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Contents

Page

Company Information 01

Directors’ Report 03

Report on Corporate Governance 09

Management Discussion 18 and Analysis Report

Auditors’ Report 22

Balance Sheet 26

Profit & Loss Account 27

Cash Flow Statement 28

Schedules & 30 Notes to Accounts

Section 212 Statement 49

Consolidated 51 Financial Statements

Financial Hhighlights 72

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B o a r d o f D i r e c t o r sD i l i p G . P i r a m a l ( C h a i r m a n )

S u d h i r J a t i a ( M a n a g i n g D i r e c t o r )

V i j a y K a l a n t r i

V i v e k N a i r

D . K . P o d d a r

G . L . M i r c h a n d a n i

C h i e f F i n a n c i a l O f f i c e rM a n o j Tu l s i a n

C o m p a n y S e c r e t a r y & H e a d - L e g a lS h r e y a s Tr i v e d i

A u d i t o r sM / s . M . L . B h u w a n i a & C o .

C h a r t e r e d A c c o u n t a n t s

B a n k e r sC e n t r a l B a n k o f I n d i a

S t a t e B a n k o f I n d i a

A x i s B a n k L i m i t e d

R e g i s t e r e d O f f i c e7 8 - A , M I D C E s t a t e , S a t p u r, N a s h i k - 4 2 2 0 0 7 , M a h a r a s h t r a .

F a c t o r i e s7 8 - A , M I D C E s t a t e , S a t p u r, N a s h i k - 4 2 2 0 0 7 , M a h a r a s h t r a .

P l o t N o . 8 , S e c t o r 1 2 I I E , S I D C U L , H a r i d w a r, - 2 4 9 2 0 3 , U t t a r a n c h a l .

L - 4 , M I D C , H i n g n a , N a g p u r - 4 4 0 0 1 6 , M a h a r a s h t r a .

A - 7 , M I D C , S i n n a r - 4 2 2 1 0 3 , M a h a r a s h t r a .

E - 5 / 2 , A d d i t i o n a l M I D C A r e a , J a l g a o n - 4 2 5 0 1 6 , M a h a r a s h t r a .

P l o t N o . J - 1 , M o u j e K a d o l i , M I D C A r e a , S a t a r a - 4 1 5 0 0 4 , M a h a r a s h t r a .

I n v e s t o r s ’ S e r v i c e s D e p a r t m e n tD G P H o u s e , 5 t h F l o o r, 8 8 - C O l d P r a b h a d e v i R o a d , M u m b a i - 4 0 0 0 2 5 , M a h a r a s h t r a .

R e g i s t r a r & S h a r e Tr a n s f e r A g e n tInt ime Spectrum Registry L imited, C-13, Pannala l S i lk Mi l ls Compound, L.B.S. Marg,

B h a n d u p ( W e s t ) , M u m b a i - 4 0 0 0 7 8 , M a h a r a s h t r a .

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Directors’ Report

Your Directors are pleased to present the 41st Annual Report together with the Audited Accounts of your Company for the year ended 31st March, 2008.

FINANCIAL RESULTS (Rs. in Crores)

Year Ended 31.03.2008

Year Ended 31.03.2007

Sales, Income from Operations & Other Income 556.5 433.5

Gross Profit 46.9 40.8

Depreciation 14.8 13.6

Profit Before Tax & Extra-ordinary Items 32.1 27.2

Extra-ordinary Items 7.6 9.0

Tax Provision (Net of Deferred Tax) 3.4 3.0

Fringe Benefit Tax 1.1 0.8

Profit After Tax 20.0 14.4

Add/(Less) Prior Year Adjustments (Net) 1.4 (0.2)

Profit brought forward from Previous Year 15.1 17.1

Profit taken over on Amalgamation 3.8 16.2

Profit available for Appropriation 40.3 47.5

Appropriations:

Proposed Dividend 8.5 6.3

Corporate Tax on Dividend 1.4 1.1

General Reserve 2.5 25.0

Balance carried to Balance Sheet 27.9 15.1

40.3 47.5

OVERALL PERFORMANCE AND OUTLOOK

During the year under review, Aristocrat Luggage Limited and Quality Plastics Limited were amalgamated with your Company. The Appointed Date for the same was 1st April, 2007. Accordingly, the financial results for the year ended 31st March, 2008 represent the figures of the amalgamated entity and to that extent are not comparable with the results of the previous year.

Income from operations & other Income during the financial year ended 31st March, 2008 was at Rs. 556.5 Crores. Profit After Tax for the year under review amounted to Rs. 20.1 Crores.

A detailed analysis of the operations of your Company during the year under report are included in the Management Discussion and Analysis Report, forming part of the Annual Report.

As of 31st March, 2008, the Reserves and Surplus of your Company were Rs. 104.5 Crores.

The outlook for the current year is favourable.

DIVIDEND

Your Directors are pleased to recommend for your consideration, a dividend of 30% (previous year 25%) on the paid-up equity share capital of your Company.

AMALGAMATION OF ARISTOCRAT LUGGAGE LIMITED AND QUALITY PLASTICS LIMITED WITH YOUR COMPANY

During the year under review, the Hon’ble High Court of Judicature at Bombay vide its Order dated 14th December, 2007, sanctioned the Scheme of Amalgamation and Arrangement of Aristocrat Luggage Limited (Aristocrat) and Quality Plastics Limited (Quality) with your Company with effect from the Appointed Date i.e. 1st April, 2007.

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Accordingly, 28,01,650 (Twenty Eight Lakhs One Thousand Six Hundred Fifty) equity shares of Rs. 10/- (Rupees Ten Only)each of your Company were allotted to the shareholders of the erstwhile Aristocrat in the ratio of 1:2, i.e. 1 (one) equity share of Rs. 10/- (Rupees Ten Only) each of your Company for every 2 (two) equity shares of Rs. 10/- (Rupees Ten Only) each held in the erstwhile Aristocrat by the shareholders.

The equity shares allotted to the shareholders of the erstwhile Aristocrat have been listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. Fractions arising out of such allotment of equity shares to the shareholders of the erstwhile Aristocrat have been paid on 15th May, 2008.

INCREASE IN SHARE CAPITAL

During the year under review, pursuant to the Scheme of Amalgamation and Arrangement of Aristocrat Lugage Limited (Aristocrat) and Quality Plastics Limited (Quality) with your Company, Rs. 10,00,00,000/- (Rupees Ten Crores, Only) being the Authorised Share Capital of the erstwhile Aristocrat and Rs. 2,50,00,000/- (Rupees Two Crores Fifty Lakhs Only), being the Authorised Share Capital of the erstwhile Quality stands consolidated with the Authorised Share Capital of your Company. Accordingly, the increased Authorised Share Capital of your Company is Rs. 49,40,00,000/- (Rupees Forty Nine Crores Forty Lakhs Only) divided into 4,93,00,000 (Four Crores Ninety Three Lakhs) equity shares of Rs. 10/- (Rupees Ten Only) each and 1,000 (One Thousand), 9% Redeemable Cumulative Preference Shares of Rs. 1,000/- (Rupees One Thousand Only) each.

Pursuant to the Scheme of Amalgamation and Arrangement, your Company has issued 28,01,650 (Twenty Eight Lakhs One Thousand Six Hundred Fifty) equity shares of Rs. 10/- (Rupees Ten Only) each to the shareholders of the erstwhile Aristocrat. The Share Exchange Ratio under the Scheme of Amalgamation and Arrangement was 1:2 i.e. 1 (one) equity share of Rs. 10/- (Rupees Ten Only) each of your Company was issued and allotted for every 2 (two) equity shares of Rs. 10/- (Rupees Ten Only) each held in the erstwhile Aristocrat.

As part of the Scheme, Quality was also amalgamated with your Company and accordingly, the new equity shares issued to Quality, as one of the shareholders of Aristocrat were directly issued to the shareholders of Quality in proportion to their respective shareholding in Quality. No additional new equity shares were allotted to the shareholders of Quality.

Accordingly, the issued, subscribed and paid-up share capital of your Company has increased from Rs. 25,46,18,130/- (Rupees Twenty Five Crores Forty Six Lakhs Eighteen Thousand One Hundred Thirty Only) divided into 2,54,61,813 (Two Crores Fifty Four Lakhs Sixty One Thousand Eight Hundred Thirteen) equity shares of Rs. 10/- (Rupees Ten Only) each to Rs. 28,26,34,630/- (Rupees Twenty Eight Crores Twenty Six Lakhs Thirty Four Thousand Six Hundred Thirty Only) divided into 2,82,63,463 (Two Crores Eighty Two Lakhs Sixty Three Thousand Four Hundred Sixty Three) equity shares of Rs.10/- (Rupees Ten Only) each.

EXPORTS AND INTERNATIONAL OPERATIONS

During the year under review, your Company initiated several steps to strengthen its International operations. Exports for the year amounted to Rs. 84.6 Crores.

The future outlook for exports is encouraging.

RESEARCH & DEVELOPMENT

The Research and Development (R&D) centre of your Company is actively engaged in upgradation of technologies, processes and development of quality products towards ensuring technological leadership for your Company in the years to come.

The R&D centre has been recognized by the Department of Scientific & Industrial Research, of the Government of India.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to the Directors’ Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2008, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) that your Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profits of your Company for the year under review;

(iii) that your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

(iv) that your Directors have prepared the accounts for the financial year ending 31st March, 2008 on a ‘going concern’ basis.

Directors’ Report (Contd.)

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MANAGEMENT DISCUSSION & ANALYSIS REPORT AND REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report, the Report on Corporate Governance and the Certificate regarding compliance of requirements of Corporate Governance, are annexed to this Report and form part of this Annual Report.

SUBSIDIARIES

During the period under report, the operations of Carlton Travel Goods Limited (Carlton) have improved. The focus of your management is to improve the reach of Carlton’s products across Europe and in other markets. Towards the same, Carlton has made strategic in-roads in the form of strengthening its distribution channels.

The operations of Blow Plast Retail Limited have not yet started.

In terms of the approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copies of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of Carlton and Blow Plast Retail Limited have not been attached with the Balance Sheet of your Company.

However, the Consolidated Financial Statements of your Company, which include the financial results of Carlton and Blow Plast Retail Limited are included in this Annual Report. Further, a statement containing the particulars prescribed under the terms of the said exemption for Carlton and Blow Plast Retail Limited are also enclosed. Copies of the relevant audited accounts of Carlton and Blow Plast Retail Limited can also be sought by any investor on making a written request to the Secretarial Department, at the Registered Office of your Company in this regard. The annual accounts of Carlton and Blow Plast Retail Limited are also available for inspection by any investor at the Registered Office of your Company and at the respective Head Offices of Carlton and Blow Plast Retail Limited.

JOINT VENTURE

Your Company exited from the Bangladesh Joint Venture – V.I.P. Nitol Industries Limited in the previous year. The necessary formalities in relation to the termination of the joint venture are under progress and are awaiting certain statutory clearances from the Government of Bangladesh.

INSURANCE

All the assets of your Company, including Plant & Machinery, Buildings, Equipments etc. have been adequately insured.

DEPOSITORY

Your Company’s shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories, i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

PUBLIC DEPOSITS

Your Company had not received instructions from 156 depositors for repayment of deposits amounting to Rs. 23,32,000/- (Rupees Twenty Three Lakhs Thirty Two Thousand Only) as at 31st March, 2008. Since then 29 deposits amounting to Rs. 4,87,000/- (Rupees Four Lakhs Eighty Seven Thousand Only) have been repaid.

CENTRAL GOVERNMENT APPROVAL UNDER SECTION 211 AND 212 OF THE COMPANIES ACT, 1956

On an application made by your Company under Section 211 of the Companies Act, 1956, the Central Government vide its letter No. 46/6/2008-CL-III dated 12th May, 2008 exempted your Company from giving disclosure of quantitative details in compliance of Schedule VI to the Companies Act, 1956 in this Annual Report.

On an application made by your Company under Section 212(8) of the Companies Act, 1956, the Central Government vide its letter No. 47/12/2008-CL-III dated 18th February, 2008, exempted your Company from attaching a copy of the Balance Sheet and the Profit and Loss Account of the subsidiary companies and other documents to be attached under Section 212(1) of the Annual Report of your Company. Accordingly, the said documents are not being attached with the Balance Sheet of your Company. A gist of the financial performance of the subsidiary companies is contained in this Report. The annual accounts of the subsidiary companies are open for inspection by any shareholder and your Company will make available these documents/details upon request by any shareholder of your Company or to any investor of its subsidiary companies who may be interested in obtaining the same. Further, the annual accounts of the subsidiary companies will also be kept for inspection by any investor at the Registered Office of your Company and at the respective Head Offices of the subsidiary companies.


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DIRECTORS

Mr. P. K. Ramakrishnan, retired as an Executive Director of your Company w.e.f. 31st March, 2008. Your Directors place on record their sincere appreciation for the valuable services rendered by Mr. P. K. Ramakrishnan during his tenure as an Executive Director.

Mr. Vivek Nair and Mr. Vijay Kalantri, Directors retire by rotation and being eligible, offer themselves for re-appointment. Pursuant to Clause 49 of the Listing Agreement, information on directors retiring by rotation is provided as part of the Notice of the ensuing Annual General Meeting.

AUDITORS

M/s. M. L. Bhuwania & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible, have expressed their willingness to continue, if so appointed. As required under the provisions of Section 224 of the Companies Act, 1956, your Company has obtained a written certificate from the Auditors proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said Section.

A proposal seeking their re-appointment is provided as part of the Notice of the ensuing Annual General Meeting.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information as required in terms of the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith and forms part of this Report as Annexure (A).

PARTICULARS OF EMPLOYEES & EMPLOYEE STOCK OPTION SCHEME

Information as per Section 217(2A) of the Companies Act, 1956 (“the Act”) read with the Companies (Particulars of Employees) Rules, 1975 forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders of your Company excluding the statement on particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said statement may write to the Secretarial Department at the Registered Office of your Company.

During the year under review, no fresh stock options have been granted by your Company. Accordingly, no new equity shares have been allotted under the Employee Stock Option Scheme of your Company. Hence, no disclosure under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 has been made during the year under review.

INDUSTRIAL RELATIONS

Industrial relations remained cordial throughout the year under review.

ACKNOWLEDGEMENT

Your Directors record their gratitude to the Financial Institutions, Banks and other Government departments for their assistance and co-operation extended to your Company during the year under report.

Your Directors also wish to place on record, their appreciation for the dedicated services of the employees of your Company at all levels.

On behalf of the Board of Directors

DILIP G. PIRAMALChairman

Place : MumbaiDate : 23rd May, 2008


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Annexure (A)

DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO AS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988.

(A) CONSERVATION OF ENERGY:

(a) Energy conservation measures taken: — Reduction in power consumption of Injection Moulding Department (IMD) Cooling Tower by replacing cross

flow type to counter flow type cooling tower. — Provided auto on/off controller for cooling tower fan motor by maintaining cooling water temperature for IMD

machines. — Auto off circuit provided for IMD machines main motor to save energy when running idle without

operation. — Replaced 2 (two) old centrifugal mono block pumps by submersible pump for energy saving without affecting

water flow rate for IMD pump house. — Reduction in power consumption of D3 machine in comparison of D2 machines. — Reduction in power consumption of air compressor used in Vacuum Forming Department (VFD). — Reduction in power consumption of A5 & A6 machines – SR2 (Servo Value). Installed on machines M3

motor made variable as per torque of motor.

(b) Additional Proposals: — 1 (One) submersible pump to be installed in place of existing remaining old centrifugal pump at IMD pump

house. — Replacement of mercury/sodium vapour lamp in Bonded Store Room, Store & Quality Assurance (Q.A.)

packing area by energy efficient Compact Fluorescent Lamp. — Incorporation of Time switches to VFD/Electro Plating Department/Despatch Department. — Making of auto variable speed of 132 KW motor of W-800T machine as per torque on motor. — Installation of AC in VFD on IMD machine.

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:

Expected energy saving with above proposals would be Rs. 9.0 Lakhs per annum.

(d) Total energy consumption and energy consumption per unit of production: Form ‘A’ of the annexure to the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,

1988, is not applicable to the Company.

(B) TECHNOLOGY ABSORPTION:

(1) Research and Development (R&D): (i) Specific areas in which R&D carried out by the Company: — Development to eliminate hazardous material like PVC, Cadmium to be ISO14000 compliant. — Development of contemporary designs. — Implementation of 3D environment for design, development and manufacturing. — Latest generation Computer Aided Design (CAD)/Computer Aided Machine (CAM) solutions inducted for

faster new product launches. — Process up-gradation including development of single piece flow concept through special purpose

machinery designed for key processes. — Induction of High Speed CNC machines and Large Electric Discharge machines for manufacturing of

world class moulds in-house. — Technology absorption appropriate for luggage manufacturing in assembly and manufacturing. — Aesthetic improvements. — Twin layer extrusion implemented for Polycarbonate and ABS Sheets. — Research on enhanced quality polymer blends by using largest generation polymers.

(ii) Benefits derived as a result of above R&D: — Product development cycles have been drastically reduced. — World class finishes and designs in Hard and Soft Luggage products. — Development of innovative luggage manufacturing techniques like conveyors, Special Process Machines etc. — Value addition in the form of improved product performance at lower raw material costs. — Ultra light luggage developed which is a key customer requirement.

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(iii) Future plan of action: — Strengthening of testing and research laboratory on polymeric materials, blends and finishes. — Innovation in adhesive and textile technology for smarter world class interiors. — Further development of new materials and processes for reliability and aesthetic enhancement. — To develop new processes like metal finishes in polymers, vibrant colouring etc. — Developing new luggage with advanced design and superior aesthetics.

(iv) Expenditure on R&D: Amount (Rs. in lakhs)

Capital — Recurring 263.48 Total R&D expenditure as a percentage of total turnover 0.48%

(2) Technology Absorption, Adaptation and Innovation: (i) Efforts taken for technology absorption, adaptation and innovation: Technology absorption from: — Internet. — Technical Journals. — Rigorous computer aided stress analysis and flow predictions continued as a system. — Training of personnel on powerful CAD/CAM tools. — National and international Exhibitions/Seminars. — Joint projects with major raw material suppliers to develop innovative technology. — Concurrent engineering using state of the art hardware and software use continued. — Prominent institutes, Research centers. — Large mould manufacturing speeded up by application of innovative technologies and capacity

enhancement. (ii) Benefits derived as a result of the above efforts: — Development center for the French luggage manufacturing company – Delsey. — Enhanced quality of large moulds to international standards. — Better utilization of polymers. — Excellent new finishes. — Thickness reduction in ABS luggages. — World-class standards in product quality. — Lightweight luggage developed.

(iii) Information regarding technology imported during last 5 years: — Latest generation double barrel injection moulding machine, twin barrel moulding machines and a battery

of hitech moulds have been inducted at the manufacturing location. — Twin extruder for polycarbonate and ABS sheets. — The Company has a technical collaboration with Delsey S.A., France for manufacturing a few of their

premium range suitcases and briefcases. — The Company has acquired the plant & machinery of the erstwhile Carlton International, UK and has

absorbed the technology towards manufacturing of quality products at its facilities in India.

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO:

Total foreign exchange used and earned during the year:

Amount (Rs. in lakhs)

Used 10,661.2

Earned 8,763.0

On behalf of the Board of Directors

Place : Mumbai DILIP G. PIRAMALDate : 23rd May, 2008 Chairman

Annexure (A) (Contd.)

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Report on Corporate Governance

ANNEXURE TO DIRECTORS’ REPORT

COMPANY’S PHILOSOPHY

The Company is committed to adopt the best Corporate Governance practices and endeavours continuously to implement the code of Corporate Governance in its true spirit. The philosophy of the Company in relation to Corporate Governance is to ensure transparency in all its operations, make disclosures and enhance shareholders’ value without compromising in any way in complying with the laws and regulations.

The Board of Directors acknowledges that it has a fiduciary relationship and a corresponding duty towards the stakeholders to ensure that their rights are protected. Through the governance mechanism in the Company, the Board along with its Committees endeavours to strike the right balance with its various stakeholders.

BOARD OF DIRECTORS

Composition of the Board:

The Board of Directors of the Company consists of six Directors out of which five are Non-Executive Directors, four of which are Independent Directors in terms of Clause 49(I)(A) of the Listing Agreement.

None of the Directors of the Board is a member of more than ten Committees and Chairman of more than five Committees across all companies in which they are Directors.

During the financial year 2007-08, seven Board Meetings were held on the following dates:

1. 27th April, 2007

2. 4th June, 2007

3. 29th June, 2007

4. 26th July, 2007

5. 29th October, 2007

6. 16th January, 2008

7. 28th January, 2008

The details of the Directors on the Board of the Company as on 31st March, 2008 are given below:

Name Category No. of shares held

Attendance Particulars

No. of Outside Director-

ships

No. of outside Committee

positions held

Board Meetings

Last AGM

(*) Chairman Members@

Mr. Dilip G. Piramal Chairman (Non-Executive)

504 7 No 6 1 –

Mr. Sudhir Jatia Managing Director 17,15,659 7 No 2 – –

Mr. Vivek Nair Independent, Non-Executive Director

– – No 7 – 2

Mr. Vijay Kalantri Independent, Non-Executive Director

– 7 No 14 – 3

Mr. D. K. Poddar Independent, Non-Executive Director

– 6 Yes 9 – 3

Mr. G. L. Mirchandani Independent, Non-Executive Director

– 3 No 8 – 1

Mr. P. K. Ramakrishnan# Executive Director 500 6 Yes – – –

# Mr. P. K. Ramakrishnan retired as an Executive Director of the Company on 31st March, 2008.

(*) excludes directorships in Indian Private Limited Companies, Foreign Companies, Companies under Section 25 of the Companies Act, 1956 and membership of Managing Committees of various bodies.

@ Only memberships of Audit Committee and Shareholders’/Investors’ Grievance Committee are considered.

