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Notes to Accounts of V2 Retail Ltd.

Mar 31, 2015

1. Corporate information

V2 Retail Limited formerly known as Vishal Retail Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange. The Company is primary engaged in the business of retail sales of garments, textiles, accessories and consumer durables products in India.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with 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 by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on an accrual basis.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below:

3. Deferred Tax Asset

In accordance with Accounting Standard 22 on ' Accounting for Taxes on Income' the net decrease in deferred tax asset of 8,69,18,390 for the current year has been recognized in the profit & loss account. The tax effect of significant timing differences as at 31st March, 2011 that reverse in one or more subsequent years gave rise to the following net deferred tax assets as at March 31, 2015.

4. Employee benefits

a) Defined contribution plans

The Company's employee provident fund scheme are defined contribution plan amounting to Rs.11,576,193/- (previous year Rs. 9,046,788/-) towards employee provident fund has been recognized as an expense in relation to the scheme and is included in employee benefits in the Statement of Profit and Loss.

b) Defined benefit plans

(i) General description of defined benefit plan:

Gratuity plan

The Company operates a gratuity plan wherein every employee is entitled to a benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vests after five years of continuous service. Gratuity benefits valued were in accordance with the payment of Gratuity Act, 1972.

(vi) Economic assumptions

The principal assumptions are the discount rate and salary growth rate. The discount rate is based upon the prevailing market yield of government bonds as at the Balance Sheet date for the estimated term of the obligation and the estimates of future salary increases considered taking into account the inflation, seniority, promotion and other relevant factors.

(v) Economic assumptions

The principal assumptions are the discount rate and salary growth rate. The discount rate is based upon the prevailing market yield of government bonds as at the Balance Sheet date for the estimated term of the obligation and the estimates of future salary increases considered taking into account the inflation, seniority, promotion and other relevant factors.

5. Leases

The company has taken premises for showroom for 12 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

Obligations on long term, non-cancellable operating leases.

The lease rentals charged during the year and maximum obligations on long term non-cancellable operating leases payable as per the rentals stated in the respective agreements.

There are no contingent liabilities in respect of the Joint Venture. The above figures are based on latest available unaudited accounts, drawn on the respective dates as certified by the management.

6. Previous year figures have been regrouped or rearranged wherever considered necessary to make them comparable with current year figures.


Mar 31, 2014

1. Corporate information

V2 Retail Limited formerly known as Vishal Retail Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the business of retail sales of garments, textiles, accessories and consumer durables products in India.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with 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 notifed by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below:

3. Leases

The company has taken premises for showroom for 12 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

Obligations on long term, non-cancellable operating leases.

4. Related Party Disclosures:

The Disclosures are required by the Accounting Standard - 18( Related Party Disclosure) are given below:

1. Names of related parties and related party relationship with whom transaction have Subsidiary companies VRL Infrastructure Limited

VRL Movers Limited VRL Retail Ventures Ltd.

Enterprises in directors of the company are directors Unicon Marketing P. Ltd.

Ricon Commodities P. Ltd. Vishal Water World P. Ltd. V2 Conglomerate Ltd.

Key managerial personnel Mr. Ram Chandra Agarwal (Director)

Mrs. Uma Agarwal (Director)

Relative of key managerial personnel Mr. Akash Agarwal (Son of Director)

Note:- The Company has already initiated the process of identifcation of Micro, Small & Medium Enterprises suppliers and service providers, In view of large number of suppliers and non receipt of critical inputs, responses from several such potential parties, the liability of interest, if any cannot be reliably estimated. Hence the required disclosure has not been made.

Previous year''s fgures have been regrouped / reclassified wherever necessary to correspond with the current year''s classifcation disclosure.

