RSWM

1.  Contingent Liabilities:
 
                                                       (Rs.in Lac)
 
                                                This Year    Previous Year
 
 A.  Contingent liabilities not provided for :
 
 i) Excise & Custom Duties, Sales Tax and Other
 
 demands disputed by the Company.  106.53 113.17
 
 ii) Claims not acknowledged by the Company 2.80 2.80
 
 iii) Default Deferred Payment Guarantee provided to j£
 
 EXIM Bank for securing the loans given by them to II
 
 RSWM International B.V., Netherlands.  ffl
 
 Outstanding Loan 1,927.3V 1,524.00
 
 [Maximum amount for which Company may be liable (during next 12 Months
 - Rs.96.37 lac)]
 
 iv) Unexpired Letters of Credit, for which counter
 
 guarantee given by the Company.  276.44 269.37
 
 v) The Company has provided surety to :-
 
 (a) Excise and Customs (on behalf of M/s. Maral NIL 800.00 
 Overseas Ltd.) for operation of the EOU in bonded JE
 premises and exports without payment of duty. 
 
 (b) Amount of Duty involved NIL 278.26
 
 vi) Counter guarantees given by the Company in respect of Guarantees
 given by the Companys Bankers.  822.10 552.19
 
 vii) The Company has provided Guarantee in favour of International
 Finance Corporation with M/s. HEG Limited on Joint and several basis on
 behalf of M/s. AD Hydro Power Limited.  350.00 350.00
 
 B.  Obligations and commitments outstanding :
 
 i) Estimated value of contracts remaining to be executed
 on Capital Account and not provided for 1,048.55 2,931.91
 II) Bills Discounted with Banks 5,799.41 8,809.46
 
 C.  The export obligations against EPCG licenses have been timely
 fulfilled by the Company.  The future additional export obligations
 against EPCG licences are of Rs. 11,639 lac (Previous Year Rs.14,305
 lac) and are to be fulfilled within the specified period.
 
 D.  The Rajasthan Government has imposed surcharge on shortfall in
 meeting Renewable Energy Obligation on the power produced from Captive
 Power plants vide their Notification dated 23rd March, 2007. The same
 has been challenged in the Honble High Court of Rajasthan through
 Rajasthan Textiles Mills Association. The Management does not foresee
 any possible liability on this account and hence no provision of
 liability to date for Rs.1,041.11 (Previous Year Rs.400.34 lac) has
 been made in the Book of Accounts.
 
 E.  The Jodhpur Divisional Bench of Honble High Court of Rajasthan had
 declared the applicability of Entry Tax in Rajasthan as Ultra-Vires,
 vide order dated 21st August, 2007 on writ filed by M/s. Dinesh Pouches
 Ltd. Writ petition has also been filed in our case in the same Bench,
 which was admitted and stay granted in our favour. Subsequently in case
 of M/s. Godfrey Philips (I) Ltd, another bench of the same Honble High
 Court had declared the levy of Entry Tax valid and now the aforesaid
 issue is pending in Honble Supreme Court for final decision.  On the
 basis of evaluation assessment of the degree of probability and
 exercise of best judgment, a further prudent provision of Rs.188.09 lac
 being the l/3rd of the outstanding unpaid amount of Entry Tax of
 Rs.564.26 lac up to 31st March, 2009 (Previous Year Rs.390.49 lac) has
 been provided during the year, pending disposal of the cases, leaving
 an un- provided amount of Rs.376.17 lac as on 31st March, 2009.
 
 2.  The Company hedges its export realizations through Foreign Exchange
 Derivative & Hedge Contracts in the normal course of business so as to
 reduce the risk of exchange fluctuations. No Foreign Exchange
 Derivative & Hedge Contracts are taken/used for trading or speculative
 purposes.  Pursuant to the announcement on Accounting for Derivatives
 issued by the Institute of Chartered Accountants of India on 29th
 March, 2008 and following the Principles of Prudence, the Company has
 accounted for losses aggregating Rs.46 lac (Previous year Rs.421.49
 lac) during the current year, computed on mark to market basis on the
 Foreign Exchange Derivative & Hedge Contracts, outstanding as on 31st
 March 2009, those are without underlying export order/product.
 
