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Notes to Accounts of Tribhovandas Bhimji Zaveri Ltd.

Mar 31, 2015

1. COMPANY OVERVIEW

Tribhovandas Bhimji Zaveri Limited ('TBZ or the "the Company) known under the brand ' TBZ- the Original' was incorporated on 24 July 2007 by conversion of a partnership firm Tribhovandas Bhimji Zaveri under Part IX of the Companies Act, 1956 whereby the partners of the partnership firm became shareholders with the shareholdings as agreed amongst the partners. The Company has been converted to a public limited company w.e.f. 3 December 2010. The Company is in the business of retail sales of ornaments made of gold, diamond, silver, platinum and other precious stones through its 28 show rooms located across India. The Company successfully completed its Initial Public Offer during the ended 31 March, 2013 of Rs. 20,000 lakhs by fresh issue of 16,666,667 equity shares.

2. SHORT TERM BORROWINGS

Working capital demand loan and the Cash credit facilities are part of the Consortium arrangement. The above facilities carry interest ranging between 4.25% to 12.35% and are secured by primary security by way of hypothecation charge on the entire current assets of the company, present and future, on first pari passu basis among the members of the consortium.

Further, the facility is secured by collateral security on first pari passu charge basis among the members of the consortium

- By way of mortgage over premise at Zaveri Bazar, Mumbai, premise at Surat, premise at Kandivali Industrial Estate, Mumbai, and commercial premises at Santacruz (West), Mumbai belonging to Shri Shrikant Zaveri (Managing director), for which he has given personal guaratee to the consortium.

- By way of hypothecation charge over fixed assets installed/erected or built in premise at Surat, premise at Kandivali Industrial Estate, Mumbai, premise at Pune, and all movable and immovable assets present in all the company's showrooms.

The facility is also secured on second pari passu charge basis among the members of the consortium:

- By way of mortgage over land and building at Punjagutta, Hyderabad (first charge to the extent of Rs. 700 lakhs for the term loan) and premise at Nariman Point, Mumbai (first charge for the term loan).

Further, bank deposits of Rs. 2,790.98 lakhs have been lien marked with the banks as a security for the above facilites. Also, the facilities are secured by Stand by Letter of credit of Rs. 15,490 lakhs and Letter of comfort of Rs. 13,996 lakhs.

The company had taken unsecured working capital demand loan from bank bearing interest @ 13.00% p.a. The loan is repayable within 45 days in 3 tranches of Rs. 800 lakhs each and additional interest. The loan has been repaid during the year.

Loan from directors is interest free and repayable on demand.

other borrowings carry interest in the range of 5% -10% p.a. These are repayable at the end of 361 days from the date of borrowing.

3. Contingent liabilities and commitments

Contingent Liabilities

Guarantee

Corporate guarantee given to bank on behalf of the Tribhovandas Bhimji Zaveri (Bombay) Limited, a wholly owned subsidiary, in respect of loans taken by them amounting to Rs. 500 lakhs. (2014: NIL)

Claims against the Company not acknowledged as debts

Particulars 31 March 2015 31 March 2014

Income tax 398.73 284.81 matters

Sales tax 254.88 49.79 matters

(a) It is not practicable for the company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgement / decisions pending with various forums/authorities.

(b) The company does not expect any reimbursements in respect of the above contingent liabilities.

(c) The company's pending litigations comprise of claims against the company by employees and pertaining to proceedings pending with Income Tax and Sales/VAT tax authorities. The company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

Commitments

contracts remaining to be executed on capital account and not provided for as at 31 March 2015 is Rs. Nil (31 March 2014: Rs. 742.55 Lakhs) (net of advances).

4. Long-term contracts

The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the company has reviewed and determined that there are no long term contracts (including derivative contracts) which require provision under any law / accounting standards for material foreseeable losses.

5. Corporate social responsibility (CSR)

As per Section 135 of the companies Act 2013, a CSR committee has been formed by the company. The areas of CSR activities are eradicate hunger, poverty and malnutrition, promoting healthcare, including preventive health care and sanitiation. The company also wants to promote education, including special education and employment, enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects. As part of above, the company has undertaken CSR acitivities through Dr. Ernest Borges Memorial Fund (body affiliated to Tata Memorial centre) and Dr. Ernest Borges Memorial Home towards 'Promoting Healthcare including Preventive Healthcare' and 'Promoting Education' , which are specified in Schedule VII of the companies Act, 2013. The company has incurred expenditure of Rs. 50 lakhs during the year for the above acitvities.