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Board Procedure:

The Board meets at least once in a quarter, inter-alia, to review the quarterly performance and the financial results. The Board Meetings are generally scheduled well in advance and the notice of each Board Meeting is given in writing to each Director. The board papers, comprising of the agenda, backed by comprehensive background information are circulated to the Directors in advance.

The information as specified in Annexure IA to Clause 49 of the Listing Agreement is regularly placed before the Board, wherever applicable.

The Board periodically reviews the compliance reports of the laws applicable to the Company.

AUDIT COMMITTEE

Terms of reference:

The Audit Committee of the Company, inter-alia, provides assurance to the Board on the adequacy of the internal control systems and financial disclosures.

Apart from all the matters provided in Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956, the Committee reviews reports of the Internal Auditors, meets Statutory Auditors periodically and discusses their findings, suggestions, internal control systems, scope of audit, observations of the Auditors and reviews accounting policies followed by the Company. The Committee reviews with the management, half yearly and annual financial statements before its submission to the Board. The minutes of the Audit Committee meetings are placed and noted at the subsequent meeting of the Board of Directors of the Company.

Composition and Attendance at Meetings:

The Audit Committee comprises of four members, all of whom are Non-Executive Directors and financially literate as prescribed in the Listing Agreement.

Mr. D. K. Poddar, Independent Director is the Chairman of the Committee. The Managing Director and the Statutory Auditors of the Company are permanent invitees at the meetings of the Committee. The quorum for the Audit Committee meetings is two members, with atleast two Independent Directors present at the meeting. The Company Secretary acts as the Secretary to the Committee. The head of Internal Audit function reports to the Audit Committee with regards to the audit program, observations and recommendations in respect of different areas of operation of the Company.

The Audit Committee generally meets once in a quarter to inter-alia, review the quarterly performance and the financial results.

The Audit Committee met six times during the year on 27th April, 2007, 4th June, 2007, 29th June, 2007, 26th July, 2007, 29th October, 2007 and 28th January, 2008.

Name of the Member Position No. of Meetings held

No. of Meetings Attended

Mr. D. K. Poddar Chairman 6 6

Mr. Dilip G. Piramal Member 6 6

Mr. Vijay Kalantri Member 6 6

Mr. G. L. Mirchandani Member 6 3

Mr. D. K. Poddar, Chairman of the Committee was present at the 40th Annual General Meeting of the Company held on 29th September, 2007 to answer the shareholders’ queries.

The minutes of the Audit Committee meetings form part of the documents placed before the meetings of the Board of Directors. In addition, the Chairman of the Audit Committee appraises the Board members about the significant discussions at Audit Committee meetings.

REMUNERATION AND COMPENSATION COMMITTEE

Terms of reference:

The Remuneration and Compensation Committee of the Company, reviews, assesses and recommends, the performance of managerial personnel on a periodical basis and also reviews their remuneration package and recommends suitable revision to the Board.

Report on Corporate Governance (Contd.)

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The Committee also looks into and decides on all issues related to administration and implementation of the Company’s Employees’ Stock Option Scheme and other matters connected thereto.

Composition and Attendance at Meetings:

The Remuneration and Compensation Committee comprises of four members, all of whom are Non-Executive Directors.

Mr. D. K. Poddar, Independent Director is the Chairman of the Committee.

The Remuneration and Compensation Committee met once during the year on 4th June, 2007.

The details of the composition, categories and attendance during the year are as under:

Name PositionNo. of

Meetings heldNo. of Meetings

attended

Mr. D. K. Poddar Chairman 1 –

Mr. Dilip G. Piramal Member 1 1

Mr. Vijay Kalantri Member 1 1

Mr. G. L. Mirchandani Member 1 1

Remuneration Policy:

The remuneration policy is directed towards rewarding performance, based on review of achievements. It is aimed at attracting and retaining high caliber talent. The remuneration policy is in consonance with the existing practice in the Industry.

(i) Non-Executive Directors’ Remuneration:

The Non-Executive Directors are not paid any remuneration except by way of sitting fees. The Company paid sitting fees of Rs. 5,000/- per meeting for attending the Audit Committee meetings. Sitting fees of Rs. 5,000/- was paid for attending the Board Meetings upto 31st July, 2007 and with effect from 29th October, 2007, the fees has been increased to Rs.10,000/- per meeting.

(Amount in Rs.)

Name Sitting Fees Commission Total

Mr. Dilip G. Piramal 1,20,000# – 1,20,000#

Mr. Vivek Nair – – –

Mr. Vijay Kalantri 1,05,000 – 1,05,000

Mr. D. K. Poddar 90,000 – 90,000

Mr. G. L. Mirchandani 50,000 – 50,000

# Includes an amount of Rs.15,000/- paid from the erstwhile Aristocrat Luggage Limited.

(ii) Executive Directors’ Remuneration:

(a) Executive Director:

The Company pays remuneration by way of salary, perquisites, allowances and commission to the Executive Director. Salary is paid within the limits approved by the shareholders.

Details of remuneration paid to the Executive Director for the year ended 31st March, 2008 is as follows: (Amount in Rs.)

Name Sitting Fees

Gross Remuneration*

(Rs.)

Commission Stock Option (Number of

Shares)

Total

Mr. P. K. Ramakrishnan – 41,06,753.06 3,50,000 – 44,56,753.06

* Gross Remuneration includes salary, contribution to Provident Fund and other perquisites. Mr. P. K. Ramakrishnan has retired as an Executive Director w.e.f. 31.3.2008.

(b) Managing Director:

At the meeting of the Board of Directors of the Company held on 30th January, 2007, Mr. Sudhir Jatia was appointed as the Managing Director of the Company for a period of five years with effect from 1st February, 2007 to


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31st January, 2012. The service contract with the Managing Director may be terminated by either party by giving the other party, 3 months’ notice or the Company paying notice pay equivalent to the amount due to the Managing Director on account of salary and perquisites for such notice period. There is no separate provision for payment of severance fees.

The Company pays remuneration by way of salary, perquisites, allowances and commission to the Managing Director. Salary is paid within the limits approved by the shareholders.

Details of remuneration of Managing Director for the year ended 31st March, 2008 is as follows:

(Amount in Rs.)

Name Sitting Fees

*Gross Remuneration

Commission Stock Option (Number of

Shares)

Total

Mr. Sudhir Jatia – 80,91,444 10,00,000 – 90,91,444

* Gross Remuneration includes salary, contribution to Provident Fund and other perquisites.

INVESTORS’ GRIEVANCE & SHARE TRANSFER COMMITTEE

Terms of reference:

The terms of reference of the Committee includes redressing shareholder and investor complaints like transfer and transmission of shares, issue of duplicate share certificates, non-receipt of balance sheets, non-receipt of dividends and to ensure expeditious share transfer process.

Intime Spectrum Registry Limited is the Registrar and Transfer Agent of the Company and the Committee oversees the performance of the Registrar and Share Transfer Agent and recommends measures for overall improvement in the quality of investors’ services.

Composition:

The Investors’ Grievance and Share Transfer Committee comprises of three members, viz. Mr. Dilip G. Piramal, as the Chairman and Mr. Sudhir Jatia and Mr. Vijay Kalantri as the Members of the Committee. Mr. Shreyas Trivedi, Deputy General Manager – Legal and Company Secretary is the Compliance Officer of the Company.

Mr. Vijay Kalantri was appointed as the Member of the Committee with effect from 28th January, 2008 and Mr. P. K. Ramakrishnan ceased to be the Member on 31st March, 2008.

The Company has approximately 31,051 investors comprising of shareholders and fixed deposit holders. During the year, the Company processed 363 share transfers comprising of 53,492 equity shares in the physical form. The Company received 158 complaints (34 complaints from the shareholders of the erstwhile Aristocrat Luggage Limited) during the year, all of which have been attended to within a period of fifteen days from the date of receipt of the same.

The Investors’ Grievance and Share Transfer Committee generally meets once in a fortnight and approves all matters related to shares vis-à-vis transfers, transmissions, dematerialisation and rematerialisation of shares etc. In case of shares held in physical form, all transfers are completed within 14 days from the date of receipt of complete documents.

GENERAL BODY MEETINGS

Particulars of General Meetings held during last three years:

Annual General Meetings Date Venue Time No. of Special Resolutions Passed

38th AGM (2004-05) 26th August, 2005 “NIWEC”, Satpur, Nashik – 422 007

11.30 a.m. 1

39th AGM (2005-06) 18th September, 2006

“NIWEC”, Satpur, Nashik – 422 007

11.30 a.m. 2

Court Convened Meeting of Equity Shareholders for Amalgamation of Blow Plast Limited with the Company

18th September, 2006


12.30 p.m. N.A.


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Annual General Meetings Date Venue Time No. of Special Resolutions Passed

40th AGM (2006-07) 29th September, 2007


11.30 a.m. Nil

Court Convened Meeting of Equity Shareholders for Amalgamation of Aristocrat Luggage Limited and Quality Plastics Limited with the Company

29th September, 2007


12.30 p.m N.A

The following Special Resolutions were passed by the shareholders during last three years:

38th Annual General Meeting held on 26th August, 2005:

To authroise the Board of Directors to issue Corporate Guarantee to UTI Bank Limited in excess of the limits prescribed under Section 372A of the Companies Act, 1956 for securing additional banking facilities granted to BP Ergo Limited.

The resolution was passed with requisite majority.

39th Annual General Meeting held on 18th September, 2006:

1. To alter the Articles of Association of the Company by inserting the definition of Allied Legislation and their applicability to the Company.


2. To de-list the equity shares of the Company from the Ahmedabad Stock Exchange Limited (ASE) and the Delhi Stock Exchange Association Limited (DSE), pursuant to Clause 5 and other applicable provisions of the Securities and Exchange Board of India (Delisting of Securities) Guidelines, 2003.


Court Convened Meeting held on 18th September, 2006:

1. To approve the Scheme of Amalgamation & Arrangement of Blow Plast Limited with the Company pursuant to the provisions of Section 391 to 394 read with Sections 100 to 104 of the Companies Act, 1956 and other applicable provisions of other applicable laws and subject to the approval of the Hon’ble High Court of Judicature at Bombay.


2. To approve the cancellation of investments in the equity share capital of the Company as appearing in the books of accounts of erstwhile Blow Plast Limited.


3. To approve reduction of paid-up share capital of the Company by Rs. 7,49,31,870 (Rupees Seven Crore Forty Nine Lakhs Thirty One Thousand Eight Hundred Seventy Only) being the face value of 74,93,187 (Seventy Four Lakhs Ninety Three Thousand One Hundred Eighty Seven) equity shares of Rs. 10/- (Rupees Ten Only) each, held by erstwhile Blow Plast Limited in the Company.


Court Convened Meeting held on 29th September, 2007:

To approve the Scheme of Amalgamation & Arrangement of Aristocrat Luggage Limited and Quality Plastics Limited with the Company pursuant to the provisions of Sections 391 to 394 and other applicable provisions of the Companies Act, 1956 and subject to the approval of the Hon’ble High Court of Judicature at Bombay.

Postal Ballot:

During the year ended 31st March, 2008, no resolution was passed through Postal Ballot.

DISCLOSURES

The Company has no material significant transactions with its related parties that may have a potential conflict with the interest of the Company. The details of transactions between the Company and the related parties are given for information under Note 17 to the Notes to Accounts to the Balance Sheet as at 31st March, 2008.


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In the preparation of the financial statements, the Company follows Accounting Standards issued by the Institute of Chartered Accountants of India.

There has been no instance of non-compliance by the Company on any matter relating to the capital markets and accordingly, no penalties or strictures have been levied by the SEBI or Stock Exchanges or any other statutory authority.

The Company has formulated and laid down the procedure on risk assessment and minimisation. These procedures have been considered by the Board and a properly defined framework is being laid down to ensure that executive management controls the identified risks. The Company has not framed any Whistle Blower Policy during the year 2007-08.

During the year under review, the Company did not raise any proceeds through public issue, rights issue and/ or preferential issue.

During the year, the Company has issued 28,01,650 (Twenty Eight Lakhs One Thousand Six Hundred Fifty) equity shares of Rs. 10/- (Rupees Ten Only) each to the shareholders of erstwhile Aristocrat Luggage Limited on its amalgamation with the Company.

The details in respect of Directors seeking re-appointment are provided as part of the Notice convening the forthcoming Annual General Meeting.

MEANS OF COMMUNICATION

Financial results are published in widely circulating national and local daily newspapers, such as Indian Express, Business Standard, Free Press Journal, Navashakti and Sakal. These are not sent individually to the shareholders.

As required under Clause 51 of the Listing Agreement with the Stock Exchanges, all the data related to quarterly financial results, shareholding pattern etc. is provided on the SEBI’s EDIFAR (Electronic Data Information Filling and Retrieval) website www.sebiedifar.nic.in within the timeframe prescribed in this regard.

The Company’s results and official news releases are displayed on the Company’s website www.vipbags.com. There were no presentations made to the institutional investors or analysts during the year under review.

The Management Discussion and Analysis Report forms part of this Annual Report.

GENERAL SHAREHOLDER INFORMATION

1. Annual General Meeting:

— Date and Time : Friday, 29th August, 2008 at 12.30 p.m.

— Venue : “NIWEC”, P-29, Street 14, MIDC, Satpur, Nashik – 422 007

2. Tentative Financial Calendar : The financial year of the Company is for the period from 1st April to 31st March of the following year.

— Publication of Audited Results : By 30th June of each year

— First Quarter Results : By 31st July of each year

— Second Quarter Results : By 31st October of each year

— Third Quarter Results : By 31st January of each year

3. Date of Book Closure : Tuesday, 19th August, 2008 to Friday, 29th August, 2008 (both days inclusive)

4. Dividend Payment Date (2007-08) : On or after 3rd September, 2008.

5. Listing on Stock Exchange : 1. Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400 023 (BSE).

: 2. National Stock Exchange of India Limited, Exchange Plaza, 5th Floor, Plot No. C/1, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai – 400 051 (NSE).

6. Listing Fees : Listing fees of both the Stock Exchanges for the year 2007-08 has been paid.

7. Stock Code

BSE : 507880

NSE : VIPIND

International Securities Identification Number (ISIN)

: INE054A01019


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8. The monthly High and Low of market price of Shares of the Company on the BSE and the stock performance during the last financial year was as under:

Period (Year 2007-08) High (Rs.) Low (Rs.) Sensex (High)

April ’07 100.25 87.00 14,383.72

May ’07 108.95 90.15 14,576.37

June ’07 104.85 93.05 14,683.36

July ’07 142.65 97.00 15,868.85

August ’07 129.25 108.00 15,542.40

September ’07 139.85 123.00 17,361.47

October ’07 142.75 121.50 20,238.16

November ’07 133.00 109.00 20,204.21

December ’07 178.30 110.60 20,498.11

January ’08 169.00 111.60 21,206.77

February ’08 131.00 105.30 18,895.34

March ’08 118.80 75.25 17,227.56

Stock Performance

9. Distribution Schedule and Shareholding Pattern as on 31st March, 2008:

DISTRIBUTION SCHEDULE SHAREHOLDING PATTERN

Category No. of Shareholders

No. of Shares

Category of Shareholders No. of Shares

%

Number of Shares

Upto 500 27,499 35,66,997 Promoters 1,21,44,126 42.97

501 – 1000 1,299 9,86,127 Mutual Funds and UTI 22,80,212 8.07

1001 – 2000 467 7,01,786 Banks, Financial Institutions, Insurance Companies

3,47,930 1.23

2001 – 3000 142 3,65,059 Foreign Institutional Investors 78,257 0.28

3001 – 4000 61 2,20,623 Bodies Corporate 40,15,237 14.21

4001 – 5000 52 2,46,810 Indian Public 67,97,820 24.05

5001 – 10000 73 5,53,482 Non Resident Individuals/ Overseas Corporate Bodies

7,43,119 2.62

10000 and Above 93 2,16,22,579 Others – Directors and their Relatives

18,56,762 6.57

TOTAL 29,686 2,82,63,463 TOTAL 2,82,63,463 100.00


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10. Registrar and Share Transfer Agent : Intime Spectrum Registry Limited, C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (W), Mumbai – 400 078,

Tel. No.: 022 – 25963838, Fax No.: 022-25962691

11. Dematerialisation of shares and liquidity : 84.39% of the paid-up share capital of the Company has been dematerialized as on 31st March, 2008. The equity shares of the Company are actively traded on the BSE and the NSE in dematerialized form.

12. Outstanding GDRs/ ADRs/ Warrants or any convertible instruments

: Nil

13. Plant Locations : (i) Nashik – 78 A, MIDC Estate, Satpur, Nashik – 422 007

(ii) Nagpur – L-4, MIDC, Hingna, Nagpur – 440 016

(iii) Sinnar – A-7, MIDC, Sinnar – 422 103

(iv) Jalgaon – E 5/2 Additional MIDC Area, Jalgaon – 425 016

(v) Haridwar – Plot No. 8, Sector 12, SIDCUL Area, Haridwar – 249 403

(vi) Satara – Plot No. J-1, Mouje Kadoli, MIDC Area, Satara – 415 004

14. Address for correspondence : (i) Intime Spectrum Registry Limited (Unit – V.I.P. Industries Limited) C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (W), Mumbai – 400 078. Tel. No. 022-25963838, Fax No.: 022-25962691

(ii) The Company Secretary V.I.P. Industries Ltd., DGP House, 88-C, Old Prabhadevi Road Mumbai – 400 025 Tel No. : 022 - 66539000, Fax No.: 022 - 66539089

15. Designated E-mail ID for registering Complaints by the investors

: [email protected]

COMPLIANCE WITH NON-MANDATORY REQUIREMENTS

The extent of compliance in respect of non-mandatory requirements is as follows:

i. The Board: A separate office is maintained for the Non-Executive Chairman and the Company reimburses expense incurred by the Non-Executive Chairman in performance of his duties, if applicable.

No specific tenure has been specified for the Independent Directors but they are liable to retire by rotation and seek re-election by the Shareholders.

ii. Shareholders’ Rights: Details of significant events, if any, are put up on the Company’s website together with the financial results; the financial results are also available on the SEBI’s website www.sebiedifar.nic.in. Designated E-mail ID of the grievance redressel section exclusively for the purpose of registering complaints by the Investors is [email protected]

iii. Audit Qualifications: During the year under review, there were no audit qualifications in the Company’s financial statements. The Company continues to adopt best practices to ensure a regime of unqualified financial statements.

iv. Training of Board Members: The Directors interact with the management in a very free and open manner on information that may be required by them for orientation with the business of the Company.

DECLARATION UNDER CLAUSE 49 OF THE LISTING AGREEMENT

In accordance with sub-clause I(D) of Clause 49 of the Listing Agreement with the Stock Exchanges, I, Sudhir Jatia, Managing Director of V.I.P. Industries Limited hereby confirm that the Board Members and the Senior Management personnel of the Company have affirmed compliance with the Company’s Code of Conduct for the financial year ended 31st March, 2008.

For V.I.P. INDUSTRIES LIMITED

Place : Mumbai SUDHIR JATIADate : 23rd May, 2008 Managing Director


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CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION

To the Board of Directors of V.I.P. Industries Limited

Dear Sirs,

Sub: CEO/CFO Certificate(Issued in accordance with the provisions of Clause 49 of the Listing Agreement)

We, Sudhir Jatia, Managing Director and Manoj Tulsian, Chief Financial Officer of V.I.P. Industries Limited, to the best of our knowledge and belief, certify that:

We have reviewed the financial statements, read with the cash flow statement of V.I.P. Industries Limited, for the year ended March 31, 2008 and that to the best of our knowledge and belief, we state that:

(a) (i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that may be misleading;

(ii) These statements present a true and fair view of the Company’s affairs and are in compliance with the current accounting standards, applicable laws and regulations.

(b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the Company’s code of conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting. We have evaluated the effectiveness of internal controls, if any and steps taken or proposed to be taken for rectifying these deficiencies.

(d) We have indicated to the Auditors and the Audit Committee:

(i) Significant changes in accounting policies made during the year and that the same have been disclosed suitably in the notes to the financial statements; and

(ii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee.

For V.I.P. INDUSTRIES LIMITED

Place : Mumbai SUDHIR JATIA MANOJ TULSIANDate : 23rd May, 2008 Managing Director Chief Financial Officer

Annexure to Directors’ ReportCERTIFICATE FROM AUDITORS REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

To the Shareholders of V.I.P. Industries Limited

We have examined the compliance of conditions of Corporate Governance by V.I.P. Industries Limited for the year ended on 31st March, 2008, as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion, and to the best of our information and according to the explanations given to us, we certify that the Company has complied in all material respects with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For M. L. BHUWANIA & CO.Chartered Accountants

J. P. BAIRAGRAPartner

Membership No. 12839

Place : MumbaiDate : 23rd May, 2008

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Management Discussion and Analysis Report

A. INDUSTRY STRUCTURE AND DEVELOPMENT

LUGGAGE

Domestic markets

The branded luggage market continued to grow at a healthy rate of around 20% in 2007-08, driven by the boom in travel and the increasingly important role being played by luggage in consumers’ lifestyle. The overall structure of the industry remained largely the same as in the previous year, with the 2 major players – V.I.P. and Samsonite – accounting for more than 90% of the market. During the year, a few other international players such as Roncato and Victorinox entered the Indian market, but these have not made any significant impact on the overall market structure. With the amalgamation of Aristocrat Luggage Limited (Aristocrat) with the Company, the amalgamated entity V.I.P. Industries Limited now commands a dominating share of branded luggage market and is better poised to take on competition.

Apart from Rs. 750 Crore branded luggage market, there is an unorganized luggage segment which is valued at around Rs. 1200 Crore and is also growing fast. This segment consists of numerous Chinese imported labels and local players. A large proportion of this unorganized segment operates at very low consumer prices of less than Rs. 1000 per piece.

