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Notes to Accounts of Zodiac Clothing Company Ltd.

Mar 31, 2014

1) (i) Contingent Liabilities: -

a) Guarantee issued by the Banks and counter guaranteed by the Company: Rs. 3,560,494/- (Previous year: Rs. 5,452,239/- ).

b) Foreign letters of Credits opened by Bank and counter guaranteed by the Company: Rs. 26,327,666/- (Previous year: Rs. 33,769,425/-).

c) Foreign bills / Letters of Credit discounted with Bank: Rs. 445,121/- (Previous year Rs. 12,346,148/-)

d) Disputed demand not provided for in respect of: -

current year Previous Year Rs. Rs.

1) Income Tax 90,823,130 128,862,070

2) Sales Tax 11,229,872 11,229,872

3) Apparel Export Promotion Council for non fulfilment of export obligation against duty free imports 424,415 2,190,575

e) Claims against the Company not acknowledged as debts: Rs. 129,200/-(Previous Year Rs. 730,841/-)

f) Labour disputes not acknowledged as debts: Amount not ascertainable.

Note:- In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

(ii) Other commitments :-

Contractual arrangement for payment in case of default on corporate credit card facility availed by certain employees from a bank Rs. 4,900,000/- (previous year Rs. Nil).

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 18,827,465/- (Previous Year Rs. 28,290,352/- )

28) The amount of premium on forward exchange contracts to be recognized in the Statement of Profit and Loss in the next financial year is Rs. 4,910,212/- (Previous Year Rs. 4,010,650/-)

3) Operating Leases: -

A) Premises taken on Lease

a) The Company has taken various Offices / shops under operating lease or leave and licence agreements. These are non- cancellable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

b) Lease Payments recognized in the Statement of Profit and Loss under Rent in Note 23 includes Rs. 297,743,155/- (Previous Year Rs. 279,486,978/-) in respect of premises taken on lease.

c) The future minimum lease payments under non-cancellable operating lease :

(i) not later than one year is Rs. 9,594,719/- (Previous Year Rs. 7,309,130/-);

(ii) later than one year and not later than five years is Rs. 1,273,638/- (Previous Year Rs. 559,930/-) and

(iii) Later than five years Nil

B) Premises Given On Lease

a) The Company has given its premises under operating lease on leave and licence basis. These are cancellable lease and the period ranges between 11 months to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms.

b) Lease rentals recognized in the Statement of Profit and Loss as Rent income in Note 19 is Rs. 550,550/- (Previous Year Rs. 179,200/-)

c) Premises given on licence basis:- Gross Carrying amount Rs. 2,322,550/- (Previous Rs. 4,645,100/-) Accumulated Depreciation Rs. 415,640/- (Previous Year Rs. 757,366/-) Depreciation for the year Rs. 37,858/- (Previous Year Rs. 75,716/-)

4) Related Party Disclosures: -

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

I) Relationships: -

a) Subsidiary Companies (including sub-subsidiaries):-

Zodiac Finsec and Holdings Ltd

Zodiac Clothing Company S. A.

Zodiac Clothing Co (U.A.E.) LLC.

Zodiac Clothing Company INC

Zodiac Properties Ltd U.A.E.

b) Key Management Personnel: -

Mr. M. Y. Noorani --Chairman

Mr. A. Y. Noorani -- Vice Chairman and Managing Director

Mr. S. Y. Noorani -- Managing Director and President

c) Other Related Parties:-

i. The enterprises where control of key management personnel and / or their relatives exist and with whom the transactions have taken place:

Zodiac Metropolitan Clothing Gmbh

Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mustang Manufacturing Company

Mashal Enterprises

Euro Global Holdings Pte Ltd

Onward LLC

Miraj Marketing Company LLP

ii. Relatives of key management personnel with whom the transactions have taken place :

Mr. Awais A. Noorani

Mr. Musaed A. Noorani

Mrs. Muna A. Noorani

Mrs. Zehra S.Noorani

Mrs. Saniyya A.Noorani

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

5) Segment Information: -

Business Segment

The Company is exclusively engaged in the business of Clothing and clothing accessories. This in the context of Accounting Standard (AS 17) "Segment Reporting", notified under the Companies (Accounting Standard) Rules, 2006, constitutes single primary segment.

