c. it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the statement of profit and loss.

2.16.2.2Financial liabilities subsequently measured at amortised cost

Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' line item.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part

of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

2.16.2.3 Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

2.16.3 Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks and to manage its exposure to imported raw material price risk including foreign exchange forward contracts and commodities future contracts. Further details of derivative financial instruments are disclosed in note 37

Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.

Equity instrument are any contract that evidences a residual interest in the assets of an equity after deducting all of its liabilities.

Debt or equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

The equity shares of the Company held by it through a trust are presented as deduction from total equity, until they are cancelled or sold.

M7 Earnings per share

Basic earnings per equity share are computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.

M8 Assets held for sale

The Company classifies non current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Current assets classified as held for sale are measured at the lower

of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset is available for immediate sale in its present condition. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale and the sale expected within one year from the date of classification.

For these purposes, sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance. The criteria for held for sale classification is regarded met only when the assets is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets, its sale is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale of the asset to be highly probable when:

• The appropriate level of management is committed to a plan to sell the asset,

• An active programme to locate a buyer and complete the plan has been initiated (if applicable),

• The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and

• Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

2.19 Significant accounting judgements, estimates and assumptions

In the application of the Company''s accounting policies, which are described as stated above, the Board of Directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that

are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only the period of the revision and future periods if the revision affects both current and future periods.

2.19.1 Key sources of uncertainty

In the application of the Company accounting policies, the management of the Company is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognised in the financial statements:

2.19.1.1 Defined benefit plans

The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future, salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation

and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

2.19.1.2 Useful lives of depreciable tangible assets and intangible assets

Management reviews the useful lives of depreciable/amortisable assets at each reporting date.

As at March 31, 2023 management assessed that the useful lives represent the expected utility of the assets to the Company.

2.19.1.3 Fair Value measurements and valuation processes

Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. The board of directors of the Company approves the fair values determined by the Chief Financial Officer of the Company including determining the appropriate valuation techniques and inputs for fair value measurements.

In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The Chief Financial Officer works closely with the qualified external valuers to establish appropriate valuation techniques and inputs to the model.

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in notes 37

2.19.1.4 Contingent Liability

In ordinary course of business, the Company faces claims by various parties. The Company annually assesses such claims and monitors the legal environment on an ongoing basis, with the assistance of external legal counsel, wherever necessary. The Company records a

liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosures in the financial statements but does not record a liability in its financial statements unless the loss becomes probable.

2.19.1.5 Income Tax

The Company''s tax jurisdiction is India. Significant judgements are involved in determining the provision for income taxes including judgement on whether tax positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods.

2.19.1.6 Inventory

Management has carefully estimated the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by market driven changes.

2.19.1.7 Applicability of new and revised IND AS

Ministry of corporate affairs (MCA) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. MCA has not notified any new standards or amendment to the existing standards applicable to the company as at March 31, 2024.

In the current year, the Company has applied the below amendments to Ind ASs that are effective for an annual period that begins on or after 1 April 2023.

(i) The Company has adopted the amendments to Ind AS 1 - Presentation of Financial Statements for the first time in the current year. The amendments change the requirements in Ind AS 1 with regard to disclosure of accounting policies. The

amendments replace all instances of the term ''significant accounting policies'' with ''material accounting policy information''. Accounting policy information is material if, when considered together with other information included in an entity''s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.

The supporting paragraphs in Ind AS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are

immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material.

(ii) The Company has adopted the amendments to Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - Definition of Accounting Estimates for the first time in the current year. The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty" The definition of a change in accounting estimates was deleted.

3A Property, plant and equipment and capital work-in-progress (Contd..)

Notes on property, plant and equipment

1 Refer to note 18 (a) for information on property, plant and equipment pledged as security by the Company.

2 Buildings includes H 2.48 Crores (March 31, 2023: H 2.48 Crores) cost of residential flats at Mandideep, the land cost of which has not been excluded from this cost. The depreciation for the year has been taken on the entire cost.

3 As per the amendment in Ind-AS 20 "Government Grants” w.e.f April 1, 2018, the Company has opted to present the grant related to assets as deduction from the carrying value of such specific assets. For financial year 2023-24 such amount deducted from Property, Plant and Equipment is H Nil (FY 22-23 H Nil).

4 The Company has availed benefit under Export Promotion Capital Goods (EPCG) scheme amounting to H 22.67 Crores (FY 2223 H 29.20 Crores) (related to non cenvatable portion of total duty saved) for financial year 2023-24, such benefit is related to Property, Plant and Equipment and Capital work in progress.

5 Borrowing cost capitalised during the year H Nil (March 31,2023 Nil).

6 Also refer Note 2.10 for option used by the Company to use carrying value of previous GAAP as deemed cost as on April 1,2015.

7 The title deeds of all immovable properties are held in the name of the Company. Where immovable properties are acquired by the Company consequent to acquisition / merger of companies, the title to the immovable properties of the transferror companies shall be deemed to have been mutated in the name of the Company as per the scheme of amalgamation approved by National Company Law Tribunal / Court.

16.1 Rights, preference and restriction attached to equity shares

The Company has one class of equity shares having a par value of H 2/- each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

16.2 Rights, preference and restriction attached to preference shares

The rate of dividend on preference shares will be decided by the Board of Directors as and when issued. Preferential shares as and when issued shall have the cumulative right to receive dividend as and when declared and shall have preferential right of repayment on amount of capital.

16.3 As per Employee Stock Options Scheme 2016, senior employees of the Company were offered 30,70,000 options having face value of H 2 (for details refer note 45). The vesting for due options began from financial year 2016-17 and NIL options/shares (NIL options/shares financial year 2022-23) vested during the financial year 2023-24. Out of these 47750 having face value of H 2 per share- shares/options (financial year 2022-23: 2,63,000 shares/options having face value of H 2) have been alloted during the year. Share options granted under Company''s employee share option plan carry right to dividend and voting rights at par with other equity holders.

17 Other equity (Contd..)

c. Capital redemption reserve

Capital Redemption reserve is a statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a Company''s own shares.

d. Securities premium

Securities premium represents amount of premium recognised on issue of shares to shareholders at a price more than its face value.

e. Debenture redemption reserve

The Company has issued non convertible debentures in Financial Year 2017-18 and as per the provisions of the Companies Act, 2013, it was required to create debenture redemption reserve out of the profits available for payment of dividend.The company has discontinued creation of DRR as per MCA notification no.464 dated August 16, 2019. During the previous year company has transfered the amount of debenture redemption reserve to general reserve pursuant to redemption of debentures.

f. Share options outstanding account

Company has approved employee share option scheme under which equity shares of Company are alloted to eligible employees as per the terms and conditions contained in the scheme. The amount is recognised based on the value of equity-settled share-based payments.

g. General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.

h. Retained earnings

Retained earnings represents amount that can be distributed by the Company to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act 2013.

i. Equity instrument through other comprehensive income

Reserve for equity instruments through other comprehensive income represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amount reclassified to retained earnings when those assets have been disposed off.

Level 1:

Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.

Level 2:

Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly.

Level 3:

Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data.

Sensitivity of Level 3 financial instruments are insignificant

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) for investments in mutual funds declared by mutual fund house.

Investment in preference shares/debentures: Fair value is determined by reference to quotes from fund houses/portfolio management services companies i.e value of investments.

Derivative contracts: The Company has entered into various foreign currency contracts to manage its exposure to fluctuations in foreign exchange rates. These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the Authorised Dealers Banks.

Quoted equity investments: Fair value is derived from quoted market prices in active markets.

Unquoted equity investments: Fair value is derived on the basis of net asset value approach, in this approach the net asset value is used to capture the fair value of these investments.

The Company''s corporate treasury functions provides services to the business, coordinates access to the financial markets, monitors and manages the financial risks relating to operations of the Company through internal risk reports which analyse exposure by degree and magnitude of risk. These risks include market risk (including currency risk, interest rate risk and other price risks, credit risk and liquidity risk).

The Company seeks to minimize the effects of these risk by using derivate financial instruments to hedge risk exposure. The issue of financial derivatives is governed by the Company''s policy approved by the board of directors.

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive directly from its operations. The principal financial liabilities of the Company, include loans and borrowings, trade and other payables and the main purpose of these financial liabilities is to finance the day to day operations of the Company.

This note explains the risks which the Company is exposed to and policies and framework adopted by the Company to manage these risks.

37.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: foreign currency risk, interest rate risk, investment risk.

A. Foreign Currency Risk Management

The Company operates internationally and business is transacted in several currencies. The export sales of Company comprise around 43%(2022-23 - 44%) of the total sales of the Company, Further the Company also imports certain assets and material from outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the Company is exposed to foreign currency risk and the results of the Company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than Company''s functional currency.

The Company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions. The Company uses a combination of derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

D. Commodity Price Risk Management

The Company uses commodity derivative instruments to manage its price risk exposures on inventory of cotton. Commodity derivatives are used primarily as risk mangement tool to safeguard price risk exposure on inventory of cotton. Company employs specific financial instruments namely future and option contracts for hedging its price risk related to commodity.

37.3.2 Credit Risk Management

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables which are typically unsecured. Credit risk on cash and bank balances is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. Investments primarily include investment in liquid mutual fund units, bonds, fixed maturity plan etc. issued by institutions having proven track record. The Company''s credit risk in case of all other financial instruments is negligible.

The Company assesses the credit risk based on external credit ratings assigned by credit rating agencies. The Company also assesses the creditworthiness of the customers internally to whom goods are sold on credit terms in the normal course of business. The credit limit of each customer is defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to overseas customers are generally covered by letters of credit.

The impairment analysis is performed on client to client basis for the debtors that are past due at the end of each reporting date. The Company has not considered an allowance for doubtful debts in case of trade receivables that are past due but there has not been a significant change in the credit quality and the amounts are still considered recoverable.

37.3.3 Liquidity Risk Management

The financial liabilities of the Company, other than derivatives, include loans and borrowings, trade and other payables. The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company monitors its risk of shortage of funds to meet the financial liabilities using a liquidity planning tool. The Company plans to maintain sufficient cash and marketable securities to meet the obligations as and when fall due. The below is the detail of contractual maturities of the financial liabilities of the Company at the end of each reporting period:

38 Contingent Liabilities and Commitments (Contd..)

b. Liability on account of bank guarantees and letter of credit of H 200.14 crores (March 31,2023: H 226.47 crores)

c. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company has been advised that it has strong legal positions against such disputes.

d. The Payment of Bonus (Amendment) Act 2015, notified on December 31, 2015, had revised the thresholds for coverage of employee eligible for Bonus and also enhanced the ceiling limits for computation of bonus retrospectively from April 1, 2014. Based on legal opinion, the Company has filed a writ petition in Hon''ble High Court of Punjab & Haryana contesting its retrospective applicability and the said jurisdictional High Court has granted stay on its retrospective operation. In view thereof, the Company has not provided differential bonus pertaining to the period from April 1, 2014 to March 31, 2015 amounting to H 8.21 crores. However, the Company has provided/paid bonus w.e.f. April 1, 2015 according to the amended provisions of the Payment of Bonus (Amendment) Act 2015.

47.2 Defined benefit plans

The Company sponsors funded defined benefit plan for qualifying employees.This defined benefit plan of gratuity is administered by a separate trust that is legally separate from the entity. The trustees are required by the law to act in the interest of the trust and all the relevant stakeholders i.e. active employees, inactive employees, retired employees and employers, etc. The trust is responsible for investment policy with regard to the assets of the trust. The Company has a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972 or as per the Company''s plan, whichever is more beneficial.

(i) These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

51 Other statutory information:

(i) No proceeding have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988).

(ii) The Company has not been declared as wilful defaulter by any bank or financial Institution or other lender.

(iii) The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

(iv) There are no transactions which are not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (""Intermediaries"") with the understanding (whether recorded in writing or otherwise) that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

(vi) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("funding party") with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly lend or invest in other persons or entities in any manner whatsoever by or on behalf of the funding party ("Ultimate beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) During the financial year, the Company has not traded or invested in Crypto currency or Virtual Currency.

(viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(ix) The Company has availed facilities from banks on the basis of security of current assets. The revised returns or statements filed by the Company are in agreement with the books of accounts and there are no material discrepancies.

(x) The Board of Directors of Company have proposed the final dividend of H 4 per fully paid 28,91,74,800 equity shares. The proposed final dividend is subject to approval of the members at the ensuing Annual General Meeting. The amount of such dividend proposed is in accordance with section 123 of Companies Act, 2013.

Remarks for more than 25% change in ratios of FY 2023-24 as compared to FY 2022-23:

1. This ratio has decreased mainly on account of decrease in profits.

2. This ratio has increased due to increased purchase of raw material during the current year.

3. This ratio has increased due to mark to market gains because of changes in yield during the year.

53 The Code on Social Security 2020 has been notified in the Official Gazette on September 29, 2020. The effective date from which the changes are applicable is yet to be notified. Impact if any of the change will be assessed and accounted in the period in which said Code becomes effective.

For and on behalf of the Board of Directors

Sanjay Gupta Rajeev Thapar Suchita Jain S.P Oswal

Company Secretary Chief Financial Officer Vice Chairperson and Chairman and

Membership No:-4935 Joint Managing Director Managing Director

DIN:00746471 DIN: 00121737

Place : Ludhiana Date: May 09, 2024

---

Mar 31, 2023

Notes on property, plant and equipment

1 Refer to note 18 (a) for information on property, plant and equipment pledged as security by the Company.

2 Buildings includes H 2.48 Crores (March 31, 2022: H 2.48 Crores) cost of residential flats at Mandideep, the land cost of which

has not been excluded from this cost. The depreciation for the year has been taken on the entire cost.

3 As per the amendment in Ind-AS 20 "Government Grants” w.e.f April 1, 2018, the Company has opted to present the grant related to assets as deduction from the carrying value of such specific assets. For financial year 2022-23 such amount deducted from Property, Plant and Equipment is H Nil (FY 21-22 H Nil).

4 The Company has availed benefit under Export Promotion Capital Goods (EPCG) scheme amounting to H 29.20 Crores (FY 21-22 H1782 Cr) (related to non cenvatable portion of total duty saved) for financial year 2022-23, such benefit is related to Property, Plant and Equipment and Capital work in progress.

5 Borrowing cost capitalised during the year H Nil Crores (March 31,2022 Nil).

6 Also refer Note 2.10 for option used by the Company to use carrying value of previous GAAP as deemed cost as on April 1,2015.

7 The title deeds of all immovable properties are held in the name of the Company. Where immovable properties are acquired by the Company consequent to acquisition / merger of companies, the title to the immovable properties of the transferror companies shall be deemed to have been mutated in the name of the company as per the scheme of amalgamation approved by National Company Law Tribunal / court.

16 Equity share capital

16.1Rights, preference and restriction attached to equity shares

The Company has one class of equity shares having a par value of H2/- each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

16.2Rights, preference and restriction attached to preference shares

The rate of dividend on preference shares will be decided by the Board of Directors as and when issued. Preferential shares as and when issued shall have the cumulative right to receive dividend as and when declared and shall have preferential right of repayment on amount of capital.

16.3As per Employee Stock Options Scheme 2016, senior employees of the Company were offered 30,70,000 options having face value of H 2 (for details refer note 45). The vesting for due options began from financial year 2016-17 and NIL options/shares (1,40,850 options/shares financial year 2021-22 having face value of H 10) vested during the financial year 2022-23. Out of these 2,63,000 having face value of H 2 per share- shares/options (financial year 2021-22: 2,10,250 shares/options having face value of H 10) have been alloted. Share options granted under Company''s employee share option plan carry right to dividend and voting rights at par with other equity holders.

a. Share application money pending allotment

It represents money received from senior employees under the Company''s employee share option scheme.

b. Capital reserve

Capital reserve represents reserve recognised on amalgamation being the difference between consideration amount and net assets of the transferor Company.

c. Capital redemption reserve

Capital Redemption reserve is a statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a Company''s own shares.

d. Securities premium

Securities premium represents amount of premium recognised on issue of shares to shareholders at a price more than its face value.

e. Debenture redemption reserve

The Company has issued non convertible debentures in Financial Year 2017-18 and as per the provisions of the Companies Act, 2013 , it was required to create debenture redemption reserve out of the profits available for payment of dividend.The company has discontinued creation of DRR as per MCA notification no.464 dated August 16, 2019. During the current year company has transfered the amount of debenture redemption reserve to general reserve pursuant to redemption of debentures.

f. Share options outstanding account

Company has approved employee share option scheme under which equity shares of Company are alloted to eligible employees as per the terms and conditions contained in the scheme. The amount is recognised based on the value of equity-settled share-based payments.

g. General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.

h. Retained earnings

Retained earnings represents amount that can be distributed by the Company to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act 2013.

i. Equity instrument through other comprehensive income

Reserve for equity instruments through other comprehensive income represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amount reclassified to retained earnings when those assets have been disposed off.

(a) Term loans from banks are secured as follows:-

(1) . 1st pari passu charge :-Hypothecation of entire fixed assets of the Company (both present and future) including equitable

mortgage.

(2) . 2nd pari passu charge:-Hypothecation of stocks of raw material, stock in process and finished goods, receivables/ book

debts and other current assets (both present and future).

(b) The Company had issued unsecured, rated listed Redeemable Non-convertible Debentures (NCDs) aggregating to H 150.00 Crores for cash at par on private placement basis on March 20, 2023. The NCD''s are listed at the Bombay Stock Exchange of India (BSE) and repayable on March 27 2024 and have a yield of 770% per annum payable on March 27 2024 along with maturity.

CRISIL has assigned a rating of AA with Stable outlook to the said NCDs of the Company on March 03, 2023.

(c) The Company had issued secured, rated listed Redeemable Non-convertible Debentures (NCDs) aggregating to H 195.00 Crores for cash at par on private placement basis on June 1, 2020. The NCD''s are listed at the Bombay Stock Exchange of India (BSE) and repayable at the end of 36 months from the date of allotment and have a yield of 6.83% per annum payable on 01-June on annual basis.

CRISIL has assigned a rating of AA with Stable outlook to the said NCDs of the Company on March 03, 2023. These NCDs are secured by way of a first pari passu charge over the immovable and movable fixed assets of the Company and it should have fixed asset cover of more than 1.25 times of outstanding amount of NCDs.The Fixed Asset coverage ratio as on March 31,2023 is 3.27 times and Asset cover as on March 31, 2023 is 3.22 times.

18 Borrowings (Non Current)

(d) The Company had also issued secured, rated listed Redeemable Non-convertible Debentures (NCDs) aggregating to H 499.80 crores for cash at par on private placement basis on September 8, 2017 The NCDs are listed at the Bombay Stock Exchange of India (BSE) and comprise of three series repayable in third, fourth and fifth years and have an overall yield of 769% per annum. During the FY 20-21, 1,500 759% Series A NCDs of H10 lacs each amounting to H150 Cr were redeemed on 08-September 2020 and during the previous year 1,500 769% Series B NCDs of H10 lacs each amounting to H150 Crores were redeemed on September 08, 2021 and during the current year 1,998 775% Series C NCDs of H10 lacs each amounting to H199.80 Crores were redeemed on September 08, 2022.

(e) There have been no breach of covenants mentioned in the loan agreements during the reporting years.

a. Details of security for working capital borrowings

Working capital borrowings from banks are secured as follows:-

(1) 1st pari passu charge :-Hypothecation of stocks of raw material, stock in process and finished goods, receivables/ book debts and other current assets (both present and future).

(2) 2nd pari passu charge:-Hypothecation of entire fixed assets of the company (both present and future) including equitable mortgage.

37 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

37.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through optimization of debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in note no.18 and offset by cash and bank balances) and total equity of the Company. The Company is not subject to any externally exposed capital requirements.

The capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maintain optimum capital structure to reduce cost of capital and to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants which otherwise would permit the banks to immediately call loans and borrowings. In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.Level 2: Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly.

Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly.

Level 3:

Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data.

Sensitivity of Level 3 financial instruments are insignificant

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) for investments in mutual funds declared by mutual fund house.

Investment in preference shares/debentures: Fair value is determined by reference to quotes from fund houses/portfolio management services companies i.e value of investments.

Derivative contracts: The Company has entered into various foreign currency contracts to manage its exposure to fluctuations in foreign exchange rates . These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the Authorised Dealers Banks.

Quoted equity investments: Fair value is derived from quoted market prices in active markets.

Unquoted equity investments: Fair value is derived on the basis of net asset value approach, in this approach the net asset value is used to capture the fair value of these investments.

37.3 Financial Risk Management

The Company''s corporate treasury functions provides services to the business, coordinates access to the financial markets, monitors and manages the financial risks relating to operations of the Company through internal risk reports which analyse exposure by degree and magnitude of risk. These risks include market risk (including currency risk, interest rate risk and other price risks, credit risk and liquidity risk).

The Company seeks to minimize the effects of these risk by using derivate financial instruments to hedge risk exposure. The issue of financial derivatives is governed by the Company''s policy approved by the board of directors.

