Mar 31, 2018
1 Significant Accounting Policies Company overview
Indian Terrain Fashions Limited (''the Company'') is a public limited company incorporated in India. The company''s equity shares are listed on BSE and NSE. The registered office is located at Chennai.
1.1 Statement of compliance
The financial statements have been prepared as a going concern in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the Companies Act, 2013 ("the Act") read with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.
Upto the year ended 31st March, 2017, the Company prepared financial statements in accordance with the requirements of previous GAAP, which includes standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act.
These financial statements for the year ended March 31 , 201 8 are the first financial statements under Ind AS. Refer Note 39 for an explanation of transition from previous GAAP to Ind AS and its impact on financial position and financial performance. The date of transition to Ind AS is April 1, 2016.
1.2 Basis of preparation and presentation
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, at the end of each reporting period, as explained in the accounting policies mentioned below. Historical cost is generally based on the fair value of the consideration given in exchange of goods or services.
The financial statements are presented in INR and all values are rounded to the nearest Crore (INR 00,00,000) except when otherwise indicated.
The principal accounting policies are set out below:
All assets and liabilities have been classified as current or noncurrent according to the Company''s operating cycle and other criteria set out in the Act. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
1.3 Going concern
The board of directors have considered the financial position of the Company at 31st March, 2018 and projected cash flows and financial performance of the Company for at least twelve months from the date of approval of these financial statements as well as planned cost and cash improvement actions, and believe that the plan for sustained profitability remains on course.
The board of directors have taken actions to ensure that appropriate long-term cash resources are in place at the date of signing the accounts to fund the Company''s operations.
1.4 Use of estimates and judgments
The preparation of financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the reported amount of revenues and expenses for the years presented. Actual results may differ from the estimates.
Estimates and underlying assumptions are reviewed at each balance sheet date. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods affected.
Significant Estimates
The areas involving critical estimates or judgements are:
Estimation of defined benefit obligation- Refer Note - 38
Estimation of revenue to be recognised on sale of loyalty points- Refer Note -
1.5.3 and Note 19
They are based on historical experience and other factors, including expectations of future events that may have a financial impact and that are believed to be reasonable under the circumstances.
Recognition of deferred tax asset -Refer Note 15
1.5 Revenue recognition
The Company recognizes revenue when the amount of revenue and its related cost can be reliably measured and it is probable that future economic benefits will flow to the entity and specific criteria in relation to significant risk.
1.5.1 Sale of goods
Revenue from sale of products is recognised when the products are delivered to the dealer / customer or when delivered to the carrier, when risks and rewards of ownership pass to the dealer / customer, as per terms of contract.
Revenue is measured at the fair value of the consideration received or receivable and net of returns, trade allowances and rebates. It excludes Value Added Tax, and Goods and Services Tax as applicable.
1.5.2 Income from ser vice
Income from services is accounted over the period of rendering of services.
1.5.3 Revenue Recognition - Loyalty Points
The Company operates a loyalty points programme which allows customers to accumulate points when they purchase the products. The points can be redeemed for free products, subject to a minimum number of points being obtained. Consideration received is allocated between the product sold and the points issued, with the consideration allocated to the points equal to their fair value. Fair value of the points is determined by applying a statistical analysis. The fair value of the points issued is deferred and recognised as revenue when the points are redeemed.
1.6 Foreign currencies
1.6.1 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates (''the functional currency''). The financial statements are presented in Indian rupee, which is the company''s functional and presentation currency.
1.6.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.
1.7 Employee Benefits
1.7.1 Short Term Obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
1.7.2 Other long term employee benefit
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of the expected future payments to be made in respect of services provided by employee upto the end of reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the period-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the leave as a current liability in the balance sheet; to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Company has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months, the same is presented as non-current liability.
1.7.3 Post employment obligation
The Company operates the following post-employment schemes:
a) Defined benefit plans such as gratuity for its eligible employees, and
b) Defined contribution plans such as provident fund.
Defined contribution plan:
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme and pension scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Defined benefit plan:
The Company has a gratuity defined benefit plans for its employees. The costs of providing benefits under these plans are determined on the basis of actuarial valuation at each year-end. Separate actuarial valuation is carried out for each plan using the projected unit credit method. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and the balance sheet. The Company has funded this with Life Insurance Corporation of India (''LIC''). The contributions made to the LIC are treated as plan assets. The defined benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as reduced by the fair value of plan assets.
