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Notes to Accounts of Kitex Garments Ltd.

Mar 31, 2023

Provisions and Contingent Liabilities

Provisions are recognised when the company has a present obligation (legal or constructive) because of a past event,
for which it is probable that a cash outflow will be required, and a reliable estimate can be made of the amount of the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, it''s carrying
amount is the present value of those cash flows (when the effect of time value of money is material). These are reviewed
at each Balance Sheet date and adjusted to reflect the current best estimates.

When the company expects some or all the provision to be reimbursed, the reimbursement is recognised as a separate
asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the
Statement of Profit and Loss net of any reimbursement.

Contingent liabilities are disclosed when the company has a possible obligation, or a present obligation and it is probable
that an outflow of resources will not be required to settle the obligation, or the amount of obligation cannot be
measured with sufficient reliability.

1.21 Significant Accounting Judgments, Estimates and Assumptions

The preparation of standalone financial statements requires management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and
the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets or liabilities affected in future years.

(i) Useful lives of property, plant and equipment and intangible assets:

As described in the significant accounting policies, the Company reviews the estimated useful lives of property,
plant and equipment and intangible assets at the end of each reporting period.

(ii) Actuarial valuation:

The determination of Company''s liability towards defined benefit obligation to employees is made through
independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit
and Loss and in other comprehensive income. Such valuation depends upon assumptions determined after
considering inflation, seniority, promotion and other relevant factors such as supply and demand factors in the
employment market. Information about such valuation is provided in notes to the standalone financial statements.

(iii) Impairment of assets:

The evaluation of applicability of indicators of impairment of assets requires assessment of several external and
internal factors which could result in deterioration of recoverable amount of the assets.

(iv) Recoverability of advances/receivables:

Management reviews its receivables for objective evidence of impairment at least quarterly. Significant financial
difficulties of the debtor, the probability that the debtor will enter bankruptcy, and default or significant delay
in payments are considered objective evidence that a receivable is impaired. In determining this, management
makes judgement as to whether there is observable data indicating that there has been a significant change
in the payment ability of the debtor, or whether there have been significant changes with adverse effect in the
technological, market, economic or legal environment in which the debtor operates in.

Where there is objective evidence of impairment, management makes judgements as to whether an impairment
loss should be recorded as an expense. In determining this, management uses estimates based on historical loss
experience for assets with similar credit risk characteristics.

1.22 Standards (including amendments) issued but not yet effective

The Ministry of Corporate Affairs ("MCA") has notified Companies (Indian Accounting Standard) Amendment Rules,
2023 dated March 31, 2023 to amend certain Ind ASs which are effective from 01 April 2023:

Below is a summary of such amendments:

(i) Disclosure of Accounting Policies - Amendment to Ind AS 1 Presentation of financial statements

The MCA issued amendments to Ind AS 1, providing guidance to help entities meet the accounting policy disclosure
requirements. The amendments aim to make accounting policy disclosures more informative by replacing the
requirement to disclose ''significant accounting policies'' with ''material accounting policy information''. The
amendments also provide guidance under what circumstance, the accounting policy information is likely to be
considered material and therefore requiring disclosure.

The amendments are effective for annual reporting periods beginning on or after 01 April 2023. The Company
is currently revisiting their accounting policy information disclosures to ensure consistency with the amended
requirements.

(ii) Definition of Accounting Estimates - Amendments to Ind AS 8 Accounting policies, changes in accounting
estimates and errors

The amendment to Ind AS 8, which added the definition of accounting estimates, clarifies that the effects of a
change in an input or measurement technique are changes in accounting estimates, unless resulting from the
correction of prior period errors. These amendments clarify how entities make the distinction between changes in
accounting estimate, changes in accounting policy and prior period errors. The distinction is important, because
changes in accounting estimates are applied prospectively to future transactions and other future events, but
changes in accounting policies are generally applied retrospectively to past transactions and other past events as
well as the current period.

The amendments are effective for annual reporting periods beginning on or after 01 April 2023. The amendments
are not expected to have a material impact on the Company''s financial statements.

(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS
12 Income taxes

The amendment to Ind AS 12, requires entities to recognise deferred tax on transactions that, on initial recognition,
give rise to equal amounts of taxable and deductible temporary differences. They will typically apply to transactions
such as leases of lessees and decommissioning obligations and will require the recognition of additional deferred
tax assets and liabilities.

The amendment should be applied to transactions that occur on or after the beginning of the earliest comparative
period presented. In addition, entities should recognise deferred tax assets (to the extent that it is probable that
they can be utilised) and deferred tax liabilities at the beginning of the earliest comparative period for all deductible
and taxable temporary differences associated with:

• right-of-use assets and lease liabilities, and

• decommissioning, restoration and similar liabilities, and the corresponding amounts recognised as part of the
cost of the related assets.

The cumulative effect of recognising these adjustments is recognised in retained earnings, or another component
of equity, as appropriate. Ind AS 12 did not previously address how to account for the tax effects of on-balance
sheet leases and similar transactions and various approaches were considered acceptable. Some entities may have
already accounted for such transactions consistent with the new requirements. These entities will not be affected
by the amendments.

The Company is currently assessing the impact of the amendments.


Mar 31, 2018

1) Liquidity Risk

Liquidity risk is the risk that the Company will encounter due to difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

The company has sound financial strength represented by its aggregate current assets as against aggregate current liabilities and its strong equity base and lower working capital debt.

2) Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company Credit risk arises primarily from financial assets such as trade receivables, other balances with banks and other receivables.

Credit risk arising from balances with banks is limited because the counterparties are banks with high credit ratings.

B Trade Receivables

Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India and USA. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

For trade receivables, as a practical expedient, the company computes credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates and also takes into account available external and internal credit risk factors.

3) Market Risk

The Company is exposed to market risk through its use of financial instruments and specifically to currency risk and interest rate risk, which result from both its operating and investing activities. A Interest Rate Risk

As the Company is having low debt liabilities and its deferred payment liabilities do not carry interest, the exposure to interest rate risk from the perspective of Financial Liabilities is negligible.

B Foreign Currency Risk

The Company undertakes transactions denominated in foreign currency (mainly US Dollar) which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency, are also subject to reinstatement risks.

The Company uses forward exchange contracts to hedge its exposures in foreign currency arising from firm commitments and highly probable forecast transactions. The carrying amount of foreign currency denominated financial assets and liabilities including derivative contracts, are detailed in Note No.2.41

The following table details the Company''s sensitivity to a 1% increase and decrease in the rupee against the relevant foreign currencies net of forward contracts.

The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 1% change in foreign currency rates, with all other variables held constant.

4 Capital Management

For the purpose of the Company''s capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value.

The Company''s financial strategy aims to support its strategic priorities and provide adequate capital to its businesses for growth and creation of sustainable stakeholder value. The Company funds its operations through internal accruals. The Company aims at maintaining a strong capital base largely towards supporting the future growth of its businesses as a going concern.

As at 31st March, 2018, the Company has only one class of equity shares and has low debt liabilities. The company is not subject to any externally imposed capital requirements.