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive directly from its operations. The principal financial liabilities of the Company, include loans and borrowings, trade and other payables and the main purpose of these financial liabilities is to finance the day to day operations of the Company.

This note explains the risks which the Company is exposed to and policies and framework adopted by the Company to manage these risks.

37.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: foreign currency risk, interest rate risk, investment risk.

A. Foreign Currency Risk Management

The Company operates internationally and business is transacted in several currencies. The export sales of Company comprise around 44%(2021-22 - 50%) of the total sales of the Company, Further the Company also imports certain assets and material from outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the Company is exposed to foreign currency risk and the results of the Company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than Company''s functional currency.

The Company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions. The Company uses a combination of derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

Foreign exchange derivative contracts

The Company uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business or financing activities. The Company''s Corporate Treasury team measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency cash flows by appropriately hedging the transactions. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

B. Interest Rate Risk Management

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.

As the Company has no significant interest-bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates, which are included in interest bearing loans and borrowings in these financial statements. The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

In case of increase in interest rate by above mentioned percentage, there would be a comparable impact on the profit before tax as mentioned above would be negative.

C. Security Price Risk Management Exposure in equity

The Company is exposed to equity price risks arising from equity investments held by the Company and classified in the balance sheet as fair value through OCI.

Equity price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to equity price risks at the end of the year.

If the equity prices had been 5% higher / lower:

Other comprehensive income for March 31, 2023 would increase / decrease by H 0.11 crores ( March 31, 2022: increase / decrease by H 0.11 crores) as a result of the change in fair value of equity investment measured at FVTOCI.

Exposure in mutual funds

The Company manages the surplus funds majorly through investments in debt based mutual fund schemes. The price of investment in these mutual fund schemes is reflected though Net Asset Value (NAV) declared by the Asset Management Company on daily basis as reflected by the movement in the NAV of invested schemes. The Company is exposed to price risk on such Investments.

Mutual fund/debentures/Equity shares/bonds price sensitivity analysis

The sensitivity analysis below have been determined based on Mutual Fund Investment at the end of the year. If NAV has been 1% higher / lower:

Profit for the year ended March 31,2023 would increase / decrease by H 21.34 crores (March 31,2022 by H 13.46 crores) as a result of the changes in fair value of mutual fund investments.

D. Commodity Price Risk Management

The Company uses commodity derivative instruments to manage its price risk exposures on inventory of cotton. Commodity derivatives are used primarily as risk mangement tool to safeguard price risk exposure on inventory of cotton. Company employs specific financial instruments namely future and option contracts for hedging its price risk related to commodity.

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables which are typically unsecured. Credit risk on cash and bank balances is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. Investments primarily include investment in liquid mutual fund units, bonds, fixed maturity plan etc. issued by institutions having proven track record. The Company''s credit risk in case of all other financial instruments is negligible.

The Company assesses the credit risk based on external credit ratings assigned by credit rating agencies. The Company also assesses the creditworthiness of the customers internally to whom goods are sold on credit terms in the normal course of business. The credit limit of each customer is defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to overseas customers are generally covered by letters of credit.

The impairment analysis is performed on client to client basis for the debtors that are past due at the end of each reporting date. The Company has not considered an allowance for doubtful debts in case of trade receivables that are past due but there has not been a significant change in the credit quality and the amounts are still considered recoverable.

The financial liabilities of the Company, other than derivatives, include loans and borrowings, trade and other payables. The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company monitors its risk of shortage of funds to meet the financial liabilities using a liquidity planning tool. The Company plans to maintain sufficient cash and marketable securities to meet the obligations as and when fall due. The below is the detail of contractual maturities of the financial liabilities of the Company at the end of each reporting period:

38 CONTINGENT LIABILITIES AND COMMITMENTS a. Claims against the Company not acknowledged as debts:
Particulars	As at	As at
	March 31, 2023	March 31, 2022
Sales tax, excise duty, etc*	6.79	6.78
Income-tax**	256.07	281.13
Others***	4.40	4.40

* Amount deposited H1.60 crore (March 31,2022 : H 0.56 crore)

** Amount deposited H210.42 crore (March 31,2022 : H 175.26 crore)

*** Amount deposited H 0.70 crore (March 31,2022 : H 0.70 crore)

b. Liability on account of bank guarantees and letter of credit of H226.47 crores (March 31, 2022: H 531.19 crores)

c. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company has been advised that it has strong legal positions against such disputes.

d. The Payment of Bonus (Amendment) Act 2015, notified on December 31, 2015, had revised the thresholds for coverage of employee eligible for Bonus and also enhanced the ceiling limits for computation of bonus retrospectively from April 1, 2014. Based on legal opinion, the Company has filed a writ petition in Hon''ble High Court of Punjab & Haryana contesting its retrospective applicability and the said jurisdictional High Court has granted stay on its retrospective operation. In view thereof, the Company has not provided differential bonus pertaining to the period from April 1, 2014 to March 31, 2015 amounting to H 8.21 crores. However, the Company has provided/paid bonus w.e.f. April 1, 2015 according to the amended provisions of the Payment of Bonus (Amendment) Act 2015.

40(a) Mahavir Share Trust (""Trust"") is holding 5,32,911 equity shares (March 31, 2022: 5,32,911 nos.) of H 10 each of Vardhman Special Steels Limited which were allotted to it in the capacity of a shareholder of the Company by virtue of ''Scheme of Arrangement & Demerger'' entered into by the Company, Vardhman Special Steels Limited and their respective shareholders and creditors.

As the aforesaid shares are held by Trust (Mahavir Share trust) on behalf of the Company and Company not being registered owner of shares, the cost of these shares is not reflected in investments but same has been valued at cost as reflected in other current asset.

41 SEGMENT INFORMATION

The Company is primarily in the business of manufacturing, purchase and sale of textiles. The Chairman and Managing Director of the Company, which has been identified as being the Chief Operating Decision Maker (CODM), evaluates the Company''s performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is only one reportable segment for the Company.

44 Leases

The Company has lease contracts for various Lands, Godowns, Guest Houses, Office premises. Leases of Office Premises,guest Houses,Godowns have lease term ranging from 11 months to 30 years and leases of land have lease terms of 99 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. There are several lease contracts that include extension and termination options. The Company also has certain leases of office premises and guest houses with lease terms of 12 months or less. The Company applies the ''short-term lease'' recognition exemptions for these leases.

45 Share based payments - Employee Share option plan of the Company

(i) Detail of employee share option of the Company: The Company has a share option scheme for senior employees of the Company. In accordance with the terms of the plan as approved by shareholders, eligible employees may be granted options to purchase equity shares. Each employee share option convert into one equity share of the Company on exercise. Exercise price payable by the recipient is determined as per scheme. The options when allotted carry rights to dividend and voting power at par with other equity shares. Options may be exercised at the time of vesting to the date of their expiry.

(ii) The number of options granted is in accordance with employee stock option scheme approved by the shareholders and is subject to approval by the remuneration committee. The scheme rewards senior employees to the extent of Company''s and the individual''s achievement judged against both qualitative and quantitative criteria.

(iv) During the current year, the company has granted equity shares of H NIL having face value of H2 per share (FY 2021-22 - 1,40,850 equity shares having face value of H 10). Further 2,63,000 equity shares having face value of H 2 per share (FY 2021-22: 2,10,250 shares having face value of H 10) have been exercised during the year.

The expenses incurred on account of the above defined contribution plans have been included in Note 33 "Employee Benefits Expenses" under the head "Contribution to provident and other funds"

47.2 Defined benefit plans

The Company sponsors funded defined benefit plan for qualifying employees. This defined benefit plan of gratuity is administered by a separate trust that is legally separate from the entity. The trustees are required by the law to act in the interest of the trust and all the relevant stakeholders i.e. active employees, inactive employees, retired employees and employers, etc. The trust is responsible for investment policy with regard to the assets of the trust. The Company has a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972 or as per the Company''s plan, whichever is more beneficial.

(i) These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. An actuarial valuations involves making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

50 There has been no delay in transferring amount, required to be transferred, to the investor education and investor fund (IEPF) by

the Company during the year.

51 Other statutory information:

(i) No proceeding have been initiated or pending against the company for holding any benami property under the BenamiTransactions (Prohibition) Act, 1988 (45 of 1988).

(ii) The company has not been declared as wilful defaulter by any bank or financial Institution or other lender.

(iii) The company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

(iv) There are no transactions which are not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (""Intermediaries"") with the understanding (whether recorded in writing or otherwise) that the Intermediary shall lend or invest in party identified by or on behalf of the company (Ultimate Beneficiaries).

(vi) No funds have been received by the company from any person(s) or entity(ies), including foreign entities ("funding party") with the understanding, whether recorded in writing or otherwise, that the company shall directly or indirectly lend or invest in other persons or entities in any manner whatsoever by or on behalf of the funding party ("Ultimate beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) During the financial year, the Company has not traded or invested in Crypto currency or Virtual Currency.

(viii) The company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(ix) The Company has availed facilities from banks on the basis of security of current assets. The revised returns or statements filed by the company are in agreement with the books of accounts and there are no material discrepancies.

Remarks for more than 25 % change in ratios of FY 2022-23 as compared to FY 2021-22:

1 This ratio has increased mainly on account of decrease in current liabilities amount (borrowings and other current liabilities decrease).

2. This ratio has decreased mainly on account of decrease in profits.

3. This ratio has decreased mainly on account of decrease in investment income.

53 The Code on Social Security 2020 has been notified in the Official Gazette on 29th September 2020. The effective date from which the changes are applicable is yet to be notified. Impact if any of the change will be assessed and accounted in the period in which said Code becomes effective.

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Mar 31, 2022

1 Refer to note 18 (a) for information on property, plant and equipment pledged as security by the Company.

2 Buildings includes H 2.48 Crores (March 31, 2021: H 2.48 Crores) cost of residential flats at Mandideep, the land cost of which

has not been excluded from this cost. The depreciation for the year has been taken on the entire cost.

3 As per the amendment in Ind-AS 20 "Government Grants” w.e.f April 1,2018, the Company has opted to present the grant related to assets as deduction from the carrying value of such specific assets. For financial year 2021-22 such amount deducted from Property, Plant and Equipment is H Nil (FY 20-21 H Nil).

4 The Company has availed benefit under Export Promotion Capital Goods (EPCG) scheme amounting to H 1782 Crores (FY 20-21 H 711 Cr) (related to non cenvatable portion of total duty saved) for financial year 2021-22, such benefit is related to Property, Plant and Equipment and Capital work in progress.

5 Borrowing cost capitalised during the year H Nil Crores (March 31, 2021 Nil)

6 Also refer Note 2.10 for option used by the Company to use carrying value of previous GAAP as deemed cost as on April 1, 2015.

7 The title deeds of all immovable properties are held in the name of the Company. Where immovable properties are acquired by the Company consequent to acquisition / merger of companies, the title to the immovable properties of the transferror companies shall be deemed to have been mutated in the name of the company as per the scheme of amalgamation approved by National Company Law Tribunal / court.

16.1 Rights, preference and restriction attached to equity shares

The Company has one class of equity shares having a par value of H 2/- each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

16.2 Rights, preference and restriction attached to preference shares

The rate of dividend on preference shares will be decided by the Board of Directors as and when issued. Preferential shares as and when issued shall have the cumulative right to receive dividend as and when declared and shall have preferential right of repayment on amount of capital.

16.3 As per Employee Stock Options Scheme 2016, senior employees of the Company were offered 6,14,000 options (for details refer note 45). The vesting for due options began from financial year 2016-17 and 1,40,850 options/shares (99,300 options/shares 2020-21) vested during the year 2021-22. Out of these, 2,10,250 of Face Value 10 per share- shares/options (FY 2020-21 43,800 shares/options) have been alloted. Share options granted under Company''s employee share option plan carry right to dividend and voting rights at par with other equity holders.

a. Share application money pending allotment

It represents money received from senior employees under the Company''s employee share option scheme.

b. Capital reserve

Capital reserve represents reserve recognised on amalgamation being the difference between consideration amount and net assets of the transferor Company.

c. Capital redemption reserve

Capital Redemption reserve is a statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a Company''s own shares.

d. Securities premium

Securities premium represents amount of premium recognised on issue of shares to shareholders at a price more than its face value.

e. Debenture redemption reserve

The Company has issued non convertible debentures in Financial Year 2017-18 and as per the provisions of the Companies Act, 2013 , it was required to create debenture redemption reserve out of the profits available for payment of dividend.The company has discontinued creation of DRR as per MCA notification no.464 dated August 16,2019.

f. Share options outstanding account

Company has approved employee share option scheme under which equity shares of Company are alloted to eligible employees as per the terms and conditions contained in the scheme. The amount is recognised based on the value of equity-settled share-based payments.

g. General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.

h. Retained earnings

Retained earnings represents amount that can be distributed by the Company to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act 2013.

i. Equity instrument through other comprehensive income

Reserve for equity instruments through other comprehensive income represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amount reclassified to retained earnings when those assets have been disposed off.

(a) Term loans from banks are secured as follows:-

(1) . 1st pari passu charge :- Hypothecation of entire fixed assets of the Company (both present and future) including equitable

mortgage.

(2) . 2nd pari passu charge:- Hypothecation of stocks of raw material, stock in process and finished goods, receivables/ book

debts and other current assets (both present and future).

(b) The Company had issued secured, rated listed Redeemable Non-convertible Debentures (NCDs) aggregating to H 195.00 Crores for cash at par on private placement basis on June 1, 2020. The NCD''s are listed at the Bombay Stock Exchange of India (BSE) and repayable at the end of 36 months from the date of allotment and have a yield of 6.83% per annum payable on 01-June on annual basis.

CRISIL has assigned a rating of AA with Stable outlook to the said NCDs of the Company on November 23, 2021. The NCDs are secured by way of a first pari passu charge over the immovable and movable fixed assets of the Company and it should have fixed asset cover of more than 1.25 times of outstanding amount of NCDs. The Fixed Asset coverage ratio as on March 31, 2022 is 2.47 times and Asset cover as on March 31, 2022 is 2.43 times.

(c) The Company had also issued secured, rated listed Redeemable Non-convertible Debentures (NCDs) aggregating to H 499.80 crores for cash at par on private placement basis on September 8, 2017 The NCDs are listed at the Bombay Stock Exchange of India (BSE) and comprise of three series repayable in third, fourth and fifth years and have an overall yield of 769% per annum. During the previous year 1,500 759% Series A NCDs of H 10 lacs each amounting to H 150 Cr were redeemed on 08-September 2020 and during the current year 1,500 769% Series B NCDs of H 10 lacs each amounting to H 150 Crores were redeemed on 08-September 2021.

CRISIL has assigned a rating of AA with Stable outlook to the said NCDs of the Company on November 23, 2021. These NCDs are secured by way of a first pari passu charge over the immovable and movable fixed assets of the Company and it should have fixed asset cover of more than 1.05 times of outstanding amount of NCDs. The Fixed Asset coverage ratio as on March 31, 2022 is 2.47 times and Asset cover as on March 31, 2022 is 2.43 times.

(d) There have been no breach of covenants mentioned in the loan agreements during the reporting years.

Details of security for working capital borrowings

Working capital borrowings from banks are secured as follows:-

(1) 1st pari passu charge :- Hypothecation of stocks of raw material, stock in process and finished goods, receivables/ book debts and other current assets (both present and future).

(2) 2nd pari passu charge:- Hypothecation of entire fixed assets of the company (both present and future) including equitable mortgage.

Includes Nil (March 31, 2021: Nil) for commercial paper issued by the Company. The maximum amount outstanding during the year is H 600 crores (including interest) (FY 2020-21: H 450.00 crores (including interest)).

37.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through optimization of debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in note no.18 and offset by cash and bank balances) and total equity of the Company. The Company is not subject to any externally exposed capital requirements.

The capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maintain optimum capital structure to reduce cost of capital and to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants which otherwise would permit the banks to immediately call loans and borrowings. In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital. The Company''s gearing ratio was as follows:

Level 1:

Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.

Level 2:

Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly.

Level 3:

Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data.

Sensitivity of Level 3 financial instruments are insignificant

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) for investments in mutual funds declared by mutual fund house.

Investment in preference shares/debentures: Fair value is determined by reference to quotes from fund houses/portfolio management services companies i.e value of investments.

Derivative contracts: The Company has entered into various foreign currency contracts to manage its exposure to fluctuations in foreign exchange rates . These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the Authorised Dealers Banks.

Quoted equity investments: Fair value is derived from quoted market prices in active markets.

Unquoted equity investments: Fair value is derived on the basis of net asset value approach, in this approach the net asset value is used to capture the fair value of these investments.

37.3 Financial Risk Management

The Company''s corporate treasury functions provides services to the business, coordinates access to the financial markets, monitors and manages the financial risks relating to operations of the Company through internal risk reports which analyse exposure by degree and magnitude of risk. These risks include market risk (including currency risk, interest rate risk and other price risks, credit risk and liquidity risk).

The Company seeks to minimize the effects of these risk by using derivate financial instruments to hedge risk exposure. The issue of financial derivatives is governed by the Company''s policy approved by the board of directors.

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive directly from its operations. The principal financial liabilities of the Company, include loans and borrowings, trade and other payables and the main purpose of these financial liabilities is to finance the day to day operations of the Company.

This note explains the risks which the Company is exposed to and policies and framework adopted by the Company to manage these risks.

37.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: foreign currency risk, interest rate risk, investment risk.

A. Foreign Currency Risk Management

The Company operates internationally and business is transacted in several currencies. The export sales of Company comprise around 50%(2020-21 - 48%) of the total sales of the Company, Further the Company also imports certain assets and material from outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the Company is exposed to foreign currency risk and the results of the Company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than Company''s functional currency.

The Company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions. The Company uses a combination of derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

Foreign exchange derivative contracts

The Company uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business or financing activities. The Company''s Corporate Treasury team measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency cash flows by appropriately hedging the transactions. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

B. Interest Rate Risk Management

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.

As the Company has no significant interest-bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates, which are included in interest bearing loans and borrowings in these financial statements. The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

C. Security Price Risk Management Exposure in equity

The Company is exposed to equity price risks arising from equity investments held by the Company and classified in the balance sheet as fair value through OCI.

Equity price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to equity price risks at the end of the year.

If the equity prices had been 5% higher / lower:

Other comprehensive income for March 31, 2022 would increase / decrease by H 0.11 crores ( March 31, 2021: increase / decrease by H 0.11 crores) as a result of the change in fair value of equity investment measured at FVTOCI.

Exposure in mutual funds

The Company manages the surplus funds majorly through investments in debt based mutual fund schemes. The price of investment in these mutual fund schemes is reflected though Net Asset Value (NAV) declared by the Asset Management Company on daily basis as reflected by the movement in the NAV of invested schemes. The Company is exposed to price risk on such Investments.

Mutual fund/debentures/Equity shares/bonds price sensitivity analysis

The sensitivity analysis below have been determined based on Mutual Fund Investment at the end of the year. If NAV has been 1% higher / lower:

Profit for the year ended March 31,2022 would increase / decrease by H 13.46 crores (March 31, 2021 by H 6.97 crores) as a result of the changes in fair value of mutual fund investments.

D. Commodity Price Risk Management

The Company uses commodity derivative instruments to manage its price risk exposures on inventory of cotton. Commodity derivatives are used primarily as risk mangement tool to safeguard price risk exposure on inventory of cotton. Company employs specific financial instruments namely future and option contracts for hedging its price risk related to commodity.

37.3.2 Credit Risk Management

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables which are typically unsecured. Credit risk on cash and bank balances is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. Investments primarily include investment in liquid mutual fund units, bonds, fixed maturity plan etc. issued by institutions having proven track record. The Company''s credit risk in case of all other financial instruments is negligible.

The Company assesses the credit risk based on external credit ratings assigned by credit rating agencies. The Company also assesses the creditworthiness of the customers internally to whom goods are sold on credit terms in the normal course of business. The credit limit of each customer is defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to overseas customers are generally covered by letters of credit.

The impairment analysis is performed on client to client basis for the debtors that are past due at the end of each reporting date. The Company has not considered an allowance for doubtful debts in case of trade receivables that are past due but there has not been a significant change in the credit quality and the amounts are still considered recoverable.