6) Derivative Financial Instruments

a) The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts and out of the money option contracts to manage its exposure in foreign exchange rates. The counter parties are banks. These contracts are for a period between one day and twelve months.

(ii) Net Gain on derivative instruments, which have been designated as cash flow hedges, of Rs. 7,228,017/- (Previous Year Net Loss of Rs. 2,593,652/-) recognized in Hedging Reserve as of March 31,2014, is expected to be reclassified to the Statement of Profit and Loss as and when the same will mature.

(iii) Net gain on non derivative financial liabilities in the form of preshipment export credit in foreign currency (PCFC) borrowings of Rs. 8,407,072/- ( previous year Rs. Nil/-) recognized in the Hedging Reserve as of March 31, 2014 is expected to be reclassified to the Statement of Profit and Loss as and when the highly probable sales takes place.

(iv) Exchange Loss of Rs. 41,307,587/- (Previous Year Loss Rs. 12,351,812/-) has been recognised in the Statement of Profit and Loss for the year ended March 31, 2014 b) (i) No derivative instruments are acquired for speculation purposes.

(d) The Company has followed the intrinsic value-based method of accounting for stock options granted based on Guidance Note on Accounting for Employees Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 Issued by Securities and Exchange Board of India (SEBI). As the exercise price of the option granted is based on the market price as on the date of the Grant, the intrinsic value of the option is Nil.

Notes:

i. Premium is paid to LIC under Group Gratuity Scheme of LIC.

ii. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iv. Contributions expected to be paid to the plan during the annual period beginning after the Balance Sheet date: Rs.12,500,000/- (Previous Year Rs. 12,500,000/-).

v. The expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risks of asset management and historical result of the return on plan asset.

(III) The Company makes provident fund contributions to defined contribution plans for the employees. Under the scheme, the company is required to contribute a specified percentage of the salary to fund the benefits. Amount recognized as an expense in the statement of profit and loss in respect of defined contribution plan is Rs. 40,959,338/- (Previous Year Rs.38,464,803/-)

7) Remuneration to Managing Directors aggregating to Rs. 24,800,000/- shown under " Other expenses " in note 23 above includes the following amounts to each of the managerial personnel viz the Vice-Chairman and Managing Director and the Managing Director and President :-

(i) An amount of Rs. 11,369,498/- by way of commission on net profits (pro-rated for the period from April1, 2013 to February 28,2014) in terms of the approval granted by the shareholders by a resolution passed in the meeting held on 26th August, 2009;

(ii) An amount of Rs. 600,000/- by way of salary for the month of March, 2014 in terms of the approval granted by the Board of Directors at their Meeting held on 19th March, 2014; and

(iii) An amount of Rs. 430,502/- by way of performance linked bonus for the year ending March 31, 2014 to be decided by the Board of Directors.

The remuneration of Rs. 600,000/- by way of Salary as shown in (ii) above and Rs. 430,502/- by way of performance linked Bonus as shown in (iii) above and the appointment of the above mentioned managerial personnel for a period of 3 years w.e.f. 1st March 2014 is subject to approval of the shareholders at the ensuing Annual General meeting.

8) Excise duty recovered on sales is included in ''Revenue from Operations''. Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced.

9) Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosures.


Mar 31, 2013

1) Contingent Liabilities: -

a) Guarantee issued by the Bank and counter guaranteed by the Company: Rs.5,452,239/- (Previous year: Rs. 4,800,659/-).

b) Foreign letters of Credits opened by Bank and counter guaranteed by the Company: Rs. 33,769,425/- (Previous year: Rs. 30,367,959/-).

c) Foreign bills/Letters of Credit discounted with Bank: Rs. 12,346,148/- (Previous year Rs. 29,787,556/-)

d) Disputed demand not provided for in respect of: -

Current year Previous Year

1) Income Tax 128,862,070 102,540,443

2) Sales Tax 11,229,872 11,229,872

3) Apparel Export 2,190,575 2,980,050

Promotion Council for non fulfillment of export obligation against duty free imports

e) Claims against the Company not acknowledged as debts: Rs. 730,841/- (Previous Year Rs. 1,066,310/-)

f) Labour disputes not acknowledged as debts: Amount not ascertainable.