5 First Time Adoption of Ind AS

These financial statements, for the period ended 31st March 2018, are the first financial statements prepared by the company in accordance with Ind AS. For periods up to and including the year ended 31st March 2017, the company prepared its financial statements in accordance with Previous GAAP, including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended).

Accordingly, the company has prepared financial statements which comply with Ind AS applicable for periods ending on or after 31st March 2018, together with the comparative period data as at and for the year ended 31st March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1st April 2016, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April 2017 and the financial statements as at and for the year ended 31st March 2017.

Exemptions applied:

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS.

The Company has applied the following exemptions:

a. Deemed cost for Property, plant and equipment and intangible assets

The Company has elected to continue with the carrying value of all of its property, plant and equipment and intangible assets recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

b. Determining whether an arrangement contains a lease

Appendix C of Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease, at the inception of the contract or arrangement. However, Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

c. Deemed cost for investments in Associate

Ind AS 101 First-time Adoption of Indian Accounting Standards, permits a first-time adopter to elect to continue with the carrying value for investments in Associates as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. Accordingly, the Company has elected to measure its investments in Associate Enterprise in the standalone financial statements at their previous GAAP carrying value.

IND AS mandatory exemptions

The following exceptions have been applied in accordance with Ind AS 101 in preparing the financial statements.

a. Estimates

In accordance with Ind AS, as at the date of transition to Ind AS an entity''s estimates shall be consistent with the estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP except impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition this was not required under the previous GAAP.

b. Derecognition of financial assets and financial liabilities

Company has elected to apply the derecognition requirements for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

c. Classification and measurement of financial assets

Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.

2.43A Reconciliations between previous GAAP and Ind AS are as given below

i. Reconciliation of Equity as previously reported on account of transition from the previous Indian GAAP to IND AS :

Details of Measurement and recognition difference between Ind AS and Previous GAAP for the year ended 31st March 2017

1) Proposed dividend

Under Previous GAAP up to 1.4.2016, proposed dividend including dividend distribution tax (DDT), are recognized as liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognized as liability in the period in which it is declared by Company, usually when approved by shareholders in a general meeting or paid.

Therefore, the dividend liability (proposed dividend) including dividend distribution tax liability amounting to Rs.428.77 Lakhs upto 1.4.2016 has been derecognised in the retained earnings as on the date of transition.

Proposed dividend including dividend distribution tax liability amounting to Rs.428.77 Lakhs upto 1.4.2016 which was derecognised as on the transition date, has been recognised in retained earnings during the year ended 31st March,2017 as declared and paid.

2) Remeasurement benefit of defined benefit plans

In the financial statements prepared under Previous GAAP, remeasurement benefit of defined plans (gratuity), arising primarily due to change in actuarial assumptions was recognised as employee benefits expense in the Statement of Profit and Loss. Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognised in Other Comprehensive Income as per the requirements of Ind AS

19 - Employee benefits. Consequently, the related tax effect of the same has also been recognised in Other Comprehensive Income.

For the year ended 31st March, 2017, remeasurement of gratuity liability resulted in a net expenses of Rs.16.18 Lakhs which has now been reclassified from employee benefits expense in the Statement of Profit and Loss and recognised separately in Other Comprehensive Income. This has resulted in increase in employee benefits expense by Rs.16.18 Lakhs and Other Comprehensive Income by Rs.16.18 Lakhs for the year ended 31st March, 2017. Consequently, tax effect of the same amounting to Rs.5.60 Lakhs is also recognised separately in Other Comprehensive Income. The above changes do not affect Equity as at date of transition to Ind AS and as at 31st March, 2017.

3) Government Grant

As per previous GAAP, Government grants specifically relatable to capital assets are credited to the carrying value of the respective asset. As per Ind AS, Government grants relating to depreciable assets are recognised as deferred income and are transferred to the Statement of Profit and Loss over the periods and in the proportions in which depreciation expense on those assets are recognised. Accordingly, unamortised Government Grants under Liabilities includes Rs 965.02 Lakhs as on transition date which has been grossed up in the Property, Plant and Equipment and Rs.120.10 Lakhs received in relation to assets purchased subsequently. Deferred grant amounting to Rs 146.64 Lakhs has been transferred to the Statement of Profit and Loss during the year 2016-17 in the proportions in which depreciation expense on those assets are recognised and the balance in the deferred grant as on 31.03.2017 is Rs 1,134.51 Lakhs (including grossing up of grant amounting to Rs 196.02 Lakhs received during the year). Consequently, depreciation expense for such assets have been increased by the same amount for the year 2016-17. The treatment has no impact in the net profit as per the Statement of Profit and Loss for the year ended 31.03.2017.

4) Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expenses that are not recognized in profit or loss, but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans, effective portion of cash flow hedge and change in fair value of equity instruments. The concept of other comprehensive income did not exist under the previous GAAP.

5) Cash Flow Hedge

Under the previous GAAP, Premium or discount arising at the inception of a forward exchange contract is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change. Under Ind AS, forward exchange contract are initially measured at fair value and are remeasured at subsequent reporting dates. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in Other Comprehensive Income in the cash flow hedge reserve and later reclassified to profit or loss when the hedge item affects profit or loss. This has resulted in increase of Other Current Financial Assets by Rs 33.21 Lakhs and corresponding increase in Other Equity by Rs 21.72 Lakhs (Net of tax of Rs 11.49 Lakhs) as at the transition date and subsequent adjustments to Foreign Exchange Rate Translation and deferred tax in the Statement of Profit and Loss on subsequent settlement in the year ended 31.03.2017. This has no impact to the Other Equity as at 31.03.2017 on closing of the forward contract.

6) Equity

Under the Previous GAAP, the Company accounted for long term investments in quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as Fair Value through Other Comprehensive Income (FVTOCI) investments. Ind AS requires FVTOCI investments to be measured at fair value. At the date of transition to Ind AS, difference between the instruments fair value and Indian GAAP carrying amount amounting to Rs 5.50 Lakhs has been recognised as a separate component of

equity, in the Equity Instrument through Other Comprehensive Income reserve with corresponding adjustment to the carrying value of investments. The amount recognised in Other Comprehensive Income for the year ended 31.03.2017 is Rs 4.62 Lakhs

7) Deferred tax

Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Consequent deferred tax adjustments in relation to transactions referred to above have also been made in the books of accounts.

8) Other matters

In the preparation of these Ind-AS Financial Statements, Company has made several presentation differences between previous GAAP and Ind-AS. These differences have no impact on reported profit or total equity. Accordingly, some assets and liabilities have been reclassified into another line item under Ind-AS at the date of transition. Further, in these Financial Statement, some line items as described differently under Ind-AS compared to previous GAAP although the assets and liabilities included in these line items are unaffected.

9. Figures have been stated to the nearest rupee in Lakhs. Previous GAAP figures have been reclasified to conform to Ind AS presentation requirements.


Mar 31, 2017

1. Corporate Information

Kitex Garments Limited is a Public Company incorporated in India. Its shares are listed on the Bombay Stock Exchange and the National Stock Exchange. The Company is engaged in the manufacture of fabric and readymade garments.

