Himatsingka America, Inc. Audited Financial Statements

Transcription

1 Himatsingka America, Inc. Audited Financial Statements

2 INDEPENDENT AUDITORS' REPORT To the Board of Directors, Himatsingka Seide Limited Bangalore, India Report on the Financial Statements We have audited the accompanying financial statements of Himatsingka America Inc. (the "Company") (a wholly owned subsidiary of Himatsingka Seide Limited), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements These financial statements are the responsibility of the management of the Company and the holding company, Himatsingka Seide Limited (the Holding Company ) and have been prepared under the generally accepted accounting principles in India. The Holding Company s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes evaluating the appropriateness of the accounting policies used and reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

3 Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, and its losses and its cash flows for the year ended on that date. Other Matters These financial statements have been extracted from the information prepared by the Holding Company s management for the purpose of its inclusion in the Consolidated Financial Statements of Himatsingka Seide Limited. This report is intended solely for the consideration of the Board of Directors of Himatsingka Seide Limited and should not be used for any other purpose. For Deloitte Haskins & Sells Chartered Accountants (Registration No S) BANGALORE, August 17, 2015 S. Sundaresan Partner (Membership No )

4 Himatsingka America, Inc. As at As at Balance Sheet Note No EQUITY AND LIABILITIES Shareholders' funds Share capital 2 2,913,573,750 2,792,790,000 Reserves and surplus 3 46,579, ,064,618 2,960,153,613 2,985,854,618 Non-current liabilities Long term borrowings 4 2,235,619,600 2,153,151,000 Long term provisions 5 249,065, ,191,361 2,484,684,666 2,323,342,361 Current liabilities Short term borrowings 6 1,174,771, ,865,818 Trade payables 7 294,136, ,505,601 Other current liabilities 8 1,568,999,023 1,248,127,097 Short term provisions 9-5,837,860 3,037,907,325 1,925,336,376 ASSETS Total 8,482,745,604 7,234,533,355 Non-current assets Non-current investments 10 6,368,949,346 6,104,921,162 Deferred tax asset ,159, ,090,393 6,954,108,876 6,468,011,555 Current assets Trade receivables 12 1,246,725, ,416,103 Cash and cash equivalents 13 40,369,300 19,960,089 Short term loans and advances ,541,717 67,145,608 1,528,636, ,521,800 Total 8,482,745,604 7,234,533,355 See accompanying notes (1 to 23) to the financial statements In terms of our report attached for Deloitte Haskins & Sells Chartered Accountants For and on on behalf of of the the Board of Directors of Shrikant Himatsingka D.K.Himatsingka Director Director S. Sundaresan DIN : DIN : Partner Place: Date: Pradeep K.P. Chief Financial Officer

5 Himatsingka America, Inc. For the year ended For the year ended Statement of Profit and Loss Note No Revenue from operations 15 2,484,326, ,984,065 Other income ,943 55,205,179 Total revenue 2,484,736, ,189,244 Expenses: Purchase of traded goods 17 2,484,326, ,984,065 Finance costs ,967, ,264,454 Depreciation - - Other expenses 19 73,287,470 62,587,997 Total expenses 2,829,581, ,836,516 Profit/(loss) before tax (344,845,332) (231,647,272) Tax expense: Current tax 14,089,910 3,962,083 Deferred tax (174,229,986) (61,279,143) Profit / (loss) after tax (184,705,256) (174,330,212) Basic and diluted earnings per equity share (Rs.) (39,722) (37,490) ($1 per share equivalent to Rs per share restated at closing rate) (Previous year is Rs per share restated at closing rate) See accompanying notes (1 to 23) to the financial statements In terms of our report attached for Deloitte Haskins & Sells Chartered Accountants For and on on behalf of of the the Board of Directors of Shrikant Himatsingka D.K.Himatsingka Executive Director Managing Director S. Sundaresan DIN : DIN : Partner Bangalore Date: Pradeep K.P. Chief Financial Officer

