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Accounting Policies of Brandhouse Retails Ltd. Company

Mar 31, 2012

1. Corporate Information

Brandhouse Retails Limited (BHRL) is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company was established as a pure play retail organization. As a company that caters to the entire spectrum of the socio-economic stratum in the Indian market, BHRL's retail expertise extends from mid-price to the lifestyle and luxury segment.

Driven by a team of specialists with experience in Retail & Brand building, BHRL's proficiency is focused to retailing of fashion wear - Textiles, Apparels, Home Textiles and Fashion Accessories.

BHRL is amongst the leading Fashion Retailers in India. It currently manages the retailing of the brands i.e. Reid & Taylor, Belmonte, Carmichael House and dunhill through Exclusive Brand Outlets across India.

2. Method of Accounting

The Financial statements have been prepared on accrual basis, except wherever otherwise stated, under the historical cost convention, in accordance with the accounting principles generally accepted in India and comply with the Accounting Standards as referred to in the Companies (Accounting Standards) Rules 2006 issued by the Central Government in exercise of power conferred under sub-section (i)(a) of Section 642 and the relevant provisions of the Companies Act, 1956.

3. Use of Estimates

The preparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of Assets and Liabilities and disclosures of contingent liabilities on the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

4. Fixed Assets

i) Tangible Assets are stated at the cost of acquisition (inclusive of all incidental expenses incurred towards acquisition and installation thereof) less accumulated depreciation thereon.

ii) Intangible assets are carried at cost less accumulated depreciation/amortization.

iii) Impairment of assets:

If the carrying amount of fixed assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured at the higher of the net selling price and the value in use determined by the present value of estimated future cash flow. Impairment loss is charged to Statement of Profit and Loss.

5. depreciation

i. The Company provides depreciation on Tangible assets on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. In respect of Leasehold Improvements & Visuals, the Company amortises the entire value over their useful life as estimated by the management or primary period of lease, including any further renewal period thereof, whichever is lower.

ii. Depreciation on assets each costing less than Rs. 5000/- is provided for at 100% of the cost as specified in Schedule XIV to the Companies Act, 1956.

iii. In respect of Stores closed, the WDV of Furniture and Fixture is depreciated @ 100% in the year, in which stores are closed down.

iv. Goodwill on demerger is amortised over Ten Years on Straight Line Method (SLM) basis.

6. Borrowing Costs

Borrowing costs attributable to the acquisition/construction of a qualifying asset are capitalised as part of the cost of such assets, up to the period assets are ready for their intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.

7. Capital work in Progress

Projects under commissioning and other capital work-in-progress are carried at cost, comprising direct cost and related incidental expenses.

8. Revenue Recognition

i. Revenue is recognised on sale of products when no significant uncertainty as to its determination or realization exists.

ii. Sales are shown net of returns and Value Added Tax.

iii. Purchases, consistently accounted for on the basis of actual receipt of goods, are shown net of returns, turnover incentives and other incidental charges and include freight charges.

iv. Interest Income is recognized on time proportion basis, taking into account the amount outstanding and the rate applicable.

vi. The claims are accounted for an acceptance basis.

9. Retirement and other Employee benefits

The Company contributes towards Provident Fund and Superannuation fund which are defined contribution schemes. Provision for Gratuity and Leave encashment is made on the basis of Actuarial Valuations done by Independent Actuaries on each Balance Sheet date, forming part of defined benefit plans.

10. Accounting for Taxes on income

i. Current tax is determined as the amount of tax payable in respect of taxable income for the year, based on the applicable tax rates and tax laws.

ii. Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates that have been enacted or substantively enacted as on the Balance Sheet date. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/ liabilities are reviewed on yearly basis to reassess their realisation.

11. Foreign Currency Transactions / Fluctuations

a. Foreign exchange transactions are recorded as per the rates prevailing on the dates of transactions and at year end are restated at rate as on Balance Sheet date.

b. Resultant Foreign exchange gain/ loss on restatement of Assets / Liabilities are charged to the Statement of Profit & Loss.

12. Earnings per share

In determining earnings per share, the Company considers the net profit after tax and includes the post tax effect of any extraordinary items. The number of shares used in computing basic earnings per share is weighted average number of shares outstanding during the period.

For the purpose of computing diluted earnings per share, the net profit attributable to equity shareholders and the weighted average number of shares outstanding are adjusted for the effects of all dilutive potential equity shares from exercise of options on un- issued share capital.

13. Provisions, Contingent Liabilities & Contingent Assets

Disputed liabilities and claims against the Company including claims raised by various revenue authorities (eg. Sales Tax, Income Tax, Excise etc.), pending in appeal/court for which no reliable estimates can be made of the amount of the obligation or which are remotely poised for crystallisation are not provided for in accounts but disclosed in Notes to Financial Statements.

However, present obligation as a result of past event with possibility of outflow of resources, when reliable estimable, is recognised in accounts.

A contingent asset is neither recognised nor disclosed in the financial statements.