6. Leases

Operating leases as a Leasee

The company has recognized the rent expenses in the books of accounts on straight line basis. Rental expenses under operating leases (including cancelable and non - cancelable) aggregating Rs. 2,429.82 Lakhs (31 March 2014: Rs.2,218.50 Lakhs) have been included under "other expense" under the notes to financial statement 28 in the statement of Profit and loss.

7. Information on related party transactions as required by the Accounting Standard (AS) - 18 for the year ended 31 March 2015

I Name of related parties

Key Managerial Personnel

1. Shrikant G Zaveri, Chairman and Managing Director

2. Binaisha Zaveri, Whole-time Director

3. Raashi Zaveri, Whole-time Director

4. Prem Hinduja, chief Executive officer

5. Saurav Banerjee, chief Financial officer

6. Niraj oza, company Secretary

Relative of Key Managerial Personnel

1. Bindu Zaveri

Entities over which Key Managerial personnel and/or their relatives exercise significant influence

1. Tribhovandas Bhimji Zaveri Jewellers (Mumbai) Private Limited

2. Tribhovandas Bhimji Zaveri (TBZ) Private Limited

3. Super Traditional Metal crafts (Bombay) Private Limited

4. cupid Annibis Jewellery Private Limited

Subsidary

1. Konfiaance Jewellery Private Limited.

2. Tribhovandas Bhimji Zaveri (Bombay) Limited

8. The management is of the opinion that the Company's domestic transactions are at an arms' length price so that the transfer pricing legislation will not have any impact on the financial statement, particularly on the tax expenses and that on provision for tax.

9. Segment reporting

The Group is engaged in manufacturing/ trading and selling of jewellery which is the primary business segment based on the nature of products manufactured/traded and sold. Thus, the company has only one reportable business which is manufacturing/trading and selling of jewellery and only one reportable geographical segment. Accordingly the segment information as required by Accounting Standard 17 on "Segment Reporting" is not required to be disclosed.

10. Disclosure Pursuant to clause 32 of the equity listing agreement and section 186 of the companies Act, 2013

No loans have been given by the Company to any third party or its subsidiary Companies The details of investments in subsidiary Companies are given in "Note 13".

The Company has given Corporate guarantee in respect of loan taken by its wholly owned subsidiary Tribhovandas Bhimji Zaveri (Bombay) Limited, amounting to Rs. 500 lakhs (2014 : Nil) for working capital purpose.

11. Previous year figures

The figures of the previous year have been regrouped/ recast, where necessary, to conform to the current year classification.


Mar 31, 2013

1 COMPANY OVERVIEW

Tribhovandas Bhimji Zaveri Limited (''TBZ or the "the Company) known under the brand ''TBZ- the Original'' was incorporated on 24 July 2007 by conversion of a partnership firm Tribhovandas Bhimji Zaveri under Part IX of the Companies Act, 1956 whereby the partners of the partnership firm became shareholders with the shareholdings as agreed amongst the partners. The Company has been converted to a public limited company w.e.f. 3 December 2010. The Company is in the business of retail sales of ornaments made of gold,diamond, silver, platinum and other precious stones through its 25 show rooms located across India.

The Company successfully completed its Initial Public Offer during the year of Rs. 20,000 lakhs by for fresh issue of 16,666,667 shares. The shares of face value of Rs. 10 each had a price band between Rs. 120 to Rs. 126 per share. The issue price was fixed at Rs. 120 per share. The shares got listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited on 9th May 2012.

2.1 Capital commitments and Contingent liabilities

Contracts remaining to be executed on capital account and not provided for as at 31 March 2013 is Rs. 233.81 Lakhs (2012: Nil) (net of advances).

Contingent Liabilities

Guarantee

Guarantees given on behalf of the directors in respect of loans taken by them is Rs. NIL (2012: Rs. 1,400 Lakhs) Indirect tax matter

The Commercial Tax Officer, KVAT Circle IV, Ernakulum has issued a notice of demand / recovery notice under the Kerala Value Added Tax Rules, 2005 for the year 2009-10 for the payment of Rs. 49.79 Lakhs towards liability of compounding tax. The Company has filed an appeal against the aforesaid notice. The appellate matter is currently pending with the Deputy Commissioner of Sales Tax (Appeal), Ernakulam.