37.3.3 Liquidity Risk Management

The financial liabilities of the Company, other than derivatives, include loans and borrowings, trade and other payables. The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company monitors its risk of shortage of funds to meet the financial liabilities using a liquidity planning tool. The Company plans to maintain sufficient cash and marketable securities to meet the obligations as and when fall due. The below is the detail of contractual maturities of the financial liabilities of the Company at the end of each reporting period:

38 CONTINGENT LIABILITIES AND COMMITMENTS a. Claims against the Company not acknowledged as debts:
Particulars	As at	As at
	March 31, 2022	March 31, 2021
Sales tax, excise duty, etc*	6.78	6.10
Income-tax**	281.13	273.01
Others***	4.40	700

* Amount deposited H0.56 crore (March 31,2021 : H 0.65 crore)

** Amount deposited H 175.26 crore (March 31, 2021 : H 11790 crore)

*** Amount deposited H 0.70 crore (March 31,2021 : H 3.30 crore)

b. Liability on account of bank guarantees and letter of credit of H 531.19 crores (March 31, 2021: H 369.85 crores)

c. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company has been advised that it has strong legal positions against such disputes.

d. The Payment of Bonus (Amendment) Act 2015, notified on December 31, 2015, had revised the thresholds for coverage of employee eligible for Bonus and also enhanced the ceiling limits for computation of bonus retrospectively from April 1, 2014. Based on legal opinion, the Company has filed a writ petition in Hon''ble High Court of Punjab & Haryana contesting its retrospective applicability and the said jurisdictional High Court has granted stay on its retrospective operation. In view thereof, the Company has not provided differential bonus pertaining to the period from April 1, 2014 to March 31, 2015 amounting to H 8.21 crores. However, the Company has provided/paid bonus w.e.f. April 1, 2015 according to the amended provisions of the Payment of Bonus (Amendment) Act 2015.

e. The Hon''ble Supreme Court in a ruling during the year 2019 had passed a judgement on the definition and scope of ''Basic Wages'' under the Employees'' Provident Funds and Miscellaneous Provision Act, 1952. Pending issuance of guidelines by the regulatory authorities on the application of this ruling, the impact on the Company, if any, cannot be ascertained. The Company will update its provision, on receiving further clarity on this subject matter.

f. Capital and other commitments
Particulars	As at	As at
	March 31, 2022	March 31, 2021
(i) Estimated Amount of contracts remaining to be executed on capital account	626.15	412.59
& not provided for (net of advance) (ii) Exports obligations under Export Promotion Capital Goods (EPCG) scheme*	32.52	1,17793

* Company is availing benefit under EPCG Scheme for import of capital goods and spare parts against obligation to export six times of the duty saved. Total Duty to be saved/saved against licences outstanding as at March 31, 2022 is H 560.07 crores (March 31, 2021 H 438.40 crores). Export obligation on such licences outstanding as at year end is disclosed above.

(iii) The Company has other commitments, for purchases / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits in normal course of business. The Company does not have any long term contracts including derivative contracts for which there will be any material foreseeable losses.

40(a) Mahavir Share Trust (""Trust"") is holding 5,32,911 equity shares (March 31, 2021: 5,32,911 nos.) of H 10 each of Vardhman Special Steels Limited which were allotted to it in the capacity of a shareholder of the Company by virtue of ''Scheme of Arrangement & Demerger'' entered into by the Company, Vardhman Special Steels Limited and their respective shareholders and creditors.

As the aforesaid shares are held by Trust (Mahavir Share trust) on behalf of the Company and Company not being registered owner of shares, the cost of these shares is not reflected in investments but same has been valued at cost as reflected in other current asset.

41 SEGMENT INFORMATION

The Company is primarily in the business of manufacturing, purchase and sale of textiles. The Chairman and Managing Director of the Company, which has been identified as being the Chief Operating Decision Maker (CODM), evaluates the Company''s performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is only one reportable segment for the Company.

Domestic information includes sales and services to customers located in India.

Overseas information includes sales and services rendered to customers located outside India.

Non-current segment assets includes property, plant and equipments, capital work in progress, intangible assets and other non current assets.

No single customer contributed 10% or more to the company''s revenue for both the financial years 2021-22 and 2020-21.

44 Leases

The Company has lease contracts for various Lands, Godowns, Guest Houses, Office premises. Leases of Office Premises,guest Houses,Godowns have lease term ranging from 11 months to 30 years and leases of land have lease terms of 99 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. There are several lease contracts that include extension and termination options. The Company also has certain leases of office premises and guest houses with lease terms of 12 months or less. The Company applies the ''short-term lease'' recognition exemptions for these leases.

45 Share based payments - Employee Share option plan of the Company

(i) Detail of employee share option of the Company: The Company has a share option scheme for senior employees of the Company. In accordance with the terms of the plan as approved by shareholders, eligible employees may be granted options to purchase equity shares. Each employee share option convert into one equity share of the Company on exercise. Exercise price payable by the recipient is determined as per scheme. The options when allotted carry rights to dividend and voting power at par with other equity shares. Options may be exercised at the time of vesting to the date of their expiry.

(ii) The number of options granted is in accordance with employee stock option scheme approved by the shareholders and is subject to approval by the remuneration committee. The scheme rewards senior employees to the extent of Company''s and the individual''s achievement judged against both qualitative and quantitative criteria.

47.2 Defined benefit plans

The Company sponsors funded defined benefit plan for qualifying employees. This defined benefit plan of gratuity is administered by a separate trust that is legally separate from the entity. The trustees are required by the law to act in the interest of the trust and all the relevant stakeholders i.e. active employees, inactive employees, retired employees and employers, etc. The trust is responsible for investment policy with regard to the assets of the trust. The Company has a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972 or as per the Company''s plan, whichever is more beneficial.

(i) These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

48 Note : Scheme of Amalgamation

Pursuant to the Scheme of Amalgamation (''Scheme'') under the provisions of Section 230 to 232 of the Companies Act, 2013, for amalgamation of two of its wholly owned subsidiaries viz. VMT Spinning Company Limited and Vardhman Nisshinbo Garments Company Limited (together referred to as "transferor companies"), with Vardhman Textiles Limited ("Transferee Company" or "the Company") as approved by the National Company Law Tribunal, Chandigarh (''NCLT'') vide its order dated March 30, 2022 with the appointed date of April 01, 2020, all the assets, liabilities, reserves and surplus of the transferor companies have been transferred to and vested in the Company with effect from April 01, 2020 at their carrying values. The Company had filed the certified copy of the NCLT order with the respective Registrar of Companies (''ROC'') on May 14, 2022. Accordingly the Scheme became effective from May 14, 2022 w.e.f. the appointed date, i.e. April 01,2020. The effect of the scheme was given in the standalone Financial Statements for the year ended March 31,2022 as follows:

a) Pursuant to the Scheme, the amalgamation has been accounted for in accordance with principles laid down in Appendix C to the Indian Accounting Standard 103 "Business Combinations" along with Ind-AS Transition Facilitation group (ITFG) bulletin 9 and all the assets, liabilities (net of inter-company loans and balances) and reserves of the transferor companies have been accounted in the books of the Transferee Company at the carrying value as appearing in the consolidated financial statement of the transferee company.

b) The employees of transferor companies have been transferred to the transferee company on their existing terms of employment with respective companies.

c) All contingent liabilities of transferor companies have been transferred to the transferee company w.e.f from the Appointed Date i.e. 1st April 2020.

e) The operation of transferor companies were carried on by them in trust on behalf of the tranferree company for the period

comencing from the Appointed Date till the Effective Date i.e. May 14, 2022 and as such the operations of transferor companies

for the period April 1, 2020 to March 31, 2022 has been merged with the transferree Company and intercompany transactions and balances have been eliminated.

f) The standalone financial statements for the year ended March 31,2021 have been restated to give effect to the amalgamation.

Consequent to this restatement, the profit after tax for the year ended March 31, 2021 is higher by H 16.33 crores and other

comprehensive income for the year ended March 31, 2021 is higher by H 0.17 crores.

*Nature of CSR activities:

Promoting Education, Promoting Healthcare including Preventive Healthcare, Rural Development, Promotion of Art & Culture, Measures for the benefit of armed forces veterans, Promotion of Nationally Recognized Sports.

**Reason for shortfall:

Amount remaining unspent pretains to "Ongoing/ Multilayer Projects” approved by CSR committee which will be spent in coming years. Details of Deposit in Unspent CSR Account:

As per requirements of Section 135(5) of The Companies Act, 2013, H 9.65 crores is deposited in special account (Unspent CSR Account) on April 29, 2022 related to shortfall for financial year 2021-22 which will be spent in coming years. Also, H 5.77 crores was deposited in Unspent CSR Account on April 29, 2021 related to shortfall for financial year 2020-21 out of which H 4.46 crores have been spent during the current year and H 1.31 crores is lying in the bank account which will be spent in coming years.

51 There has been no delay in transferring amount, required to be transferred, to the investor education and investor fund (IEPF) by the Company during the year.

52 On account of COVID-19 pandemic the Company has made assessment of its liquidity position for the next year and the recoverability and carrying value of its assets comprising property, plant and equipment, intangible assets, right of use assets, investments, inventories and trade receivables as at the date of the balance sheet. The Company has considered internal and external sources of information for making said assessment. Basis the evaluation of the current estimates, the Company expects to recover the carrying amount of these assets and no material adjustments is required in the financial statements. Given the uncertainties associated with nature, condition and duration of COVID-19, the Company will closely monitor any material changes arising of the future economic conditions and any significant impact of these changes would be recognized in the financial statements as and when these material changes to economic condition arise.

53 Other statutory information:

(i) No proceeding have been initiated or pending against the company for holding any benami property under the BenamiTransactions (Prohibition) Act, 1988 (45 of 1988).

(ii) The company has not been declared as wilful defaulter by any bank or financial Institution or other lender.

(iii) The company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

(iv) There are no transactions which are not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (""Intermediaries"") with the understanding (whether recorded in writing or otherwise) that the Intermediary shall lend or invest in party identified by or on behalf of the company (Ultimate Beneficiaries).

(vi) No funds have been received by the company from any person(s) or entity(ies), including foreign entities ("funding party") with the understanding, whether recorded in writing or otherwise, that the company shall directly or indirectly lend or invest in other persons or entities in any manner whatsoever by or on behalf of the funding party ("Ultimate beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) During the financial year, the Company has not traded or invested in Crypto currency or Virtual Currency.

(viii) The company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period.

(ix) The Company has availed facilities from banks on the basis of security of current assets. The company has filed statements of current assets with banks which are in agreement with the books of accounts and there are no material discrepancies.

56 The Code on Social Security 2020 has been notified in the Official Gazette on 29th September 2020. The effective date from which the changes are applicable is yet to be notified . Impact if any of the change will be assessed and accounted in the period in which said Code becomes effective .

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Mar 31, 2021

3A Property, plant and equipment and capital work-in-progress (Contd..)

Notes on property, plant and equipment

1 Refer to note 18 (a) for information on property, plant and equipment pledged as security by the Company.

2 Buildings includes Rs. 2.48 Crores (March 31, 2020: Rs. 2.48 Crores) cost of residential flats at Mandideep, the land cost of which has not been excluded from this cost. The depreciation for the year has been taken on the entire cost.

3 As per the amendment in Ind-AS 20 “Government Grants" w.e.f April 1, 2018, the Company has opted to present the grant related to assets as deduction from the carrying value of such specific assets. For financial year 2020-21 such amount deducted from Property, Plant and Equipment is Rs. Nil (FY 19-20 Rs.0.25 Crores).

4 The Company has availed benefit under Export Promotion Capital Goods (EPCG) scheme amounting to Rs. 7.11 Crores (FY 19-20 Rs.8.08 Cr) (related to non cenvatable portion of total duty saved) for financial year 2020-21, such benefit is related to Property, Plant and Equipment and Capital work in progress.

5 Borrowing cost capitalised during the year Rs.Nil Crores (March 31, 2020 0.93 Crores)

6 Also refer Note 2.10 for option used by the Company to use carrying value of previous GAAP as deemed cost as on April 1, 2015.

16.1 Rights, preference and restriction attached to equity shares

The Company has one class of equity shares having a par value of Rs.10/- each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

16.2 Rights, preference and restriction attached to preference shares

The rate of dividend on preference shares will be decided by the Board of Directors as and when issued. Preferential shares as and when issued shall have the cumulative right to receive dividend as and when declared and shall have preferential right of repayment on amount of capital.

16.3 As per Employee Stock Options Scheme 2016, senior employees of the Company were offered 6,14,000 options (for details refer note 45). The vesting for due options began from financial year 2016-17 and 99,300 options/shares (1,06,200 options/ shares 2019-20) vested during the year 2020-21. Out of these, 43,800 shares/options (FY 2019-20 40,600 shares/options) have been alloted. Share options granted under Company''s employee share option plan carry right to dividend and voting rights at par with other equity holders.

17 Other equity (Contd..)

a. Share application money pending allotment

It represents money received from senior employees under the Company''s employee share option scheme.

b. Capital reserve

Capital reserve represents reserve recognised on amalgamation being the difference between consideration amount and net assets of the transferor Company.

c. Capital redemption reserve

Capital Redemption reserve is a statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a Company''s own shares.

d. Securities premium

Securities premium represents amount of premium recognised on issue of shares to shareholders at a price more than its face value.

e. Debenture redemption reserve

The Company has issued non convertible debentures in Financial Year 2017-18 and as per the provisions of the Companies Act, 2013 , it is required to create debenture redemption reserve out of the profits available for payment of dividend.The company has discontinued creation of DRR as per MCA notification no.464 dated August 16,2019.

f. Share options outstanding account

Company has approved employee share option scheme under which equity shares of Company are alloted to eligible employees including senior executives as per the terms and conditions contained in the scheme. The amount is recognised based on the value of equity-settled share-based payments.

g. General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.

h. Retained earnings

Retained earnings represents amount that can be distributed by the Company to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act 2013.

i. Equity instrument through other comprehensive income

Reserve for equity instruments through other comprehensive income represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amount reclassified to retained earnings when those assets have been disposed off.

(a) Term loans from banks are secured as follows:-

(1) 1st pari passu charge ^Hypothecation of entire fixed assets of the Company (both present and future) including equitable mortgage.

(2) 2nd pari passu charge:-Hypothecation of stocks of raw material, stock in process and finished goods, receivables/ book debts and other current assets (both present and future).

(b) The Company had issued secured, rated listed Redeemable Non-convertible Debentures (NCDs) aggregating to Rs. 195.00 Crores for cash at par on private placement basis on June 1, 2020. The NCD''s are listed at the Bombay Stock Exchange of India (BSE) and repayable at the end of 36 months from the date of allotment and have a yield of 6.83% per annum payable on 01-June on annual basis.

CRISIL has assigned a rating of AA with Stable outlook to the said NCDs of the Company on December 18, 2020. The NCDs shall be secured by way of a first pari passu charge over the immovable and movable fixed assets of the Company and it should have fixed asset cover of more than 1.25 times of outstanding amount of NCDsThe Fixed Asset coverage ratio as on March 31, 2021 is 2.14 times.

(c) The Company had also issued secured, rated listed Redeemable Non-convertible Debentures (NCDs) aggregating to Rs. 499.80 crores for cash at par on private placement basis on September 8, 2017. The NCDs are listed at the Bombay Stock Exchange of India (BSE) and comprise of three series repayable in third, fourth and fifth years and have an overall yield of 7.69% per annum.During the year 1,500 7.59% Series A NCDs of Rs.10 lacs each amounting to Rs.150 Cr were redeemed on 08-September 2020.

CRISIL has assigned a rating of AA with Stable outlook to the said NCDs of the Company on December 18, 2020. These NCDs are secured by way of a first pari passu charge over the immovable and movable fixed assets of the Company and it should have fixed asset cover of more than 1.05 times of outstanding amount of NCDsThe Fixed Asset coverage ratio as on March 31, 2021 is 2.14 times.

23 Borrowings (Current)¹ (Contd..)

Details of security for working capital borrowings

Working capital borrowings from banks are secured as follows:-

(1) 1st pari passu charge ^Hypothecation of stocks of raw material, stock in process and finished goods, receivables/ book debts and other current assets (both present and future).

(2) 2nd pari passu charge:-Hypothecation of entire fixed assets of the company (both present and future) including equitable mortgage."

Includes NIL (March 31, 2020: Nil) for commercial paper issued by the Company. The maximum amount outstanding during the year is Rs. 450 crores (including interest) (FY 2019-20: Rs. 550.00 crores (including interest)).

37 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

37.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through optimization of debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in note no.18 and offset by cash and bank balances) and total equity of the Company. The Company is not subject to any externally exposed capital requirements.

The capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maintain optimum capital structure to reduce cost of capital and to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants which otherwise would permit the banks to immediately call loans and borrowings. In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital. The Company''s gearing ratio was as follows:

37 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Contd..)

Level 1:

Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.

Level 2:

Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly.

Level 3:

Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data.

Sensitivity of Level 3 financial instruments are insignificant

The fair value of the financial instruments are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) for investments in mutual funds declared by mutual fund house.

Investment in preference shares/debentures: Fair value is determined by reference to quotes from fund houses/portfolio management services companies i.e value of investments.

Derivative contracts: The Company has entered into various foreign currency contracts to manage its exposure to fluctuations in foreign exchange rates . These financial exposures are managed in accordance with the Company''s risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the Authorised Dealers Banks.

Quoted equity investments: Fair value is derived from quoted market prices in active markets.

Unquoted equity investments: Fair value is derived on the basis of net asset value approach, in this approach the net asset value is used to capture the fair value of these investments.

The Company''s corporate treasury functions provides services to the business, coordinates access to the financial markets, monitors and manages the financial risks relating to operations of the Company through internal risk reports which analyse exposure by degree and magnitude of risk. These risks include market risk (including currency risk, interest rate risk and other price risks, credit risk and liquidity risk).

The Company seeks to minimize the effects of these risk by using derivate financial instruments to hedge risk exposure. The issue of financial derivatives is governed by the Company''s policy approved by the board of directors.

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive directly from its operations. The principal financial liabilities of the Company, include loans and borrowings, trade and other payables and the main purpose of these financial liabilities is to finance the day to day operations of the Company.

This note explains the risks which the Company is exposed to and policies and framework adopted by the Company to manage these risks.

37.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: foreign currency risk, interest rate risk, investment risk.

A. Foreign Currency Risk Management

The Company operates internationally and business is transacted in several currencies. The export sales of Company comprise around 47%(2019-20 - 40%) of the total sales of the Company, Further the Company also imports certain assets and material from outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the Company is exposed to foreign currency risk and the results of the Company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than Company''s functional currency.

The Company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions. The Company uses a combination of derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

Foreign exchange derivative contracts

The Company uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business or financing activities. The Company''s Corporate Treasury team measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency cash flows by appropriately hedging the transactions. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency. All identified exposures are managed as per the policy duly approved by the Board of Directors.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.

As the Company has no significant interest-bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates, which are included in interest bearing loans and borrowings in these financial statements. The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:

C. Security Price Risk Management Exposure in equity

The Company is exposed to equity price risks arising from equity investments held by the Company and classified in the balance sheet as fair value through OCI.

Equity price sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to equity price risks at the end of the year.

If the equity prices had been 5% higher / lower:

Other comprehensive income for March 31, 2021 would increase / decrease by Rs.0.11 crores ( March 31, 2020: increase / decrease by Rs. 0.10 crores) as a result of the change in fair value of equity investment measured at FVTOCI.

Exposure in mutual funds

The Company manages the surplus funds majorly through investments in debt based mutual fund schemes. The price of investment in these mutual fund schemes is reflected though Net Asset Value (NAV) declared by the Asset Management Company on daily basis as reflected by the movement in the NAV of invested schemes. The Company is exposed to price risk on such Investments.

Mutual fund/debentures/Equity shares/bonds price sensitivity analysis

The sensitivity analysis below have been determined based on Mutual Fund Investment at the end of the year. If NAV has been 1% higher / lower:

Profit for the year ended March 31, 2021 would increase / decrease by Rs. 6.97 crores (March 31, 2020 by Rs. 8.31 crores) as a result of the changes in fair value of mutual fund investments.

D. Commodity Price Risk Management

The Company uses commodity derivative instruments to manage its price risk exposures on inventory of cotton. Commodity derivatives are used primarily as risk mangement tool to safeguard price risk exposure on inventory of cotton. Company employs specific financial instruments namely future and option contracts for hedging its price risk related to commodity.

37.3.2 Credit Risk Management

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables which are typically unsecured. Credit risk on cash and bank balances is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. Investments primarily include investment in liquid mutual fund units, bonds, fixed maturity plan etc. issued by institutions having proven track record. The Company''s credit risk in case of all other financial instruments is negligible.

The Company assesses the credit risk based on external credit ratings assigned by credit rating agencies. The Company also assesses the creditworthiness of the customers internally to whom goods are sold on credit terms in the normal course of business. The credit limit of each customer is defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to overseas customers are generally covered by letters of credit.

The impairment analysis is performed on client to client basis for the debtors that are past due at the end of each reporting date. The Company has not considered an allowance for doubtful debts in case of trade receivables that are past due but there has not been a significant change in the credit quality and the amounts are still considered recoverable.