Note: In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 28,290,352/- (PreviousYear Rs. 62,809,263/-)

3) Micro, Small and Medium enterprises have been identified by the company on the basis of the information available. Total outstanding dues of Micro, Small and Medium enterprises, which are outstanding for more than the stipulated period are given below.

4) The amount of premium on forward exchange contracts to be recognized in the Statement of Profit and Loss in the next financial year is Rs. 4,010,650 /- (Previous Year Rs. 1,457,365/-)

5) Operating Leases: -

(a) Premises taken on Lease

(a) The Company has taken various offices/ shops under operating lease or leave and licence agreements. These are non- cancelable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

(b) Lease Payments recognized in the Statement of Profit and Loss under Rent in Note 24 includes Rs. 279,486,978/- (Previous Year Rs. 257,950,464/-) in respect of premises taken on lease.

(c) The future minimum lease payments under non-cancelable operating lease:

(i) not later than one year is Rs. 7,309,130/- (Previous Year Rs. 37,112,888/-);

(ii) later than one year and not later than five years is Rs. 559,930/- (Previous Year Rs. 15,449,296/-) and

(iii) Later than five years Nil

(b) Premises Given On Lease

(a) The Company has given its premises under operating lease on leave and licence basis. These are cancelable lease and the period ranges between 11 months to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms.

(b) Lease rentals recognized in the Statement of Profit and Loss as Rent income in Note 20 is Rs. 179,200/- (Previous Year Rs. 1,073,100/-)

c) Premises given on licence basis:-

Gross Carrying amount Rs. 4,645,100/- (Previous 4,645,100/-) Accumulated Depreciation Rs. 757,366 /-(Previous Year 681,650 /-) Depreciation for the year Rs. 75,716/- (Previous Year 75,716/-)

The Net Deferred tax charge of Rs. 8,636,105/- (Previous year (credit) Rs. 1,607,299/-) for the year has been recognized in the Statement of Profit and Loss.

The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date.

6) Related Party Disclosures: -

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

(i) Relationships: -

(a) Subsidiary Companies (including sub-subsidiaries): -

Zodiac Finsec and Holdings Ltd.

Zodiac Clothing Company S. A.

Zodiac Clothing Co (U.A.E.) LLC.

Zodiac Clothing Company INC

Zodiac Properties Ltd

(b) Key Management Personnel: -

Mr. M. Y. Noorani

Mr. A. Y. Noorani

Mr. S. Y. Noorani

(c) Other Related Parties:-

i. The enterprises where control of key management personnel and/or their relatives exist and with whom the transactions have taken place :

Zodiac Metropolitan Clothing Gmbh

Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mariambai & Haji Noor Mohamad Noorani Foundation Trust

Mustang Manufacturing Company

Mashal Enterprises

Euro Global Holdings Pte Ltd

Onward LLC

Miraj Marketing Company LLP

ii. Relatives of key management personnel with whom the transactions have taken place :

Mr. Awais A. Noorani

Mr. Musaed A. Noorani

Mrs. Muna A. Noorani

Mrs. Zehra S. Noorani

Mrs. Saniyya A. Noorani

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

7) Derivative Financial Instruments

(a) The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts and out of the money option contracts to manage its exposure in foreign exchange rates. The counter parties are banks. These contracts are for a period between one day and twelve months.

(i) The following are outstanding Foreign Exchange Forward contracts, as on March 31, 2013

(ii) Net Gain on derivative instruments which have been designated as Cash Flow hedges of Rs. 2,593,652/- (Previous Year Net Loss of Rs. 2,020,887/-) recognized in Hedging Reserve as of March 31, 2013, is expected to be reclassified to the Statement of Profit and Loss as and when the same will mature.