2. Basis of Preparation

2.1. The financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the Companies (Accounts) Rules, 2014, and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3.1 The Board of Directors of the company has proposed final dividend of Rs.0.75 (Rs.0.75) per share, which is subject to approval by the share holders at the ensuing Annual General Meeting. In accordance with the revised Accounting Standard - 4 ‘Contingencies and Events occurring after the Balance Sheet Date’ (effective from 01.04.2016) proposed dividend for the year and Corporate Dividend Tax thereon has not been recognised as a distribution of profit in the current year’s accounts.

3.2 During the year, the Board of Directors of the Company has declared and paid interim dividend of Rs.0.75 /- per share for the Financial Year ending on 31st March, 2017, which is subject to regularisation of the shareholders in the ensuing Annual General Meeting.

3.3 The Board of Directors of the company has proposed to issue bonus shares in the ratio of 2:5 to the share holders which is subject to approval of the share holders at the ensuing Annual General Meeting.

4.1 Terms loans from SBI are secured by first charge over the assets created out of bank’s finance, by equitable mortgage over 25.44 acres of land and building belonging to the company and by personal guarantee of Managing Director.

4.2 The vehicle loans from Axis Bank Limited is secured by way of hypothecation of vehicles acquired by using the loan.

5.1 The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act 2006. Intimations have been received from some of the suppliers regarding their status under the said Act as at the year-end, based on which, principal amount unpaid to such suppliers as at the year end aggregating to Rs.11,153,071/- (Rs.4,355,163/-) has been included under Trade payables. In the opinion of the management, there are no overdue to the above parties and the impact of interest, if any, which may be payable in accordance with the provisions of the Act, is not expected to be material. Disclosures required under section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 are as follows:

6.1 Adjustments during the year from Plant and Machinery, Office Equipments and Computer includes Rs.12,784,180/- (Rs.NIL), being the Government Grant received under “Integrated Skill Development Scheme” (ISDS).

6.2 Adjustment during the year from Plant and Machinery includes Rs.18,828,563/- (Rs.NIL), being the Government grant received under the “Technology Upgradation fund Scheme” (TUFS).

6.3 In accordance with provisions of revised Accounting Standard- 10 ‘Plant Property and Equipment (Fixed Assets) effective from 01.04.2016, the cost of replacement spares which have an effective life of more than one financial year have been treated as Fixed Assets. These replacement spares were earlier being expensed to the Statement of Profit and Loss. The impact of the change on the Statement of Profit and Loss for the year is not material.

7.1 Balance with banks in Current Accounts include earmarked balances for unpaid dividend of Rs.6,597,893/-(Rs.7,356,078/-)

7.2 Balance with banks in Deposit Accounts include Rs.39,157,087/- (Rs.35,133,138/-) with a maturity period of less than 12 months and Rs Nil (Rs.1,557,340) with a maturity period of more than 12 months as at the end of the year, which are held as security against Letter of Credits/Bank Guarantee.

8.1 In the opinion of the Directors, Loans and Advances and Other current assets have the value at which they are stated in the Balance Sheet, if realised in the ordinary course of business.

9.1 During the year , income from export incentive has been recognised based on exports made, as against the earlier practice of recognising such income when confirmation of the right to receive was established, since in the opinion of the management there are no significant uncertainties at this stage. This has resulted in recognition of a higher income from export incentives to the extent of Rs.69,833,399/- in the current year.

9.2 Subsidy receivable under the Textile Upgradation Fund Scheme (TUFS) includes Rs.87,668,951/- (Rs.80,530,588/-) carried forward from earlier years. Steps are being taken to recover the subsidy claims, which in the opinion of the management are considered recoverable in full.

10. Details of expenses on corporate social responsibility activities :

a. Gross amount required to be spent by the company during the year Rs.26,774,793/- (Rs.18,258,000/-)

b. Amount spent during the year on :

11. Leases

A. Operating Lease: Company as Lessor

Future minimum rentals receivable under operating lease is as follows:

B. Operating Lease: Company as Lessee

The Company has taken various residential and office premises under operating lease agreements. These agreements are generally for a period of 11 months. The Company has also taken equipments on rent for shorter duration during the year. Minimum lease payments charged during the year to the Statement of Profit and Loss aggregated to Rs.4,509,635/- (Previous year Rs.3,852,152/-)

12.1 Inter segment transfers have been priced on the basis of the pricing adopted for inter company fabric sales made to Kitex Childrenswear Limited.

12.2 Assets and liabilities are not capable of being stated separately geographical segment wise since all the assets and liabilities are held under composite undertaking for both the geographical segments.

13. Related Party Disclosure

Disclosure of transactions with related parties as required by Accounting Standard-18 on related party disclosures as prescribed by Companies (Accounting Standards) Rules, 2006

Related parties with whom transactions have taken place during the year:

a. Key Managerial Personnel:

(i) Sabu M Jacob, Managing Director having control over the enterprise

(ii) Sindhu Chandrasekhar, Whole time director

b. Enterprise owned or significantly influenced by key management personnel or their relatives:

(i) Kitex Childrenswear Limited

(ii) Kitex Limited

(iii) Anna Aluminium Company Private Limited

(iv) Kitex Herbals Limited

(v) Kitex Apparels Limited

(vi) Kitex Infantswear Limited

c. Associate Enterprise

(i) Kitex USA LLC

13.1 Necessary approval of the shareholders as may be required is being sought for at the General Meeting.

13.2 Necessary approval for increase in remuneration of whole time director Rs.286,171/- is being sought for at the ensuing Annual General Meeting.

14. Contingent Liabilities and Commitments

14.1 Contingent Liabilities (to the extent not provided for)

The details of Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006)

14.2 Capital Commitments

Estimated amount of contracts remaining to be executed on capital accounts and not provided for (Net of advance) : Rs.158,477,305/- (Rs.NIL)

15. Long Term Contracts

There are no long term contracts as on 31.03.2017 including derivative contracts for which there are any material foreseeable losses.

16. Previous Year Figures

Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current year’s layout.


Mar 31, 2015

1. Corporate Information

Kitex Garments Limited is a public company incorporated in India. Its shares are listed on the Bombay Stock Exchange and the National Stock Exchange. The Company is engaged in the manufacture of fabric and readymade garments. The readymade garments manufactured are exported.

