Cravatex Ltd. — Capital/Financing Update 2020

Mar 9, 2020

Registered Office Matulya Centre 2nd Floor Senapat, Bapat Marg Lowe, Parel (W). Mumbai· 400 013 CIN L93010MH1951PLC008546 T +91 22 6666 7474 F •91 22 2497 3210

E 1nfo@cravatex com W www cravatex com

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March 9, 2020

BSE Limited

Department of Corporate Services (DCS-Listing) Phiroze Jeejeebhoy Towers Dalal Street Mumbai - 400 001

Company Code: 509472

Dear Sirs,

Sub: Execution of Share Subscription and Shareholders' Agreement ("SSSHA")

Ref : Disclosure under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure) Regulations, 2015

Further to our letter dated March 6, 2020 and in accordance with Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure) Regulations, 2015 ("SEBI LODR"), we wish to inform you that the Company has today executed the share subscription and shareholders' agreement ("SSSHA") between Cravatex Brands Limited ("CBL"), which is a material subsidiary of the Company, the Company and Paragon Partners Growth Fund - I ("Investor"), Rajesh Batra, Rohan Batra and RB Fitness and Trading Private Limited, in relation to the Investor's investment into CBL. Pursuant to the SSSHA, CBL proposes to inter a/ia offer, issue and allot an aggregate of 16,04,970 Series A compulsorily convertible preference shares ("Series A CCPS") to the Investor at an aggregate consideration of INR 30,00,00,992.40 (Rupees Thirty Crore Nine Hundred Ninety Two and Forty paise only), by way of private placement, on the terms and conditions contained in the SSSHA. The SSSHA also contains certain rights, obligations and duties on parties, including restrictions on transferability, and provision of indemnity.

Detailed information in relation to the above, as required to be disclosed in terms of Regulation 30 read with Schedule Ill of the SEBI LODR is annexed hereto as Annexure 1 .

Kindly take the same on record.

Sudhanshu Nam Company Secretary

Registered Office Matulya Centre 2nd Floor Senapan Bapat Marg Lower Parel (W). Mumbai· 400 013 CIN L93010MH1951PLC008546 T +91226666 7474 F •91 22 2497 3210 E 1nfo@cravatex com W www cravatex com

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Annexure 1

The disclosure pursuant to Regulation 30 of the SEBI LODR read with Para A(5) of Part A of Schedule 111 and SEBI Circular Cl R/CFD/CMD/4/2015 dated 9[1" ] September 2015 with respect to the SSSHA is as follows:

Agreements (viz. shareholder agreement(s), joint venture agreement(s), family settlement agreement(s) (to the extent that it impacts management and control of the listed entity), agreement(s)/treaty(ies)/contract(s) with media companies) which are binding and not in normal course of business, revision(s) or amendment(s) and termination(s) thereof

Sr.	Disclosure	Disclosure	Disclosure				Remarks
No.
1 . Name(s) ofparies with						whom	CravatexBrands Limited(CBL"),Rajesh Batra,
theagreement is entered							Rohan Batra,R.B. FitnessandTrading Private
							Limited("RB Fitness"),Paragon Parners Growh
							Fund - I("Investor").
2. Purpose ofentering					into the		To record the manner andterms of issuanceand
agreement							allotmentof an aggregate of 16,04,970 Series A
							compulsorily converible preference shares
							(Series A CCPS")to the Investor for an
							aggregate consideration ofINR 30,00,00,992.40
							(Rupees Thiry Crore NineHundred Ninety Two
							and Fory Paise only), by way of private
							placement.and to record the modification and
							provision of ceraininter serights andobligations
							of the pariesvis-a-visCBL pursuant to the
							subscription of Series A CCPS of CBL by the
							Investor.
3. Shareholding,if			any,			in the	Subject to the terms ofthe SSSHA,post the
entity	with		whom			the	Investor making investment inCBL under the
agreement is		executed					SSSHA,there will be no changein the equity
							shareholding of the Company inCBL,which will
							be as follows:
							Company - 99.997%
							Investor - 0.003%
4. Significant		terms			of the		Set out belowin brief are cerain key termsI
agreement (in brief						special	rights set outin the SSSHA
rights	like	right	to			appoint
director,first right				to		share	>The Investor shall have the right to nominate
subscription		in		case of			two directors on the board of CBL,who shall
issuance of		shares,			right to		be non-executive directors, while the
restrict	any change			in		capital	Companyshall have the right to nominate
structure,etc.							three directors on the board of CBL.
							>If the Companyproposes to sell its securities
							to anyperson,the Company is required to
							give notice of the same to the Investor,who
							shall have a right of first refusal with respect to
							such securities.