 3.  The Company has incurred Rs.3,188 lac during the year (Rs.95,218
 lac to date) on the projects under the Technology Up-gradation Fund
 Scheme (TUFS)for Textiles established by Government of India for
 modernizations, expansions and up gradations. The Interest Subsidy
 accrued under this scheme for the year of Rs 3,793 lac (Previous year
 Rs.3,473 lac), out of which Rs.3,762 lac (Previous year Rs.2,585 lac),
 has been credited against Term Loan Interest in Profit & Loss and Rs.31
 lac (Previous year Rs. 888 lac)has been credited against Pre-operative
 Expenses.
 
 4.  The 10 percent capital subsidy under TUFS is accounted adopting
 Deferred Income Approach. A sum of Rs. NIL (up to year Rs.433 lac) is
 therefore considered as Deferred Income. Out of the above Deferred
 Income, a sum of Rs.31 lac (previous year Rs.22 lac) has been
 recognized against Depreciation (up to year Rs.58 lac).
 
 5.  On annual review of the CENVAT Credit receivables on the Balance
 Sheet date, a sum of Rs.152 lac, out of the unutilisable amount of
 Rs.1,853 lac has been considered as likely to be utilized within
 reasonable foreseeable future in the normal course of business and has
 been de-capitalised on the respective fixed assets. The balance amount
 of CENVAT Receivable of Rs. 1,701 lac (Previous year Rs. 1,853 lac)
 continues to be capitalized on respective fixed assets being not likely
 to be utilized within reasonable foreseeable future in the normal
 course of trade, though the debit entries in the excise records have
 not been passed.
 
 6.  Based on technical experts advice, the Company has provided
 depreciation on the Plant & Machinery of the Integrated Denim Unit, at
 the rates applicable on Continuous Process Plant.  Had the
 depreciation been provided at rate applicable forTriple Shift
 Operation, the Depreciation would have been higher by Rs.649 lac
 (Previous year Rs.466 lac). (Up to this year Rs.1,115 lac)
 
 7.  The Company had sold land admeasuring 1,26,207 Sq. ft. (14,023 Sq.
 yard) situated at Bhilwara for total consideration of Rs.15 crore, on
 initial payment of Rs.l crore, balance amount was receivable by 30th
 June, 2008 vide agreement to sell dated 21st March, 2008. Upon the
 request of and the Vendee pleading reasons of sluggish real estate
 market leading to fall in prices, financial constraints, economic
 recession etc., the Company has agreed to extend the period up to 31st
 March, 2010 for making balance payment of Rs.14 crore without interest.
 The possession was already given for the purpose of development of land
 on initial payment and the profit on which of Rs.9.04 crore recognised
 in the year 2007-08 continue to be recognised in the Books of Accounts.
 
 8.  The 2.5 million Optionally Convertible Preference Shares (OCPS) of
 Rs.150/- each carrying a coupon of 0.01 percent were converted into
 0.01 percent Redeemable Preference Shares (RPS) of Rs.150 each on
 non-exercising of option by the holders in the previous year and were
 due for redemption on 30th November 2008. Out of this, the Company
 redeemed 8,33,400 RPS after creating a Capital Redemption Reserve of
 Rs.1,250.10 lac and the balance 16,66,600 RPS were agreed to be
 retained, pursuant to agreement dated 30th December 2008, as 10 percent
 Redeemable Preference Shares of Rs.150/- each repayable in 4 quarterly
 installments of Rs.499.95 lac each beginning 30th June 2009 and the
 last installment of Rs.500.10 lac on 30th May, 2010 subject to the
 approval of the Regulatory Authorities.
 
 9.  To augment the long term resources, the Company on 1st Dec. 2007,
 had issued and allotted 35,00,000 Warrants of Rs.87/- each aggregating
 to Rs.3,045 lac and received Rs.304.50 lac (being 10 percent of the
 total amount) to the Promoters and Employees of the Company with the
 option of conversion of each Warrant into one Equity Share of Rs.10/-
 each, within a period of 18 months from the date of allotment on
 payment of balance amount of Rs.2,740.50 lac. Failure to exercise the
 conversion right shall entitle the Company to forfeit the amount
 received on allotment.
 
