NOTE 1. CORPORATE INFORMATION

Sportking India Limited (the Company) is a public limited company domicited in India and incorporated under the provisions of the Companies Act, 1956 on 15th February 1989 and has its registered office at 5/69, Guru Mansion, Padam Singh Road, Karol Bagh, New Delhi-110005. The company is engaged in manufacturing of Cotton Yarn, Synthetic Yarn and Blended Yarn and of Dyeing Activity. The Company has manufacturing units at Ludhiana and at Bathinda. The company is listed at BSE Limited (Bombay Stock Exchange)

The financial statements are approved for issue by the Company's Board of Directors on 21st May 2018.

1. The tangible assets are hypothecated/mortgaged to secure borrowings of the company (refer note no.12)

2. All property, plant and equipment and intangible assets carried in balance sheet as at April 1,2016 are in accordance with previous GAAP.

The company has elected to regard such carrying value as deemed cost at the date of transition.

3.The company has availed the exemption available under Ind AS 101, whereas the carrying value of Property, plant and equipment has been carried forwarded at the amount as determined under the previous GAAP netting of Ind AS adjustment such as government grants and processing fee etc.. Considering the FAQ issued by the ICAI, regarding application of deemed cost, the company has disclosed the cost as at 1st April 2016 net of accumulated depreciation. However, information regarding gross block of assets, accumulated depreciation has been disclosed by the company separately as follows:

b) Rights, preferences and restrictions attached to equity shares

Each holder of Equity share is entitled to one vote per share. In the event of liquidation of the company, the holders are entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note 1 :-The amount remaining unpaid on account of calls in arrear of Equity Shares of Rs. 10/- each at a premium of ' 25/- per share have been apportioned between Share Capital and Securities Premium Reserve Account in the ratio of three to seven.

The equity share capital and securities premium of Rs.14.80 Lacs and Rs.34.53 Lacs respectively are yet to be received on account of calls unpaid as on 31st March 2018 (Rs.16.20 Lacs and Rs.37.81 Lacs as on 31st March 2017)

Rights, preferences and restrictions attached to preference shares

Preference shares are having preference over equity shares in respect of payment of 5% dividend and repayment of capital over equity shareholders and is entitled to voting rights in the resolutions directly affecting their interest and on all resolution at every meeting of the company if the dividends to them are in arrears for the two financial years immediately preceding the last meeting or for any three years during the period of six years ending with the financial years preceeding the last meeting. Preference shares are redemable within 20 years from the date of allotment.

# Liability component of 5% Redeemable Non Cumulative Preference Shares includes unwinding of interest of Rs.49.99 Lacs upto 31st March 2018 (Rs. 24.38 Lacs upto 31st March 2017) using effective interest method to the liability component.

i) The term loans from State Bank of India, Punjab National Bank, Central Bank of India, Punjab and Sind Bank and Allahabad Bank are secured against a) first pari-pasu charge on hypothecation and Mortgage of all present and future Plant and Machinery and Land/Building of the Company situated at Village Meharban / Village Kanech / Village Barmalipur, Ludhiana and Village Jeeda, Bathinda. b) second pari-pasu charge on hypothecation of current assets of the company and c)first pari pasu charge on equitable mortgage of commercial land and building situated at Village Barmalipur, Ludhiana owned by Sh. Raj Kumar Avasthi (Chairman and Managing Director)and Sh.Munish Avasthi (Managing Director)

These term loans are further guaranteed by Sh. Raj Kumar Avasthi (Chairman and Managing Director) and Sh. Munish Avasthi (Managing Director).

ii) The term loans from ICICI Bank Limited,AXIS Bank Limited are secured against hypothecation of respective vehicles.

iii) The Loan of Rs.100.00 Lacs from Sh. Munish Avasthi (Managing Director) carry NIL interest and is not repayable before 31.03.2019

iv) The Company has not defaulted in repayment of loans and interest .

v) Terms of repayment of term loans including acceptance payable / buyer credit forming part of term loans.