Within the branded luggage market, two broad price segments have emerged and these two segments are behaving very differently. The Value segment (below Rs. 3000) grew by only 3% in 2007-08 due to the inroads made by Chinese labels. On the other hand, the Premium segment (above Rs. 3000) grew by around 47% in 2007-08, fuelled by the growing purchasing power of affluent consumers and the increasing lifestyle values associated with luggage.

The upswing in the economy and the burgeoning travel scenario has led to several new trends in the luggage industry. Style and aesthetics are becoming increasingly important in luggage vis-à-vis basic functionality. Evolved consumers are seeking different types of luggage for different travel occasions. There is a need for differentiated products aimed at emerging user segments such as business travellers, women travellers and youth. The “short haul” or office segment is growing rapidly and is demanding more and more specialized products.

There has been a continuing shift from hard luggage to soft luggage in the industry over the last few years and this trend is visible across all price segments. In 2007-08, as in the previous year, soft luggage was the primary driver with a growth of 35%, while hard luggage grew by only 2%. Hard luggage, however, is making a comeback of sorts especially in the Premium segment, proving that there is a need for innovative and stylish hard luggage in which its traditional plus points of strength and durability are combined with lightness and good looks.

The trends in the civil market are also reflected in the Canteen Stores Department (CSD) segment. The Company has a dominant presence in this segment. To capitalize on the rapid growth of soft luggage in CSD, which has traditionally been a hard luggage oriented market, the Company has revamped its soft luggage portfolio and introduced several new soft luggage products in CSD.

The significant changes in the retail scenario in India have also impacted the luggage industry. Hypermarkets and Departmental/Lifestyle Stores are emerging as important shopping destinations for luggage. Standalone exclusive brand outlets in high street locations as well as in malls, offer a premium shopping experience to discerning luggage consumers and are garnering a larger share of luggage sales especially in the Premium segment. The Company is evaluating its channel strategy to provide better customer service to Organised Retail Stores and get its rightful share of the growth in these channels.

International markets

The growth in international market is estimated to be 6%. This market is highly fragmented with no brand holding significant market share across the geographical areas. At the same time, regional brands have significant market share in their respective markets viz., Antler in UK, Delsey in France, Germany and UAE, Titan in Scandinavian countries, Rimova in Germany etc.

The Company through its Carlton brand has entered many of these markets and is in the process of strengthening its position. During the year, Carlton’s growth was healthy and higher than market growth in Netherlands, Belgium, Norway, Sweden, UK, Russia, Serbia, Ukraine, Czech Republic, South Africa and many other countries in Europe and Middle East.

Carlton also entered in Singapore, Malaysia, Hong Kong and Germany markets during the year.

As a part of the strategy to strengthen the Carlton brand, mono brand stores were established in different parts of the world, notably in UK and South Africa.

Investments made in these activities are expected to show results in the coming years and establish Carlton as a significant brand in international markets.

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The collaboration with Delsey S.A. to manufacture moulded luggage under Delsey brand at the Nashik plant strengthened further during the year under review. A new PP luggage was designed, manufactured and shipping commenced during the year under review.

MOULDED FURNITURE

While the overall moulded furniture market is stagnant, the gap between large national players and local/regional players is widening. The local players have a cost advantage in terms of freight and distribution due to their limited area of operation and thus are able to compete successfully in the economy segment. On the other hand, national players are moving towards launching value added/premium products and targeting large corporate buyers who are more quality conscious.

The Company continues to maintain its position as a manufacturer of high quality moulded furniture and its products command a price premium over competition.

B. OPPORTUNITIES AND THREATS

LUGGAGE

Considerable opportunities exist for the Company in the Indian luggage market across various price and usage segments. The Company has put in place strategies and plans to tap growth opportunities at both ends of the spectrum – Premium segment as well as Value segment – by leveraging its wide portfolio of brands.

In the fast growing Premium segment, regaining segment leadership from competition is a key opportunity and the Company has developed plans to significantly increase its share in this segment by leveraging the flagship V.I.P. brand and the international appeal of Delsey. V.I.P. will be clearly positioned as a premium brand, with adequate investments in brand building to increase brand salience and infuse it with contemporary, youthful values. Steps have also been taken to identify gaps in the premium portfolio and develop new products in priority segments such as premium uprights, business bags, duffels/totes and backpacks.

The explosive growth in Organised Retail offers opportunities for the Company to strengthen its presence in these emerging channels, showcase its premium products and deliver a superior and consistent brand experience to consumers at the point-of-sale. The Company has initiated an ambitious expansion plan for V.I.P. Lounges and other retail formats which will exclusively sell the entire portfolio of the Company’s brands.

Most of the leading global players in luggage have discontinued manufacturing of hard luggage and this is an opportunity for the Company to leverage its traditional strengths and capabilities in hard luggage manufacturing to not only launch innovative products and revive the hard luggage segment in India, but also become a global supplier of hard luggage.

The amalgamation of the erstwhile Aristocrat with the Company, has thrown up many opportunities for synergies and efficiencies. With the integration of the sales operations of V.I.P. and Aristocrat, the Company is now in a position to leverage the combined distribution muscle power to expand its distribution reach and increase its dominance in the Value segment.

One of the key threats continues to be the rapid growth of the unorganized segment driven by imported Chinese labels and the resulting trend towards category commoditization. With 3 value brands in its portfolio – Aristocrat, Alfa and Skybags – the Company is in a better position to focus product development, branding and distribution efforts on the Value segment and thereby counter the threat of Chinese labels.

MOULDED FURNITURE

Opportunity for growth exists in the mid-price and premium segments of the moulded furniture market. The Company has introduced a premium designer chair recently and plans have been drawn up to launch a range of metal-cum-plastic chairs.

There is an increasing need for mass seating in sporting and gaming venues. Existing stadiums are being renovated. The Company bagged the biggest order for the year from the stadium in Pune which will host the Commonwealth Youth games. Government buying of moulded furniture for computerization of education in schools is gaining momentum. The above initiatives would help the Company to boost its performance in this segment.

C. SEGMENT/PRODUCT WISE PERFORMANCE

LUGGAGE

Consequent to the amalgamation of Aristocrat Luggage Limited, the Company now has an end-to-end presence in all segments of the luggage industry. The portfolio of brands – V.I.P., Aristocrat, Alfa, Skybags and Delsey – spans across all the price points in the branded luggage market and caters to different distribution channels and customer segments.

Management Discussion and Analysis Report (Contd.)

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The sales growth in luggage in 2007-08 was driven by V.I.P., Alfa and Skybags brands. In terms of distribution channels, the growth drivers were V.I.P. Lounges and other Retail Stores (Hypermarkets and Department/Lifestyle Stores). In line with the overall market trend, soft luggage led the growth, with sales of hard luggage being flat compared to previous year.

On the export front, the Company has been able to register an impressive growth. The export turnover of the Company during the year under review was Rs. 84.6 Crores. The increase in export turnover was in spite of 10% rupee appreciation against USD.

MOULDED FURNITURE

Sales of moulded furniture in the year under review declined compared to the previous year. This was primarily driven by decline in the Institutional and Economy segments. The decline in the mid-price segment was arrested, while the Premium segment has grown significantly. There was a significant improvement in average price realizations and contribution margins over the previous years. The Commonwealth games in the year 2010 has come up as a huge opportunity for this segment.

D. OUTLOOK

LUGGAGE

The Company has drawn up a growth strategy addressing different segments of the luggage market. Gaining market share in the Premium segment is a key priority and the focus here will be on V.I.P. and Delsey brands. Aggressive plans are in place to launch several innovative new products in the Premium segment, based on an identification of gaps in the current product portfolio and emerging travel needs of consumers. The new products launched recently such as Coupe (a unique twin-section strolly which is targeted at frequent business travelers) and Diva (a range of luggage specially designed for women travelers) have been encouraging in the marketplace. A significant brand building thrust is planned behind V.I.P. brand. All these initiatives will definitely help the Company take advantage of the growth trend in the Premium segment.

The growth strategy for the Value segment will be spearheaded by Aristocrat and Alfa brands. Product development in this segment will focus on the needs of the value seeking consumers, providing consistent quality at affordable prices. The Value brands will benefit from the synergies achieved through the V.I.P. – Aristocrat sales integration and the thrust will be to expand distribution reach and increase brand visibility at the point-of-sale.

Skybags will continue to focus on the rapidly growing hypermarket channel. In the rapidly growing casual bags/backpack segment, plans have been drawn up to revitalize Footloose as a youth oriented brand.

To leverage the growth of modern retail channels, a major expansion of V.I.P. Lounges and other Retail Formats selling the entire portfolio of the Company’s brands is planned in 2008-09. The Company will be making significant investments in improving in-store execution and merchandising in order to deliver the best-in-class shopping experience to consumers, which in turn will support the premium positioning of V.I.P. brand.

The growth prospects in the CSD market are also good. The product portfolio restructuring and the thrust in soft luggage are expected to drive growth and consolidate the Company’s dominant position in CSD.

MOULDED FURNITURE

The Company is well poised to take advantage of the growing demand for lifestyle furniture. Introduction of premium furniture is planned to reinforce the premium brand image and the existing strong relationships with corporate customers will be leveraged.

E. RISKS AND CONCERNS

Most of the soft luggage sold by the Company is sourced from China. In recent months, there has been continuous escalation in soft luggage buying prices on account of strengthening of the Chinese currency and tightening of labour regulations in China. Volatility of prices of plastic and metal raw materials used in hard luggage also remains an issue. To what extent the market will accept the price increases required to take care of these factors remains to be seen, particularly in the price sensitive Value segment.

F. INTERNAL CONTROL SYSTEMS

The Company has an independent Internal Audit Department and have designed such disclosure controls and procedures that material information relating to the Company including its subsidiaries is known to the management immediately. The Company has designed control over financial reporting to provide reasonable assurance regarding reliability of the statements and the preparation of the financial statement for external purpose is made in accordance with generally accepted accounting principles. The effectiveness of the Company’s disclosure, controls and procedures is evaluated from time to time. All significant changes in accounting policies during the year, if any, have been disclosed in the notes to the financial statement.


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G. FINANCIAL PERFORMANCE

During the year under review, Aristocrat Luggage Limited and Quality Plastics Limited were amalgamated with the Company. The Appointed Date for the same was 1st April, 2007. As a result of the same, the financial results for the year ended 31st March, 2008 represent the figures of the amalgamated entity and to that extent are not comparable with the results of the previous year.

SALES

The Sales and Other Income of the Company for the year ended 31st March, 2008 was at Rs. 556.5 Crores (Previous Year Rs. 433.5 Crores). The consolidated Sales and Other Income for the year under review was Rs. 578.3 Crores (Previous Year Rs. 451.3 Crores).

EXPENDITURE

The Company continued its focus on cost management initiatives. The amalgamation of Aristocrat Luggage Limited with the Company has brought in cost synergies across manufacturing, distribution and commercial functions.

PROFIT

Profit After Tax for the year under review amounted to Rs. 20.1 Crores (Previous Year Rs. 14.4 Crores). The consolidated Profit After Tax for the year under review was Rs. 21.5 Crores (Previous Year Rs. 16.1 Crores).

H. HUMAN RESOURCE DEVELOPMENT & INDUSTRIAL RELATIONS

The year gone by was the one that of change and consolidation as an organization. During the year, Aristocrat Luggage Limited with its various business divisions and entire manpower were systematically integrated with the Company. The amalgamation was seamlessly executed and with minimum effect on employee attrition or loss of business. The relationship with the various Unions at the plants have been cordial, professional and productive while collectively agreeing to the deliverables of the Company’s business goals. Employee engagement and morale has also been kept high through various programmes and initiatives executed throughout the year. The employee strength in the amalgamated entity as on 31st March, 2008 was 1870.


Sec Part.indd 21 7/29/2008 4:43:21 PM

2322 2322

TO THE MEMBERS OF V.I.P. INDUSTRIES LIMITED

1. We have audited the attached Balance Sheet of V.I.P. Industries Limited as at 31st March, 2008, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 (together the ‘Order’) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the Directors, as on 31st March, 2008 and taken on record by the Board of Directors, we report that no Director is disqualified as on 31st March, 2008 from being appointed as a director of the Company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008;

b. in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For and on behalf of

M. L. BHUWANIA & CO.Chartered Accountants

J. P. BAIRAGRAPlace: Mumbai (Partner)Date: 23rd May, 2008 Membership No. 12839

Auditors’ Report

Sec Part.indd 22 7/29/2008 4:43:22 PM

2322 2322

Auditors’ Report (Contd.)

Annexure referred to in paragraph 3 of Auditors’ Report to the members of V.I.P. Industries Limited for the year ended 31st March, 2008.

On the Basis of the records produced to us for our verification/perusal, such checks as we considered appropriate and in terms of information and explanation given to us on our enquiries, we state that:

(i) (a) The Company is maintaining the proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets of the Company are physically verified by the Management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and discrepancies noticed between the book records and the physical inventories were not material and have been properly dealt with in the accounts.

(c) In our opinion and according to the information and explanation given to us, a substantial part of the fixed assets has not been disposed off by the Company during the year.

(ii) (a) During the year, the inventories have been physically verified by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to the book records were not material and have been properly dealt with in the books of account.

(iii) The Company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clause 4 (iii) (a) to (g) of the Order is not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

(v) (a) According to the information and explanation given to us, we are of the opinion that during the year, the particulars of the contracts/arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) According to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, and exceeding the value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public during the year covered by the audit. In respect of deposits accepted in earlier years, the Company has complied the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under. To the best of our knowledge and according to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal.

(vii) According to the information and explanation given to us, the Company has an adequate internal audit system commensurate with its size and nature of its business.

(viii) The Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956, for any of the products of the Company.

(ix) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty, Customs Duty, Cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable were outstanding at the year end for a period of more than six months from the date they became payable except Sales Tax of Rs. 5,75,775.

According to the records of the Company, there are no dues of Wealth Tax, Service Tax, Excise Duty, Customs Duty and Cess, which have not been deposited on account of any dispute.

Sec Part.indd 23 7/29/2008 4:43:23 PM

2524 2524


The disputed amounts that have not been deposited in respect of Income Tax and Sales Tax are as under:

Name of the Statue Nature of the Dues

Amount (Rs.)

Period to which it relates

Forum where dispute is pending

Assam (Finance) Sales Tax Act, 1956

Sales Tax Dues 240,051 1989-90, 1990-91 and 1993-94

Joint Commissioner of Tax

Assam (Finance) Sales Tax Act, 1956

Sales Tax Dues 838,773 1990-91 to 1992-93

Superintendent of Tax

Assam General Sales Tax Act

Sales Tax Dues 1,930,577 1993-94 and 1996-97

Deputy Commissionerate of Appeals

Bihar Sales Tax Act, 1959 Sales Tax Dues 889,714 2002-03 Commercial Tax Officer

Bihar Sales Tax Act, 1959 Sales Tax Dues 784,376 2003-04 Joint Commissioner (Appeals)

Bihar Sales Tax Act, 1959 Sales Tax Dues 111,838 2001-02 Joint Commissioner of Sales Tax

Bombay Sales Tax Act, 1959

Sales Tax Dues 4,690,643 1999-00 to 2001-02

Honourable High Court


Sales Tax Dues 952,682 1988-89 and 2002-03

Joint Commissioner (Appeals)


Sales Tax Dues 17,315,021 1988-89, 1990-91, 2000-01 and 2001-02

Sales Tax Tribunal

Central Sales Tax Act, 1956 Sales Tax Dues 5,306,870 1988-89 and 2002-03

Joint Commissioner (Appeals)

Central Sales Tax Act, 1956 Sales Tax Dues 3,621,459 1989-90, 1992-93, 1993-94 and 2002-03

Sales Tax Tribunal

Central Sales Tax Act, 1956 Sales Tax Dues 62,672 1988-89, 1990-91 & 1991-92

Superintendent of Tax

Delhi Sales Tax Act, 1975 Sales Tax Dues 100,000 1992-93 Deputy Commissioner (Appeals) Sales Tax

Income Tax Act, 1961 TDS Dues 4,233,336 2005-06 to 2007-08

Additional/Joint Commissioner (Appeals)

Income Tax Act, 1961 Income Tax Dues

13,647,520 2006-07 Deputy Commissioner of Income Tax

Income Tax Act, 1961 Income Tax Dues

1,017,178 2000-01, 2004-05 & 2005-06

Income Tax Tribunal

Karnataka Value Added Tax Act, 2003

Sales Tax Dues 243,574 Nov-07 Assistant Commissioner of Commercial Taxes

Kerala General Sales Tax Act, 1948

Sales Tax Dues 790 2001-02 & 2005-06

Commercial Tax Officer

Orissa Entry Tax Act, 1999 Entry Tax 2,729,259 2001-02 to 2004-05

Assistant Commissioner of Appeals

Orissa Entry Tax Act, 1999 Entry Tax 357,448 2001-02 to 2005-06 Sales Tax Officer

Orissa Sales Tax Act, 1947 Sales Tax Dues 666,065 2001-02 Additional Commissioner

Orissa Sales Tax Act, 1947 Sales Tax Dues 5,326,457 2000-01 to 2004-05

Assistant Commissioner of Appeals

Orissa Sales Tax Act, 1947 Sales Tax Dues 2,326,996 1996-97 to 2000-01 Assistant Commissioner of Sales Tax

Sec Part.indd 24 7/29/2008 4:43:24 PM

2524 2524


Name of the Statue Nature of the Dues

Amount (Rs.)

Period to which it relates

Forum where dispute is pending

Punjab General Sales Tax Act, 1948

Sales Tax Dues 543,042 1989-90 Sales Tax Tribunal

Uttar Pradesh Trade Tax Act, 1948

Sales Tax Dues 1,108,267 1986-87 & 1997-98 Trade Tax Tribunal

Uttar Pradesh Trade Tax Act, 1948

Sales Tax Dues 1,184,375 2005-06 Joint Commissioner (Appeals)

West Bengal Sales Tax Act, 1994

Sales Tax Dues 4,447,658 1997-98 Sales Tax Tribunal


Sales Tax Dues 163,059 1998-99 Deputy Commissionerate of Appeals


Sales Tax Dues 25,862 1997-98 Appellate & Revisional Board

(x) The Company does not have accumulated losses at the end of the financial year March 31, 2008. Further, the Company has not incurred any cash losses during the financial year ended March 31, 2008 and in the immediately preceding financial year ended March 31, 2007.

(xi) According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to banks during the year. The Company has not taken any loans from financial institutions and has not issued debentures during the year. Accordingly, clause 4 (xi) of the Order is not applicable to the Company.

(xii) In our opinion and according to the information and explanation given to us, the Company has not granted any loans and advances during the year on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, clause 4 (xii) of the Order is not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies. Accordingly, clause 4 (xiii) of the Order is not applicable to the Company.

(xiv) In our opinion and according to the information and explanation given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4 (xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanation given to us, the Company has given guarantees in earlier years, which remain enforceable, for loans taken by others from banks or financial institutions; we are of the opinion that the terms and conditions thereof are prima-facie not prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanation given to us, term loans have been applied for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

(xviii) The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31, 2008.


M. L. BHUWANIA & CO.Chartered Accountants

J. P. BAIRAGRAPlace: Mumbai (Partner)Date: 23rd May, 2008 Membership No. 12839

Sec Part.indd 25 7/29/2008 4:43:25 PM

Please check thoroughly. Vakils will not be responsible for errors not noted on this proof.

