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Notes to Accounts of Celebrity Fashions Ltd.

Mar 31, 2015

1. Rights, Preferences and Restrictions attached to each Class of Shares

The Company has two classes of shares:

Equity Shares having a par value of Rs.10/- each with voting rights. Each holder of Equity Shares is entitled to one vote per share. 1% Cumulative Redeemable Preference Shares of Rs.10/- each. The Cumulative Redeemable Preference Shares carry a dividend of 1% p.a. and will be redeemed in 6 equal annual installments starting with the financial year 2022.

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive any of the remaining assets of the Company in proportion to the number of Equity Shares held by the shareholders, after distribution of all preferential amounts.

2. During the year under review, the Company had arrived at an out of court settlement with its tenant In this connection, the Company has recognized an income of Rs.1.26 crs pertaining to previous years under rental income. Further the Company has entered into a fresh lease deed and Memorandum of Understanding, whereby the tenant has agreed to pay Rs.2.25 crs towards settlement of old dues outstanding till 31st March, 2014 in installments. As at 31st March, 2015 service tax amounting to Rs.0.30 crs (Previous Year Rs.0.04 crs) on account of renting of immovable property is yet to be remitted to Government Account. Provision has been made in the accounts for the service tax payable.

3. EROSION OF NETWORTH, DECLARATION AS SICK UNIT AND STATUS OF DEBT REHABILITATION SCHEME

The Company’s networth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company filed reference with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR appointed State Bank of India as the Operating Agency (OA) and issued directions to submit a Rehabilitation Scheme for the revival of the Company as per Section 18 of SICA.

State Bank of India (SBI), the OA has sanctioned a re-structuring package for the Company vide its letter dated 16th November 2012. The OA has submitted the same for approval before Hon’ble BIFR.

The package includes interest concessions, re-schedulement of Term loans and Conversion of portion of Term loans into Equity and 1% Cumulative Redeemable Preference Shares (CRPS). The Company has settled the dues of HDFC Bank under One-Time Settlement Scheme. The gain on settlement of HDFC Bank’s dues was recognized as Extra-Ordinary Item during the year ended 31st March 2014 in the Profit and Loss Account. The Rehabilitation Scheme was as of 31st March 2014 pending for approval before Hon’ble BIFR.

The Company’s networth turned positive under provisions of Sick Industries Companies Act (SICA) as on 31st March 2014. Accordingly, the Company filed for discharge under the purview of SICA before BIFR. BIFR vide its order dated 4th August 2014 has discharged the Company from the purview of BIFR.

The Accounts of the Company has been prepared on "Going Concern" basis.

Rs. In Crores

Particulars As at As at 31-Mar-15 31-Mar-14

4. CONTINGENT LIABILITIES (TO THE ExTENT NOT PROVIDED FOR)

a Guarantees given by Banks and counter Guaranteed by the Company - -

b On account of Letters of Credit issued by Bankers on behalf of the Company 1.64 0.96

c Claims against Company not acknowledged as debts being petition/ appeals pending before the Assessing Officer/ Commissioner of Income Tax (Appeals). 0.29 0.29

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the opinion that the demands are likely to be deleted and consequently no provision has been made for such demands. The Management believes that the ultimate outcome of these proceedings will not have a material averse effect on the Company’s financial position and results of operations.

d The Banks have extended concessional interest rate for the credit facilities sanctioned to the Company for the period upto 31st March 2015. As per the terms of the Sanction letter, Banks have the right to be recompensated in future for the sacrifice extended.

5. RELATED PARTY TRANSACTIONS a Key Managerial Personnel:

Mr. V.Rajagopal

Mrs. Rama Rajagopal

Mr. Charath Ram Narsimhan

Mr. Vidyuth Rajagopal

b Enterprises under Control or Significant Influence of Key Managerial Personnel:

M/s Indian Terrain Fashions Limited

M/s Celebrity Clothing Limited

M/s Celebrity Connections

6. disclosure AS PER clause 32 OF THE LISTING AGREEMENTS WITH THE STOCK ExCHANGES

Loans and advances in the nature of loans given to Subsidiaries, Associates and Others - -

7. EMPLOYEE BENEFIT PLAN - GRATUITY

The employees’ gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on the actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

8. Previous year figures have been regrouped, reworked and reclassified wherever necessary to conform to current year classification.