1.7.4 Share based payments: ESOP
The fair value of options granted under the ESOP are recognised as an employee benefits expense with a corresponding increase in equity.
The total amount to be expensed is determined by reference to the fair value of the options granted.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions.
It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
1.7.5 Bonus plans
The Company recognizes a liability and an expense for bonus. The Company recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
1.8 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
1.8.1 Current tax
The income tax expenses or credit is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted.
1.8.2 Deferred tax
Deferred tax is provided in full, using the balance sheet approach, on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences and incurred tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
1.8.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the income taxes are also recognised in other comprehensive income or directly in equity respectively.
1.9 Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation less accumulated impairment, if any.
Such assets are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. The other repairs and maintenance of revenue nature are charged to profit or loss during the reporting period in which they are incurred.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its Property, Plant and Equipment recognised as of 1st April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method on a prorata basis from the month in which each asset is put to use to allocate their cost, net of their residual values, over their estimated useful lives.
Company has ascertained and adopted the useful life of the asset as mentioned in the schedule II of Companies Act, 2013
The assets'' residual values, estimated useful lives and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Gains and losses on disposal are determined by comparing proceeds with carrying amount and are credited / debited to profit or loss.
Additional depreciation is being provided to the extent required during the year of sale of assets. Assets, for which the estimated useful life is completed, have been removed from gross block and accumulated depreciation.
1.10 Intangible assets
Intangible assets are stated at cost of acquisition or construction less accumulated depreciation less accumulated impairment, if any.
Intangible assets are amortised over its estimated useful life of 5 years on straight line basis.
1.10.1 Deemed cost on transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as of 1April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
1.11 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
1.12 Inventories
Inventories are valued at the lower of cost and net realizable value.
The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and appropriate proportion of variable and fixed overhead expenditure. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
1.13 Provisions and contingencies
Provisions: Provisions are recognised when there is a present obligation or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessment of the time value of money and the risks specific to the liability
Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
1.14 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial instruments (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss. Subsequently, financial instruments are measured according to the category in which they are classified.
1.15 Financial assets
1.15.1 Classification of financial assets
Classification of financial assets depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- those measured at amortised cost
Debt instruments
Subsequent measurement of debt instruments depends on the company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Equity instruments
The group subsequently measures all equity investments at fair value. Where the group''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the group''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain or losses in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
1.15.2 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment.
1.15.3 Cash and cash equivalents
In the cash flow statement, cash and cash equivalents includes cash in hand, cheques and drafts in hand, balances with bank and deposits held at call with financial institutions, short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet and forms part of financing activities in the cash flow statement.
Book overdraft are shown within other financial liabilities in the balance sheet and forms part of operating activities in the cash flow statement.
1.15.4 Impairment of financial assets
The Company assesses impairment based on expected credit losses (ECL) model to the following:
- Financial assets measured at amortized cost
- Financial assets measured at fair value through other comprehensive income
Expected credit loss are measured through a loss allowance at an amount equal to :
- the twelve month expected credit losses (expected credit losses that result from those default events on the financial instruments that are possible within twelve months after the reporting date); or
- full life time expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
1.15.5 Interest Income recognition on financial assets
Interest income from debt instruments is recognized using the effective interest rate method.
1.16 Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest rate method or at fair value through profit or loss.
1.17 Trade and other payables
Trade and other payables represent liabilities for goods or services provided to the Company prior to the end of financial year which are unpaid.
1.18 Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest rate method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognised in profit or loss.
1.19 Foreign exchange gains or losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in profit or loss.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the exchange rate at the end of the reporting period. For financial liabilities that are measured as at fair value through profit or loss, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
1.20 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Company has only a single reportable segment
1.21 Leases
Leases of property, plant and equipment where the Company, as a lessee has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases. Contingent rents are payable as per the agreed terms
1.22 Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period in which they are incurred.
1.23 Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are recognised in the profit or loss over the period necessary to match them with the costs.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.
