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Notes to Accounts of PDS Multinational Fashions Ltd.

Mar 31, 2015

Note 1: LEASES

Asset Taken on Lease

(a) The Company has taken immoveable property located at Bangalore on lease. The lease agreement is valid till September, 2015 and lease rentals(including transfer to lease equalisation reserve) amounting to Rs. 1,866,552 (March 31,2014: Rs. 1,894,706) has been debited to the Statement of Profit and Loss during the year in pursuance of Accounting Standard - 19 " Leases" notified under Company (Accounts) Rules 2014. Future minimum lease rentals as on March 31, 2015 are as under:

Note 2: The Company has not spent any amount towards Corporate Social Responsibility during the financial year 2014-15. As certified by the Management and as per sub-section (1) of Section 135 of the Companies Act, 2013 read with Rule 3 of Companies (Corporate Social Responsibility Policy) Rules, 2014; the Company is not required to spend any amount towards CSR activities during the financial year 2014-15.

Note 3: In view of the management, the Current Assets, Loans & Advances have a value on realization in the ordinary course of business at least equal to the amount, at which they are stated in the Balance Sheet as at March 31, 2015.


Mar 31, 2014

Note 1. Corporate Information

Pearl Global Industries Limited is a public limited company domiciled in India and incorporated under the provisions of the Companies Act,1956. The company is primarily engaged in manufacturing, sourcing and export of ready to wear apparels through its facilities and operations in India and sourcing overseas. It''s shares are listed on BSE and NSE in India.

Note 2

2.1 Basis of Preparation

i) The financial statements of the Company have been prepared in compliance with Generally Accepted Accounting Principles in India (“GAAP”) and mandatory accounting standard issued by the Companies (Accounting Standard) Rules 2006 (as amanded from time to time) the relevant provisions of the Companies Act, 1956 and other applicable statutes under the historical cost convention and on an accrual basis of accounting exept investment available for sale and held for trading is meausred at for value and land and building which is measure at revalued cost. The company has complied in all matiral respect with Accounting Standard notified under the Companies Act, 1956 read with general circular 8/2014 dated 4 April 2014 issued by the Ministry of Corporate Affair. The acounting policies adopted in the preparation of financial statements are consistent with those of previous year

2.2 Uses of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires making of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets & liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting year. Differences between the actual results and estimates are recognized in the Statement of Profit & Loss in the year in which the results are known /materialized.

(A) Terms/rights attached to equity shares

The company has only one class of equity shares having per value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. For the year ended March 31, 2014, the amount of Rs. 2 per (March 31, 2013: Rs. 1 per share) share has been proposed to be declared as dividend for distribution to equity shareholders. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

a. In case of secured loans, the nature of security are:

(i) The Loan from Kotak Mahindra bank was secured by exclusive first charge on immovable property located at Plot No. 10; Sector - 5 , Growth center, Bawal. However, during the year ended March 31, 2014 the bank released the charge from such property and presently the loan is (with effect from Aug 2013) secured by charge on immvobale property situated at Plot No. 446, Phase-V, Udyog Vihar Industrial Estate, Haryana. The loan is also secured by personal guaranter of the Promoter director.

(ii) Term loan from Axis bank is secured by equitable mortgage on property situated at plot no. 21/13-X, Block-A, Naraina Industrial Area, Phase-II, New Delhi owned and guaranteed by the promoter directors of the company. The account was repayable Rs. 909,600 p.m. by January 2016. However, the loan account is preclosed and outstanding amount is fully paid before the reporting date. Accordingly, the security corresponding to this loan has also been released as of the reporting date.

(iii) Vehicle loans are secured against hypothecation of respective vehicles.

a) In case of secured loans, the nature of security are:

Working Capital Loan including bill discounting under consortium of banks are secured by first pari-passu charge on present and future movable fixed assets comprising vehicle, furniture and fixtures, disposable fixed assts, stocks of raw material, stocks in process, stores & spares, bill receivable & book debts, mortgage of the properties situated at Plot No.H-597-603, RICCO Industrial Area, Bhiwadi, Alwar and Plot No.16-17, Phase-VI, Udyog Vihar, Gurgaon and personal guarantee by promotor director of the company.

b) Loan from Directors: Loan from directors is repayable on demand, taken during ordinary course of business.