5. Contingent Liabilities

Particulars 31.03.2014 31.03.2014

a. Outstanding Bank Guarantees 4,652,797 4,652,797

b. Disputed Sales Tax Demands - matter under appeal 291,007,117 291,007,117

c. Claims against the Company not acknowledged as debts 181,771,441 201,556,700

d. Claims by Income Tax Department 1,188,071,650 -

e. Claims by Provident Fund Department - 113,929,006

f. Claims by Service Tax Department 30,208,391 30,208,391

Total 1,695,711,396 641,354,011

The Company has made provision in the books of account in the current year with respect to amount payable to Labour Welfare Fund. The Liability on account of the same was not provided for in the earlier years and the same cannot be ascertained, which in the view of the management is not likely to be material.

6. The fgures of previous year were audited by AKGVG and Associates Previous Year''s fgures have been regrouped and/or rearranged where necessary to conform to this year''s classification.


Mar 31, 2013

1. Corporate information

V2 Retail Limited formerly known as Vishal Retail Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the business of retail sales of garments, textiles, accessories, consumer durables and FMCG products in India.

2. Basis of preparation

The fnancial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these fnancial statements to comply in all material respects with the Accounting Standards notifed by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The fnancial statements have been prepared under the historical cost convention on an accrual basis.

The accounting policies adopted in the preparation of fnancial statements are consistent with those of previous year, except for the change in accounting policy explained below:

3. Leases

The company has taken premises for showroom for 12 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

Obligations on long term, non-cancellable operating leases.

The lease rentals charged during the year and maximum obligations on long term non-cancellable operating leases payable as per the rentals stated in the respective agreements.

4. Contingent Liabilities

Particulars As at As at 31st March, 2013 31st March, 2012 (Rs.) (Rs.)

a. Outstanding Bank Guarantees 4,652,797 5,997,535

b. Disputed Sales Tax Demands - matter under appeal 291,007,117 298,551,617

e. Claims against the Company not acknowledged as debts 201,556,700 198,177,295

f. Claims by Provident Fund Department 113,929,006 113,929,006

g. Claims by Service Tax Department 30,208,391 30,208,391

Total 641,354,011 646,863,844

The Company has made provision in the books of account in the current year with respect to amount payable to Labour Welfare Fund. The liability on account of the same was not provided for in the earlier years and the same cannot be ascertained, which in the view of the management is not likely to be material.

There are no contingent liabilities in respect of the Joint Venture. The above fgures are based on latest available unaudited accounts, drawn on the respective dates as certifed by the management. 40. The fgures of previous year were audited by AKGVG and Associates Previous year''s fgures have been regrouped and/or rearranged where necessary to conform to this year''s classifcation


Mar 31, 2011

1. Contingent liabilities

(Amount in Rs.) Particulars 31st March 2011 31st March 2010

a. Outstanding Bank Guarantees 1,225,000 1,225,000

b. Disputed Sales Tax Demands - matter under appeal 5,51,96,492 4,687,235

c. Disputed excise duty demands- matter under appeal - 500,000

d. Disputed Liability in respect of Income Tax demands - matter under appeal - 127,166,302

e. Claims against the Company not acknowledged as debts 269,598,913 296,461,235

f. Claims by Provident Fund Department 113,929,006 113,929,006

Total 439,949,411 543,968,778

The Company has made provision in the books of account in the current year with respect to amount payable to Labour Welfare Fund. The liability on account of the same was not provided for in the earlier years and the same cannot be ascertained, which in the view of the management is not likely to be material.

2. There is a lien on Fixed Deposits of Rs. 5,851,327 (Rs. 8,556,525) towards Bank Guarantee provided by Banks and pledge of Fixed Deposits with various Revenue Authorities as surety bond.

3. Securities for Loans.

Bank : State Bank of India, HSBC & HDFC Bank Security

- First charge on pari passu basis on all the movable and immovable assets of the Company as on the transfer date.

- First pari passu charge by way of equitable mortgage of property in the name of Vishal Water World Pvt. Ltd. situated at Kouchapukur, PO Hatgachia ,dist 24 Parganas (West Bangal)

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at Khasra No. 122/43,122/44, Mouza Central Hope town (Selakui), Paragana Pachwodopon, Tehsil Vikas Nagar, district Dehradun.