1.24 Earning Per Share
Basic earnings per share have been computed by dividing the net income by the weighted average number of shares outstanding during the year. Diluted earnings per share has been computed using the weighted average number of shares and diluted potential shares, except where the result would be anti-dilutive.
1.25 Dividends
Final dividends on shares are recorded on the date of approval by the shareholders of the Company.
1.26 Accounting for Corporate Social Responsibility
The Company is required to contribute to Corporate Social Responsibility according to section 135 of the Companies Act, 2013. Accounting for the said contributions are made in accordance with the Guidance Note issued by Institute of Chartered Accountants of India (ICAI).
1.27 New Amendments issued yet not effective:
Ind AS 115, Revenue from contracts with customers
a. It deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity''s contracts with customers. The standard replaces Ind AS 18 Revenue and Ind AS 11 Construction contracts and related appendices. The new standard is mandatory for financial years commencing on or after 1 April 2018 and early application is not permitted. The standard permits either a full retrospective or a modified retrospective approach for the adoption.
b. The company is in the process of evaluating the impact of the standard
Amendments to Ind AS 40 Investment property - Transfers of investment property.
a. The amendments clarify that transfers to, or from, investment property can only be made if there has been a change in use that is supported by evidence. A change in use occurs when the property meets, or ceases to meet, the definition of investment property.
b. The company doesn''t have any investment property accordingly no impact is envisaged.
Amendments to Ind AS 12 Income taxes regarding recognition of deferred tax assets on unrealised losses
a. The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the asset''s tax base.
b. The company is in the process of evaluating the impact of the standard
Notification of Appendix B to Ind AS 21 Foreign currency transactions and advance consideration
a. The MCA has notified Appendix B to Ind AS 21, Foreign currency transactions and advance consideration. The appendix clarifies how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts.
b. The company has assessed the impact of the above the notification and concluded there no impact on the above
Mar 31, 2015
1.1 Basis of Preparation of Financial Statements
These financial statements are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) in India under the historical
cost convention on accrual basis. GAAP comprises of mandatory
accounting standards as prescribed under Section 133 of the Companies
Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules,
2014, the provisions of the Act (to the extent notified) and guidelines
issued by the Securities and Exchange Board of India (SEBI). Accounting
policies have been consistently applied except where a newly issued
accounting standard is initially adopted or a revision to an existing
accounting standard requires a change in the accounting policy hitherto
in use.
1.2 Use of Estimates
The preparation of the financial statements in conformity of the GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of financial statements and
reported amounts of income and expenses during the period. Although
these estimates are based upon the management best knowledge of current
events and actions, actual results could differ from those estimates.
Appropriate changes in estimates are made as the management becomes
aware of changes in circumstances surrounding the estimates. Changes in
estimates are reflected in the financial statements in the period in
which changes are made and if material their effects are disclosed in
the notes to the financial statements.
1.3 Revenue Recognition
Revenue is recognized only when risks and rewards incidental to
ownership are transferred to the customer, it can be reliably measured
and it is reasonable to expect ultimate collection. Revenue from
operations includes Sales (net of trade discounts and rebates) which
are recorded when the significant risks and rewards of ownership are
transferred. Consignment Sales are accounted on the basis of Sales Memo
received from Consignees. Export Sales are accounted on the basis of
the dates of Bill of Lading and other delivery documents as per the
contract. Domestic Sales excludes Sales Tax and Value Added Tax. Export
benefits are accounted for in the year of exports based on eligibility
and when there is no uncertainty in receiving the same.
Interest Income is recognized on time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividend income is recognized when the Company's right to receive
dividend is established.
1.4 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. These estimates are reviewed at each reporting
date and adjusted to reflect the current best estimates.
Where no reliable estimate can be made, a disclosure is made as a
contingent liability. A disclosure for a contingent liability is also
made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. Where
there is a possible obligation or a present obligation in respect of
which the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Contingent assets are neither recognized nor disclosed in the financial
statements.
1.5 Fixed Assets
Tangible Assets
Tangible assets are stated at cost of acquisition, less accumulated
depreciation and impairment losses if any, net of grants received,
where applicable and subsequent improvements thereto including taxes,
duties, freight, and other incidental expenses related to acquisition.
Any trade discounts and rebates are deducted in arriving at the
purchase price. Direct costs are capitalized until such assets are
ready for use.