2. Basis of Preparation

2.1. The financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the Companies (Accounts) Rules 2014 and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3. CONTINGENT LIABILITIES AND COMMITMENTS

1 Contingent Liabilities (to the extent not provided for)

i Counter Guarantees issued by the Company for the guarantees issued by Banks amounts to Rs.7,26,77,157/- (Previous year- Rs.4,20,42,612/-).

ii Letters of Credit Outstanding amounts to Rs.11,26,88,850/- (Previous year -Rs 16,92,15,995/-)

iii Bills discounted - Rs. Nil (Previous year - Nil.)

iv Customs, Income Tax, Provident Fund and Employee State Insurance Claims

a Commissioner of Customs issued Show Cause Notice directing the company to remit Rs.3,25,20,531/- (inclusive of interest @ 24% as applicable) for the financial year 1997-98 towards non- fulfillment of export obligation. Company approached the Settlement Commission and remitted admitted liability of Rs.1,21,29,942/- during the financial year 2001-2002. Settlement Commission, issued final order on 03.07.2003 fixing total duty liability of Rs.2,20,61,171/- and directed the company to remit balance amount of Rs.99,31,229/- with simple interest at the rate 10% per annum. Aggrieved by the order of the Settlement Commission, the company filed a writ petition before Honourable High Court of Kerala, which was dismissed and the Company preferrred an appeal against the same with the Hon Supreme Court. The Honourable Supreme court stayed the demand and instructed the Company to remit Rs.99,31,229/- and stayed the interest claimed. The company remitted Rs.99,31,229/- during the year. The Company had furnished Bank Guarantee for Rs.101.74 lakhs to the Office of the Commissioner of Customs

b The Deputy Commissioner of Income Tax, Aluva has raised a demand for Rs.6,29,406/- while completing the assessment for the years 2003-04 and 2004-05. The demand was dismissed by the CIT(Appeals). The Tribunal has dismissed the appeal filed by the Revenue. However, the department has preferred an appeal before Hon. High Court of Kerala. The Company has received a refund of Rs.3,61,732/- with regard to assessment years 2003-04 and 2004-05.

c The Asst Commissioner of Income Tax, Kochi had raised a demand of Rs.3,16,22,680 while completing the assessment for the Assessment Year 2008-09. The company had gone on appeal and obtained favorable orders from the CIT(Appeals) and Income Tax Appellate Tribunal. The Department has filed an appeal before the Honourable High court of Kerala.

d The Joint Commissioner of Income Tax, Kochi had raised a demand of Rs.58,87,640/- while completing the assessment for the Assessment Year 2009-10. The company has remitted Rs.58,87,640/- against the same. The company had appealed against the same with the Commissioner of Income tax (Appeals). The CIT(Appeals) and obtained partial relief. The company has filed an Appeal against the order with the Income Tax Appellate Tribunal.

e The Additional Commissioner of Income Tax, Kochi had raised a demand of Rs.48,72,980/- while completing the assessment for the Assessment Year 2011-12. The company has filed an appeal before the Commissioner of Income Tax (Appeals) against the order.

f The Additional Commissioner of Income Tax, Kochi has raised a demand of Rs.19,48,040/- while completing the assessment for the Assessment Year 2012-13. The Company is in the process of filing an appeal against the order before the CIT(Appeals).

g Asst. Provident Fund Commissioner (Enforcement) has determined a sum of Rs.1,31,86,588/- towards contributions payable for the period 2001 to 2006 as per the schemes framed under the Provident Fund Act. The company preferred an appeal before the Employees Provident Fund Appellate Tribunal against the order of the Asst. Provident Fund Commissioner. The Employees Provident Fund Appellate Tribunal directed the Company to remit Rs.52,74,636/- for staying the proceedings and subsequently upheld the orders of the Asst. Provident fund Commissioner (Enforcement). The Company deposited the amount since the Tribunal order was not in its favour. The Company filed an appeal with the Hon High Court of Kerala and the same was partially allowed in favor of the company. The balance amount of Rs 3,00,451/- has been further paid and total liability settled as per the order. The company has filed an appeal before the before Division bench of the Hon. High court for the disallowed portion 55,75,087/-.

h The Regional Provident Fund Commissioner, Kochi vide his order dated 21.05.2014 has demanded a sum of Rs.31,24,050/- towards EPF dues for the period 08/11 to 03/12. The company has filed appeal before The Employees Provident Fund Appellate Tribunal and also the obtained stay of demand. An amount of Rs 12,49,620/- has been deposited towards the same

i The Regional Provident Fund Commissioner, Kochi vide his review order dated 07.11.2014 has demanded a sum of Rs.20,44,752/- towards EPF dues for the period 04/12 to 08/12. The company has filed appeal before The Employees Provident Fund Appellate Tribunal and also obtained an interim stay of recovery from the Hon. High Court of Kerala.

j The Regional Provident Fund Commissioner, Kochi vide his order dated 07.11.2014 has demanded a sum of Rs.59,88,655/- towards EPF dues for the period 09/12 to 01/14. The company has

filed appeal before The Employees Provident Fund Appellate Tribunal and also obtained an interim stay of recovery from the Hon. High Court of Kerala.

k The Regional Provident Fund Commissioner, Kochi vide his order dated 07.11.2014 has demanded a sum of Rs.9,51,441/- towards EPF dues for the period 02/14 to 04/14. The company has filed appeal before The Employees Provident Fund Appellate Tribunal and also obtained an interim stay of recovery from the Hon. High Court of Kerala.

l The Regional Provident Fund Commissioner, Kochi vide his order dated 21.05.2014 has demanded a sum of Rs.66,67,450/- towards EPF dues of Processing unit for the period 06/2007 to 10/2012. The company had filed revision petition before The Regional Provident Fund Commissioner. The Regional Provident fund Commissioner has completed the enquiry and orders have been reserved.

The Regional Provident Fund Commissioner, Kochi vide his order dated 27.02.2015 has demanded a sum of Rs.14,78,145/- towards EPF dues of Processing Unit for the period 11/2012 to m 04/2014. The company has obtained stay of demand from the Hon. High Court of Kerala for a period of 3 months on condition to pay 30% within 3 months.

n The Deputy Director, Sub-Regional Office Ernakulam of the ESI Corporation had raised a demand of Rs.8,63,348/- against the company for the year 2008-09 vide order dated 30.09.2013.The Company has disputed the claim and appealed before the ESI Court and deposited Rs 1,00,000/-.

o The Deputy Director, Regional Office Ernakulam of the ESI Corporation has raised a demand for Rs.2,03,687/- against the Company for the years 1996-97 and 1997-98 vide revised order dated 30.09.2013. The Company had deposited Rs.1,25,000/- and has preferred an appeal before the ESI Court against the order.

p The Deputy Director, Sub-Regional Office Ernakulam of the ESI Corporation has raised a demand of Rs.26,01,275/- against the company for the year 2008-09 vide order dated 22.11.2013. The Company has disputed the claim and appealed before the ESI Court and deposited Rs.3,00,000/-.

q The Deputy Director, Sub-Regional Office Ernakulam of the ESI Corporation has raised a demand of Rs.3,36,461/- against the company for the period 06/2005 to 01/2009 vide order dated 13.11.2014. The Company has disputed the claim and filed appeal before the Director, Sub-Regional Office Ernakulam and deposited Rs.84,115/-.

r The Deputy Director, Sub-Regional Office Ernakulam of the ESI Corporation has raised a demand of Rs.12,11,248/- against the company for the period 04/2003 to 03/2004 vide order dated 13.11.2014. The Company has disputed the claim and filed appeal before the Director, Sub-Regional Office Ernakulam and deposited Rs.3,02,812/-.

s The Deputy Director, Sub-Regional Office Ernakulam of the ESI Corporation has raised a demand of Rs.30,18,037/- against the company for the period 04/2009 to 11/2009 vide order dated 13.11.2014. The Company has disputed the claim and filed appeal before the Director, Sub-Regional Office Ernakulam and deposited Rs.7,54,510/-.

t The Deputy Director, Sub-Regional Office, Ernakulam of the ESI Corporation initiated recovery proceeding towards ESI dues of Rs.2,79,558/-, and related interest of Rs.9,466/- vide two orders dated 23.10.2013. The Company disputed the demand and approached the ESI Court and obtained stay and deposited Rs.50,000/-.

u During the year 1997 the Thahasildar Kunnathunadu Taluk had demanded a sum of Rs. 3,08,945/- towards one time building tax. The Company had disputed the applicability of tax on a particular portion of the building . The matter is pending before the Hon High Court of Kerala.

