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Notes to Accounts of Kewal Kiran Clothing Ltd.

Mar 31, 2016

1. ''The Company has given part of the premises under operating lease. The gross carrying amount, accumulated depreciation at the balance sheet date and depreciation recognized in Statement of Profit and Loss for the year of said premises is Rs. 22.84 lakhs, Rs. 6.36 lakhs and Rs. 6.21 lakhs respectively (P.Y. Rs. 191.40 lakhs, Rs. 58.99 lakhs and Rs. 5.47 lakhs).

2. Building includes the value of 14,000 (P.Y.14,000) share of Rs. 100 each in Synthofine Estate CHS Ltd and value of 10 (P.Y.Nil) share of Rs. 50 each in Gautam Chemical Industrial Premises CHS Ltd.

3. Balance useful life of software (Tukacad Professional Edition software) as at year end is Nil (P.Y. 9 months). Balance useful life of membership rights as at year end is 36 months (P.Y. 48 months).

4. During the previous year 2014-15, the Company had realigned its depreciation policy in accordance with Schedule II to Companies Act, 2013. Consequently w.e.f. 1st April 2014 :

(a) the carrying value of assets acquired prior to 1st April 2014 is now depreciated over its revised remaining useful life;

(b) where the remaining useful life of the asset is nil as on 1st April 2014, carrying value of assets has been adjusted against opening reserves (net of deferred tax of Rs. 18.45 lakhs) amounting to Rs. 35.82 lakhs in accordance with transitional provision of Schedule II;

(c) on account of above change, depreciation charged to Statement of Profit and Loss for year 2014-2015 is lower by Rs. 139.18 lakhs.

5. In the previous year 2014-15, the Company had acquired freehold land with integrated structure for a composite value whose conveyance is registered and municipal records (property card) is in the process of updation. The value of structure is determined based on estimated depreciated value of structures and the balance is considered as the value of land. In respect of land, the Company has an undivided share in land. Also an insignificant portion of land is unlawfully occupied by an illegal occupant and the said occupant has raised some illegal structures for which the Municipal Corporation has served a demolition notices. The demolition notices are being contested, by the unlawful tenant, in an Appeal before the Hon''ble High Court and the matter remains subjudice as on date.

6. Contingent Liabilities:

a) Disputed demands in respect of income tax not acknowledged as debt - Rs. 15.74 lakhs (P.Y. Rs. 15.47 lakhs). Future cash outflows in respect of above are dependent on outcome of matter under dispute.

In respect of Assessment year 2005-2006 there was tax demand of Rs. 68.94 lakhs (Nil) which had been adjusted by the tax authorities against refund due to the company in respect of other years. During the year, the company has received favourable Order passed by the ITAT, Mumbai against which the Income Tax Department has filed the appeal before the Bombay High Court and is under pre-admission stage.

b) The Company has purchased capital assets under EPCG license against which the Company has a balance export obligation of Nil (P.Y. Rs. 63.37 lakhs). Contingent liability, to the extent of duty saved in respect of EPCG is Nil (P.Y. Rs. 10.56 lakhs).

Further, in respect of the above, outstanding bonds at the year-end executed by the Company in favour of customs authority aggregates to Rs. 251.00 lakhs (P.Y. Rs. 270.07 lakhs). Out of above, bonds aggregating to Rs. 112.57 lakhs (P.Y. Rs. 169.25 lakhs) are under the process of discharge from custom authorities.

c) Bank guarantees of Rs. 60.09 lakhs (P.Y. Rs. 65.47 lakhs).

d) Letter of Credit of Nil (P.Y. Rs. 78.75 lakhs).

Note: The Company does not expect any outflow of resources in respect of Para (b), (c) and (d).

7. Estimated amount of contracts remaining to be executed on-

a) Capital Account and not provided for Rs. 308.76 lakhs (net of advances) (P.Y. Rs. 129.34 lakhs).

b) Other commitments-Relating to Advertisement contracts aggregating to Rs. 116.02 lakhs (Net of advances) (P.Y Rs. 64.39 lakhs). Also Refer Note 2.42 in respect of minimum lease rental payment under non-cancellable operating lease.

100% of the plan assets held by gratuity trust comprises of employees group gratuity scheme with Life Insurance Corporation of India. Additional provision has been made for short fall between liability as per actuarial valuation and value of plan assets. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The expected rate of return on plan assets comprising of Insurance Policy with LIC of India is based on the historical results of returns given by LIC of India.

The Company expects to contribute Rs. 75.00 lakhs (P.Y. Rs. 125.00 lakhs) to gratuity trust for contribution to LIC of India in financial year 2016-17.

b) Disclosure in respect of leave entitlement liability:

Leave entitlement is short term benefit which is recognized as an expense at the un-discounted amount in the year in which the related service is rendered.

c) Death in service benefit:

The Company has taken group term policy from an insurance Company to cover its obligation for death in service benefit given to eligible employees. The insurance premium of Rs. 11.81 lakhs (P.Y. Rs. 7.50 lakhs) is recognized in Statement of Profit and Loss.

d) The Company contributes towards Employees Provident Fund, Employees State Insurance, National pension Scheme and Labour Welfare Fund. The aggregate amount contributed and charged to Statement of Profit and Loss is Rs. 387.95 lakhs (P.Y. Rs. 322.96 lakhs).

8. Segment Reporting :

a) Primary segment:

The Company is engaged in the business of manufacturing and marketing of Apparels & trading of Lifestyle Accessories/ Products. The Company is also generating power from Wind Turbine Generator. The power generated from the same is predominantly used for captive consumption. However, the operation of Wind Turbine Segment is within the threshold limit stipulated under AS - 17 "Segment Reporting" and hence it does not require disclosure as a separate reportable segment.