37.3.3 Liquidity Risk Management

The financial liabilities of the Company, other than derivatives, include loans and borrowings, trade and other payables. The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company monitors its risk of shortage of funds to meet the financial liabilities using a liquidity planning tool. The Company plans to maintain sufficient cash and marketable securities to meet the obligations as and when fall due. The below is the detail of contractual maturities of the financial liabilities of the Company at the end of each reporting period:

b. Liability on account of bank guarantees and letter of credit of Rs.367.99 crores (March 31, 2020: Rs. 151.94 crores)

c. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company has been advised that it has strong legal positions against such disputes.

d. The Payment of Bonus (Amendment) Act 2015, notified on December 31, 2015, had revised the thresholds for coverage of employee eligible for Bonus and also enhanced the ceiling limits for computation of bonus retrospectively from April 1, 2014. Based on legal opinion, the Company has filed a writ petition in Hon''ble High Court of Punjab & Haryana contesting its retrospective applicability and the said jurisdictional High Court has granted stay on its retrospective operation. In view thereof, the Company has not provided differential bonus pertaining to the period from April 1, 2014 to March 31, 2015 amounting to Rs. 8.21 crores. However, the Company has provided/paid bonus w.e.f. April 1, 2015 according to the amended provisions of the Payment of Bonus (Amendment) Act 2015.

e. The Hon''ble Supreme Court in a ruling last year had passed a judgement on the definition and scope of ‘Basic Wages'' under the Employees'' Provident Funds and Miscellaneous Provision Act, 1952. Pending issuance of guidelines by the regulatory authorities on the application of this ruling, the impact on the Company, if any, cannot be ascertained. The Company will update its provision, on receiving further clarity on this subject matter.

(iii) The Company has other commitments, for purchases / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits in normal course of business. The Company does not have any long term contracts including derivative contracts for which there will be any material foreseeable losses.

40 (a) The Company was holding its own 15,98,741 equity shares of Rs. 10 each through a Trust, which were received by it in its capacity as a shareholder of Vardhman Holdings Limited, in accordance with the ‘Scheme of Arrangement and Demerger''. Out of above, 1,36,539 shares were tendered during 2016-17 year in terms of buy back announced by the Company and remaining 14,62,202 shares were sold in 2017-18 in market.

40 (b) The Trust is also holding 5,32,911 equity shares (March 31, 2020: 5,32,911 nos.) of Rs. 10 each of Vardhman Special Steels Limited which were allotted to it in the capacity of a shareholder of the Company by virtue of ‘Scheme of Arrangement & Demerger'' entered into by the Company, Vardhman Special Steels Limited and their respective shareholders and creditors.

The Company has lease contracts for various Lands, Godowns, Guest Houses, Office premises. Leases of Office Premises,guest Houses, Godowns have lease term ranging from 11 months to 30 years and leases of land have leave terms of 99 years. The Company''s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. There are several lease contracts that include extension and termination options.

The Company also has certain leases of office premises and guest houses with lease terms of 12 months or less. The Company applies the ‘short-term lease'' recognition exemptions for these leases.

On transition, the adoption of the new standard resulted in recognition of ‘Right of Use'' asset of f 1.67 crore and a lease liability of f1.67 crore. Further, in respect of leases which were classified as operating leases, applying Ind AS 17, Rs. 7.22 crores has been reclassified from “Other Assets" to “Right of Use Asset". The effect of this adoption is insignificant on the profit before tax, profit for the period and earnings per share. Ind AS 116 will result in an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on account of lease payments.

45 Share based payments - Employee Share option plan of the Company

(i) Detail of employee share option of the Company: The Company has a share option scheme for senior employees of the Company. In accordance with the terms of the plan as approved by shareholders, eligible employees may be granted options to purchase equity shares. Each employee share option convert into one equity share of the Company on exercise. Exercise price payable by the recipient is determined as per scheme. The options when allotted carry rights to dividend and voting power at par with other equity shares. Options may be exercised at the time of vesting to the date of their expiry.

(ii) The number of options granted is in accordance with employee stock option scheme approved by the shareholders and is subject to approval by the remuneration committee. The scheme rewards senior employees to the extent of Company''s and the individual''s achievement judged against both qualitative and quantitative criteria.

47.2 Defined benefit plans

The Company sponsors funded defined benefit plan for qualifying employees. This defined benefit plan of gratuity is administered by a separate trust that is legally separate from the entity. The trustees are required by the law to act in the interest of the trust and all the relevant stakeholders i.e. active employees, inactive employees, retired employees and employers, etc. The trust is responsible for investment policy with regard to the assets of the trust. The Company has a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972 or as per the Company''s plan, whichever is more beneficial.

(i) These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment. Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

48 Additional disclosures

48.1 Disclosure required by Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements)

Regulations,2015:-

(i) The Company has given inter corporate deposits aggregating to Rs.37 Crores (March 31, 2020: Rs. NIL ) to VMT Spinning Company Limited during the year. The maximum amount outstanding during the year was Rs.30 Crores (March 31, 2020: Rs. NIL). The Balance outstanding as on March 31, 2021 is Rs.30 Crores (March 31, 2020: Rs. NIL ).

(ii) The Company has given inter corporate deposits aggregating to Rs.Nil (March 31, 2020: Rs. 15 crore) to Vardhman Special Steels Limited during the year. The maximum amount outstanding during the year was Rs. Nil (March 31, 2020: Rs. 30.00 crore). The balance outstanding as on March 31, 2021 is Rs.Nil (March 31, 2020: Rs. NIL).

(iii) The Company has given inter corporate deposits aggregating to Rs.5 crore (March 31, 2020: Rs. 10.00 crore) to Vardhman Nisshinbo Garments Company Limited during the year. The maximum amount outstanding during the year was Rs.31.99 crores (March 31, 2020: Rs. 26.99 crores). The balance outstanding as on March 31, 2021 is Rs.31.99 crores (March 31, 2020: Rs. 26.99 crores).

48.4 There has been no delay in transferring amount, required to be transferred, to the investor education and investor fund (IEPF) by the Company during the year.

48.5 On account of COVID-19 pandemic the Company has made assessment of its liquidity position for the next year and the recoverability and carrying value of its assets comprising property, plant and equipment, intangible assets, right of use assets, investments, inventories and trade receivables as at the date of the balance sheet. The Company has considered internal and external sources of information for making said assessment. Basis the evaluation of the current estimates, the Company expects to recover the carrying amount of these assets and no material adjustments is required in the financial statements. Given the uncertainties associated with nature, condition and duration of COVID-19, the Company will closely monitor any material changes arising of the future economic conditions and any significant impact of these changes would be recognized in the financial statements as and when these material changes to economic condition arise.

48.6 The Board of Directors, in its meeting held on May 27, 2020 has approved a Scheme of Amalgamation (the “Scheme") under Sections 230 to 232 of the Companies Act, 2013 (‘the 2013 Act'') and other applicable provisions of the 2013 Act, as per pooling of interest method, between the Company and its subsidiaries, by the name of VMT Spinning Company Limited and Vardhman Nisshinbo Garments Company Limited. The amalgamation will be from April 1, 2020 being the appointed date and is subject to other approvals as may be required in this case.

48.7 The Code on Social Security 2020 has been notified in the Official Gazette on 29th September 2020. The effective date from which the changes are applicable is yet to be notified . Impact if any of the change will be assessed and accounted in the period in which said Code becomes effective .

1

Refer note 37

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Mar 31, 2017

1. CORPORATE INFORMATION

Vardhman Textiles Limited (the Company) is a public company incorporated under the provisions of the Companies Act, 1956 on 8th October, 1973 and has its registered office at Chandigarh Road, Ludhiana. The name of the company at its incorporation was Mahavir Spinning Mills Ltd. and subsequently changed to Vardhman Textiles Limited on 5th September, 2006. The company is engaged in manufacturing of Cotton yarn, Synthetic yarn and woven fabric. The company is listed on two stock exchanges i.e. at National Stock Exchange and at Bombay Stock Exchange.

a Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period :

(b) Rights, preferences and restrictions attached to equity shares

The company has one class of equity shares having a par value of Rs.10/- each. Each holder of equity shares is entitled to one vote per share. 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 March 31, 2017 the amount of dividend recognised as distributions to equity shareholders is Nil (Previous Year: Rs.15 per share).

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

(c) Rights, preferences and restrictions attached to preference shares

The rate of dividend on preference shares will be decided by the Board of Directors as and when issued. Preference shares as and when issued shall have the cumulative right to receive dividend as and when declared and shall have preferential right of repayment of amount of capital.

(d) Shares held by holding company or its ultimate holding company or subsidiaries or associates of the holding company or the ultimate holding company in aggregate.

There is no holding /ultimate holding company of the Company.

(e) The Board of Directors of the Company at its meeting held on 24th September 2016 approved the buyback of upto 62,60,869 fully paid up equity shares of Rs.10 each, at a price not exceeding Rs.1,175 payable in cash,through the Tender Offer route, upto an aggregate amount not exceeding Rs.720 crore from the open market through Stock Exchange(s). During the year, the Company had bought back and extinguished 62,60,869 Equity Shares of Rs.10 each at a price of Rs.1,150.00. Consequently, Rs.626.08 Lakhs were transferred to Capital Redemption Reserve as per requirements of section 69 of Companies Act, 2013.

(f) Aggregate number and class of shares alloted as fully paid up pursuant to contract(s) without payment being received in cash, bonus shares and shares bought back for the period of five years immediately preceding the reporting date.

(g) Detail of shareholders holding more than 5% shares in the Company

(h) Terms of securities convertible into equity/preference shares N.A.

a). Details of security for term loans

Term loans from banks are secured by mortgage created or to be created on all the immovable assets of the company, both present and future and hypothecation of all movable assets including movable machinery, machinery parts, tools and accessories and other movable both present and future (except book debts), subject to charges created or to be created in favour of the bankers for securing the working capital limits.

b) Terms of repayment of term loans*

Details of security for working capital borrowings

Working capital borrowings from banks are secured by way of hypothecation of entire present and future tangible current assets of the company as well as a second charge on the entire present and future fixed assets of the company.

2. First time adoption of Ind AS

This financial statement is the first financial statement that has been prepared in accordance with Ind AS together with the comparative period data as at and for the year ended 31st March 2016, as described in the summary of significant accounting policies. The transition to Ind AS has been carried out in accordance with Ind AS 101-’First time adoption of Indian Accounting Standards’ with 1st April 2015 as the transition date.

This note explains the exemptions availed by the company on first time adoption of Ind AS and the principal adjustments made by the Company in restating its Indian GAAP financial statements as at 1st April 2015 and financial statements as at and for the year ended 31st March 2016 in accordance with Ind AS 101.

Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has, accordingly, applied following exemptions:

a) The Company has elected to consider carrying amount of all items of property, plant and equipments measured as per Indian GAAP as recognized in the financial statements as at the date of transition, as deemed cost at the date of transition. The effect of consequential changes arising on the application of other Ind AS has been adjusted to the deemed cost of Property, Plant & Equipment.

b) The Company has adopted to measure investments in subsidiaries, joint ventures and associates at cost in accordance with Ind AS 27 and therefore has measured such investments in its separate opening Ind AS balance sheet at carrying amount as per Indian GAAP at the date of transition in accordance with Ind AS 101.

c) The Company has availed the exemption of fair value measurement of financial assets or liabilities at initial recognition and accordingly will apply fair value measurement of financial assets or liabilities at initial recognition prospectively to transactions entered into on or after 01st April 2015.

d) The estimates at 1st April 2015 and at 31st March, 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items under Indian GAAP did not require estimation:

- Fair values of Financial Assets & Financial Liabilities

- Impairment of financial assets based on expected credit loss modal

- Discount rates

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions as at 1st April, 2015 and 31st March, 2016.

Notes to the reconciliation of equity as at 1st April 2015 and 31st March 2016 and Total comprehensive income for the year ended 31st March 2016

1. Leasehold land

Under Indian GAAP, land on lease was not covered under ‘Leases’ and therefore it was shown as Tangible assets. Under Ind AS, land on lease is considered as operating lease. Therefore, net block of leasehold land (31st March 2016 Rs.748.26 Lakhs, 1st April 2015 Rs.756.41Lakhs) has been re-classified under the head “Other non-current assets” (31st March 2016 Rs.740.11 Lakhs, 1st April 2015 Rs.748.26 Lakhs) and “Other current assets” (31st March 2016 Rs.8.15 Lakhs, 1st April 2015 Rs.8.15 Lakhs) as ‘Prepayments of leasehold land’. Further, the amortization of leasehold payment for the year ended 31st March 2016 amounting to Rs.8.15 Lakhs has been reclassified from ‘Depreciation and amortization’ to ‘Other expenses’. However, the same has no impact on the total equity as at 31st March, 2016.

2. Fair Valuation of Investments

Under Indian GAAP, investments in equity instruments, mutual funds and debt securities were classified as long term investments or current investments based on the intended holding period and realisability. Long term investments were carried at cost less provision for other than temporary diminution in the value of investments. Current investments were carried at lower of cost and fair value. Ind AS requires such investments to be measured at fair value except investments in subsidiaries, associates and joint venture for which exemption has been availed.

Accordingly, the Company has designated such investments as investments measured at FVTPL/FVTOCI/amortized cost in accordance with Ind AS. The difference between the instrument’s fair value and carrying amount as per Indian GAAP has been recognized in retained earnings. This has resulted in increase in retained earnings of Rs.6482.59 Lakhs and Rs.2611.52 Lakhs as at 31st March 2016 and 1st April 2015 respectively and increase in net profit of Rs.3871.07 Lakhs for the year ended 31st March 2016.

3. Financial instruments measured at amortized cost

Under Indian GAAP, interest free loan to employees are recorded at their transaction value. Under Ind AS, these loans are to be measured at amortized cost on the basis of effective interest rate method. Due to this, long term loans to employees and short term loans to employees has been decreased and difference between carrying amount and amortized cost has been recognized as ‘Deferred employee cost’ under the head ‘Other non-current assets’ (31st March 2016 Rs.4.47 Lakhs, 1st April 2015 Rs.5.53 Lakhs) and ‘Other current assets’ (31st March 2016 Rs.11.82 Lakhs, 1st April 2015 Rs.11.51Lakhs). Further, Employee benefit expense has been increased due to amortisation of the deferred employee benefit of Rs.11.51 Lakhs which is offset by the notional interest income on loan to employee of Rs.11.51Lakhs for the year ended 31st March 2016.

4. Derivative Instruments

The fair value of derivative instruments is recognized under Ind AS which was not recognized under Indian GAAP. Derivative instruments at fair value through profit or loss reflect the positive change in fair value of those foreign exchange forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for expected sales and purchases. Accordingly, difference on account of fair valuation of these instruments has been adjusted in retained earnings in accordance with Ind AS. This has resulted in increase in retained earnings of Rs.248.13 Lakhs and Rs.689.76 Lakhs as at 31st March 2016 and 1st April 2015 respectively and decrease in net profit of Rs.442.33 Lakhs for the year ended 31st March 2016.

5. Borrowings

Under Indian GAAP, transaction costs incurred in connection with borrowings are amortised upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method. This has resulted in decrease in long term borrowings on account of unamortized amount of processing charges with a corresponding adjustment in retained earnings of Rs.272.34 Lakhs and Rs.258.08 Lakhs as at 31st March 2016 and 1st April 2015 respectively and increase in the net profit for the year ended 31st March 2016 of Rs.14.26 Lakhs.

6. Capital grant

(i) Under Indian GAAP, certain capital grant received from Government as ‘Promoter Contribution’ is shown under the head ‘Capital reserve’. Under Ind AS, such grant is treated as deferred income and is recognized as income over the useful life of the assets for which such grant is received. This has resulted in decrease in Capital reserve (31st March 2016 Rs.285.00 Lakhs, 1st April 2015 Rs.285.00 Lakhs) with a corresponding adjustment in retained earnings (31st March 2016 Rs.271.00 Lakhs, 1st April 2015 Rs.263.00 Lakhs) and deferred income for capital subsidy (31st March 2016 Rs.14.00 Lakhs, 1st April 2015 Rs.22.00 Lakhs) respectively. Further profit for the year ended 31st March 2016 has been increased with Rs.8.00 Lakhs on account of income of capital grant pertaining to financial year 2015-16.

(ii) Under Indian GAAP, Government grant related to Property, plant and equipment are reduced from the cost of respective asset. Under Ind AS, Government grant related to Property, plant and equipment are treated as deferred income and are recognized in the statement of profit and loss on a systematic basis over the useful life of the asset. This has resulted in increase in Property, Plant and Equipment (net of accumulated depreciation) (31st March 2016 1924.99 Lakhs,1st April 2015 Rs.2050.28 Lakhs) with a corresponding adjustment in retained earnings (31st March 2016 Rs.72.56 Lakhs, 1st April 2015 Rs.88.76 Lakhs) and deferred income for capital subsidy (31st March 2016 1996.85 Lakhs, 1st April 2015 Rs.2139.05 Lakhs). Further profit for the year ended 31st March 2016 has been increased with Rs.16.90 Lakhs on account of difference between income of capital grant amounting to Rs.142.20 Lakhs and the depreciation amounting to Rs.125.29 Lakhs pertaining to financial year 2015-16 related to the grant earlier decapitalized in fixed assets under Indian GAAP.

7. Proposed Dividend

Under Indian GAAP, proposed dividend (including Dividend Distribution Tax) is recognized as a liability in the period to which it relates, irrespective of when it is declared. Under Ind AS, proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid.

In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability for the year ended 31st March 2015 recorded as proposed dividend as on 1^st April, 2015 along with dividend distribution tax amounting to Rs.7697.09 Lakhs has been de-recognised with a corresponding adjustment in the retained earnings.

8. Defined benefit obligation

Under Ind AS, remeasurements i.e. actuarial gains and losses are to be recognized in ‘Other comprehensive income’ and are not to be reclassified to profit and loss in a subsequent period. Under the Indian GAAP, these remeasurements were forming part of the profit or loss. Therefore, actuarial gain/loss amounting to Rs.6.22 Lakhs for the financial year 2015-16 has been recognized in OCI (net of tax Rs.2.15 Lakhs) which was earlier recognised as Employee benefits expense. However, the same has no impact on the total equity as at 31st March, 2016.

9. Sale of goods

a. Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Thus, sale of goods under Ind AS has increased by Rs.53.99 Lakhs with a corresponding increase in other expenses.

b. Under Indian GAAP, turnover discount was shown as expense. However under Ind AS revenue is to be shown as net of turnover discount. Accordingly, turnover discount amounting to Rs.39.53 Lakhs has been reduced from revenue with a corresponding adjustment in other expenses.

10. Treasury Shares

The Company is holding 15,98,741 equity shares of Vardhman Textiles Limited at cost of Rs.1,428.72 Lakhs through a trust, which were received by it in its capacity as a shareholder of Vardhman Holdings Limited, in accordance with the ‘Scheme of Arrangement and Demerger’.

The Equity share capital has been reduced with paid up value of Rs.159.87 Lakhs and Reserve & Surplus has been reduced with Rs.1,268.85 Lakhs as per Ind AS-32.

11. Bill discounted against debtors

Under Indian GAAP, bills discounted against debtors were shown as contingent liability. However, the same falls under the category of ‘Financial instruments’ under Ind AS. Therefore, the bills discounted amounting to Rs.8,807.06 Lakhs and Rs.13,724.98 Lakhs as on 31st March 2016 and 1st April 2015 respectively have been shown under ‘Short term borrowings’ with a corresponding adjustment in ‘Trade receivables’. However, the same has no impact on the total equity as at 31st March, 2016 and 1st April, 2015.

12. Deferred tax

Under Indian GAAP, deferred tax was recognized for the temporary timing differences which focus on differences between taxable profits and accounting profits for the period. Ind AS requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Further, the application of Ind AS has resulted in recognition of deferred tax on certain temporary differences which was not required under Indian GAAP. Accordingly, deferred tax adjustments have been recognised in correlation to the underlying transactions in retained earnings/OCI in accordance with Ind AS. This has resulted decrease in retained earnings of Rs.1814.49 Lakhs and Rs.676.91Lakhs as at 31st March 2016 and 1st April 2015 respectively. The net profit has been decreased with Rs.1137.58 Lakhs for the year ended 31st March 2016 with a corresponding adjustment in ‘Deferred tax liability”.

13. Statement of cash flows

The transition from Indian GAAP to Ind AS has not had a material impact on statement of cash flows.