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Registered Office Matulya Centre 2nd Floor. Senapau Bapat Marg, Lower Parel (W). Mumbai - 400 013 CIN L93010MH1951PLC008546 T +91 22 6666 7474 F +91 22 2497 3210 E ,nfo@cravatex com W www cravatex com

J	In the event the Investor chooses not to
	exercise its right of first refusal,theInvestor
	has a tag along right to sellon a pro-rata
	basis,its securities held in CBL,to the person
	whois purchasing CBL's securities from the
	Company,and if such sale causes a change in
	control of CBL,theInvestorhas a tag along
	right with respect to all its securities held in
	CBL.
J	TheInvestor and the Company have a pro­
	rata right to subscribe to any new issuance of
	securities by CSL.The Investor also has
	cerain anti-dilution protections.
J	CBL and the Company must make
	commercially reasonable efors to provide an exit to theInvestorby 301hSeptember 2022,by
	way of aninitialpublic ofering,sale of all or a
	majority of the securities of CBL,merger with
	the Company,sale of theInvestor's securities
	in CBLto a third pary or in any other manner
	acceptable to theInvestor.
J	The Investor has a drag along rightagainst
	other shareholders of the Company in a
	proposed sale ofthe securities held by the
	Investor:(a) in an event of default;or (b) if the
	Investor doesnot get anexit as contemplated
	above.
J	The Company,Rajesh Batra and Rohan Batra
	have provided covenants not to engagein a
	business which competes with the business of
	CBL,and have also provided covenants of
	non-solicitationvis-a-visCBL.
J	No action or decision relating to cerain
	resered matters shall be taken without the
	consent of theInvestor.
J	The Investor shallhave cerain information
	rights in relation to CSL.
J	On the occurrence of cerain events (such as
	merger, demerger, sale of shares etc.
	resulting in a change of control of CBL,or
	liquidation of CSL or sale of all assets of CBL),
	all assets/funds available for distribution are to
	be distributed among the diferent classes of
	shareholders of CSL in a specified manner
	with holders of preference shares and OCDs
	getting a preferential return over equity
	shareholdersofCSL.
J	The holders of the CCPS and OCDs have
	cerain rightswhich includes the right to
	conver their securitiesinto equityshares of
	CBL at a pre-agreed conversion formula and
	price.

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Registered Office Matulya Centre 2nd Floor. Senapau Bapat Marg. Lower Parel (W). Mumbai - 400 013 CIN L93010MH1951PLC008546

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T +912266 7474 F +91 22 2497 3210 E 1nfo@cravatex com W www cravatex com

Further, the SSSHA also contemplates the merger of Proline India Limited ("PIL") with CBL, subject to the fulfilment of various conditions ("Merger ). PIL is one of the key players sportswear industry with a well-known 'Proline' brand in the apparel category, and certain promoters I members of the promoter group of the Company are majority shareholders of Pl L. It is envisaged that the Merger will enable CBL to benefit from the synergies in supply change management, improve efficiency in the overall business, result in operational rationalization, etc. CBL will issue compulsorily convertible preference shares to the shareholders of Pl L as consideration for merger. As mentioned above, this is subject to various terms and conditions, including the obtaining of all necessary approvals and authorizations which shall be obtained at the appropriate time. > It rs further contemplated pursuant to the SSSHA that, upon the Merger becoming effective, the Investor shall acquire Series A CCPS from certain shareholders of CBL (who are shareholders of PIL but would become shareholders of CBL pursuant to the Merger, and who are promoters I members of the promoter group of the Company), for a consideration of INR 10,00,00,000 (Rupees Ten Crores Only) on terms and conditions which will be mutually agreed between such oarties. 5. Whether the said parties are R. B. Fitness, Rajesh Batra and Rohan Batra are related to the promoter I promoters I members of the promoter group of promoter group I group the Company, and collectively hold 74.99% of the companies in any manner. If shareholding of the Company, and CBL is a yes, nature of the relationshin. material subsidiarv of the cornoanv. 6. Whether the transaction would Not applicable fall within related party transactions? If yes, whether the same is done at "arms lenath".

1. In case of issuance of shares to the parties, details of issue Price, class of shares issued.

Not applicable.

1. Any other disclosures related Not applicable. to such agreements, viz., details of nominee on the board of directors of the listed entity, potential conflict of interest arising out of such aareements, etc;

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Reg1!>tercd Qff1r l' Matu'va Centre 2nd Floor Ser.ap.tu Bap. \1arg lower Parel (W) Mumbai 400 0[1] 3 CIN L93010MH 195' PcC008546

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T •91 22 6666 7474 F •91 22 2497 3210 E 1nfo( ravatex com W M'./W cravatex com

