1. Corporate Information:

Virat Industries Limited (“the Company”) is a public Company listed on the Bombay Stock Exchange. The Company is a manufacturer and Exporter of premium quality of dress and sport socks for Men, Ladies and Children. The Company also manufactures high quality football socks for many clubs of Europe. The socks are knitted and processed on imported machinery. The socks of the Company are exported to Switzerland, U.K. and Gulf countries for top end markets.

The manufacturing activity and Registered Office of the Company are located in Navsari, South Gujarat. The Head Office of the Company is situated in Mumbai. The marketing function is carried out at the Mumbai Head Office.

2.1 Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period:

The Company has not alloted any equity shares for consideration other than cash, bonus shares, nor have any shares been bought back in the 5 years immediately preceding the balance sheet date.

Terms and rights attached to equity shares

The equity shares of the Company rank pari passu in all respacts including voting rights and entitlement to dividend.

2.2 Details of shares held by each shareholder holding more than 5% shares:

3 Employee Benefit Plans

(a) Defined Contribution Plan: The Company makes Provident fund and other funds contributions to defined contribution plans for qualifying employees. The Company recognised (Rs. ‘000) 2,483 (Year ended 31 March, 2017 (Rs. ‘000) 2,159) for Provident Fund contributions.

(b) Defined Benefit Plan: Gratuity: Provision is made for gratuity and compensated absences based upon actuarial valuation done at the end of every financial year using ‘Projected Unit Credit’ method and it covers all regular employees. Gains and losses on changes in actuarial assumptions are accounted for in the Statement of profit and loss. The Company has funded gratuity with Life Insurance Corporation of India.

The disclosures as required under revised Indian Accounting Standard 19 on "Employee Benefits" are as follows: The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

4 Segment information

The principal business of the company is of manufacturing of socks. All other activities of the Company revolve around its main business. Hence, there is only one primary reportable business segment as defined by Indian Accounting Standard (Ind AS) 108 - “Segment Reporting”. The segment reporting is consistent with the internal reporting provided to the Managing Director regarded as the Chief Operating Decision Maker (“CODM”).

The Secondary Segment are identified based on the geographical location of customers. The secondary geographical segments of the company consist of regions of United Kingdom, Switzerland, UAE, India and Rest of the World.

Previous year figures are given in brackets.

Segregation of assets (except trade receivable) into secondary segments has not been done as all the assets are located and used in India and the Company is of the view that it is not practical to reasonably allocate such assets and an ad-hoc allocation will not be meaningful.

Information about major customers

Included in revenues arising from direct sales of knitted socks of (In Rs.’000) 138,277, 51,009 and 43,495 (2015-2016 : (In Rs.’000) 81,694, 37,239 and 53,521) are revenues of approximately (In *’000) 265,164 (2016-17: (In Rs.’000) 172,454) which arose from Federation of Migros Co-operative Society, Buffalo Private Label Ltd. and RNA Resources. No other single customers contributed 10% or more to the revenue for both 2017-2018 and 2016-2017.

5 Details of leasing arrangements As Lessee

The Company has entered into finance lease arrangements for vehicles, which provide the Company an option to purchase the asset at the end of the lease period.

The Company has acquired premises on lease, which are in the nature of cancellable operating lease as defined in Accounting Standard 19 “Leases”. The lease rent paid and accounted during the year was (Rs. ‘000) 2049 (Previous year ((Rs. ‘000) 2249) as per the terms and conditions of the lease agreements and is charged to the Statement of Profit and Loss.

6 The Company has not granted any loans / advances in the nature of loans as stipulated in the Clause 32 of the Listing Agreement with the Stock Exchanges. For this purpose, the loans to employees as per the Company’s policy and security deposits paid towards premises taken on leave and license basis have not been considered.

7 In the year 2016-17, the Company had received an advance of Rs.’000) 2420/- from a Customer against an order for socks. Since the Customer has wound up its business, the said order has been cancelled. Consequent to this, the said advance has been written back as liabilities no longer required, Note no. 26(ii) and adjusted against the cost of raw material of (Rs.’000) 355/- (Note No. 27) and cost of finished goods Rs.’000) 780/- (Note No. 28) of the said Order.