2. The Depreciation of Rs. 97,461,842 for the year includes depreciation of Rs. 19,690,911 on assets transferred under scheme of Demerger through column "Depreciation- Deletion on account of Demerger" in the above chart. Therefore, depreciation for the year charged to statement of Profit & Loss is Rs. 77,770,931.

3. In the earlier years, the company had initiated the process of converting its leasehold land into freehold land. However, the deed is yet to be transferred in the name of the Company as at March 31, 2014.

4. Opening balance of land includes Rs. 45,229,131 on account of revaluation on 31.03.2002.

5. Opening balance of building includes Rs. 5,932,276 on account of reduction in revaluation on 31.03.2002.

6. Cost of Land Include Rs. 3,070,006 (March 31, 2013: Nil) being borrowing cost capitalised in accordance with Accounting Standard AS-16 on "Borrowing Cost" as specified in the Companies Accounting Standard Rules 2006.

7. The above includes the amount of Land of Rs. 15,954,319 (March 31, 2013 : Rs. 15,954,319) & Building of Rs. 23,434,599 (March 31, 2013 : Rs. 23,434,599) situated at Narshingpur, Tehsil District gurgaon for which the company has executed an agreement for the construction of commercial project with DLF Retail Developers Ltd. on November 30th 2007. However, as certified by the Management, the work has not started during the financial year 2013-14.

(I) The Company has classified the various benefits provided to employees as under:-

(i) Defined Contribution Plan

The company makes contribution towards provident fund & employee state insurance (ESI) as defined contribution retirement plan for qualifying employees. The provident fund plan is operated by the Regional Provident Fund Commissioner and the company contribute a specified percentage of payroll cost to the said schemes to fund the benefits.

Durint the year, the company recognized Rs. 23,866,590 (March 31, 2013: Rs. 23,967,776) for provident fund contributions & Rs. 9,302,594 (March 31, 2013 : Rs. 10,083,333) for ESI in the Statement of Profit and Loss The contributions payable to these plans by the company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plan: It includes:

a) Contribution to Gratuity Fund maintained by Life Insurance Corporation of India in case of Gurgaon Division (Funded)

b) Gratuity in case of Chennai Division (Unfunded)

c) Leave encashment/Compensated absence (Unfunded)

In accordance with Accounting Standard 15 (revised 2005), an acturial valuation is carried out in respect of aforesaid defined benefit plans and other long term benefits based on the assumption given in the table with subheading ''e'' below. The present value of obligation is determine based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

Note 2: Contingent Liabilities and Commitments

i) Corporate Guarantee given by the Company

- To UCO Bank, Hong Kong for securing trade finance limits to its step down subsidiary Norwest Industries Ltd, Hong Kong for Rs. NIL (March 31,2013: HKD 300 Million equivalent to Rs. 2,097,000,000 & GBP 40 million equivalent to Rs. 3,292,800,000).

- To HSBC Limited, Indonesia for securing credit facilities to its step down subsidiary PT Pinnacle Industry, Indonesia for USD 2,500,000 equivalent to Rs. 150,250,000 (March 31,2013: USD 2,500,000 equivalent to Rs. 135,975,000).

- To HSBC, Hong Kong for securing credit facilities to its step down subsidiaries Norwest Industries Ltd., Simple Approach Ltd. and Zamira Fashion Ltd for Rs. NIL (March 31, 2013: HKD 330 million equivalent to Rs. 2,306,700,000)

- To Standard Chartered Bank, Hong Kong for securing credit facilities to its step down subsidiary Norwest Industries Ltd for USD 21,052,840 equivalent to Rs. 1,265,275,684/ - (March 31, 2013: : USD 21,052,840 equivalent to Rs. 1,145,063,968).

- To HSBC, Bangladesh for securing various credit facilities to its subsidiary Norp Knit Industries Ltd. for Rs. NIL (March 31, 2013: BDT 1,673,367,000 equivalent to Rs. 1,137,889,560).

