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.

SIGNIFICANT ACCOUNTING POLICIES :

(a) Basis of brparation of financial statements:

The accounts are brpared on accrual basis under the historical cost convention in accordance with the applicable accounting standards brscribed under section 133 of Companies Act,2013 read with rule 7 of The Companies (Accounts) rules, 2014.

(b) Use of Estimates:

The brparation of financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results materialise.

(c) Revenue Recognition:

(i) Sales:

Revenue from sale of goods is recognized:

(a) When all the significant risks and rewards of ownership are transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership; and

(b) No significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods.

(ii) Export Incentives :

Revenue in respect of the export incentives is recognized on post export basis.

(iii) Interest:

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

(iv) Dividend:

Dividend income is recognized when the right to receive the payment is established.

(v) Insurance and Other Claims

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

(d) Employees Benefits:

(a) Short Term Employee Benefits :

Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the statement of profit and loss of the year in which the related service is rendered.

(b) Post Employment Benefits : (i) Defined Contribution Plans:

(1.1) Provident Fund :

The Employer's contribution to Provident Fund and Employees Pension Scheme, a defined contribution plan is made in accordance with the Provident Fund Act,1952 read with the Employees Pension  Scheme,1995.

(1.2) Superannuation :

The liability in respect of eligible employees covered under the scheme is provided through a policy taken from Life Insurance Corporation of India by an approved trust formed for the purpose. The brmium in respect of such policy is recognized as an expense in the period in which it falls due.

(ii) Defined Benefit Plans (1.1) Gratuity :

The Employees Gratuity Fund Scheme, managed by Employee's Group Gratuity Trust is a defined benefit plan. The liability for gratuity is provided on the basis of actuarial valuation carried out by an independent actuary at the balance sheet date using projected unit credit method. The Present Value of the company's obligation is determined on the basis of actuarial valuation at the year end and the fair value of plan assets is reduced from the gross obligations under the gratuity scheme to recognize the obligation on a net basis.

Actuarial gain or loss is recognized immediately in the statement of profit or loss.

(iii) Long Term Employee Benefits

The liability for leave encashment and other compensated absences is recognized on the basis of actuarial valuation carried out by an independent actuary at the balance sheet date by using projected unit credit method.

(e) Fixed Assets:

i. Fixed Assets are stated at historical cost less accumulated debrciation.

ii. Cost of fixed assets comprise its purchase price and any attributable expenditure (both direct and indirect) for bringing an asset to its working condition for its intended use.

(f) Intangible Assets:

Intangible assets are stated at cost less accumulated amount of amortization.

(g) Debrciation:

i) Debrciation on tangible fixed assets is provided on Straight Line Method on the basis of useful lives of such assets specified in Schedule II to the Companies Act, 2013.

ii) Debrciation on assets costing Rs.5000/- or below is charged @ 100% per annum on proportionate basis.

(h) Amortization:

i) Intangible assets are amortized on straight line method over their estimated useful life.

ii) Right to use Power Lines is amortised on straight line method over their estimated useful life.

(i) Investments:

Long term Investments are carried at cost less provision for diminution, other than temporary, in the value of investment. Current investments are carried at lower of cost and fair value.

(j) Inventories:

Inventories are valued at cost or net realizable value, whichever is lower. The cost in respect of the various items of inventory is computed as under:

• In case of raw materials at weighted average cost plus direct expenses.

• In case of stores and spares at weighted average cost plus direct expenses.

• In case of work in progress at raw material cost plus conversion costs depending upon the stage of completion.

• In case of finished goods at raw material cost plus conversion costs, packing cost, excise duty (if applicable) and other overheads incurred to bring the goods to their brsent location and condition.

(k) Cenvat Credit:

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognised in accordance with the Cenvat Credit Rules, 2004.

(l) Subsidy:

Government grants are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to capital reserve. Government subsidy received for a specific asset is reduced from the cost of the said asset.

(m) Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

(n) Segment Information :

Segment information is brpared in conformity with the accounting policies adopted for brparing and brsenting the financial statements of the enterprise as a whole.

(o) Operating Leases :

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

(p) Foreign Currency Transaction :

(i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency as at the date of the transaction.