9. Operating Lease Arrangements:

Disclosure as per Accounting Standard (AS-19) - "Leases" are given below:

a) As lessee:

Rental expenses of Rs. 73.01 lakhs (P.Y. Rs. 113.89 lakhs) under operating leases have been recognized in the Statement of Profit and Loss. It includes contingent lease rent of Rs. 3.79 lakhs (P.Y. Rs. 7.67 lakhs) based on revenue sharing model.

The above figures include:

i. The agreements are executed for the periods of 33 to 108 months with a non-cancellable period at the beginning of the agreement ranging from 12 to 36 months and having a clause for extension of lease period.

ii. Lease rentals based on estimated date of commencement of lease in cases where the agreements / MOUs have been entered into but the date of commencement of lease is dependent on the date of construction/ renovation of premises and based on the commitment for delivery by lessors.

iii. The above-mentioned lease rentals include a lease the period of which is dependent on the occurrence of an event, the date of which is not ascertainable beyond five years. Hence, the lease rentals are considered up to a period of five years only.

iv. Lease rentals do not include common area maintenance charges and tax payable, if any.

v. The above details of lease rental obligation exclude the amounts payable by franchisee in accordance with the arrangement with them (a) not later than 1 year Rs. 54.92 lakhs (P.Y. Rs. 93.92 lakhs) (b) between 1 to 5 year Rs. 125.20 lakhs (P.Y. Rs. 139.27 lakhs) (c) more than 5 years Rs. 59.31 lakhs (P.Y. Rs. 84.12 lakhs).

b) As Lessor:

Rental income of Rs. 6.31 lakhs (P.Y. Rs. 19.04 lakhs) is recognized in the Statement of Profit and Loss. It includes contingent lease rent of Rs. 1.93 lakhs (P.Y. Rs. 5.24 lakhs) based on revenue sharing model, which is higher of fixed amount or percentage of revenue of lessee. There is no escalation clause and one of the lease agreement is cancelled during the current year. The initial direct cost (if any) is charged off to expenses in the year in which it is incurred.

10. Corporate Social Responsibility

As per Section 135 of the Companies Act, 2013, the company has spent on Corporate Social Responsibility as per its CSR policy.

a) Gross amount required to be spent by the company during the year is Rs. 183.61 lakhs (P.Y. Rs. 167.74 lakhs)

11. Additional information as required by para 5 of General Instructions for preparation of Statement of Profit and Loss (other than already disclosed above) are either Nil or Not Applicable.

12. Previous year figures are regrouped or rearranged wherever considered necessary


Mar 31, 2015

1. The company has given part of the premises along with amenities under operating lease. The gross carrying amount, accumulated depreciation at the balance sheet date and depreciation recognized in Statement of Profit and Loss for the year of said premises is ' 191.40 lakhs, Rs. 58.99 lakhs and Rs. 5.47 lakhs respectively (P.Y. Rs. 159.90 lakhs, Rs. 53.51 lakhs, and Rs. 5.60 lakhs).

2. Building includes the value of 14,000 (P.Y.14,000) share of Rs. 100 each in Synthofine Estate CHS Ltd and value of 10 (P.Y.NIL) share of Rs. 50 each in Gautam Chemical Industrial Premises CHS Ltd.

3. Balance useful life of software (Tukacad Professional Edition software) as at year end is Nil (P.Y. 9 months). Balance useful life of membership rights as at year end is 36 months (P.Y. 48 months).

4. During the quarter ended 30th June 2014, the Company had realigned its depreciation policy in accordance with Schedule II to Companies Act, 2013. Consequently w.e.f. 1st April 2014 :

(a) the carrying value of assets acquired prior to 1st April 2014 is now depreciated over its revised remaining useful life;

(b) where the remaining useful life of the asset is nil as on 1st April 2014, carrying value of assets has been adjusted against opening reserves (net of deferred tax of Rs. 18.45 lakhs) amounting to Rs. 35.82 lakhs in accordance with transitional provision of Schedule II;

(c) on account of above change, depreciation charged to Statement of Profit and Loss for year 2014-2015 is lower by Rs. 139.18 lakhs and depreciation for the year 2015-2016 would be lower by Rs. 94 lakhs for the assets held as at 1st April 2014.

5. The addition to freehold land represents land acquired with integrated structure for a composite value. The value of structure is determined based on estimated depreciated value of structures and the balance is considered as the value of land. In respect of land, the company has an undivided share in land. Also an insignificant portion of land is illegally occupied by the occupant and occupant has raised some illegal structure for which the Municipal Corporation has served a demolition notice.

6. CONTINGENT LIABILITIES

a) Disputed demands in respect of income tax not acknowledged as debt - Rs. 15.47 lakhs (P.Y. Rs. 68.94 lakhs). Future cash outflows in respect of above are dependent on outcome of matter under dispute.

b) The Company has purchased capital assets under EPCG license against which the Company has a balance export obligation of Rs. 63.37 lakhs (P.Y. Rs. 15.55 lakhs). Contingent liability, to the extent of duty saved in respect of EPCG is Rs. 10.56 lakhs (P.Y. Rs. 2.59 lakhs). The balance export obligation to be fulfilled as per license upto year 2020-2021.

Further, in respect of the above, outstanding bonds at the year-end executed by the Company in favour of customs authority aggregates to Rs. 270.07 lakhs (P.Y. Rs. 259.10 lakhs). Out of above, bonds aggregating to Rs. 169.25 lakhs (P.Y. Rs. 251.97 lakhs) are under the process of discharge from custom authorities.

c) Bank guarantees of Rs. 65.47 lakhs (P.Y. Rs. 95.22 lakhs)

d) Letter of Credit of Rs. 78.75 lakhs (P.Y. Nil)

Note: The Company does not expect any outflow of resources in respect of Para (b), (c) and (d).