(iii) Exchange Loss of Rs. 12,351,812 (Previous Year Loss Rs. 56,904,302/-) has been recognized in the Statement of Profit and Loss for the year ended March 31, 2013.

(b) (i) No derivative instruments are acquired for speculation purposes.

(ii) Foreign currency exposures that are not hedged by derivative instruments or otherwise are Rs. 281,359,801/- (Previous Year Rs. 298,281,546/-) as given below:

8. Excise duty recovered on sales is included in ''Revenue from Operations''. Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced.

9. Previous year''s figures have been regrouped /reclassified wherever necessary to correspond with the current year''s classification/disclosures.


Mar 31, 2012

1) Contingent Liabilities: -

a) Guarantee issued by the Bank and counter guaranteed by the Company: Rs. 4,800,659/- (Previous year: Rs. 4,632,913/-).

b) Foreign letters of Credits opened by Bank and counter guaranteed by the Company: Rs. 30,367,959/- (Previous year: Rs. 29,269,060/-).

c) Foreign bills/Letters of Credit discounted with Bank: Rs. 29,787,556./- (Previous year Rs. 4,980,791/-).

d) Disputed demand not provided for in respect of:-

Note: In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 62,809,263/- (Previous Year Rs. 31,636,946/-)

3) Micro, Small and Medium enterprises have been identified by the company on the basis of the information available. Total outstanding dues of Micro, Small and Medium enterprises, which are outstanding for more than the stipulated period are given below.

4) The amount of premium on forward exchange contracts to be recognized in the Statement of Profit and Loss in the next financial year is Rs. 1,457,365/- (Previous Year Rs. 2,781,563/-)

5) Operating Leases: -

A) Premises taken on Lease

a) The Company has taken various offices/shops under operating lease or leave and licence agreements. These are non-cancelable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

b) Lease Payments recognized in the Statement of Profit & Loss under Rent in Note 24 is Rs. 257,950,464/- (Previous Year Rs. 220,418,873/-).

c) The future minimum lease payments under non-cancelable operating lease: (i) not later than one year is Rs. 37,112,888/- (Previous Year Rs. 18,977,662/-); (ii) later than one year and not later than five years is Rs. 15,449,296/- (Previous Year Rs. 1,896,510/-) and

(iii) Later than five years Nil

B) Premises Given On Lease

a) The Company has given its premises under operating lease on leave and licence basis. These are cancelable lease and the period ranges between 11 months to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms.

b) Lease rentals recognized in the Statement of Profit & Loss under Rent in Note 20 is Rs. 1,073,100//- (Previous Year Rs. 916,000/-)

c) Premises given on licence basis:-

Gross Carrying amount Rs. 4,645,100/- (Previous 4,645,100/-) Accumulated Depreciation Rs. 681,650 /- (Previous Year 605,934 /-) Depreciation for the year Rs. 75,716/- (Previous Year 75,716/-)

The Net Deferred tax (Credit)/charge of (Rs. 1,607,299/-) (Previous year Rs. 12,263,460/-) for the year has been recognized in the Statements of Profit and Loss.

The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date.

6) Related Party Disclosures: -

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

I) Relationships: -

a) Subsidiary Companies (including sub-subsidiaries): -

Zodiac Finsec and Holdings Ltd. (previously known as Multiplex Collapsible Tubes Ltd.) Zodiac Clothing Company S. A. Zodiac Clothing Co (U.A.E.) LLC. Zodiac Clothing Company INC Zodiac Properties Ltd

b) Key Management Personnel:- Mr. M. Y. Noorani

Mr. A. Y. Noorani Mr. S. Y Noorani

c) Other Related Parties:-

i. The enterprises where control of key management personnel and/or their relatives exist and with whom the transactions have taken place:

Zodiac Metropolitan Clothing Gmbh

Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mariambai & Haji Noor Mohamad Noorani Foundation Trust

Mustang Manufacturing Company

Mashal Enterprises

Elite Clothing Co.Pvt Ltd

Euro Global Holdings Pte Ltd

Onward LLC

Miraj Marketing Company LLP

(Zodiac Private Limited merged into Miraj Marketing Company Pvt. Ltd. we.f 23.12.2010 and Miraj Marketing Pvt. Ltd. converted into LLP we.f. 24.01.2011)

ii. Relatives of key management personnel with whom the transactions have taken place :

Mr. Awais A. Noorani

Mr. Musaed A. Noorani

Mrs. Muna A. Noorani Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

7) Segment Information: -

Business Segment

The Company is exclusively engaged in the business of Clothing and clothing accessories. This in the context of Accounting Standard (AS 17) "Segment Reporting", notified under the Companies (Accounting Standard) Rules, 2006, constitutes single primary segment.