ii) The Working capital borrowings (Cash Credit / Export Packing Credit) and Acceptances Payable/ Buyer Credit/Letter of Credit from consortium member banks viz. State Bank of India,(Earlier State Bank of Patiala also), Punjab and Sind Bank, Central Bank of India and Punjab National Bank are secured against first pari-pasu charge on all the current assets of the company including raw material, consumable stores and spares, stock in process, finished goods, bills, book debts and receivables and further collaterally secured against second charge on the Property, Plant and Equipment of the company at Village Meharban, Village Kanech, Village Barmalipur, Ludhiana, Village Jeeda Bathinda and equitable mortgage of commercial land and building situated at Village Barmalipur, Ludhiana owned by Sh. Raj Kumar Avasthi (Chairman and Managing Director) and Sh. Munish Avasthi (Managing Director)

iii) The working capital borrowings (Pledge of Warehouse Receipts) from State Bank of India and Punjab National Bank are secured against pledge of warehouse receipts of the raw cotton bales stored in approved warehouse.

These working capital borrowings are further guaranteed by Sh. Raj Kumar Avasthi (Chairman cum Managing Director) and Sh. Munish Avasthi (Managing Director)

iv) Working capital loans are repayable on demand.

NOTE 2. First time adoption of Ind AS

This financial statement is the first financial statement that has been prepared in accordance with Ind AS 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. The transition to Ind AS has been carried out in accordance with Ind AS 101 -'First time adoption of Indian Accounting Standards' with 1st April 2016 as the transition date.

This note explains the exemptions availed by the company on first time adoption of Ind AS and the principal adjustments made by the Company in restating its Indian GAAP financial statements as at 1st April 2016 and financial statements as at and for the year ended 31st March 2017 in accordance with Ind AS 101.

Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has, accordingly, applied following exemptions:

a) The Company has elected to consider carrying amount of all items of property, plant and equipments measured as per Indian GAAP as recognized in the financial statements as at the date of transition, as deemed cost at the date of transition. The effect of consequential changes arising on the application of other Ind AS has been adjusted to the deemed cost of Property, Plant & Equipment.

b) The Company has availed the exemption of fair value measurement of financial assets or liabilities at initial recognition and accordingly will apply fair value measurement of financial assets or liabilities at initial recognition prospectively to transactions entered into on or after 01st April 2016.

c) The estimates at 1st April 2016 and at 31st March, 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items under Indian GAAP did not require estimation:

- Fair values of Financial Assets & Financial Liabilities

- Impairment of financial assets based on expected credit loss modal

- Discount rates

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions as at 1st April, 2016 and 31st March, 2017.

Notes to the reconciliation of equity as at 1st April 2016 and 31st March 2017 and Total comprehensive income for the year ended 31st March 2017

1. Financial instruments measured at amortized cost

Under Indian GAAP, interest free loan from directors are recorded at their transaction value. Under Ind AS, these loans are to be measured at amortized cost on the basis of effective interest rate method. Due to this, long term borrowings have been decreased with Rs.13.47 lakhs as on 31st March 2017 (1st April 2016 Rs.19.50 lakhs). The difference between carrying amount and amortized cost has been recognized as 'Deferred interest income'. The said deferred interest income has been recognized under the head 'Other non current liabilities' (31st March 2017 Rs.6.98 lakhs 1st April 2016 Rs.13.47 lakhs) and 'Other current liabilities' (31st March 2017 Rs.6.49 lakhs 1st April 2016 Rs.6.03 lakhs).

Further, finance cost for the year ended 31st March 2017 has been increased by Rs.6.03 lakhs which is offset by the notional interest income of Rs.6.03 lakhs under the head 'Other Income'

2. Borrowings

Under Indian GAAP, transaction costs incurred in connection with borrowings are amortised upfront and are either charged to profit or loss for the period or are capitalized in property, plant and equipments.

Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and are either charged to profit or loss or are capitalized in property, plant and equipments using the effective interest method over the period of loan. This has resulted a decrease in long term borrowings on account of unamortized amount of processing charges with Rs.85.45 lakhs as on 31st March 2017 (1st April 2016 Rs.117.55 lakhs). This has resulted a corresponding decrease in retained earnings and property, plant and equipments with Rs.40.27 lakhs and Rs.125.71 lakhs respectively as on 31st March 2017 (1st April 2016 Rs.32.07 lakhs and Rs.149.62 lakhs respectively). This has also resulted in net decrease of Rs.8.17 lakhs in the profit for the year ended 31st March 2017 having effect of decrease of Rs.23.91 lakhs in depreciation and amortization expenses and increase in finance cost of Rs.32.10 lakhs

3. Capital grant

Under Indian GAAP, certain capital grant received from Government as 'Promoter Contribution' is shown under the head 'Capital reserve'. Under Ind AS, such grant is treated as deferred income and is recognized as income over the useful life of the assets for which such grant is received. This has resulted a decrease in Capital reserve of Rs.90.00 lakhs as on 31st March 2017(1st April 2016 Rs.90.00 lakhs) with a corresponding adjustment in retained earnings.

4. Defined benefit obligation

Under Ind AS, remeasurements i.e actuarial gains and losses are to be recognized in 'Other comprehensive income' and are not to be reclassified to profit and loss in a subsequent period. Under the Indian GAAP, these remeasurements were forming part of the profit or loss. Therefore, actuarial loss amounting to Rs.6.50 lakhs for the financial year ended 31st March 2017 has been recognized in OCI (net of taxes of Rs.2.25 lakhs) which was earlier recognized Employee benefits expense. However, the same has no impact on the total equity as at 31st March, 2017.

5. Sale of goods

Under I ndian GAAP, sale of goods was presented as net of excise duty. However, under I nd AS, sale of goods includes excise duty. Thus, sale of goods under Ind AS has increased by Rs.145.47 lakhs with a corresponding increase in other expenses as on 31st March, 2017.

6. Bill discounted against debtors

Under Indian GAAP, bills discounted against debtors were shown as contingent liability. How ever, the same falls under the category of 'Financial instruments' under Ind AS. Therefore, the bills discounted amounting to Rs.9,573.14 lakhs and Rs.10,993.75 lakhs as on 31st March 2017 and 1st April 2016 respectively have been shown under 'Short term borrowings' with a corresponding adjustment in 'Trade receivables'. However, the same has no impact on the total equity as at 31st March, 2017 and 1st April, 2016.

7. Non-Convertible preference shares

The Company has issued non cumulative non convertible redeemable preference shares. Under Indian GAAP, the preference shares were classified as equity. Under Ind AS, the same has been treated as a financial liability as per criteria mentioned in Ind AS 32 and interest on said financial liability is recognised using the effective interest method. On account of this, the share capital is reduced by Rs.851.62 lakhs as on 31st March, 2017 (1st April 2016: Rs.851.62 lakhs) with a corresponding increase in long term borrowings of Rs.512.06 lakhs as on 31st March 2017 (1st April 2016 Rs.487.67 lakhs) and other equity of Rs.339.56 lakhs as on 31st March 2017 (1st April 2016 Rs.363.95 lakhs).This has also resulted increase in finance cost of Rs.24.39 lakhs for the year ended 31 st March 2017on account of unwinding of interest which has lead to decrease in the net profit with the said amount.

8. Deferred tax

Under Indian GAAP, deferred tax was recognized for the temporary timing differences which focus on differences between taxable profits and accounting profits for the period. Ind AS requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Further, the application of Ind AS has resulted in recognition of deferred tax on certain temporary differences which was not required under Indian GAAP Accordingly, deferred tax adjustments have been recognised in correlation to the underlying transactions in retained earnings/OCI in accordance with Ind AS. This has resulted decrease in deferred tax liability of Rs.14.00 lakhs and Rs.11.00 lakhs as at 31st March 2017 and 1st April 2016 respectively. The net profit for the year ended 31st March 2017 has been decreased with Rs.3.00 lakhs with a corresponding adjustment in 'Deferred tax liability'.