7. ESTIMATED AMOUNT OF CONTRACTS REMAINING TO BE EXECUTED ON-

a) Capital Account and not provided for Rs. 129.34 lakhs (net of advances) (P.Y. Rs. 1,698.00 lakhs).

b) Other commitments-Relating to Advertisement contracts aggregating to Rs. 64.39 lakhs (Net of advances) (P.Y Rs. 41.00 lakhs). Also Refer Note 2.42 in respect of minimum lease rental payment under non-cancellable operating lease.

8. EMPLOYEE BENEFITS:

a) Disclosure in respect of leave entitlement liability:

Leave entitlement is short term benefit which is recognized as an expense at the un-discounted amount in the year in which the related service is rendered.

b) Death in service benefit:

The Company has taken group term policy from an insurance Company to cover its obligation for death in service benefit given to eligible employees. The insurance premium of Rs. 7.50 lakhs (P.Y. Rs. 3.73 lakhs) is recognized in Statement of Profit and Loss.

c) The Company contributes towards Employees Provident Fund, Employees State Insurance and Labour Welfare Fund. The aggregate amount contributed and charged to Statement of Profit and Loss is Rs. 322.96 lakhs (P.Y. is Rs. 251.15 lakhs).

9. RELATED PARTY DISCLOSURE

Disclosures as per Accounting Standard (AS-18) - 'Related Party Disclosures' are given below:

a) Related Parties where i) control exists and ii) where significant influence exists (with whom transaction have taken place during the year).

Joint Ventures

White Knitwear Private Limited

Enterprises where Key Management Personnel (KMP) and their relatives have significant influence:

Enlighten Lifestyle Limited (Formerly known as Kornerstone Retail Limited)

Smt. Jatnobai Karamchandji Ratanparia Chouhan Charitable Trust

Lord Gautam Charitable Foundation

Kewal Kiran Finance Private Limited

Key Management Personnel

Kewalchand P. Jain Chairman & Managing Director

Hemant P. Jain Whole-time Director

Dinesh P. Jain Whole-time Director

Vikas P. Jain Whole-time Director

Relatives / Other concerns of Key Management Personnel:

Shantaben P. Jain (Mother of Key Management Personnel)

Veena K. Jain (Wife of Kewalchand P. Jain.)

Lata H. Jain (Wife of Hemant P. Jain)

Sangeeta D. Jain (Wife of Dinesh P. Jain)

Kesar V. Jain (Wife of Vikas P. Jain)

Pankaj K. Jain (Son of Kewalchand P. Jain)

Hitendra H. Jain (Son of Hemant P. Jain)

Kewalchand P. Jain (HUF)

Hemant P. Jain (HUF)

Dinesh P. Jain (HUF)

Vikas P. Jain (HUF)

P.K. Jain Family Holding Trust

Employee Funds:

Kewal Kiran Clothing Limited - Employee Group Gratuity Scheme.

10. Following are the Key Managerial Personnel (KMPs)and their relative w.e.f. 01.04.2014 in accordance with the provisions of the Companies Act, 2013:

1. S. L. Kothari Chief Financial Officer

2. Abhijit Warange Company Secretary

3. Amita S Kothari Wife of S.L. Kothari

11. OPERATING LEASE ARRANGEMENTS

Disclosure as per Accounting Standard (AS-19) - "Leases" are given below:

a) As lessee:

Rental expenses of Rs. 113.89 lakhs (P.Y.Rs. 107.17 lakhs) under operating leases have been recognized in the Statement of Profit and Loss. It includes contingent lease rent of Rs. 7.67 lakhs (P.Y. Rs. 17.73 lakhs) based on revenue sharing model.

b) As Lessor:

Rental income of Rs. 19.04 lakhs (P.Y. Rs. 16.48 lakhs) is recognized in the Statement of Profit and Loss. It includes contingent lease rent of Rs. 5.24 lakhs (P.Y. Rs. 3.03 lakhs) based on revenue sharing model, which is higher of fixed amount or percentage of revenue of lessee. There is no escalation clause and the arrangement is mutually cancellable. The initial direct cost (if any) is charged off to expenses in the year in which it is incurred.

12. Additional information as required by para 5 of general instructions for preparation of statement of profit and loss (other than already disclosed above) are either Nil or Not applicable.

13. Previous year figures are regrouped or rearranged wherever considered necessary.


Mar 31, 2014

Not Available


Mar 31, 2013

1.1 Contingent Liabilities:

a) Disputed demands in respect of income tax not acknowledged as debt - Rs. 6,894,195 (P.Y. Rs. 9,648,192). Future cash outflows in respect of above are dependent on outcome of matter under dispute.

b) The Company had purchased capital assets under EPCG license against which export obligation is fulfilled. Further, in respect of the above, outstanding bonds at the year-end executed by the Company in favour of customs authority aggregating Rs. 32,429,895 (P.Y. Rs. 32,429,895) are under the process of discharge from custom authorities.

c) Bank guarantees of Rs. 9,395,420(P.Y. Rs. 8,457,672)

Note: The Company does not expect any outflow of resources in respect of Para b and c.

1.2 Estimated amount of contracts remaining to be executed on-

a) Capital Account and not provided for Rs. 160,900,000 (net of advances) (P.Y. Rs. 30,199,535).

b) Other commitments-Relating to Advertisement contracts aggregating to Rs. 1,600,000 (Net of advances) (P.Y Rs. 4,100,000). Also Refer Note 2.42 in respect of minimum lease rental payment under non-cancellable operating lease.

1.3 Employee Benefits:

a) Disclosure in respect of gratuity liability

100% of the plan assets held by gratuity trust comprises of employees group gratuity scheme with Life Insurance Corporation of India. Additional provision has been made for short fall between liability as per actuarial valuation and value of plan assets. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The expected rate of return on plan assets comprising of Insurance Policy with LIC of India is based on the historical results of returns given by LIC of India.