- To BNP Paribas, Hong Kong for letter of credit facility to its step down subsidiary Norwest Industries Ltd. for USD 10,000,000 equivalent to Rs. 601,000,000 (March 31, 2013: USD 10,000,000 equivalent to Rs. 543,900,000)

- To Canara Bank, Hong Kong Branch, for securing various credit facilities to its subsidiary Norwest Industries Ltd. for USD 15,000,000 equivalent to Rs. 901,500,000 (March 31, 2013: USD 15,000,000 equivalent to Rs. 815,850,000)

- To Bank of Baroda, Hongkong, for securing credit facilities to its step down subsidiary Simple Approach Ltd. for Rs. NIL (March 31, 2013: USD 4,000,000 equivalent to Rs. 217,560,000).

- To Bank of Baroda, Hongkong, for securing credit facilities to its step down subsidiary Norwest Industries Ltd. for Rs. NIL (March 31,2013: USD 15,000,000 equivalent to Rs. 815,850,000).

- To ICICI Bank Limited, Hong Kong Branch, for securing the derivative limits to its step down subsidiary Norwest Industries Ltd. for USD 3,000,000 equivalent to Rs. 180,300,000 (March 31,2013: USD 3,000,000 equivalent to Rs. 163,170,000).

- To ICICI Bank Limited, Hong Kong Branch, for securing the credit limits to its step down subsidiary Norwest Industries Ltd. and Nor Lanka Manufacturing Limited for USD 15,000,000 equivalent to Rs. 901,500,000 (March 31, 2013: USD 15,000,000 equivalent to Rs. 815,850,000).

- To Punjab National Bank, Hong Kong Branch, for securing the credit limits to its step down subsidiary Norwest Industries Ltd. for USD 30,000,000 equivalent to Rs. 1,803,000,000 (March 31, 2013: USD 30,000,000 equivalent to Rs. 1,631,700,000)

- To Intesa Sanpaolo S.p.A, Hongkong Branch for securing credit facilities to its step down subsidiary Norwest Industries Ltd. or Simple Approach Ltd. or Zamira Fashions Ltd, Hong Kong for Rs. NIL (March 31,2013: USD 18,000,000 equivalent to Rs. 979,020,000).

- To Standard Chartered Bank, Hongkong Branch for securing credit facilities to its wholly owned subsidiary Pearl Global (HK) Ltd, Hong Kong for USD 8,200,000 equivalent to Rs. 492,820,000 (March 31, 2013: USD 8,200,000 equivalent to Rs. 445,998,000).

- To Standard Chartered Bank, Bangladesh Branch for securing credit facilities to its subsidiary Norp Knit Industries Ltd, Bangladesh for BDT 560,000,000 equivalent to Rs. 425,600,000 (March 31, 2013: BDT 560,000,000 equivalent to Rs. 380,800,000).

- HSBC Bank Plc. UK for securing credit facilities to its subsidiary Poeticgem Ltd., UK for GBP 12,050,000 equivalent to Rs. 1,203,192,500 (March 31,2013: NIL).

- HSBC Invoice Finance (UK) Limited UK for securing credit facilities to its subsidiary Poeticgem Ltd., UK for GBP 5,000,000 equivalent to Rs. 499,250,000 (March 31, 2013: NIL).

- Counter gurantee given by the Company to Axis Bank, Gurgaon for issue of Standby Letter of Credit to HSBC, Bangladesh for securing credit facilities to its subsidiary Norp Knit Industries Ltd Ltd, Bangladesh for USD 400,000 equivalent to Rs. 24,040,000 (March 31, 2013: USD 200,000 equivalent to Rs. 10,878,000).

ii) Claims against the Company not acknowledged as debts and other matters Rs.219,281 (March 31, 2013: Rs. 1,061,474).

iii) Export Bills Discounted with banks Rs. 187,899,296 (March 31, 2013: Rs. 301,478,818).

iv) Irrevocable letter of credit outstanding with banks Rs. 919,723,355 (March 31, 2013: Rs. 714,716,962)

v) Bank Guarantee given to government authorities Rs. 86,081,000 (March 31, 2013: Rs. 94,907,000).

vi) Counter Guarantees given by the company to the Sales Tax Department for its associates company Rs. 100,000 (March 31, 2013: Rs. 100,000), for others Rs. 50,000 (March 31, 2013: Rs. 50,000).

