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Notes to Accounts of Brandhouse Retails Ltd.

Mar 31, 2012

A) Terms/Rights attached to Equity shares :

The Company has only one class of equity shares having a par value of Rs. 10 per shares. Each holder of Equity Shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend, if proposed by the Board of Directors, is subject to the approval of the shareholder in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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.

a) Loans from Banks (Working Capital facilities repayment on demand) are secured by hypothecation of :

i. Principal Security First pari-passu - present and future Current Asset of the Company.

ii. Second pari-passu - present and future Movable and Non-Movable Fixed Asset of the Company.

iii. Personal Guarantee of Chairman & Managing Director

iv. Corporate Guarantee given by S. Kumars Nationwide Limited.

The above Loans from Banks (Working Capital Facilities) carries interest @ 15% to 16%. b ) Loans from others (Vehicle Loans) is secured by hypothecation of the vehicles financed.

*There are no dues payable to Micro, Small and Medium Enterprises for more than 45 days, and hence there is no need for provision of interest in the current year. The same is based on the information available with the Company and relied upon by the Auditors.

NOTE : 1 A

15% Non-Convertible Debentures (NCDs) issued to India Debt Management Private Limited are secured in favour of the Debenture Trustees, IDBI Trusteeship Services Ltd. by way of the following;

a) Primary security

i) An english Mortgage on the immovable fixed assets of the Company situated at Plot No. 3, Survey No. 37, Mouje Ishwarpura, Taluka Kadi, District Mehsana, and Ahmedabad to secure issue of the Debenture Certificate.

ii) equitable Mortgage on future immovable fixed assets of the Company other than that mentioned in i) above.

iii) Charge on the present and future movable fixed assets of the Company.

b) Additional security

i) Pledge and Default Call Option exercise on 1,05,82,630 Fully Convertible Debentures of Rs. 100 each of S. Kumars Nationwide Limited (SKNL) held by Anjaneya Holding Pvt. Ltd (AHPL) and the consequent shares to be issued to AHPL on conversion of the said Fully Convertible Debentures.

ii) Pledge and Default Call Option exercise on the 10,00,000 equity Shares of Rs. 10/- each of the Company held by SKNL.

c) Redemption of the Non Convertible Debentures

The redemption of Non Convertible Debentures shall take place by September 30, 2012 of the face value of the Non Convertible debentures.

d) The Non Convertible Debentures shall have redemption premium of 20% on face value of debentures redeemed as above.

NOTE : 2 B

There is delay in Interest payment of Rs. 267.12 Lacs (Net of TDS Rs. 29.68 Lacs) to India Debt Management Private Limited for NCDs due on 31st March, 2012.

i) The Company has become the holding company of Brandhouse Oviesse Ltd on 29th July, 2009. It additionally acquired by virtue of subscription to 1,61,73,989 shares (Previous Year 1,28,07,041 shares) i.e. 62.50 % paid-up Equity Share Capital of the Subsidiary on 28th December 2011 .

ii) Investment in shares being in the nature of Long Term investments is carried at cost of acquisition.

Stock in Trade 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. Goods in Transit are carried at cost.

NOTE: 3.

Estimated amount of Contracts remaining to be executed on capital or other account and not provided for (net of advances) - Rs. Nil (Previous Year - Rs. 16.01 Lacs).

NOTE-: 4.

The confirmation, reconciliation and adjustment of balances pertaining to Trade Receivable & Trade Payables is an ongoing process. Such adjustments made and balances as on 31st March, 2012 have been independently confirmed. As regards outstanding Trade Receivables, the Company is of the opinion that the same are fully recoverable and hence, no additional provision is required to be made

NOTE- 5.

Balances under the heads Long Term Loan & Advances, are subject to confirmation from the respective parties and consequential reconciliation / adjustment, if any. The necessary accounting effect, if any, will be given by the Company in the period of such confirmation/reconciliation.

notE- "6."

a) The Company has transferred the required post tax profit of Rs. 235.88 Lacs (Previous year Rs. 2012.97 Lacs) to Debenture Redemption Reserve (DRR).

b) The Premium payable on redemption of the Non-Convertible Debentures on maturity, amounting to Rs. 30.08 Lacs was adjusted against Securities Premium Account disclosed under the head provisions (Previous year - Rs. 161.49 Lacs).

note 7."

The Company has classified the various benefits provided to employees under the purview of Accounting Standard 15 (Revised) as under:

i) Defined Contribution Plans

a. Provident Fund & Employees Pension Scheme 1995

b. Employees State Insurance

ii) Defined Benefits Plan

a. Contribution to Gratuity (Non Funded Scheme)

b. Leave Encashment (Non Funded Scheme)

In accordance with the Accounting Standard (AS 15) (Revised), actuarial valuation was performed in respect of the aforesaid defined benefit plans based on following assumptions:

NOTE: 8

The entire Operations of the Company comprise of only one segment, namely Retail and as such, no separate segment reporting is considered necessary for segment reporting as stipulated in Accounting Standard-17 issued by Institute of Chartered Accountants of India.