 10.  The Company has demerged its Strategic Investment of 66,00,000
 Equity Shares of Rs.10/- each in BMD Pvt Limited, pursuant to the
 approval order of Honble High Court of Rajasthan, Jodhpur dated 9th
 March 2009. Entire Assets and Liabilities of the said Strategic
 Investment Division has been transferred to new company named Bhilwara
 Technical Textile Limited (BTTL) with effect from appointed date i.e.
 1st April,2008. In consideration of relinquishment rights of the
 investment in 66,00,000 Equity Shares of Rs.10/- each by RSWM Ltd in
 favour of Bhilwara Technical Textiles Limited (BTTL) which has been
 charged to Capital Reserve as per approved Demerger Scheme, the
 shareholders of RSWM Ltd. have been allotted 10 equity share of Re.l/-
 each of BTTL for every 4 Equity Shares of Rs.10/- each held on the
 record date i.e. 24th April, 2009.
 
 Further, the holder of 35,00,000 convertible warrants shall also be
 entitled to the Equity Shares of BTTL in the same proportion, upon full
 payment and conversion into fully paid up Equity Shares of Rs.10/- each
 of RSWM Ltd. Until such conversion BTTL shall keep the equivalent
 amount in abeyance to enable it to issue the said Equity Shares.
 
 11.  The loans & advances, debtors and other current assets are
 reviewed annually and their value in the ordinary course of business
 will not be less than the amount at which they are stated in the
 Balance Sheet as assessed by the Management, However, balance
 confirmation from parties are under process.
 
 12.  In view of legal opinion and various reliefs available under
 Income Tax Act, 1961, provision for taxation has been considered
 adequate.
 
 13.  Adjustment relating to previous year includes Expenses Rs.0.12 lac
 and Income Rs. Nil (Previous year Expenses Rs.0.09 lac and Income Rs.
 NIL).
 
 14.  The figures for the previous year have been regrouped and/or
 rearranged wherever found necessary to make these comparable with those
 of the current year.
 
 C.  DISCLOSURES
 
 1.  SEGMENT REPORTING
 
 The Companys operations predominantly relates to manufacturing of Yarn
 and Fabric & Apparel and on the basis of assessment of the risk and
 return differential in terms of AS-17, the Company has identified Yarn
 and Fabric & Apparel as primary reportable business segments. Further
 the geographical segments have been considered as secondary segments
 and bifurcated into India, Europe, Middle East, Americas and Other
 Countries.
 
 The accounting policy in respect of segments is in conformity with the
 accounting policies of the enterprise as a whole. The inter segment
 transfers are accounted at the prevailing market prices charged to
 unaffiliated customers for similar goods. These transfers are
 eliminated in consolidation.
 
 The revenue and expenditure in relation to the respective segments have
 been identified and allocated to the extent possible. Other items i.e.
 extraordinary items, Loss/Profit on sale of investments and foreign
 currency transactions, corporate office expenses, etc. not allocable to
 specific segments are being disclosed separately as unallocated and
 adjusted directly against the Total Income of the Company.
 
 4.  RELATED PARTY
 
 (a) Enterprises that directly or indirectly through one or more
 intermediaries, control or are controlled by or are under common
 control with the reporting enterprise (this includes holding companies,
 subsidiaries and fellow subsidiaries).
 
 I) Cheslind Textiles Limited
 
 II) RSWM International B.V.
 
 None
 
 (b) Associate
 
 I) Bhilwara Energy Limited
 
 (c) Individuals owning directly or indirectly, an interest in the
 voting power of the reporting enterprise that gives them control or
 significant influence over the enterprise, and relatives of any such
 individual.
 
 None
 
 (d) Key Management Personnel and their relatives
 
 1) Mr. Ravi Jhunjhunwala
 
 2) Mr. Shekhar Agarwal
 
 3) Mr. A. K.Churiwal
 
 4) Mr. Riju Jhunjhunwala
 
 5) Mr. J. C. Laddha
 
 6) Mr. Rishabh Jhunjhunwala
 
 (e) Enterprises over which any person described in (c) or (d) is able
 to exercise significant influence.
 