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at Krishnanagar Village, Taluq Hubli, District Dharwad.

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at PJE Plaza, deg No.77-78,81,82 Khasra B no.655-11-5-12, Mauza -Kyenjara, VIP road ,Kolkata (except ground floor which is exclusively mortgaged to HDFC Bank)

- Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. Uma Agarwal

- Corporate Guarantee of Vishal Water World Pvt. Limited

- Pledge of 100% of existing promoters' shareholding in the Company or 51% of the Company's paid up capital whichever is lower.

4. Secured Loan repayable within a year is Rs. 588,464,092 (P. Y. Rs. 592,081,863).

5. Business Restructuring:

The company has restructured its business during the year by way of sale of its Wholesale and Retail Businesses to TPG Wholesale Private Limited and Airplaza

Retail Holdings Private Limited (referred to as Acquiring Companies) respectively. The Master Restructuring Agreement and other settlement agreements were entered into by the Company with the Acquiring Companies and its Lenders to effect the said restructuring and CDR proposal of the Company. As a result of the said agreement the liabilities to the extent of Rs. 823.20 Crores and assets of Rs. 393.78 crores were taken over by the acquiring companies against a consideration of Rs. 70 crores. The Slump Sale transaction resulted in a Capital Reserve of Rs. 499.42 Crores.

As a part of the said restructuring some unsecured lenders of the company also waived off their claims to the extent of Rs. 105.81 Crores which has also been transferred to Capital reserve Account.

The company got waiver of Rs. 96.93 crores as reversal of interest under the CDR scheme which has been disclosed as extra ordinary item in the Profit & Loss Account.

6. Management Plan

The Company has already started its new retail venture under the brand & style "V2". The Company has entered into MOU for eight new stores, out of the same, four stores has already operational with a total area of 60,775 sq, ft during the current period.

7. In the opinion of the management, sundry debtors, loans and advances and other current assets are approximately of the value stated if realized in the ordinary course of business. The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

As per the Business Transfer Agreement entered into by the Company with TPG Wholesale Private Ltd and Airplaza Retail Holding Private Ltd (referred to as acquiring companies), the balances due to Sundry Creditors have been transferred to acquiring companies. The interest payable to Micro, Small and Medium Enterprises amounting to Rs. 68,34,368 has been written back in the Profit and Loss Account. However if any liability arises for the same in future the interest will be accounted for on payment basis.

8. The Company is engaged in the business of retail sales of garments, textiles, accessories and FMCG in India and there are no separate reportable segments as per AS-17 "Segment reporting" notified by Companies (Accounting Standards) Rules, 2006.

Notes:

i. The Company is dealing in a large number of products at several locations across the country. The quantitative information required in terms of Schedule VI of the Companies Act, 1956 have been broadly grouped as Apparels, FMCG and Non-Apparels (household goods and other accessories).

c) Other information in pursuance of the provisions of the paragraph 3, 4C, 4D, Part II of Schedule VI of the Companies Act, 1956 is not applicable to the Company.

9. The figures of previous year were audited by firm of Chartered Accountants other than Surana Singh Rathi and Co.. Previous year's figures have been regrouped and/or rearranged where necessary to conform to this year's classification.


Mar 31, 2010

1. The financial statements as on 31st March, 2010 have been prepared by the Management on a "going concern basis" taking into account the present operations of the company.

2. Contingent liabilities

(Amount in Rs.)

Particulars 31st March 2010 31st March 2009

a. Outstanding Bank Guarantees 1,225,000 6,263,297

b. Disputed Sales Tax Demands-matter underappeal 4,687,235 4,687,235

c. Disputed Excise Duty demands-matter under appeal 500,000 3,201,968

d. Disputed Liability in respect of Income Tax demands-matter under appeal 127,166,302 3,323,879

e. Claims againstthe Company not acknowledged as debts 296,461,235 134,613,270

f. Claims by Provident Fund Department 113,929,006 Nil

Total 5437968778 152,089,649

The Company has made provision in the books of account in the current year with respect to amount payable to Labour Welfare Fund. The liability on account of the same was not provided for in the earlier years and the same cannot be ascertained, which in the view of the management is not likely to be material.