9. 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 realized in the due course of the business. The provision for all liabilities is adequate and not in excess of the amount reasonably necessary.


Mar 31, 2014

1 Rights, Preferences and Restrictions attached to each Class of Shares

The Company has two classes of shares:

Equity Shares having a par value of Rs.10/- each with Voting Rights. Each holder of equity shares is entitled to one vote per share 1% Cumulative Redeemable Preference Shares of Rs.10/- each. The cummulative redeemable preference shares carry a dividend of 1% p.a. and will be redeemed in 6 equal annual instalments starting with the financial year 2022.

Charge on Inventories in the form of Raw Materials, Stock In Process and Finished Goods, Receivables and other current assets of the Company both present and future for the loans in the form of Export Packing Credit, Cash Credit, Export Bills Discounting facility extended by State Bank of India.

Loans from State Bank of India is further secured by Pledge of Promoters Shares in the Company to an extent of 53,52,516 Equity Shares and Personal Guarantee by Promoters.

The Company has not received any Memorandum (as required to be filed by the Supplier with the notified authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status as on 31st March 2014 as Micro, Small or Medium Enterprises (MSME). Consequenty the amount payable to these enterprises during the year is Rs. NIL.

Duty Drawback and Service Tax receivable amounting to Rs. 0.09 crores and 0.43 crores respectively have been outstanding for a period exceeding 12 months and accrodingly has been grouped under Other Non Current Assets.

The Company had let out one of it''s properties on lease to Deepam Hospital Ltd with effect from April 01, 2010. The Lessee has since then been in continuous default on it''s Lease rental obligations. The gross receivables pending from Deepam Hospitals Limited as at March 31, 2014 amounted to Rs. 2.33 Crores.

The Lease agreement entered into with Deepam Hospital Limited expired on January 31, 2013 and the Company has not renewed the lease with Deepam Hospitals Limited. A termination notice was served on Deepam Hospitals Limited and the Company has also taken legal recoures to recover it''s dues from Deepam Hospitals Private Limited.

Deepam Hospitals Limited is currently occupying the Company''s premises in an unauthorised manner. The Security Deposit of Rs. 1.50 crs received from Deepam Hospitals at the time of entering into lease agreement has been adjusted against the receivables outstanding and the net receivable of Rs. 0.83 crores has been included under "Others".

Auditors'' Remuneration includes Rs. 4.50 lakhs (PY-Rs. 4.50 lakhs) against Statutory Audit, Rs. 0.70 lakhs (PY-Rs. 0.70 lakhs) against Tax Audit and Rs. 1.24 lakhs (PY - Rs. NIL) against Cost Audit An amount of Rs. 5,72,593/- (PY - Rs. 223,571/-) was paid to the Auditors towards Certification, Out-of-Pocket Expenses and for representation in Taxation matters and the same is classified under Consultancy Charges

Directors Sitting Fee of Rs. 0.40 lakhs (PY - Rs. 0.35 lakhs) is grouped under Other Miscellaneous Expenses

**nterest on Term loans is net off TUF Interest subsidy of Rs. 0.53 crs (Previous Year Rs. NIL) received during the year During the Financial Year 2012-13, the excess interest charged to Profit and Loss Account for the period April 2011-March 2012 of Rs. 4.71 crs on SBI Term loans was reversed in accordance with the Sanction letter dated 16th November 2012

2 EROSION OF NETWORTH, DECLARATION AS SICK UNIT AND STATUS OF DEBT REHABILITATION SCHEME

The Company''s networth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company filed reference with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR appointed State Bank of India as the Operating Agency (OA) and issued directions to submit a Rehabilitation Scheme for the revival of the Company as per Section 18 of SICA. State Bank of India (SBI), the OA has sanctioned a re-structuring package for the Company vide its letter dated 16th November 2012. The OA has submitted the same for approval before Hon''ble BIFR.