2 (b) Fair Value Measurement

(i) Fair Value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

(ii) The following table presents fair value hierarchy of assets and liabilities measured at fair value:

As at 31st March 2017

a) The Company has contested the additional demand in respect of Sales Tax, Excise Duty etc., amounting to Rs.666.43 Lakhs (31.03.2016 Rs.1,194.71 Lakhs, 01.04.2015 Rs.1,159.80 Lakhs). As against this a sum of Rs.67.21 Lakhs (31.03.2016 Rs.110.21 Lakhs, 01.04.2015 Rs.113.70 Lakhs) has been deposited under protest and stands included under the head “Balance with government authorities in note-14 -Other Current Assets “. The Company has filed an appeal with the Appellate Authorities and is advised that the demand is not in accordance with law. No provision, therefore, has been made in accounts in respect thereof.

b) The Company has contested the additional demand in respect of income tax amounting to Rs.18,250.72 Lakhs (31.03.2016 Rs.18,253.23 Lakhs, 01.04.2015 Rs.16,298.27 Lakhs). As against this a sum of Rs.10,068.97 Lakhs (31.03.2016 Rs.6,799.35 Lakhs, 01.04.2015 Rs.6,035.72 Lakhs) has been deposited/ adjusted under protest and stands included in “Advance income tax” under the head “Current Tax Assets”. Provision of Rs.15,635.13 (31.03.2016 Rs.15,635.13 Lakhs, 01.04.2015 Rs.14,250.47 Lakhs) in this respect has not been made as the company has filed various appeals with the appellate authorities and the company is confident to get the desired relief.

c) The company had taken over the textile undertaking of Vardhman Holdings Limited (formerly known as Vardhman Spinning & General Mills Limited) by a scheme of Arrangement and De-merger. An injunction was obtained against the London Branch of the said textile undertaking for preventing disposal of assets upto the value of Pound Sterling 2.99 Lac as a result of a court case pending in London for alleged non-fulfilment of an agreement of cotton purchase. The said matter had been decided against the said textile undertaking and accordingly, Pound Sterling 0.48 Lac lying in the bank account at London had been paid to the claimant pursuant to the Order of the Court. The said amount was written off in the books of the said undertaking by way of debit to the statement of Profit and Loss. No provision has been made for the balance decreed amount by the undertaking in view of the fact that the said undertaking was prevented by force majure in fulfiling its part of contract. The Company as successor to the textile undertaking is contesting this matter in Indian Courts and is confident that there would not be any further liability in this regard.

3. Amortisation of Intangible assets

a. Softwares have been amortised @ 25% on straight line basis as the useful life has been estimated to be not more than four years.

b. Right to use power lines have been amortised @ 20% on straight line basis as the useful life thereof has been estimated to be not more than five years.

c. Contribution to CETP has been amortised @ 20% on straight line basis as the useful life thereof has been estimated to be not more than five years.

4. (a) The Company was holding its own 15,98,741 (31.03.2016- 15,98,741) equity shares of Rs.10 each through a Trust, which were received by it in its capacity as a shareholder of Vardhman Holdings Limited, in accordance with the ‘Scheme of Arrangement and Demerger’. Out of above 1,36,539 shares were tendered during the year in terms of buy back announced by the company. The value of shares held at the end of each reporting period has been adjusted in the equity in accordance with Ind AS 32.

(b) The aforesaid Trust is also holding 3,19,748 equity shares (31.03.2016- 3,19,748) of Rs.10 each of Vardhman Special Steels Limited which were allotted to it in the capacity of a shareholder of the company by virtue of ‘Scheme of Arrangement & Demerger’ entered into by the company, Vardhman Special Steels Limited and their respective shareholders and creditors.

As the aforesaid shares are held by a Trust on behalf of the company and company not being registered owner of shares, the cost of these shares is not reflected in Investments but same has been valued at cost as reflected in other current asset.

The amount recoverable on account of equity shares of Vardhman Textiles Limited held by the trust has been reduced from equity share capital & retained earnings.

5. Business segments have been identified based on the nature and class of products and services, assessment of differential risks and returns. Accordingly, company is a single segment company operating in textile business and disclosure requirements as contained in Ind AS- 108 ‘Operating Segments’ are not required in the Standalone financial statements. However, the disclosure has been made in the Consolidated Financial Statements.

6. In accordance with Ind AS-36 on “Impairment of Assets” the Company has assessed as on the balance sheet date, whether there are any indications with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

7. Earning Per Share

(a) The calculation of Earning Per Share (EPS) as disclosed in the statement of profit and loss has been made in accordance with Indian Accounting Standard (Ind AS)-33 on “Earning Per Share”

(i) A statement on calculation of basic & Diluted EPS is as under:

8. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 under the chapter on delayed payments to Micro & small enterprises.

Dues of Micro, Small and Medium enterprises have been determined on the basis of information collected by the management. This has been relied upon by the auditors.

9. Leases :

The Company has leased facilities under cancellable and non-cancellable operating lease arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs.161.57 Lakhs (31.03.2016 Rs.156.74 Lakhs). The future minimum lease payments in respect of the non-cancellable operating leases are:

10. Disclosure required by Regulation 34 read with Schedule V of SEBI (Listing obligations and Disclosure Requirements) Regulations,2015:-

(i) The Company has given inter corporate deposits aggregating to Rs.Nil (31.03.2016 Rs.Nil, 01.04.2015 Rs.500 Lakhs) to M/s Vardhman Acrylics Ltd. during the year. The maximum amount outstanding during the year was Rs.Nil (31.03.2016 Rs.Nil, 01.04.2015 Rs.500 Lakhs). The Balance outstanding as on 31.03.17 is Rs.Nil (31.03.2016 Rs.Nil, 01.04.2015 Rs.Nil).

(ii) The Company has given inter corporate deposits aggregating to Rs.2,225 Lakhs (31.03.2016 Rs.Nil, 01.04.2015 Rs.2,844 Lakhs) to M/s VMT Spinning Company Limited during the year. The maximum amount outstanding during the year was Rs.1,375 Lakhs (31.03.2016 Rs.Nil, 01.04.2015 Rs.1,098 Lakhs). The Balance outstanding as on 31.03.17 is Rs.700 Lakhs (31.03.2016 Rs.Nil, 01.04.2015 Rs.Nil).

(iii) The Company has given inter corporate deposits aggregating to Rs.Nil (31.03.2016 Rs.4,700 Lakhs, 01.04.2015 Rs.65,079 Lakhs) to M/s Vardhman Special Steels Limited. The maximum amount outstanding during the year was Rs.1,500 Lakhs (31.03.2016 Rs.1,954.57 Lakhs, 01.04.2015 Rs.6,535.74 Lakhs). The Balance outstanding as on 31.03.2017 is Rs.1,500 Lakhs (31.03.2016 Rs.1,500 Lakhs, 01.04.2015 Rs.2,554.57 Lakhs).

(iv) The Company has given inter corporate deposits aggregating to Rs.200 Lakhs (31.03.2016 Rs.681.00 Lakhs, 01.04.2015 Rs.1,636 Lakhs) to M/s Vardhman Nisshinbo Garments Company Limited during the year. The maximum amount outstanding during the year was Rs.1199.12 Lakhs (31.03.2016 Rs.1,199.12 Lakhs, 01.04.2015 Rs.1,187.62 Lakhs). The Balance outstanding as on 31.03.17 is Rs.1199.12 Lakhs(31.03.2016 Rs.1,199.12 Lakhs, 01.04.2015 Rs.918.12 Lakhs).

(v) The Company has given inter corporate deposits aggregating to Rs.Nil (31.03.2016 Rs.Nil, 01.04.2015 Rs.2,621.00 Lakhs) to M/s Vardhman Yarns and Threads Limited during the year. The maximum amount outstanding during the year was Rs.Nil (31.03.2016 Rs.Nil, 01.04.2015 Rs.861.00 Lakhs). The Balance outstanding as on 31.03.17 is Rs.Nil (31.03.2016 Rs.Nil, 01.04.2015 Rs.Nil).

11. In accordance with the provisions of Section 135 of the Companies Act, 2013 the company has paid a sum of Rs.540.91 Lakhs (31.03.2016 Rs.476.60 Lakhs) towards approved Corporate Social Responsibility (CSR) activities. The said amount stands debited to the “Miscellaneous” under the head “other expenses”.

12. Employee Benefits :

Gratuity plan: The Company has a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act or as per the Company’s plan, whichever is more beneficial.

The following tables set out the disclosures in respect of the gratuity plan as required under Ind AS 19.

(a) Changes in the present value of the obligations:

(c) Amount recognized in Balance Sheet:

(d) Actuarial Gain/Loss on Plan Assets

(e) Expenses Recognized in Profit & Loss:

(f) OCI Recognized:

(h) Principal actuarial assumption at the Balance Sheet Date (expressed as weighted average):

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

(i) The quantitative sensitivity analysis on net liability recognized on account of change in significant assumptions:

As per Actuarial Certificate, sensitivities due to mortality & withdrawals are not material & hence impact of change has not been calculated.

(j) The following payments are expected contributions to the defined benefit plan in future years:

(k) The average duration of the defined benefit plan obligation at the end of the reporting period is 13.65 years (31 March 2016: 14.00 years).

13. Financial Risk Management

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive directly from its operations. The principal financial liabilities of the company, include loans and borrowings, trade and other payables and the main purpose of these financial liabilities is to finance the day to day operations of the company.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks and that advises on financial risks and the appropriate financial risk governance framework for the Company.

This note explains the risks which the company is exposed to and policies and framework adopted by the company to manage these risks:

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: foreign currency risk, interest rate risk, investment risk.

(i) Foreign currency risk

The company operates internationally and business is transacted in several currencies.

The export sales of company comprise around 35% of the total sales of the company, Further the company also imports certain assets and material from outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently the company is exposed to foreign currency risk and the results of the company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than company’s functional currency.

The company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions. The Company uses a combination of derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

The following table summarizes the company’s exposure foreign currency risk from financial instruments at the end of each reporting period:

Foreign currency sensitivity

The impact on the Company’s profit before tax due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives on account of reasonably possible change in USD and Euro exchange rates (with all other variables held constant) will be as under:

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates.

As the Company has no significant interest-bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates, which are included in interest bearing loans and borrowings in these financial statements. The company’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

At the reporting date the interest rate profile of the Company’s interest bearing financial instrument is at its fair value:

Cash flow sensitivity analysis for variable rate instruments

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. A change of 100 basis points in interest rates for variable rate instruments at the reporting date would have increased/(decreased) profit or loss for the below years by the amounts shown below. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

(iii) Investment Risk

The company is exposed to equity price risk arising from equity investments.

The company manages equity price risk by investing in fixed deposits/Fixed Maturity Plan, debt instruments and Liquid funds. The company does not actively trade equity investments. Equity investments are mainly held for strategic rather than trading purposes. Protection principle is given high priority by limiting company’s investments to AA and higher rated companies and top rated money market instruments only.

Liquidity Risk

The financial liabilities of the company, other than derivatives, include loans and borrowings, trade and other payables. The company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations.

The company monitors its risk of shortage of funds to meet the financial liabilities using a liquidity planning tool. The company plans to maintain sufficient cash and marketable securities to meet the obligations as and when fall due.

The below is the detail of contractual maturities of the financial liabilities of the company at the end of each reporting period:

Credit Risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables which are typically unsecured. Credit risk on cash and bank balances is limited as the company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. Investments primarily include investment in liquid mutual fund units, bonds, fixed maturity plan etc. issued by institutions having proven track record. The Company’s credit risk in case of all other financial instruments is negligible.

The company assesses the credit risk based on external credit ratings assigned by credit rating agencies. The company also assesses the creditworthiness of the customers internally to whom goods are sold on credit terms in the normal course of business. The credit limit of each customer is defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to overseas customers are generally covered by letters of credit.

The impairment analysis is performed on client to client basis for the debtors that are past due at the end of each reporting date. The company has not considered an allowance for doubtful debts in case of trade receivables that are past due but there has not been a significant change in the credit quality and the amounts are still considered recoverable.

The following is the detail of revenues generated from top five customers of the company and allowance for lifetime expected credit loss:

The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables as disclosed at Note 10.

Write off policy

The financials assets are written off incase there is no reasonable expectation of recovering from the financial asset.

14. Capital Management

The capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the company. The primary objective of the company’s capital management is to maintain optimum capital structure to reduce cost of capital and to maximize the shareholder value.

The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants which otherwise would permit the banks to immediately call loans and borrowings. In order to maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

Further, there have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year ended 31st March 2017.

There were no changes in the objectives, policies or processes for managing capital during the year ended 31 March 2017 and 31 March 2016.

15. During the financial year 2016-17, the company has sold its 40% equity stake in Vardhman Yarns & Threads Limited (VYTL), equivalent to 22,802,541 equity shares, to its Joint Venture partner namely American & Efird Global(A & E) for a consideration of Rs.413.01 crore. Gain on sale of such investment amounting to Rs.313.00 crore has been shown under the head ‘Other Income’ (refer note no. 28). Accordingly now the company holds 11% equity stake in VYTL equivalent to 62,69,699 equity shares at a cost of Rs.27.49 crore. In view of changed situation, the investment is also re-classified as ‘Investment in Associates’.

16. Disclosure on Specified Bank Notes (SBNs)

During the year, the Company had specified bank notes or other denomination notes as defined in the Ministry of Corporate Affairs (MCA) notification G.S.R. 308(E) dated 31 March 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from 8 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification is given below:

17. Figures in bracket indicate deductions.

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Mar 31, 2016

1. CORPORATE INFORMATION

Vardhman Textiles Limited (The Company) is a public company incorporated under the provisions of the Companies Act, 1956 on 8th October, 1973. The name of the company at its incorporation was Mahavir Spinning Mills Ltd. & subsequently changed to Vardhman Textiles Limited on 5th September, 2006. The company is engaged in manufacturing of Cotton yarn, Synthetic yarn & woven fabric.

2. AMORTISATION OF INTANGIBLE ASSETS

a. Softwares have been amortised @ 25% on straight line basis as the useful life has been estimated to be not more than four years.

b. Right to use power lines have been amortised @ 20% on straight line basis as the useful life thereof has been estimated to be not more than five years.

c. Contribution to CETP has been amortised @ 20% on straight line basis as the useful life thereof has been estimated to be not more than five years.

3. The Company is holding 15,98,741 (Previous year 15,98,741) equity shares of Vardhman Textiles Limited through a trust, which were received by it in its capacity as a shareholder of Vardhman Holdings Limited, in accordance with the ''Scheme of Arrangement and Demerger''. Further, during the accounting year ended 31st March, 2012, the trust had been allotted 3,19,748 equity shares by Vardhman Specials Steels Limited (VSSL) in the ratio of one equity share against every five equity shares held in the company in accordance with the ''Scheme of Arrangement and Demerger'' entered into by the company, VSSL and their respective shareholders and creditors . The said trust has been exclusively formed for the benefit of the company. As per the provision of the trust deed, all the money received by the trust (including dividend and the proceeds of the sale of shares) shall be paid forthwith to the company by the trust.

4. The accumulated losses of Vardhman Nisshinbo Garments Company Limited, a subsidiary of the company, as on 31st March, 2016 are more than 50% of its net worth. However the subsidiary company has turned around and has reported net profit during the current financial year. In view of the management of the subsidiary company, these losses were only due to the starting phase of the business and based on the orders on hand and expected growth in export business the losses would be further reduced within a few years. Therefore no provision for decline in the value of investment has been made as in the opinion of the management of the Company, such decline is temporary in nature.

5. Business segments have been identified based on the nature and class of products and services, assessment of differential risks and returns. On the basis of factors detailed in Accounting Standard- 17 ''Segment Reporting'', Yarn and Fabric segments have been combined into one segment. Now company is a single segment company operating in textile business and disclosure requirements as contained in the Accounting Standard- 17 ''Segment Reporting'' are not required in the Standalone financial statements. However, the disclosure has been made in the Consolidated Financial Statements.

6. In accordance with the Accounting Standard (AS)-28 on "Impairment of Assets" the Company has assessed as on the Balance Sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

7. EARNING PER SHARE

(a) The calculation of Earning Per Share (EPS) as disclosed in the Statement of Profit and Loss has been made in accordance with Accounting Standard (AS)-20 on "Earning Per Share" prescribed in Companies (Accounts) rules, 2014.

(i) A statement on calculation of basic EPS is as under:

8. LEASES :

The Company has leased facilities under cancellable and non-cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs.100.02lacs (Previous Year Rs.108.37 lacs). The future minimum lease payments in respect of the non-cancellable operating leases are:

9. Disclosure required by Regulation 34 read with Schedule V of SEBI (Listing obligations and Disclosure Requirements) Regulations,2015:-

(i) The Company has given inter corporate deposits aggregating to Rs.Nil (Previous Year Rs.500.00 lacs) to M/s Vardhman Acrylics Ltd. during the year. The maximum amount outstanding during the year was Rs.Nil (Previous Year Rs.500.00 lacs). The Balance outstanding as on 31.03.16 is Rs.Nil (Previous Year Rs.Nil).

(ii) The Company has given inter corporate deposits aggregating to Rs. NIL (Previous Year Rs.2,844.00 lacs) to M/s VMT Spinning Company Limited during the year. The maximum amount outstanding during the year was Rs. NIL (Previous Year Rs.1,098.00 lacs). The Balance outstanding as on 31.03.16 is Rs.Nil (Previous Year Rs.Nil).

(iii) The Company has given inter corporate deposits aggregating to Rs.4,700.00 lacs (Previous Year Rs.65,079.00 lacs) to M/s Vardhman Special Steels Limited. The maximum amount outstanding during the year was Rs.1,954.57 lacs (Previous Year Rs.6,535.74 lacs). The Balance outstanding as on 31.03.2016 is Rs.1,500.00 lacs (Previous Year Rs.2,554.57 lacs).

(iv) The Company has given inter corporate deposits aggregating to Rs.681.00 lacs (Previous Year Rs.1,636.00 lacs) to M/s Vardhman Nisshinbo Garments Company Limited during the year. The maximum amount outstanding during the year was Rs.1,199.12 lacs (Previous Year Rs.1,187.62 lacs). The Balance outstanding as on 31.03.16 is Rs.1,199.12 lacs (Previous Year Rs.918.12 lacs).

(v) The Company has given inter corporate deposits aggregating to Rs.Nil (Previous Year Rs.2,621.00 lacs) to M/s Vardhman Yarns and Threads Limited during the year. The maximum amount outstanding during the year was Rs.Nil (Previous Year Rs.861.00 lacs). The Balance outstanding as on 31.03.16 is Rs.Nil (Previous Year Rs.Nil).

10. Figures in bracket indicate deductions.

11. Previous year''s figures have been recast/regrouped wherever necessary, to make these comparable with current year''s figures.

12. In accordance with the provisions of Section 135 of the Companies Act, 2013 the company has paid a sum of Rs.476.60 lacs (Previous year Rs.600.00 lacs) towards approved CSR activities. The said amount stands debited to the "Miscellaneous" under the head "other expenses".

13. The Payment of Bonus (Amendment) Act 2015, notified on 31st December 2015, has revised the thresholds for coverage of employee eligible for Bonus and also enhanced the ceiling limits for computation of bonus retrospectively from 1st April 2014. Based on legal opinion, the Company has filed a writ petition in Hon''ble High Court of Punjab & Haryana contesting its retrospective applicability and the same is pending for hearing. However, the said jurisdictional High Court has already granted stay on its retrospective operation in some other case. In view thereof, the company has not provided differential bonus pertaining to the period from 1st April 2014 to 31st March 2015 amounting to Rs.8.21 crore.

However, the company has provided bonus for the current financial year according to the amended provisions of the Payment of Bonus (Amendment) Act 2015.

14. EMPLOYEE BENEFITS :

The summarized position of Post-employment benefits and long term employee benefits recognized in the Statement of Profit and Loss and Balance Sheet as required in accordance with Accounting Standard (AS) 15 is as under:-

15. The company uses forward contracts and options to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities, firm commitment and highly probable forecast transactions. The use of the aforesaid financial instruments is governed by the company''s overall risk management strategy. The company does not use forward contracts and options for speculative purposes. The details of the outstanding forward contracts and options as at 31st March 2016 is as under:

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Mar 31, 2015

1. CORPORATE INFORMATION

Vardhman Textiles Limited (The Company) is a public company incorporated under the provisions of the Companies Act, 1956 on 8th October, 1973. The name of the company at its incorporation was Mahavir Spinning Mills Ltd. & subsequently changed to Vardhman Textiles Limited on 5th September, 2006. The company is engaged in manufacturing of Cotton yarn, Synthetic yarn & woven fabric.

2. Rights, preferences and restrictions attached to equity shares

The company has one class of equity shares having a par value of Rs.10/- each. Each holder of equity shares is entitled to one vote per share. 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 March 31, 2015 the amount of per share dividend recognised as distributions to equity shareholders was Rs.10 per share (Previous Year: Rs.11).

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

3. Rights, preferences and restrictions to Preference Shares

The rate of dividend on preference shares will be decided by the Board of Directors as and when issued. Preferential shares as and when issued shall have the cumulative right to receive dividend as and when declared and shall have preferential right of repayment of amount of capital.

4. Shares held by holding company or its ultimate holding company or subsidiaries or associates of the holding company or the ultimate holding company in aggregate.

5.There is no holding or ultimate holding company of the company.

a). Details of security for term loans

Term loans from banks are secured by mortgage created or to be created on all the immovable assets of the company, both present and future and hypothecation of all movable assets including movable machinery, machinery parts, tools and accessories and other movable both present and future (except book debts), subject to charges created or to be created in favour of the bankers for securing the working capital limits.