Direct tax matter

The Additional Commissioner of Income Tax Central circle 4(3) has issued notice of demand under Section 156 of Income Tax Act, 1961 for A.Y. 2010 - 2011 for the payment of Rs. 148.75 Lakhs, the Company has filed an appeal against the aforesaid notice. The appellate matter is currently pending with the Commissioner of Income Tax (Appeal).

2.2 Employee Stock Option Plan

TBZ ESOP 2011 (''Scheme 2011'')

In January 2011, the Board of the Company approved the TBZ ESOP 2011 ("the Scheme"), which covers the employees of the Company including its subsidiaries.

The scheme provides share based compensation to its employees using Stock options (Options) and Restricted Share Units (RSU)

- The Scheme would be administered and supervised by the members of the Remuneration Committee (which has been authorized by the Board to function as the "Compensation Committee");

- Exercise price of options will be Rs. 149.93 per share and Exercise price of restricted stock units will be Rs. 10 per share;

- The Scheme provides that these options would vest in tranches over a period of 3 years as follows:

2.3 Micro, Small and Medium Enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprise.

On the basis of the information and records available with management , the following disclosures are made for the amounts due to Micro, Small and Medium enterprises who have registered with the Competent authorities.

2.4 Operating lease obligations

The Company has recognized the rent expenses in the books of accounts on straight line basis. Rental expenses under operating leases (including cancelable and non - cancelable) aggregating Rs. 1,512.34 Lakhs (31 March 2012: Rs. 1,084.20 Lakhs) have been included under "Administrative and selling expenses- Rent" under the notes to financial statement 25 in the statement of Profit and loss.

The future minimum lease payments in respect of non-cancellable operating leases as at 31 March 2013 are as follows -

2.5 During the year, the Company has changed its business practice i.e. from outright purchase of gold from its vendors, the Company has now also started procuring gold on lease basis from banks.

2.6 The management is of the opinion that the Company''s domestic transactions are at an arms'' length price so that aforesaid legislation will not have any impact on the financial statement, particularly on the tax expenses and that of provision for tax.

2.7 Disclosures as required by the Accounting Standard - 18 on "Related Party Disclosures" are given below: Name of related parties

Key Managerial Personnel

1 Shrikant G Zaveri

2 Binaisha Zaveri

3 Raashi Zaveri

Relatives of key managerial personnel

1 Bindu S Zaveri

2 Kamla G Zaveri

Entities over which Key Managerial personnel and/or their relatives exercise significant influence

1 Tribhovandas Bhimji Zaveri Jewellers (Mumbai) Private Limited

2 Tribhovandas Bhimji Zaveri (TBZ) Private Limited

3 Super Traditional Metal Crafts (Bombay) Private Limited

4 Tribhovandas Bhimji Zaveri Trading Co

5 Cupid Annibis Jewellery Private Limited

6 Shrikant G Zaveri (HUF)

7 T.B. Zaveri / A.B Zaveri (Family Benefit Trust)

Subsidiary

1 Konfiaance Jewellery Private Limited.

2 Tribhovandas Bhimji Zaveri (Bombay) Limited

2.8 Pursuant to the Accounting Standard (AS 29) - Provisions, Contingent Liabilities and Contingent Assets, the disclosure relating to provisions made in the accounts for the year ended 31 March 2013 is as follows:

Provision for Sales promotion expenses

2.9 Initial Public Offering (IPO)

During the year pursuant to the approval of the shareholders of the Company in an Extra Ordinary General Meeting held on 5 January 2011, the Company has issued and allotted through Initial Public Offering (IPO) 16,666,667 equity shares of Rs. 10 each at a premium of Rs. 110 per share aggregating to a total of Rs. 20,000 Lakhs to all categories of investors. The issue was made in accordance with the terms of the Company''s prospectus dated 30 April 2012 and the shares got listed on 9 May 2012 on BSE Limited and National Stock Exchange of India Limited. In accordance with "objects of issue" as stated in the prospectus of the Company, the status of utilisation upto 31 March 2013 of the amount raised through the said initial public offer is as follows:-

2.10 Segment Reporting

The Company is engaged in manufacturing/ trading and selling of jewellery which is the primary business segment based on the nature of products manufactured/traded and sold. Thus, the Company has only one reportable business which is manufacturing/trading and selling of jewellery and only one reportable geographical segment. Accordingly the segment information as required by Accounting Standard 17 on "Segment Reporting" is not required to be disclosed.