The package includes interest concessions, re-schedulement of Term loans and Conversion of portion of Term loans into Equity and 1% Cumulative Redeemable Preference Shares (CRPS). The Company has settled the dues of HDFC Bank under One-Time Settlement Scheme.

The gain on settlement of HDFC Bank''s dues has been recognised as Extra-Ordinary Item during the year in the Profit and Loss Account. The Rehabilitation Scheme is pending for approval before Hon''ble BIFR.

The Company''s networth has turned positive under provisions of Sick Industries Companies Act (SICA) as on 31st March 2014.

The Accounts of the Company has been prepared on "Going Concern" basis.

The Company is exploring various strategic initiatives and the Management is confident of being able to continue and operate the business and bring positive results in future.

3 CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR)

a Gurantees given by Banks and Counter Guaranteed by the Company - -

b On account of Letters of Credit issued by Bankers on behalf of the Company 0.96 1.05

c Claims against Company not acknowledged as debts, being Income Tax demand pending before Commissioner of Income Tax (Appeals) and Income Tax Appellate tribunal. 0.29 0.69

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the Opinion that the demands are likely to be deleted, and consequently no provision has been made for such demands.

d The Banks have extended concessional interest rate for the Credit facilities sanctioned to the Company for the period upto 31st March 2014. As per the terms of the Sanction letter, Banks have the right of recompense in future for the sacrifice extended.


Mar 31, 2013

1 EROSION OF NETWORTH, DECLARATION AS SICK UNIT AND STATUS OF DEBT REHABILITATION SCHEME The Company''s networth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company fled referencewith the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR appointed State Bank of India as the Operating Agency (OA) and issued directions to submit a Rehabilitation Scheme for the revival of the Company as per Section 18 of SICA. State Bank of India (SBI), the OA has sanctioned a re-structuring package for the Company vide its letter dated 16th November 2012. The OA has submitted the same for approval before Hon''ble BIFR. The package includes interest concessions, re-schedulement of Term loans and Conversion of portion of Term loans into Equity and 1% Cumulative Redeemable Preference Shares (CRPS). The approval from HDFC Bank for the package is pending. SBI is yet to convert the portion of Term loans into Equity and 1% CRPS.

The Accounts of the Company have been prepared on the basis of ''Going Concern Concept'' despite negative net worth as on 31st March 2013 in view of the various strategic initiatives that the company is exploring and also considering the Rehabiliation Scheme submitted to the Banks / BIFR. The Management is confdent of being able to continue and operate the business and bring positive results in future.

2 DISCLOSURE AS PER CLAUSE 32 OF THE LISTING AGREEMENTS WITH THE STOCK EXCHANGES Loans and advances in the nature of Loans given to Subsidiaries, Associates and Others

3. EMPLOYEE BENEFIT PLAN - GRATUITY

The employees'' gratuity fund scheme managed by a Trust is a defned beneft plan. The present value of obligation is determined based on the actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee beneft entitlement and measures each unit separately to build up the fnal obligation.


Mar 31, 2012

Collateral Securities:

First Charge to State Bank of India and Second Charge on to HDFC Bank for Term loans over the following assets:

Entire Plant and Machinery - present and future

Land and building situated at 107-A, GST Road, Chrompet, Chennai

Factory land and building situated at Thiruvanchery, Agaram Road, Tambaram Taluk, Chennai Factory land and building situated at 72/1, Poonamalle Bypass Road, Poonamalle, Chennai

Leasehold rights of land and Factory building situated at plot SDF - IV, 3rd Main Road, MEPZ-SEZ, Tambaram,Chennai - 600045 Leasehold rights of land situated at C2, 3rd Main Road, MEPZ-SEZ, Tambaram, Chennai - 600045 Building situated at C2, 3rd Main Road, MEPZ-SEZ, Tambaram, Chennai - 600 045

Loans from State Bank of India is further secured by Pledge of Promoters Shares in the Company to an extent of 53,52,516 Equity Shares and Personal Guarantee by Promoters. Further the Lease rental receivables from the property let out on lease are assigned to Term loans of State Bank of India (SBI).