3. There is a lien on Fixed Deposits of Rs. 8,556,525 (Rs. 9,708,297) towards Bank Guarantee provided by Banks for the company.

4. Securities for Loans.

Bank

State Bank of India, HSBC & HDFC Bank

Security

- First charge on pari passu basis on all the fixed assets of the company.

- First pari passu charge over all the receivables and stocks and current assets of the company.

- First Pari passu charge by way of equitable mortgage of property in the name of Vishal Water World Pvt. Ltd. situated at Kouchapukur, PO Hatgachia ,dist 24 Parganas (West Bangal) *

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at Khasra No. 122/43,122/44, Mouza Central Hope town (Selakui), Paragana Pachwodopon, Tehsil Vikas Nagar, district Dehradun.

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at Krishnanagar Village, TaluqHubli, District Dharwad.

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at PJE Plaza, deg No.77-78,81,82 Khasra B no.655-11-5-12, Mauza -Kyenjara, VIP road .Kolkata (except ground floor which is exclusively mortgaged to HDFC Bank)

- Personal Guarantee of Mr. Ram Chandra Agarwal, Mr. Surendra Kumar Agarwal , Mrs. UmaAgarwal

- Corporate Guarantee of Vishal World Pvt. Limited.

Bank

HDFC Bank

Security

- Loan against property )also available for HDFC Term Loans

- First charge on the basement and ground floor of property at 52/6 VIP Road, Kolkata, West Bengal in the name of VRL.

- First charge on property at 896,Golbazar, Wright Town, Jabalpur

Bank

Bank of India

Security

- Exclusive charge of property at industrial land Khata no.329, Khasra No. 122/43,122/44 Mouza Central Hope town, (Saelakui), Paragna Pachwodopon, Tehsil Vikas Nagar, District Dehradun (Note: this is a small piece of land measuring 0.57 acres distinct from the other property at Dehradun over which SBI.HDFC and HSBC have a charge)

- Subservient charge on Current Assets

- Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. UmaAgarwal.

- Pledge of 953,770 shares of VRL.

- Corporate Guarantee of Unicorn Marketing Private Limited.(Liability limited to the extent of shares pledged( 7,70,000 shares of VRL)

- Post dated Cheaues for Principal Amount + FITL

Bank

ICICIBank

Security

- Vehicle Loan

- First Charge on Vehicle under finance and Personal guarantee of Promoters

Bank

Kotak Mahindra Bank

Security

- venicie Loan

- Charge on Vehicle under finance and Personal guarantee of Promoters

Bank

ICICIBank

Security

- Equipment Loan

- Charge on Fixed Assets under finance, and Personal Guarantee of Promoters

5. Secured Loan repayable within a year is Rs. 592,081,863 (P. Y. Rs.352,357,918).

6. Unsecured Non-convertible Debentures issued to LIC Mutual Fund Asset Management Company Limited are redeemable on monthly basis from 30th June, 2009 to 31st May, 2011 as per the agreed schedule. Unsecured Non-convertible Debentures issued to Deutsche Trustee Services (I) Private Limited were repayable on 25th August, 2009. These debentures have not been redeemed/ repaid as per terms of the related debentures.

7. During the year, the Company has submitted its proposal under Corporate Debt Restructuring (CDR) mechanism to CDR cell for restructuring its secured as well as unsecured debts. SBI, HDFC, HSBC, ING Vyasa, UCO Bank and BOI are participating banks under the CDR mechanism.

The CDR Empowered Group has considered the proposal of the Company.

8. The Company had initiated the process of identifying non- moving, slow moving, obsolete, damaged inventory, shortages due to pilferage in all the categories i.e. Raw material and finished goods for all the stores and warehouses across India during the previous year, which is now completed. The company has recognized an aggregate amount of Rs. 3,417,159,919 as write off on account of the above, which is charged to Profit & loss account for the year ended 31st March 2010 and is included in Cost of Goods Sold in Schedule 15.