2726 2726

Balance Sheet as at March 31, 2008

(Rupees in ’000)

Schedule 2008 2007

SOURCES OF FUNDS

Shareholders’ Funds:

Share Capital A 282,635 254,618

Reserves and Surplus B 1,045,297 871,935

1,327,932 1,126,553

Loan Funds:

Secured Loans C 924,126 953,643

Unsecured Loans D 331,203 139,663

1,255,329 1,093,306

Deferred Tax Liabilities (Net) E 35,851 45,214

TOTAL 2,619,112 2,265,073

APPLICATION OF FUNDS

Fixed Assets: F

Gross Block 2,430,872 2,164,369

Less: Accumulated Depreciation/Amortisation 1,545,803 1,333,907

Net Block 885,069 830,462

Capital Work-in-progress 24,669 24,182

909,738 854,644

Investments G 38,084 37,584

Current Assets, Loans and Advances:

Inventories H 789,448 685,455

Sundry Debtors I 1,120,208 867,930

Cash and Bank Balances J 71,340 66,003

Other Current Assets K 91,476 59,317

Loans and Advances L 410,923 392,083

2,483,395 2,070,788

Less: Current Liabilities and Provisions:

Current Liabilities M 816,634 740,334

Provisions N 125,334 90,987

941,968 831,321

Net Current Assets 1,541,427 1,239,467

Miscellaneous Expenditure O 129,863 133,378

(to the extent not written off or adjusted)

TOTAL 2,619,112 2,265,073

Notes to Accounts W

Accounting Policies X

As per our Report of even date attached

for M. L. BHUWANIA & CO. Dilip Piramal Chairman

Chartered Accountants Sudhir Jatia Managing Director

Vijay Kalantri Director

J. P. BAIRAGRA G. L. Mirchandani Director

(Partner) S. P. Trivedi Company Secretary

Membership No. : 12839

Place : Mumbai Place : Mumbai

Dated : 23rd May, 2008 Dated : 23rd May, 2008

Accounts.indd 26 7/29/2008 4:47:10 PM

2726


2726

Profit and Loss Account for the year ended March 31, 2008

(Rupees in ’000)

Schedule 2008 2007

INCOME:

Income from Operations P 5,520,003 4,246,332

Other Income Q 44,705 88,491

5,564,708 4,334,823

EXPENDITURE:

Cost of Materials R 2,776,578 2,205,604

Payments to and Provisions for Employees S 526,986 424,520

Administrative, Selling and Other Expenses T 1,659,867 1,201,013

Interest (Net) U 132,146 96,098

Depreciation/Amortisation 147,801 136,310

5,243,378 4,063,545

Profit before Tax and Extraordinary items 321,330 271,278

Less : Extraordinary items V 75,811 90,233

Profit before Tax 245,519 181,045

Less : Provision for Tax:

Current Tax [including Wealth Tax Rs. 300,000 (previous year Rs. 400,000)]

32,500 33,500

Deferred Tax 1,116 (3,950)

Fringe Benefit Tax 10,910 8,220

Profit after Tax 200,993 143,275

Add : (Short) / Excess provision for Tax 13,737 (1,710)

Add : Balance of profit brought forward 150,738 171,350

Add : Balance of profit & loss account taken over on Amalgamation (Refer Note No. 25 of Schedule ‘W’)

37,758 162,295

AMOUNT AVAILABLE FOR APPROPRIATION 403,226 475,210

APPROPRIATIONS:

Proposed Dividend 84,790 63,654

Tax on Proposed Dividend 14,410 10,818

General Reserve 25,000 250,000

Balance carried to Balance Sheet 279,026 150,738

403,226 475,210

Earnings per share, Rupees: (Refer Note No. 18 of Schedule ‘W’)

Basic/Diluted Earnings Per Share excluding Extraordinary items (net of tax expenses) 9.56 9.36

Basic/Diluted Earnings Per Share including Extraordinary items 7.11 5.76

Notes to Accounts W











Accounts.indd 27 7/29/2008 4:47:11 PM


2928 2928

Cash Flow Statementfor the year ended March 31, 2008

(Rupees in ’000)

2008 2007

A. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax & Extraordinary items 321,330 271,278

Adjusted for :


Investment income (4) (21,976)

Interest charged (Net) 132,146 96,098

Provision for Warranty 601 26

Provision for Leave Encashment 391 (1,369)

Provision for Doubtful Debts 4,065 –

(Gain)/Loss on Exchange rate fluctuation (7,174) (12,118)

(Profit)/Loss on sale of Investments (5) –

Provision for diminution of Investments written back – 7,400

(Profit)/Loss on sale/disposal of fixed assets 5,044 5,522

Miscellaneous expenditure written off – 1,880

282,865 211,773

Operating profit before working capital changes 604,195 483,051

Changes in :

Trade receivables (107,909) (252,532)

Inventories 76,363 (180,648)

Trade payables & Provisions (143,122) 170,238

Loans and Advances (23,011) 42,012

Other Current Assets (32,073) (7,228)

(229,752) (228,158)

Cash generated from operations 374,443 254,893

Direct taxes paid (Net of refund received) (37,738) (57,892)

Cash flow before extraordinary and prior period items 336,705 197,001

Extraordinary/prior period items (63,756) (140,701)

NET CASH FROM OPERATING ACTIVITIES 272,949 56,300

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets/ Payment towards CWIP (112,781) (103,984)

Purchase of Investments (500) –

Sale of Fixed Assets 11,504 7,657

Sale of Investments 5 275,995

Interest received 6,826 43,871

Dividend received 4 21,976

NET CASH FROM INVESTING ACTIVITIES (94,942) 245,515

Accounts.indd 28 7/29/2008 4:47:12 PM

2928


2928

(Rupees in ’000)

2008 2007

C. CASH FLOW FROM FINANCING ACTIVITIES

Interest paid (145,651) (134,150)

Proceeds from exercise of Employee Stock Options – 18,000

Proceeds/(Repayments) from/of borrowings (net) 6,630 (99,764)

Dividend paid (inclusive of Dividend Tax) (74,375) (73,813)

NET CASH FROM FINANCING ACTIVITIES (213,396) (289,727)

NET CHANGES IN CASH AND CASH EQUIVALENTS(A+B+C) (35,389) 12,088

CASH AND CASH EQUIVALENTS – OPENING BALANCE 66,003 32,910

Add : Taken over on Amalgamation 40,726 21,005

CASH AND CASH EQUIVALENTS – CLOSING BALANCE 71,340 66,003

(35,389) 12,088

Notes:

(1) Closing Balance of Cash & Cash Equivalents includes exchange rate difference loss of Rs. 78,577 (previous year loss of Rs. 1,03,043)

(2) Cash and Cash Equivalents include :

2008 2007

Cash and Cheques on Hand 5,880 4,816

Balances with Scheduled Banks in :

Current Accounts 29,778 22,808

Margin Money Accounts 9,917 5,965

Unclaimed Dividend Accounts 5,421 5,323

45,116 34,096

Remittance-in-Transit 20,344 27,091

Total 71,340 66,003

(3) Cash and Cash Equivalents as on 01/04/2007 of erstwhile Aristocrat Luggage Ltd. and Quality Plastics Ltd. taken over on Amalgamation. (See Note 4 below)

(4) The Amalgamation of erstwhile Aristocrat Luggage Ltd. and Quality Plastics Ltd. with the Company is a non-cash transaction. (Refer Note No. 25 of Schedule ‘W’).

(5) In view of the aforesaid Scheme of Amalgamation and Arrangement with effect from 1st April 2007, the figures for the current year are not comparable with the figures of the previous year.

(6) Previous year’s figures have been regrouped and/or rearranged wherever considered necessary.










Cash Flow Statement (Contd.)for the year ended March 31, 2008

Accounts.indd 29 7/29/2008 4:47:13 PM


3130 3130

(Rupees in ’000)

2008 2007

Schedule ‘A’SHARE CAPITAL

Authorised:

49,300,000 Equity Shares (previous year 36,800,000) of Rs. 10/- each 493,000 368,000

1,000 9% Redeemable Cumulative Preference shares of Rs. 1,000/- each 1,000 1,000

494,000 369,000

Issued,Subscribed and Paid-Up:

28,263,463 (previous year 25,461,813) Equity Shares of Rs. 10/- each fully paid-up 282,635 254,618

282,635 254,618

Notes:Of the above Equity Shares:

(a) 30,000 Equity Shares (previous year 30,000) of Rs. 10/- each were allotted as fully paid-up shares, pursuant to a contract for consideration other than cash, and

(b) 3,525,000 Equity Shares (previous year 3,525,000) of Rs. 10/- each were allotted as fully paid-up Bonus Shares by way of capitalisation of reserves.

(c) Nil Equity Shares (previous year 600,000) of Rs. 10/- each were issued pursuant to Employee Stock Option Scheme.

(d) Nil Equity Shares (previous year 16,800,000) of Rs. 10/- each were issued to shareholders of erstwhile Blow Plast Ltd. pursuant to Scheme of Amalgamation.

(e) 2,801,650 Equity Shares (previous year Nil) of Rs. 10/- each were issued to shareholders of erstwhile Aristocrat Luggage Ltd. during the year. (Refer Note No. 25 of Schedule ‘W’)

(f) Nil Equity Shares (previous year 7,493,187) of Rs. 10/- each held by erstwhile Blow Plast Ltd. were cancelled pursuant to Amalgamation.

Schedule ‘B’RESERVES AND SURPLUS

Capital Reserve :

As per last Balance Sheet 1,496 1,496

Capital Incentive :


Add : Taken over consequent to Amalgamation* – 932

9,432 9,432

Securities Premium Account :


Add : Received on exercise of Stock option by the Employee – 12,000

Add : Transferred from Employee Stock Option Outstanding – 14,280

Add : Taken over consequent to Amalgamation* – 193,221

335,251 335,251

Capital Redemption Reserve :

As per last Balance Sheet 1,502 2

Add : Taken over consequent to Amalgamation * – 1,500

1,502 1,502

General Reserve :


Add : Transferred from Profit and Loss Account 25,000 250,000

Add : Taken over consequent to Amalgamation * 27,593 95,321

Less : Adjustment on account of liability in respect of Employee Benefits as on 31/03/2007 (net of deferred tax) as per Revised AS-15 2,363 –

Less : Adjustment on account of Scheme of Amalgamation (Refer Note No. 25 of Schedule ‘W’) 5,156 175,656

418,590 373,516

Accounts.indd 30 7/29/2008 4:47:14 PM

3130


3130

(Rupees in ’000)

2008 2007

Schedule ‘B’ (Contd.)

Employee Stock Options Outstanding :

As per last Balance Sheet – 14,280

Less : Transferred to Securities Premium Account – 14,280

– –

Profit and Loss Account:

Balance as per Account annexed 279,026 150,738

1,045,297 871,935

* Reserves taken over consequent to the Scheme of Amalgamation of Aristocrat Luggage Ltd. (previous year Blow Plast Ltd.) with the Company. (Refer Note No. 25 of Schedule ‘W’)

Schedule ‘C’SECURED LOANS

A. Term Loans:

(1) Foreign Currency loan from IDBI 18,421 46,582

– Refer Note No. 1

(2) ECB loan from Axis Bank Ltd. 65,195 86,960


(3) Foreign Currency Corporate loan from State Bank of India 66,332 89,859


(4) Corporate term loan from State Bank of India 79,600 100,000


(5) Corporate term loan from State Bank of India – 25,750


(6) Corporate term loan from State Bank of India 26,296 –


(7) Term loan from Axis Bank Ltd. 38,528 61,111


294,372 410,262

B. Working Capital Facilities from Banks 629,754 543,381


924,126 953,643

Notes :

1. The foreign currency loan from Industrial Development Bank of India is secured by mortgage of movable and immovable assets of the Company located at Sinnar, Jalgaon and Nasik both present and future (save and except book debts) ranking pari passu subject to the charges created/to be created in favour of the Company’s bankers on current assets for working capital facilities.

2. ECB loan from Axis Bank Ltd. is secured by first charge on pari passu basis on all the movable and immovable fixed assets of the Company located at Haridwar (save and except book debts) and subject to prior charge created in favour of the Company’s bankers on current assets for working capital facilities.

3. The Corporate Rupee loan and Foreign currency loan from State Bank of India is secured by first pari passu charge on fixed assets of the Company located at Plants in Nasik, Sinnar and Haridwar (save and except book debts) and subject to charge created in favour of the Company’s bankers on current assets for working capital facilities.

4. The Corporate Loan from State Bank of India is secured by the exclusive first charge on the Company’s specific immovable property.

5. The Corporate Loan from State Bank of India taken over on amalgamation is secured by the exclusive first charge on the Company’s immovable property situated at Haridwar, Satara & Paithan.

6. Term loan from Axis Bank is secured against exclusive charge on specific movable fixed asset at Nasik and by a first pari passu charge on the movable fixed assets of the Company at Nagpur.

7. Working Capital facilities from banks are secured by hypothecation of Inventories & assignment of Book Debts ranking pari passu inter-se and by second charge on the fixed assets of the Company located at Nasik, Nagpur, Jalgaon, Sinnar, Haridwar, Satara & Paithan.

Accounts.indd 31 7/29/2008 4:47:15 PM


3332 3332

(Rupees in ’000)

2008 2007

Schedule ‘D’UNSECURED LOANS

1. Fixed Deposits 19,828 89,163

2. Short Term Deposits from Limited Companies 10,500 500

3. Short Term loan from banks 300,000 50,000

4. Sales Tax Deferral Package Scheme of Incentives* 875 –

331,203 139,663

* Amount payable within one year Rs. Nil (previous year Rs. Nil)

Schedule ‘E’DEFERRED TAX LIABILITIES (Net)

Deferred Tax Liabilities

On account of :

– Depreciation/Amortisation 62,394 70,862

(a) 62,394 70,862

Deferred Tax Assets

On account of :

– Expenses allowable on payment basis 9,554 6,241

– Provision for Doubtful Debts 1,824 443

– Voluntary Retirement Scheme Expenses 13,370 18,253

– Merger Expenses 1,795 711

(b) 26,543 25,648

Net (a – b) 35,851 45,214

Schedule ‘F’FIXED ASSETS

GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK

As at 31st March,

2007

Taken over consequent to Amalga-

mation #

Additions Deduc- tions/

Adjust- ments

As at 31st March,

2008

As at 31st March,

2007


mation #

For the year

Deduc- tions/

Adjust- ments

As at 31st March,

2008

As at 31st March,

2008

As at 31st March,

2007

Freehold Land 210 59 – – 269 – – – – – 269 210

Leasehold Land 26,385 11,985 2,023 – 40,393 – – – – – 40,393 26,385

Buildings 286,447 55,373 18,673 8,391 352,102 87,618 12,722 10,995 1,682 109,653 242,449 198,829

Plant and Machinery 864,860 103,462 6,937 67,173 908,086 635,705 67,619 40,677 63,387 680,614 227,472 229,155

Data Processing Machines 119,606 3,921 7,826 4,301 127,052 92,502 2,981 7,793 3,797 99,479 27,573 27,104

Moulds and Dies 495,368 70,885 50,082 3,909 612,426 366,730 58,477 40,874 456 465,625 146,801 128,638

Furniture, Fixture and Equipments 177,538 7,163 19,136 14,758 189,079 61,567 4,383 30,786 10,273 86,463 102,616 115,971

Vehicles 34,052 1,903 12,361 7,147 41,169 10,710 953 3,602 3,445 11,820 29,349 23,342

Assets held for disposal 40,140 – – – 40,140 33,718 – – – 33,718 6,422 6,422

Intangible Assets:

Patents and Trademarks 88,232 – – – 88,232 41,155 – 6,709 – 47,864 40,368 47,077

Computer Software 31,531 – 393 – 31,924 4,202 – 6,365 – 10,567 21,357 27,329

2,164,369 254,751 117,431 105,679 2,430,872 1,333,907 147,135 147,801 83,040 1,545,803 885,069 830,462

Previous Year 1,628,687 221,096 376,972 62,386 2,164,369 1,125,178 121,625 136,310 49,206 1,333,907 830,462

Notes:(1) Buildings include: (a) Original cost of Rs. 5,890,497 (previous year Rs. 12,663,037) being the cost of ownership flats represented by 10 (previous year 15) shares of Rs. 50 each of Co-operative

societies. (b) One premise of Rs. 2,664,863 (previous year Rs. 447,475) acquired on lease basis.(2) Assets held for disposal include Plant & Machinery items having original cost of Rs. 40,140,000 (previous year Rs. 40,140,000) given on lease having net realisable value of

Rs. 6,422,400 (previous year Rs. 6,422,400), shown at lower of cost and net realisable value.(3) # Taken over on Amalgamation consequent to the Scheme of Amalgamation of Aristocrat Luggage Ltd. (previous year Blow Plast Ltd.) with the Company. (Refer Note No. 25 of

Schedule ‘W’).

Accounts.indd 32 7/29/2008 4:47:16 PM

3332


3332

(Rupees in ’000)

2008 2007

Face ValueRupees Nos. Nos.

Schedule ‘G’

INVESTMENTS (At Cost)

Long term and Non-Trade

Quoted:

(a) Equity Shares :

(1) Windsor Machines Ltd. 10 2,580,730 185,159 2,580,730 185,159

(2) Kemp & Co. Ltd. (18 shares sold during the year) 10 1,909 21 1,927 21

185,180 185,180

(b) Bonds:

6.75% Tax Free US64 Bonds. 100 137,567 13,756 137,567 13,756

Total Value of Quoted Investments 198,936 198,936

Unquoted :

(a) Equity Shares:

(1) Dinnette Exclusive Club Pvt. Ltd. 100 500 50 500 50

(2) Taluka Audyogik Sahakari Vasahat. Maryadit, Sinnar

100 10 1 10 1

(3) The Saraswat Co-Op. Bank Ltd. 10 2,000 20 2,000 20

(4) The Shamrao Vithal Co-Op. Bank Ltd. 25 100 2 100 2

(5) Investment in Wholly Owned Subsidiary Company:

(i) Carlton Travel Goods Ltd. (Face Value of GBP 1) – 200,000 16,556 200,000 16,556

(ii) Blow Plast Retail Ltd. (50,000 shares purchased during the year) 10 50,000 500 – –

(6) Jindal Southwest Holdings Ltd. 10 2,250 – 2,250 –

17,129 16,629

(b) Joint Venture

Equity shares:

VIP Nitol Industries Ltd. (Face Value of BDT 1,000) 25,003 21,190 25,003 21,190

(c) Others

National Saving Certificate & Kisan Vikas Patra

At Face Value 21 21

Total Value of Unquoted Investments 38,340 37,840

Total Value of Investments 237,276 236,776

Less: Provision for diminution in value of Investments 199,192 199,192

Net Value of Investments 38,084 37,584

Note: Aggregate market value of Quoted Investments Rs. 52,028,264 (previous year Rs. 48,910,945)

Accounts.indd 33 7/29/2008 4:47:17 PM


3534 3534

(Rupees in ’000)

2008 2007

Schedule ‘H’INVENTORIES

(As certified by a Director)

(Valued at lower of cost and net realisable value unless otherwise stated)

Stores and Spares & Loose Tools 7,150 9,375

Raw Materials & Components 151,725 155,483

Packing Materials 3,779 4,645

Work-in-Process (at estimated cost) 49,706 66,660

Scrap (at net realisable value) 418 445

Finished Goods 576,670 448,847

789,448 685,455

Schedule ‘I’SUNDRY DEBTORS (unsecured)

Over Six Months:

Considered Good 249,613 140,850

Considered Doubtful 5,367 1,302

254,980 142,152

Other debts:


1,125,575 869,232

Less: Provision for Doubtful Debts 5,367 1,302

1,120,208 867,930

Amount due from subsidiary Rs. 452,671,473 (previous year Rs. 359,018,976)

Schedule ‘J’CASH AND BANK BALANCES




Margin Money Accounts 9,917 5,965


45,116 34,096


71,340 66,003

Schedule ‘K’OTHER CURRENT ASSETS

Interest Receivable* (Includes interest accrued on investments Rs. 309,520, previous year Rs. 830,051)

5,683 5,598

Export Incentive Receivable 13,156 6,925

Others 72,637 46,794

91,476 59,317

* Interest Receivable includes an amount due from Subsidiary Rs. 2,879,808 (previous year Rs. 3,082,844)

Accounts.indd 34 7/29/2008 4:47:18 PM

3534


3534

(Rupees in ’000)

2008 2007

Schedule ‘L’LOANS AND ADVANCES

(Unsecured, considered good, unless otherwise stated)

Deposit with Corporate Bodies & Others 1,703 1,503

Advance Recoverable in cash or in kind or for value to be received* 213,338 199,480

Advances for Capital Expenditure 172 4,495

Balance with Central Excise 1 1

Loans and advances to staff 5,566 4,970

Deposits:

Public Bodies 12,153 11,374

Others 117,468 94,210

129,621 105,584

Advance Income Tax (net of provisions)** 60,522 76,050

410,923 392,083

* Includes Rs. 1,630 (previous year Nil) due from a Subsidiary.** Advance Income Tax is net of Provision for tax of Rs. 519,336,783 (previous year Rs. 509,815,800).

Schedule ‘M’CURRENT LIABILITIES

Sundry Creditors 542,939 475,571

Other Liabilities 188,667 131,294

Temporary Bank Overdraft 41,047 43,628

Advances and deposits from customers 30,646 70,035

Investor Education & Protection Fund*

Unclaimed Dividend 5,421 5,324

Unclaimed Interest on Fixed Deposits 1,134 1,116

Unclaimed Fixed Deposits 2,332 2,120

8,887 8,560

Interest accrued but not due on loans 4,448 11,246

816,634 740,334

(1) Sundry Creditors include amount due to Subsidiary Rs. 6,675,483 (previous year Rs. 21,100,828)

(2) * There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as on 31st March, 2008.