NOTE: 9.

Based on the age of the Assets situated at various locations/stores and considering the fact that the Company operates generally in the leased out properties, the management is of the opinion that there was no material impairment in its fixed assets during the year under review with in the definition of Accounting Standard 28, Impairment of Assets issued by the Institute of Chartered Accountants of India. The position is reviewed on yearly basis.

NOTE: 10.

The Company believes that Goodwill as represented in the books of accounts as at the Balance Sheet date amounting to Rs.1,562.56 Lacs (Previous year Rs. 1,875.08 Lacs) has an appropriate future economic benefit as arrived at, upon its de- merger of business with the erstwhile parent Company in the earlier years.

NOTE: 11

The Company has obtained various stores on operating Lease. Lease payments made during the year debited to Statement of Profit and loss is Rs. 2,107.31 Lacs (Previous Year Rs. 2,370.43 Lacs). The amount of future minimum lease payments/ commitment under Non Cancelable operating Lease is as under:

NOTE: 12

'As notified by Ministry of Corporate Affairs, Revised Schedule VI under the Companies Act, 1956 is applicable to the Financial Statements for the financial year commencing on or after 1st April, 2011. Accordingly, the financial Statements for the year ended 31 March 2012 are prepared in accordance with the Revised Schedule VI. The amounts and disclosure included in the financial statements of the previous year have been reclassified to confirm to the requirement of the Revised Schedule.


Mar 31, 2010

1 Contingent Liabilities

Sr.no Particulars As at As at

31st March, 2010 31st March, 2009

1. Sales Tax – Disputed in Appeal-Mumbai - 1.64 Lacs

2. Sales Tax – Disputed in Appeal-Ghaziabad 4.10 Lacs -

3. DLF Limited Delhi towards TDS 5.62 Lacs** -

4. Bank guarantee in favour of The Collector, 14.15 Lacs* 14.15 Lacs* Gaziabad, U.P. for Stamp duty in the court of

Hon’ble Court of District Magistrate/Collector

5 As may arise due to delay / non-compliance Amount Amount

of certain statutory requirement Unascertainable Unascertainable

* FDR with Scheduled Banks Rs. 15.45 Lacs (including accumulated interest of Rs. 1.30 Lacs) kept as deposits in respect of the above.

** FDR with Schedule Bank Rs. 5.65 Lacs kept as deposit in respect of above.

2 Estimated amount of Contracts remaining to be executed on capital account and not provided for (net of advances) - NIL (Previous Year Rs 107.77 Lacs).

3 14% Non-Convertible Debentures issued to India Debt Management Private Limited are secured in favour of the Debenture Trustees, IDBI Trusteeship Services Ltd. by way of the following;

a. Primary Security

i) An English Mortgage on the immovable fixed assets of the Company situated at Plot No. 3, Survey No. 37,

Mouje Ishwarpura, Taluka Kadi, District Mehsana, and Ahmedabad to secure issue of the Debenture Certificate.

ii) Equitable Mortgage on future immovable fixed assets of the Company other than that mentioned in i) above.

iii) Charge on the present and future movable fixed assets of the Company.

b. Additional Security

i) Pledge and Default Call Option exercise on 1,05,82,630 Fully Convertible Debentures of Rs.100 each of S. Kumars Nationwide Limited (SKNL) held by Anjani Finvest Pvt. Ltd (AFPL) and the consequent shares to be issued to AFPL on conversion of the said Fully Convertible Debentures.

ii) Pledge and Default Call Option exercise on the 10,00,000 Equity Shares of Rs. 10/- each of the Company held by SKNL.

c. Redemption of the Non Convertible Debentures

i) The Non convertible Debentures shall be due for repayment on June 30, 2010 (35%); July 15, 2010 (30%) and June 30, 2011 (35%) after considering the revision in the repayment dates allowed by Debenture Holders, subsequent to the Balance Sheet date.

ii) The Non Convertible Debentures shall have redemption premium of 20% on face value of debentures redeemed as above.

3 Working Capital Demand Loans from Banks are secured by hypothecation of companys stocks and book- debts, present and future and by a second charge on all the immovable properties of the company.

4 In the opinion of the management, Current Assets, Loans and Advances have a value of at least equal to the amounts shown in the Balance Sheet, if realised in the normal course of the business. The provision for all the known Liabilities is adequate and not in excess of the amount reasonably necessary.

5 The Company has become the holding company of Brandhouse Oviesse Ltd on 29th July 2009 by virtue of subscription to 50,000 Equity Shares of Rs. 10 each aggregating Rs. 5,00,000 i.e.100 % paid-up Equity Share Capital of the Subsidiary.