(ii) Net loss on derivative instruments of Rs. 2,020,887/- (Previous Year Rs. 2,533,663 /-) recognized in Hedging Reserve as of March 31, 2012, is expected to be reclassified to the Statement of Profit and Loss as and when the same will mature.

(iii) Exchange Loss of Rs. 56,904,302/- (Previous Year Gain Rs. 6,247,040/-) on foreign exchange forward contracts has been recognized in the Statement of Profit and Loss for the year ended March 31, 2012.

b) (i) No derivative instruments are acquired for speculation purposes.

(ii) Foreign currency exposures that are not hedged by derivative instruments or otherwise are Rs. 298,281,546/- (Previous Year Rs. 290,006,699) as given below:

(d) The Company has followed the intrinsic value-based method of accounting for stock options granted based on Guidance Note on Accounting for Employees Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 Issued by Securities and Exchange Board of India (SEBI). As the exercise price of the option granted is based on the market price as on the date of the Grant, the intrinsic value of the option is Nil.

(e) Fair Valuation:

The fair value of options used to compute proforma net income and earnings per equity share have been done by an independent firm of Valuers on the date of grant using the BlackScholes Model.

Note: (a) Loans and Advances to employees and investment by such employees in the shares of the company, if any are excluded from the above disclosure.

(b) m respect of the above loans there is no repayment schedule and they are repayable on demand.

(c) No interest is charged in respect of the loan of Rs. - NIL- (Previous Year Rs. 21,560,000).

However, the provisions of Section 372A of the Companies Act, 1956 are not applicable to loans covered under (c) above in view of the loanee being wholly owned subsidiary of the Company.

8. Excise duty recovered on sales is included in 'Revenue from Operations'. Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced.

9. The revised Schedule VI has become effective from 1st April, 2011, for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped /reclassified wherever necessary to correspond with the current year's classification/disclosures.


Mar 31, 2010

1) Contingent Liabilities:

a) Guarantee issued by the Bank and counter guaranteed by the Company: Rs.6,621,567/- (Previous year: Rs.6,421,567/-).

b) Foreign letters of Credits opened by Bank and counter guaranteed by the Company: Rs. 13,073,806/- (Previous year: Rs. 11,164,129/-).

c) Foreign bills/Letters of Credit discounted with Bank: Rs26,689,108./- (Previous year Rs.5,093,714/-)

d) Disputed demand not provided for in resDect of:

Current Previous Year Year Rupees Rupees

1) Income Tax 27,484,073 31,896,473 (amount paid under protest Rs.26,078,952/-) (Previous Year Rs.24,766,099/-

2) Sales Tax (amount 10,441,872 2,626,899 paid under protest Rs.6,416,870/-) (Previous Year Rs.138,709/-)

3) Apparel Export 2,980,050 2,980,050 Promotion Council for non fulfillment of export obligation against duty free imports

e) Claims against the Company not acknowledged as debts: Rs. 1,066,310/- (Previous year Rs.8,204,270/-)

f) Labour disputes not acknowledged as debts: Amount not ascertainable.

ote: In respect of items mentioned above, till the matters are finally decided, the financial effect cannot be ascertained.

2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs 20,608,069/- (Previous Year Rs 7,821,806/-)

3) The Company has requested its suppliers to confirm the status as to whether they are covered under the Micro, Small and Medium Enterprises Development Act, 2006. Few suppliers have confirmed that they are not covered under the said Act . In the absence of confirmation from the suppliers, disclosures relating to amount unpaid as at year end together with interest paid/payable as required under the said Act have not been given.