Subsequent expenditures related to an item of tangible asset are added
to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.
Intangible Assets
Intangible assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortization / depletion and impairment loss, if
any. The cost comprises purchase price, borrowing costs and any cost
directly attributable in bringing the asset to its working condition
for the intended use.
1.6 Depreciation and Amortization
Depreciation on tangible assets is provided on the straight-line method
over the useful lives of assets estimated by the Management.
Depreciation for assets purchased / sold during a period is
proportionately charged.
Intangible assets are amortized over their respective individual
estimated useful lives on a straight-line basis, commencing from the
date the asset is available to the Company for its use.
Additional depreciation is being provided to the extent required during
the year of sale of assets. Assets, for which the estimated useful life
is completed, have been removed from gross block and accumulated
depreciation.
1.7 Impairment
The Company assesses at each Balance Sheet date whether there is any
indication due to internal or external factors that an asset may be
impaired. If any such indication exists, the Company estimates the
recoverable amount of the asset. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount and the reduction is treated as an
impairment loss and is recognized in the profit and loss account. If at
any subsequent balance sheet date there is an indication that a
previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at recoverable amount
subject to maximum of depreciated historical cost and is accordingly
reversed in the profit and loss account.
1.8 Borrowing Costs
Borrowing costs attributable to acquisition and construction of
qualifying assets are capitalized as part of the cost of such assets.
All other borrowing costs are charged to the Statement of Profit and
Loss in the period in which they are incurred.
1.9 Foreign Currency Transactions
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that which
approximates the actual rate at the date of the transaction.
Non-monetary assets and non-monetary liabilities denominated in a
foreign currency and measured at historical cost are translated at the
exchange rate prevalent on the date of transaction. Monetary items
denominated in foreign currencies at the year end are restated at year
end rates. Any income or expense on account of exchange differences
either on settlement or on translation is recognized in the Statement
of Profit and Loss.
1.10 Investments
Trade investments are the investments made to enhance the Company's
business interests. Investments are either classified as current or
non- current (long term) based on Management's intention at the time of
purchase. Investments which are readily realizable and intended to be
held for not more than one year from the date on which such investments
are made, are classified as current investments.
Long term investments are carried at cost less provisions recorded to
recognize any decline, other than temporary, in the carrying value of
each investment. Current investments are carried at the lower of cost
and fair value of each investment individually.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
Statement or Profit and Loss.
1.11 Inventories
Raw Materials and Components are valued at lower of Cost or Net
Realizable Value. Cost of the said is computed by applying Specific
Identification Method. Work in Progress and Finished Goods are valued
at lower of Cost or Net Realizable Value. Cost of these inventories
includes Costs of Conversion and Other costs incurred in bringing them
to the present location and condition.
1.12 Employee Benefits
All employee benefits payable within twelve months of rendering the
service are classified as short term employee benefits. Short term
employee benefits in the nature of salary, wages, bonus, leave
encashment and the expected cost of ex-gratia are recognized and
accounted for on accrual basis in the period in which the employee
renders the related service.
A) Defend Contribution Plans
Provident Fund and Employees State Insurance Scheme is a defend
contribution plan, each eligible employee and the Company makes equal
contributions at a percentage on the basic salary specified under the
Employees' Provident Funds and Miscellaneous Provision Act, 1952 and
Employees State Insurance Act, 1948 respectively. The Company's
contributions are charged to the statement of profit and loss in the
year when the contributions to the respective funds are due. The
Company has no further obligations under the plan beyond its periodic
contributions.
B) Defend Benefit Plan
The Company provides for gratuity, a defend benefit retirement plan
("the Gratuity Plan") covering the eligible employees. The Gratuity
Plan provides a lump-sum payment to vested employees at retirement,
death, incapacitation or termination of employment, of an amount based
on the respective employee's salary and tenure of the employee's
employment with the Company.
The Employees Gratuity Scheme which is a defend benefit plan, is
managed by trust maintained with SBI General Insurance Company Ltd. The
liability with respect to gratuity plan is determined by an independent
actuarial valuation on projected unit credit method on the balance
sheet date, base upon which the Company contributes to the Group
Gratuity Scheme. Obligation is measured at the present value of the
estimated future cash flows using a discount rate that is determined
with reference to market yields at the Balance Sheet date on Government
Bonds, where the currency and terms of the Government Bonds are
consistent with the currency and estimated terms of the defend benefit
obligation.