2.11 Previous year figures

Details of regrouping/reclassification for the previous year


Mar 31, 2012

1 Background

Tribhovandas Bhimji Zaveri Limited (TBZ or the "the Company) known under the brand' TBZ- the Original1 was incorporated on 24 July 2007 by conversion of a partnership firm Tribhovandas Bhimji Zaveri under Part IX of the Companies Act, 1956 whereby the partners of the partnership firm became shareholders with the shareholdings as agreed amongst the partners.The Company has been converted to a public limited company w.e.f. 3 December 2010. The Company is in the business of retail sales of ornaments made of gold, diamond, silver, platinum and other precious stones through its 14 show rooms located across India.

The Company successfully completed its Initial Public Offer of Rs. 2,000 Million by fresh issue of 16,666,667 shares. The shares of face value of Rs. 10 each had a Price Band between Rs. 120 to Rs. 126 per share. The issue price was fixed at Rs. 120 per share. The shares were listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited on 9 May 2012.

a Terms / rights attached to eauily shares

The Company has only one class of eauity shares having a par value of Rs. 10 per share. Each holder of eauily shares is entitled to one vote per shares. The Company declares dividends in Indian rupees. The Company declares and pays dividends in Indian rupees. 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 liauidation of the Company the holders of eauity 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 eauily shares held by the shareholders.

f The Company had increased its authorized eauity share capital to Rs. 750,000,000 consisting of 75,000,000 eauily shares of nominal value Rs. 10 in the Annual General Meeting held on 30 September 2010.

g During the previous year, the Board had approved the purchase of 5019 eauily shares of Rs. 100 each of Tribhovandas Bhimji Zaveri (Bombay) Limited (formerly Tribhovandas Bhimji Zaveri (Bombay) Private Limited) at a price of Rs. 4,030 per share amounting to Rs. 20,226,570. Conseguentto the investment, Tribhovandas Bhimji Zaveri (Bombay) Limited (formerly Tribhovandas Bhimji Zaveri (Bombay) Private Limited) became the subsidiary of the Company w.e.f. 4 October 2010. Subseauently, the Company had sold 5 shares at its cost of acauisition. On 13 June 2011, the Company has purchased 6 shares at Rs. 4,490 per share for Rs. 26,940, conseauent to the purchase Tribhovandas Bhimji Zaveri (Bombay) Limited (formerly Tribhovandas Bhimji Zaveri (Bombay) Private Limited) became 100% subsidiary of the Company.

2.1 Capital commitments and Contingent liabilities

Contracts remaining to be executed on capital account and not provided for as at 31 March 2012 Rs. is Nil (2011:Rs. Nil) (net of advances).

Contingent Liabilities

Guarantee

Guarantees given on behalf of the directors in respect of loans taken by them isRs. 140,000,000 (2011: Rs. 140,000,000).

Indirect tax matter

The Commercial Tax Officer, KVAT Circle IV, Ernakulum has issued a notice of demand / recovery notice under the Kerala Value Added Tax Rules, 2005 for the year 2009-10 for the payment ofRs. 4,979,320 towards liability of compounding tax. The Company has filed an appeal against the aforesaid notice. The appellate matter is currently pending with the Deputy Commissioner of Sales Tax.

2.2 Employee Stock Option Plan

TBZ ESOP 2011 ("Scheme 2011')

In January 2011, the Board of the Company approved the TBZ ESOP 2011 ("the Scheme"), which covers the employees of the Company including its subsidiaries.

The scheme provides share based compensation to its employees using Stock options (Options) and Restricted Share Units (RSU)

The Scheme would be administered and supervised by the members of the Remuneration Committee (which has been authorized by the Board to function as the "Compensation Committee");

Exercise price of options will beRs. 149.93 per share and Exercise price of restricted stock units will be Rs. 10 per share;

2.3 Micro, Small and Medium Enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October 2006, certain disclosures are reauired to be made relating to Micro, Small and Medium Enterprise.