4) Issue of Warrants to Promoters

A total of 4,40,000 Warrants were allotted on preferential basis on 15th January 2008 to certain promoters of the company which were excercisable within a period of 18 months from the date of allotment into an equal number of paid up equity shares subject to the condition that the promoters holding on conversion is within the prescribed limit under SEBI (Substantial Acquisition & Takeover), Regulation (SAST) 1997. Those promoters could not opt for conversion as this would have made their holding cross the limit prescribed under SAST Act 1997, The amount of Rs 17,600,000/- paid by those promoters therefore stood forfeited on 15th July, 2009 i.e. on the expiry of 18 months.The forfeited amount has been credited to Capital Reserve Account. The funds raised through the Preferential issue of warrants have been utilized for working capital requirements.

5) The amount of premium on forward exchange contracts to be recognised in the profit and loss account in the next financial year is Rs. 1,665,087/- (Previous Year Rs. 1,010,247/-

6) Operating Leases:

A) Premises taken on Lease

a) The Company has taken various offices/shops under operating lease or leave and licence agreements. These are non-cancelable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms.

b) Lease Payments recognized in the statement of Profit & Loss Account under Rent in Schedule 14 is Rs. 193,544,934/- (Previous Year Rs. 170,245,532/- ).

c) The future minimum lease payments under non-cancellable operating lease : (i) not later than one year is Rs.41,648,201 (Previous Year Rs.28,750,406/-);

(ii) later than one year and not later than five years is Rs.6,702,612/- (Previous Year Rs.9,629,860/-) and (iii) Later than five years Nil.

B) Premises Given On Lease

a) The Company has given its premises under operating lease on leave and licence basis. These are cancelable lease and the period ranges between 11 month to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms.

b) Lease rentals recognized in the statement of Profit & Loss Account under Rent in Schedule 12 is Rs. 1,067,150/-

The Net Deferred tax charge of Rs.728,768/- (Previous year Rs. 1,410,447/-) for the year has been recognized in the Profit and Loss Account.

The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date.

7) Related Party Disclosures:

Related party disclosures as required by (AS-18) "Related Party Disclosures" are given below:

I) Relationships:

a) Subsidiary Companies (including sub-subsidiaries): Multiplex Collapsible Tubes Limited.

Zodiac Clothing Company S. A.

Zodiac Clothing Co. (U.A.E.) LLC.

Zodiac Clothing Company INC

Zodiac Properties Ltd. ( Subsidiary w.e.f 22nd November, 2009)

b) Key Management Personnel: Mr. M. Y. Noorani

Mr. A. Y. Noorani Mr. S. Y Noorani

c) Other Related Parties:-

i. The enterprises where control of key management personnel and/or their relatives exist and with whom the transactions have taken place :

Zodiac Private Limited

Miraj Marketing Company Private Limited

Zodiac Metropolitan Clothing Gmbh

Asia Tangible Investments Pte. Ltd.

Metropolitan Trading Company

Montage Corporation

Munraz Enterprises

Mariambai & Haji Noor Mohamad Noorani Foundation Trust

Mustang Manufacturing Company

Mashal Enterprises

Elite Clothing Co.Pvt Ltd.

Euro Global Holdings Pte Ltd.

Onward LLC

ii. Relatives of key management personnel with whom the transactions have taken place : Mr. Awais A. Noorani Mr. Musaed A. Noorani Mrs. Muna A. Noorani

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

8) Segment Information: Business Segment The Compay is exclusively engand in the business of Clothing and clothing.This in the context of Accounting Standard (AS 17) "Segment Reporting" notifield under the Companies (Accouning Standard) Rules,2006, consitutes one single primary segment.

9) Derivative Financial Instruments

a) The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign exchange rates. The counter party is a bank. These contracts are for a period between one day and thirty eight months .

(i) The following are outstanding Foreign Exchange Forward contracts, which have been designated as Cash Flow Hedges, as on March 31, 2010

(ii) Net loss on derivative instruments of Rs.433,784/- (Previous Year Rs.60,979,099/- ) recognised in Hedging Reserve as of March 31, 2010, is expected to be reclassified to the profit and loss account as and when the same will mature.