1.13 Taxation
Tax expense comprises of current and deferred tax. Provision for
current tax is made on the basis of estimated taxable income for the
current accounting year in accordance with the Income-tax Act, 1961.
Consequent to Demerger, with effect from August 16, 2010 the Company
has a portion of accumulated losses and unabsorbed depreciation
transferred from Celebrity Fashions Limited and hence the Company does
not have any income liable to be taxed under the normal provisions of
the Income Tax Act. However the Company is subject to Minimum Alternate
Tax (MAT). Minimum Alternate Tax gives rise to future economic benefits
in the form of tax credit against future income tax liability. MAT
credit is recognised as an asset if there is convincing evidence that
the Company will pay normal tax after setting off the carried forward
losses and the resultant asset can be measured reliably. During the
year the Company has not recognised the eligible MAT credit as an
asset, as a matter of prudence. Deferred income tax reflects the impact
of current period timing differences between taxable income and
accounting income for the period and reversal of timing differences of
earlier periods. Deferred tax assets and liabilities are measured,
based on tax rates and laws enacted or substantively enacted at the
Balance Sheet date. Deferred tax assets arising from timing differences
are recognised to the extent there is reasonable certainty that these
would be realised in future. In case of unabsorbed losses and
unabsorbed depreciation, deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profit. Unrecognized deferred
tax assets of earlier periods are re-assessed and recognized to the
extent that it has become reasonably certain or virtually certain as
the case may be, that future taxable income will be available against
which such deferred tax assets can be realized.
1.14 Accounting of Government Grants:
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grant / subsidy will be received and all
attaching conditions will be complied with. When the grant or subsidy
relates to an expense item, it is netted off with the relevant expense.
Where the grant or subsidy relates to an asset, its value is deducted
in arriving at the carrying amount of the related asset.
1.15 Segment reporting:
The Company has considered business segment as the primary segment for
disclosure. The Company is primarily engaged in a single segment
business of dealing in garments and is managed as one entity and is
governed by a similar set of risks and return.
1.16 Earnings per Share
Basic earnings per share is computed by dividing the net profit after
tax by the weighted average number of equity shares outstanding during
the period. Diluted earnings per share is computed by dividing the
profit after tax by the weighted average number of equity shares
considered for deriving basic earnings per share and also the weighted
average number of equity shares that could have been issued upon
conversion of all dilutive potential equity shares. The diluted
potential equity shares are adjusted for the proceeds receivable had
the shares been actually issued at fair value which is the average
market value of the outstanding shares. Dilutive potential equity
shares are deemed converted as of the beginning of the period, unless
issued at a later date. Dilutive potential equity shares are determined
independently for each period presented.
The number of shares and potentially dilutive equity shares are
adjusted retrospectively for all periods presented for any share splits
and bonus shares issues including changes effected prior to the
approval of the financial statements by the Board of Directors.
1.17 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
1.18 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on deposit with Banks. The
Company considers all highly liquid investments with a remaining
maturity at the date of purchase of three months or less and that are
readily convertible to known amounts of cash to be cash equivalents.
1.19 Leases
Lease under which the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. Such assets
acquired are capitalized at fair value of the asset or present value of
the maximum lease payment at the inception of the lease, whichever is
lower. Lease payments under operating leases are recognized as an
expense on a straight line basis in the statement of profit and loss
over the lease term.
Mar 31, 2013
1. Accounting Convention:
The Financial Statements are prepared on accrual basis and in
accordance with the requirements of the Companies Act, 1956 and the
applicable Accounting Standards and guidelines issued by the Securities
and Exchange Board of India (SEBI).
