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Notes to Accounts of Cravatex Ltd.

Mar 31, 2015

NOTE 1.1A

Consequent to the enactment of Companies Act, 2013 (the Act) and its applicability for accounting periods commencing on or after 1 April, 2014 the Company has re-worked depreciation with reference to the useful lives of fixed assets as prescribed in Schedule II to the Act. Accordingly the unamortised carrying value is being depreciated over the revised / remaining useful lives. The written down value of Fixed Assets whose lives have expired as at 1st April, 2014 have been adjusted in the opening balance of Profit and Loss Account amounting to Rs.38,70,012.

1.2 — CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR)

Claims against the Company not acknowledged as debt:

Labour claim of an earlier year disputed by the Company against which Rs.1,75,000 has been deposited with The High Court, Mumbai.

(i) Guarantees and Letters of Credit:

(a) Outstanding against Indemnity of default loss given to the Axis Bank Ltd to the extent of Rs.10 crores on account of factoring of trade receivable from reputed identified customers of the Company is Rs.8,96,00,012 (Previous year Rs.Nil) as on 31 March, 2015.

(b) Bank guarantees given to the extent of Rs. 1,30,70,052 (Previous year Rs.1,39,23,472)

(c) Letters of Credit outstanding to the extent of Rs.11,15,93,267 (Previous year Rs.11,10,39,818)

(d) Standby LC limit of the amount of 3.98 crore (previous year Rs.4.29 crore) from Axis Bank Ltd in favour of HSBC Bank Plc, UK on behalf of the subsidiary company BB (UK) Ltd for working capital facilities of the subsidiary company.

(ii) Other money for which the Company is contingently liable:

(a) Demands for Wealth Tax for the assessment years 1997-98 & 1998-99 amounting to Rs.51,25,378 was raised by the Tax authorities in earlier years which had been disputed by the Company and appeals filed with the Hon. High Court, Mumbai. The Company however deposited the demanded amounts in full with the tax authorities.

(b) For the assessment years 2000-2001, 2002-2003 and 2003-2004 the Income-tax Appellate Tribunal had given relief of Rs.8,74,254 which had been accounted for in an earlier year. The tax authorities had subsequently filed an appeal with the Hon. High Court, Bombay against the relief of Rs.8,74,254. The matter was set aside by Hon. High Court, in an earlier year and the matter was restored to the Tribunal court for disposal. The matter is still pending with the tax authorities.

(c) Demand of Rs.13,50,000 raised in an earlier year by the customs authorities for goods imported had been disputed by the Company against which the full amount had been deposited under protest. The matter is still pending with the Customs authorities.

(d) Bond for Rs.1.20 crore executed with the Customs authorities for demand raised by the authorities in an earlier year which had been disputed and challenged by the Company. This Bond is to remain in force till finalisation of the value by the Customs authorities of the goods imported by the Company.

(e) Demand of Rs.38,31,386 (Previous year Rs. 38,31,386) raised by the New Maker Chambers IV Premises Co-operative Society Ltd, Mumbai for the difference in BMC tax from 01.04.2000 to 31.03.2015, which has been disputed by the Company. However net liability of the Company against this demand is Rs.15,66,683.

1.3 LEASEHOLD IMPROVEMENT

The Management had decided in the previous year that renovation expenditure incurred on premises taken on lease is to be written off over the period of five years in equal installments. Accordingly, one-fifth of the expenditure incurred in the previous year was charged as repairs in the Profit and Loss Account and the balance treated as deferred revenue expenditure. The management has however now adopted the policy to treating such expenditure on leasehold improvement as a fixed assets to be amortized/ depreciated over a period of five years in equal installments.