(iii) Exchange (Gain)/Loss of Rs. (l,418,787/-)/-(Previous Year Rs. 147,824,655/-) on foreign exchange forward contracts have been recognized in the Profit and Loss Account for the year ended March 31, 2010.

b) (i) No derivative instruments are acquired for speculation purposes.

(ii) Foreign currency exposure that are not hedged by derivative instruments or otherwise are Rs. 180,803,685/- (Previous Year Rs.93,657,847/-) as given below:

10) Employee Stock Option Scheme (ESOP)

a) As approved by the Shareholders of the Company in their meeting held on 31.08.2006, during 2006-07, the Company had granted 291,000 options under ESOP 2006 duly approved by the Compensation Committee of the Board of the Company. Details of same are as under:

b) The Company has followed the intrinsic value-based method of accounting for stock options granted based on Guidance Note on Accounting for Employees Share-based Payments, notified under the Companies (Accounting Standard) Rules, 2006. As the exercise price of the option granted is based on the market price as on the date of the Grant, the intrinsic value of the option is Nil.

c) Fair value of Options calculated by external valuer using Black Scholes Model is Rs. 102.68, which is lower than the exercise price and hence these options are considered to be anti-dilutive in nature and the effect of this is ignored in calculating diluted earnings per share in accordance with Accounting Standard 20 viz. Earnings Per share notified under the Companies (Accounting Standard) Rules, 2006.

d) Had the company followed fair value method for accounting the stock option, compensation expenses would have been higher by Rs Nil (Previous Year Rs.87.86 lakhs) and consequently profit after tax would have been lower by Rs Nil (Previous Year Rs.57.60 lakhs) and Basic & Diluted Earning per share would have been lower by Rs.Nil (Previous Year Rs 0.69) per share& Rs Nil(Previous Year Rs 0.65) per share respectively

e) Method and significant assumptions used to estimate the Fair Value of the Options are as under:

The Fair value of Options has been calculated by an independent valuer. The valuation has been done using the Black - Scholes model based on the assumptions given by the management, which are as under:

i. Expected Life of the Options:

These stock options will vest on expiry of one year in the following proportion from the date of grant and can be exercised during a period of three years from the date of vesting.

Year 2 from the date of Grant - 30% of the Options Granted;

Year 3 from the date of Grant - 30% of the Options Granted;

Year 4 from the date of Grant - 40% of the Options Granted

ii. Risk free interest rate:

This rate has been assumed at 7.67% for the first year, 7.62% for the second year and 7.59% for the third year.

iii. Share price:

It is the market price on the National Stock Exchange of India Limited (exchange on which highest volume for the Companys shares was recorded) with reference to the date of options granted .

iv. Volatility:

Volatility is calculated based on the period to represent a consistent trend in the price movement after adjusting abnormal events, if any at 45.22% for the first year, 50.51% for the second year and 51.13% for the third year.

v. Expected dividend yield:

Dividend per share/Market price of the share on the Grant Date is 2.49%.

Note: Loans and Advances to employees and investment by such employees in the shares of the company, if any are excluded from the above disclosure.

Notes:

i. The Fair Value of Plan assets in the above computation includes the funds of the following Companies that merged with the company as per the details given below

However, the above balances have not yet been transferred by Life Insurance Corporation of India (LIC) in favour of the company. ii. ii.Premium is paid to LIC under Group Gratuity Scheme of LIC.

iii. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iv. The details of experience adjustments on account of Plan Liability and Plan Assetas required by Para 120 (n) (ii) of AS-15 is Rs 1,755,002/- (Previous Year Rs.4,209,940/-) and Rs 216,807/- (Previous Year (Rs. 408,244/- )) respectively. However, details of experience adjustment for the prior years are not readily available in valuation reports and hence not furnished.

v. Contributions expected to be paid to the plan during the annual period beginning after the Balance Sheet date: Rs 10,566,908/-(Previous Year Rs.8,946,782/-)

vi. The expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risks of asset management and historical result of the return on plan asset.

 
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