2 Fixed Assets, Intangible Assets & Depreciation:
a Fixed Assets are stated at cost of acquisition (inclusive of all
incidental expenses incurred towards acquisition and installation
thereof) less accumulated depreciation there on
b Depreciation on Fixed Assets is calculated on Straight Line Method at
the rates specifed in Schedule XIV to the Companies Act, 1956
3 Use of Estimates
The preparation of fnancial statements requires management to make
estimates and assumptions that affect the reported balances of assets
and liabilities and disclosures relating to contingent liabilities as
at the date of the fnancial statements and reported amounts of income
and expenses during the period. Although these estimates are based upon
the managements best knowledge of current events and actions, actual
results could differ from those estimates. Appropriate changes in
estimates are made as the Management becomes aware of changes in
circumstances surrounding the estimates. Changes in estimates are
refected in the fnancial statements in the period in which changes are
made and if material their effects are disclosed in the notes to the
fnancial statements.
4 Inventories:
a Raw Materials and Components are valued at lower of Cost or Net
Realizable Value. Cost of the said is computed by applying Specifc
Identifcation Method.
b Work in Progress and Finished Goods are valued at lower of Cost or
Net Realizable Value. Cost of these inventories includes Costs of
Conversion and Other costs incurred in bringing them to the present
location and condition.
5 Income Recognition:
Sales net of trade discounts and rebates are recorded when the
signifcant risks and rewards of ownership are transferred. Consignment
Sales are accounted on the basis of Sales Memo received from
Consignees. Sales include excise duty but exclude Sales Tax and Value
Added Tax. Export Sales are accounted on the basis of the dates of Bill
of Lading, other delivery documents as per the contract. Export benefts
are accounted for in the year of exports based on eligibility and when
there is no uncertainty in receiving the same. Interest Income is
recognised on
Time-Proportion basis taking into account the amount outstanding and
the rate applicable.
6 Measurement of foreign currency monetary items at the Balance Sheet
date and Treatment of Exchange Differences:
Foreign currency monetary items of the Company outstanding at the
Balance Sheet date are restated at the year-end rates. Exchange
differences arising on settlement / restatement of short-term foreign
currency monetary assets and liabilities of the Company are recognised
as income or expense in the Statement of Proft and Loss.
7 Leases
Leases where the lessor effectively retains substantially all the risks
and benefts of ownership of the leased item, are classifed as operating
leases. All lease payments are recognized as an expense in the
Statement of Proft and Loss on a straight line method over the lease
term.
8 Employees'' Benefts:
All employee benefts payable within twelve months of rendering the
service are classifed as short term employee benefts. Short term
employee benefts in the nature of salary, wages, bonus, leave
encashment and the expected cost of ex-gratia are recognized and
accounted for on accrual basis in the period in which the employee
renders the related service. Provident Fund is defned contribution plan
and charged to Proft & Loss Account on accrual basis with corresponding
contribution to recognised funds. Leave Entitlement is short term
employees beneft and determined arithmetically and charged to Proft &
Loss Account on accrual basis. Gratuity Liability under Payment of
Gratuity Act is determined on the basis of an actuarial valuation made
at the end of the fnancial year and in accordance with the Revised
Accounting Standard 15.
9 Taxation:
Income Taxes are accrued in the same period when the related revenue
and expenses arise. Provision for Current Tax is made after taking into
consideration tax allowances, benefts and exemptions admissible under
the provisions of the Income Tax Act, 1961. Consequent to Demerger, the
Company has a portion of Accumulated losses and unabsorbed depreciation
transferred from Celebrity Fashions Limited and hence the Company is
not liable for Income Tax under the normal provisions of the Income Tax
Act. However the Company is subject to Minimum Alternate Tax (MAT).
Minimum alternate tax gives rise to future economic benefts in the form
of tax credit against future income tax liability. MAT credit is
recognised as an asset if there is convincing evidence that the Company
will pay normal tax after setting off the carried forward losses and
the resultant asset can be measured reliably. During the year the
Company has not recognised the eligible MAT credit as an asset, as a
matter of prudence. Deferred Tax is recognised on timing differences,
being the differences between taxable income and the accounting income
that originate in one period and is capable of reversal in one or more
subsequent periods. The Company recognises Deferred Tax Asset on
accumulated losses and unabsorbed Depreciation and restricts the same
to Deferred Tax Liability as a matter of prudence.