6 Himatsingka America, Inc. For the year ended For the year ended Cash flow statement A. CASH FLOW FROM OPERATING ACTIVITIES: Profit/(loss) before tax (344,845,332) (231,647,272) Interest income (409,943) (247,685) Dividend income - (54,957,494) Finance costs 271,967, ,264,454 Operating cash profit before working capital changes (73,287,470) (62,587,997) Decrease/(increase) in trade and other receivables (567,309,608) - Decrease/(increase) in short term, long term loan and advances and other current assets (267,359,724) (239,979,172) (Decrease)/increase in current and non current liabilities and provisions 686,899, ,642,185 Cash generated from operations (221,057,216) (144,924,984) Income tax paid (98,264) - Net cash from operations (221,155,480) (144,924,984) B. CASH FLOW FROM INVESTING ACTIVITIES: Investment in wholly owned subsidiary - (23,558,163) Dividend received - 54,957,494 Interest received 409, ,685 Net cash from investing activities 409,943 31,647,016 C. CASH FLOW FROM FINANCING ACTIVITIES: Finance costs paid (271,967,805) (227,865,111) Inter corporate loan received during the year 1,340,953,600 - Repayment of long term borrowings (1,482,881,400) (194,319,469) Proceeds /(repayments) of short term borrowings 655,905, ,341,880 Net cash from financing activities 242,010, ,157,300 Total increase in cash and cash equivalents 21,264, ,332 Effect of exchange differences on restatement of foreign currency cash and cash equivalents (855,270) 974,240 Cash and cash equivalents at the beginning of the period 19,960,089 18,106,517 Cash and cash equivalents at the end of the year 40,369,300 19,960,089 In terms of our report attached for Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors Shrikant Himatsingka D.K.Himatsingka Director Director S. Sundaresan DIN : DIN : Partner Bangalore Date: Pradeep K.P. Chief Financial Officer

7 Himatsingka America Inc. Notes to Financial Statements Note 1 : SIGNIFICANT ACCOUNTING POLICIES 1.1. Basis of accounting and preparation of financial statements The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ( the 2013 Act ) / Companies Act, 1956 ( the 1956 Act ), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention, that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year Use of estimates The preparation of the financial statements in conformity with GAAP requires, the Management to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statement and reported amounts of revenues and expenses for the year. Actual results could differ from these estimates. Any revision is recognised prospectively in current and future periods Investment Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value if any. Current investments, comprising investments in mutual funds, are stated at lower of cost and fair value determined on the portfolio basis. Cost of investment include acquisition charges such as brokerage, fees and duties Revenue recognition Revenue from sale of goods is recognised on the transfer of title in the goods which generally coincides with dispatch and is stated net of discounts and sales tax Foreign currency Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities in foreign currencies as at the year-end are restated at the year-end rates. Exchange differences on settlement / restatement of foreign currency monetary assets and liabilities are charged to the Statement of Profit and Loss. Premium or discount on forward contract, that are not intended for trading or speculation purpose, are amortised over the life of such contract and is recognised as a expense or income. Any profit or loss arising on cancellation, renewal, or restatement of forward contract is recognised in the statement of profit and loss.

8 1.6 Derivative Contracts and Hedge Accounting The Company is exposed to currency fluctuations risk on foreign currency assets, liabilities, net investment in non-integral foreign operations and forecasted cash flows denominated in foreign currency, and is also exposed to interest rate fluctuations on floating interest rate borrowings. The Company follows a risk management policy of covering this risk through a combination of forward contracts, options, swaps and other derivative contracts. In accordance with the principles set out in AS 30, changes in fair value of designated derivative contracts being effective hedges, are recognised directly in Hedge reserve account under Reserves and surplus and reclassified into Statement of Profit and Loss upon the occurrence of the underlying hedged transaction. In case, the hedging instrument expires, sold, terminated or the underlying transaction is no longer expected to occur the net gain or loss recognised in the Hedge reserve account is transferred to the Statement of Profit and Loss. The changes in fair values of instruments designated at fair value through profit and loss are adjusted in the Statement of Profit and Loss. 1.7 Earnings per share Basic earnings per share are computed by dividing net profit after tax by the weighted average number of equity shares outstanding for the period. Diluted earnings per share have not been computed as the Company has not issued any dilutive potential equity shares. 1.8 Income tax Income tax comprises the current tax provision, the net change in the deferred tax asset or liability in the year. Current income tax expenses are based on the local tax regulations. Deferred tax assets and liabilities are recognised for the estimated future tax consequences of temporary differences between the carrying values of the assets and liabilities and their respective tax bases. Deferred tax assets in the nature of unabsorbed depreciation and losses are recognised only if there is virtual certainty of realisation. Other deferred tax assets are recognised if there is reasonable certainty of realisation. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the income statement in the period of enactment of the change. 1.9 Provisions and contingencies A provision is recognised when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement. A contingent asset is neither recognised nor disclosed.