Loans from HDFC Bank is further secured by Pledge of Promoters Shares in the Company to an extent of 8,00,000 Equity Shares and Personal Guarantee is limited to an extent of 8,00,000 Equity Shares in the Company.

Both the Term loans obligations and Interest Commitments thereon have been met in full to SBI in accordance with the Terms and Conditions of the Sanction letter. However the Company has defaulted in repayments of Term loans amounting to Rs.0.22 crs (Previous Year - NIL) and Interest commitments amounting to Rs.1.55 crs with respect to HDFC Bank. The term loan repayment is pending since February 2012, while interest remains unpaid The Company has submitted a Draft Rehabilitation Proposal with Cut-off-Date as 31st March 2011 seeking certain reliefs / concessions in since January 2011. Term loans / interest rates and the same is pending for approval from Appropriate Authorities.

The Company is one among the Petitioners challenging the levy of Service Tax on Rent of Immovable Properties. The total Service Tax Liability on renting of Immovable Properties is Rs. 35,09,477/- upto September 30, 2011.The Supreme Court vide its Order dated 4th August 2011 has directed the petitioners to remit 50% of the disputed liability up to September 30,2011 in three installments and to furnish a Bank Guarantee / Solvency Certificate for the balance 50%. Further it ordered for payment of Service Tax on Rentals commencing 1st October 2011.The Company has accordingly paid 50% of the Disputed Service Tax of Rs.17,54,739/- and has given a Bank Guarantee for the balance amount. The Company has provided for the Service Tax Amounts in the books as a matter of prudence and has started remitting Service Tax on lease rentals from 1st October 2011.

1 EROSION OF NETWORTH AND DECLARATION AS SICK UNIT

The Company's net worth was eroded as on 31st March 2010 under the provisions of Sick Industries Companies Act, (SICA). Accordingly the Company filed reference with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The reference was taken for consideration by BIFR and upon submissions made and material on record, BIFR has declared the Company as Sick Industrial Company u/s 3(1)(o) of SICA vide its order dated 19th April 2011. BIFR issued directions to the lenders and to the Company to submit a Rehabilitation Scheme as per Section 18 of SICA.

The Company has submitted its Draft Rehabilitation Proposal to the Operating Agency, State Bank of India and is awaiting the sanction of the Second Re-structuring Package.

The Accounts of the Company have been prepared on the basis of 'Going Concern Concept' despite negative net worth as on 31st March 2012 in view of the various strategic initiatives that the company is exploring and also considering the Rehabilitation Scheme submitted to the Banks / BIFR. The Management is confident of being able to continue and operate the business and bring positive results in future.

2 CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR)

a Guarantees given by Banks and Counter Guaranteed by the Company 0.18 -

b On account of Letters of Credit issued by Bankers on behalf of the Company 0.49 5.72

c Claims against Company not acknowledged as debts, being Income Tax demand pending before

Commissioner of Income Tax (Appeals) and Income Tax Appellate tribunal. Of this a sum Rs.13.50 0.77 1.24

lakhs has been Paid - categorized under Advance Income Tax.

Based on the decisions of the appellate authorities for the earlier years and interpretations of other relevant provisions, the Company is of the Opinion that the demands are likely to be deleted, and consequently no provision has been made for such demands.

d The Banks have extended concessional interest rate for the Credit facilities sanctioned to the Company for the period upto 31st March 2012. As per the terms of the Sanction letter, Banks have the right of recompense in future for the sacrifice extended.

3 RELATED PARTY TRANSACTIONS a Key Managerial Personnel:

Mr. V.Rajagopal Mrs. Rama Rajagopal Mr.S.Suryanarayanan

b Enterprises under Control or Significant Influence of Key Managerial Personnel:

M/s Indian Terrain Fashions Limited M/s Celebrity Clothing Limited M/s Celebrity Connections

b No amount is paid / payable by the company U/s 441 A of the Companies Act,1956 (cess on turnover) since the rules specifying the manner in which the cess shall be paid has not been notified yet by the Central Government.

c During the Year ended 31st March 2012, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Company for the preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the Current Year.

 
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