9.	In	case	of	termination	termination	termination	or	This SSSHA amends and supersedes an earlier
	amendment			of	agreement,			agreement dated 23ro March 2017 ("2017
	listed entity			shall		disclose		Agreement,and the details are as follows:
	additional details				to	the stock
	exchange(s):							>The Company,CBL,the Investor,Rajesh
	a)	name	of	paries to			the	Batra,Rohan Batra and RB Fitness were
	agreement;							paries to the earlier agreement;
	b)	nature of the agreement;						>The2017Agreement had been entered into
	c)	date of execution of					the	to record the mannerand terms of issuance
	agreement; d) details of amendment and impact thereof or reasons of terminationandimpact thereof.							and allotment by CBL of an aggregate of100 equity shares, 57,00,000 compulsorily converible preference shares("CCPS")and 18,00,000 optionally converible debentures (OCDS")to the Investor for an aggregate
								consideration of INR75,00,10,000and to
								record theinter serights and obligations of the
								paries vis-a-vis CBL pursuant to the
								subscription of equity shares,CCPS and
								OCDS of CBL by theInvestor.
								>The agreement was enteredinto on23rc
								March2017.
								>This agreement has been entered into for the
								purpose of recording the fresh investment into
								CBL by the Investor by subscription of Series
								A CCPS of CBL and to record the
								continuation,modification and provision of
								ceraininter serights and obligations of the
								paries vis-e-vis CBL pursuant to the
								subscription of Series A CCPS of CBL by the
								Investor.

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Registered Office Matutya Centre 2nd Ftcor Scnaoau Bapat Marg Lower Parel (W). Murnbat 400 013 CIN L93010MH1951 PLC008546 T +91 22 6666 7474 F •91 22 2497 3210 E 1nfo@cravatex com W www cravatex com

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The disclosure pursuant to Regulation 30 of the SEBI LODR read with Para A(2) of Part A of Schedule Ill and SEBI Circular CIR/CFD/CMD/4/2015 dated 9[1" ] September 2015 with respect to the SSSHA is as follows:

Restrictions on transferability of securities of the corncanv Sr. Disclosure Remarks No. 1 . Authority issuing attachment or Not applicable. orohibitorv orders 2. Brief details and reasons for Not applicable. attachment or prohibitory orders 3. Name or registered holders (i) Mr. Rajesh Batra; against whom restriction on (ii) Mr. Rohan Batra; transferabilitv has been c laced iii) R B Fitness and Tradina Private Limited 4. Total number of securities so Name of Number of Percentage affected shareholders securities shareholdina Mr. Rajesh [70] [0.00] Batra; Mr. Rohan [10) [0.00) Batra; R B Fitness [19,21,570) [74.36) and Trading Private Limited Total [19,21,6501 r74361 5. Distinctive numbers of such Not applicable as the Securities are securities if apolicable dematerialized. 6. Period for which order would be Not applicable. applicable (if stated)

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Registered Office Matu!ya Centre 2nd Floor Senapat, Bapat Marg .ower Parer (W) Mumbai - 400 013 CIN L9301 OMH 1951 PLC008546 T +91 22 6666 7474 F •91 22 2497 3210

E 1nfo@cravatex com W WWW cravatex com

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The disclosure pursuant to Regulation 30 of the SEBI LODR read with Para 8 ( 11) of Part A of Schedule Ill and SEBI Circular CIR/CFD/CMD/4/2015 dated 9[1] " September 2015 with respect to the SSS HA is as follows:

Givina of guarantees or indemnitv or becoming a suretv for anv third oarty Sr.No. Disclosure Remarks 1 . Name of the party for which Under the SSSHA, the Company has agreed to such guarantees or surety or indemnify the Investor, its investment manager indemnity was aiven and directors ("Indemnified Parties"). 2. Whether the promoter /promoter The transaction is an investment transaction group/ group companies have whereby the Investor is investing into CBL, which any interest in this transaction? is a material subsidiary of the Company. No If yes, nature of interest and promoter I member of the promoter group of the details thereof and whether the Company has any interest in the transaction same is done at "arms length". except as set out herein. In any event. the transaction is taking place on an arms' length basis. 3. Brief details of such guarantee Under the SSSHA, the Company has agreed to or indemnity or becoming a indemnify the Indemnified Parties for losses surety viz. brief details of incurred by them in connection with breach of agreement entered (if any) certain warranties, covenants, and obligations set including significant terms and out therein, as well as in the event of gross conditions, including amount of negligence, wilful misconduct or fraud in relation to guarantee. CBL and/or the Company in relation to CBL. Such indemnity shall be provided only if the amount of each individual loss or a series of losses arising from the same event or circumstances equals or exceeds INR 20,00,000 and the aggregate of such losses equals or exceeds INR 3,50,00,000. In certain cases, such indemnity shall first be paid by CBL, and only in case there is a shortfall in such payment would the Company be required to make any indemnity payments Certain restrictions in terms of amount of claim as well as timeframe for making claims have been provided for in the SSSHA. 4. Impact of such guarantees or Under the SSSHA, the Company has agreed to indemnity or surety on listed indemnify the Indemnified Parties for losses entity. incurred by them in connection with breach of certain warranties, covenants or obligations, gross negligence, wilful misconduct or fraud and costs relating thereto, subject to the following limitations: � amount of each individual loss or a series of losses arising from the same event or circumstances should equal to or exceed INR 20,00,000 and the aggregate of such losses should equal to or exceed INR 3,50,00,000; � Maximum aggregate liability shall not exceed INR r1 ,05,00, 1 1 , 708401

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