(3) Refer Note No. 5 of Schedule ‘W’ for disclosure under the Micro, Small and Medium Enterprises Development Act, 2006

Schedule ‘N’

PROVISIONS

Provision for Proposed Dividend 84,790 63,654

Provision for Tax on Proposed Dividend 14,410 10,818

Provision for Leave encashment 24,332 15,314

Provision for Warranty (Refer Note No. 24 of Schedule ‘W’) 1,802 1,201

125,334 90,987

Schedule ‘O’MISCELLANEOUS EXPENDITURE


Voluntary Retirement Scheme 129,863 133,378

129,863 133,378

Accounts.indd 35 7/29/2008 4:47:19 PM


3736 3736

(Rupees in ’000)

2008 2007

Schedule ‘P’INCOME FROM OPERATIONS

Sales 5,672,308 4,389,597

Less : Excise Duty 239,038 225,110

Net Sales 5,433,270 4,164,487

Income from Job work 68,628 73,022

Export Incentives 18,105 8,823

5,520,003 4,246,332

Schedule ‘Q’OTHER INCOME

Dividend from Long term (Non-trade) Investments 4 21,976

Profit on sale of Long term (Non trade) Investments 5 –

Profit on sale of Fixed Assets (Net) 651 991

Exchange Rate Difference (Net) – 10,051

Miscellaneous Income 44,045 55,473

44,705 88,491

Schedule ‘R’COST OF MATERIALS

Raw Materials & Components Consumed :

Opening Stock 155,483 101,219

Add : Stock taken over on Amalgamation 64,563 –

Purchases 1,417,555 1,423,313

1,637,601 1,524,532

Less : Sales 19,913 5,632

Closing Stock 151,725 155,483

1,465,963 1,363,417

Purchase of Finished Goods 1,221,527 903,994

Decrease/(Increase) in stock:

Opening Stock

Finished goods 448,847 258,122

Add : Stock taken over on Amalgamation 114,085 112,457

Less : VAT receivable on Opening Stock – 1,760

562,932 368,819

Work-in-process 66,660 21,802

Scrap 445 360

630,037 390,981

Less : Closing stock

Finished goods 576,670 448,847

Work-in-process 49,706 66,660

Scrap 418 445

626,794 515,952

3,243 (124,971)

Packing Materials Consumed 85,845 63,164

2,776,578 2,205,604

Schedule ‘S’PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

Salaries, Wages and Bonus 466,065 357,122

Contribution to Provident and Other Funds 30,356 40,496

Welfare Expenses 30,565 26,902

526,986 424,520

Accounts.indd 36 7/29/2008 4:47:20 PM

3736


3736

(Rupees in ’000)

2008 2007

Schedule ‘T’ADMINISTRATIVE, SELLING AND OTHER EXPENSES

Stores and Spares Consumed 30,465 34,667

Power and Fuel 110,001 91,164

Repairs and Maintenance to :

Plant and Machinery 8,824 4,003

Buildings 4,254 4,337

Others 33,621 18,270

46,699 26,610

Freight, Handling and Octroi 344,006 263,649

Discounts & Commission on Sales 510,027 265,689

Insurance 6,109 8,048

Rent including Lease rentals 127,903 109,369

Rates and Taxes 12,127 9,496

Advertisement and Publicity 138,436 112,043

Travelling & Conveyance 94,894 76,220

Legal & Professional Fees 20,749 22,050

Directors’ Sitting Fees 425 370

Auditors’ Remuneration (Refer Note No. 15 of Schedule ‘W’) 1,626 918

Loss on Obsolescence of Fixed Assets 5,695 6,514

Exchange Rate Difference (Net) 10,974 –


Provision for Dimunition in value of Investment – 7,400

Miscellaneous Expenses 195,666 166,806

1,659,867 1,201,013

Schedule ‘U’

INTEREST (NET)

Fixed Loans 54,033 49,037

Banks 77,199 61,518

Others 7,621 18,317

138,853 128,872

Less : Interest Income:

Interest received on Long-term (Non-Trade) Investments (Tax Deducted at source Rs. Nil, previous year Rs. 5,353,325) 929 20,612

Interest received on I.T. Refunds, loans & deposits (Tax Deducted at source Rs. 405,586, previous year Rs. 1,406,163) 5,778 12,162

6,707 32,774

132,146 96,098

Schedule ‘V’

EXTRAORDINARY ITEMS

Voluntary Retirement Expenses 75,811 90,233

75,811 90,233

Accounts.indd 37 7/29/2008 4:47:20 PM

3938 3938

(Rupees in ’000)

2008 2007Schedule ‘W’

NOTES TO THE ACCOUNTS

1 Estimated amounts of Contracts remaining to be executed on Capital Account and not provided for (net of advances). 4,019 2,625

2 Contingent Liabilities not provided for in respect of:

a) Disputed Income Tax liability 53,034 31,738

b) Counter Guarantees given to the bankers — 6,938

c) Disputed Sales Tax liability 61,376 38,069

d) Guarantee given by the Company on behalf of a corporate body to a financial institution 1,525 159,115

e) Guarantee given by the Company on behalf of subsidiary 10,220 —

f) Bills discounted with Banks — 8,357

g) Bills factored with Bank 135,743 133,654

h) Bonds issued under EPCG scheme 55,240 50,789

i) Disputed Excise duty liability 37,145 38,576

j) Disputed Provident Fund Contribution on Leave Encashment — 1,089

k) Claims against the Company not acknowledged as Debts 4,122 291

3 During the year, the Company has made a provision of Rs. 9,090,219 (previous year Rs. 7,846,929) for excise duty on closing stocks, other than goods meant for exports, in bonded warehouse. The excise duty is also included in valuation of the inventories. There is no effect on the profits for the year.

4 Managerial Remuneration:

Particulars of remuneration paid to Managing Director and Executive Director

Salary and allowances 9,937 6,742

Commission 1,350 1,350

Contribution to Provident and other funds* 828 586

Perquisites** 1,433 696

Total 13,548 9,374

* Exclusive of provision of future liabilities in respect of gratuity which are based on actuarial valuation done on overall Company basis.

** Evaluated as per Income Tax Rules, 1962, where necessary.

Computation of Net Profits in accordance with Section 349 of the Companies Act, 1956 and calculation of the Directors Commission thereon for the year ended 31st March, 2008:

Profit before Tax for the year as per Profit and Loss Account 245,519

Add: Directors remuneration 13,548

Directors Fees 425

Provision for doubtful debts 4,065

(Profit)/Loss on sale of fixed assets (651)

Loss on obsolescence of fixed assets 5,695

(Profit)/Loss on sale of investments (5)

Deferred VRS expenses 75,811 98,888

Net Profit as per Section 198 of the Companies Act, 1956 344,407

Commission 1% of Net Profits 3,444

Commission payable to Directors as directed by the Board of Directors 1,350

Notes.indd 38 7/29/2008 4:41:43 PM

3938 3938

Schedule ‘W’ (Contd.)

5 The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the year end together with interest paid/payable under this Act, have not been given. The same has been relied upon by the Auditors.

6 Licensed and Installed Capacity: Unit Licensed capacity*

Installed capacity**

Production

Injection/Vaccum Moulded Plastic Goods (in ’000) Tonnes 38 28 4178 nos.

(30) (23) (3701 nos.)

Flexible Luggage (in ’000) Numbers 420 — —

(420.) — —

Moulds, Tools, Jigs & Fixtures Numbers 520 520 98

(520) (520) (82)

Element Panels (in ’000) M.T. 3 2 —

(3) (2) —

Notes:

* Licensed Capacity includes capacities enhanced by the Industrial Entrepreneur’s Memorandum (IEM) submitted under the New Industrial Policy.

** Installed Capacity has been certified by a Director and relied upon by the Auditors.

7 The Ministry of Corporate Affairs, Government of India vide its Order No. 46/6/2008-CL-III dated 12th May, 2008 issued under Section 211(4) of the Companies Act, 1956, has exempted the Company from disclosure of details required to be provided under Paragraph 3(i)(a), 3(ii)(a)(1), 3(ii)(a)(2), 3(ii)(b) and 3(ii)(d) of the Part II of Schedule VI to the Companies Act, 1956.

8 Raw Materials and Components Consumed:

%2008Value

(Rupees in ’000)%

2007Value

(Rupees in ’000)

Raw Materials

Imported* 14 132,777 7 63,695

Indigenous 86 783,382 93 801,375

100 916,159 100 865,070

Components

Imported* 1 4,193 — 1,440

Indigenous 99 545,611 100 496,907

100 549,804 100 498,347

Total 1,465,963 1,363,417

* Excludes imported items purchased locally

9 Stores and Spares Consumed:

Imported* 6 1,676 6 2,109

Indigenous 94 28,789 94 32,558

100 30,465 100 34,667

* Excludes imported items purchased locally.

Notes.indd 39 7/29/2008 4:41:44 PM

4140 4140


(Rupees in ’000)

2008 2007

10 Value of imports on C.I.F. basis:


Capital Goods 8,620 37,086

Stores & Spares 1,573 1,368

11 Expenditure in foreign currency:

Travelling 6,302 5,809

Interest 15,992 14,462

Advertisement 24,556 21,515

Commission 1,158 1,059

Royalty 10,119 7,246

Capital Assets 372 416

Professional Fees 4,174 1,425

Salary 24,734 16,293

Others 32,183 27,827

Note: Capital assets of Rs. 371,536 (previous year Rs. 415,731) have been capitalised during the year.

12 a) Amount remitted in foreign currency on account of Dividend (net of Income Tax) 37 29

b) No. of non-resident shareholders 118 123

c) No. of shares held by the shareholders 14650 14650

d) Dividend remitted relates to the year 2006-07 2005-06

13 Earnings in foreign currency:

Exports of Finished Goods, Components & Other Items (on F.O.B. basis) 845,632 691,736

Interest 11 3

Insurance 90 65

Freight 30,569 16,246

14 Research & Development Expenditure:

Revenue expenditure charged to Profit & Loss A/c 26,348 26,408

Capital expenditure included in fixed assets — 3,839

15 Auditors’ Remuneration:

Audit Fees (including Limited Review) (Refer Note) 1,000 467

Tax Audit Fees 75 75

Certification & Other services 339 184

Income Tax representation 212 192

Towards Service Tax (Refer Note) 201 116

1,827 1,034

Note: 1. Out of above, service tax credit of Rs. 200,971 (previous year Rs. 116,084), has been taken and the same has not been debited to Profit & Loss Account.

2. The above includes Rs. Nil (previous year Rs.145,758) paid by the erstwhile Aristocrat Luggage Ltd. (previous year Blow Plast Ltd.) to its Auditors.

16 During the Financial Year ended 31st March, 2008, there is no allotment of ESOP. For the financial year ended 31st March, 2007, the Company had allotted 600,000 fully paid up Equity Shares of Rs.10 each at a Premium of Rs. 20 per Share for Cash. The shares have been allotted pursuant to exercise of options granted under The Employee Stock Option Scheme 2004 and accordingly the nominal value of the Issued, Subscribed & Paid up Equity Share Capital stands increased by Rs. 6,000,000 and an amount of Rs. 12,000,000 has been credited to the securities premium account. Further the balance in the Employee stock options outstanding of Rs. 14,280,000 was transferred to the Securities Premium Account on allotment of 600,000 shares.

The Details of the Employee Stock Option are as under:2008

No. of Shares2007

No. of Shares

Outstanding at the beginning of the period — 600,000

Add: Option granted during the year — —

Less: Exercised during the period — 600,000

Outstanding at the end of the period — —

Notes.indd 40 7/29/2008 4:41:46 PM

4140 4140


17 Related Parties Disclosure :1. Name of Related Parties & description of relationship

VIP Nitol Industries Ltd. Joint VentureCarlton Travel Goods Ltd. (A) Wholly owned Subsidiary CompanyBlow Plast Retail Ltd. (B) Wholly owned Subsidiary CompanyAristocrat Luggage Ltd. (since amalgamated with VIP Industries Ltd.)

Enterprise in which Key Management Personnel had significant influence.

Key Management Personnel:Mr. Sudhir Jatia Managing DirectorMr. P. K. Ramakrishnan Executive Director

Relatives of Key Management Personnel:Mrs. Kalpana Ramakrishnan Wife of Mr. P. K. Ramakrishnan

2. The following transactions were carried out with related parties

(Rupees in ’000)

Joint Venture

Wholly owned

Subsidiary Company (A)

Carlton

Wholly owned

Subsidiary Company (B)

B P Retail

Enterprise in which

Key Mngmt Personnel

had significant influence

Key Mgt.

Personnel

Relative of Key Mgt.

Personnel

Balances at the year end:Loans/Advances Receivable as on 31st March, 2008 4,312 — — — — —

(4,487) — — — — —Equity Contribution as on 31st March, 2008 3,790 16,556 500 — — —(Net of provision for diminution) (3,790) (16,556) — — — —Creditors as on 31st March, 2008 — 6,675 — — — —

— (21,101) — — — —Debtors as on 31st March, 2008 — 452,671 — — — —

— (359,019) — (18,723) — —Interest Receivable as on 31st March, 2008 — 2,880 — — — —

— (3,083) — — — —Deposit given against leased house — — — — — 200

— — — — — (200)Advance given — — 2 — — —

— — — — — —Transactions during the year:Technical Fees charged — — — — — —

— — — (224) — —Sale of FG, Components, Accessories & Spares — 481,803 — — — —

— (476,976) — (5,081) — —Remuneration paid to:Mr. Sudhir Jatia — — — — 9,091 —

— — — — (6,049) —Mr. P. K. Ramakrishnan — — — — 4,457 —

— — — — (3,325) —Provision for Diminution in value of Investment — — — — — —

(7,400) — — — — —Rent Paid — — — — — 360

— — — — — (360)600,000 equity shares of Rs. 10 each issued under ESOS at a premium of Rs. 20 each to Mr. Sudhir Jatia — — — — — —

— — — — (18,000) —Sale of fixed asset — — — — 75 —

— — — — — —Expenses reimbursed/incurred — 15,757 — — — —

— (22,336) — (758) — —Job Work charges received — — — — — —

— — — (1,744) — —Purchase of Components — — — — — —

— — — (608) — —Purchase of Finished Goods — — — — — —

— — — — — —Advances given — — 10 — — —

— — — — — —Advances received back — — 8 — — —

— — — — — —Balance Written off during the year — — — — — —

(4,096) — — — — —Guarantee Issued:Guarantee given by the Company on behalf of subsidiary — 10,220 — — — —

— — — — — —Note: 1. Related party relationship is as identified by the Company and relied upon by Auditors. 2. Previous year figures are given in brackets.

Notes.indd 41 7/29/2008 4:41:47 PM

4342 4342


(Rupees in ’000)

2008 2007

18 Earning Per Share (EPS) – The numerators and denominators used to calculate Basic and Diluted Earning Per Share.

Basic and Diluted Earnings per share

Numerator for Basic and Diluted earnings per share:

Profit/(Loss) before tax and extraordinary items 321,330 271,278

Less: Provision for Tax

– Current year (Net of tax on extraordinary items) 44,664 28,878

– Deferred Tax (Net of extraordinary items) (4,351) 1,464

– Fringe Benefit Tax (Net of extraordinary items) 10,910 8,220

51,223 38,562

Profit after tax excluding extraordinary items (a) 270,107 232,716

Profit after tax and extraordinary items (b) 200,993 143,276

Denominator for Basic and Diluted earnings per share:

Number of shares (previous year weighted average number of shares) (c) 28,263,463 24,874,964

Basic and Diluted earnings per share excluding extraordinary items (Rs.) (a)/(c) 9.56 9.36

Basic and Diluted earnings per share including extraordinary items (Rs.) (b)/(c) 7.11 5.76

Face value of Equity Share (Rs.) 10 10

19 Segment Information for the year ended 31st March, 2008

The Company has two primary business segments, viz i. Luggage & Accessories ii. Furniture. Since the segment revenue, segment result and segment assets of the segment ‘Furniture’ is less than 10% of the respective totals, the same is considered insignificant and accordingly no Primary segment is considered reportable. Since the ‘sales outside India’ is more than 10% of the total sales, geographical segment is reported as the secondary segment.

Information about Secondary Segments (Rupees in ’000)

2008 2007

Within India Outside India

Total Within India Outside India

Total

Segment Revenue 4,666,508 876,334 5,542,842 3,709,929 708,043 4,417,972

Segment Assets 2,948,408 612,671 3,561,079 2,204,065 892,328 3,096,393

Capital Expenditure 117,060 371 117,431 376,556 416 376,972

Notes:

(a) The segment revenue in the geographical segments considered for disclosure are as follows:-

(i) Revenue within India includes sales to customers located within India and Earnings in India.

(ii) Revenue outside India includes sales to customers located outside India and Earnings outside India.

(b) Segment Revenue, Segment Assets and Capital Expenditure include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

20 Employee Benefits:

The disclosures as required under the revised AS-15 are as under:

a) Defined Benefit Plan

The Company has schemes for long-term benefits such as provident fund, gratuity and leave encashment. In case of funded scheme, the funds are recognised by the Income tax authorities and administered through trustees/appropriate authorities. The Company’s defined benefit plans include provident fund, gratuity and leave encashment. In terms of the Guidance on implementing the revised AS-15, issued by the Accounting Standards Board of the Institute of Chartered Accountants of India, the provident fund set up by the Company is treated as a defined benefit plan since the Company has to meet the interest shortfall, if any. However, as at the year end no shortfall remains unprovided for. It is not practical or feasible to actuarially value the liability of provident fund considering that the rate of interest as notified by the Government can vary annually. Further the pattern of investments for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of provident fund have not been made.

Notes.indd 42 7/29/2008 4:41:49 PM

4342 4342


(Rupees in ’000)

b) Disclosures for defined benefit plans based on actuarial reports as on 31/03/2008

Gratuity Leave Encashment

(Funded plan) (Non-funded plan)(i) Assumptions

Discount Rate 8% 8%Rate of increase in Compensation levels 5% and 6% 5% and 6%Rate of Return on Plan Assets 8% —

(ii) Change in Benefit ObligationProjected Benefit Obligations at the beginning of the year 131,208 23,941Interest Cost 9,407 1,653 Service Cost 6,830 3,089 Benefits paid (27,231) (6,560)Actuarial (gain)/loss on obligations 16,609 2,209 Projected Benefit Obligations at the end of the year 136,823 24,332

(iii) Fair value of Plan AssetsFair value of Plan Assets at the beginning of the year 119,371 —Expected Return on Plan Assets 8,543 —Contributions/Transfers 2,067 6,560 Benefits paid (27,231) (6,560)Gain/(loss) on Plan Assets 30,369 —Fair value of Plan Assets at the end of the year 133,119 —

(iv) Change in Plan AssetsFair value of Plan Assets at the beginning of the year 119,371 —Actual return on Plan Assets 38,912 —Contributions/Transfers 2,067 6,560 Benefits paid (27,231) (6,560)Fair value of Plan Assets at the end of the year 133,119 —Excess of actual over expected return on Plan Assets 30,369 —

(v) Funded Status (3,704) (24,332)

(vi) Limits of Corridor not considered since total actuarial gain/loss is being recognised as on 31/03/2008Actuarial gain/(loss) for the year - Obligation (16,609) (2,209)Actuarial gain/(loss) for the year - Plan Assets 30,369 —Actuarial gain/(loss) recognised (13,760) (2,209) Unrecognised actuarial gains/(losses) at the end of the year — —

(vii) The amounts to be recognised in Balance Sheet and Income Statement and the related analysisPresent value of obligation 136,823 24,332 Fair value of Plan Assets (133,119) —Difference 3,704 24,332 Unrecognised Actuarial gains/(losses) — — Unrecognised Transitional liability — — Liability/(Asset) recognised in Balance Sheet 3,704 24,332

(viii) Net Periodic CostCurrent Service Cost 6,830 3,089 Interest Cost 9,407 1,653 Expected return on Plan Assets (8,543) — Net Actuarial (gain)/loss recognised in the year (13,760) 2,209 Expenses recognised in the Income Statement (6,066) 6,951

(ix) Movements in the liability recognised in the Balance SheetOpening Net liability 11,837 23,941 Expense as above (6,066) 6,951 Contributions/Transfers (2,067) (6,560)Closing Net liability 3,704 24,332

Notes:1. Rate of return is different based on class of employees.2. During the year, the Company has adopted Accounting Standard-15 (AS-15) (Revised 2005) for “Employee Benefits” issued by

the Institute of Chartered Accountants of India. Accordingly, the Company had adjusted Rs. 2,363,533 (net of Deferred Tax of Rs. 1,054,575) in respect of additional liability pertaining to Employee benefits up to 31st March, 2007, against the opening balance of General Reserve in accordance with the transitional provision referred to in the said standard.

Notes.indd 43 7/30/2008 10:42:52 AM

4544 4544


21 Derivatives:

The Company has entered into Forward Hedged Exchange Contracts, being derivative instruments for hedge purpose and not intended for trading or speculation purposes, to establish the amount of currency in Indian Rupees required or available at the settlement date of certain payables and receivables. The following are the outstanding Forward Exchange Contracts entered into by the Company:

Currency Buy or Sell Amount in Rs.’000 Amount in US $

31-Mar-08 31-Mar-07 31-Mar-08 31-Mar-07

USD SELL 5,993 — 150,000 —

UNHEDGED: The year end Foreign Currency exposures that have not been hedged by a derivative instrument as outstanding are as under:

a. Amount receivable in foreign currency on account of the following :

Particulars As on 31.03.2008 As on 31.03.2007 Foreign Currency

Rs. in ’000 Amount in Foreign Currency


Receivables against Exports 7,680 121,192 86,156 1,488,520 EUR

66,492 836,056 149,801 1,759,877 GBP

427,866 10,667,310 172,718 3,975,102 USD

Other Receivables 2,880 36,224 3,083 36,224 GBP

4,312 107,500 4,671 107,500 USD

b. Amount payable in foreign currency on account of the following :




Creditors 1,154 18,210 1,640 28,334 EUR

6,933 87,170 12,863 151,120 GBP

283 54,975 306 54,975 HKD

61,229 1,526,140 51,938 1,194,532 USD

Loans 149,948 3,737,485 223,401 5,138,017 USD

Interest Payable 1,477 36,838 1,851 42,575 USD

Other Payables 6,696 615,504 216 18,050 AED

98 19,000 — — HKD

15,576 388,288 7,316 168,273 USD

4,717 74,434 1,440 24,885 EUR

22 During the previous year, the Company had entered into an agreement to sell its stake in the Joint Venture, VIP Nitol Industries Ltd. The sale has not been effected pending clearances from the authorities in Bangladesh. Consequently the disclosures under AS-27 are not applicable for the current year.

23 Assets taken on Lease

The Company’s major leasing arrangements are in respect of residential/commercial premises (including furniture and fittings therein wherever applicable taken on leave and license basis). The aggregate lease rentals of Rs. 127,902,543 (previous year Rs. 109,369,087) as Rent are grouped under schedule of “Administrative, Selling and other Expenses”. These leasing arrangements, which are cancellable, range between 11 months and 5 years generally, or longer, and are usually renewable by mutual consent at mutually agreed terms and conditions.

Rental Income of Rs. 3,237,550 (previous year Rs. 2,685,307) from Operating leases are recognised in the Profit & Loss Account & grouped under the schedule of ‘Other Income’.

Notes.indd 44 7/29/2008 4:41:52 PM

4544 4544


24 Disclosure relating to Provisions

Provision related to Warranty

A Provision has been recognised for the expected Warranty Claims on Product Sold based on past experience. It is expected that the majority of this expenditure will be incurred in the next 2-3 Years.

The movement in the above Provision is summarised as under: (Rupees in ’000)

2008 2007

Opening Balance 1,201 1,175

Additions 708 1,201

Utilisation/reversals 108 1,175

Closing Balance 1,801 1,201

25 Scheme of Amalgamation and Arrangement of Aristocrat Luggage Ltd. and Quality Plastics Ltd. with the Company.

1. Pursuant to the scheme of amalgamation and arrangement of Aristocrat Luggage Ltd. and Quality Plastics Ltd. with the Company, as approved by the shareholders in the court convened meeting held on 29th September, 2007 and subsequently sanctioned by the Honorable High Court of Judicature at Bombay on 14th December, 2007, the assets and liabilities of Aristocrat Luggage Ltd. and Quality Plastics Ltd. were transferred to and vested in the Company with effect from 1st April, 2007.