10 Impairment of Assets:
The Company assesses at each Balance Sheet date whether there is any
indication due to internal or external factors that an asset may be
impaired. If any such indication exists, the Company estimates the
recoverable amount of the asset. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount and the reduction is treated as an
impairment loss and is recognised in the proft and loss account. If at
any subsequent balance sheet date there is an indication that a
previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is refected at recoverable amount
subject to maximum of depreciated historical cost and is accordingly
reversed in the proft and loss account. 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 due
course of the business. The provision for all liabilities is adequate
and not in excess of the amount reasonably necessary.
11 Provisions and Contingent Liabilities:
Provisions are recognized when the Company has a present obligation, as
a result of past events, for which it is probable that an outfow of
economic benefts will be required to settle the obligation and a
reliable estimate can be made for the amount of obligation. Contingent
liabilities are not recognized but are disclosed in the Notes.
12 Segment reporting:
The Company has considered business segment as the primary segment for
disclosure. The Company is primarily engaged in a single segment
business of manufacturing garments and is managed as one entity and is
governed by a similar set of risks and return.
Mar 31, 2012
1 Accounting Convention:
The Financial Statements are prepared on accrual basis and in
accordance with the requirements of the Companies Act, 1956 and the
applicable Accounting Standards. '
2 Fixed Assets, Intangible Assets & Depreciation:
a Fixed Assets are stated at cost of acquisition (inclusive of all
incidental expenses incurred towards acquisition and installation
thereof) less accumulated depreciation there on
b Depreciation on Fixed Assets is calculated on Straight Line Method at
the rates specified in Schedule XIV to the Companies Act, 1956
3 Inventories:
a Raw Materials and Components are valued at lower of Cost or Net
Realizable Value. Cost of the said is computed by applying Specific
Identification Method.
b Work in Progress and Finished Goods are valued at lower of Cost or
Net Realizable Value. Cost of these inventories includes Costs of
Conversion and Other costs incurred in bringing them to the present
location and condition.
c The excise duty in respect of closing stock of finished goods is
included as part of the finished goods.
4 Income Recognition:
Sales net of trade discounts and rebates are recorded when the
significant risks and rewards of ownership are transferred.
Consignment Sales are accounted on the basis of Sales Memo received
from Consignees. Sales include excise duty but exclude Sales Tax and
Value Added Tax.
Export Sales are accounted on the basis of the dates of Bill of Lading,
other delivery documents as per the contract.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
Interest Income is recognised on Time-Proportion basis taking into
account the amount outstanding and the rate applicable.
5 Measurement of foreign currency monetary items at the Balance Sheet
date and Treatment of Exchange Differences:
Foreign currency monetary items of the Company outstanding at the
Balance Sheet date are restated at the year-end rates.
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company are
recognised as income or expense in the Statement of Profit and Loss.
6 Employees' Benefits:
Provident Fund is defined contribution plan and charged to Profit &
Loss Account on accrual basis with corresponding contribution to
recognised funds.
Leave Entitlement is short term employees benefit and determined
arithmetically and charged to Profit & Loss Account on accrual basis.
Gratuity Liability under Payment of Gratuity Act is determined on the
basis of an actuarial valuation made at the end of the financial year
and in accordance with the Revised Accounting Standard 15.
7 Taxation:
Income Taxes are accrued in the same period when the related revenue
and expenses arise. Provision for Current Tax is made after taking into
consideration tax allowances, benefits and exemptions admissible under
the provisions of the Income Tax Act, 1961.
Consequent to Demerger, the Company has a portion of Accumulated losses
and unabsorbed depreciation transferred from Celebrity Fashions Limited
and hence the Company is not liable for Income Tax under the normal
provisions of the Income Tax Act. However the Company is subject to
Minimum Alternate Tax (MAT) amounting to Rs.0.47 crs (Previous Year
Rs.1.29 crs).
Minimum alternate tax gives rise to future economic benefits in the
form of tax credit against future income tax liability.
MAT credit is recognised as an asset if there is convincing evidence
that the Company will pay normal tax after setting off the carried
forward losses and the resultant asset can be measured reliably. During
the year the Company has not recognised the eligible MAT credit as an
asset, as a matter of prudence.
Deferred Tax is recognised on timing differences, being the differences
between taxable income and the accounting income that originate in one
period and is capable of reversal in one or more subsequent periods.