2 Commitments - Nil

4. LONG TERM CONTRACTS

There are no long term contracts as on 31.03.2015 including derivative contracts for which there are any material forseeable losses.

5. IMPAIRMENT OF ASSETS

No material Impairment of Assets has been identified by the Company and as such no provision is required as per Accounting Standards (AS 28) issued by the Institute of Chartered Accountants of India.

6. Donations

Donations include payments of Rs 2,60,000/- (31 March 2014: Rs.18,69,500/-) made to Communist Party of India Marxist, National Congress Party and Congress.

7. Transfer of Unclaimed Dividend to Investor Education and Protection Fund

During the year the company has transferred the unclaimed dividend for the year 2006-07 amounting to Rs. 2,86,232/- to the Investor Education and Protection Fund.

8. PREVIOUS YEAR FIGURES

Previous year figures have been reworked, regrouped,rearranged and reclassified, wherever necessary.


Mar 31, 2014

1. RELATED PARTY DISCLOSURE

Related parties with whom transactions have taken place during the year:

a Key Management Personnel:

i Sabu M Jacob, Managing Director

ii C Mohan, Whole Time Director (Finance)/Company Secretary ( up to 14.05.2013), Director (from 15.05.2013)

iii E M Paulose, Director

iv Benni Joseph, Director

v K L V Narayanan, Director (from 04.04.2013)

vi M P Kuriakose, Director (up to 31.03.2013)

b Relatives of Key Management Personnel:

i Renjitha Joseph, Wife of Sabu M Jacob

c Enterprise owned or significantly influenced by key management personnel or their relatives:

i Kitex Childrenswear Limited

ii Kitex Limited

iii Anna Aluminum Company Private Limited

2. CONTINGENT LIABILITIES AND COMMITMENTS

1 Contingent Liabilities (to the extent not provided for)

i Counter Guarantees issued by the Company for the guarantees issued by Banks amounts to Rs.4,20,42,612/- (Previous year- Rs.2,60,42,612/-).

ii Letters of Credit Outstanding amounts to Rs.16,92,15,995/- (Previous year -Rs 67,83,62,952/-)

iii Bills discounted - Rs. Nil (Previous year - Nil.)

iv Customs, Income Tax, Provident Fund and Employee State Insurance Claims

a Commissioner of Customs issued Show Cause Notice directing the company to remit Rs.3,25,20,531/- (inclusive of interest @ 24% as applicable) for the financial year 1997-98 towards non-fulfillment of export obligation. Company approached the Settlement Commission and remitted admitted liability of Rs.1,21,29,942/- during the financial year 2001-2002. Settlement Commission, issued final order on 03.07.2003 fixing total duty liability of Rs.2,20,61,171/- and directed the company to remit balance amount of Rs.99,31,229/- with simple interest at the rate 10% per annum. Aggrieved by the order of the Settlement Commission, the company filed a writ petition before Honorable High Court of Kerala, which was dismissed and the Company preferred an appeal against the same with the Hon Supreme Court. The Honorable Supreme court stayed the demand and instructed the Company to remit Rs.99,31,229/- and stayed the interest claimed. The company remitted Rs.99,31,229/- during the year. The Company had furnished a Bank Guarantee for Rs. 101.74 lakhs to the office of the Commissioner of Customs.

b The Deputy Commissioner of Income Tax, Aluva has raised a demand for Rs.6,29,406/- while completing the assessment for the years 2003-04 and 2004-05. The demand was dismissed by the CIT (Appeals). The Tribunal has dismissed the appeal filed by the Revenue. However, the department has preferred an appeal before Hon. High Court of Kerala. The Company has received a refund of Rs.3,61,732/- with regard to assessment years 2003-04 and 2004-05.

c The Additional Commissioner of Income Tax, Kochi has raised a demand of Rs. 48,72,980/-, while completing the assessment for the Assessment Year 2011-12. The company had already remitted Rs.33,76,555/-, which was not considered while issuing the order. The company is in the process of filing an appeal for the balance amount of Rs.14,96,428/-.

d Asst. Provident Fund Commissioner (Enforcement) has determined a sum of Rs.1,31,86,588/- towards contributions payable for the period 2001 to 2006 as per the schemes framed under the Provident Fund Act. The company preferred an appeal before the Employee''s Provident Fund Appellate Tribunal against the order of the Asst. Provident Fund Commissioner. The Employee''s Provident Fund Appellate Tribunal directed the Company to remit Rs.52,74,636/- for staying the proceedings and subsequently upheld the orders of the Asst. Provident fund Commissioner (Enforcement). The Company deposited the amount and since the Tribunal order was not in its favor, the Company has filed an appeal with the Hon High Court of Kerala and the proceedings have been stayed. The Honorable High Court of Kerala has heard the appeal and orders are awaited.

e The Regional Provident Fund Commissioner, Kochi vide his order dated 10.03.2014 has demanded a sum of Rs.20,44,752/- towards EPF dues for the period 04/12 to 08/12.The company is in the process of approaching the appropriate authority for stay of demand proceedings and appeal.

f The Director, Regional Office Ernakulam of the ESI Corporation had raised a demand for Rs.3,66,333/- along with interest of Rs.2,69,330/- against the Company for the years 1996-97 and 1997-98 vide order dated 28.11.2003. The Company had disputed the claim and approached the ESI court and deposited Rs.1,25,000/-. The ESI court had remanded the matter back to Regional Director for reconsideration and the Regional Director ESI has issued an fresh order demanding a sum of Rs.2,03,687/-. The company has preferred an appeal before the ESI Court against the order.

g During the year 2005-06, ESI Corporation had demanded an amount of Rs.5,61,692/- for the years 1998 to 2002. The Company had disputed the claim and filed an appeal with the Hon ESI Court and obtained a favorable order. The ESI Corporation has filed an appeal with the Hon High Court of Kerala against the order of the ESI Court and the same is pending disposal. The Company has deposited a sum of Rs.2,15,791/- against the same.

h The Deputy Director, Sub-Regional Office, Ernakulam of the ESI Corporation initiated recovery proceeding towards ESI dues of Rs.2,79,558/-, and related interest of Rs.9,466/- vide two orders dated 23.10.2013. The Company disputed the demand and approached the ESI Court and obtained stay and deposited Rs.50,000/- i The Deputy Director, Sub-Regional Office Ernakulam of the ESI Corporation has raised a demand of Rs.26,01,275/- against the company for the year 2008-09 vide order dated 22.11.2013. The Company has disputed the claim and appealed before the ESI Court and deposited Rs.3,00,000/-.

j The Deputy Director, Sub-Regional Office Ernakulam of the ESI Corporation had raised a demand of Rs.8,63,348/- against the company for the year 2008-09 vide order dated 30.09.2013.The Company has disputed the claim and appealed before the ESI Court and deposited Rs 1,00,000/-.

k During the year 1997 the Thahasildar Kunnathunadu Taluk had demanded a sum of Rs. 3,08,945/- towards one time building tax. The Company had disputed the applicability of tax on a particular portion of the building . The matter is pending before the Hon High Court of Kerala.