Accordingly the following adjustments have been made in the accounts:

Fixed Assets (Tangible Assets) : (Note '1.9' on Notes on Financial Statements)

Depreciation:

Rs.9,59,380 for the current year

Rs.7,08,930 of the previous year and adjusted for the period upto 31.03.2014

Previous year figures in the Schedule of fixed assets, in respect of gross block and depreciation for the period upto 31.03.2014, in the Balance Sheet in respect of deferred revenue expenditure and in the Profit and Loss Account in respect of Repairs-others have been regrouped/recast/reclassified accordingly.

1.4 — OTHER COMMITMENTS

An amount of Rs.1,55,00,000 was due from a third party in terms of Contract of Engagement with this party as a Consultant against which provision for doubtful debt of Rs.77,50,000 was made and subsequently written off in an earlier year. Though the Contract had been terminated with effect from 1 April 2007, inspite of all assurances given to the Company by this party for clearing this debt, the party has not paid any amount so far against these dues. The Company had initiated an Arbitration proceeding invoking Arbitration in the previous year as per the Contract of Engagement referred to above. The Arbitration proceeding is still in process.

1.5 — OPERATING LEASE:

The Company has taken certain premises on operating lease, the minimum future lease rentals payable on which are as follows:

1.6 — Previous years figures have been regrouped / reclassified wherever necessary to confirm to the current year presentation.

1.7 — SEGMENT REPORTING

As per Accounting Standard (AS) 17 on "Segment Reporting" the Company, has identified geographical segment as primary segment. The geographical segment consist of (a) Fitness/ Sports Goods/Readymade Garments (Domestic) (b) Readymade Garments/Sports Goods (International)


Mar 31, 2014

1. CONTINGENT LIABILITIES (to the extent not provided for)

Claims against the Company not acknowledged as debt:

Labour claim of an earlier year disputed by the Company against which Rs. 1, 75, 000 has been deposited with The High Court, Mumbai.

Guarantees and Letters of credit:

(a) Bank guarantees given to the extent of Rs. 1, 39, 23, 472 (Previous year Rs. 1, 44, 93, 309).

(b) Letters of Credit outstanding to the extent of Rs. 11, 10, 39, 818 (Previous year Rs. 11, 03, 44, 102)

(c) Standby LC limit of the amount of Rs. 4. 29 crore from Axis Bank Ltd in favour of HSBC Bank Plc, UK on behalf of the subsidiary company BB (UK) Ltd for working capital facilities of the subsidiary company.

Other money for which the Company is contingently liable:

(a) Demands for Wealth Tax for the assessment years 1997-98 & 1998-99 amounting to Rs. 51, 25, 378 was raised by the Tax authorities in earlier years which had been disputed by the Company and appeals filed with the Hon. High Court, Mumbai. The Company however deposited the demanded amounts in full with the tax authorities.

(b) For the assessment years 2000-2001, 2002-2003 and 2003-2004 the Income-tax Appellate Tribunal had given relief of Rs. 8, 74, 254 which had been accounted for in an earlier year. The tax authorities had subsequently filed an appeal with the Hon. High Court, Bombay against the relief of Rs. 8, 74, 254. The matter was set aside by Hon. High Court, in the earlier year the matter was restored to the Tribunal court for disposal. The matter is still pending with the tax authorities.

(c) Demand of Rs. 13, 50, 000 raised in an earlier year by the customs authorities for goods imported had been disputed by the Company against which the full amount had been deposited under protest. The matter is still pending with the Customs authorities.

(d) Bond for Rs. 1. 20 crore executed with the Customs authorities for demand raised by the authorities in an earlier year which had been disputed and challenged by the Company. This Bond is to remain in force till finalisation of the value by the Customs authorities of the goods imported by the Company.

(e) Demand of Rs. 38, 31, 386 (Previous year Rs. 37, 23, 543) raised by the New Maker Chambers IV Premises Co-operative Society Ltd, Mumbai for the difference in BMC tax from 01. 04. 2000 to 31. 03. 2014, which has been disputed by the Company. However net liability of the Company against this demand is Rs. 15, 66, 683.