2. Aristocrat Luggage Ltd. was engaged in the business of manufacturing & trading of luggage goods. Quality Plastics Ltd. was engaged interalia in the business of Investments and was the Holding Company of Aristocrat Luggage Ltd.

3. The Amalgamation has been accounted for under the “pooling of interest” method as prescribed by the Accounting Standard AS-14 issued by the Institute of Chartered Accountants of India. Accordingly the assets and liabilities and other reserves of the erstwhile Aristocrat Luggage Ltd. and Quality Plastics Ltd. as on 1st April, 2007 have been taken over at their book values subject to the adjustments as specified in the scheme of amalgamation and arrangement. Accordingly Rs. 22,438,589 (net of adjustment pursuant to Scheme of Amalgamation of Rs. 5,155,862) has been credited to the General Reserve.

4. Pursuant to the scheme of amalgamation and arrangement, 2,801,650 shares of Rs. 10 each were issued to the share holders of Aristocrat Luggage Ltd. in the ratio of one share of the Company for every two shares held in Aristocrat Luggage Ltd. Out of the above,1,676,650 shares were directly issued to the shareholders of Quality Plastics Ltd. in respective proportion as Quality Plastics Ltd. was one of the shareholders of Aristocrat Luggage Ltd. and it was also amalgamated with the Company.

5. In view of the aforesaid scheme of amalgamation and arrangement with effect from 1st April, 2007 the figures for the current year are not comparable to those of the previous year.

6. There were certain differences in the Accounting Policies of the Company & erstwhile Aristocrat Luggage Ltd. as under. The same is accounted under General Reserve Account in accordance with the Scheme of Amalgamation.

(Rupees in ’000)

Sr. No.

Particulars VIP Policy Aristocrat Policy

Amount (net of tax)

Remarks

1 Fixed Assets and Depreciation

Jigs, Tools & Dies Revenue Capitalized 544

Carrying Value of fully depreciated Fixed Assets Re. 1 5% of original value

4,016

Depreciation method at HO and Branches Straight Line method

Written Down Value method

(539)

2 VRS amount Charged off during 4 years

Charged off during 5 years

1,135

3 Inventory RM & Components at Moving Average

RM & Components at

FIFO method

— The impact of the same is not

ascertainable

Total 5,156

26 Directors’ Fees include Rs. 75,000 (previous year Rs. 170,000) paid by Aristocrat Luggage Ltd. (previous year Blow Plast Ltd.) to its Directors.

27 During the year, the Company has valued a portion of the traded Finished goods at the first in first out method/specific identification method as against the accounting policy of valuing the same at average cost. The impact of the same has not been ascertained.

28 Previous Year figures have been regrouped and/or rearranged wherever necessary.

29 Figures in brackets are in respect of previous year.

Notes.indd 45 7/29/2008 4:41:53 PM

4746 4746


30 Balance Sheet Abstract and Company’s General Business Profile

I. Registration Details

CIN L25200MH1968PLC013914 State Code 11

Balance Sheet Date 31 03 08

DD MM YY

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue NIL Rights Issue NIL

Bonus Issue NIL Private Placement NIL

III. Position of Mobilisation and Deployment of Funds (Amounts in Rs. Thousands)

Total Liability 3,587,622 Total Assets 3,587,622

Sources of Funds:

Paid-up Capital 282,635 Reserves & Surplus 1,045,297

Secured Loans 924,126 Unsecured Loans 331,203

Deferred Tax Liabilities (Net) 35,851

Application of Funds:

Net Fixed Assets 909,738 Investments 38,084

Net Current Assets 1,541,427 Misc. Expenditure 129,862

Accumulated Losses —

IV. Performance of Company (Amount in Rs. Thousands)

Turnover 5,564,708 Total Expenditure 5,243,378

Profit/Loss before tax + 245,519 Profit/Loss after tax + 200,993

Earning per share in Rs. 7.11 Dividend rate 30%

V. Generic Names of Three Principal Products/Services of Company:

Item Code No. (ITC Code) 420212 04

Product Description Plastic Moulded Suitcase


Product Description Plastic Moulded Briefcase


Product Description Vanity Case

Dilip Piramal Chairman

Sudhir Jatia Managing Director


G. L. Mirchandani Director

S. P. Trivedi Company Secretary

Place : Mumbai

Dated : 23rd May, 2008

Notes.indd 46 7/29/2008 4:41:55 PM

4746 4746

Schedule ‘X’

ACCOUNTING POLICIES

BASIS OF ACCOUNTING:

The Financial Statements are prepared on the basis of historical cost convention and on the accounting principles of a going concern, complying with the Accounting Standards, issued by the Institute of Chartered Accountants of India, referred to in Section 211 (3C) of the Companies Act, 1956.

REVENUE RECOGNITION:

Sales are recognised when goods are supplied and are recorded at net of Value Added Tax and trade discount and is inclusive of Excise Duty.

FIXED ASSETS AND DEPRECIATION:

(a) Fixed Assets are stated at cost less accumulated depreciation. Depreciation is provided on straight line method in accordance with the rates and in the manner specified in Schedule XIV to the Companies Act, 1956, except on items of Furniture & Fixtures capitalised at the Lounges which are depreciated at the rate of 50% on pro-rata basis. Leasehold land is not amortised over the period of the lease.

(b) Intangible assets are identified when it is expected to provide future enduring economic benefits. The assets are identified in the year in which the relevant asset is put to use in the production or supply of goods or services. The assets are amortised over a period of estimated useful life as determined by the management.

– Expenditure on trademarks is amortised over a period of ten years on straight line method.

– Expenditure on patents is amortised over a period of ten years on straight line method or over the period of control, whichever is earlier.

– Expenditure on Computer Software is amortised over a period of five years on straight line method.

INVESTMENTS:

Long term investments are stated at cost. Provision for diminution in value of long term investment is made only if such decline is other than temporary in the opinion of the management. Dividends are accounted for as and when received.

EMPLOYEE BENEFITS:

(i) Short term employee benefits are recognised as an expense at the undiscounted amounts in the Profit and Loss Account of the year in which the related service is rendered.

(ii) Liabilities in respect of defined benefit plans other than provident fund schemes are determined based on actuarial valuation made by an independant actuary as at the balance sheet date. The actuarial gains or losses are recognised immediately in the Profit and Loss Account.

INVENTORY:

Raw materials, components & finished goods are valued at lower of cost and net realisable value. Work-in-Process is valued at estimated cost and scrap is valued at net realisable value. Cost of Raw Materials and Components is at Weighted Average Cost. Cost of Finished Goods includes purchase cost/cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

FOREIGN CURRENCY TRANSACTIONS:

(a) In respect of foreign exchange transaction, the transaction in foreign currency is recorded in rupees by applying the exchange rate prevailing at the time of the transaction. Amount short or excess realised/incurred is transferred to Profit and Loss Account.

(b) All foreign currency liabilities/assets not covered by forward contracts, are restated at the rates prevailing at the year end and any exchange differences are dealt with in the Profit & Loss Account.

(c) In respect of transaction covered by forward contracts, the difference between the contract rate and the spot rate on the date of transaction is charged to the Profit & Loss Account over the period of the contract.

EXPORT BENEFITS:

All export benefits other than advance licence benefits are accounted for on accrual basis.

TAXATION:

(a) Provision for income tax is made on the basis of the taxable income for the current accounting period in accordance with the provisions of the Income Tax Act, 1961.

(b) The deferred tax for timing differences between the book profits and the tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as of the Balance Sheet date. Deferred tax asset arising from timing differences are recognised to the extent there is a virtual certainity that this would be realised in future and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

(c) Fringe Benefit Tax is determined at current applicable rates on expenses falling within the ambit of ‘Fringe Benefit Tax’ as defined under the Income Tax Act, 1961.

Notes.indd 47 7/29/2008 4:41:56 PM

PB48

EMPLOYEES STOCK OPTION:

Employee Stock Option are accounted in accordance with the guidelines stipulated by the Securities and Exchange Board of India (SEBI). The difference between the market price of the shares underlying the options granted on the date of the grant of options and the option price is expensed out as employee compensation over the period of vesting.

LEASE:

Lease rental in respect of asset acquired under operating lease are charged off to the Profit and Loss Account as incurred. Lease rentals in respect of assets given under operating lease are credited to the Profit and Loss Account.

IMPAIRMENT OF ASSETS:

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the management estimates the recoverable amount of 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 Profit and Loss Account. If at the balance sheet date, there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

PROVISION AND CONTINGENT LIABILITIES:

The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. 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. Where there is possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

MISCELLANEOUS EXPENDITURE:

(a) Expenditure on Voluntary retirement scheme is being charged over a period of 4 years.

(b) Expenditure incurred in respect of Foreign collaboration agreement are written off over the period of the agreement.

Signatures to Schedules ‘A’ to ‘X’










Notes.indd 48 7/30/2008 10:44:33 AM

49PB

Statement pursuant to exemption under section 212(8) of the Companies Act, 1956 relating to Subsidiary Company

Name of the Subsidiary Company : Carlton Travel Goods Ltd.Reporting Currency : GBP

Exchange Rate as on 31.03.2008 : 1GBP = Rs. 79.53

Sr. No. Particulars

2008 2007

Exchange Rate

Amount (Rupees in ’000)

Exchange Rate


a Capital 79.53 15,906 85.09 17,018

b Reserves 79.53 429 85.09 (3,191)

c Total Assets 79.53 538,735 85.09 379,859

d Total Liabilities 79.53 538,735 85.09 379,859

e Details of Investment 79.53 – 85.09 –

(Other than investment in subsidiary)

f Turnover (including Other Income) 80.84 767,988 85.65 655,084

g Profit before Taxation 80.84 14,745 85.65 (693)

h Provision for Taxation 80.84 – 85.65 –

i Profit after Taxation 80.84 14,745 85.65 (693)

j Proposed Dividend 80.84 – 85.65 –

Note:-

As required under para (vi) of the Approval Letter dated 18.02.2008 issued by the Ministry of Corporate Affairs, Government of India, Shastri Bhawan, 5th Floor, ‘A’ Wing, Dr. R. P. Road, New Delhi, Indian Rupees equivalents of the figures given in foreign currency appearing in the accounts of the subsidiary company, has been given along with the exchange rate as on 31.03.2008.

Dilip Piramal ChairmanSudhir Jatia Managing DirectorVijay Kalantri DirectorG. L. Mirchandani DirectorS. P. Trivedi Company Secretary

Place: MumbaiDated: 23rd May, 2008.

Auditors Rep (Cons).indd 49 7/29/2008 4:49:35 PM

5150 5150

Statement pursuant to exemption under section 212(8) of the Companies Act, 1956 relating to Subsidiary Company

Name of the Subsidiary Company : Blow Plast Retail Ltd.

Reporting Currency : INR

2008 2007

Sr. No.

Particulars Amount (Rupees in ’000)


a Capital 500 –

b Reserves – –

c Total Assets 507 –

d Total Liabilities 507 –

e Details of Investment (Other than investment in subsidiary) – –

f Turnover (including Other Income) – –

g Profit before Taxation (47) –

h Provision for Taxation – –

i Profit after Taxation (47) –

j Proposed Dividend – –

Dilip Piramal ChairmanSudhir Jatia Managing DirectorVijay Kalantri DirectorG. L. Mirchandani DirectorS. P. Trivedi Company Secretary

Place: MumbaiDated: 23rd May, 2008.


5150 5150

TO THE BOARD OFDIRECTORS OF V.I.P. INDUSTRIES LIMITED

1. We have audited the attached Consolidated Balance Sheet of V.I.P. Industries Limited and its Subsidiary Companies as at 31st March, 2008, the Consolidated Profit and Loss account and also the Consolidated Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have audited the Financial Statement of Subsidiary Company Blow Plast Retail Limited whose financial statement reflects total assets of Rs. 4,60,067 as at 31st March, 2008 and total revenue of Rs. Nil for the period ended on that date. We did not audit the Financial Statement of the Subsidiary Company Carlton Travel Goods Limited whose financial statement reflects total assets of Rs. 49,76,32,730 as at 31st March, 2008 and total revenue of Rs. 76,79,87,862 for the period ended on that date. The financial statement of the Subsidiary Carlton Travel Goods Limited have been audited by other auditor, whose reports have been furnished to us, our opinion, in so far as it relates to the amounts included in respect of this entity, is based solely on the report of the auditors.

4. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard – 21, ‘Consolidated Financial Statement’ issued by the Institute of Chartered Accountants of India on the basis of individual financial statements of VIP Industries Ltd. and its subsidiary companies included in the Consolidated Financial Statement.

5. On the basis of the information and explanation given to us and on the consideration of the separate audit reports on individual financial statements of the Company and its subsidiaries, we are of the opinion that the said consolidated financial statement give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Consolidated Balance Sheet, of the state of affairs of the Company as at 31st March 2008;

b. in the case of the Consolidated Profit and Loss account, of the profit for the year ended on that date; and

c. in the case of the Consolidated Cash Flow Statement, of the cash flows for the year ended on that date.


M. L. Bhuwania & Co.Chartered Accountants

J. P. BairagraPlace: Mumbai (Partner)Date: 23rd May, 2008 Membership No. 12839

Auditors’ ReportON THE CONSOLIDATED FINANCIAL STATEMENTS


5352 5352

Consolidated Balance Sheetas at March 31, 2008

(Rupees in ’000)

Schedule 2008 2007

SOURCES OF FUNDS

Shareholders’ Funds :

Share Capital A 282,635 254,618

Reserves and Surplus B 987,605 797,474

1,270,240 1,052,092

Loan Funds:

Secured Loans C 925,316 953,642

Unsecured Loans D 331,203 139,663

1,256,519 1,093,305

Deferred Tax Liabilities (Net) E 35,851 45,214

TOTAL 2,562,610 2,190,611

APPLICATION OF FUNDS

Fixed Assets: F

Gross Block 2,451,370 2,169,737

Less: Accumulated Depreciation/Amortisation 1,551,093 1,337,285

Net Block 900,277 832,452

Capital Work-in progress 24,669 24,181

924,946 856,633

Investments G 21,028 21,028

Current Assets, Loans and Advances:

Inventories H 1,012,724 839,888

Sundry Debtors I 888,472 647,063

Cash and Bank Balances J 84,419 74,164

Other Current Assets K 95,777 56,977

Loans and Advances L 416,500 393,549

2,497,892 2,011,641

Less: Current Liabilities and Provisions:

Current Liabilities M 885,784 741,082

Provisions N 125,334 90,987

1,011,118 832,069

Net Current Assets 1,486,774 1,179,572

Miscellaneous Expenditure (to the extent not written off or adjusted)

O 129,862 133,378

TOTAL 2,562,610 2,190,611

Notes to Accounts W











Accounts (Cons).indd 52 7/29/2008 5:07:43 PM

5352 5352

Consolidated Profit and Loss Accountfor the year ended March 31, 2008

(Rupees in ’000)

Schedule 2008 2007

INCOME: Income from Operations P 5,735,303 4,411,406

Other Income Q 48,114 101,525

5,783,417 4,512,931

EXPENDITURE: Cost of Materials R 2,799,229 2,234,903

Payments to and Provisions for Employees S 590,447 485,050

Administrative, Selling and Other Expenses T 1,775,760 1,270,212

Interest (Net) U 131,983 96,098


5,447,388 4,223,918

Profit before Tax and Extraordinary items 336,029 289,013

Extraordinary items V 75,812 90,233

Profit before Tax 260,217 198,780

Less : Provision for Tax :

Current Tax [including Wealth Tax Rs. 300,000 (previous year Rs. 400,000)]

32,500 33,500

Deferred Tax 1,116 (3,950)

Fringe Benefit Tax 10,910 8,220

Profit after Tax 215,691 161,010

Add : (Short) / Excess provision for Tax 13,737 (1,710)

Add : Balance of profit brought forward 106,650 109,527

Add : Balance of profit & loss account taken over on Amalgamation (Refer Note No. 15 of Schedule ‘W’)

37,758 162,295

AMOUNT AVAILABLE FOR APPROPRIATION 373,836 431,122

APPROPRIATIONS: Proposed Dividend 84,790 63,654

Tax on Proposed Dividend 14,410 10,818

General Reserve 25,000 250,000

Balance carried to Balance Sheet 249,636 106,650

373,836 431,122

Earnings per share, Rupees : (Refer Note No. 9 of schedule ‘W’)

Basic/Diluted Earnings Per Share excluding Extraordinary items (net of tax expenses)

10.08 10.07

Basic/Diluted Earnings Per Share including Extraordinary items 7.63 6.47

Notes to Accounts W












5554 5554

Consolidated Cash Flow Statementfor the year ended March 31, 2008

(Rupees in ’000)

2008 2007

A. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax & Extraordinary item 336,029 289,013

Adjusted for:


Investment income (4) (21,976)

Interest charged (Net) 131,982 96,098

Provision for warranty 601 26

Provision for leave encashment 391 (1,369)


(Gain)/Loss on Exchange rate fluctuation (54,521) (12,219)

(Gain)/Loss on Translation 2,165 (33,080)

(Profit)/Loss on sale of Investments (5) –

Provsion for diminution of Investments written back – 7,400

(Profit)/Loss on sale/disposal of fixed assets 5,044 5,522

Miscellaneous expenditure written off – 1,880

239,687 179,937

Operating profit before working capital changes 575,716 468,950

Changes in :

Trade receivables (97,039) (175,845)

Inventories 7,520 (242,077)

Trade payables & Provisions (27,373) 156,590

Loans and Advances (27,123) 46,738

Other Current Assets (38,308) (6,140)

(182,323) (220,734)

Cash generated from operations 393,393 248,216

Direct taxes paid (Net of refund received) (37,737) (57,893)

Cash flow before extra-ordinary and prior period items 355,656 190,323

Extra-ordinary/prior period items (63,756) (140,701)

NET CASH FROM OPERATING ACTIVITIES 291,900 49,622

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets/Payment towards CWIP (128,261) (104,036)

Sale of fixed assets 11,504 7,657

Sale of Investments 5 275,995

Interest received 6,582 44,147

Dividend received 4 21,976

NET CASH FROM INVESTING ACTIVITIES (110,166) 245,739


5554 5554

Consolidated Cash Flow Statement (Contd.)for the year ended March 31, 2008

(Rupees in ’000)

2008 2007

C. CASH FLOW FROM FINANCING ACTIVITIES

Interest paid (145,651) (134,150)

Proceeds from exercise of Employee Stock Options – 18,000

Proceeds/(Repayments) from/of borrowings (net) 7,822 (99,766)

Dividend paid (inclusive of Dividend Tax) (74,375) (73,813)

NET CASH FROM FINANCING ACTIVITIES (212,204) (289,729)

NET CHANGES IN CASH AND CASH EQUIVALENTS (A+B+C) (30,470) 5,632

CASH AND CASH EQUIVALENTS – OPENING BALANCE 74,163 47,525

Add : Taken over on Amalgamation 40,726 21,006

CASH AND CASH EQUIVALENTS – CLOSING BALANCE 84,419 74,163

(30,470) 5,632

Notes:

(1) Closing Balance of Cash & Cash Equivalents included exchange rate difference loss of Rs. 78,577 (previous year loss of Rs. 103,043)

(2) Cash and Cash Equivalents include :

2008 2007




Margin Money Account 9,917 5,965


58,192 42,227


Total 84,419 74,163

(3) Cash and Cash equivalents as on 01/04/2007 of erstwhile Aristocrat Luggage Ltd. & Quality Plastics Ltd. taken over on Amalgamation (See Note (4) below)

(4) The Amalgamation of erstwhile Aristocat Luggage Ltd. & Quality Plastics Ltd. with the Company is a non-cash transaction. (Refer Note No. 15 of Schedule ‘W’)

(5) In view of the aforesaid Scheme of Amalgamation and Arrangement with effect from 1st April 2007, the figures for the current year are not comparable with the figures of the previous year.

(6) Previous year’s figures have been regrouped and/or rearranged wherever considered necessary.











5756 5756

(Rupees in ’000)

2008 2007

Schedule ‘A’SHARE CAPITAL

Authorised:

49,300,000 Equity Shares (previous year 36,800,000) of Rs. 10/- each 493,000 368,000

1,000 9% Redeemable Cumulative Preference shares of Rs. 1,000/- each 1,000 1,000

494,000 369,000

Issued, Subscribed and Paid-Up:

28,263,463 (previous year 25,461,813) Equity Shares of Rs. 10/- each fully paid-up 282,635 254,618

282,635 254,618

Notes:Of the above Equity Shares:

(a) 30,000 Equity Shares (previous year 30,000) of Rs. 10/- each were allotted as fully paid-up shares, pursuant to a contract for consideration other than cash, and

(b) 3,525,000 Equity Shares (previous year 3,525,000) of Rs. 10/- each were allotted as fully paid-up Bonus Shares by way of capitalisation of reserves.

(c) Nil Equity Shares (previous year 600,000) of Rs. 10/- each were issued pursuant to Employee Stock Option Scheme.

(d) Nil Equity Shares (previous year 16,800,000) of Rs. 10/- each were issued to shareholders of erstwhile Blow Plast Ltd. Pursuant to Scheme of Amalgamation.

(e) 2,801,650 Equity Shares (previous year Nil) of Rs. 10/- each were issued to shareholders of erstwhile Aristocrat Luggage Ltd. during the year. (Refer Note No. 15 of Schedule ‘W’)

(f) Nil Equity Shares (previous year 7,493,187) of Rs. 10/- each held by erstwhile Blow Plast Ltd. were cancelled pursuant to Amalgamation.

