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Notes to Accounts of Kitex Garments Ltd.

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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