Accounting Policies of Bata India and its competitors:

Company/Poli cies Revenue recognition

Bata India
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Straight line method is suitable for assets that operate uniformly and consistently over the life of the item. The fixed method is straightforward, uncomplicated, easy to understand and simple to apply. In Written Down Value method higher depreciation is charged in early years as it takes into account that asset is more efficient in early years and therefore it is more realistic way of depreciation.

Crew Boss
Sales are recognized upon the transfer of significant risks and rewards of ownership to the customers. Cost of samples developed and supplied is recognized on accrual basis net of recoveries. The Company adequately hedges its inherent Foreign Currency Exposures.

Mirza International
Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. It includes sale of goods, export incentives etc. Revenue arising from the use by others of enterprises resources yielding interest, dividends, are recognized on the following basis : Interest income is recognized on time proportion basis taking in to account the amount outstanding and rate applicable. Dividend for investment is recognized when right to receive is established.

Investment s

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon

Quoted Investments: Quoted Investments are carried at lower of cost and fair value. Fair value in the case of quoted investments refer to the market value of the investments arrived at on the basis of last tradedprices as at the year end. Unquoted Investments: Unquoted Investments

Long term investments are valued at cost. The Cost of Investments made in Foreign Currency is translated at rates prevailing on the Balance Sheet date unless temporary in nature and gain/loss if any is accumulated in Foreign Currency Translation Reserve. Diminution in the value of Long Term Investments is recognized only if the same is, in the opinion of the management, of a permanent

management's best knowledge of current events and actions, actual results could differ from these estimates.

are carried at cost.

nature.

Borrowing Costs

Borrowing costs that are directly attributable to the acquisition or construction of Qualifying Assets, which take substantial period of time to get ready for its intended use are capitalized until the time all substantial activities necessary to prepare such assets for their intended use are complete. Other Borrowing costs are recognized as an expense in the year in which they are incurred.

The borrowing costs on funds other than those directly attributable to the acquisition of a qualifying asset i.e. assets that necessarily takes a substantial period of time to get ready for its intended use, are charged to revenue in the period in which they are incurred. The borrowing costs that are directly attributable to the acquisition, Construction or production of qualifying assets are capitalized as part of the cost of that asset. Raw materials are valued at weighted average cost. Semi finished goods are valued at cost up to estimated stage of process. Finished Goods are valued at lower of cost and net realizable value.

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets. Borrowing costs comprise of interest and other costs incurred in connection with borrowing of funds.

Inventories

Raw materials, components, stores and spares are valued at lower of cost and net realizable value . Cost of finished goods includes excise duty. Cost of traded goods includes purchase and allied costs incurred to bring inventory to its present condition and location, determined on FIFO basis FIFO can reduce the inflationary impact felt by the company, as the oldest inventory items are used. Assuming that inflation is constant, the purchase price of the inventory used in production or that is sold at retail was lower than the price of inventory most recently purchased.

Inventories are valued at the lower of Historic cost or the Net Realisable Value. Costs are determined as under: a. Bought Out Items : On First in First Out (FIFO) method except raw hides (valued at six months average purchase price incase of Indigenous hides and full year weighted average price in case of imported hides). In respect of bought out items where CENVAT CREDIT is permitted excise duty is excluded from purchase price for determining the cost. b. Goods In Process : At cost plus estimated value addition/cost of conversion at each major stage of production.

c. Finished Goods : At direct cost plus allocation of all overheads (including interest on working capital) other than Marketing, Selling & Distribution Expenses and Interest on Term Loan / Debentures.

Taxes Income

on Tax expense comprises of

current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

In accordance with Accounting Standard 22 Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India, the deferred tax for timing differences between the book 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 Assets arising from temporary timing differences are recognized to the extent there is reasonable certainty that the asset can be realized in future.

Provision for Income Tax comprises of Current Tax, i.e. tax on the taxable income computed for the year as per Tax laws and the net change in the deferred tax assets / liability of the company during the current year. Deferred tax assets/ liabilities are recognized on the basis of timing difference in Tax treatment of Revenue Item. The timing differences are subjected to the extant provision of law and enacted tax rates in force to determine the Deferred Tax Asset / liability. While a deferred tax liability is recognized when computed, the management exercises prudence and conservatism while recognizing deferred Tax Assets.

Impairment

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is the carrying amount fanassetexceedsits recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in

Fixed assets are reviewed for impairment on each balance sheet date, inaccordance with the accounting standard AS 28 issued by The Institute of Chartered Accountants of India.

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Proft and Loss in the year in which an asset is identifed as impaired. The impairment loss recognised in prior accounting period is increased/ reversed where there has been change in the estimate of recoverable value. The

use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and risk specific to the asset. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

recoverable value is the higher of the assets'' net selling price and value in use

Bata India: Key Highlights of Board of Directors report 2012 During the year 2012, Bata India achieved a total turnover of Rs. 18,717.54 million as compared to Rs. 15,650.78 million in 2011, reflecting a growth of approx. 19.6% on year-on- year. Large scale expansion of retail stores, renovation of existing stores, improvement in customer service, Bata has improved its online shopping experience by making 'cash on delivery' and 'multiple order services' for the customers. Your Company has also made tie-up arrangements with various e-commerce sites, e.g., Jabong, Snapdeal, India Times, Rediff, Junglee, etc., to attract potential customers online. It has transferred a sum of Rs.171.60 million to General Reserve against Rs.225.84 million transferred last year. Bata India had opened 189 new stores in 2012 across metros, tier 1 and tier 2 cities. The company has renovated more than 50 retail stores and closed / relocated more than 60 retail stores. The Company has also continued expansion of its Hush Puppies brand with the opening of 15 exclusive new stores and 12 shop-in-shops stores across the country. Started Home Delivery service: In order to achieve volume growth your Company has opened 10 new FOOTIN stores across India during the year 2012 Most of the existing brands of footwear sold by your Company viz., Comfit, Ambassador, Mocassino, Scholl, Power,North Star, etc., have recorded a healthy growth during the year 2012. Introduction of new range of Marie Claire shoes helped your Company gain market share in the ladies footwear segment. Bubblegummer continues to remain the most favourite brands amongst the children for its comfort and attractive designs. New Brands launched in the year 2012 e.g., Sundrops,Angry Birds, etc, have generated good response in the market. Bata India Export sales in 2012 were Rs 149.82 million compared to Rs.169.34 million in 2011. The Logistics Team of your Company has successfully implemented the barcode enabled warehouse management system at three RDCs, i.e. Chennai, Farrukhnagar and Bhiwandi. The Capital Expenditure incurred during the year amounted to Rs. 877.59 million as against Rs. 1,244.97 million (including Batanagar housing of Rs. 433.76 million) in 2011. The capital expenditure was predominantly due to opening a number of new stores and modernization of

old stores. Capital expenditure has also been incurred for installation of machinery and moulds to modernize the factories and to produce footwear of the latest trendy designs. The Earning per Share (EPS) of Bata has increased by 20.8% (from Rs. 22.11 in 2011 to Rs. 26.70 in 2012) without considering the gains from Surplus Property Development in previous year. Bata is debt-free and the entire capital expenditure has been funded through internal sources. Total expenditure incurred on Research & Development was Rs. 46.89 million during the year. To the benefits of technical research and innovative programs of the Bata group from Global Footwear Services Pte. Ltd., Singapore, for which your Company has paid a fee of Rs.160 million during the calendar year 2012.Bata India Board has recommended a dividend @ Rs.6/- per share (i.e., 60%) on equity shares for the year ended December 31, 2012