Schedule ‘B’RESERVES AND SURPLUS

Capital Reserve :


Capital Incentive :


Add : Taken over consequent to Amalgamation* – 932

9,432 9,432

Securities Premium Account :


Add : Received on exercise of Stock option by the Employee – 12,000

Add : Transferred from Employee Stock Option Outstanding – 14,280


335,251 335,251

Capital Redemption Reserve :

As per last Balance Sheet 1,502 2


1,502 1,502

General Reserve :


Add : Transferred from Profit and Loss Account 25,000 250,000

Add : Taken over consequent to Amalgamation* 27,595 95,321

Less : Adjustment on account of liability in respect of Employee Benefits as on 31/03/2007 (net of deferred tax) as per Revised AS-15 2,364 –

Less : Adjustment on account of Scheme of Amalgamation (Refer Note No. 15 of Schedule ‘W’) 5,156 175,656

418,591 373,516


5756 5756

(Rupees in ’000)

2008 2007

Schedule ‘B’ (Contd.)Employee Stock Options Outstanding :

As per last Balance Sheet – 14,280

Less : Transferred to Securities Premium Account – 14,280

– –

Foreign Currency Translation Reserve (28,303) (30,373)

Profit and Loss Account:

Balance as per Account annexed 249,636 106,650

987,605 797,474

* Reserves taken over consequent to the Scheme of Amalgamation of Aristocrat Luggage Ltd. (previous year Blow Plast Ltd.) with the Company. (Refer Note No. 15 of Schedule ‘W’)

Schedule ‘C’SECURED LOANS

A. Term Loans:

(1) Foreign Currency loan from IDBI 18,421 46,582


(2) ECB loan from Axis Bank Ltd. 65,195 86,960


(3) Foreign Currency Corporate loan from State Bank of India 66,332 89,859


(4) Corporate term loan from State Bank of India 79,600 100,000


(5) Corporate term loan from State Bank of India – 25,750


(6) Corporate term loan from State Bank of India 26,296 –


(7) Term loan from Axis Bank Ltd. 38,528 61,111


294,372 410,262

B. Working Capital Facilities from Banks 630,944 543,380

– Refer Note No. 7 and 8

925,316 953,642

Notes : 1. The foreign currency loan from Industrial Development Bank of India is secured by mortgage of movable and immovable assets of the Company located

at Sinnar, Jalgaon and Nasik both present and future (save and except book debts) ranking pari passu subject to the charges created/to be created in favour of the Company’s bankers on current assets for working capital facilities.

2. ECB loan from Axis Bank Ltd. is secured by first charge on pari passu basis on all the movable and immovable fixed assets of the Company located at Haridwar (save and except book debts) and subject to prior charge created in favour of the Company’s bankers on current assets for working capital facilities.

3. The Corporate Rupee loan and Foreign currency loan from State Bank of India is secured by first pari passu charge on fixed assets of the Company located at Plants in Nasik, Sinnar and Haridwar (save and except book debts) and subject to charge created in favour of the Company’s bankers on current assets for working capital facilities.

4. The Corporate Loan from State Bank of India is secured by the exclusive first charge on the Company’s specific immovable property.

5. The Corporate Loan from State Bank of India taken over on amalgamation is secured by the exclusive first charge on the Company’s immovable property situated at Haridwar, Satara & Paithan.

6. Term loan from Axis Bank is secured against exclusive charge on specific movable fixed asset at Nasik and by a first pari passu charge on the movable fixed assets of the Company at Nagpur.

7. Working Capital facilities from banks are secured by hypothecation of Inventories & assignment of Book Debts ranking pari passu inter-se and by second charge on the fixed assets of the Company located at Nasik, Nagpur, Jalgaon, Sinnar, Haridwar, Satara & Paithan.

8. Working Capital facilities from banks include facility used by wholly owned subsidiary and same is secured by fixed and floating charges over the assets of the said subsidiary company.


5958 5958

(Rupees in ’000)

2008 2007

Schedule ‘D’UNSECURED LOANS

1. Fixed Deposits 19,828 89,163

2. Short Term Deposits from Limited Companies 10,500 500

3. Short Term loan from banks 300,000 50,000

4. Sales Tax Deferral Package Scheme of Incentives* 875 –

331,203 139,663

* Amount payable within one year Rs. Nil (previous year Rs. Nil)

Schedule ‘E’DEFERRED TAX LIABILITIES (Net)

Deferred Tax Liabilities

On account of :

– Depreciation /Amortisation 62,394 70,862

(a) 62,394 70,862

Deferred Tax Assets

On account of :

– Expenses allowable on payment basis 9,554 6,241

– Provision for Doubtful Debts 1,824 443

– Voluntary Retirement Scheme Expenses 13,370 18,253

– Merger Expenses 1,795 711

(b) 26,543 25,648

Net (a – b) 35,851 45,214

Schedule ‘F’FIXED ASSETS

GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK

As at 31st March,

2007


mation #

Additions Deduc- tions/

Adjust- ments

As at 31st March,

2008

As at 31st March,

2007


mation #

For the year

Deduc- tions/

Adjust- ments

As at 31st March,

2008

As at 31st March,

2008

As at 31st March,

2007

Freehold Land 210 59 – – 269 – – – – – 269 210

Leasehold Land 26,385 11,985 2,023 – 40,393 – – – – – 40,393 26,385

Buildings 286,447 55,373 25,752 8,391 359,181 87,618 12,722 11,148 1,684 109,804 249,377 198,829

Plant and Machinery 864,860 103,463 6,937 67,173 908,087 635,705 67,619 40,677 63,387 680,614 227,473 229,155

Data Processing Machines 123,568 3,921 12,827 4,560 135,756 95,046 2,981 9,157 3,985 103,199 32,557 28,522

Moulds and Dies 495,368 70,885 50,082 3,909 612,426 366,730 58,477 40,874 456 465,625 146,801 128,638

Furniture, Fixture and Equipments

178,944 7,163 22,536 14,850 193,793 62,400 4,383 31,436 10,339 87,880 105,913 116,544

Vehicles 34,052 1,903 12,361 7,147 41,169 10,711 953 3,601 3,445 11,820 29,349 23,341

Assets held for disposal 40,140 – – – 40,140 33,718 – – – 33,718 6,422 6,422

Intangible Assets:

Patents and Trademarks 88,232 – – – 88,232 41,155 – 6,710 – 47,865 40,367 47,077

Computer Software 31,531 – 393 – 31,924 4,202 – 6,366 – 10,568 21,356 27,329

2,169,737 254,752 132,911 106,030 2,451,370 1,337,285 147,135 149,969 83,296 1,551,093 900,277 832,452

Previous Year 1,633,528 221,096 377,024 61,911 2,169,737 1,127,036 121,625 137,655 49,031 1,337,285 832,452

Notes:(1) Buildings include: (a) Original cost of Rs. 5,890,497 (previous year Rs. 12,663,037) being the cost of ownership flats represented by 10 (previous year 15) shares of Rs. 50 each of Co-operative

societies. (b) One premise of Rs. 2,664,863 (previous year Rs. 447,475) acquired on lease basis.(2) Assets held for disposal include Plant & Machinery items having original cost of Rs. 40,140,000 (previous year Rs. 40,140,000) given on lease having net realisable value of

Rs. 6,422,400 (previous year Rs. 6,422,400), shown at lower of cost and net realisable value.(3) Exchange rate Difference of Rs. 94,984 (previous year Rs. 301,615) on account of translation of gross block & depreciation into Indian Rupees is shown under deductions/

adjustments.(4) # Taken over on Amalgamation consequent to the Scheme of Amalgamation of Aristocrat Luggage Ltd. (previous year Blow Plast Ltd.) with the Company. (Refer Note No. 15 of

Schedule ‘W’).


5958 5958

(Rupees in ’000)

2008 2007

Face ValueRupees Nos. Nos.

Schedule ‘G’

INVESTMENTS (At Cost)

Long term and Non-Trade

Quoted:

(a) Equity Shares :

(1) Windsor Machines Limited 10 2,580,730 185,159 2,580,730 185,159

(2) Kemp & Co. Ltd. (18 shares sold during the year) 10 1,909 21 1,927 21

185,180 185,180

(b) Bonds:

6.75% Tax Free US64 Bonds. 100 137,567 13,756 137,567 13,756

Total Value of Quoted Investments 198,936 198,936

Unquoted :

(a) Equity Shares:

(1) Dinnette Exclusive Club Pvt. Ltd. 100 500 50 500 50

(2) Taluka Audyogik Sahakari Vasahat. Maryadit, Sinnar 100 10 1 10 1

(3) The Saraswat Co-Op. Bank Ltd. (1,000 Shares acquired consequent to Amalgamation) 10 2,000 20 2,000 20

(4) The Shamrao Vithal Co-Op. Bank Ltd. 25 100 2 100 2

(5) Jindal Southwest Holdings Ltd. 10 2,250 – 2,250 –

73 73

(b) Joint Venture

Equity shares:

VIP Nitol Industries Limited. (Face Value of BDT 1,000) – 25,003 21,190 25,003 21,190

(c) Others

National Saving Certificate & Kisan Vikas Patra

At Face Value 21 21

Total Value of Unquoted Investments 21,284 21,284

Total Value of Investments 220,220 220,220

Less: Provision for diminution in value of Investments 199,192 199,192

Net Value of Investments 21,028 21,028

Notes: Aggregate market value of Quoted Investments Rs. 52,028,264 (previous year Rs. 48,910,945)


6160 6160

(Rupees in ’000)

2008 2007

Schedule ‘H’INVENTORIES

(As certified by a Director)

(Valued at lower of cost and net realisable value unless otherwise stated)

Stores and Spares & Loose Tools 7,150 9,374


Packing Materials 3,778 4,645

Work-in-Process (at estimated cost) 49,706 66,660

Scrap (at net realisable value) 419 445

Finished Goods 799,946 603,281

1,012,724 839,888

Schedule ‘I’SUNDRY DEBTORS (unsecured)

Over Six Months:


Considered Doubtful 5,367 1,302

255,856 142,526

Other debts:


893,839 648,365

Less: Provision for Doubtful Debts 5,367 1,302

888,472 647,063

Schedule ‘J’CASH AND BANK BALANCES




Margin Money Account 9,917 5,965


58,192 42,227


84,419 74,164

Schedule ‘K’OTHER CURRENT ASSETS

Interest Receivable (Includes interest accrued on investments Rs. 309,520, previous year Rs. 830,051)

2,804 2,515

Export Incentive Receivable 13,156 6,925

Others 79,817 47,537

95,777 56,977


6160 6160

(Rupees in ’000)

2008 2007

Schedule ‘L’LOANS AND ADVANCES

(Unsecured, considered good, unless otherwise stated)

Deposit with Corporate Bodies & Others 1,703 1,503

Advance Recoverable in cash or in kind or for value to be received 218,915 200,946

Advances for Capital Expenditure 172 4,495

Balance with Central Excise 1 1

Loans and advances to staff 5,566 4,970

Deposits:

Public Bodies 12,153 11,374

Others 117,468 94,210

129,621 105,584

Advance Income Tax (net of provisions)* 60,522 76,050

416,500 393,549

* Advance Income Tax is net of Provision for tax of Rs. 519,336,783 (previous year Rs. 509,815,800).

Schedule ‘M’CURRENT LIABILITIES

Sundry Creditors 560,247 469,676

Other Liabilities 240,509 143,353

Temporary Bank Overdraft 41,047 43,628

Advances and deposits from customers 30,646 64,619

Investor Education & Protection Fund*

Unclaimed Dividend 5,421 5,324

Unclaimed Interest on Fixed Deposits 1,134 1,116

Unclaimed Fixed Deposits 2,332 2,120

8,887 8,560

Interest accrued but not due on loans 4,448 11,246

885,784 741,082

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as on 31st March, 2008.

Schedule ‘N’

PROVISIONS

Provision for Proposed Dividend 84,790 63,654

Provision for Tax on Proposed Dividend 14,410 10,818

Provision for Leave encashment 24,332 15,314

Provision for Warranty (Refer Note 14 of Schedule ‘W’) 1,802 1,201

125,334 90,987

Schedule ‘O’MISCELLANEOUS EXPENDITURE


Voluntary Retirement Scheme 129,862 133,378

129,862 133,378


6362 6362

(Rupees in ’000)

2008 2007

Schedule ‘P’INCOME FROM OPERATIONS

Sales 5,887,608 4,554,671

Less : Excise Duty 239,038 225,110

Net Sales 5,648,570 4,329,561

Income from Job work 68,628 73,022

Export Incentives 18,105 8,823

5,735,303 4,411,406

Schedule ‘Q’OTHER INCOME

Dividend from Long term (Non-trade) Investments 4 21,976

Profit on sale of Long term (Non-trade) Investments 5 –

Profit on sale of Fixed Assets (Net) 651 991

Exchange Rate Difference (Net) 3,346 22,731

Miscellaneous Income 44,108 55,827

48,114 101,525

Schedule ‘R’COST OF MATERIALS

Raw Materials & Components Consumed : Opening Stock 155,483 101,219 Add : Stock taken over on Amalgamation 64,563 – Purchases 1,417,556 1,423,313

1,637,602 1,524,532 Less : Sales 19,914 5,632 Closing Stock 151,725 155,483

1,465,963 1,363,417 Purchase of Finished Goods 1,325,303 985,535 Decrease/(Increase) in stock: Opening Stock Finished goods 594,879 361,420 Add : Stock taken over on Amalgamation 114,085 112,457 Less : VAT receivable on Opening Stock – 1,760

708,964 472,117 Work-in-process 66,660 21,802 Scrap 445 360

776,069 494,279 Less : Closing stock Finished goods 803,825 604,387 Work-in-process 49,706 66,660 Scrap 419 445

853,950 671,492 (77,881) (177,213)

Packing Materials Consumed 85,844 63,164

2,799,229 2,234,903

Schedule ‘S’PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

Salaries, Wages and Bonus 521,583 410,840

Contribution to Provident and Other Funds 38,224 47,162

Welfare Expenses 30,640 27,048

590,447 485,050


6362 6362

(Rupees in ’000)

2008 2007

Schedule ‘T’ADMINISTRATIVE, SELLING AND OTHER EXPENSES

Stores and Spares Consumed 30,465 34,667

Power and Fuel 110,235 91,580

Repairs and Maintenance to :

Plant and Machinery 8,824 4,003

Buildings 4,254 4,337

Others 33,621 18,270

46,699 26,610

Freight, Handling and Octroi 381,174 288,386

Discounts, Commission on Sales 529,006 271,227

Insurance 7,975 9,200

Rent including Lease rentals 131,530 113,072

Rates and Taxes 13,323 10,725

Advertisement and Publicity 157,954 126,938

Travelling & Conveyance 106,321 85,135

Legal & Professional Fees 24,457 24,749

Directors’ Fees 425 370

Auditors’ Remuneration (Refer Note No. 7 of Schedule ‘W’) 3,248 2,631


Bad debts 31 371

Loss on Obsolescence of Fixed Assets 5,695 6,514

Provision for Dimunition in value of Investment – 7,400

Miscellaneous Expenses 223,157 170,637

1,775,760 1,270,212

Schedule ‘U’

INTEREST (NET)

Fixed Loans 54,033 49,037

Banks 77,199 61,518

Others 7,621 18,317

138,853 128,872

Less : Interest Income:

Interest received on Long-term Investments (Tax Deducted at source Rs. Nil, previous year Rs. 5,353,325) 929 20,612

Interest received on I.T. Refunds, loans & deposits (Tax Deducted at source Rs. 405,586, previous year Rs. 1,406,163) 5,941 12,162

6,870 32,774

131,983 96,098

Schedule ‘V’

EXTRAORDINARY ITEMS

Voluntary Retirement Expenses 75,812 90,233

75,812 90,233


6564 6564

(Rupees in ’000) Schedule ‘W’

NOTES TO THE ACCOUNTS

1 The Consolidated Financial Statements (CFS) are prepared in accordance with Accounting Standard (AS 21) on Consolidated Financial Statements issued by the Institute of Chartered Accountants of India (ICAI).

2 Subsidiary to Consolidate

(a) Name of Subsidiary: Carlton Travel Goods Ltd.

Country of Incorporation: United Kingdom

Extent of holding: 100%

(b) Name of Subsidiary: Blow Plast Retail Ltd.

Country of Incorporation: India

Extent of holding: 100%

2008 2007

3 Estimated amounts of Contracts remaining to be executed on Capital Account and not provided for (net of advances). 4,019 2,625

4 Contingent Liabilities not provided for in respect of:

a) Disputed Income Tax liability 53,034 31,738

b) Counter Guarantees given to the bankers — 6,938

c) Disputed Sales Tax liability 61,376 38,069

d) Guarantee given by the Company on behalf of a corporate body to a financial institution 1,525 159,115

e) Bills Discounted with Banks — 8,357

f) Bills factored with Bank 135,743 133,654

g) Bonds issued under EPCG scheme 55,240 50,789

h) Disputed Excise duty liability 37,145 38,576

i) Disputed Provident Fund Contribution on Leave Encashment — 1,089

j) Claims against the Company not acknowledged as Debts 4,122 291

5 During the year, the Company has made a provision of Rs. 9,090,219 (previous year Rs. 7,846,929) for excise duty on closing stocks, other than goods meant for exports, in bonded warehouse. The excise duty is also included in valuation of the inventories. There is no effect on the profits for the year.

6 Research & Development Expenditure:

Revenue expenditure charged to Profit & Loss A/c 26,348 26,408

Capital expenditure included in fixed assets — 3,839

7 Auditors Remuneration:

Audit Fees (including Limited Review) (Refer Note) 1,814 1,324

Tax Audit Fees 75 75

Certification & Other services 1,147 1,040

Income Tax representation 212 192

Towards Service Tax (Refer Note below) 201 116

3,449 2,747

Note: 1. Out of above, service tax credit of Rs. 200,971 (previous year Rs. 116,084), has been taken and the same has not been debited to Profit & Loss Account.

2. The above includes Rs. Nil (previous year Rs. 145,758) paid by the erstwhile Aristocrat Luggage Ltd. (previous year Blow Plast Ltd.) to its Auditors.

8 Related Parties Disclosure:

1. Name of Related Parties & description of relationship

VIP Nitol Industries Ltd. Joint Venture

Aristocrat Luggage Ltd. (since amalgamated with VIP Industries Ltd.)

Enterprise in which Key Management Personnel had significant influence

Key Management Personnel:

Mr. Sudhir Jatia Managing Director

Mr. P. K. Ramakrishnan Executive Director

Relatives of Key Management Personnel:

Mrs. Kalpana Ramakrishnan Wife of Mr. P. K. Ramakrishnan

Consoli-Notes-NN.indd 64 7/29/2008 4:42:51 PM

6564 6564


2. The following transactions were carried out with related parties(Rupees in ’000)

Joint Venture

Enterprise in which key

Mngmt. Personnel

had significant influence

Key Mgt.

Personnel

Relative of Key Mgt.

Personnel

Balances at the year end:

Loans / Advances Receivable as on 31st March, 2008 4,312 — — —

(4,487) — — —

Equity Contribution as on 31st March, 2008 3,790 — — —

(Net of provision for dimunition) (3,790) — — —

Debtors as on 31st March, 2008 — — — —

— (18,723) — —

Deposit given against leased house — — — 200

— — — (200)

Transactions during the year:

Technical Fees charged — — — —

— (224) — —

Sale of FG, Components, Accessories & Spares — — — —

— (5,081) — —

Remuneration paid to:

Mr. Sudhir Jatia — — 9,091 —

— — (6,049) —

Mr. P. K. Ramakrishnan — — 4,457 —

— — (3,325) —

Provision for Dimunition in value of Investment — — — —

(7,400) — — —

Rent Paid — — — 360

— — — (360)

600,000 equity shares of Rs. 10 each issued under ESOS at a premium of Rs. 20 each to Mr. Sudhir Jatia — — — —

— — (18,000) —

Sale of fixed asset — — 75 —

— — — —

Expenses Reimbursed/Incurred — — — —

— (758) — —

Job Work charges received — — — —

— (1,744) — —

Purchase of Components — — — —

— (608) — —

Balance Written off during the year — — — —

(4,096) — — —

Note: 1. Related party relationship is as identified by the Company and relied upon by Auditors.

2. Previous year figures are given in brackets.

(Rupees in ’000)

2008 2007

9 Earning Per Share (EPS) – The numerators and denominators used to calculate Basic and Diluted Earning Per Share.

Basic and Diluted Earnings per share

Numerator for Basic and Diluted earnings per share:

Profit/(Loss) before taxation and extraordinary items 336,029 289,013

Less: Provision for Taxation

– Current year (Net of tax on extraordinary items) 44,664 28,878


6766 6766

(Rupees in ’000)

2008 2007

– Deferred Tax (Net of extraordinary items) (4,351) 1,464– Fringe Benefit Tax (Net of extraordinary items) 10,910 8,220

51,223 38,562Profit after tax excluding extraordinary items (a) 284,806 250,451Profit after tax and extraordinary items (b) 215,691 161,010Denominator for Basic and Diluted earnings per share:Number of shares (previous year weighted average number of shares) (c) 28,263,463 24,874,964Basic and Diluted earnings per share excluding extraordinary items (Rs.) (a)/(c) 10.08 10.07Basic and Diluted earnings per share including extraordinary items (Rs.) (b)/(c) 7.63 6.47Face value of Equity Share (Rs.) 10 10

10 Segment Information for the year ended 31st March 2008

The Company has two primary business segments, viz i. Luggage & Accessories ii. Furniture. Since the segment revenue, segment result and segment assets of the segment ‘Furniture’ is less than 10% of the respective totals, the same is considered insignificant and accordingly no Primary segment is considered reportable. Since the ‘sales outside India’ is more than 10% of the total sales, geographical segment is reported as the secondary segment.

Information about Secondary Segments (Rupees in ’000)2008 2007

Within India Outside India

Total Within India Outside India

Total

Segment Revenue 4,666,508 1,162,519 5,829,027 3,709,932 886,148 4,596,080Segment Assets 2,935,531 638,197 3,573,728 2,680,858 341,739 3,022,597Capital Expenditure 117,060 15,851 132,911 376,556 468 377,024

Notes:

(a) The segment revenue in the geographical segments considered for disclosure are as follows:-

(i) Revenue within India includes sales to customers located within India and Earnings in India.