(f) Forward Contract (Lien on Exchange Rate) outstanding to the extent of Rs. 64, 92, 139 (Previous year Rs. 11, 82, 174).

2. Rs. 39, 23, 225 was incurred for civil work on two premises taken on lease during the year is to be written off over the period of 5 years in equal instalments as decided by the management. Accordingly Rs. 7, 08, 930 being the proportionate amount has been charged as repairs in the Profit and Loss Account and balance of Rs. 32, 14, 295 treated as deferred revenue expenditure.

3 OTHER COMMITMENTS

(a) An amount of Rs. 1, 55, 00, 000 was due from a third party in terms of Contract of Engagement with this party as a Consultant against which provision for doubtful debt of Rs. 77, 50, 000 has been made in an earlier year and written off as bad debt in the accounts for the year ended 31 March 2013. Though the Contract had been terminated with effect from 1 April 2007, inspite of all assurances given to the Company by this party for clearing this debt, the party has not paid any amount so far against these dues. The Company has initiated an Arbitration proceeding invoking Arbitration as per the Contract of Employment referred to above. The Arbitration proceeding is still in process.

4 SEGMENT REPORTING

As per Accounting Standard (AS) 17 on "Segment Reporting" the Company, considering its starting of Exports of Readymade Garments/Sports Goods during the year 2012-13, has identified geographical segment as primary segment. The geographical segment consist of: (a) Fitness/Sports Goods/Readymade Garments (Domestic) (b) Readymade Garments/ Sports Goods (International).


Mar 31, 2013

1.1 — CONTINGENT LIABILITIES (to the extent not provided for)

Claims against the Company not acknowledged as debt:

Labour claim of an earlier year disputed by the Company against which Rs.1,75,000 has been deposited with The High Court, Mumbai.

Guarantees and Letters of credit:

(a) Bank guarantees given to the extent of Rs.1,44,93,309 (Previous year Rs.44,04,830).

(b) Letters of Credit outstanding to the extent of Rs.11,03,44,102 (Previous year Rs.10,09,75,790)

(c) Standby LC limit of the amount of Rs. 3.53 crore from Axis Bank Ltd in favour of HSBC Bank Plc, UK on behalf of the subsidiary company BB (UK) Ltd for working capital facilities of the subsidiary company.

Other money for which the Company is contingently liable:

(a) Demands for Wealth Tax for the assessment years 1997-98 & 1998-99 amounting to Rs.51,25,378 was raised by the Tax authorities in earlier years which had been disputed by the Company and appeals filed with the Hon. High Court, Mumbai. The Company however deposited the demanded amounts in full with the tax authorities.

(b) For the assessment years 2000-2001, 2002-2003 and 2003-2004 the Income-tax Appellate Tribunal had given relief of Rs.8,74,254 which had been accounted for in an earlier year. The tax authorities had subsequently filed an appeal with the Hon. High Court, Bombay against the relief of Rs.8,74,254. The matter was set aside by Hon. High Court, in the previous year the matter was restored to the Tribunal court for disposal. The matter is still pending with the tax authorities.

(c) Demand of Rs.13,50,000 raised in an earlier year by the customs authorities for goods imported had been disputed by the Company against which the full amount had been deposited under protest. The matter is still pending with the Customs authorities.

(d) Bond for Rs.1.20 crore executed with the Customs authorities for demand raised by the authorities in an earlier year which had been disputed and challenged by the Company. This Bond is to remain in force till finalisation of the value by the Customs authorities of the goods imported by the Company.

(e) Demand of Rs.37,23,543 (Previous year Rs. 32,92,171) raised by the New Maker Chambers IV Premises Co-operative Society Ltd, Mumbai for the difference in BMC tax from 01.04.2000 to 31.03.2013, which has been disputed by the Company. However net liability of the Company against this demand is Rs.15,66,683.

(f) Forward Contract (Lien on Exchange Rate) outstanding to the extent of Rs.11,82,174 (Previous year Rs.15,35,606).