2.4 Operating lease obligations

The Company has recognized the rent expenses in the books of accounts on straight line basis. Rental expenses under operating leases (including cancelable and non - cancelable) aggregating Rs. 107,223,271 (31 March 2011: Rs. 83,907,262) have been included under "Administrative and selling expenses- Rent, rates and taxes" under the notes to financial statement 25 in the Profit and loss account.

2.5 Segment reporting

The Company is engaged in manufacturing/ trading and selling of jewellery which is the primary Pusiness segment Pased on the nature of products manufactured/traded and sold. Thus, the Company has only one reportable business which is manufacturing/trading and selling of jewellery and only one reportable geographical segment. Accordingly the segment information as reauired by Accounting Standard 1 7 on "Segment Reporting" is not reguired to be disclosed.

2.6 Disclosures as required by the Accounting Standard -18 on " Related Party Disclosures" are given below:

Key Managerial Personnel

1 ShrikantGZaveri

2 Binaisha Zaveri

3 Raashi Zaveri

Relatives of key managerial personnel

1 BinduS Zaveri

2 Kamla G Zaveri

Entities over which Key Managerial personnel and/or their relatives exercise significant influence

1 Tribhovandas Bhimji Zaveri Jewellers (Mumbai) Private Limited

2 Tribhovandas Bhimji Zaveri (TBZ) Private Limited

3 T B Zaveri Jewelleries Limited (upto 20 March 2011)

4 Super Traditional Metal Crafts (BomPay) Private Limited

5 New Transmission & Power Technology Private Limited (upto 16 March 2011)

6 TriPhovandas Bhimji Zaveri Trading Co

7 Cupid AnniPis Jewellery Private Limited

8 ShrikantG Zaveri (HUF)

9 T.B. Zaveri/A.BZaveri(FamilyBenefitTrust) Subsidiary

1 Konf iaance Jewellery Private Limited.

2 TriPhovandas Bhimji Zaveri (BomPay) Limited, (formerly TriPhovandas Bhimji Zaveri (BomPay) Private Limited) (w.e.f 4 October 2010)

2.7 The Company had entered into a joint venture (JV) agreement with Ms Parinda Bajaj on June 25, 2009. As a part of the agreement one of the Company's brand "Krsala" was transferred to the joint venture partner which in turn was licensed back to the Company. The Company and the JV partner incorporated 'Konfiaance Jewellery Private Limited' ('KJPL') to carry on the JV business with an eauily participation of 60% by the Company in KJPL. Till the time KJPL commenced its business, the Company continued the business in the said Krsala brand. The Joint venture agreement with Mrs. Parinda Bajaj has been terminated on 22nd June, 2011 and Mrs. Parinda Bajaj's shareholding in Konfiaance Jewellery Private Limited has been acauired by the Company. Conseauentto the acauisition KJPL has became 100% subsidiary of the Company.

2.8 The Company has recently been announced as the successful bidder in relation to a bid submitted by it for commercial premises at Tulsiani Chambers, Nariman Point, Mumbai for an amount of Rs. 260,000,000. The Company is in the process of negotiating the terms of the purchase and has executed a provisional offer acceptance letter dated January 19, 2012 with the seller. However, the payments mentioned above are subject to, among other things, completion of title due diligence of the premises. In the event the Company decides not to proceed with the above transaction, the seller may forfeit the earnest money deposit of Rs. 500,000 paid by the Company.

2.9 The Company executed a letter of intent dated April 12, 2012 to lease a showroom with a carpet area of 1,230 sq. ft. located in Churchgate, Mumbai and in connection therewith has paid an interest free deposit of Rs. 100,000 to the owner of the premises. The initial period of the lease will be three years, renewable at the Company's option for two further periods of three years. The final lease agreement has not yet been executed. In the event the Company decides not to enter into the final lease agreement, the owner of the premises may not refund the deposit of Rs. 100,000.

2.10 Previous year figures

Till the year ended 31 March 2011, the Company was using pre-Revised Schedule VI to the Companies Act 1956 for preparation and presentation of its financial statements. 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.

 
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