NOTES TO ACCOUNTS

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Market Cap. (₹)	-	P/BV	-	Book Value (₹)	-
52 Week High/Low (₹)	-	FV/ML	-	P/E(X)	-
Bookclosure	-	EPS (₹)	-	Div Yield (%)	-

Year End :2013-03

1. The Company got to know about the fraudulent transactions entered into Merchant Trading as was highlighted by legal notices received from Standard Bank Mauritius Limited, Mauritius and Bank One Limited, Mauritius. After finding the same, Company formed an internal investigating committee to go into the detail and come out with the appropriate impact on the account. Based on the committee findings ex- CFO cum Director International Sales and CEO Leather Division - Mr. Sanjeev Sehgal was terminated as he was solely responsible for the International Trade transactions. Company has lodged complaint against him which is pending with the appropriate authority. Accordingly legal notices were also sent to the buyers in Dubai relating to Merchant Trade transactions. Based on the findings of the initial report of the committee the following adjustment/provision have been made in the books of accounts.

a. Company has accounted for export sales of ' 4,938.74 lacs in the first three quarters of the financial year on the basis of the certified copy of invoices and cargo receipt received from the ex- CFO Mr. Sanjeev Sehgal. However these sales were reversed in the last quarter based on the findings by the internal investigating committee that there were no proper documents, records to substantiate these transactions reflected as sales in earlier quarters.

b. The Company has made provision to write back the all the creditors related to International Merchant Trade amounting to ' 3,111.16 lacs

c. The Company has made provision for bad and doubtful debts for all the debtors related to International Merchant Trade amounting to ' 11,180.08 lacs.

d. The Company has made an ad-hoc provision for bad and doubtful debts for debtors related to domestic trading amounting to ' 3500 lacs. The net receivables related to domestic trading after making above provision are ' 10825.97 lacs at the year end.

e. The Company has debited ' 68.64 lacs to the accounts of Mr. Sanjeev Sehgal in regard to the advance payment made by him from the company's bank account to various parties which seems to made by him for his personal affairs.

The investigation is still on and it may come out with Further findings later on, which will be dealt with in the books when final committee report is received and substantiated by documents.

2. Management of the Company is of the opinion that going concern principle followed in preparation of financial statement hold good, as it believes that the realizable value of assets is much above its book value. which is sufficient to discharge its liability (known and unknown) The Company is confident to revive with new business plan and strategies when supported by the financial institutions/lenders.

3. The various parties balances (debit/credit) outstanding are subject to confirmation. The Company has sent letter to certain parties for confirmation of statement of account/balances for the year. The Company has not received confirmed statement/balance confirmation from those parties except in few cases. The variation if any found upon reconciliation may affect the financial statement to that extent.

4. Contingent liabilities in the respect of:

                                                  (Rs.in Lacs)

                                           For the 
                                           year ended   For the year 
                                                        ended 
                                           31st March, 
                                           2013         31st March,
                                                        2012

a) Guarantees given by Bankers                 3.63

b) Capital Commitments (Net of Advance) 198.76 806.01

c) Bonds given to Excise authorities 
   for its Export
   Oriented Unit(s) (Total amount of
   Bond-' 800.00 Lakhs)                      712.40        711.41

d) Bonds/LUT given to custom authority
   against EPCG Licences                     843.07       1855.26

e) Letter of Credit established by bank 934.11 1509.85

f) The Company has given Corporate Guarantee to the bankers of its following wholly owned subsidiaries for credit facility availed by them

I.Biz Trade Post, Mauritius : USD 23 Million (Which has been invoked by the Standard Bank

Mauritius Limited, Mauritius due to default in repayment of loan by its WOS)

Alchemy Trade Post, Mauritius : USD 10 Million to Mauritius Commercial Bank, Mauritius

i. Connect Trade Post, Mauritius : GBP 5 Million (Which has been invoked by the Bank One Limited, Mauritius due to default in repayment of loan by its WOS) Vogue Home Products Limited : INR 300 Lacs to Yes Bank Limited Crew PPO Leathers Limited : INR 1000 Lacs to Yes Bank Limited

g) Claims made by four employees are pending in the Industrial Tribunals/High Court. Any liability which may arise out of awards from Tribunal is Contingent and shall be account for in the year of settlement of case. These cases are still running in Courts as confirmed by the Management.

h) Effects of Exchange Difference on Derivative transactions shall be accounted for at the time of cancellation and/or maturity of the Foreign Exchange hedging contract. Pending derivatives contracts as on 31.03.2013 are USD 0.30 Million.

i) The Company has outstanding Export obligation of ' Nil (Previous Year Nil) under EPCG Licenses obtained for Import of Capital Goods. The redemption of EPCG licenses having Export Obligation completed aggregating to ' 3021.79 Lakhs is under process with DGFT.

j) No provision has been made for the possible liability arising out of pending legal cases. Detail of pending legal case is as per note no. 34.

k) The Company has received short payment of ' 124.78 lacs against Claims and Rejections and Rebate and Discount of the buyers for export made to them. The Company has debited under the head "Rebate and Discounts". The Company has not refunded the Duty Draw Back on the above claims to the Govt. Authority and the same is contingent liability in case the same is asked by the department to refund the excess amount of Duty Draw Back received.

l) Company has not made provision for the disputed income tax demand as mentioned in note no 30 as matter is pending under appeal.

5. The company has served a legal notice upon Zeta Leather Exports u/s 138 of Negotiable Instrument Act for dishonour of cheques aggregating to ' 4.0 lacs. The total outstanding of the above mentioned firm is ' 10.10 lacs at the yearend as per books of account of the Company. The company has not made provision for Bad Debts for this amount since the Company is hopeful for recovery after filling of legal case against the party.

6. Earning Per Share (E.P.S)

The basic/diluted earning per share calculated as per Accounting Standard- 20 issued by The Institute of Chartered Accountants of India is as under:

7 As notified by the Ministry of Corporate Affairs of the Government of India revised schedule VI under the Companies Act, 1956 is applicable to all financial statements for the financial year commencing on or after 1st April, 2011. Accordingly, the Financial Statement for the year ended 31st March, 2013 are prepared in accordance with the aforesaid Revised Schedule VI

8 Figures pertaining to the previous year have been rearranged, regrouped, reclassified and restated, wherever necessary to make them comparable with those of current year.

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NOTES TO ACCOUNTS