1.2 — OTHER COMMITMENTS

(a) An amount of Rs.1,55,00,000 was due from a third party in terms of Contract of Engagement with this party as a Consultant against which provision for doubtful debt of Rs.77,50,000 has been made as at 31 March 2012. Though the Contract had been terminated with effect from 1 April 2007, inspite of all assurances given to the Company by this party for clearing this debt, the party has not paid any amount during the year against these dues. The Company has intiated an Arbitration proceeding invoking Arbitration as per the Contract of Employment referred to above.

1.3 — FINANCE LEASE

(a) The Company has taken on finance lease, cost of assets having an aggregate value of Rs.7,80,000 (Previous year Rs.7,80,000) against which the future obligations aggregate to Rs.4,28,953 (Previous year Rs.7,18,260), including lease charge Rs. 22,751 (Previous year Rs.62,690) and the same are payable as under:

1.4 — Previous years figures have been regrouped / reclassified wherever necessary to conform to the current year presentation.

1.5 — SEGMENT REPORTING

As per Accounting Standard (AS) 17 on "Segment Reporting" the Company, considering its starting of Exports of Readymade Garments/Sports Goods during the year 2012-13, has identified geographical segment as primary segment. The geographical segment consist of: (a) Fitness/Sports Goods/Readymade Garments (Domestic) (b) Readymade Garments/ Sports Goods (International).


Mar 31, 2011

1. The Company is contingently liable in respect of:

(a) Bank guarantees given to the extent of Rs.25,49,500 (Previous year Rs.13,56,494)

(b) Letters of credit outstanding to the extent of Rs.6,99,08,462 (Previous year Rs.5,94,25,478)

(c) Labour Claim of an earlier year disputed by the Company against which Rs.1,75,000 has been deposited with The High Court, Mumbai.

(d) Advance on Capital Account of Rs. 1,08,66,198 has been transferred to Building account on completion of the building project.

(e) (i) Demands for Wealth Tax for the assessment years 1997-98 & 1998-99 amounting to Rs.51,25,378 (Previous year Rs.51,25,378) raised by the Tax authorities have been disputed by the Company and appeals filed with the relevant authority. The Company has however deposited the demand amounts in full.

(ii) For the assessment years 2000-2001, 2002-2003 and 2003-2004 the Income-tax Appeallate Tribunal has passed an Order in favour of the Company in respect of total demand of Rs. 1,22,00,886 for these assessment years. Against this demand the Company had deposited Rs. 1,13,26,632 with the tax authorities. The relief of Rs. 8,74,254 given by the Tirbunal had been accounted for in these accounts. The tax authrities had filed an appeal with the Hon. High Court, Bombay against the relief of Rs. 8,74,225 which has been set aside by Hon. High Court, and restore the appeal to the Tribunal for fresh disposal.

(f) (i) Demand of Rs.13,50,000 raised by the customs authorities for goods imported has been disputed by the Company against which the full amount has been deposited under protest.

(ii) Bond for Rs.1.20 crore executed with the Customs authorities for demand raised by the authorities which has been disputed and challenged by the Company. This bond is to remain in force till finalisation of the value by the Customs authorities of the goods imported by the Company.

(g) Demand of Rs.28,60,799 (Previous year Rs.24,29,427) raised by the New Maker Chambers IV Premises Co-operative Society Ltd, Mumbai for the difference in BMC tax from 01.04.2000 to 31.03.2011, which has been disputed by the Company. However net liability of the Company against this demand is Rs. 15,66,683.

2. Amounts if any due to Micro Enterprises, Small Enterprises and Medium Enterprises under Micro Enterprises, Small Enterprises and Medium Enterprises Development Act, 2006 could not be disclosed as such parties could not be identified from the records of the Company.

3. (a) Fixed Deposit Account with a Bank include Rs.10,000 (Previous year Rs.NIL) earmarked against repayment of public deposits

(b) National Savings Certificate is held in the name of an employee of the company as under lien of sales tax authorities of Rajasthan.