9 1.10 Borrowings Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such assets are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

10 Himatsingka America, Inc. As at As at Notes to Financial Statements Note 2 - Share capital Authorised 7,000 equity shares at no par value 3,000 preference shares at no par value - - Issued 4,650 equity shares of USD 10,000 each fully called up (Previous year: 4650 equity shares of USD 10,000 each) 2,913,573,750 2,792,790,000 Subscribed and fully paid-up 4,650 equity shares of USD 10,000 each fully paid up (Previous year: 4650 equity shares of USD 10,000 each) 2,913,573,750 2,792,790,000 2,913,573,750 2,792,790,000 (i) There has been no movement in the shares outstanding from the prior year to the current year. (ii) Details of the rights, preferences and restrictions attaching to each share : The Company has only one class of share, having a par value of USD 10,000/- per share. Each holder of equity share is entitled to one vote per share without restriction. (iii) Number of shares held by each shareholder holding more than 5% shares in the Company: Himatsingka Seide Ltd has 100% shareholding in Himatsingka America, Inc. Note 3 - Reserves and surplus Foreign currency translation reserve Opening balance 198,687, ,792,345 Movement during the year 32,382,641 11,895,130 Closing balance 231,070, ,687,475 Surplus/ (Deficit) in Statement of Profit and Loss Opening balance 215, ,545,215 Add: Transferred from surplus in statement of profit and loss (184,705,256) (174,330,212) Add: Deferred tax asset adjustment - - Closing balance (184,490,253) 215,003 Hedge reserve Opening balance (5,837,860) - Movement during the year 5,837,860 (5,837,860) Closing balance - (5,837,860) Note 4 - Long term borrowings 46,579, ,064,618 Secured Term loan from banks (Refer (i) below) - 1,108,107,000 Unsecured Loan from related parties 2,235,619,600 1,045,044,000 2,235,619,600 2,153,151,000 Notes: (i) Details of terms of repayment for the long-term borrowings: Term loans from bank: ICICI Bank Loan - 969,969,000 [Nature of security : First paripassu charge on certain movable fixed assets of the parent Company and pledge of shares of Himatsingka America, Inc., Divatex Home Fashion, Inc. and DWI Holdings, Inc. and DSRA account] [Repayment terms : Twenty Equal Installments-5% of the Loan amount on quarterly basis commencing 27th month from drawdown - December The outstanding term as of March 31, 2015 was Nil] [Interest rate : LIBOR(3M) plus 575 basis points p.a.] [The amount includes the current maturity of Rs. Nil (Previous year: Rs.204,204,000) included in Note 8]

11 Himatsingka America, Inc. As at As at Notes to Financial Statements Canara Bank Loan - 512,912,400 [Nature of security : Pledge of Shares of Himatsingka America, Inc., Divatex Home Fashion, Inc. and DWI Holdings, Inc.] [Repayment terms : Nine Half Yearly Installments commencing December 2012.The outstanding term as of March 31, 2015 was Nil] [Interest rate : LIBOR (6months) plus 495 basis points p.a.] [The amount includes the current maturity of Rs. Nil (Previous year: Rs.170,570,400) included in Note 8] - 1,482,881,400 Loan from related parties: Himatsingka Seide Limited 2,385,997,600 1,045,044,000 [Repayment terms : Quarterly Installments with step-up repayment after the initial moratorium period of 2 years] [Interest rate : 8.5% p.a.] [The amount includes the current maturity of Rs.150,378,000 (Previous year: Rs. Nil) as referred in Note 8] 2,385,997,600 1,045,044,000 Total long term borrowings including current maturities 2,385,997,600 2,527,925,400 (ii) For the current maturities of long-term borrowings, refer Note 8 - Other current liabilities.

12 Himatsingka America, Inc. As at As at Notes to Financial Statements Note 5 - Long term provisions Provision for taxes 249,065, ,191, ,065, ,191,361 Note 6 - Short term borrowings Working capital loan from banks (secured) EXIM (Buyers credit) 1,174,771, ,865,818 (Nature of Security: (a) Promissory Notes covering the value of consignments financed. (b) Trust Receipts relating to each shipment of goods financed by way of the relevant disbursement ('c) Escrow of Receivables (d) Corporate Guarantee of Himatsingka Seide Limited, being the Holding Company) 1,174,771, ,865,818 Note 7 - Trade payables Trade Payables, including dues to related parties (Refer Note 21) 294,136, ,505, ,136, ,505,601 Note 8 - Other current liabilities Current maturities of long term debt Term loan from banks (Secured) - 374,774,400 Loan from related parties (Unsecured) 150,378,000 - Interest accrued but not due on borrowings (include dues to related parties. Refer Note 21) 69,279,621 12,611,918 Other current liabilities (include dues to related parties. Refer Note 21) Divatex Home Fashions 1,294,240, ,871,826 DWI Holdings Inc., 52,909,058 99,868,953 Withholding Tax Payable 1,691,753 - Others 500,000-1,568,999,023 1,248,127,097