6. Contingent liabilities and Commitments (to the extent not provided for): No outflow is expected in view of past history relating to these items: -

(Rs. in lac)

Particulars As at 31st As at 31st March 2015 March,2014

I Contingent Liabilities

(i) Claims not acknowledged as debts 827.69 790.29

(ii) Bank Guarantees and Letters of Credit outstanding 8,781.05 6,407.84

(iii) Bills discounted with banks 13,710.55 7,884.34

(iv) Other monies for which the company is contingently liable

a) The Company has contested the additional demand in respect of Sales Tax, Excise Duty etc., amounting to H1,159.80 lac (Previous Year Rs.1,319.07 lac). As against this a sum of Rs.113.70 lac (Previous Year H102.14 lac) has been deposited under protest and stands included under the head "other recoverables in note-21 - Short-term loans and advances ". The Company has filed an appeal with the Appellate Authorities and is advised that the demand is not in accordance with law. No provision, therefore, has been made in accounts in respect thereof.

b) The Company has contested the additional demand in respect of income tax amounting to H16,298.27 lac (Previous Year Rs.14,681.78 lac). As against this a sum of H6,035.72 lac (Previous year Rs. 6,248.56 lac) has been deposited/adjusted under protest and stands included under the head "Advance income tax" in Note-15 "Long term loans and advances". Provision of Rs.14,250.47 lac (Previous Year Rs.11,695.08 lac ) in this respect has not been made as the company has filed various appeals with the appellate authorities and the company is confident to get the the desired relief.

c) The company had taken over the textile undertaking of Vardhman Holdings Limited (formerly known as Vardhman Spinning & General Mills Limited) by a scheme of Arrangement and De-merger. An injunction was obtained against the London Branch of the said textile undertaking for preventing disposal of assets upto the value of Pound Sterling 2.99 lac as a result of a court case pending in London for alleged non-fulfilment of an agreement of cotton purchase. The said matter had been decided against the said textile undertaking and accordingly, Pound Sterling 0.48 lac lying in the bank account at London had been paid to the claimant pursuant to the Order of the Court. The said amount was written off in the books of the said undertaking by way of debit to the statement of Profit and Loss. No provision has been made for the balance decreed amount by the undertaking in view of the fact that the said undertaking was prevented by force majure in fulfiling its part of contract. The Company as successor to the textile undertaking is contesting this matter in Indian Courts and is confident that there would not be any further liability in this regard.

(Rs. in lac)

Particulars As at 31st As at 31st March,2015 March,2014

II Commitments

(i) Estimated amount of contracts remaining to be executed on Capital 12,151.21 11,611.40 Account and not provided for (net of advances)

(ii) Exports obligations under Export Promotion Capital Goods 49,512.28 Nil (EPCG) scheme#

#The Company has executed bonds for an aggregate amount of H91,640.51 lac (Previous Year H79,013.25 lac) in favour of the President of India under section 59 (2) and 67 of the Customs Act,1962 and Central Excise and salt Act, 1944 for fulfilment of the obligation under the said Acts.

7. Depreciation for the year has been provided on Straight Line Method on the basis of useful lives specified in the Schedule-II of the Companies Act, 2013 as against the amount of depreciation calculated on the basis of rates of depreciation in respect of various assets contained in Schedule XIV to the Companies Act 1956.

In view of this change, carrying amounts of various tangible fixed assets as at 1st April, 2014 of H4,928.09 lacs (net of deferred tax of Rs.1, 182.68 lacs) has been recognized in the opening balance of retained earnings, where the useful life of an asset is nil. In other cases, the carrying amounts as at 1st April, 2014 have been depreciated over the revised remaining useful life of the asset as per Schedule II. The depreciation for the year is higher to the extent of H15,635.13 lacs on account of this change and accordingly the profit for the year is lower by H15,635.13 lacs.

8. Amortisation of Intangible assets

a. Softwares have been amortised @ 25% on straight line basis as the useful life has been estimated to be not more than four years.

b. Right to use power lines have been amortised @ 20% on straight line basis as the useful life thereof has been estimated to be not more than five years.

9. The Company is holding 15,98,741 (Previous year 15,98,741) equity shares of Vardhman Textiles Limited through a trust, which were received by it in its capacity as a shareholder of Vardhman Holdings Limited, in accordance with the 'Scheme of Arrangement and Demerger'. Further, during the accounting year ended 31st March, 2012, the trust had been allotted 3,19,748 equity shares by Vardhman Specials Steels Limited (VSSL) in the ratio of one equity share against every five equity shares held in the company in accordance with the 'Scheme of Arrangement and Demerger' entered into by the company, VSSL and their respective shareholders and creditors . The said trust has been exclusively formed for the benefit of the company. As per the provision of the trust deed, all the money received by the trust (including dividend and the proceeds of the sale of shares) shall be paid forthwith to the company by the trust.

10. The accumulated losses of Vardhman Nisshinbo Garments Company Limited, a subsidiary of the company, as on 31st March, 2015 are more than 50% of its net worth. In view of the management of the subsidiary company, these losses are only due to the starting phase of the business and based on the orders on hand and expected growth in export business the losses would be reduced within few years. Therefore no provision for decline in the value of investment has been made as in the opinion of the management of the Company, such decline is temporary in nature.

11. Segment Information as required by Accounting Standard (AS)-17 on "Segment Reporting" issued by Companies (Accounting Standards) Rules 2006, has been compiled on the basis of the consolidated financial statements and is disclosed in the notes to accounts forming part of the consolidated financial statements in accordance with the above standard. Therefore segment information in respect of separate financial statements of the company is not being disclosed in the stand alone financial statements.

12. In accordance with the Accounting Standard (AS)-28 on "Impairment of Assets" the Company has assessed as on the balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

13. Related Party Disclosure

(a) Disclosure of Related Parties and relationship between the parties.

1. Subsidiaries VMT Spinning Company Limited Vardhman Acrylics Limited VTL Investments Limited Vardhman Yarns and Threads Limited Vardhman Nisshinbo Garments Company Limited

2. Associates Vardhman Textile Components Limited (upto 30-03-2014) Vardhman Spinning and General Mills Limited Vardhman Special Steels Limited

3. Key Management Mr. S.P.Oswal Personnel Mr. Sachit Jain Mrs. Suchita Jain Mr. Neeraj Jain

4. Enterprises over Vardhman Holdings Limited which key Management Vardhman Apparels Limited Personnel and relative Smt. Banarso Devi Oswal Public Charitable of such personnel Trust is able to exercise Sri Aurobindo Socio Economic and Management significant influence Research Institute or control *Adhiswar Enterprises LLP (formerly known as Adinath Investment and Trading Company) *Devakar Investment and Trading Co. Limited *Srestha Holdings Limited *Santon Finance and Investment Co. Limited *Flamingo Finance and Investment Co. Limited *Ramaniya Finance and Investment Co. Limited *Marshall Investment and Trading Co.(P) Limited *Pardeep Mercentile Co. (P) Limited *Plaza Trading Co. (P) Limited *Anklesh Investment (P) Limited *Syracuse Investment and Trading Co. (P) Limited *Mahavir Spinning Mills (P) Ltd. **Northern Trading Co. **Amber Syndicate **Paras Syndicate **Adinath Syndicate **Eastern Trading Company

Note: *Only Loan Transactions have taken place with these Companies.

**No transaction has taken place during the year.

14. Disclosure required by Clause 32 of Listing Agreement:

(i) The Company has given inter corporate deposits aggregating to H500 lac (Previous Year Rs. Nil) to M/s Vardhman Acrylics Ltd. during the year. The maximum amount outstanding during the year was H500 lac (Previous Year Rs. Nil). The Balance outstanding as on 31.03.15 is Rs. Nil (Previous Year Rs. Nil).

(ii) The Company has given inter corporate deposits aggregating to H2,844 lac (Previous Year H4,553 lac) to M/s VMT Spinning Company Limited during the year. The maximum amount outstanding during the year was Rs.1,098 lac (Previous Year H1,519 lac). The Balance outstanding as on 31.03.15 is Rs. Nil (Previous Year Rs. Nil).

(iii) The Company has given inter corporate deposits aggregating to H65,079.00 lac (Previous Year Rs.81,891 lac) to M/s Vardhman Special Steels Limited. The maximum amount outstanding during the year was H6,535.74 lac (Previous Year H5,634 lac). The Balance outstanding as on 31.03.15 is H2,554.57 lac (Previous Year H1,346.50 lac).

(iv) The Company has given inter corporate deposits aggregating to H1,636 lac (Previous Year Rs.2,113.50 lac) to M/s Vardhman Nisshinbo Garments Company Limited during the year. The maximum amount outstanding during the year was Rs.1,187.62 lac (Previous Year Rs.1,602.40 lac ). The Balance outstanding as on 31.03.15 is Rs.18.12 lac (Previous Year Rs.773.90 lac).

(v) The Company has given inter corporate deposits aggregating to Rs.2,621.00 lac (Previous Year Rs.1,493.50 lac ) to M/s Vardhman Yarns and Threads Limited during the year. The maximum amount outstanding during the year was Rs.861.00 lac (Previous Year Rs.613.50 lac). The Balance outstanding as on 31.03.15 is Rs. Nil (Previous Year Rs. Nil).

15. Figures in bracket indicate deductions.

16. Previous year's figures have been recast/regrouped wherever necessary, to make these comparable with current year's figures.

17. In accordance with the provisions of Section 135 of the Companies Act, 2013 the company has contributed a sum of H600.00 lac towards an approved CSR activity. The said amount stands debited to the "Miscellaneous" under the head "Other expenses".

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Mar 31, 2014

1. CORPORATE INFORMATION

Vardhman Textiles Limited (The Company) is a public Company incorporated under the provisions of the Companies Act, 1956 on 8th October, 1973. The name of the Company at its incorporation was Mahavir Spinning Mills Ltd. & subsequently changed to Vardhman Textiles Limited on 5th September, 2006. The Company is engaged in manufacturing of Cotton yarn, Synthetic yarn & woven fabric.

2. CONTINGENT LIABILITIES AND PROVISIONS (to the extent not provided for) (Rs in lac) Particulars As at As at 31st March 2014 31st March 2013

I Contingent Liabilities

(i) Claims not acknowledged as debts 790.29 1,342.23

(ii) Bank Guarantees and Letters of Credit outstanding 6,407.84 22,612.40

(iii) Bills discounted with banks 7,884.34 4,176.64

(iv) Other monies for which the Company is contingently liable

a) The Company has contested the additional demand in respect of Sales Tax, Excise Duty etc., amounting to Rs.1,319.07 lac (Previous Year Rs.51 5.02 lac). As against this a sum of Rs.102.14 lac (Previous Year Rs.101.71 lac) has been deposited under protest and stands included under the head "other recoverable in note-21 - Short-term loans and advances ". The Company has filed an appeal with the Appellate Authorities and is advised that the demand is not in accordance with law. No provision, therefore, has been made in accounts in respect thereof.

b) The Company has contested the additional demand in respect of income tax amounting to Rs.14,681.78 lac (Previous Year Rs.5,036 lac). Pending appeal with appellate authorities, provision of Rs.11,695.08 lac (Previous Year Rs.2,323 lac) has not been made in the books of account as the Company is confident to get the desired relief.

c) The Company had taken over the textile undertaking of Vardhman Holdings Limited (formerly known as Vardhman Spinning & General Mills Limited) by a scheme of Arrangement and De-merger. An injunction was obtained against the London Branch of the said textile undertaking for preventing disposal of assets upto the value of Pound Sterling 2.99 lac as a result of a court case pending in London for alleged non-fulfilment of an agreement of cotton purchase. The said matter had been decided against the said textile undertaking and accordingly, Pound Sterling 0.48 lac lying in the bank account at London had been paid to the claimant pursuant to the Order of the Court. The said amount was written off in the books of the said undertaking by way of debit to the statement of Profit and Loss. No provision has been made for the balance decreed amount by the undertaking in view of the fact that the said undertaking was prevented by force majure in fulfiling its part of contract. The Company as successor to the textile undertaking is contesting this matter in Indian Courts and is confident that there would not be any further liability in this regard.

#The Company has executed bonds for an aggregate amount of Rs.79,013.25 lac (Previous Year Rs.120,916.00 lac) in favour of the President of India under section 59 (2) and 67 of the Customs Act,1962 and Central Excise and salt Act, 1944 for fulfilment of the obligation under the said Acts.

32. The Company has provided depreciation on Computers @ 25% on straight line basis as the useful life of the computers has been estimated to be not more than four years.

33. AMORTISATION OF INTANGIBLE ASSETS

a. Softwares have been amortised @ 25% on straight line basis as the useful life has been estimated to be not more than four years.

b. Right to use power lines have been amortised @ 20% on straight line basis as the useful life thereof has been estimated to be not more than five years.

3. The Company is holding 1,598,741 (Previous Year 1,598,741) equity shares of Vardhman Textiles Limited through a trust, which were received by it in its capacity as a shareholder of Vardhman Holdings Limited, in accordance with the ''Scheme of Arrangement and Demerger''. Further, during the accounting year ended 31st March, 2012, the trust had been allotted 3,19,748 equity shares by Vardhman Specials Steels Limited (VSSL) in the ratio of one equity share against every five equity shares held in the Company in accordance with the ''Scheme of Arrangement and Demerger'' entered into by the Company, VSSL and their respective shareholders and creditors. The said trust has been exclusively formed for the benefit of the Company. As per the provision of the trust deed, all the money received by the trust (including dividend and the proceeds of the sale of shares) shall be paid forthwith to the Company by the trust.

4. The accumulated losses of Vardhman Nisshinbo Garments Company Limited, a subsidiary of the Company, as on 31st March, 2014 are more than 50% of its net worth. In the view of the management of the subsidiary company, these losses are only due to the starting phase of the business and based on the orders on hand and expected growth in export business the losses would be reduced within few years. Therefore no provision for decline in the value of investment is considered as such decline is temporary in nature.

5. Segment Information as required by Accounting Standard (AS)-17 on "Segment Reporting" issued by Companies (Accounting Standards) Rules 2006, has been compiled on the basis of the consolidated financial statements and is disclosed in the notes to accounts forming part of the consolidated financial statements in accordance with the above standard. Therefore segment information in respect of separate financia statements of the Company is not being disclosed in the stand alone financial statements.

6. In accordance with the Accounting Standard (AS)-28 on "Impairment of Assets" the Company has assessed as on the balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

7. EARNING PER SHARE

(a) The calculation of Earning Per Share (EPS) as disclosed in the statement of profit and loss has been made in accordance with Accounting Standard (AS)-20 on "Earning Per Share" issued by Companies (Accounting Standards) Rules, 2006.

Dues of Micro, Small and Medium enterprises have been determined on the basis of information collected by the management. This has been relied upon by the auditors.

8. LEASES

The Company has leased facilities under cancellable and non-cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs.104.32 lac (Previous Year Rs.88.37 lac). The future minimum ease payments in respect of the non-cancellable operating leases are:

9. RELATED PARTY DISCLOSURE

(a) Disclosure of Related Parties and relationship between the parties.

1. Subsidiaries VMT Spinning Company Limited Vardhman Acrylics Limited VTL Investments Limited Vardhman Yarns and Threads Limited Vardhman Nisshinbo Garments Company Limited

2. Associates Vardhman Textile Components Limited (upto 30-03-2014) Vardhman Spinning and General Mills Limited Vardhman Special SteelsLimited

3. Key Management Personnel Mr. S.P.Oswa Mr. Sachit Jain Mrs. Suchita Jain Mr. Neeraj Jain

4. Enterprises over which key Management Personnel and relative of such personnel is able to exercise significant influence or Public Charitable Trust control : Vardhman Holdings Limited **Vardhman Apparels Limited Smt. Banarso Devi Oswal Sri Aurobindo Socio Economic and Management Research Institute *Adinath Investment and Trading Co. *Devakar Investment and TradingCo. Limited *Srestha Holdings Limited *Santon Finance and InvestmentCo. Limited *Flamingo Finance and Investment Co. Limited *RamaniyaFinance and Investment Co. Limited *Marshall Investment and Trading Co.(P) Limited *Pardeep Mercentile Co. (P) Limited *Plaza Trading Co. (P)Limited *Anklesh Investment (P) Limited *Syracuse Investment andTrading Co. (P) Limited *Mahavir Spinning Mills (P) Ltd. **NorthernTrading Co. **Amber Syndicate **Paras Syndicate **Adinath Syndicate **Eastern Trading Company

Note: *Only Loan Transactions have taken place with these Companies. **No transaction has taken place during the year.

10. DISCLOSURE REQUIRED BY CLAUSE 32 OF LISTING AGREEMENT:

(i) The Company has given inter corporate deposits aggregating to Rs. Nil (Previous Year Rs.14,334.00 lac) to M/s Vardhman Acrylics Ltd. during the year. The maximum amount outstanding during the year was Rs. Nil (Previous Year Rs.1,190.50 lac). The Balance outstanding as on 31.03.14 is Rs. Nil (Previous Year Rs. Nil).

(ii) The Company has given inter corporate deposits aggregating to Rs.4,553 lac (Previous Year Rs.5,687.60 lac) to M/s VMT Spinning Company Limited during the year. The maximum amount outstanding during the year was Rs.1,519 lac (Previous Year Rs.1,620.55 lac). The Balance outstanding as on 31.03.14 is Rs. Nil (Previous Year Rs. Nil).

(iii) The Company has given inter corporate deposits aggregating to ^81,891 lac (Previous Year Rs.65,109.32 lac) to M/s Vardhman Specia Steels Limited. The maximum amount outstanding during the year was Rs.5,634 lac (Previous Year Rs.8,210.00 lac). The Balance outstanding as on 31.03.2014 is Rs.1,346.50 lac (Previous Year Rs. Nil lac).

(iv) The Company has given inter corporate deposits aggregating to Rs.2,113.50 lac (Previous Year Rs.1,724.00 lac) to M/s Vardhman Nisshinbo Garments Company Limited during the year. The maximum amount outstanding during the year was Rs.1,602.40 lac (Previous Year Rs.1,424.40 lac). The Balance outstanding as on 31.03.14 is Rs.773.90 lac (Previous Year Rs.1,373.40 lac).

(v) The Company has given inter corporate deposits aggregating to Rs. Nil (Previous Year Rs. Nil lac) to M/s VTL Investments Limited during the year. The maximum amount outstanding during the year was Rs. Nil (Previous Year Rs. Nil lac). The Balance outstanding as on 31.03.14 is Rs. Nil (Previous YearRs. Nil).

(vi) The Company has given inter corporate deposits aggregating to Rs.1,493.50 lac (Previous Year Rs.3,261.75 lac) to M/s Vardhman Yarns and Threads Limited during the year. The maximum amount outstanding during the year was Rs.613.50 lac (Previous Year Rs.1,230.1 5 lac). The Balance outstanding as on 31.03.14 isRs. Nil (Previous Year Rs. Nil).

11. Figures in bracket indicate deductions.

12. EMPLOYEE BENEFITS :

The summarised position of Post-employment benefits and long term employee benefits recognised in the Statement of Profit and Loss and Balance Sheet as required in accordance with Accounting Standard (AS) 1 5 is as under:-

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

(h) During the year, the Company has recognised an expense of Rs.1,522.45 lac (Previous Year Rs.1,353.21 lac) in respect of Contribution to Provident Fund and Rs.71.70 lac (Previous Year Rs.68.27 lac) in respect of Contribution to Superannuation Scheme.

13. The Company uses forward contracts and options to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities, firm commitment and highly probable forecast transactions. The use of the aforesaid financial instruments is governed by the Company''s overall risk management strategy. The Company does not use forward contracts and options for speculative purposes. The details of the outstanding forward contracts and options as at 31st March 2014 is as under:

14. Previous Year''s figures have been recast/regrouped wherever necessary, to make these comparable with current year''s figures.

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Mar 31, 2013

1. CORPORATE INFORMATION

Vardhman Textiles Limited (the Company) is a public company incorporated under the provisions of the Companies Act, 1956 on 8th October, 1973. The name of the company at its incorporation was Mahavir spinning mills Ltd. & subsequently changed to Vardhman Textiles Limited on 5th September, 2006. The company is engaged in manufacturing of Cotton Yarn, Synthetic Yarn & woven Fabric.