4. Loans and Advances include:

(a) An amount of Rs.2,14,79,707 was due from a third party in terms of Contract of engagement with this party as a Consultant. This Contract was terminated by mutual agreement with effect from 1 April 2007. On negotiating with the party an amount of Rs. 59,79,707 was written-off in the previous year from these dues showing balance amount of Rs. 1,55,00,000 due as at 31 March 2010. Inspite of all assurances given to the Company by this party for clearing this debt, the party has not paid any amount during the year against these dues. The Company has served a legal notice to the party and is in the process of initiating legal proceedings for the recovery of this amount and therefore no provision has been made in the accounts against this outstanding.

(b) The Company has paid an amount of Rs. 18,00,000 as Security Deposit to M/s Sunrydge India Heritage Pvt. Ltd, and Rs. 3,75,000 to M/s Sunrydge Services Society against rental of one of their properties. The rented property has since been vacated, but the party has not refunded the Deposit amount. The Company has initiated arbitration proceedings before the Delhi High Court Arbitration Centre for the recovery of the Deposit.

5. Goodwill:

In accordance with the Accounting Standard 26 (Intangible Assets) Goodwill has been amortised over a period of ten years.

6. Sales and Services are reported net of trade and turnover discount to dealers and commission on consignment sales.

7.(b) Professional and legal charges include Rs.6,00,000 (previous year Rs.6,00,000) paid as consultancy charges to a Director of the Company.

8. Retirement benefit:

The following tables summarises the components of the net benefit expenses recognised in the Profit and Loss Account, the fund status and amount recognised in the Balance sheet for the gratuity benefit plan pursuant to Accounting Standard-15 (Revised 2005) on "Employee Benefits."

9. Related Party Transactions :

details of transactions with Related Parties:

(A) Companies and Firms in which some directors of this company are interested as directors or partners with whom:

(i) There are transactions during the year:

(1) Proline India Limited,

(2) Big Time Exports

(ii) There are no transactions during the year:

(1) Proline Exports Pvt. Ltd.,

(2) Lezara Trading Ltd.

(3) Promark Fitness & Leisures Pvt. Ltd.,

(4) Rajesh Rajeev Investments Pvt. Ltd.,

(B) Shareholders/Directors and Key Management Personnels

(1) Mr. Rajesh Batra

(2) Mr. Rajiv Batra

(3) Mrs. Prathima Batra

(4) Mrs. Sujaya Batra

(5) Mrs. Jamna Batra

(6) Mrs. Raj Batra

(7) Ms. Divya Batra

(8) Mr. Rohan Batra

(9) Mr. N.R. Mahalingam

(10) Mr. Rajiv Wallia

(11) Mr. Nabankur Gupta

10. Segment Reporting :

As companys business falls under the single segment viz "Fitness and Sports goods", there is no additional disclosure to be provided under Accounting Standard-17 dealing with "Segment Reporting."

11. Previous years figures have been regrouped wherever necessary to conform to this years classifications.


Mar 31, 2010

1. The Company is contingently liable in respect of:

(a) Bank guarantees given to the extent of Rs. 13,56,494 (Previous year Rs. 9,18,523)

(b) Letters of credit outstanding to the extent of Rs. 5,94,25,478 (Previous year Rs. 98,51,666)

(c) Labour Claim of an earlier year disputed by the Company against which Rs. 1,75,000 has been deposited with The High Court, Mumbai.

(d) Estimated amount of contract remaining to be executed on capital account and not provided for (net of advances) is Rs. 8,57,135 (Previous year Rs. 16,20,132.)

(e) (i) Demands for Wealth Tax for the assessment years 1997-98 & 1998-99 amounting to Rs.51,25,378 (Previous year Rs.51,25,378) raised by the Tax authorities have been disputed by the Company and appeals filed with the relevant authority. The Company has however deposited the demand amounts in full.