13 Himatsingka America, Inc. As at As at Notes to Financial Statements Note 9 - Short term provisions Provision for loss on derivatives - 5,837,860-5,837,860 Note 10 - Non current investments Investments, at cost Trade (Unlisted, unquoted) Investment in equity instruments DWI Holdings, Inc. 1,676,561,502 1,607,058,753 Equity shares of USD each fully paid up [No. of shares: 100 (Previous year: 100)] Divatex Fashions, Inc. 4,692,387,844 4,497,862,409 Equity shares of USD 1 each fully paid up [No. of shares: 50 (Previous year: 50)] 6,368,949,346 6,104,921,162 Note 11 - Deferred tax (asset) / liability Tax effect of items constituting deferred tax liability On difference between book balance and tax balance of fixed assets Tax effect of items constituting deferred tax assets Unabsorbed depreciation/ tax losses 556,322, ,426,012 Other Timing Differences 28,837, ,381 Deferred tax (asset)/liability net 585,159, ,090,393 The Company has recognized deferred tax asset on brought forward tax losses. Note 12 - Trade receivables (Unsecured, considered good) Outstanding for a period exceeding six months from the date they were due for payment 8,392,211 8,044,684 Others* 1,238,333, ,371,419 1,246,725, ,416,103 * includes dues from subsidiaries (Refer Note 21) Divatex Home Fashion, Inc. 1,238,333, ,371,419 Note 13 - Cash and cash equivalents Balances with banks - in current account 40,369,300 3,623,769 - in deposit account - 16,336,320 40,369,300 19,960,089 Note 14 - Short term loans and advances (unsecured, considered good) Prepaid expenses 3,194,848 26,404,737 Officer Loan 12,531,500 12,012,000 Interest Receivable - 989,065 Advance to subsidiaries Himatsingka Seide Limited 191,337,927 27,739,806 DWI Holdings, Inc. 34,477, ,541,717 67,145,608

14 Himatsingka America, Inc. For the year ended For the year ended Notes to Financial Statements Note 15 - Revenue from operations Sale of home textile products 2,484,326, ,984,065 2,484,326, ,984,065 Note 16- Other income Dividend income from subsidiaries - 54,957,494 Interest income Interest on fixed deposit with banks 43, ,685 Interest others 366, ,943 55,205,179 Note 17 - Cost of materials Purchase of Traded Goods 2,484,326, ,984,065 2,484,326, ,984,065 Note 18 - Finance costs Interest on loan 262,378, ,045,300 Finance charges 9,589,750 10,219, ,967, ,264,454

15 Himatsingka America, Inc. For the year ended For the year ended Notes to Financial Statements Note 19 - Other expenses Rent 3,328,232 3,256,645 Travelling and conveyance 3,206,595 3,396,492 Professional and consultancy charges 6,769,737 2,488,703 Other expenses 387,247 2,834 Corporate management fees paid to Parent Company 59,595,659 53,443,323 73,287,470 62,587,997 Note 19A - Professional and consultancy charges include payment to auditors Statutory audit Audit fees 500,000 50, ,000 50,671 The Company is mainly engaged in the business of home textiles. Considering the nature of business and financial reporting of the Company, it has only one business segment viz; home textiles as primary reportable segment. Note 21 - Related party disclosures Nature of relationship Holding company HC Himatsingka Seide Limited Subsidiary companies WOS Divatex Home Fashions, Inc. WOS DWI Holdings, Inc. Fellow Subsidiaries FS Himatsingka Wovens Private Limited FS Guiseppe Bellora S.p.A FS Himatsingka Singapore Pte Limited FS Twill and Oxford L.L.C Enterprises owned or significantly influenced by KMP, directors or their relatives (Referred as "enterprises") Bihar Mercantile Union Limited Satin Reed (America) Inc. BMU International Key management personnel KMP Shrikant Himatsingka KMP D.K.Himatsingka KMP Pradeep K.P.