9. Statement of cash flows

The transition from Indian GAAP to Ind AS has not had a material impact on statement of cash flows.

3 (A) Fair Value Measurement

(i) Fair Value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly(i.e. as prices) or indirectly (i.e. derived from prices) Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

Note: Based on legal advice, discussions with the solicitors, etc., the management believes that there is fair chance of decisions in the company's favour in respect of all the items listed above and hence no provision is considered necessary against the same. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the company's financial position and results of operations.

Note: During the financial year 2017-18, the amount of Duty saved on import of spares under EPCG license has been charged to expense for Rs.16.45 Lakhs and duty saved on import of Capital goods under EPCG license has been capitalized for Rs.1.16 Lakhs and corresponding effect of the both amounts has been offset with Deferred Income EPCG Obligations account.

NOTE - 4

Amortization of Intangible Assets

Software purchased and expenditure on power lines have been amortized @20% on straight line basis as the useful life has been estimated to be not more than five years.

NOTE - 5

Impairment of Assets

In accordance with Ind AS-36 on "Impairment of Assets" the Company has assessed as on the balance sheet date, whether there are any indications with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

NOTE-6

Earning Per Share

The calculation of Earning per Share (EPS) as disclosed in the statement of profit and loss has been made in accordance with Indian Accounting Standard (Ind AS)-33 on "Earning per Share"

NOTE – 7 LEASE EXPENSES

The company has entered into operating leases for its godowns, land, building, guest house and residential house that are renewable on a periodic basis. The company has not entered into sub-lease agreements in respect of these leases. The lease rentals charged in the statement of profit and loss for the year is Rs.20.87 Lacs (Previous year is Rs.17.50 Lacs).

LEASE INCOMES

The company has entered into operating leases for its land and building that are renewable on a periodic basis. The lease rentals incomes booked in the statement of Profit and Loss for the year is Rs.4.03 Lakhs (Previous year is Rs.4.22 Lakhs).

(j) The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 13.00 years (Previous Year: 14.00 years).

(k) The expected contribution to the trust during the next year is Rs.680.56 Lakhs (Previous Year Rs.605.66 Lakhs)

NOTE-8 Financial Risk Management

The principal financial assets of the Company include loans, trade and other receivables, and cash and bank balances that derive directly from its operations. The principal financial liabilities of the company include loans and borrowings, trade and other payables and the main purpose of these financial liabilities is to finance the day to day operations of the company.

The company is exposed to market risk, credit risk and liquidity risk. The company's senior management oversees the management of these risks and that advices on financial risks and the appropriate financial risk governance framework for the company

This note explains the risks which the company is exposed to and policies and framework adopted by the company to manage these risks:

(i) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: foreign currency risk, interest rate risk and investment risk.

a) Foreign currency risk

The company operates internationally and business is transacted in several currencies. The export sales of company comprise around 55% of the total sales of the company, Further the company also imports certain assets and material from outside India. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently the company is exposed to foreign currency risk and the results of the company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than company's functional currency.

The company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by appropriately hedging the transactions. The Company uses a combination of derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The following table summarizes the company's exposure foreign currency risk from financial instruments at the end of each reporting period:

b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's debt obligations with floating interest rates.

As the Company has no significant interest-bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's debt obligations with floating interest rates, which are included in interest bearing loans and borrowings in these financial statements. The company's fixed rate borrowings are not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Cash flow sensitivity analysis for variable rate instruments

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. A change of 100 basis points in interest rates for variable rate instruments at the reporting date would have increased/(decreased) profit or loss for the below years by the amounts shown below. With all other variables held constant, the Company's profit before tax is affected through the impact on floating rate borrowings, as follows:

c) Investment Risk:

Company has not made any investments hence it is not exposed to investment risk.

(ii) Liquidity Risk

The financial liabilities of the company, other than derivatives, include loans and borrowings, trade and other payables. The company's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations.