6 Balances under the heads Sundry debtors, Loans and advances and Sundry Creditors are subject to confirmation from the respective parties and consequential reconciliation / adjustment, if any. The necessary accounting effect, if any, will be given by the Company in the period of such confirmation/reconciliation.

7 a. As against the statutory requirement of transfer of Rs. 1694.57 Lacs (Previous year Rs. 2514.67 Lacs), the Company has transferred the available post tax profit of Rs.1620.87 Lacs (Previous year Rs. 1338.51 Lacs) to Debenture Redemption Reserve (DRR).

b. The Premium payable on redemption of the above NCDs on maturity, amounting to Rs. 338.91 Lacs was adjusted against Securities Premium Account shown under the head current liabilities and provisions (Previous year Rs. 502.94 Lacs ).

8 The Company has classified the various benefits provided to employees under the preview of Accounting Standard

9 (Revised) as under .

i) Defined Contribution Plans

a. Provident Fund & Employees Pension Scheme, 1995

b. Employees State Insurance

ii) Defined Benefits Plan

a. Contribution to Gratuity (Non Funded Scheme)

b. Leave Encasement (Non Funded Scheme)

In accordance with the Accounting Standard (AS 15) (Revised), actuarial valuation was performed in respect

10 There is no dues payable to Micro , Small and Medium Enterprises for more than 45 days, and hence there is no need for provision of interest in the current year. The same is based on the information available with the Company and relied upon by the Auditors.

11. Taxation :

i) Provision towards Current taxation is made at the rates as applicable for the Assessment year 2010-2011

12. The entire operations of the Company comprise of only one segment, namely Retail; and as such, no separate segment reporting is considered necessary for segment reporting as stipulated in Accounting Standard-17 issued by the Institute of Chartered Accountants of India.

13. Based on the age of the Assets situated at various locations/stores and considering the fact that the Company operates generally in the leased out properties, the management is of the opinion that there was no material impairment in its fixed assets during the year under review within the definition of Accounting Standard 28, Impairment of Assets issued by the Institute of Chartered Accountants of India. The position will, however be reviewed on yearly basis.

14. The Company believes that Goodwill as represented in the books of accounts as at the Balance Sheet date amounting to Rs.2,187.61 Lacs (Previous year Rs.2,500.12 Lacs) has an appropriate future economic benefit as arrived at upon its de-merger of business with the erstwhile parent Company in the earlier years.

15. Related parties Disclosure under Accounting Standard-18

Subsidiary Company Brandhouse Oviesse Ltd. ( w.e.f. 29th July, 2009).

S. Kumars Nationwide Ltd.

Belmonte Lifestyle Ltd.

Sansar Exim Pvt. Ltd.

Key Enterprises in which Anjani Finvest Pvt. Ltd.

Directors are Interested Reid & Taylor (India) Ltd.

Ingenious Finance & Investment Pvt. Ltd.

Verve Properties & Investments Pvt. Ltd.

Natty Finance & Investment Pvt. Ltd.

Tulja Enterprises Pvt. Ltd.

Chamundeshwari Mercantile Pvt. Ltd.

Maverick Mercantile Pvt. Ltd.

S Kumars Enterprises (Synfabs) Ltd.

S Kumars Textiles Ltd.

S.K.Worsteds Pvt Ltd

Reid & Taylor Ltd ; U.K.

SKNL International B.V.

SKNL Europe B.V.

SKNL Italy S.P.A

SKNL Global Holding B.V.

LEGGIUNO S.P.A.

SKNL North America B.V.

N Essence Holdings Limited.

SKNL ( U.K.) Ltd.

Key Enterprises in which Anjaneya Foundation.

directors are interested. SKNL Foundation.

Remala Trading B.V.

Coppley Corp

HMX Poland sp. Z.o.o

HMX Poland sp. Z.o.o, Luxembourg.

HMX Acquisition Corp.

HMX Des Plaines LLC.

Quartet Real Estate LLC.

HMX LLC.

HMX, DTC Co.

Marling & Evans Ltd , U.K.

Global Apparel (U.S.) Limited.

Global Apparel (France) Limited.

Global Apparel (Hongkong) Limited.

7172931 Canada Limited

Key Management Personnel Mr. Nitin S. Kasliwal-Chairman & Managing Director

Mrs. Jyoti N. Kasliwal - Director

Relatives of Key Management Personnel Ms. Anjani N. Kasliwal

(Daughter of Shri Nitin S. Kasliwal and Smt Jyoti N. Kasliwal)

Mr. Kartikeya N. Kasliwal (Son of Shri Nitin S. Kasliwal and Smt Jyoti N. Kasliwal)

16. Previous years figures are re-grouped/re-arranged wherever considered necessary.

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