The Company expects to contribute Rs. 7,000,000 (P.Y. Rs. 4,000,000) to gratuity trust for contribution to LIC of India in year 2013-14.

b) Disclosure in respect of leave entitlement liability:

Leave entitlement is short term benefit which is recognised as an expense at the un-discounted amount in the year in which the related service is rendered.

c) Death in service benefit:

The Company has taken group term policy from an insurance company to cover its obligation for death in service benefit given to eligible employees. The insurance premium of Rs. 317,221 (P.Y. Rs. 366,500) is recognised in Statement of Profit and Loss.

d) The Company contributes towards Employees Provident Fund, Employees State Insurance and Labour Welfare Fund. The aggregate amount contributed and charged to Statement of Profit and Loss is Rs. 23,041,857 (P.Y. Rs. 20,205,502).

1.4 Segment Reporting:

a) Primary Segment:

The Company is engaged in the business of manufacturing and marketing of Apparels & trading of Lifestyle Accessories/Products. The Company is also generating power from Wind Turbine Generator. The power generated from the same is predominantly used for captive consumption. However, the operation of Wind Turbine Segment is within the threshold limit stipulated under AS - 17 "Segment Reporting" and hence it does not require disclosure as a separate reportable segment.

1.5 Related Party Disclosure:

Disclosures as per Accounting Standard (AS-18) - ''Related Party Disclosures'' are given below:

a) Related Parties where i) control exists and ii) where significant influence exists (with whom transaction have taken place during the year).

Joint Ventures:

White Knitwear Private Limited

Enterprises where Key Management Personnel (KMP) and their relative have significant influence:

Kornerstone Retail Limited

Smt. Jatnobai Karamchandji Ratanparia Chouhan Charitable Trust Lord Gautam Charitable Foundation

Key Management Personnel:

Kewalchand P. Jain Chairman & Managing Director Hemant P. Jain Whole-time Director

Dinesh P. Jain Whole-time Director

Vikas P. Jain Whole-time Director

Relatives / Other concerns of Key Management Personnel:

Shantaben P Jain (Mother of Key Management Personnel)

Veena K. Jain (Wife of Kewalchand P. Jain.)

Lata H. Jain (Wife of Hemant P. Jain)

Sangeeta D. Jain (Wife of Dinesh P. Jain)

Kesar V. Jain (Wife of Vikas P. Jain)

Pankaj K. Jain (Son of Kewalchand P. Jain)

Hitendra H. Jain (Son of Hemant P. Jain)

Arpita K. Jain (Daughter of Kewalchand P Jain)

Pukhraj K. Jain (HUF)

Kewalchand P. Jain (HUF)

Hemant P. Jain (HUF)

Dinesh P. Jain (HUF)

Vikas P. Jain (HUF)

P.K. Jain Family Holding Trust

Employee Funds:

Kewal Kiran Clothing Limited - Employee Group Gratuity Scheme.

1.6 Operating Lease Arrangements:

Disclosure as per Accounting Standard (AS-19) - "Leases" are given below:

a) As lessee:

Rental expenses of Rs. 17,379,517 (P.Y. Rs. 25,746,833) under operating leases have been recognised in the Statement of Profit and Loss. It includes contingent lease rent of Rs. 3,189,672 (P.Y. Rs. 3,465,089) based on revenue sharing model.

The above figures include:

i. The agreements are executed for the periods of 33 to 108 months with a non-cancellable period at the beginning of the agreement ranging from 12 to 36 months and having a clause for extension of lease period.

ii. Lease rentals based on estimated date of commencement of lease in cases where the agreements / MOU''s have been entered into but the date of commencement of lease is dependent on the date of construction/ renovation of premises and based on the commitment for delivery by lessors.

iii. The afore-mentioned lease rentals include a lease the period of which is dependent on the occurrence of an event, the date of which is not ascertainable beyond five years. Hence, the lease rentals are considered up to a period of five years only.

iv. Lease rentals do not include common area maintenance charges and tax payable, if any.

v. The above details of Lease Rental obligation exclude the amounts payable by franchisee in accordance with the arrangement with them (a) not later than 1 year Rs. 12,623,281 (P.Y. Rs. 9,535,550) (b) between 1 to 5 year Rs. 27,095,618 (P.Y. Rs. 25,414,833) (c) more than 5 years Rs. 579,179 (P.Y. Rs. 210,000).

b) As Lessor:

Rental income of Rs. 1,575,119 (P.Y. Rs. 1,681,578) is recognised in the Statement of Profit and Loss. It includes contingent lease rent of Rs. 375,119 (P.Y. Rs. 481,578) based on revenue sharing model, which is higher of fixed amount or percentage of revenue of lessee. There is no escalation clause and the arrangement is mutually cancellable. The initial direct cost (if any) is charged off to expenses in the year in which it is incurred.

1.7 Joint Venture Information:

Details as per Accounting Standard (AS) -27 "Financial Reporting of Interest in Joint Venture" are given below:

The Company''s share in the contingent liability and capital/other commitment of the Joint Venture are Rs. 3,500,000 (P.Y. Rs. Nil) and Rs. Nil (P.Y. Rs. Nil) - respectively. The Company''s share in contingent liability towards cumulative preference dividend including tax thereon of the Joint Venture aggregates to Rs. 11,652,000 (P.Y. Rs. 9,500,000) which is payable to its joint venture partners.

The Company''s contingent liability and capital/other commitment in relation to joint venture Rs. Nil (P.Y. Rs. Nil) and Rs. Nil (P.Y. Rs. Nil)

The current year figures are based on un-audited accounts of the joint venture and previous year figures given in bracket are based on the audited financial accounts of the joint venture.