The company monitors its risk of shortage of funds to meet the financial liabilities using a liquidity planning tool. The company plans to maintain sufficient cash and marketable securities to meet the obligations as and when fall due.

The below is the detail of contractual maturities of the financial liabilities of the company at the end of each reporting period:

(iii) Credit Risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables which are typically unsecured. Credit risk on cash and bank balances is limited as the company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. The Company's credit risk in case of all other financial instruments is negligible.

The company assesses the credit risk based on external credit ratings assigned by credit rating agencies. The company also assesses the creditworthiness of the customers internally to whom goods are sold on credit terms in the normal course of business. The credit limit of each customer is defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to overseas customers are generally covered by letters of credit.

The impairment analysis is performed on client to client basis for the debtors that are past due at the end of each reporting date. The company has not considered an allowance for doubtful debts in case of trade receivables that are past due but there has not been a significant change in the credit quality and the amounts are still considered recoverable.

The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables as disclosed at Note 6.

Write off policy

The financials assets are written off in case there is no reasonable expectation of recovering from the financial asset.

NOTE-9

Capital Management

The capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the company. The primary objective of the company's capital management is to maintain optimum capital structure to reduce cost of capital and to maximize the shareholder value.

The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants which otherwise would permit the banks to immediately call loans and borrowings. In order to maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

(a) The trade receivables include Rs.2854.17 lakhs due from the firms and private companies in which any director is a partner or a director or a member.

(b) The advances to suppliers include Rs.1183.13 lakhs due from the firms and private companies in which any director is a partner or a director or a member.

(c) The trade payables include Rs.1.36 lakhs due to the firms and private companies in which any director is a partner or a director or a member.

NOTE -10

Segment Reporting

The Company's Chief Operational Decision Makers consisting of chief executive officer and chief finance officer examines the company's performance both from product and geographic perspective.

From product perspective, the company is a single segment company operating in textile business and disclosure requirements as contained in Ind AS- 108 'Operating Segments' are not required.

The transactions with any single external customer do not exceed 10% of the company's total revenue.

NOTE -11

In accordance with provisions of section 135 of the Companies Act, 2013, a company meeting the applicable threshold, need to spend at least 2% of the average net profit for the immediate preceding three financial years on Corporate Social Responsibility (CSR) activities as defined in schedule-VII of the Companies Act 2013. The company has spent a sum of Rs. Nil (previous year Rs. Nil) towards approved Corporate Social Responsibility (CSR) activities. The unspent amount as at reporting date is Rs.38.55 Lakhs (Previous year Rs.43.92 Lakhs.)

NOTE -12

In accordance with Ind AS 18 on "Revenue" and Schedule III to the Companies Act, 2013, Sales for the previous year ended 31 March 2017 and for the period 1 April to 30 June 2017 were reported gross of Excise Duty and net of VAT/ CST. Excise Duty was reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from 1 July 2017, VAT/CST, Excise Duty etc. have been subsumed into GST and accordingly the same is not recognized as part of sales as per the requirements of Ind AS 18. This has resulted in lower reported sales in the current year in comparison to the sales reported under the pre-GST structure of indirect taxes. With the change in structure of indirect taxes, certain expenses where credit of GST is available are also being reported net of taxes.

Recent Accounting pronouncements

(i) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:

On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, "Foreign Currency Transactions and Advance Consideration" which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration.

The amendment is applicable for annual reporting periods beginning on or after April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.

(ii) Ind AS 115- Revenue from Contract with Customers:

On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers.

The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.

NOTE- 13 Reconciliation of Cash flow from financing Activities

In Pursuant to amendment in the Companies(Indian Accounting Standards) Rules,2017 via MCA notification G.S.R 258(E) dated 17th March, 2017 Para 44A to Para 44E has been inserted after para 44 in Indian Accounting Standard -7 "Statement of Cash Flows", following reconciliation required from beginning on or after 1st April,2017

The previous year figures have been regrouped/ restated wherever necessary.