(ii) Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at the closing rate as at the balance sheet date are recognized as income or expense in the period in which they arise.

(iii) The brmium or discount arising at the inception of forward exchange contract is amortized as an expense or income over the life of the contract. Exchange difference on such a contract is recognised in the statement of profit and loss in the reporting period in which the exchange rates change. Profit or loss arising on cancellation or renewal of such contract is recognized as income or expense in the period in which such profit or loss arises.

(iv) The exchange difference to the extent of loss, arising on forward contracts and put and call derivative options to hedge the transactions in the nature of firm commitments and/or highly probable forecast transactions is recognised in the statement of Profit and Loss. The profit, if any arising thereon is ignored.

(v) In respect of foreign branch, which is in the nature of integral foreign operations, all transactions (except fixed assets, monetary assets, monetary liabilities and debrciation on fixed assets) are translated at average monthly rates which approximate to the actual rates at the date of transaction. Branch monetory assets & liabilities are restated at the year-end rates. Fixed assets are translated as at the date of transaction. Debrciation is translated at the rates applied for translation of fixed assets.

(q) Accounting for Taxes on Income :

The accounting treatment followed for taxes on income is to provide for Current Tax and Deferred Tax. Current Tax is the aggregate amount of income-tax determined to be payable in respect of taxable income for a period. Deferred tax is the tax effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

(r) Earning per Share :

Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account the aggregate of the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all the dilutive potential equity shares into equity shares.

(s) Impairment of Assets :

At each balance sheet date an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

(t) Cash flow statement :

The cash flow statement has been in accordance with the Accounting Standard (AS) - 3 on "Cash flow statements" issued by the Companies (Accounting Standard) Rules, 2006.

(u) Provision and Contingent Liabilities :

i) Provision is recognized (for liabilities that can be measured by using a substantial degree of estimation) when:

a) the company has a brsent obligation as a result of a past event;

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated

ii) Contingent liability is disclosed in case there is :

a) (i) possible obligation that arises from past events and existence of which will be confirmed only by the  occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

b) a brsent obligation arising from past events but is not recognised

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made

1. Debrciation 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 debrciation calculated on the basis of rates of debrciation in respect of various assets contained in Schedule XIV to the Companies Act 1956.

2.In view of this change, carrying amounts of various tangible fixed assets as at 1st April, 2014 of Rs.4,928.09 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 debrciated over the revised remaining useful life of the asset as per Schedule II. The debrciation for the year is higher to the extent of Rs.15,635.13 lacs on account of this change and accordingly the profit for the year is lower by Rs.15,635.13 lacs.

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.

4. 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.

5. 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.

6. 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.

7. 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 brsent and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

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.108.37 lac (Previous Year Rs.104.32 lac). The future minimum lease payments in respect of the non-cancellable operating leases are:

9. Disclosure required by Clause 32 of Listing Agreement:

(i) The Company has given inter corporate deposits aggregating to Rs.500 lac (Previous Year H Nil) to M/s Vardhman Acrylics Ltd. during the year. The maximum amount outstanding during the year was Rs.500 lac (Previous Year Rs. Nil). The Balance outstanding as on 31.03.15 is Rs. Nil (Previous Year H Nil).

(ii) The Company has given inter corporate deposits aggregating to Rs.2,844 lac (Previous Year Rs.4,553 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 Rs.1,519 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 Rs.65,079.00 lac (Previous Year H81,891 lac) to M/s Vardhman Special Steels Limited. The maximum amount outstanding during the year was Rs.6,535.74 lac (Previous Year Rs.5,634 lac). The Balance outstanding as on 31.03.15 is Rs.2,554.57 lac (Previous Year Rs.1,346.50 lac).

(iv) The Company has given inter corporate deposits aggregating to Rs.1,636 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.918.12 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).

As per our report of even date For S. C. Vasudeva & Co., Chartered Accountants Firm Regn. No.: 000235N

For and on behalf of the Board of Directors

(Sanjiv Mohan) Partner M. No. 086066

Karan Kamal Walia  Company Secretary

Rajeev Thapar

Chief Financial Officer

Sachit Jain Joint

Managing Director

S.P. Oswal

Chairman andManaging Director

Place : Ludhiana

Dated: 8th May, 2015