8 Impairment of Assets:
The Company assesses at each Balance Sheet date whether there is any
indication due to internal or external factors that an asset may be
impaired. If any such indication exists, the Company estimates the
recoverable amount of the asset. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount and the reduction is treated as an
impairment loss and is recognised in the profit and loss account. If at
any subsequent balance sheet date there is an indication that a
previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at recoverable amount
subject to maximum of depreciated historical cost and is accordingly
reversed in the profit and loss account.
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 due course of the business. The provision for
all liabilities is adequate and not in excess of the amount reasonably
necessary.
9 Provisions and Contingent Liabilities:
Provisions are recognized when the Company has a present obligation, as
a result of past events, for which it is probable that an outflow of
economic benefits will be required to settle the obligation and a
reliable estimate can be made for the amount of obligation. Contingent
liabilities are not recognized but are disclosed in the Notes.
10 Segment reporting:
The Company has considered business segment as the primary segment for
disclosure. The Company is primarily engaged in a single segment
business of manufacturing garments and is managed as one entity and is
governed by a similar set of risks and return.
Mar 31, 2011
1 Accounting Convention:
The Financial Statements are prepared on accrual basis and in
accordance with the requirements of the Companies Act, 1956 and the
applicable Accounting Standards.
2 Fixed Assets & Depreciation:
a Fixed Assets are stated at cost of acquisition (inclusive of all
incidental expenses incurred towards acquisition and installation
thereof) less accumulated depreciation there on b Depreciation on Fixed
Assets acquired is calculated on Straight Line Method at the rates
specifed in Schedule XIV to the Companies
Act, 1956
3 Inventories:
a Raw Materials and Components are valued at lower of Cost or Net
Realizable Value. Cost of the said is computed by applying
Specifc Identifcation Method. b Work in Progress and Finished Goods
are valued at lower of Cost or Net Realizable Value. Cost of these
inventories includes Costs of Conversion and Other Costs incurred in
bringing them to the present location and condition.
4 Revenue Recognition:
Sales net of trade discounts and rebates are recorded when the
signifcant risks and rewards of ownership are transferred.
Consignment Sales are accounted on the basis of Sales Memo received
from Consignees.
Export Sales are accounted on the basis of the dates of Bill of Lading,
other delivery documents as per the contract.
Export Incentives are accounted for on export of goods if the
entitlements can be estimated with reasonable accuracy and conditions
precedent to claim are fulflled.
5 Employees' Benefits:
Provident Fund is defned contribution plan and charged to Profit & Loss
Account on accrual basis with corresponding contribution to recognised funds.
Leave Entitlement is short term employees benefit and determined
arithmetically and charged to Profit & Loss Account on accrual basis.
Gratuity Liability under Payment of Gratuity Act is determined on the
basis of actuarial valuation made at the end of the financial year.
The Company did not have an independent Gratuity Policy as on 31st
March 2011.
The employees of the Company were covered under the Policy taken by
Celebrity Fashions Limited. Gratuity Liability pertaining to
the Company's employees were determined specifcally by the Actuaries
and accordingly the same was provided in the Books of Accounts.
6 Taxation:
Consequent to Demerger, the Company will have a portion of Accumulated
losses and unabsorbed depreciation transferred from Celebrity Fashions
Limited and hence the Company will not be subjected to Income Tax.
However the Company is subject to Minimum Alternate Tax of Rs.1.29 crs
which has been grouped under Advance Income Tax and is not charged to
Profit and Loss Account.
7 Impairment of Assets:
The Company assesses at each Balance Sheet date whether there is any
indication due to internal or external factors that an asset may be
impaired. If any such indication exists, the Company estimates the
recoverable amount of the asset. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount and the reduction is treated as an
impairment loss and is recognised in the profit and loss account. If at
any subsequent balance sheet date there is an indication that a
previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is refected at recoverable amount
subject to maximum of depreciated historical cost and is accordingly
reversed in the profit and loss account. 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 due
course of the business. The provision for all liabilities is adequate
and not in excess of the amount reasonably necessary.
8 Provisions and Contingent Liabilities:
Provisions are recognized when the Company has a present obligation, as
a result of past events, for which it is probable that an outfow of
economic benefits will be required to settle the obligation and a
reliable estimate can be made for the amount of obligation. Contingent
liabilities are not recognized but are disclosed in the Notes.