16 Himatsingka America, Inc. For the year ended For the year ended Notes to Financial Statements Related party disclosure Relationship Purchase of goods Himatsingka Seide Limited HC 2,484,326, ,984,065 Sale of goods Divatex Home Fashions, Inc. WOS 2,484,326, ,984,065 Claims and Discounts Himatsingka Seide Limited HC 106,149,136 - Reimbursement of expenses paid Himatsingka Seide Limited HC 71,067,396 53,000,000 DWI Holdings, Inc. WOS 82,876,901 9,265,997 71,067,396 53,000,000 Interest expense on inter corporate loan Himatsingka Seide Limited HC 118,252,359 90,126, ,252,359 90,126,000 Inter corporate loans received during the year Himatsingka Seide Limited HC 1,337,070,000-1,337,070,000 - Inter corporate loans repaid during the year Himatsingka Seide Limited HC 20,050,400-20,050,400 - Dividend received Divatex Home Fashions, Inc. WOS - 41,213,054 DWI Holdings, Inc. WOS - 13,744,440-54,957,494

17 Himatsingka America, Inc. For the year ended For the year ended Notes to Financial Statements Outstanding as at year end Amounts payable Himatsingka Seide Limited HC 294,136, ,104,000 DWI Holdings, Inc. WOS 19,268,121 99,868,953 Divatex Home Fashions, Inc. WOS 1,294,727, ,871,826 Amounts receivable Divatex Home Fashions, Inc. WOS 1,238,333, ,371,419 Himatsingka Seide Limited HC 191,337,960 29,057,000 Inter corporate loan payable Himatsingka Seide Limited HC 2,385,998,000 1,045,044,000 Interest payable on inter corporate loan Himatsingka Seide Limited HC 64,763,732 2,320,000 Note 22 - Earning per share Net profit/(loss) for the year (being entirely attributable to the equity shareholders) (184,705,256) (174,330,212) Basic / diluted Weighted average number of equity shares 4,650 4,650 Par value per share - USD 10,000 each 10,000 10,000 Earnings per share - Basic / diluted (39,722) (37,490) Note 23 -Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

18 Divatex Home Fashions Inc Audited Financial Statements

19 INDEPENDENT AUDITORS' REPORT To the Board of Directors, Himatsingka Seide Limited Bangalore, India Report on the Financial Statements We have audited the accompanying financial statements of Divatex Home Fashions, Inc. (the "Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements These financial statements are the responsibility of the management of the ultimate holding company, Himatsingka Seide Limited (the Holding Company ) and have been prepared under the generally accepted accounting principles in India. The Holding Company s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes evaluating the appropriateness of the accounting policies used and reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

20 Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, and its losses and its cash flows for the year ended on that date. Other Matters These financial statements have been extracted from the information prepared by the Holding Company s management for the purpose of its inclusion in the Consolidated Financial Statements of Himatsingka Seide Limited. This report is intended solely for the consideration of the Board of Directors of Himatsingka Seide Limited and should not be used for any other purpose. For Deloitte Haskins & Sells Chartered Accountants (Registration No S) BANGALORE, August 17, 2015 S. Sundaresan Partner (Membership No )

21 Divatex Home Fashions Inc As at As at Balance Sheet Note No EQUITY AND LIABILITIES Shareholders' funds Share capital 2 3,133 3,003 Reserves and surplus 3 1,784,001,462 1,309,951,729 1,784,004,595 1,309,954,732 Non-current liabilities Long term Borrowings 4 19,580,477 33,783,753 Deferred tax liability (Net) 11 7,028,882 - Long term provisions 5 64,527,915 62,852,323 91,137,274 96,636,076 Current liabilities Short Term Borrowings 6 392,049, ,232,525 Trade payables 7 511,077, ,661,117 Other current liabilities 8 15,787,467 15,015, ,914,402 1,668,908,642 ASSETS Total 2,794,056,271 3,075,499,450 Non-current assets Fixed assets Tangible assets 9 162,533, ,147,379 Capital work in progress 35,175,909 - Long term loans and advances 10 15,792,750 15,536,396 Deferred tax asset (Net) 11-2,276, ,501, ,960,770 Current assets Inventories 12 2,357,077,781 2,691,115,485 Trade receivables 13 69,605,479 73,270,966 Cash and cash equivalents 14 20,318,755 24,939,925 Short term loans and advances ,552,365 94,212,304 2,580,554,380 2,883,538,680 Total 2,794,056,271 3,075,499,450 See accompanying notes (1 to 26) to the financial statements In terms of our report attached for Deloitte Haskins & Sells Chartered Accountants For and on behalf of of the the Board of of Directors Shrikant Himatsingka D.K.Himatsingka Director Director S. Sundaresan DIN : DIN : Partner Place: Date: Pradeep K.P. Chief Financial Officer