Notes: First-time adoption of Ind-AS

(i) These financial statements, for the year ended 31st March, 2018, are the first statements prepared by the Company in accordance with Ind-AS. For periods up to and including the year ended 31st March 2017, the Company prepared its financial statements in accordance with statutory reporting requirement in India immediately before adopting Ind AS (‘previous GAAP’).

(ii) Accordingly, the Company has prepared financial statements which comply with Ind-AS applicable for periods ending on or after 31st March, 2018, together with the comparative period data as at and for the year ended 31st March, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1st April, 2016, the Company’s date of transition to Ind-AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April, 2016 and the financial statements as at and for the year ended 31st March, 2017.

(iii) Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expense, gains, or losses are required to be presented in other comprehensive income. Further, Indian GAAP profit is reconciled to total comprehensive income as per Ind AS.

(iv) The estimates at 1 April 2016 and at March 31, 2016 are consistent with those made for the same dates in accordance with previous GAAP (after adjustments to reflect any differences in accounting policies).

(v) Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS.

The Company has applied the following exemptions:

Property, Plant and Equipments were carried in the statement of financial position prepared in accordance with previous GAAP on 31 March 2016. The Company has not elected the option to regard carrying values as at 31 March 2015 as deemed cost at the date of transition. Accordingly the Company has elected to measure its items of Property, Plant & Equipment at the date of transition to In AS. Accordingly an amount of (Rs.’000) 148 has been adjusted against opening reserves on date of transition.

(vi) Under previous GAAP, leasehold properties were presented as Fixed Assets and amortized over the period of the lease. Under Ind AS, such properties have been classified as Non Current Assets (current portion presented as Other Current Assets) and have been amortised over the period of the lease, resulting in decrease in Property, Plant and Equipment (PPE) by (Rs.’000) 499/- (NBV) as at 1st April, 2016 and by (Rs.’000)491/- as at 31st March, 2017 and corresponding increase in Other Non Current Assets by by (Rs.’000) 499/- (NBV) as at 1st April, 2016 and by (Rs.’ 000) 491/- as at 31st March, 2017.

Such reclassification has resulted in decrease in Depreciation and amortization expense by (Rs.’000) 8/- for the year ended 31st March 2017 and corresponding increase in Other Expenses, but does not affect profit before tax and total profit for the year ended 31st March, 2017.

(vii) Under previous GAAP, dividends on equity shares (including the tax thereon) was provided in the books of account as proposed by the Directors, pending approval at the Annual General Meeting. Under Ind AS, dividends to shareholders recommended by the Directors after the end of the reporting period but before the financial statements are approved at the Annual General Meeting are not recognised as a liability (including the tax thereon) at the end of the reporting period, but are disclosed separately in the notes. These are recognised when declared by the members in the Annual General Meeting. The effect of this change is an increase in total equity as at 31st March, 2017 of Rs. NIL (1st April, 2016 - (Rs.’000) 14,814/-), but does not affect profit before tax and total profit for the year ended 31st March, 2017.

(viii) Under previous GAAP, actuarial gains and losses were recognised in profit or loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability / asset which is recognised in other comprehensive income. Consequently, the tax effect of the same has also been recognised in other comprehensive income under Ind AS instead of profit or loss. The actuarial gains for the year ended March 31, 2017 were (Rs.’000) 354/- and the tax effect thereon (Rs.’000) 117/-. This change does not affect total equity, but there is a increase in profit before tax of (Rs.’000) 354/-, and in total profit of (Rs.’000) 354/- for the year ended March 31, 2017.

(ix) Under previous GAAP, revenue from sale of products was presented net of excise duty under revenue from operations. Whereas, under Ind AS, revenue from sale of products includes excise duty. The corresponding excise duty expense is presented separately on the face of the standalone financial statement of profit and loss. The change does not affect total equity as at April 1, 2016 and March 31, 2017, profit before tax or total profit for the year ended March 31, 2017.