(ii) Revenue outside India includes sales to customers located outside India and Earnings outside India.

(b) Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

11 During the previous year, the Company had entered into an agreement to sell its stake in the Joint Venture, VIP Nitol Industries Ltd. The sale has not been effected pending clearances from the authorities in Bangladesh. Consequently the disclosures under AS 27 are not applicable for the current year.

12 Assets taken on Lease:

(a) The Company’s major leasing arrangements are in respect of residential/commercial premises (including furniture and fittings therein wherever applicable taken on leave and license basis). The aggregate lease rentals of Rs. 131,530,008 (previous year Rs. 113,072,336) are charged as Rent and shown under schedule of “Administrative, Selling and other Expenses”. These leasing arrangements, which are cancellable, range between 11 months and 5 years generally, or longer, and are usually renewable by mutual consent at mutually agreed terms and conditions.

Rental Income of Rs. 3,237,550 (previous year Rs. 2,685,307) from Operating leases are recognised in the Profit & Loss Account & grouped under the schedule of ‘Other Income’.

(Rupees in ’000)

2008 2007

(b) In respect of one office premise:

The total of future minimum lease payments under non-cancellable operating leases for each of the following periods:

(i) not later than one year; 24,654 3,426

(ii) later than one year and not later than five years; 9,544 3,426

(iii) later than five years; — —

13 During the Financial Year ended 31st March 2008 there is no allotment of ESOP. For the financial year ended 31st March 2007 the Company has allotted 600,000 fully paid up Equity Shares of Rs.10 each at a Premium of Rs. 20 per Share for Cash. The shares have been allotted pursuant to exercise of options granted under The Employee Stock Option Scheme 2004 and accordingly the nominal value of the Issued, Subscribed & Paid up Equity Share Capital stands increased by Rs. 6,000,000 and an amount of Rs. 12,000,000 has been credited to the securities premium account. Further the balance in the Employee stock options outstanding of Rs. 14,280,000 is transferred to the Securities Premium Account on allotment of 600,000 shares.



6766 6766

The Details of the Emloyee Stock Option are as under:

No. of Shares No. of Shares

Outstanding at the beginning of the period — 600,000

Add: Option granted during the year — —

Less: Exercised during the period — 600,000

Outstanding at the end of the period — —

14 Disclosure relating to Provisions

Provision related to Warranty

A Provision has been recognised for the expected Warranty Claims on Product Sold based on past experience. It is expected that the majority of this expenditure will be incurred in the next 2–3 Years.

The movement in the above Provision is summarised as under:

Opening Balance 1,201 1,175

Additions 708 1,201

Utilisation 108 1,175

Closing Balance 1,801 1,201

15 Scheme of Amalgamation and Arrangement of Aristocrat Luggage Ltd. and Quality Plastics Ltd. with the Company.

1. Pursuant to the scheme of amalgamation and arrangement of Aristocrat Luggage Ltd and Quality Plastics Ltd. with the Company, as approved by the shareholders in the court convened meeting held on 29th September 2007 and subsequently sanctioned by the Honorable High Court of Judicature at Bombay on 14th December 2007, the assets and liabilities of Aristocrat Luggage Ltd. and Quality Plastics Ltd. were transferred to and vested in the Company with effect from 1st April, 2007.

2. Aristocrat Luggage Ltd. was engaged in the business of manufacturing & trading of luggage goods. Quality Plastics Ltd. was engaged interalia in the business of Investments and was the Holding Company of Aristocrat Luggage Ltd.

3. The Amalgamation has been accounted for under the “pooling of interest” method as prescribed by the Accounting Standard AS-14 issued by the Institute of Chartered Accountants of India. Accordingly the assets and liabilities and other reserves of the erstwhile Aristocrat Luggage Ltd. and Quality Plastics Ltd. as on 1st April, 2007 have been taken over at their book values subject to the adjustments as specified in the scheme of amalgamation and arrangement. Accordingly Rs. 22,438,589 (net of adjustment pursuant to Scheme of Amalgamation of Rs. 5,155,862) has been credited to the General Reserve.

4. Pursuant to the scheme of amalgamation and arrangement, 2,801,650 shares of Rs. 10 each were issued to the share holders of Aristocrat Luggage Ltd. in the ratio of one share of the Company for every two shares held in Aristocrat Luggage Ltd. Out of the above,1,676,650 shares were directly issued to the shareholders of Quality Plastics Ltd. in respective proportion as Quality Plastics Ltd. was one of the shareholders of Aristocrat Luggage Ltd. and it was also amalgamated with the Company.

5. In view of the aforesaid scheme of amalgamation and arrangement with effect from 1st April, 2007 the figures for the current year are not comparable to those of the previous year.

6. There were certain differences in the Accounting Policies of the Company & erstwhile Aristocrat Luggage Ltd. as under. The same is accounted under General Reserve Account in accordance with the Scheme of Amalgamation.

(Rupees in ’000)

Sr. No.

Particulars VIP Policy Aristocrat Policy

Amount (net of tax)

Remarks

1 Fixed Assets And Depreciation

Jigs, Tools & Dies Revenue Capitalized 544

Carrying Value of fully depreciated Fixed Assets Re. 1 5 % of original value

4,016

Depreciation method at HO and Branches Straight Line method

Written Down Value method

(539)

2 VRS amount Charged off during 4 years

Charged off during 5 years

1,135

3 Inventory RM & Components

at Moving Average

RM & Components at

FIFO method

— The impact of the same is not

ascertainable

Total 5,156

16 Opening Stock of Finished Goods included in cost of sales has been translated at average rate of exchange prevailing during the year. Consequently, Loss of Rs. 9,508,023 (previous year Gain Rs. 8,353,953) has been debited to Profit & Loss Account. Further, Closing Stock of finished goods included in Profit & Loss Account and Balance Sheet has been translated at average rate of Exchange & closing rate of exchange respectively. Consequently, Loss of Rs. 3,879,283 (previous year Loss Rs. 1,106,196) has been debited to Foreign Currency Translation Reserve



6968 6968

17 Directors’ Fees include Rs. 75,000 (previous year Rs. 170,000) paid by Aristocrat Luggage Ltd. (previous year Blow Plast Ltd.) to its Directors.

18 During the year, the Company has valued a portion of the traded Finished goods at the first in first out method/specific identification method as against the accounting policy of valuing the same at average cost. The impact of the same has not been ascertained.

19 Derivatives:

HEDGED: The Parent Company has entered into Forward Hedged Exchange Contracts, being derivative instruments for hedge purpose and not intended for trading or speculation purposes, to establish the amount of currency in Indian Rupees required or available at the settlement date of certain payables and receivables. The following are the outstanding Forward Exchange Contracts entered into by the Company:

Currency Buy or Sell Amount in Rs.’000 Amount in US $

31-Mar-08 31-Mar-07 31-Mar-08 31-Mar-07

USD SELL 5,993 — 150,000 —

UNHEDGED: The year end Foreign Currency exposures that have not been hedged of parent company by a derivative instrument as outstanding are as under:a. Amount receivable in foreign currency on account of the following:




Receivables against Exports — — 3,094 53,460 EUR49,337 1,230,045 46,453 1,069,112 USD

Other Receivables 4,312 107,500 4,671 107,500 USDb. Amount payable in foreign currency on account of the following :




Creditors 1,154 18,210 1,640 28,334 EUR411 5,168 21 253 GBP283 54,975 306 54,975 HKD

61,074 1,522,274 43,685 1,004,711 USDLoans 149,948 3,737,485 223,401 5,138,017 USDInterest Payable 1,477 36,838 1,851 42,575 USDOther Payables 6,696 615,504 216 18,050 AED

98 19,000 — — HKD15,576 388,288 7,316 168,273 USD

4,717 74,434 1,440 24,885 EUR

(Rupees in ’000)20 Employee Benefits:

The disclosures as required under the revised AS 15 are as under:

a) Defined Benefit Plan

The Parent Company has schemes for long-term benefits such as provident fund, gratuity and leave encashment. In case of funded scheme, the funds are recognised by the Income tax authorities and administered through trustees/appropriate authorities. The Company’s defined benefit plans include provident fund, gratuity and leave encashment. In terms of the Guidance on implementing the revised AS 15, issued by the Accounting Standards Board of the Institute of Chartered Accountants of India, the provident fund set up by the Company is treated as a defined benefit plan since the Company has to meet the interest shortfall, if any. However, as at the year end no shortfall remains unprovided for. It is not practical or feasible to actuarially value the liability of provident fund considering that the rate of interest as notified by the Government can vary annually. Further the pattern of investments for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of provident fund have not been made.

b) Disclosures for defined benefit plans based on actuarial reports as on 31/03/2008


(Funded Plan) (Non-funded Plan)

(i) Assumptions

Discount Rate 8% 8%Rate of increase in Compensation levels 5% and 6% 5% and 6%Rate of Return on Plan Assets 8% —



6968 6968


(Funded Plan) (Non-funded Plan)(ii) Change in Benefit Obligation

Projected Benefit Obligations at the beginning of the year 131,208 23,941Interest Cost 9,407 1,653 Service Cost 6,830 3,089 Benefits paid (27,231) (6,560)Actuarial (gain)/loss on obligations 16,609 2,209 Projected Benefit Obligations at the end of the year 136,823 24,332

(iii) Fair value of Plan AssetsFair value of Plan Assets at the beginning of the year 119,371 —Expected Return on Plan Assets 8,543 —Contributions/Transfers 2,067 6,560 Benefits paid (27,231) (6,560)Gain/(loss) on Plan Assets 30,369 —Fair value of Plan Assets at the end of the year 133,119 —

(iv) Change in Plan AssetsFair value of Plan Assets at the beginning of the year 119,371 —Actual return on Plan Assets 38,912 —Contributions/Transfers 2,067 6,560 Benefits paid (27,231) (6,560)Fair value of Plan Assets at the end of the year 133,119 —Excess of actual over expected return on Plan Assets 30,369 —

(v) Funded Status (3,704) (24,332)(vi) Limits of Corridor not considered since total actuarial

gain/loss is being recognised as on 31/03/2008Actuarial gain/(loss) for the year – Obligation (16,609) (2,209)Actuarial gain/(loss) for the year – Plan Assets 30,369 —Actuarial gain/(loss) recognised (13,760) (2,209) Unrecognised actuarial gains/(losses) at the end of the year — —

(vii) The amounts to be recognised in Balance Sheet and Income Statement and the related analysisPresent value of obligation 136,823 24,332 Fair value of Plan Assets (133,119) —Difference 3,704 24,332 Unrecognised Actuarial gains/(losses) — — Unrecognised Transitional liability — — Liability/(Asset) recognised in Balance Sheet 3,704 24,332

(viii) Net Periodic CostCurrent Service Cost 6,830 3,089 Interest Cost 9,407 1,653 Expected return on Plan Assets (8,543) — Net Actuarial (gain)/loss recognised in the year (13,760) 2,209 Expenses recognised in the Income Statement (6,066) 6,951

(ix) Movements in the liability recognised in the Balance SheetOpening Net liability 11,837 23,941 Expense as above (6,066) 6,951 Contributions/Transfers (2,067) (6,560)Closing Net liability 3,704 24,332

Notes:

1. Rate of return is different based on class of employees

2. During the year the Company has adopted Accounting Standard 15 (AS 15) (Revised 2005) for “Employee benefits” issued by the Institute of Chartered Accountants of India. Accordingly, the Company has adjusted Rs. 2,363,533 (net of Deferred tax of Rs. 1,054,575) in respect of additional liability pertaining to Employee benefits upto 31/03/2007 against the opening balance of General reserve in accordance with the transitional provision referred to in the said standard.

21 Previous year’s figures have been regrouped and/or rearranged wherever considered necessary.

22 Figures in brackets are in respect of previous year.



7170 7170

Schedule ‘X’

ACCOUNTING POLICIES

BASIS OF ACCOUNTING:

The Financial Statements are prepared on the basis of historical cost convention and on the accounting principles of a going concern, complying with the Accounting Standards, issued by The Institute of Chartered Accountants of India, referred to in Section 211 (3C) of the Companies Act, 1956.

REVENUE RECOGNITION:

Sales are recognised when goods are supplied and are recorded at net of Value Added Tax and trade discount and is inclusive of Excise Duty.

FIXED ASSETS AND DEPRECIATION:

(a) Fixed Assets are stated at cost less accumulated depreciation. Depreciation is provided on straight line method in accordance with the rates and in the manner specified in Schedule XIV to the Companies Act, 1956, except on items of Furniture & Fixtures capitalised at the Lounges which are depreciated at the rate of 50% on pro-rata basis. Leasehold land is not amortised over the period of the lease.

(b) Intangible assets are identified when it is expected to provide future enduring economic benefits. The assets are identified in the year in which the relevant asset is put to use in the production or supply of goods or services. The assets are amortised over a period of estimated useful life as determined by the management.

– Expenditure on trademarks is amortised over a period of ten years on straight line method.

– Expenditure on patents is amortised over a period of ten years on straight line method or over the period of control, whichever is earlier.

– Expenditure on Computer Software is amortised over a period of five years on straight line method.

Foreign Subsidiary:

(c) Tangible Fixed Assets are stated at cost less depreciation. Depreciation is provided at the rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

– Plant and Machinery 25% - Straight line

– Fixtures, fittings & equipment 25% - Straight line

INVESTMENTS:

Long term investments are stated at cost. Provision for dimunition in value of long term investment is made only if such decline is other than temporary in the opinion of the management. Dividends are accounted for as and when received.

EMPLOYEE BENEFITS:

(i) Short term employee benefits are recognised as an expense at the undiscounted amounts in the Profit and Loss account of the year in which the related service is rendered.

(ii) Liabilities in respect of defined benefit plans other than provident fund schemes are determined based on actuarial valuation made by an independant actuary as at the balance sheet date. The actuarial gains or losses are recognised immediately in the Profit and Loss account.

INVENTORY:

(a) Raw materials, components & finished goods are valued at lower of cost and net realisable value. Work-in-Process is valued at estimated cost and scrap is valued at net realisable value. Cost of Raw Materials and Components is at Weighted Average Cost. Cost of Finished Goods includes purchase cost/cost of conversion and other costs incurred in bringing the inventory to their present location and condition.

Foreign Subsidiary:

(b) Stock is valued at the lower of cost and net realisable value. Cost is mainly average cost and comprises direct costs incurred to bring the stock to their present location and condition.

FOREIGN CURRENCY TRANSACTIONS:

(a) In respect of foreign exchange transaction, the transaction in foreign currency is recorded in rupees by applying the exchange rate prevailing at the time of the transaction. Amount short or excess realised/incurred is transferred to Profit and Loss account.

(b) All foreign currency liabilities/assets not covered by forward contracts, are restated at the rates prevailing at the year end and any exchange differences are dealt with in the Profit & Loss Account.

(c) In respect of transaction covered by forward contracts, the difference between the contract rate and the spot rate on the date of transaction is charged to the Profit & Loss Account over the period of the contract.

Foreign Subsidiary:

(d) Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the Balance Sheet date. Transactions in foreign currencies are recorded at the average exchange rate for the year. All differences are taken to Profit and Loss account.


7170 7170

Translation of Financial statements of Foreign Subsidiary:

(a) All incomes and expenses are translated at the simple average rate of exchange prevailing during the year.

(b) Assets and liabilities are translated at the closing rate of exchange on the Balance Sheet date.

(c) The resulting foreign currency differences are accumulated in foreign currency translation reserve.

EXPORT BENEFITS:

All export benefits other than advance licence benefits are accounted for on accrual basis.

TAXATION:

(a) Provision for income tax is made on the basis of the taxable income for the current accounting period in accordance with the provisions of Income Tax Act, 1961.

(b) The deferred tax for timing differences between the book profits and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as of the Balance Sheet date. Deferred tax asset arising from timing differences are recognised to the extent there is a virtual certainity that this would be realised in future and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

(c) Fringe Benefit Tax is determined at current applicable rates on expenses falling within the ambit of ‘Fringe Benefit Tax’ as defined under the Income Tax Act, 1961.

EMPLOYEES STOCK OPTION:

Employee Stock Options are accounted in accordance with the guidelines stipulated by Securities Exchange Board of India (SEBI). The difference between the market price of the shares underlying the options granted on the date of the grant of options and the option price is expensed out as employee compensation over the period of vesting.

LEASE:

(a) Lease rental in respect of asset acquired under operating leases are charged off to the Profit and Loss account as incurred. Lease rentals in respect of assets given under operating leases are credited to the Profit and Loss account.

Foreign Subsidiary:

(b) Lease rentals payable under operating leases are charged against income on a straight-line basis over the term of the lease.

PROVISION AND CONTINGENT LIABILITIES:

The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. 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. Where there is possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

IMPAIRMENT OF ASSETS:

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the management estimates the recoverable amount of 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 carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

MISCELLANEOUS EXPENDITURE:

(a) Expenditure on Voluntary retirement scheme is being charged over a period of 4 years.

(b) Expenditure incurred in respect of Foreign collaboration agreement are written off over the period of the agreement.

Schedule ‘X’ (Contd.)

Dilip Piramal Chairman

Sudhir Jatia Managing Director


G. L. Mirchandani Director

S. P. Trivedi Company Secretary

Place : Mumbai

Dated : 23rd May, 2008

Signatures to Schedule ‘A’ to ‘X’

As per our Report of even date attachedfor M. L. BHUWANIA & CO.Chartered Accountants

J. P. BAIRAGRA (Partner)Membership No. : 12839

Place : MumbaiDated : 23rd May, 2008



7272

Financial Highlights

(Rupees in ’000)

PARTICULARS

YEAR ENDED

31st March 2004

31st March 2005

31st March 2006

31st March 2007

31st March 2008

A. SUMMARISED BALANCE SHEET

Assets Employed:

Fixed Assets (Net) 533,058 542,178 555,128 854,644 909,738

Investments 160,295 156,471 145,369 37,584 38,084

Net Current Assets 791,583 668,523 878,487 1,239,467 1,541,427

1,484,936 1,367,172 1,578,984 2,131,695 2,489,249

Financed by:

Shareholders’ Funds 455,074 497,393 585,988 993,175 1,198,069

Loan Funds 968,330 816,232 950,005 1,093,306 1,255,329

Deferred Tax Liabilities (Net) 61,532 53,547 42,991 45,214 35,851

1,484,936 1,367,172 1,578,984 2,131,695 2,489,249

B. SUMMARISED OPERATIONS

Gross Sales 2,963,896 3,212,325 3,308,345 4,389,597 5,672,308

Gross Profit after Interest 191,249 214,258 233,980 317,355 393,320

Depreciation 99,980 108,515 109,895 136,310 147,801

Profit before Tax 91,269 105,743 124,085 181,045 245,519

Taxation 25,581 33,015 42,843 37,770 44,526

Profit after Tax 65,688 72,728 81,242 143,275 200,993

Dividend (Incl. Dividend Tax) 34,645 35,095 35,473 74,472 99,200

Retained Earnings 31,550 37,012 41,915 229,388 153,288

C. KEY RATIOS/PERCENTAGES

Profit before Tax/Sales % 3.08 3.29 3.75 4.12 4.33

Profit after Tax/Shareholder’s Funds % 14.43 14.62 13.86 14.43 16.78

Earnings per Equity Share (Rs.) 4.28 4.74 5.29 5.76 7.11

Net worth per Equity Share % 296.37 323.93 376.72 390.06 423.89

Sales: Fixed Assets (Net) 5.56:1 5.92:1 5.96:1 5.14:1 6.24:1

Current Ratio 2.45:1 2.06:1 2.74:1 2.49:1 2.64:1

Dividend % 20 20 20 25 30

Financial.indd 72 7/29/2008 5:04:49 PM

72


72

Registered Office: 78-A, MIDC Estate, Satpur, Nashik - 422 007.

ATTENDANCE SLIP

41st Annual General Meeting on Friday, the 29th August, 2008, at 12.30 p.m.

PLEASE COMPLETE THIS ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL

Joint Shareholders may obtain additional Attendance Slips on request

NAME & ADDRESS OF THE SHAREHOLDER L.F. NO./DP. ID & CL. ID NO. OF SHARES

I certify that I am the registered shareholder/proxy for the registered shareholder of the Company.

I hereby record my presence at the 41st Annual General Meeting of the Company at “NIWEC”, P-29, Street 14, MIDC, Satpur, Nashik - 422 007 on Friday, the 29th August, 2008, at 12.30 p.m.

SIGNATuRE OF THE SHAREHOLDER OR THE PROxy ATTENDING THE MEETING

If Shareholder, please sign here If Proxy, please sign here

TEAR HERE

Registered Office: 78-A, MIDC Estate, Satpur, Nashik - 422 007.

PROXY FORM

L. F. NO./DP. ID & CL. ID :

I/We ................................................................................................................. of ......................................................... in the

district of ................................................................................... being a member(s) of V.I.P. INDUSTRIES LIMITED hereby

appoint ..................................................................................................... of ............................................................... in

the district of................................................... or failing him/her...................................................................................................

of ................................................................... in the district of............................................................ as my/our proxy to attend and vote for me/us on my/our behalf at the 41st Annual General Meeting of the Company to be held on Friday, the 29th day of August, 2008, at 12.30 p.m. at “NIWEC”, P-29, Street 14, MIDC, Satpur, Nashik - 422 007 and at any adjournment(s) thereof.

Signed this ............................................................................................... day of .............................................................. 2008.

Affix a Re. 1

Revenue Stamp

(Signature of the Shareholder)

NOTE : This proxy Form in order to be effective must be deposited, duly completed, at the Registered Office of the Company, not less than 48 hours before the commencement of the aforesaid Meeting.

TEA

R H

ER

E

Financial.indd 73 7/29/2008 5:04:51 PM

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