 S.  Companys Name               No
 
 01.   Maral Overseas Ltd.
 02.   HEG Ltd.
 03.   Malana Power Company Ltd.
 04.   AD Hydro Power Ltd.
 05.   Indo Canadian Consultancy
       Services Ltd.
 06.   Bhilwara Scribe Pvt. Ltd.
 07.   Investors India Ltd.
 08.   Shree Vardhman Stock Holding
        Pvt Ltd.
 09.   RSWM SISA S. A., Spain
 10.   BMP Pvt. Ltd.
 11.   Sudhiva Spinners Pvt. LLtd.
 12.   Kalati Holding Pvt. Ltd._
 13.   Raghav Commercial Ltd.
 14.   Gilitedged India Securities Ltd.
 15.   LNJ Financial Services Ltd.
 16.   Deepak Knits Pvt. Ltd.
 17.   Raghav Knits & Textiles Pvt. Ltd.
 18.   Expert Fabric & Textiles Pvt. Ltd.
 19.   BSL Limited (w.e.f. 17.03.2009)
 20.   Bhilwara Processors Ltd. (w.e.f. 17.03.2009)
 21.   Shashi Commercial Co. Ltd.
 22.   Ganga Yamuna Auto Pvt. Ltd.
 23.   USS Investment & Finlease Pvt. Ltd.
 24.   Bagrodia Investment & Finlease Pvt. Ltd.
 25.   Jagur Finvest Pvt. Ltd.
 26.   Ramkant Sales & Services Pvt. Ltd.
 27.   Diplomat Leasing Pvt. Ltd.
 28.   Agarwal Finestate Pvt. Ltd.
 29.   Essay Marketing Co. Ltd.
 30.   Jyoti Knits Pvt. Ltd.
 31.   Mayur Knits Pvt. Ltd
 32    Bhilwara Software Pvt. Ltd.
 33    Bhilwara Technical Textiles Ltd.
 
 5.  JOINTLY CONTROLLED ASSETS
 
 The Company jointly owns 50% share in a building Bhilwara Bhawan at
 New Delhi with M/s.  HEG Limited. The aggregate amount of the Assets,
 Liabilities, Income and Expenditure has been recognized in the
 respective heads of the financial statements.
 
 v) There is no amount included in the fair value of plan assets for
 Companys own financial instruments and property occupied by or other
 assets used by the Company.
 
 vi) The overall expected rate of return on assets is assumed based on
 the market prices prevailing on that date over the accounting period.
 The Company is having approved Gratuity and Leave Encashment Trust,
 which is having Insurer Managed Fund.
 
 The estimates of future salary increase considered in actuarial
 valuation, take account of : inflation, seniority promotion and other
 relevant factors, such as supply and demand in the employment market.
 The above information is certified by the Actuary.
 
 b) Defined Contribution Plans
 
 Amount recognized as an expense and included in the Schedule 16 -
 
 8.  INTANGIBLE ASSETS
 
 a) Expenditure incurred on Intangible Items has been recognized as
 Intangible Assets, when material, which hitherto were capitalized along
 with related/specific assets, before applicability of AS 26.
 
 b) Useful lives of such assets have been considered by the Management
 equivalent to the period as prescribed under the Companies Act 1956.
 
 c) The Amortization is charged on Straight Line Method as Expense, on
 systematic basis, over its useful life.
 
 In terms of the provision of Section 212 (8) of the Companies Act,
 1956, the Company has applied to the Central Government for exemption
 from attaching to the Balance Sheet of the Company, the Accounts and
 other documents of its Subsidiary on 23rd April, 2009. However, the
 consolidated financial statements of the Company, which includes
 results of said subsidiary, are included in this Annual Report.
 Further, a statement containing the particulars of Companys
 Subsidiary, is also herein given above. The copies of the Audited
 Annual Accounts of the Companys Subsidiary for the year ended 31st
 March, 2009 and the related detailed information can be sought by any
 investor of the Company or its Subsidiary on making a written request
 to the Company in this regard. The Annual Accounts of the Subsidiary
 Company are also available for inspection by any investor at the
 Registered Office of the Company and its Subsidiary.
 
 In terms of the provision of Section 212 (8) of the Companies Act,
 1956, the Company has applied to the Central Government for exemption
 from attaching to the Balance Sheet of the Company, the Accounts and
 other documents of its Subsidiary on 23rd April, 2009. However, the
 consolidated financial statements of the Company, which includes
 results of said subsidiary, are included in this Annual Report.
 Further, a statement containing the particulars of Companys
 Subsidiary, is also herein given above. The copies of the Audited
 Annual Accounts of the Companys Subsidiary for the year ended 31st
 March, 2009 and the related detailed information can be sought by any
 investor of the Company or its Subsidiary on making a written request
 to the Company in this regard. The Annual Accounts of the Subsidiary
 Company are also available for inspection by any investor at the
 Registered Office of the Company and its Subsidiary.