22 Divatex Home Fashions Inc For the year ended For the year ended Statement of Profit and Loss Note No Revenue from operations 16 11,723,501,460 12,253,487,957 Other income 17 15,084 8,053,468 Total revenue 11,723,516,544 12,261,541,425 Expenses: Cost of materials 18 10,365,050,280 11,038,363,168 Employee benefit expense ,878, ,642,288 Finance costs ,570, ,066,068 Depreciation and amortization expense 9 24,484,866 14,420,860 Other expenses ,862, ,318,775 Total expenses 11,312,846,206 11,913,811,159 Profit before tax 410,670, ,730,266 Tax expense: Current tax 55,413,020 1,460,484 Deferred tax 9,346,317 11,552,106 Profit after tax 345,911, ,717,676 Basic and diluted earnings per equity share (Rs.) (Refer note 25) 6,918,220 6,694,354 ($1 per share equivalent to Rs per share restated at closing rate) (Previous year is Rs per share restated at closing rate) See accompanying notes (1 to 26) to the financial statements In terms of our report attached for Deloitte Haskins & Sells Chartered Accountants For and on behalf of of the the Board of of Directors Shrikant Himatsingka D.K.Himatsingka Director Director S. Sundaresan DIN : DIN : Partner Place: Date: Pradeep K.P. Chief Financial Officer

23 Divatex Home Fashions Inc For the year ended For the year ended Cashflow Statement A. CASH FLOW FROM OPERATING ACTIVITIES: Profit/(loss) before tax 410,670, ,730,266 Depreciation and amortisation expense 24,484,866 14,420,860 Loss/(Profit) on sale of assets 558,910 (7,380,223) Finance costs 139,570, ,066,068 Interest Income (15,084) (3,901) Operating cash profit before working capital changes 575,269, ,833,070 Decrease in trade and other receivables 6,664,022 32,262,028 Decrease/(increase) in inventories 439,199,377 (1,478,319,323) Decrease/(increase) in short term, long term loan and advances and other current assets (1,257,231,454) 103,691,745 (Decrease)/increase in current and non current liabilities and provisions 772,355, ,245,707 Cash generated from operations 536,256,487 (427,286,773) Income tax paid - (1,502) Net cash from operations 536,256,487 (427,288,275) B. CASH FLOW FROM INVESTING ACTIVITIES: Purchase of fixed assets (45,008,715) (179,531,788) Sale proceeds of fixed assets 4,371,017 13,797,829 Interest received 15,084 3,901 Net cash from investing activities (40,622,614) (165,730,058) C. CASH FLOW FROM FINANCING ACTIVITIES: Finance costs paid (139,570,039) (127,066,068) Proceeds/(Repayments) of short term borrowings (net) (343,256,517) 721,886,837 Proceeds of long term borrowings (15,274,008) 49,390,874 Dividend paid - (39,918,588) Net cash from financing activities (498,100,564) 604,293,055 Total decrease in cash and cash equivalents (2,466,691) 11,274,722 Effect of exchange rates changes (2,154,479) (101,646) Cash and cash equivalents at the beginning of the period 24,939,925 13,766,849 Cash and cash equivalents at the end of the year 20,318,755 24,939, In terms of our report attached for Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors Shrikant Himatsingka D.K.Himatsingka Director Director S. Sundaresan DIN : DIN : Partner Place: Date: Pradeep K.P. Chief Financial Officer

24 Divatex Home Fashions Inc. Notes to Financial Statements Note 1 : SIGNIFICANT ACCOUNTING POLICIES 1.1. Basis of accounting and preparation of financial statements The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ( the 2013 Act ) / Companies Act, 1956 ( the 1956 Act ), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention, that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year Use of estimates The preparation of the financial statements in conformity with GAAP requires, the Management to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statement and reported amounts of revenues and expenses for the year. Actual results could differ from these estimates. Any revision is recognised prospectively in current and future periods Fixed assets Fixed assets and intangibles are stated at cost less accumulated depreciation. Cost includes all costs relating to acquisition and installation of fixed assets including any incidental costs of bringing the assets to their working condition for their intended use. Borrowing costs directly attributable to acquisition or construction of qualifying assets, which necessarily take a substantial period of time to get ready for their intended use, are capitalised Depreciation Fixed assets are depreciated over the estimated useful lives as determined by the Management or over the lives determined based on rates of depreciation specified under various applicable statutes, whichever is shorter, on a straight line method. The estimated useful lives of assets are as follows: Leasehold improvements Shorter of lease term or useful life Other Assets - 5years 1.5. Impairment of assets At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss.