1.8 Disclosure regarding Derivative Instrument and unhedged Foreign Currency Exposure:

The Company does not enter into any forward exchange contracts being derivative instruments, for trading, speculative or hedging purposes. The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

The above Provision has been grouped under the head ''Short Term Provisions'' in Note 2.8.

The timing of the outflow is dependent on various aspects/fulfillment of conditions and occurrence of events. Such provisions are made based on the past experience and assessment of rates and taxes. However, it is most likely that outflow is expected to be within a period of one year from the date of Balance Sheet.

1.9 Additional information as required by para 5 of General Instructions for preparation of Statement of Profit and Loss (other than already disclosed above) are either Nil or Not Applicable.

1.10 Previous year figures are regrouped or rearranged wherever considered necessary.


Mar 31, 2012

1.1.1 The company has given part of the premises along with amenities under operating lease. The gross carrying amount, accumulated depreciation atthe balance sheet date and depreciation recognized in Statement of Profit and Loss for the year of said premises is Rs 15,990,000, Rs 4,201,988, and Rs 620,421 respectively (RY. Rs 15,990,000, Rs 3,581,556, and Rs 653,075).

1.1.2 Balance useful life of software (Tukacad Professional Edition software) as on 31st March 2012 is 33 Months

1.1.3. Building includes Rs 1,400,000/- (RY. Rs 1,180,000) being the value of 14000 shares (RY. 11800 shares) ofRs 100 in Synthofine estate.

1.2 CONTINGENT LIABILITIES:

a) Disputed demands in respect of income tax not acknowledged as debt - Rs 9,648,192 (PY 9,648,192). Future cash outflows in respect of above are dependent on outcome of matter under dispute.

b) The Company has purchased capital assets under EPCG license against which the Company has a balance export obligation of Rs Nil (PY Rs 36,696,501). Contingent liability, to the extent of duty saved in respect of EPCG is Rs Nil (PY. Rs 6,550,908). Balance Export obligation was to be fulfilled as per license up to the year 2019. Further, in respect of the above, outstanding bonds at the year end executed by the Company in favour of customs authority aggregating Rs 32,429,895 (PY Rs 33,700,395) for which export obligation is pending / fulfilled but under the process of discharge from customs authorities. The export obligation fulfilled against these licenses aggregates to Rs 74,991,528 (PY. Rs 9,817,108).

c) Bank guarantees of Rs 8,457,672 (PY. Rs 3,219,244).

d) Guarantee of Rs Nil(PY Rs 16,602,758) given to Bank for securing overdraft facility to third party of the Company by creating lien on Fixed Deposits of Rs Nil (PY. Rs 27,892,641).

Note: The Company does not expect any outflow of resources in respect of Para b, c, and d.

1.3 ESTIMATED AMOUNT OF CONTRACTS REMAINING TO BE EXECUTED ON-

a) Capital Account and not provided for Rs 30,199,535 (net of advances) (PY Rs 5,446,435).

b) Other commitments-Relating to Advertisement contracts aggregating to Rs 4,100,000 (Net of advances) (PY Nil).Also Refer Note 2.42 in respect of minimum lease rental payment under non-cancellable operating lease 100% of the plan assets held by gratuity trust comprises of employees group gratuity scheme with Life Insurance Corporation of India. Additional provision has been made for short fall between liability as per actuarial valuation and value of plan assets. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The expected rate of return on plan assets comprising of Insurance Policy with LIC of India is based on the historical results of returns given by LIC of India.

The Company expects to contribute Rs 4,000,000 to gratuity trust for contribution to LIC of India in year 2012-13

b) Disclosure in respect of leave entitlement liability:

Leave entitlement is short term benefit which is recognised as an expense at the un-discounted amount in the year in which the related service is rendered.

c) Death in service benefit:

The Company has taken group term policy from an insurance company to cover its obligation for death in service benefit given to eligible employees. The insurance premium of Rs366,500 (PY Rs Nil) is recognised in Statement of Profit and Loss.

d) The Company contributes towards Employees Provident Fund, Employees State Insurance and Labour Welfare Fund. The aggregate amount contributed and charged to Statement of Profit and Loss is Rs20,205,502 (PY Rs 18,024,592).

1.4 SEGMENT REPORTING:

a) Primary Segment:

The Company is engaged in the business of manufacturing and marketing of Apparels & trading of Lifestyle Accessories. The Company is also generating power from Wind Turbine Generator. The power generated from the same is predominantly used for captive consumption. However, the operation of Wind Turbine Segment is within the threshold limit stipulated under AS - 17 "Segment Reporting" and hence it does not require disclosure as a separate reportable segment. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

(Figures in bracket indicate previous year's figures)

*Segment Assets from outside India represents receivables from Export Sales (net of advances in relation to exports). In view of the interwoven / intermix nature of business and manufacturing facility, other information is not ascertainable.

1.5 OPERATING LEASE ARRANGEMENTS:

Disclosure as per Accounting Standard (AS-19) - "Leases" are given below:

a) As lessee:

Rental expenses of Rs 25,746,833 (PY. Rs 32,118,122) under operating leases have been recognised in the Statement of Profit and Loss. It includes contingent lease rent of Rs 3,465,089 (PY. Rs 2,408,718) based on revenue sharing model.