(ii) For the assessment years 2000-2001, 2002-2003 and 2003-2004 the Income-tax Appellate Tribunal has passed an Order in favour of the Company in respect of total demand of Rs. 1,22,00,886 for these assessment years. Against this demand the Company had deposited Rs. 1,13,26,632 with the tax authorities. The relief of Rs. 8,74,254 given by the Tribunal has been accounted for in these accounts. The tax authorities have however filed an appeal with the Hon. High Court, Bombay against the relief of Rs. 8,74,254.

(f) (i) Demand of Rs.13,50,000 raised by the customs authorities for goods imported has been disputed by the Company against which the full amount has been deposited under protest. (ii) Bond for Rs.1.20 crore executed with the Customs authorities for demand raised by the authorities which has been disputed and challenged by the Company. This bond is to remain in force till finalisation of the value by the Customs authorities of the goods imported by the Company.

(g) Demand of Rs. 24,29,427 (Previous year Rs. 19,98,055) raised by the New Maker Chambers IV Premises Co-operative Society Ltd, Mumbai for the difference in BMC tax from 01.04.2000 to 31.03.2010, which has been disputed by the Company.

2. Amounts if any due to Micro Enterprises, Small Enterprises and Medium Enterprises under Micro Enterprises, Small Enterprises and Medium Enterprises Development Act, 2006 could not be disclosed as such parties could not be identified from the records of the Company.

3. (a) Fixed Deposit Account with a Bank include Rs. Nil (Previous year Rs. 4,00,000) earmarked against repayment of public deposits.

(b) National Savings Certificate is held in the name of an employee of the company as under lien of sales tax authorities of Rajasthan.

4. Advances and amounts recoverable include Rs. 1,55,00,000 due as on 31 March 2010 (Previous year Rs. 2,19,79,078) from a third party in terms of Contract of Engagement with this party as a Consultant. This contract was terminated by mutual agreement with effect from 1 April 2007. In opinion of the management this amount is considered good for recovery.

5. Goodwill:

In accordance with the Accounting Standard 26 (Intangible Assets) Goodwill is being amortised over a period of ten years.

6. (a) Finance Lease :

The Company has taken on finance lease, cost of assets having an aggregate value of

7. Sales and Services are reported net of trade and turnover discount to dealers and commission on consignment sales.

8. Employee Benefits:

The following tables summarises the components of the net benefit expenses recognised in the Profit and Loss Account, the fund status and amount recognised in the Balance Sheet for the gratuity benefit plan persuant to Accounting Standard-15 (Revised 2005) on "Employee Benefits".

Details of transactions with Related Parties.

(A) Companies and Firms in which some directors of this company are interested as directors or partners with whom:

(i) There are transactions during the year:

(1) Proline India Limited,

(2) Integrix B V,

(3) M/s Big Time Exports.

(ii) There are no transactions during the year:

(1) Proline Exports Pvt. Ltd.,

(2) Proline International Ltd. (U.K.),

(3) Promark Fitness & Leisure Pvt. Ltd.,

(4) Crav Apparels Pvt. Ltd.,

(5) Rajesh Rajeev Investments Pvt. Ltd.,

(B) Shareholders/Directors and Key Management Personnels

(1) Mr. Rajesh Batra

(2) Mr. Rajiv Batra

(3) Mrs. Prathima Batra

(4) Mrs. Sujaya Batra

(5) Mrs. Jamna Batra

(6) Mrs. Raj Batra

(7) Ms. Divya Batra

(8) Mr. Rohan Batra

(9) Mr. N.R. Mahalingam

(10) Mr. Rajiv Wallia

(11) Mr. Nabankur Gupta

9. Segment Reporting:

As companys business falls under the single segment viz "Fitness and Sports goods", there is no additional disclosure to be provided under Accounting Standard-17 dealing with "Segment Reporting".

10. Previous years figures have been regrouped wherever necessary to conform to this years classifications.



 
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