25 Reversal of impairment losses recognised in prior years, if any, is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for the asset in prior years Investment Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value if any. Current investments, comprising investments in mutual funds, are stated at lower of cost and fair value determined on the portfolio basis. Cost of investment include acquisition charges such as brokerage, fees and duties Inventories Inventories of raw materials, stores and spares, work-in-process and finished goods are valued at lower of cost and estimated net realisable value. Cost is ascertained on weighted average basis. Cost of finished goods and work-in-process includes an appropriate proportion of conversion cost 1.8. Revenue recognition Revenue from sale of goods is recognised on the transfer of title in the goods which generally coincides with dispatch and is stated net of discounts and sales tax Retirement benefits Post employment benefit plans : Payments to defined contribution plans, such as provident fund are charged as an expense as they fall due. For defined benefit schemes, the cost of providing benefits is determined using Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur. Past Service Cost in recognised immediately. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme. Short term employee benefits : The undiscounted portion of short-term employee benefits expected to be paid in exchange for the services rendered by the employees is recognized during the period when the employee renders service. These benefits include compensated absences such as paid annual leave.

26 1.10. Foreign currency Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities in foreign currencies as at the year-end are restated at the year-end rates. Exchange differences on settlement / restatement of foreign currency monetary assets and liabilities are charged to the Statement of Profit and Loss. Premium or discount on forward contract, that are not intended for trading or speculation purpose, are amortised over the life of such contract and is recognised as a expense or income. Any profit or loss arising on cancellation, renewal, or restatement of forward contract is recognised in the statement of profit and loss Derivative Contracts and Hedge Accounting The Company is exposed to currency fluctuations risk on foreign currency assets, liabilities, net investment in non-integral foreign operations and forecasted cash flows denominated in foreign currency, and is also exposed to interest rate fluctuations on floating interest rate borrowings. The Company follows a risk management policy of covering this risk through a combination of forward contracts, options, swaps and other derivative contracts. In accordance with the principles set out in AS 30, changes in fair value of designated derivative contracts being effective hedges, are recognised directly in Hedge reserve account under Reserves and surplus and reclassified into Statement of Profit and Loss upon the occurrence of the underlying hedged transaction. In case, the hedging instrument expires, sold, terminated or the underlying transaction is no longer expected to occur the net gain or loss recognised in the Hedge reserve account is transferred to the Statement of Profit and Loss. The changes in fair values of instruments designated at fair value through profit and loss are adjusted in the Statement of Profit and Loss Earnings per share Basic earnings per share are computed by dividing net profit after tax by the weighted average number of equity shares outstanding for the period. Diluted earnings per share have not been computed as the Company has not issued any dilutive potential equity shares Income tax Income tax comprises the current tax provision, the net change in the deferred tax asset or liability in the year. Current income tax expenses are based on the local tax regulations. Deferred tax assets and liabilities are recognised for the estimated future tax consequences of temporary differences between the carrying values of the assets and liabilities and their respective tax bases. Deferred tax assets in the nature of unabsorbed depreciation and losses are recognised only if there is virtual certainty of realisation. Other deferred tax assets are recognised if there is reasonable certainty of realisation. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the income statement in the period of enactment of the change.

27 1.14 Provisions and contingencies A provision is recognised when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement. A contingent asset is neither recognised nor disclosed Borrowings Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such assets are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

28 Divatex Home Fashions Inc As at As at Notes to Financial Statements Note 2 - Share capital Authorized 200 equity shares of no par value (Previous year: 200 equity shares of no par value) Issued 50 equity shares of USD 1 each (Previous year: 50 equity shares of USD 1 each) 3,133 3,003 Subscribed and paid-up 50 equity shares of USD 1 each (Previous year: 50 equity shares of USD 1 each) 3,133 3,003 Note 3 - Reserves and surplus 3,133 3,003 Foreign currency translation reserve Opening balance 321,288, ,807,759 Movement during the year 128,138,732 93,480,297 Closing balance 449,426, ,288,056 Surplus/ (deficit) in Statement of Profit and Loss Opening balance 988,663, ,159,051 Add: Transferred from surplus in statement of profit and loss 345,911, ,717,676 Less: Dividend - 41,213,054 Closing balance 1,334,574, ,663,673 Note 4 - Long term borrowings 1,784,001,462 1,309,951,729 Term Loans from Banks 19,580,477 33,783,753 19,580,477 33,783,753 [Nature of security : Secured by Lease hold improvements at warehouse in Spartanburg, South Carolina] [Repayment terms : 48 equal monthly installments.the outstanding term as of March 31, 2015 was 27 installments] [Interest rate : 3.75% p.a.] [The amount includes the current maturity of Rs.15,664,372 year: 15,015,000 ) included in Note 8] (Previous 35,244,849 48,798,753 Note 5 - Long term provisions Provision for taxes 64,527,915 62,852,323 64,527,915 62,852,323 Note 6 - Short Term Borrowings Working Capital Loan from Bank 392,049, ,232, ,049, ,232,525 Note 7 - Trade payables Trade payables 511,077, ,661, ,077, ,661,117 Note 8 - Other current liabilities Current maturities of long term debt Term loan from financial institution (Secured) 15,664,372 15,015,000 Others 123,095 15,787,467 15,015,000