14. segment Reporting Policies

The Company prepares its segment information, in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

15. Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term are classified as operating leases. Operating lease rentals are recognised as an expense, as applicable, over the lease period.

16. investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as Non Current investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Non Current investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

17. Cash & Cash Equivalents

Cash and Cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.


Mar 31, 2010

1. Method of Accounting

The Financial statements have been prepared on accrual basis, except wherever otherwise stated, under the historical cost convention, in accordance with the accounting principles generally accepted in India and comply with the Accounting Standards as referred to in the Companies (Accounting Standards) Rules 2006 issued by the Central Government in exercise of power conferred under sub-section (i)(a) of section 642 and the relevant provisions of the Companies Act, 1956.

2. Use of Estimates

The preparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities on the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

3. Fixed Assets

Fixed Assets are stated at the cost of acquisition (inclusive of all incidental expenses incurred towards acquisition and installation thereof) less accumulated depreciation thereon.

Impairment of assets:

If the carrying amount of fixed assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the net selling price and the value in use determined by the present value of estimated future cash flow. Impairment loss is charged to Profit and Loss Account.

4. Depreciation

i. The Company provides depreciation on fixed assets on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. In respect of leasehold improvements, the Company amortises the entire value over their useful life as estimated by the management or primary period of lease including any further renewal period thereof, whichever is lower.

ii. Depreciation on assets each costing less than Rs. 5000/- is provided for at 100% of the cost as specified in Schedule XIV to the Companies Act, 1956.

iii. Goodwill on demerger is amortised over Ten Years in equal annual instalments.

5. Capital Work in Progress

Projects under commissioning and other capital work-in-progress are carried at cost, comprising direct cost and related incidental expenses.

6. Revenue Recognition

i. Revenue is recognised on sale of products when no significant uncertainty as to its determination or realisation exists.

ii. Sales are shown net of returns and Value Added Tax and are inclusive of Tailoring services.

iii. Purchases, consistently accounted on the basis of actual receipt of goods, are shown net of returns, turnover incentives and other incidental charges and include freight charges.

iv. Interest Income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

v. Compensation are recognised on receipt basis.

7. Inventories

Finished Goods comprising of Textiles and Made-ups (including accessories) are carried at the lower of cost or Net Realisable value, where cost comprises of all purchase costs and other costs incurred in bringing the inventories to their present location and condition.

8. Borrowing Costs

Borrowing costs attributable to the acquisition/construction of a qualifying asset are capitalised as part of the cost of such assets upto the period assets are ready for their intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.

9. Retirement and other Employee Benefits

The Company contributes towards Provident Fund and Superannuation fund which are defined contribution schemes. Provision for Gratuity and Leave encashment is made on the basis of Actuarial Valuations done by Independent Actuaries on each Balance Sheet date, forming part of defined benefit plans.

10. Accounting for Taxes on Income

i. Current tax is determined as the amount of tax payable in respect of taxable income for the year, based on the

applicable tax rates and tax laws.

ii. Deferred tax is recognised on timing differences, being the difference between taxable income and

accounting income that originate in one period and are capable of reversal on one or more subsequent periods and is measured using tax rates that have been enacted or substantively enacted as on the Balance Sheet date. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/ liabilities are reviewed on yearly basis to reassess their realisation or otherwise.

iii. Fringe Benefit Tax (FBT) payable under the provisions of section 115 WC of the Income Tax Act, 1961 is in accordance with the Guidance Note on Accounting for Fringe Benefits Tax issued by the Institute of Chartered Accountants of India regarded as an additional income tax.

11. Foreign Currency / Fluctuation

i. Foreign Exchange transactions are recorded as per the rates prevailing on the dates of transactions and at

year end are restated at rate as on Balance sheet date.

ii. Resultant Foreign exchange gain/ loss on restatement of Assets / Liabilities are charged to the Profit &

Loss Account.

12. Earnings per Share

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect of any extraordinary items. The number of shares used in computing basic earnings per share is weighted average number of shares outstanding during the period.

For the purpose of computing diluted earnings per share, the net profit attributable to equity shareholders and the weighted average number of shares outstanding are adjusted for the effects of all dilutive potential equity shares from exercise of options on un- issued share capital.

13. Provisions, Contingent Liabilities & Contingent Assets

Disputed liabilities and claims against the Company including claims raised by various revenue authorities (Eg Sales Tax, Income Tax, Excise etc), pending in appeal/court for which no reliable estimates can be made of the amount of the obligation or which are remotely poised for crystallisation are not provided for in accounts but disclosed in Notes on Accounts.

However, present obligation as a result of past event with possibility of outflow of resources, when reliably estimable, is recognised in accounts.

A contingent asset is neither recognised nor disclosed in the financial statements.

14. Investments

i. Investment in shares being in the nature of long term investments is carried at cost of acquisition.

ii. Quoted current investments are stated at the lower of cost and market value.

iii Unquoted current investments are stated at lower of cost and fair value where available.

15. Segment Reporting Policy

The company prepares its segment information if any, in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

 
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