At balance sheet date, minimum lease payments under non-cancellable operating leases fall due as follows:

The above figures include:

i. The agreements are executed for the periods of 33 to 108 months with a non-cancellable period at the beginning of the agreement ranging from 12 to 36 months and having a clause for extension of lease period.

ii. Lease rentals calculated based on estimated date of commencement of lease in cases where the agreements / MoU's have been entered into but the date of commencement of lease is dependent on the date of construction/renovation of premises and based on the commitment for delivery by lessors.

iii. The afore-mentioned lease rentals include a lease the period of which is dependent on the occurrence of an event, the date of which is not ascertainable beyond five years. Hence, the lease rentals are considered up to a period of five years only.

iv. Lease rentals do not include common area maintenance charges and tax payable, if any.

v. The above details of Lease Rental obligation exclude the amounts payable by franchisee in accordance with the arrangement with them (a) not later than 1 year Rs9,535,550 (PY. Rs 7,111,142) (b) between 1 to 5 year Rs25,414,833 (PY. Rs 19,316,502) (c) more than 5 years Rs210,000 (RY. Rs 1,110,000).

b) As Lessor:

Rental income of Rs 1,681,578 (PY. Rs 1,609,667) is recognised in the Statement of Profit and Loss. It includes contingent lease rent of Rs 481,578 (PY Rs 409,667) based on revenue sharing model. There is no escalation clause and the arrangement is mutually cancellable. The initial direct cost (if any) is charged off to expenses in the year in which it is incurred.

The above Provision has been grouped under the head 'Short Term Provisions' in Note 2.8.

The timing of the outflow is dependent on various aspects/fulfillment of conditions and occurrence of events. Such provisions are made based on the past experience, However it is most likely that outflow is expected to be within a period of one year from the date of Balance Sheet.

1.6 These financial statements have been prepared in the format prescribed by the revised Schedule VI to the Companies Act, 1956. Previous year figures are regrouped or rearranged wherever considered necessary.


Mar 31, 2011

1. CONTINGENT LIABILITIES:

a. Disputed demands in respect of income tax not acknowledged as debt - Rs. 9,648,192 (P.Y Rs. 12,325,246). Future cash outflows in respect of above are dependent on outcome of matter under dispute.

b. The Company has purchased capital assets under EPCG license against which the Company has a balance export obligation of Rs. 36,696,501 (P.Y. Rs. 28,631,956). Contingent liability, to the extent of duty saved in respect of EPCG is Rs. 6,550,908 (P.Y. Rs. 3,151,492). Balance Export obligation to be fulfilled as per license up to the year 2019. Further, in respect of the above, outstanding bonds at the year end executed by the Company in favour of customs authority aggregating Rs. 33,700,395 (P.Y. Rs. 26,588,573) for which export obligation is pending / fulfilled but under the process of discharge from custom authorities.

c. The Company has fulfilled its export obligation with regards to certain EPCG License. However, the discharge from Custom authorities / DGFT is under process. The export obligation fulfilled against these licenses aggregates to Rs. 9,817,108 (P.Y. Rs. 18,601,084).

d. Bank guarantees of Rs. 3,219,244 (P.Y. Rs. 3,144,159).

e. Letter of Credit of Rs. Nil (P.Y. Rs. 5,722,649) discounted with Banks.

f. Guarantee of Rs. 16,602,758 (P.Y. Rs. 25,846,592) given to Bank for securing overdraft facility to third party of the Company by creating lien on Fixed Deposits of Rs. 27,892,641 (P.Y Rs.42,500,000).

Note: The Company does not expect any outflow of resources in respect of Para b, c, d and f

2. Estimated amount of contracts remaining to be executed on Capital Account and not provided forRs. 5,446,435 (net of advances) (P.Y Rs. 6,001,300)

3. In March 2006, the Company made a public issue of its 3,100,037 equity share having face value of Rs. 10 each at a premium of Rs. 250/- per share. The aggregate fund raised by the issue was Rs. 733,459,620 (net of share issue expenses of Rs. 72,550,000). The entire proceeds raised from the issue have been fully utilised upto 31st March, 2010 as per revised objects approved by the shareholders of the Company.

4. INVESTMENT IN JOINT VENTURE:

The Company had invested in aggregate Rs. 34,550,000 (P.Y.Rs.34,550,000) in Joint Venture "White Knitwear Private Limited" (WKPL). WKPL had acquired land in Surat SEZ and created building for setting up of production unit for producing of knitwear apparels for exports. In view of the sluggish demand in international market, most of the members of SEZ shelved their projects and approached to central government for de-notification of SEZ. The management is hopeful that the SEZ would be de-notified soon. Post de- notification WKPL shall dispose of the land and building and realise the proceeds to return it to joint venture partners.

No provision for diminution in the value of investment is considered necessary in view of the value of underlying assets base of joint venture, however the Company as a matter of abundant precaution made provision towards its share of loss of Rs.600,000 (P.Y Rs.4,300,000) for the year ended 31st March, 2011 (cumulative share of loss aggregates to Rs.4,900,000 P.Y Rs.4,300,000) and provision is grouped under administrative & other expenses).

5. Interim Dividend includes Special Interim Dividend of Rs.6 per share (Face value of Rs.10 each) declared on 2nd April, 2011 and paid on 26th April, 2011 on the occasion of completion of 5 years of listing on the stock exchanges. Accordingly an amount of Rs.73,950,222 along with Dividend Distribution Tax of Rs.11,996,575 is shown under Schedule 11 as provisions.

b) Disclosure in respect of leave entitlement liability:

Effective current year, the Company has change its leave policy. Accordingly, Leave entitlement is short term benefit which is recognised as an expense at the un-discounted amount of the year in which the related service is rendered. Previous year, Long term leave entitlements was recognised as expense based on the actuarial valuation and the principal assumptions used in determining leave entitlement liability were same as those used for gratuity (Refer Note 10 - a of Schedule 21).

12. RELATED PARTY DISCLOSURE:

Disclosures as per Accounting Standard (AS-18) - 'Related Party Disclosures' are given below:

a) Related Parties where a) control exists and b) where significant influence exists (with whom transaction have taken place during the year).