D. Scheme of Arrangement

During the year, consequent upon sanction of “Scheme of Arrangement” (the Scheme), for demerger of the Sourcing, Distribution and Marketing Business of the Company (hereinafter referred as ‘Demerged Undertaking’) into PDS Multinational Fashions Limited (‘Transferee Company’), as approved by the Hon’ble High Court of Delhi vide its Order dated March 10, 2014 u/s 394(2) of the Companies Act, 1956 and subsequent filing of said Order with the Registrar of Companies, NCT of Delhi & Haryana on May 13, 2014 being the ''Effective Date'', the financial statements of the Company have been prepared in accordance with the relevant clauses of the Scheme as under:- i) The demerger has been accounted for under the “pooling of interest” method as prescribed by the Accounting Standard (AS-14) of the Company (Accounting Standards) Rules, 2006. Accordingly, for the year ended March 31, 2014, all assets and liabilities of the ‘Demerged Undertaking’ have been transferred to the Transferee Company at the book values with effect from April 01, 2012 being the ‘Appointed Date’ resulting into a reduction in ‘Share Premium Account’ by Rs. 10,677.74 Lacs. Further, there is no difference in accounting policies between the Company and the Transferee Company; hence no adjustments have been made.

Note 3: Lease

a) Asset Given on Lease

(i) Minimum Lease Payments Receivables

The company has given certain assets on operating lease and lease rent (income) amounting to Rs. 73,136,469 (March 31, 2013 : Rs. 65,129,536) has been credited in the Statement of Profit & Loss. The future minimum lease payments receivable and detail of assets as at March 31, 2014 are as under:

Note 4: Currency Derivatives

The company utilizes currency derivatives to hedge significant future transactions and cash flows and is a party to a variety of foreign currency contracts and options in the management of its exchange rate exposures. The Company has no outstanding derivative financial instrument as at the balance sheet date except for forward currency contracts as below:

These commitments have been entered into by the Company to hedge against future payments to suppliers and receipts from customers in the ordinary course of business. These arrangements are designed to address significant exchange exposures and are reviewed/ renewed by the Management on a revolving basis as required.

b) The terms of the forward currency contracts has been negotiated to match the terms & commitments of receivables and payables. The cash flow hedges of the expected future receivables/ payables in April 2014 to March 2015 is assessed at a profit of Rs. 25,621,584 (March 31, 2013 : Loss of Rs. 43,978,918) as on repor ting date.

Note 5: In view of the management, the current assets, loans and advances have a value on realization in the ordinary courses of business at least equal to the amount, at which they are stated in the Balance Sheet as at 31st March, 2014.

Note 6: There is no reportable segment of the company in view of the Accounting Standard -17 ''Segment Reporting'' as issued by the Companies (Accounting Standards) Rules, 2006

Note 7: The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in process of updating the documentation for the International transactions entered into with the associated enterprises during the period as required under law. The Management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation

Note 8: Previous year figures have been regrouped & reclassified whereever necessary.

Note 9: Figures have been rounded off to the nearest rupee.


Mar 31, 2013

Corporate Information

PDS Multinational Fashions Limited is a limited Company domiciled in India and incorporated on April 06, 2011 under the provisions of the Companies Act,1956.

A. Terms/rights attached to Equity shares

The Company has only one class of equity shares having a par value of Rs.10 per share.

Each holder of Equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribu -tion of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note 2: In view of the management, the current assets have a value on realization in the ordinary course of business at least equal to the amount, at which they are stated in the Balance Sheet as at March 31, 2013.

Note 3: There is no reportable segment of the Company in view of the Accounting Standard-17 "Segment Reporting" as issued by the Companies (Accounting Standard) Rules, 2006.

Note 4: The balances of trade payables & trade receivables are subject to confirmation.

Note 5: Amount rounded off to the nearest rupee.

Note 6: Previous year figures have been regrouped & reclassified whereever considered necessary.

 
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