9. The company has recognized Rs. 507,897,976 as Extra-ordinary item during the year on account of Loss of Inventory due to fire in distribution centre at Gurgaon, on 4th June, 2009.

10. In the opinion of the management, sundry debtors, loans and advances and other current assets are approximately of the value stated if realized in the ordinary course of business. The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

11. Inventory valued at Rs.2,199,612,291 lying at various stores and warehouses of the Company spread across the country are as physically verified by other Chartered Accountants and relied upon by the auditors of the Company.

12. During the year the company shut down 15 stores and added 11 new stores across various locations.

13. Preferential Issue of Warrants

In order to meet the fund requirement of the company, the company has come out with preferential allotment of 3,910,000 Warrants to the promoters during the year at an issue price of Rs. 60/- calculated under SEBI (DIP) Guidelines, 2000 on preferential basis duly approved by Shareholders and Board of Directors of the company. These warrants issued on 30th October, 2009 are convertible into equity shares on or before 18 months from the date of issue.

The above managerial remuneration does not include expense towards gratuity since the same is based on actuarial valuations carried out for the company as a whole.

Remuneration amounting Rs.2,623,572 paid during the year has been subsequently reversed. The unrecovered amount of Rs. 1,600,333 has been shown as recoverable from directors underthe head Loans SAdvances.

14. The company has provided for interest amounting Rs. 3,652,688 (Previous Year Rs. 3,181,680) on delayed payments and outstanding balance of MSME Creditors as on 31st March, 2010. This information is required to be disclosed under 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. In terms of notification no. G.S.R. 719(E) dated November 16, 2007 issued by the Central Government of India, the disclosure of payments due to any supplier as at March 31,2010 are as follows:

15. The Company is engaged in the business of retail sales of garments, textiles, accessories and FMCG in India and there are no separate reportable segments as perAS-17 "Segment reporting" notified by Companies (Accounting Standards) Rules, 2006.

16. Disclosures Pursuant to Accounting Standard 15 "Employee Benefits": a) Defined Contribution Plans

i. Provident Fund

ii. State Defined Contribution Plans

17. The Disclosure as required by the Accounting Standard -18 (Related Party Disclosure) are given below:- Names of related parties with whom transactions have taken place and relationship

Name Designation Relationship

Mr. Ram Chandra Agarwal Director Key Managerial Personnel

Mr. Surendra Kumar Agarwal Director Key Managerial Personnel (upto 30,h September, 2009)

Mrs. Uma Agarwal Director Key Managerial Personnel

Mr. Jai Prakash Shukla Director Key Managerial Personnel (from 30* September, 2009)

VRL Infrastructure Limited Subsidiary Company

VRL Consumer Goods Limited Subsidiary Company

VRL Movers Limited Subsidiary Company

VRL Fashions Limited Subsidiary Company

VRL Retailer Business Solutions Pvt. Limited Joint Venture Company

VRL Retailer Ventures Limited Subsidiary Company

VRL Knowledge Process Limited Subsidiary Company

VRL Foods Limited Subsidiary Company

Unicon Marketing Pvt. Ltd. Two directors of Vishal Retail Limited are directors in the Company.

Ricon Commodities Pvt. Ltd. Two directors of Vishal Retail Limited are directors in the Company.

Vishal Water World Private Ltd. Two directors of Vishal Retail Limited are directors in the Company.

18. Lease

The company has taken premises for showroom for 12 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

* Lease rental for the year includes contingent rent amounting Rs. 4,869,084 calculated on the basis of sales.

In respect of residential premises taken on lease on short term basis, relevant agreement had not been executed as per the practice prevalent in that area. The relevant disclosure for future lease commitments, if any in respect of such leases is not ascertainable.

19. Previous years figures have been regrouped where necessary to conform to this years classification.

 
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