Joint Ventures

White Knitwear Private Limited

Enterprises where Key Management Personnel and their relative have significant influence

Kornerstone Retail Limited

Smt. Jatnobai Karamchandji Ratanparia Chouhan Charitable Trust

Relatives / Other concerns of Key Management Personnel

Shantaben P Jain

Veena K. Jain

Lata H.Jain

Sangeeta D Jain

Kesar V. Jain

Pankaj K.Jain

Hitendra H.Jain

Aarpita K. Jain

Pukhraj K. Jain (HUF)

Kewalchand P. Jain (HUF)

Hemant P. Jain (HUF)

Dinesh P. Jain (HUF)

Vikas P. Jain (HUF)

PK. Jain Family Holding Trust

Key Management Personnel:

Kewalchand P. Jain Chairman & Managing Director

Hemant P. Jain Whole-time Director

Dinesh P. Jain Whole-time Director

Vikas P. Jain Whole-time Director

Employee Funds:

Kewal Kiran Clothing Ltd. - Employee Group Gratuity Scheme.

13.0PERATING LEASE ARRANGEMENTS:

Disclosure as per Accounting Standard (AS-19) - "Leases" are given below:

a) As lessee:

Rental expenses ofRs. 32,118,122 (P.Y. Rs. 42,154,500) under operating leases have been recognised in the profit and loss account. It includes contingent lease rent ofRs. 2,408,718 (P.Y. Rs. 781,669) based on revenue sharing model.

i) The agreements are executed for the periods of 33 to 108 months with a non-cancellable period at the beginning of the agreement ranging from 12 to 36 months and having a clause for extension of lease period.

ii) Lease rentals calculated based on estimated date of commencement of lease in cases where the agreements / MOU's have been entered into but the date of commencement of lease is dependent on the date of construction/renovation of premises and based on the commitment for delivery by lessors.

iii) The afore-mentioned lease rentals include a lease the period of which is dependent on the occurrence of an event, the date of which is not ascertainable beyond five years. Hence, the lease rentals are considered up to a period of five years only.

iv) Lease rentals do not include common area maintenance charges and tax payable, if any.

v) The above details of Lease Rental obligation exclude the amounts payable by franchisee in accordance with the arrangement with them (a) not later than 1 year Rs. 7,111,142 (P.Y. Rs. 5,210,928) (b) between 1 to 5 year Rs. 19,316,502 (P.Y Rs.18,285,345) (c) more than 5 years Rs.1,110,000 (P.Y.Rs.2,317,744)

b) As Lessor:

Rental income ofRs. 1,609,667 (P.Y Rs.1,359,602) is recognised in the Profit & Loss account. It includes contingent lease rent ofRs. 409,667 (P.Y. Rs. 434,602) based on revenue sharing model. The Company has given part of the premises along with amenities under operating lease. There is no escalation clause and the arrangement is mutually cancellable. The gross carrying amount, accumulated depreciation at the balance sheet date and depreciation recognised in Profit and Loss account for the year of said premises is Rs. 15,990,000, Rs. 3,581,556, and Rs. 653,075 respectively (P.Y. Rs. 15,990,000, Rs. 2,928,491, and Rs. 687,448).

16.Sundry debtors include Rs. 1,419 (PY Rs. 329,985) [maximum amount due during the year Rs. 1,123,629 (PY Rs. 945,169)] receivable from Kornerstone Retail Limited under same management.

17.Loans and advance includes Deposit of Rs. 324,000 for the premises taken on lease from the directors. (P.Y. Rs. 324,000) [Maximum amount due during the year Rs.324,000 P.Y Rs.324,000).

30.Previous year's figures are regrouped or rearranged wherever considered necessary.


Mar 31, 2010

1. Contingent Liabilities:

a. Disputed demands in respect of income tax not acknowledged as debt-Rs. 1^,325,246 (P.Y. Rs. 3,034,459). Figures exclude show cause notice, if any issued by the income tax department not considered in nature of demand.

b. Disputed demands in respect of Custom Duty against Advance License not acknowledged as debt - Rs. Nil (P.Y. Rs. 1,320,720)

c. The company has purchased capital assets under EPCG license against which the company has an export obligation of Rs. 24,815,075 (P.Y. Rs. 25,211,933). Contingent liability, to the extent of duty saved in respect of EPCG is Rs. 3,151,492 (P.Y. Rs. 3,151,492). Balance Export obligation to be fulfilled as per license up to the year 2015 / 2016. Further, in respect of the above outstanding bonds at the year end executed by the Company in favour of customs authority aggregating Rs. 26,003,573 (P.Y. Rs. 26,003,573) for which export obligation is pending / fulfilled but under the process of discharge from custom authorities.

d. Bank guarantees of Rs. 3,144,159 (P.Y. Rs. 3,941,109).

e. Letter of Credit of Rs. 5,722,649 (P.Y. Rs. Nil) discounted with Banks.

f. Guarantee (in the nature of First Loss Deficiency) to Bankers Rs. 25,846,592 (P.Y Rs. 12,914,720) against which Fixed Deposits of Rs. 42,500,000 are given as security for the current year and secured by pari-passu first charge on Stocks and Receivables for previous year.

Note: Future cash outflows in respect of (a) above is dependent on outcome of matter under dispute.

2. The company has fulfilled its export obligation with regards to certain EPCG License. However, the discharge from Custom authorities/DGFT is under process. The export obligation fulfilled against these licenses aggregates to Rs. 18,601,084 (P.Y Rs. 18,601,084).

3. Estimated amount of contracts remaining to be executed on Capital Account and not provided for - Rs.6,001,300 (net of advances) (P.Y. Rs. 25,671,603)

4. Secured Loans:

a. Term Loan was secured by first charge on specified immovable properties situated at Goregaon, Mumbai.

b. Foreign Currency Demand Loan was secured by pari-passu first charge on all movable properties (present and future) including stocks, Book debts, movable plant and machinery etc.

c. Working Capital Loans from banks are secured by pari-passu first charge on Stocks and receivables.