Capital Management and Financial Instrument Disclosures

8 Capital management

The Company manages capital risk in order to maximize shareholders’ profit by maintaining sound and optimal capital structure through monitoring of financial ratios, such as debt-to-equity ratio and net borrowings-to-equity ratio on a monthly basis and implements capital structure improvement plan when necessary. There is no change in the overall capital risk management strategy of the Company compared to last year.

The Company monitors the total capital as comprising of debt and equity. Debt includes all short term and long term debts. Equity comprises of total shareholders’ equity as reported in the financial statements.

The Company is not subject to externally enforced capital regulation.

9 Financial Risk Management

The Company’s activities expose it to avariety of financial risks: market risk, credit risk, liquidity risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer.

Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices could affect the Company’s income or the value of its holdings of financial instruments including cash flow. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Company uses derivatives to manage market risks.

All such transactions are carried out within the guidelines set by the Board of Directors. Generally, the Company seeks to apply hedge accounting to manage volatility in profit or loss.

Currency Risk

The Company undertakes transactions denominated in foreign currencies. Consequently, exposures to exchange rate fluctuations arise. The Company’s exposure to currency risk relates primarily to the Company’s operating activities and borrowings when transactions are denominated in a different currency from the Company’s functional currency.

The above year-end foreign currency exposures have not been hedged by derivative instruments or otherwise.

Credit Risk

Credit Risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collatarel, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure are continuously monitored.

Trade Receivables

The Company applies the simplified approach to providing for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expected loss provision for all trade receivables. The company has computed expected credit losses based on a provision matrix which uses historical credit loss experience of the Company. Forward-looking information (including macroeconomic information) has been incorporated into the determination of expected credit losses. The Company has taken dealer deposit amounting to Rs. 5 lakh and also certain sales are undertaken based on advance payments from customers, which is considered as collateral and these are considered in determination of expected credit losses, where applicable.

The credit risk on liquid funds such as Fixed deposits with Banks, investment in IRFC Bonds and derivative financial instruments is limited because the counterparties are banks and financial institutions with high credit-ratings.

The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on ongoing basis. To assess whether there is a significant increase in credit risk, the company compares the risk of default occuring on the asset as at the reporting date with the risk of default as at the date of initial recognition.

Liquidity Risk

The Company has established an appropriate liquidity risk management framework for the management of short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Maturity profile of financial liabilities

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.

The amounts included above for financial guarantee contracts are the maximum amounts the Company could be forced to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Company onsiders that it is more likely than not that such an amount will not be payable under the arrangement.

10 Sensitivity Analysis

Foreign Currency Sensitivity

The sensitivity analysis arises on account of outstanding foreign currency denominated assets and liabilities, including derivative contracts. The Company considers a sensitivity of 10% in applicable foreign currency rates, holding all other variables constant.

The following tables demonstrate the sensitivity to a reasonably possible change in USD, GBP and AUD exchange rates, with all other variables held constant.

If the change in rates decline by a similar percentage, there will be opposite impact of similar amount on Profit Before Tax and Pre-tax Equtiy Effect.

The sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

Interest Rate sensitivity

The sensitivity analyses below have been determined based on exposure to interest rate for both derivative and non-derivative instruments at the end of reporting period. For floating rate liabilities, analysis is prepared assuming the amount of liability outstanding at the end of the reporting period was outstanding for the whole year.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

Offsetting of balances

Certain financial assets and financial liabilities are subject to offsetting where there is currently a legally enforceable right to set off recognized amounts and the Company intends to either settle on a net basis, or to realise the asset and settle the liability, simultaneously. Certain derivative financial assets and financial liabilities are subject to master netting arrangements, whereby in the case of insolvency, derivative financial assets and financial liabilities will be settled on a net basis.

Our Company has not offset any financial asset and financial liability.

11 Fair Value Measurement Fair value hierarchy

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities

Level 2: Inputs other than quoted price including within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Derivatives are valued using valuation techniques with market observable inputs such as foreign exchange spot rates and forward rates at the end of the reporting period, yield curves, risk free rate of returns, volatility etc., as applicable.

Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case with listed instruments where market is not liquid and for unlisted instruments.

The fair value of trade receivables and payables is considered to be equal to the carrying amounts of these items due to their short - term nature.

There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has not classified any material financial instruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year.

12 Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.