3 Commitments

Commitments for Capital Expenditure as on 31.03.2014 in connection with the expansion of the Fabric Processing house amounts to Rs.16,74,75,367/- (Previous Year Rs.57,32,77,822/-) and other civil works amounts to Nil. (Previous Year Rs.2,06,41,434/-)

4. IMPAIRMENT OF ASSETS

No material Impairment of Assets has been identified by the Company and as such no provision is required as per Accounting Standards (AS 28) issued by the Institute of Chartered Accountants of India.

5. DONATIONS

Donation Include payments of Rs 18,69,500 (31 March 2013: Rs.75,000/-) made to the following political parties- Bharatiya Janata Party, Communist Party of India , Communist Party of India Marxist, Indian National Congress, Janata Dal(S) , Kerala Congress, Shiv Sena and R S P.

6. PREVIOUS YEAR FIGURES

Previous year figures have been reworked, regrouped, rearranged and reclassified, wherever necessary.


Mar 31, 2013

1. Corporate Information

Kitex Garments Limited is a public company incorporated in India under the provisions of the Companies Act, 1956. Its shares are listed on The Bombay Stock Exchange, The National Stock Exchange and The Cochin Stock Exchange. The Company is engaged in the manufacture of fabric and readymade garments. The readymade gar- ments manufactured are exported.

2. Basis of Preparation

2.1. The financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The account- ing policies adopted in the preparation of financial statements are consistent with those of previous year.

1 Indian Rupee Term loans from Banks (Other than Vehicle loans) are Secured by:

i Primary Security:

a Federal Bank Working Capital Term Loan Account No.10357100004284 - Pari Passu first charge in favor of State bank of India and Federal Bank Ltd. by way of Equitable mortgage of 19.24 acres of land together with the buildings and Pari Passu first charge in favour of State bank of India and Federal Bank Ltd. by way of hypothecation of entire plant and machinery and fixed assets of the Backward Integration Project.

b State Bank of India Term Loan Account no 32331339891 - Paripassu First charge in favour of State bank of India and Federal Bank Ltd. on the entire fixed assets, present and future, of the Company and including:

(i) Extention of Equitable Mortgage over 19.24 acres of Land , Building and Plant and Machinery of the Backward Integration Project in Re.Sy no. 122/9/4 , 112/5 , 112/1 , 108/2/2 , 108/10/2 , 108/2 , 108/10 , 112/4 , 122/9/3 , 108/1/2 , 122/7 ,121/1/1 in Block 27 of Pattimattom Village , Kunnathunadu taluk , Puthencruz sub district, Ernakulam belonging to the Company.

(ii) Equitable Mortgage over 244.629 cents of Land in Re Sy No 76/3 in Block no 27 of Kizhakkambalam, Puthencruz sub district, Ernakulam belonging to the Company.(Exclusive first charge to State bank of India).

ii Collateral Security:

a Pari-passu Second charge in favor of State Bank of India and Federal Bank, on the entire current assets of the Company, both present and future.

b Pari-passu Second charge in favor of State Bank of India and Federal Bank, on the entire Fixed assets of the Company, both present and future other than Fixed assets charged as primary security

c First charge in favor of State bank of India by Equitable Mortgage on 3.75 Acres of land & building in Re. Sy No. 81/1 at Pattimattom Village, Kunnathunadu Taluk (Kizhakkambalam), Puthen cruz Sub-district, Ernakulam belonging to the Company.

1 Terms of repayment of Packing Credits:

Packing credit from Bank is repayable on demand and carries interest @ 7.70%. (Current rate for State Bank of India)

2 Working capital Limits from Bank is secured by

(i) Primary Security:

First charge in favor of State bank of India over the entire Current Assets of the Company, both present and future.

(ii) Collateral Security:

Pari-passu Second charge, in favor of State bank of India and Federal Bank on the entire Fixed Assets of the Company (excluding vehicles purchased under the Hire Purchase), of which includes:

1. First charge in favor of State bank of India over Equitable Mortgage on 3.75 Acres of land & building in Re. Sy No. 81/1 at Pattimattom Village, Kunnathunadu Taluk (Kizhakkambalam), Puthen cruz Sub-district, Ernakulam belonging to the Company.

2. Second charge over Equitable Mortgage on 19.24 acres of land, building and plant & machinery of the fabric processing plant at Kizhakkambalam. (First charge for Federal Bank for their Term Loan limit of Rs. 15 Crores and State Bank of India Term Loan limit of Rs 82 Crores )

3. Second charge over EM on 244.629 cents of Land in Re Sy No 76/3 in Block no 27 of Kizhakkambalam, Puthencruz sub district, Ernakulam belonging to the Company.

(iii) Personal Guarantee of Mr. Sabu M Jacob, Managing Director._

COperating Lease: Company as Lessee

The Company has taken various residential and office premises under operating lease agreements. These agreements are generally for a period of 11 months. The Company has also taken equipments on rent for shorter duration during the year. Minimum lease payments charged during the year to the Statement of Profit and Loss aggregated to Rs.48,48,342/- (Previous year Rs 66,23,419/-)

3. RELATED PARTY DISCLOSURE

Related parties with whom transactions have taken place during the year:

a Key Management Personnel:

i Sabu M Jacob, Managing Director

ii C Mohan, Whole Time Director (Finance)/Company Secretary

b Relatives of Key Management Personnel:

i Renjitha Joseph, Wife of Sabu M Jacob

c Enterprise owned or significantly influenced by key management personnel or their relatives:

i Kitex Childrenswear Limited

ii Kitex Limited

iii Anna Aluminum Company Private Limited

4. CONTINGENT LIABILITIES AND COMMITMENTS

1 Contingent Liabilities (to the extent not provided for)

i Counter Guarantees issued by the Company for the guarantees issued by Banks amounts to Rs 2,60,42,612/- (Previous year- Rs. 2,59,35,272/-).

ii Letters of Credit Outstanding amounts to Rs 67,83,62,952/- (Previous year - Rs.22,86,55,737/-)

iii Bills discounted - Rs. Nil (Previous year - Rs. 76,63,192/-)

iv Customs, Income tax, Provident Fund and Employee State Insurance Claims a Commissioner of Customs issued show cause notice directing the company to remit Rs.3,25,20,531/- (inclusive of interest @ 24% as applicable) for the financial year 1997-98 towards non-fulfillment of export obligation. Company approached settlement commission and remitted admitted liability of Rs.1,21,29,942/- during the financial year 2001-2002. Settlement commission, issued final order on 03.07.2003 fixing total duty liability of Rs.2,20,61,171/- and directed the company to remit balance amount of Rs.99,31,229/- with simple interest at the rate 10% per annum. Aggrieved by the order of settlement commission, the company filed writ petition before Humble High Court of Kerala, which was dismissed and company has preferred an appeal against the same with the Hon Supreme Court . The Company has furnished Bank Guarantee for Rs.101.74 lakhs to the Office of the Commissioner of Customs. b The Deputy Commissioner of Income Tax, Aluva has raised a demand for Rs.6,29,406/- while completing the assessment for the years 2003-04 and 2004-05. The demand was dismissed by the CIT (Appeals). The Tribunal has dismissed the appeal filed by the Revenue. However, the department has preferred an appeal before Hon. High Court of Kerala.The company has received a refund of Rs 3,61,732/-,with regard to assessment years 2003-04 and 2004-05. c The Assistant commissioner of Income tax, Kochi raised a demand of Rs 21,29,567/- while issuing order U/s 154 of the Income tax Act, 1961, for Assessment year 2005-06. The company has preferred appeal before the Commissioner of Income tax (Appeals).