5. Investment in Joint Venture:

The company has invested aggregate Rs. 34,550,000 (P.Y. Rs. 30,400,000) in Joint Venture "White Knitwear Private Limited" (WKPL). WKPL had acquired land in Surat SEZ for setting up the manufacturing unit for knitwear apparels for export market. WKPL has not commenced its in-house commercial production. In view of the global economic situation, WKPL has decided to explore alternatives to utilize its assets. No provision for diminution in the value of investment is considered necessary in view of the value of underlying assets base of joint venture , however the company as a matter of abundant precaution made a provision of Rs. 4,300,000 (P.Y Rs. Nil) being Companys share of loss in the WKPL (Joint Venture).

6. Deposits grouped under Loans and Advances includes earnest money deposits of Rs. 3,485,398 (P.Y. Rs. 8,407,081) in respect of premises to be taken on lease and in respect of which there have been delays in handing over of possession by lessors. The company is taking necessary legal /persuasive action for recovery of the deposits. However, by way of abundant precaution, the management has provided a sum of Rs. 1,425,000 (P.Y. Rs. 346,000) towards possible non-recovery of deposits given.

7. Segment Reporting:

a. Primary Segment:

The Company is engaged in the business of manufacturing and marketing of Apparels & Apparel Accessories. The Company is also generating power from Wind Turbine Generator. The power generated from the same is predominantly used for captive consumption. However, the operation of Wind Turbine Segment is within the threshold limit stipulated under AS - 17 "Segment Reporting" and hence it does not require disclosure as a separate reportable segment.

8. Related Party Disclosure:

As per Accounting Standard (AS-18) - Related Party Disclosures as notified by the rules, the disclosures of the transactions with the related parties as defined in the accounting standard are given below:

a. Name of the enterprises having same Key Management Personnel and/or their relatives as the reporting enterprise:

Kewal Kiran Enterprises

Kewal Kiran Finance Private Limited

Kewal Kiran Realtors & Infrastructures Private Limited

Kewal Kiran Retail India Private Limited

Kornerstone Retail Limited

Karwa & Kewal Kiran Realtors

Raj & Karwa Kewal Kiran Realtors

Kewal Kiran Media & Communication Limited

Kalpvriksh Realtors & Infrastructures Private Limited (w.e.f 12.02.2010)

b. Joint Ventures

White Knitwear Private Limited

c. Relatives / Other concerns of Key Management Personnel: Shantaben P Jain

Veena K. Jain

Lata H. Jain

Sangeeta D. Jain

Kesar V. Jain

Pankaj K. Jain

Hitendra H. Jain

Aarpita K. Jain

Pukhraj K. Jain (HUF)

Kewalchand P. Jain (HUF)

Hemant P. Jain (HUF)

Dinesh P. Jain (HUF)

Vikas P. Jain (HUF)

P.K. Jain Family Holding Trust

d. Key Management Personnel:

Kewalchand P. Jain Chairman & Managing Director

Hemant P. Jain Whole-time Director

Dinesh P. Jain Whole-time Director

Vikas P. Jain Whole-time Director

9. Operating Lease Arrangements:

Pursuant to the Accounting Standard (AS-19) - "Leases" issued by the Institute of the Chartered Accountants of India, the following information is given:

a. As lessee:

Rental expenses of Rs. 43,671,529 (P.Y. Rs. 51,117,960) under operating leases have been recognized in the profit and loss account. It includes contingent lease rent of Rs. 781,669 (P.Y. Rs. 501,606) based on revenue sharing model.

The above figures include:

i. The agreements are executed for the periods of 33 to 108 months with a non-cancellable period at the beginning of the agreement ranging from 12 to 36 months and having a clause for extension of lease period.

ii. Lease rentals calculated based on estimated date of commencement of lease in cases where the agreements / MOUs have been entered into but the date of commencement of lease is dependent on the date of construction/renovation of premises and based on the commitment for delivery by lessors.

iii. The afore-mentioned lease rentals include a lease the period of which is dependent on the occurrence of an event, the date of which is not ascertainable beyond five years. Hence, the lease rentals are considered up to a period of five years only.

iv. Lease rentals do not include common area maintenance charges and tax payable, if any.

v. The above details of Lease Rental obligation exclude the amounts payable by franchisee in accordance with the arrangement with them (a) not later than 1 year Rs. 5,210,928 (P.Y. Rs. 11,633,898) (b) between 1 to 5 year Rs. 18,285,345 (P.Y. Rs. 35,579,020) (c) more than 5 years Rs. 2,317,744 (P.Y. Rs. 10,230,877)

b. As Lessor:

Rental income of Rs. 1,359,602 (P.Y. Rs. 579,646) is recognized in the Profit & Loss account. It includes contingent lease rent of Rs. 434,602 (P.Y. Rs. 459,646) based on revenue sharing model. The company has given part of the premises along with amenities under operating lease. There is no escalation clause and the arrangement is mutually cancellable. The gross carrying amount, accumulated depreciation at the balance sheet date and depreciation recognized in Profit and Loss account for the year of said premises is Rs. 15,990,000, Rs. 2,928,491, and Rs. 687,448 respectively.

10. Sundry debtors include Rs. 329,985 (P.Y. Rs. 245,207) [maximum amount due during the year Rs. 945,169 (P.Y. Rs. 349,089) receivable from Kornerstone Retail Limited under same management.

11. Loans and advance include Rs. 324,000 (P.Y. Rs. 324,000) [maximum amount due during the year Rs. 324,000 (P.Y. Rs. 324,000) due from directors in which directors are interested.

12. Previous years figures are regrouped or rearranged wherever considered necessary.

 
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