2. Contingent Liabilities and provisions (to the extent not provided for)

Particulars As at 31st March, 2013 As at 31st March, 2012 (Rs. in lac) (Rs. in lac)

I Contingent Liabilities

(i) Claims not acknowledged as debts 1,342.23 937.20

(ii) Bank Guarantees and Letters of Credit outstanding 22,612.40 16,581.71

(iii) Bills discounted with banks 4,176.64 8,289.88

(iv) Other monies for which the company is contingently liable

a) The Company has contested the additional demand in respect of Sales Tax, Excise Duty etc., amounting to Rs. 515.02 lac (Previous Year Rs. 554.49 lac). As against this a sum of Rs. 101.71 lac (Previous Year Rs. 155.85 lac) has been deposited under protest and stands included under the head "other recoverable in note-21 - Short-term loans and advances ". The Company has filed an appeal with the Appellate Authorities and is advised that the demand is not in accordance with law. No provision, therefore, has been made in accounts in respect thereof.

b) The Company has contested the additional demand in respect of income tax amounting to Rs. 5,036.00 lac (Previous Year Rs. 4,819.00 lac). Pending appeal with appellate authorities, provision of Rs. 2,323.00 lac (Previous Year Rs. 2,823.00 lac ) has not been made in the books of account as the company is confident to get the desired relief.

c) The company had taken over the textile undertaking of Vardhman Holdings Limited (formerly known as Vardhman Spinning & General Mills Limited) by a scheme of Arrangement and De-merger. An injunction was obtained against the London Branch of the said textile undertaking for preventing disposal of assets upto the value of Pound Sterling 2.99 Lac as a result of a court case pending in London for alleged non-fulfilment of an agreement of cotton purchase. The said matter had been decided against the said textile undertaking and accordingly, Pound Sterling 0.48 Lac lying in the bank account at London had been paid to the claimant pursuant to the Order of the Court. The said amount was written off in the books of the said undertaking by way of debit to the statement of Profit and Loss. No provision has been made for the balance decreed amount by the undertaking in view of the fact that the said undertaking was prevented by force majure in fulfilling its part of contract. The Company as successor to the textile undertaking is contesting this matter in Indian Courts and is confident that there would not be any further liability in this regard.

II Commitments

(i) Estimated amount of contracts remaining to be executed on 26,006.66 24,405.30 Capital Account and not provided for (net of advances)

(ii) Exports obligations under Export Promotion Nil 18,155.62 Capital Goods (EPCG) scheme#

# The Company has executed bonds for an aggregate amount of Rs. 120,916.00 lac (Previous Year Rs. 129,358.00 lac) in favour of the President of India under section 59 (2) and 67 of the Customs Act,1962 and Central Excise and salt Act, 1944 for fulfilment of the obligation under the said Acts.

3. The Company has provided depreciation on Computers @ 25% on straight line basis as the useful life of the computers has been estimated to be not more than four years.

4. Amortisation of Intangible assets

a. Softwares have been amortised @ 25% on straight line basis as the useful life has been estimated to be not more than four years.

b. Right to use power lines have been amortised @ 20% on straight line basis as the useful life thereof has been estimated to be not more than five years.

5. The Company is holding 15,98,741 (Previous year 15,98,741) equity shares of Vardhman Textiles Limited through a trust, which were received by it in its capacity as a shareholder of Vardhman Holdings Limited, in accordance with the ''Scheme of Arrangement and Demerger''. Further, during the year under consideration, the Trust has been allotted 3,19,748 equity shares by Vardhman Specials Steels Limited (VSSL) in the ratio of one equity share against every five equity shares held in the company in accordance with the ''Scheme of Arrangement and Demerger'' entered into by the company, VSSL and their respective shareholders and creditors . The said trust has been exclusively formed for the benefit of the company. As per the provision of the trust deed, all the money received by the trust (including dividend and the proceeds of the sale of shares) shall be paid forthwith to the company by the trust.

6. The company has provided the loss for outstanding derivative options on mark to market basis in the current financial year. The figures for the current financial year and the previous financial year may not be comparable.

7. Segment Information as required by Accounting Standard (AS)-17 on "Segment Reporting" issued by Companies (Accounting Standards) Rules 2006, has been compiled on the basis of the consolidated financial statements and is disclosed in the notes to accounts forming part of the consolidated financial statements in accordance with the above standard. Therefore segment information in respect of separate financial statements of the company is not being disclosed in the standalone financial statements.

8. In accordance with the Accounting Standard (AS)-28 on "Impairment of Assets" the Company has assessed as on the balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

9. Earning Per Share

The calculation of Earning Per Share (EPS) as disclosed in the statement of profit and loss has been made in accordance with Accounting Standard (AS)-20 on "Earning Per Share" issued by Companies (Accounting Standards) Rules, 2006.

A statement on calculation of basic EPS is as under:

10. Leases

The Company has leased facilities under cancellable and non-cancellable operating lease arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognised during the year amounts to Rs. 88.37 lac (Previous Year Rs. 70.96 lac). The future minimum lease payments in respect of the non-cancellable operating leases are :

11. Related Party Disclosure

(a) Disclosure of Related Parties and relationship between the parties.

1. Subsidiaries VMT Spinning Company Limited

Vardhman Acrylics Limited

VTL Investments Limited

Vardhman Yarns and Threads Limited

Vardhman Special Steels Limited (upto 7th April, 2011)

Vardhman Nisshinbo Garments Company Limited (Formerly known as Vardhman Texgarments Ltd)

2. Associates Vardhman Textile Components Limited

Vardhman Spinning and General Mills Limited

Vardhman Special Steels Limited (w.e.f 8th April, 2011)

3. Key Management Personnel Mr. S.P. Oswal

Mr. Sachit Jain

Mrs. Suchita Jain

Mr. Neeraj Jain

4. Enterprises over which key Management Personnel and relative of such personnel is able to exercise significant influence or control

Vardhman Holdings Limited

Vardhman Apparels Limited

Smt. Banarso Devi Oswal Public Charitable Trust

Sri Aurobindo Socio Economic and Management Research Institute

*Adinath Investment and Trading Co.

*Devakar Investment and Trading Co. Limited

*Srestha Holdings Limited

*Santon Finance and Investment Co. Limited

*Flamingo Finance and Investment Co. Limited

*Ramaniya Finance and Investment Co. Limited

*Marshall Investment and Trading Co. (P) Limited

*Pardeep Mercantile Co. (P) Limited

*Plaza Trading Co. (P) Limited

*Anklesh Investments (P) Limited

*Syracuse Investment and Trading Co. (P) Limited

*Mahavir Spinning Mills (P) Ltd.

(Formerly known as Vardhman Textiles Processors (P) Limited) **Northern Trading Co.

**Ambar Syndicate **Paras Syndicate **Adinath Syndicate **Eastern Trading Company

Note: * Only Loan Transactions have taken place with these Companies. ** No transaction has taken place during the year.

12. Disclosure required by Clause 32 of Listing Agreement:

(i) The Company has given inter corporate deposits aggregating to Rs. 14,334.00 lac (Previous Year Rs.1 1,324.95 lac) to M/s Vardhman Acrylics Ltd. during the year. The maximum amount outstanding during the year was Rs. 1,190.50 lac (Previous Year Rs. 3,419.35 lac). The Balance outstanding as on 31.03.13 is Rs. Nil (Previous Year Rs. Nil).

(ii) The Company has given inter corporate deposits aggregating to Rs. 5,687.60 lac (Previous Year Rs. 8,900.85 lac) to M/s VMT Spinning Company Limited during the year. The maximum amount outstanding during the year was Rs. 1,620.55 lac (Previous Year Rs. 2,673.80 lac). The Balance outstanding as on 31.03.13 is Rs. Nil (Previous Year Rs. 1,260.55 lac).

(iii) The Company has given inter corporate deposits aggregating to Rs. 65,109.32 lac (Previous Year Rs. 1,125.00 lac) to M/s Vardhman Special Steels Limited. The maximum amount outstanding during the year was Rs. 8,210.00 lac (Previous Year Rs. 670.00 lac). The Balance outstanding as on 31.03.2013 is Rs. Nil lac (Previous Year Rs. 2,981.05 lac).

(iv) The Company has given inter corporate deposits aggregating to Rs. 1,724.00 lac (Previous Year Rs. 1,221.30 lac) to M/s Vardhman Nisshinbo Garments Company Limited during the year. The maximum amount outstanding during the year was Rs. 1,424.40 lac (Previous Year Rs. 799.40 lac ). The Balance outstanding as on 31.03.13 is Rs. 1,373.40 (Previous Year Rs. 631.40 lac).

(v) The Company has given inter corporate deposits aggregating to Rs. Nil (Previous Year Rs. 500.00 lac) to M/s VTL Investments Limited during the year. The maximum amount outstanding during the year was Rs. Nil (Previous Year Rs. 500.00 lac). The Balance outstanding as on 31.03.13 is Rs. Nil (Previous Year Rs. Nil).

(vi) The Company has given inter corporate deposits aggregating to Rs. 3,261.75 lac (Previous Year Rs. 2,081.61 lac) to M/s Vardhman Yarns and Threads Limited during the year. The maximum amount outstanding during the year was Rs. 1,230.15 lac (Previous Year Rs. 685.72 lac). The Balance outstanding as on 31.03.13 is Rs. Nil (Previous Year Rs. Nil).

13. Figures in bracket indicate deductions.

14. Previous year''s figures have been recast/regrouped wherever necessary, to make these comparable with current year''s figures.

15. Employee Benefits

The summarized position of Post-employment benefits and long term employee benefits recognized in the Statement of Profit and Loss and Balance Sheet as required in accordance with Accounting Standard (AS) 15 is as under:-

(h) During the year, the company has recognized an expense of Rs. 1,353.21 Lac (Previous Year Rs. 1,166.23 lac) in respect of Contribution to Provident Fund and Rs. 68.27 Lac (Previous Year Rs. 67.66 Lac) in respect of Contribution to Superannuation Scheme.

16. The company uses forward contracts and options to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities, firm commitment and highly probable forecast transactions. The use of the aforesaid financial instruments is governed by the company''s overall risk management strategy. The company does not use forward contracts and options for speculative purposes. The details of the outstanding forward contracts and options as at 31st March 2013 is as under:

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Mar 31, 2012

1. CORPORATE INFORMATION

Vardhman Textiles Limited (The Company) is a public company incorporated under the provisions of the Companies Act, 1956 on 8th October, 1973. The name of the company at its incorporation was Mahavir Spinning Mills Limited and subsequently changed to Vardhman Textiles Limited on 5th September, 2006. The company is engaged in manufacturing of Cotton yarn, Synthetic yarn & Woven fabric.

a. Rights, preferences and restrictions attached to equity shares

The company has one class of equity shares having a par value of Rs.10/- each. Each holder of equity shares is entitled to one vote per share. 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 March 31, 2012 the amount of per share dividend recognized as distributions to equity shareholders was Rs. 4.50 per share (Previous Year: Rs. 4.50).The rate of dividend for redeemable cumulative preference shares is decided by the board of directors as and when issued.

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

b. Shares held by holding company or its ultimate holding company or subsidiaries or associates of the holding company or the ultimate holding company in aggregate.

There is no holding or ultimate holding company of the company.

a). Details of security for term loans

Term loans from banks are secured by mortgage created or to be created on all the immovable assets of the company, both present and future and hypothecation of all movable assets including movable machinery, machinery parts, tools and accessories and other movable both present and future (except book debts), subject to charges created or to be created in favor of the bankers for securing the working capital limits.

2. Contingent Liabilities and provisions (to the extent not provided for)

As at 31st As at 31st March, 2012 March, 2011

(Rs. in lacs) (Rs. in lacs)

I Contingent Liabilities

(i) Claims not acknowledged as debts 878.03 1,034.07

(Ii) Bank Guarantees and Letters of Credit outstanding 16,581.71 15,264.42

(iii) Bills discounted with banks 8,289.88 8,221.02

(iv) Other monies for which the company is contingently liable

a) The Company has contested the additional demand in respect of Sales Tax, Excise Duty etc., amounting to Rs. 613.66 lacs (Previous Year Rs. 572.85 lacs). As against this a sum of Rs. 200.74 lacs (Previous Year Rs. 201.39 lacs) has been deposited under protest and stands included under the head "Advances and other recoverable in cash or in kind". The Company has filed an appeal with the Appellate Authorities and is advised that the demand is not in accordance with law. No provision, therefore, has been made in accounts in respect thereof.

b) The Company has contested the additional demand in respect of income tax amounting to Rs. 4,819.00 lacs (previous Year Rs. 3,400.00 lacs). Pending appeal with Appellate Authorities, provision of Rs. 2,823.00 lacs (Previous Year Rs. 2,004.00 lacs) has not been made in the books of account as the company is confident to get the desired relief.

c) The company had taken over the textile undertaking of Vardhman Holdings Limited by a scheme of Arrangement and De-merger. An injunction was obtained against the London Branch of the said textile undertaking for preventing disposal of assets up to the value of Pound Sterling Rs. 2.99 lacs as a result of a court case pending in London for alleged non-fulfillment of an agreement of cotton purchase. The said matter had been decided against the textile undertaking and accordingly, Pound Sterling Rs. 0.48 lacs lying in the bank account at London had been paid to the claimant pursuant to the Order of the Court. The said amount was written off in the books of the said undertaking by way of debit to the statement of Profit and Loss Account. No provision has been made for the balance decreed amount in view of the fact that the said undertaking was prevented by force majure in fulfilling its part of contract. The Company as successor to the textile undertaking is contesting this matter in Indian Courts and is confident that there would not be any further liability in this regard.

II Commitments

(i) Estimated amount of contracts remaining to be executed on 24,405.30 44,710.72 Capital Account and not provided for (net of advances)

(ii) Exports obligations under Export Promotion 18,155.62 20,654.66 Capital Goods (EPCG) scheme#

# The Company has executed bonds for an aggregate amount of Rs. 18,155.62 lacs (previous Year Rs. 20,654.66 lacs) in favor of the President of India under section 59 (2) and 67 of the Customs Act, 1962 and Central Excise Act, 1944 for fulfillment of the obligation under the said Acts.

3. The Company has provided depreciation on Computers @ 25% on straight line basis as the useful life of the computers has been estimated to be not more than four years.

4. Amortization of Intangible assets

a. Softwares have been amortised @ 25% on straight line basis as the useful life has been estimated to be not more than four years.

b. Right to use power lines have been amortised @ 20% on straight line basis as the useful life thereof has been estimated to be not more than five years.

5. The Company is holding 15,98,741 (Previous year 15,98,741) equity shares of Vardhman Textiles Limited through a trust, which were received by it in its capacity as a shareholder of Vardhman Holdings Limited in accordance with the 'Scheme of Arrangement and Demerger'. Further, during the year under consideration, the Trust has been allotted 3,19,748 equity shares by Vardhman Specials Steels Limited (VSSL) in the ratio of one equity share against every five equity shares held in the company in accordance with the 'Scheme of Arrangement and Demerger' entered in to between the company, VSSL and their respective shareholders and creditors . The said trust has been exclusively formed for the benefit of the company. As per the provision of the trust deed, all the money received by the trust (including dividend and the proceeds of the sale of shares) shall be paid forthwith to the company by the trust.

6. The Company also hedges its foreign currency fluctuation exposure by way of foreign currency derivative options. The Company has taken various USD/INR options from banks. As at March 31, 2012, there are 10 options (Previous Year 15) against exports and 1 option (Previous Year 5) against Imports having a maturity period up to Feb.,2016 (Previous Year Jan 2016). These derivative options are proprietary products of banks which do not have a ready market and are not traceable in the open market. These options are marked to a model, which is bank specific instead of being marked to market. In view of the significant uncertainty associated with the above derivative options, the ultimate outcome of which depends on future events which are not under the direct control of the company, the resultant gain/loss if any, on such open derivative options cannot be determined at this stage and has accordingly not been accounted for in the books of account.

7. Segment Information as required by Accounting Standard (AS)-17 on "Segment Reporting" issued by Companies (Accounting Standards) Rules 2006, has been compiled on the basis of the consolidated financial statements and is disclosed in the notes to accounts forming part of the consolidated financial statements in accordance with the above standard. Therefore segment information in respect of separate financial statements of the company is not being disclosed in the stand alone financial statements.

8. In accordance with the Accounting Standard (AS)-28 on "Impairment of Assets", the Company has assessed as on the balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly, no impairment loss has been provided in the books of account.

9. Earnings Per Share

(a) The calculation of Earnings Per Share (EPS) as disclosed in the statement of profit and loss has been made in accordance with Accounting Standard (AS)-20 on "Earning Per Share" issued by Companies (Accounting Standards) Rules, 2006.

(i) A statement on calculation of basic EPS is as under:

10. Leases

The Company has leased facilities under cancellable and non-cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs. 70.96 lacs (Previous Year Rs. 72.46 lacs). The future minimum lease payments in respect of the non-cancellable operating leases as at 31st March 2012 are:

11. In the year ended 31st March, 2011, pursuant to the Scheme of Arrangement and Demerger, the steel business undertaking of the company stands vested with Vardhman Special Steels Limited (VSSL) w.e.f. 1st January, 2011. The steel business was a separate reportable business segment and was being disclosed as such. The following table reflects the carrying values of the primary components of the discontinuing operations viz; assets, liabilities, revenue, expense, pretax profits, tax expense and cash flows for the period ended 31st December, 2010. The said information is required to be disclosed as per the requirements of Accounting Standard (AS)- 24 Discounting Operations issued by Companies (Accounting Standards) Rules, 2006.

The Scheme of Arrangement and Demerger provides for the issue and allotment of shares to the shareholders of the company by Vardhman Special Steels Ltd. in consideration of such demerger. There was no gain or loss involved in the transaction of Demerger.

12. Related Party Disclosure

(a) Disclosure of Related Parties and relationship between the parties.

1. Subsidiaries VMT Spinning Company Limited

Vardhman Acrylics Limited

VTL Investments Limited

Vardhman Yarns and Threads Limited

Vardhman Special Steels Limited (upto 7th April, 2011)

Vardhman Nisshinbo Garments Company Limited (Formerly known as Vardhman Texgarments Ltd)

13. Disclosure required by Clause 32 of Listing Agreement:

(i) The Company has given inter corporate deposits aggregating to Rs.1,132.50 lacs (Previous Year Rs.1,111.50 lacs) to M/s Vardhman Acrylics Ltd. during the year. The maximum amount outstanding during the year was Rs. 3,419.35 lacs (Previous Year Rs. 833.80 lacs). The balance outstanding as on 31.03.12 is Rs. Nil (Previous Year Rs. Nil).

(ii) The Company has given inter corporate deposits aggregating to Rs. 8,900.85 lacs (Previous Year Rs. 4,914.80 lacs) to M/s VMT Spinning Company Limited during the year. The maximum amount outstanding during the year was Rs. 2,673.80 lacs (Previous Year Rs. 2,195.30 lacs). The balance outstanding as on 31.03.12 is Rs. 1,260.55 lacs (Previous Year Rs. 1,104.30 lacs).

(iii) The Company has given inter corporate deposits aggregating to Rs. 1,125.00 lacs (Previous Year Rs. 8,121.83 lacs) to M/s Vardhman Special Steels Limited during the year up to 07.04.2011. The maximum amount outstanding during the year was Rs. 670.00 lacs (Previous Year Rs. 1,181.29 lacs). The balance outstanding as on 07.04.11 is Rs. 625.00 lacs (Previous Year Rs. Nil).

(iv) The Company has given inter corporate deposits aggregating to Rs. 1,221.30 lacs (Previous Year Rs. 567.60 lacs) to M/s Vardhman Nisshinbo Garments Company Limited during the year. The maximum amount outstanding during the year was Rs. 799.40 lacs (Previous Year Rs. 455.00 lacs). The balance outstanding as on 31.03.12 is Rs. 631.40 lacs (Previous Year Rs. Nil).

(v) The Company has given inter corporate deposits aggregating to Rs. 500.00 lacs (Previous Year Rs. 4,287.00 lacs) to M/s VTL Investments Limited during the year. The maximum amount outstanding during the year was Rs. 500.00 lacs (Previous Year Rs. 2462.00 lacs). The balance outstanding as on 31.03.12 is Rs. Nil (Previous Year Rs. Nil).

(vi) The Company has given inter corporate deposits aggregating to Rs.2,081.61 lacs (Previous Year Rs. 4,287.00 lacs) to M/s Vardhman Yarns and Threads Limited during the year. The maximum amount outstanding during the year was Rs. 685.72 lacs (Previous Year Rs. 2,462.00 lacs). The balance outstanding as on 31.03.12 is Rs. Nil (Previous Year Rs. Nil).

14. Figures in bracket indicate deductions.

15. The financial statements for the year ended 31st March, 2012 have been prepared as per Revised Schedule-VI to the Companies Act, 1956. Accordingly the previous year figures have been reclassified to confirm to this year's classification.

16. Employee Benefits

The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit and Loss Account and Balance Sheet as required in accordance with Accounting Standard (AS) 15 is as under:-

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

(h) During the year, the company has recognized an expense of Rs. 1,166.23 Lacs (Previous Year Rs. 926.35 Lacs) in respect of Contribution to Provident Fund and Rs. 67.66 Lacs (Previous Year Rs. 63.83 Lacs) in respect of Contribution to Superannuation Scheme.