d For the Assessment year 2008-09 the Company had appealed against the Assessment order demand of Rs 3,16,22,680/- with the Commissioner of Income Tax (Appeals) and obtained a favorable order dismissing the demand. An appeal against this order has been filed by The Assistant commissioner of Income tax,(OSD) Kochi at the ITAT Cochin amounting to Rs.2,95,83,594/-.The company has already remitted Rs 1,17,57,862/- as Self Assessment Tax for the year. e Asst. Provident Fund Commissioner (Enforcement) has determined a sum of Rs.1,31,86,588/- towards contributions payable for the period 2001 to 2006 as per the schemes framed under Provident Fund Act. Company preferred appeal before Provident Fund Appellate Tribunal against the order of Asst. Provident Fund Commissioner. Provident Fund Appellate Tribunal directed the company to remit Rs.52,74,636/-. Company deposited the amount and since the Tribunal order was not in favor of the Company, the Company has filed an appeal with the Hon High Court of Kerala and the Proceedings have been stayed.

f During the year 1997 the Thahasildar Kunnathunadu Taluk had demanded a sum of Rs 3,08,945/- towards one time building tax. The company had disputed the applicability of tax on a particular portion of the building . The matter is pending before the Hon High court of Kerala. g During the year 1999-2000, The Director ,Regional office Ernakulum of ESI Corporation has raised demand for Rs.3,66,333/- along with interest Rs 2,69,330/- against the Company for the years 1996-97 and 1997-98. The Company has disputed the claim and has made a deposit of Rs.75,000/- h During the year 2005-06, ESI Corporation has demanded an amount of Rs.5,61,692/- lakhs for the years 1998 to 2002. The company has disputed the claim and obtained stay from the Hon. ESI Court and deposited a sum of Rs.2,15,791/- against the same.

i During the year 2010-11, ESI Corporation, has raised a demand of Rs.57,72,341/- for the years from 2003 to 2009. The Com- pany has disputed the claim and obtained stay from Hon. ESI Court. The Company has deposited Rs.15,00,000/-

2 Commitments

Commitments for Capital Expenditure as on 31.03.2013 in connection with the expansion of the Fabric Processing house amounts to Rs 57,32,77,822/- and other civil works amounts to Rs 2,06,41,434/-. Total estimated project cost for the Fabric Processing House expansion is Rs 1,08,00,20,000/-

5. IMPAIRMENT OF ASSETS

No material Impairment of Assets has been identified by the Company and as such no provision is required as per Ac- counting Standards (AS 28) issued by the Institute of Chartered Accountants of India.

6. PRIOR PERIOD EXPENSES

Import duty of Rs 1,81,60,102/- and Interest thereon of Rs. 1,20,58,180/- on account of ''Non fulfillment of Export Obligations'' against licences obtained for duty free import of raw materials during earlier years has been accounted under Prior Period Expenses.

7. DONATIONS

Donations Include payments of Rs 75,000/- made to the following political parties - Communist Party of India Marxist, Democratic Youth Federation of India , Communist Marxist Party , Indian Communist League, Mandalam Congress committee, Pattimattom.

8. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

During the year, the company has transferred the unclaimed dividend for the year 2005-06 amounting to Rs 1,94,375/- to Investor Education and Protection Fund.

9. PREVIOUS YEAR FIGURES

Previous year figures have been reworked, regrouped, rearranged and reclassified, wherever necessary.


Mar 31, 2012

1. RELATED PARTY DISCLOSURE

Related parties with whom transactions have taken place during the year: a Key Management Personnel:

i Sabu M Jacob, Managing Direcor

ii C Mohan, Whole Time Director (Finance) /Company Secretary b Relatives of Key Management Personnel:

Renjitha Joseph, Wife of Sabu M Jacob c Enterprise owned or significantly influenced by key management personnel or their relatives:

i Kitex Childrenswear Limited

ii Kitex Limited

iii Anna Aluminium Company Private Limited

2. CONTINGENT LIABILITIES

i Counter Guarantees issued by the Company for the guarantees issued by Banks amounts to Rs.2,59,35,272 (Previous year- Rs. 2,23,45,295/-).

ii Letters of Credit Outstanding amounts to Rs. 22,86,55,736.69 (Previous year - Rs.140,130,980.73)

iii Bills discounted - Rs. 76,63,192. (Previous year - Rs. 201,925,127.84)

iv Customs, Income tax, Provident Fund and Employee State Insurance Claims a Commissioner of Customs issued show cause notice directing the company to remit Rs.3,25,20,531/- (inclusive of interest @ 24% as applicable) for the financial year 1997-98 towards non-fulfillment of export obligation. Company approached Settlement Commission and remitted admitted liability of Rs.1,21,29,942/- during the financial year 2001-2002. Settlement Commission, issued final order on 03.07.2003 fixing total duty liability of Rs.2,20,61,171 and directed the company to remit balance amount of Rs.99,31,229 with simple interest at the rate 10% per annum. Aggrieved by the order of Settlement Commission, the company filed writ petition before Hon'ble High Court of Kerala, who stayed the proceedings. The matter is still pending before the Hon. High Court for disposal. Company has furnished Bank Guarantee for Rs.101.74 lakhs to the Office of the Commissioner of Customs.

b Asst. Commissioner of Customs has demanded customs duty of Rs.27,52,846 on the import of snap fasteners, which is claimed as exempt by the Company. Commissioner of Customs (Appeals) has stayed the proceed- mgs with a direction to make a pre-deposit of Rs.5 lakhs. Company got favorable order from CESTAT, Ban- galore. The Customs had appealed against the order of CESTAT, Bangalore and the Hon'ble High Court has upheld the order of CESTAT and has dismissed the Customs Department's appeal in our favor. A Special Leave Petition (SLP) was filed by the Customs Department in this regard with Supreme court of India and the Hon'ble Supreme Court has dismissed the Special Leave Petition (SLP).

c The Deputy Commissioner of Income Tax, Aluva has raised a demand for Rs.6,29,406/- while completing the assessment for the years 2003-04 and 2004-05. The demand was dismissed by the Tribunal in the appeal filed by the Company. However, the department has preferred an appeal before Hon. High Court of Kerala.

d The Deputy Commissioner of Income Tax, Aluva demanded Rs.38,32,909/- while completing the assessment for the year 2006-07. The company has preferred an appeal before the Commissioner of Income Tax (Ap- peals). The Company has remitted an amount of Rs.31,50,000/-.