29 Divatex Home Fashions Inc Notes to Financial Statements Note 9 Particulars Tangible Assets As at 01/04/2014 Additions Deletions Adjustments * Gross block Depreciation Net Block As at 31/03/2015 As at 01/04/2014 For the year On deletions On other adjustments* As at 31/03/2015 As at 31/03/2015 As at 31/03/2014 Furnitures & Fixtures 19,469,667-7,436, ,031 12,875,250 8,002,548 2,495,627 7,022, ,822 3,880,253 8,994,997 11,467,119 Leasehold Improvements 174,054,571 3,530,974 19,801,884 7,527, ,311,247 23,126,674 16,129,803 15,146,852 1,379,743 25,489, ,821, ,927,897 Office Equipments 161, ,987 7, , ,981 6, Other Property 25,546,924 7,453,034 5,480,974 1,104,865 28,623,849 13,794,561 5,859,436 5,480, ,470 14,907,493 13,716,356 11,752,363 Total 219,233,144 10,984,008 32,888,293 9,481, ,810,346 45,085,765 24,484,866 27,819,551 2,526,034 44,277, ,533, ,147,379 Previous Year 46,745, ,359,584 10,035,768 5,164, ,233,144 31,065,317 14,420,860 3,422,483 3,022,072 45,085, ,147,379 15,679,820 * Adjustments include exchange fluctuation arising on account of conversion of fixed assets from foreign currency to reporting currency.

30 Divatex Home Fashions Inc As at As at Notes to Financial Statements Note 10 - Long term loans and advances (unsecured, considered good) Security deposits 15,792,750 15,536,396 15,792,750 15,536,396 Note 11 - Deferred tax asset / (liability) Tax effect of items constituting deferred tax liability On difference between book balance and tax balance of fixed assets (26,115,513) (23,026,933) Tax effect of items constituting deferred tax assets Unabsorbed depreciation/losses - 8,464,676 Other timing differences 19,086,631 16,839,252 Deferred tax asset/ (liability) net (7,028,882) 2,276,995 Note 12 - Inventories Traded goods 2,357,077,781 2,691,115,485 2,357,077,781 2,691,115,485 Note 13 - Trade receivables Unsecured considered good 69,605,479 73,270,966 69,605,479 73,270,966 Note 14 - Cash and cash equivalents Cash in hand 375, ,169 Balances with banks - in current account 19,943,737 24,542,756 20,318,755 24,939,925 Note 15 - Short term loans and advances (unsecured, considered good) Advance to suppliers 2,625,729 1,838,912 Prepaid expenses 94,945,510 62,494,232 Other advances 35,981,126 29,879, ,552,365 94,212,304

31 Divatex Home Fashions Inc For the year ended For the year ended Notes to Financial Statements Note 16 - Revenue from operations Sale of products 11,676,456,129 12,195,706,388 Sale of services 47,045,331 57,781,569 11,723,501,460 12,253,487,957 Note 17- Other income Interest income 15,084 3,901 Profit on sale of assets - 7,380,223 Miscellaneous income - 669,344 15,084 8,053,468 Note 18 - Cost of materials Opening stock: Traded goods 2,691,115,485 1,113,429,098 2,691,115,485 1,113,429,098 Add: Purchases 10,031,012,576 12,616,049,555 Total 12,722,128,061 13,729,478,653 Less: Closing stock Traded goods 2,357,077,781 2,691,115,485 10,365,050,280 11,038,363,168 Note 19 - Employee benefit expense Salaries and wages 347,621, ,242,788 Contribution to provident and other funds 181, ,841 Workmen and staff welfare expenses 27,074,900 22,963, ,878, ,642,288 Note 20 - Finance costs Interest on working capital loan 108,979,135 89,806,071 Finance charges 30,590,904 37,259, ,570, ,066,068