17. The company uses forward contracts and options to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities, firm commitment and highly probable forecast transactions. The use of the aforesaid financial instruments is governed by the Company's overall strategy. The company does not use forward contracts and options for speculative purposes. The details of the outstanding forward contracts and options as at 31st March 2012 is as under:

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Mar 31, 2011

As At As At

1. There are contingent liabilities in respect of the following items : No outflow is 31.3.2011 31.3.2010 expected in view of the past history relating to these items :- (Rs. In Lac) (Rs. In Lac)

a) Claims not acknowledged as debts 1,034.07 739.06

b) Bank Guarantees and Letters of Credit outstanding 15,264.42 4,537.93

c) Bills discounted with banks 8,221.02 218.31

2. Estimated amount of contracts remaining to be executed on Capital Account 44,710.72 1,296.57 (Net of advances)

3. The Company has contested the additional demand in respect of Sales Tax, Excise Duty etc., amounting to Rs. 572.85 Lac (Previous Year Rs. 576.69 Lac). As against this a sum of Rs. 201.39 Lac (Previous Year Rs. 217.22 Lac) has been deposited under protest and stands included under the head "Advances and other recoverables in cash or in kind". The Company has filed an appeal with the Appellate Authorities and is advised that the demand is not in accordance with law. No provision, therefore, has been made in accounts in respect thereof.

4. The Company has executed bonds for an aggregate amount of Rs. 20,654.66 Lac (Previous Year Rs. 35,095.04 Lac) in favour of the President of India under section 59 (2) and 67 of the Customs Act,1962 and Central Excise Act, 1944 for fulfillment of the obligation under the said Acts.

5. The Company has contested the additional demand in respect of income tax amounting to Rs. 2,004.00 Lac (Previous Year Rs. 2,478.00 Lac). Pending appeal with appellate authorities, no provision has been made in the books of account as the company is hopeful to get the desired relief in appeal.

6. The company had taken over the textile undertaking of Vardhman Holdings Limited by a scheme of Arrangement and De-merger. An injunction was obtained against the London Branch of the said textile undertaking for preventing disposal of assets upto the value of Pound Sterling 2.99 Lac as a result of a court case pending in London for alleged non-fulfillment of an agreement of cotton purchase. The said matter had been decided against the textile undertaking and accordingly, Pound Sterling 0.48 Lac lying in the bank account at London had been paid to the claimant pursuant to the Order of the Court. The said amount was written off in the books of the said undertaking by way of debit to the Profit and Loss Account. No provision has been made for the balance decree amount in view of the fact that the said undertaking was prevented by force majure in fulfilling its part of contract. The Company as successor to the textile undertaking is contesting this matter in Indian Courts and is confident that there would not be any further liability in this regard.

7. Pursuant to the ‘Scheme of Arrangement and Demerger among Vardhman Textiles Limited (VTXL), Vardhman Special Steels Limited (VSSL), and their respective Shareholders and creditors, the entire steel business undertaking together with all its properties, assets, rights, benefits and interest therein of steel business undertaking has vested with VSSL w.e.f 1st January, 2011 as per the order of the Honble Punjab and Haryana High Court dated 12.01.2011. As a result of the above, the following assets, liabilities and reserves of the steel business undertaking stand vested with VSSL w.e.f 1st January, 2011:

8. The Company has provided depreciation on Computers @ 25% on straight line basis as the useful life of the computers has been estimated to be not more than four years.

9. Intangible assets which comprise of softwares have been amortized @ 25% on straight line basis as the useful life thereof has been estimated to be not more than four years.

10. The Company is holding 15,98,741 (Previous year 15,98,741) equity shares of Vardhman Textiles Limited through a trust, which were received by it in its capacity as a shareholder of Vardhman Holdings Limited, in accordance with the ‘Scheme of Arrangement and Demerger. The said trust has been exclusively formed for the benefit of the company. As per the provision of the trust deed, all the money received by the trust (including dividend and the proceeds of the sale of shares) shall be paid forthwith to the company by the trust.

11. The detail of the amount recoverable from Mahavir Share Trust as at the close of the year is as under:

12. The company has paid Rs. 33.75 Lacs (Previous Year Rs. 18.70 Lacs) to Madhya Pradesh Power Transmission Company Limited, Bhopal for expenditure on power lines. As future economic benefits associated with the installation of such power lines will flow to the company, the same has been reflected in the schedule of Fixed Assets. The company has amortized these lines @ 20% on straight line basis as the useful life is estimated to be five years.

13. The Company also hedges its foreign currency fluctuation exposure by way of foreign currency derivative options. The Company has taken various USD/INR options from banks. As at March 31, 2011, there are 15 options (Previous Year 7) against exports and 5 options (Previous Year Nil) against Imports having a maturity period up to Jan 2016 (Previous Year June 2013). These derivative options are proprietary products of banks which do not have a ready market and are not tradeable in the open market. These options are marked to a model, which is bank specific instead of being marked to market. In view of the significant uncertainty associated with the above derivative options, the ultimate outcome of which depends on future events which are not under the direct control of the company, the resultant gain/loss if any, on such open derivative options cannot be determined at this stage and has accordingly not been accounted for in the books of account.

14. Segment Information as required by Accounting Standard (AS)-17 on "Segment Reporting" issued by Companies (Accounting Standards) Rules 2006, has been compiled on the basis of the consolidated financial statements and is disclosed in the notes to accounts forming part of the consolidated financial statement in accordance with the above standard. Therefore segment information in respect of separate financial statements of the company is not being disclosed in the stand alone financial statements.

15. In accordance with the Accounting Standard (AS)-28 on "Impairment of Assets" the Company has assessed as on the balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

19. (a) The company has identified Micro, Small and Medium Enterprises on the basis of information made available. There are no dues to Micro and Small Enterprises, that are reportable under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act).

23. Related Party Disclosure

(a) Disclosure of Related Parties and relationship between the parties.

1. Subsidiaries VMT Spinning Company Limited

Vardhman Acrylics Limited

VTL Investments Limited

Vardhman Yarns & Threads Limited

Vardhman Special Steels Limited

Vardhman Nisshinbo Garments Company Limited (Formerly known as

Vardhman Texgarments Limited)

2. Associates Vardhman Textile Components Limited

Vardhman Spinning & General Mills Limited

3. Key Management Personnel

Mr. S.P.Oswal Mr. Sachit Jain Mrs. Suchita Jain Mr. Neeraj Jain

4. Enterprises over which key Management Personnel and relative of such personnel is able to exercise significant influence or control

Vardhman Holdings Limited

Vardhman Apparels Limited

Banarso Devi Oswal Public Charitable Trust

Sri Aurobindo Socio Economic and Management Research Institute

*Adinath Investment & Trading Co.

*Devakar Investment & Trading Co. Pvt. Limited

*Srestha Holdings Limited

*Santon Finance & Investment Co. Limited

*Flamingo Finance & Investment Co. Limited

*Ramaniya Finance & Investment Co. Limited

*Marshall Investment & Trading Co. (P) Limited

*Pradeep Mercentile Co. (P) Limited

*Plaza Trading Co. (P) Limited

*Anklesh Investments (P) Limited

*Syracuse Investment & Trading Co. (P) Limited

**Mahavir Spinning Mills (P) Limited

(Formerly known as Vardhman Textile Processors (P) Limited)

**Northern Trading Co.

Note: * Only Loan Transactions have taken place with these Companies. ** No transaction has taken place during the year.

25. Previous years figures have been recast / regrouped wherever necessary.

26. Disclosure required by Clause 32 of Listing Agreement:

The Company has given inter corporate deposits aggregating to Rs. 1,111.50 lacs (Previous Year Rs. Nil) to M/s Vardhman Acrylics Ltd. during the year. The maximum amount outstanding during the year was Rs. 833.80 lacs (Previous Year Nil). The Balance outstanding as on 31.03.11 is Rs. Nil (Previous Year Rs. Nil).

The Company has given inter corporate deposits aggregating to Rs. 4,914.80 lacs (Previous Year Rs. Nil ) to M/s VMT Spg. Company Limited during the year. The maximum amount outstanding during the year was Rs. 2,195.30 lacs (Previous Year Rs. Nil). The Balance outstanding as on 31.03.11 is Rs. 1,104.30 lacs (Previous Year Rs. Nil).

The Company has given inter corporate deposits aggregating to Rs. 8,121.83 lacs (Previous Year Rs. Nil) to M/s Vardhman Special Steels Limited during the year. The maximum amount outstanding during the year was Rs. 1,181.29 lacs (Previous Year Nil). The Balance outstanding as on 31.03.11 is Rs. Nil (Previous Year Rs. Nil).

The Company has given inter corporate deposits aggregating to Rs. 567.60 lacs (Previous Year Rs. Nil) to M/s Vardhman Nisshinbo Garments Company Limited during the year. The maximum amount outstanding during the year was Rs. 455.00 lacs (Previous Year Nil). The Balance outstanding as on 31.03.11 is Rs. Nil (Previous Year Rs. Nil).

The Company has given inter corporate deposits aggregating to Rs. 4,287.00 lacs (Previous Year Rs. Nil) to M/s VTL Investments Limited during the year. The maximum amount outstanding during the year was Rs. 2,462.00 lacs (Previous Year Rs. Nil). The Balance outstanding as on 31.03.11 is Rs. Nil (Previous Year Rs. Nil).

27. Excise Duty amounting to Rs. 3,015.07 Lacs (Previous Year Rs. 2,426.80 Lacs) has been reduced from gross turnover as the same is included in the figure of gross turnover. Further the difference of excise duty between the closing stock and opening stock has been disclosed separately in the statement of profit and loss.

28. During the year, the Company raised Rs. 200 crores by issuing 58,82,352 equity shares of Rs. 10/- each at a premium of Rs. 330/ - per share through a QIP issue to QIBs in accordance with ICDR Regulations, 2009 pursuant to which the Equity Share Capital of the Company stand increased from Rs. 57.77 crores to Rs.63.65 crores. The amount so raised has been utilized for the purpose it was raised.

29. The company had issued Zero Coupon Foreign Currency Convertible Bonds (FCCB) aggregating to US $ 60 Million out of which FCCBs of US $ 1 Million were bought back by the company in the year 2008-09, thus leaving the outstanding FCCBs of US $ 59 Million. The bond holders had an option to convert bonds in to equity shares of the company at a price of Rs. 423.25 per share (subject to adjustment if any) with a fixed exchange rate of Rs. 44.1722 per US $ at any time on or after 16th March 2006 but before 17th Jan 2011. These FCCBs were redeemable on 17th Feb 2011 at a premium of 34.39% of their principal amount unless previously converted, redeemed, paid or cancelled. In view of conversion of FCCBs not having been opted by the bond holders, the company has during the year redeemed such Bonds along with premium. The approximate amount of premium payable was allocated over period of 5 years and had been provided in the books of account in the preceding years as well as in this year by debit to Securities Premium Account. No adjustment had been made in respect of tax effect on such a debit in the preceding years in view of uncertainty as to the convertibility of bonds into equity shares. The adjustment of tax effect for debit to Securities Premium Account for the year under reference as well as for the preceding years has been made during the year.

30. Figures in bracket indicate deductions.

31. The figures for the current year are not comparable with the preceding years figures on account of demerger of the steel business undertaking of the Company to Vardhman Special Steels Limited with effect from 1st January, 2011. (Refer Note No. 7).

32. The company uses forward contracts and options to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities, firm commitment and highly probable forecast transactions. The use of the aforesaid financial instruments is governed by the companys overall strategy. The company does not use forward contracts and options for speculative purposes. The details of the outstanding forward contracts and options as at 31st March 2011 is as under:

---

Mar 31, 2010

As At As At

1. There are contingent liabilities in respect of the following items : No outflow is 31.3.2010 31.3.2009 expected in view of the past history relating to these items :- (Rs. In Lac) (Rs. In Lac)

a) Claims not acknowledged as debts 739.06 720.02

b) Bank Guarantees and Letters of Credit outstanding 4,537.93 3,083.16

c) Bills discounted with banks 218.31 9,638.57

2. Estimated amount of contracts remaining to be executed on Capital Account 1,296.57 12,555.93 (Net of advances)

3. The Company has contested the additional demand in respect of Sales Tax, Excise Duty etc., amounting to Rs. 576.69 lac (Previous Year Rs. 836.28 lac). As against this a sum of Rs. 217.22 lac (Previous Year Rs. 239.90 lac) has been deposited under protest and stands included under the head “Advances and other recoverables in cash or in kind”. The Company has filed an appeal with the Appellate Authorities and is advised that the demand is not in accordance with law. No provision, therefore, has been made in accounts in respect thereof.

4. The Company has executed bonds for an aggregate amount of Rs. 35,095.04 lac (Previous Year Rs. 32,539.27 lac) in favour of the President of India under section 59 (2) and 67 of the Customs Act,1962 and Central Excise and Salt Act, 1944, for fulfillment of the obligation under the said Acts.

5. The Company has contested the additional demand in respect of income tax amounting to Rs. 2,478.00 lac (Previous Year Rs. 2,121.00 lac). Pending appeal with appellate authorities, no provision has been made in the books of account as the company is hopeful to get the desired relief in appeal.

6. The Company had taken over the textile undertaking of Vardhman Holdings Limited (formerly known as Vardhman Spinning & General Mills Limited) by a scheme of Arrangement and De-merger. An injunction was obtained against the London Branch of the said textile undertaking for preventing disposal of assets upto the value of Pound Sterling 2.99 lac as a result of a court case pending in London for alleged non-fulfillment of an agreement of cotton purchase. The said matter had been decided against the textile undertaking and accordingly, Pound Sterling 0.48 Lac lying in the bank account at London had been paid to the claimant pursuant to the Order of the Court. The said amount was written off in the books of the said undertaking by way of debit to the Profit and Loss Account. No provision has been made for the balance decree amount in view of the fact that the said undertaking was prevented by force majure in fulfilling its part of contract. The Company as successor to the textile undertaking is contesting this matter in Indian Courts and is confident that there would not be any further liability in this regard.

7. The erstwhile amalgamating Company i.e. Mohta Industries Limited had constructed and sold the flats in the building at Bhikaji Cama Place, New Delhi before the date of Amalgamation. However DDA did not execute a lease deed in favour of the company in respect of the land on which construction of flats had been effected by the amalgamating company, on the contention that on account of amalgamation with the company there has been a transfer of the lease hold land auctioned to amalgamating company. The Hon’ble High Court vide its order dated 02.02.2010 has agreed with the contention of the company that the company has no claim in the rights of the land and is only maintaining common facilities in the building sold to various flat owners by the amalgamating company. In view thereof, the company has written off the amount of difference of Rs. 40.41 lacs between Rs. 229.85 lacs realised by the amalgamating company in respect of the sale of flats and the cost of construction of such flats amounting to Rs. 270.26 lacs reflected under Work-in- Progress in the earlier Balance Sheets.

8. The Company has provided depreciation on Computers @ 25% on straight line basis as the useful life of the computers has been estimated to be not more than four years.

9. Intangible assets which comprise of softwares have been amortized @ 25% on straight line basis as the useful life thereof has been estimated to be not more than four years.

10. The Company is holding 15,98,741 (Previous year 15,98,741) equity shares of Vardhman Textiles Limited (formerly known as Mahavir Spinning Mills Limited) through a trust, which were received by it in its capacity as a shareholder of Vardhman

Holdings Limited (formerly known as Vardhman Spinning & General Mills Limited), in accordance with the ‘Scheme of Arrangement and Demerger’. The said trust has been exclusively formed for the benefit of the company. As per the provision of the trust deed, all the money received by the trust (including dividend and the proceeds of the sale of shares) shall be paid forthwith to the company by the trust.

11. The company had paid Rs. 18.70 Lacs (Previous Year Rs. 80.74 Lacs) to Madhya Pradesh Power Transmission Company Limited, Bhopal for expenditure on power lines. As future economic benefits associated with the installation of such power lines will flow to the company, the same has been reflected in the schedule of Fixed Assets. The company has amortized these lines @ 20% on straight line basis as the useful life is estimated to be five years.

12. The Company also hedges its foreign currency fluctuation exposure by way of foreign currency derivative options. The Company has taken various USD/INR options from banks. As at March 31, 2010, there are 7 options (Previous Year 5) against exports having a maturity period up to June 2013. These derivative options are proprietary products of banks which do not have a ready market and are not tradeable in the open market. These options are marked to a model, which is bank specific instead of being marked to market. In view of the significant uncertainty associated with the above derivative options, the ultimate outcome of which depends on future events which are not under the direct control of the company, the resultant gain/loss if any, on such open derivative options cannot be determined at this stage and has accordingly not been accounted for in the books of account.

13. Segment Information as required by Accounting Standard (AS)-17 on Segment Reporting, issued by Companies (Accounting Standards) Rules 2006, has been compiled on the basis of the consolidated financial statements and is disclosed in the notes to accounts forming part of the consolidated financial statements in accordance with the above standard. Therefore segment information in respect of separate financial statements of the company is not being disclosed in the stand alone financial statements.

14. In accordance with the Accounting Standard (AS)-28 on Impairment of Assets, the Company has assessed as on the balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard) with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

15. Any change in the amount of deferred tax liability on account of change in the enacted tax rates and change in the quantum of depreciation allowable under the tax laws, is disclosed in the statement of profit and loss account as ‘Deferred tax adjustment’.

16. Pursuant to the Scheme of Arrangement, Reorganization & De-merger, the sewing thread business of the company alongwith its spinning unit at Hoshiarpur got vested in Vardhman Yarns & Threads Limited (VYTL) w.e.f. 1st April 2008 by way of a slump sale for a consideration of Rs. 260 crores.

17. Related Party Disclosure

(a) Disclosure of Related Parties and relationship between the parties.

1. Subsidiaries

VMT Spinning Company Limited

Vardhman Acrylics Limited

VTL Investments Limited (Formerly known as Vardhman Threads Limited)

Vardhman Yarns & Threads Limited

Vardhman Texgarments Limited

2. Associates

Vardhman Textile Components Limited Vardhman Spinning & General Mills Limited (Formerly known as Vardhman Linen Limited)

3. Key Management Personnel Mr. S.P.Oswal, Mr. Sachit Jain

4. Enterprises over which key Management Personnel and relative of such personnel is able to exercise significant influence or control

Vardhman Holdings Limited

(Formerly known as Spinning & General Mills Limited)

Vardhman Apparels Limited

Banarso Devi Oswal Public Charitable Trust

Sri Aurobindo Socio Economic and Management Research Institute

*Adinath Investment & Trading Company

*Devakar Investment & Trading Company Limited

*Srestha Holdings Limited

*Santon Finance & Investment Company Limited

*Flamingo Finance & Investment Company Limited

*Ramaniya Finance & Investment Company Limited

*Marshall Investment & Trading Company (P) Limited

*Pradeep Mercentile Company (P) Limited

*Plaza Trading Company (P) Limited

*Anklesh Investment (P) Limited

*Syracuse Investment & Trading Company (P) Limited

**Mahavir Spinning Mills (P) Limited

(Formerly known as Vardhman Textiles Processors (P) Limited)

**Northern Trading Company

Note: *Only Loan Transactions have taken place with these Companies. **No transaction has taken place during the year.

18. Previous year’s figures have been recast / regrouped wherever necessary.

19. Disclosure required by Clause 32 of Listing Agreement:

The Company has given inter corporate deposits aggregating to Rs. Nil (Previous Year Rs. 11,613.00 lac) to M/s Vardhman Acrylics Limited during the year. The maximum amount outstanding during the year was Rs. Nil (Previous Year Rs. 2,857.00 lac). The Balance outstanding as on 31.03.10 is Rs. Nil (Previous Year Rs. Nil).

The Company has given inter corporate deposits aggregating to Rs. Nil (Previous Year Rs. 883.00 lac) to M/s VMT Spinning Company Limited during the year. The maximum amount outstanding during the year was Rs. Nil (Previous Year Rs. 350.00 lac). The Balance outstanding as on 31.03.10 is Rs. Nil (Previous Year Rs. Nil).

The Company has given inter corporate deposits aggregating to Rs. Nil (Previous Year Rs. 4,562.45 lac) to M/s Vardhman Yarns & Threads Limited during the year. The maximum amount outstanding during the year was Rs. Nil (Previous Year Rs. 2,328.10 lac). The Balance outstanding as on 31.03.10 is Rs. Nil (Previous Year Rs. Nil).

20. Excise Duty amounting to Rs. 2,426.80 lac (Previous Year Rs. 4,173.18 lac) has been reduced from gross turnover as the same is included in the figure of gross turnover. Further the difference of excise duty between the closing stock and opening stock has been disclosed separately in the statement of profit and loss.

21. The Company has outstanding Zero Coupon Foreign Currency Convertible Bonds (FCCB) aggregating to US $ 59 Million. The bond holders have an option to convert bonds in to equity shares of the company at a price of Rs. 423.25 per share (subject to adjustment, if any) with a fixed exchange rate of Rs. 44.1722 per US $ at any time on or after 16 March, 2006 but before th 17th Jan, 2011. Further these FCCBs may be redeemed in whole, at the option of company at any time on or after 16 Feb, 2007 th but on or before 10 Feb, 2011, subject to satisfaction of certain conditions. These FCCBs are redeemable on 17 Feb, 2011 at a premium of 34.39% of their principal amount unless previously converted, redeemed, paid or cancelled.

22. Figures in bracket indicate deductions.