e The Deputy Commissioner of Income Tax, Aluva has demanded Rs.23,93,497/- while issuing intimation u/s 143(1) of the Income Tax Act, 1961, for the assessment year 2007-08. The Company has remitted Rs. 23,93,500/- towards the same.

f The Asst. Commissioner of Income Tax, Circle I (2), Kochi, has demanded Rs.3,16,22,680/- vide order dated 21.12.2010 under section 143(3) of the Income Tax, 1961, for the Assessment Year 2008-09. The Com- pany preferred an Appeal before the Commissioner of Income Tax (Appeals). The Company has remitted Rs.1,56,06,500/-

g Asst. Provident Fund Commissioner (Enforcement) has determined a sum of Rs.1,31,86,588/- towards con- attributions payable for the period 2001 to 2006 as per the schemes framed under Provident Fund Act. Company preferred appeal before Provident Fund Appellate Tribunal against the order of Asst. Provident Fund Commissioner. Provident Fund Appellate Tribunal directed the company to remit Rs.52,74,636. Company deposited the amount and since the Tribunal order was not in favour of the Company, the Company has filed an appeal with the High Court of Kerala and the Hon. High court has stayed the proceedings.

h During the year 1999-2000, ESI Corporation has raised demand for Rs.3.66 Lakhs against the Company for the years 1996-97 and 1997-98. The Company has disputed the claim and has made a deposit of Rs.75,000/-.

i During the year 2005-06, ESI Corporation has demanded an amount of Rs.5.62 lakhs for the years 1998 to 2002. The company has disputed the claim and obtained stay from the Hon. ESI Court against deposit of Rs.50,000.

j During the year 2010-11, ESI Corporation, has raised a demand of Rs.57,72,341 for the years from 2003 to 2009. The Company has disputed the claim and obtained stay from Hon. ESI Court against deposit of Rs.15 Lakhs.

3. IMPAIRMENT OF ASSETS

No material Impairment of Assets has been identified by the Company and as such no provision is required as per Accounting Standards (AS 28) issued by the Institute of Chartered Accountants of India.

4. TAIWAN OFFICE OF THE COMPANY

The Company's Taiwan office was closed on 31st March, 2011 and assets are transferred to Head office at Kizhakkambalam except cash and bank balance with International Commercial Bank of China for which necessary steps are being taken.

5. DUTY DRAWBACK WRITTEN OFF

The Company had claimed in earlier years duty drawback in respect of export of Babies Caps. The claim was not approved and appeal made by the company in this regard was dismissed by the Government. Based on this order and the legal opinion obtained in this regard, the Board has decided to write-off an amount of Rs. 2,85,72,725.43 during the current year.

6. PREVIOUS YEAR FIGURES

During the year ended 31 March 2012 the Revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year's classification.


Mar 31, 2010

1. Contingent Liabilities

(i) Counter Guarantees issued by the Company for the guarantees issued by Banks amount to Rs.2,23,45,295/- (Previous year Rs. 2,01,03,215/-).

(ii) During the financial year 2001-2002, Office of the Commissioner of customs issued show cause notice directing the company to remit Rs 3,25,20,531/- (inclusive of interest @ 24% as applicable) towards non-fulfillment of export obligation. Company approached settlement commission and remitted admitted liability of Rs 1,21,29,942/- during the financial year 2001-20D2. Settlement commission issued final order on 03.07.2003 fixing total duty liability at Rs. 2,20,61,171 and directed the company to remit balance amount of Rs.99,31,299 with simple interest at the rate of 10% per annum. Aggrieved by the order of settlement commission company filed writ petition before Honble High Court of Kerala, who stayed the proceedings. The matter is still pending before the Hon. High court for disposal. Company has furnished Bank Guarantee for Rs.101.74 lakhs to Office of the commissioner of Customs.

(iii) Asst. Commissioner of Customs has demanded customs duty of Rs 27, 52,846/- on the import of snap buttons, which is claimed as exempt by the Company. Commissioner of customs (Appeals) has stayed the proceedings with a direction to make a pre-deposit of Rs 5 lakhs. Company got favorable order from CESTAT, Bangalore. The Customs has appealed against CESTAT order and the Honble High Court has stayed the refund of Rs.5,00,000/- but has not stayed the CESTAT Order.

(iv) The Deputy Commissioner of Income Tax, Aluva demanded Rs.12,23,097/- while completing the assessment for the Assessment Years 1999-2000,2000-2001 & 2002-2003. The company preferred appeal against the demand and the matter is before the Income Tax Appellate Tribunal. The company has obtained stay from the tribunal against deposit of Rs. 1,00,000/-

(v) The Deputy Commissioner of Income Tax, Aluva demanded Rs.6,29,406/- while completing the assessment for the years 2003-04 and 2004-05. The department has preferred an appeal before Hon. High Court of Kerala.

(vi) The Deputy Commissioner of Income Tax, Aluva demanded Rs 38,32,909/- while completing the assessment for the year A/Y 2006-07. The company preferred an appeal before the Commissioner of Income Tax (Appeals) by remitting an amount of Rs 24,50,000/-, which is pending disposal.

(vii) The Deputy Commissioner of Income Tax, Aluva has demanded Rs. 23,93,497/- while issuing intimation u/s 143 (1) of the Income Tax Act, 1961, for the assessment year 2007/08 which has been disputed by the company

(viii) During the year 2005-06 Employee State Insurance Corporation has demanded an amount of Rs.6.11 lakhs for the years 1999-00 to 2001-02. The company has disputed the claim and obtained Stay from the Honble ESI Court against deposit of Rs.50,000/-.

(ix) Asst. Provident Fund Commissioner (enforcement) has determined a sum of Rs.1,31,86,588/- contributions payable for the period 1999-00 to 2005-06 as per the schemes framed under Provident Fund Act. Company preferred appeal before Provident Fund Appellate Tribunal against the order of Asst. Provident Fund Commissioner. Provident Fund Appellate Tribunal has stayed the proceedings and directed the company to remit Rs.52, 74,636. Company deposited the amount and the appeal is yet to be disposed off.

2. Secured Loans

(a) Term Loans from Banks are secured by

(i) First charge on all immovable properties both present and future.

(ii) First charge by way of hypothecation of all movable asset (Other than those provided to bank for working capital limit) both present and future.

(iii) Personal guarantee of the Directors/Promoters Mr. M C Jacob, Mr. Sabu M Jacob and Mr. Bobby M Jacob.

(b) Working Capital Loan from Banks are secured by hypothecation of Inventory and finished goods and second charge on all immovable property, both present and future.

(c) Hire Purchase Loan is secured by hypothecation of the vehicle so purchased.

3. Employee Remuneration and benefits includes Managing Directors remuneration of Rs 1,46,26,448/-.

4. Balance with Scheduled Banks includes Rs 2,94,87,899/- (Previous Year Rs 2,05,88,654/-) kept as margin for Letter of Guarantee/Letter of Credit.

5. There are no Micro and Small Enterprises to whom the company owes dues, which are outstanding for more than 45 days as at March 31, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

6. Arrangements have been made to collect confirmation from Debtors, Creditors, and Vendors.

7. Previous year figures have been re-grouped or re-arranged in order to suit the current years groupings.

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