1. The above unaudited financial results as reviewed by the Audit Committee  were taken on record by the Board of Directors in  their meeting held on 28th January 2005.
2. The  effective tax rate is higher due to phase out of Sec 80HHC on export profits.
3. The Income Tax provision including deferred taxation for the quarter is on estimated basis. The actual provision will be made at the year end.
4. Provision for impairment loss, if any , as at 1st April 2004, will be adjusted against the opening balance of revenue reserve in line with the requirements of Accounting Standard 28 "Impairment of Assets" at the end of the financial year.
5. Segments have been identified in line with the accounting standard on segment reporting taking into account the organisation structure as well the differential risk and returns of these segments. The company operates mainly in the garment and accessories segment and has no other reportable business segment which exceeds 10% of the total turnover as required by the accounting standard (AS - 17) of ICAI. 
6. There were no investor complaints pending at the beginning of the current quarter. Two complaints were received during the quarter and were duly attended. There is no pending complaint at the end of the quarter.
7. The company  is eligible  for grant of Duty Free Credit Entitlement Certificate, but the company has not yet recognised the benefit accruing for the same in the above financial statement on the grounds of prudence and conservatism.
8.  The company on 9.12.04 had allotted 7,50,000 equity shares of Rs.10/- each at a price of Rs.400/- per share  on preferential allotment basis. The company has received in-principle approvals from all the stock exchanges where the shares of the company are listed for listing of the above shares.
9. The above unaudited financial results for the quarter ended 31st Dec 2004 have been reviewed by the statutory auditors of the company.
10. Previous year/period figures have been regrouped wherever necessary.

• Sales for the quarter ended December, 04 was flat at Rs. 3840 lakhs as against    Rs. 3960 lakhs for the quarter ended December, 03.

• USA imposed an embargo on imports of men shirts from India during the quarter which resulted in lower exports from India. We had anticipated action, with the exhausting of quota towards mid/end December, 04; however the same came much earlier.

• The company rescheduled production across its factories in India and the factory in Dubai (which it agreed to acquire) so as to meet its commitment to its customers. This however entailed higher logistical cost and also led to loss in production days. The strategy of multi-country production (& multi-market sales) has been vindicated in this embargo situation as zodiac was able to meet its commitments to its clients and reach the products to them on time 

• The domestic business continued to operate satisfactorily and recorded growth and positive contribution. Two more stores were opened under the new format – both in Mumbai at the recently launched malls – CR2 and Grand Hyatt. Eight more new format stores are planned to be opened by March, 05, taking the total number of new format stores to eleven by March 31, 05.

• Profit declined due to higher costs on account of production rescheduling and increased production costs, directly resulting from the embargo as well due to higher tax rate due to phasing out of  sec 80HHC 

• The duty drawback rate has been reduced for the industry and the company is taking steps to mitigate the adverse effect of the same.

• The company raised Rs. 30 crores by issue of 7,50,000 equity shares of Rs. 10 each at a price of Rs. 400 per share (including premium of Rs. 390 per share) to certain investors on preferential allotment basis in terms of SEBI Guidelines.

• Capacity expansion at Bangalore has stabilized from 2nd half of December, 04. 

• The company completed acquisition of shirt factory at Dubai on 11 January, 05.  Dubai business reported revenues of AED 197 lakhs and profits of AED 13 lakhs for the half year ended December, 04 as against AED 207 lakhs and AED 10 lakhs respectively for the first half ended June, 04.Profit accruing on account of Dubai unit will be reflected in the year end account.

• Quota dismantling from 1.1.05 became effective without any hitch.