Mar 31, 2018
NOTE 1: CORPORATE INFORMATION
Pearl Global Industries Limited is a public limited Company domiciled in India and has its registered office at A-3, Community Centre, Naraina Industrial Area, Phase-II, New Delhi-110028. The company is primarily engaged in manufacturing, sourcing and export of ready to wear apparels through its facilities and operations in India and overseas. The Company has its primary listings on Bombay Stock Exchange and National Stock Exchange in India.
The financial statements were authorised for issue in accordance with a resolution of the Board of Directors on May 29, 2018.
NOTE 2: BASIS OF PREPARATION AND MEASUREMENT
Statement of Compliance: The financial statements have been prepared as a going concern in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the Companies Act, 2013 (âthe Actâ) read with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.
Upto the year ended 31st March, 2017, the Company prepared the financial statements in accordance with the requirements of previous GAAP, which includes standards notified under the Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the Act. These are the Companyâs first Ind AS financial statements. The date of transition to the Ind AS is 1st April, 2016. Refer to note 48 for the details of first-time adoption exemptions availed by the Company.
Basis of Preparation and presentation: The financial statements have been prepared on the historical cost convention on accrual basis except for certain financial instruments which are measured at fair value at the end of each reporting period, as explained in the accounting policies mentioned below. Historical cost is generally based on the fair value of the consideration given in exchange of goods or services.
The principal accounting policies are set out below.
All assets and liabilities have been classified as current or noncurrent according to the Companyâs operating cycle and other criteria set out in the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current non-current classification of assets and liabilities.
The financial statements are presented in â and all values are rounded to the nearest lakhs upto two decimal places except otherwise stated.
Recent accounting pronouncements
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying amendments to Ind AS 12 âIncome Taxesâ, Ind AS 21, âThe effects of changes in foreign exchange rates and also introduced new revenue recognition standard Ind AS 115 âRevenue from contracts with customersâ. These amendments rules are applicable to the Company from April 1, 2018.
Ind AS 115 âRevenue from Contracts with Customersâ (Ind AS 115)
Ministry of Corporate Affairs (âMCAâ) has notified new standard for revenue recognition which overhauls the existing revenue recognition standards including Ind AS 18 - Revenue. The new standard provides a control-based revenue recognition model and provides a five step application principle to be followed for revenue recognition:
(i) Identification of the contracts with the customer
(ii) Identification of the performance obligations in the contract
(iii) Determination of the transaction price
(iv) Allocation of transaction price to the performance obligations in the contract (as identified in step ii)
(v) Recognition of revenue when performance obligation is satisfied.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8
- Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach) The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.
The management is yet to assess the impact of this new standard on the Companyâs financial statements.
Amendment to Ind AS 12
The amendment to Ind AS 12 requires the entities to consider restriction in tax laws in sources of taxable profit against which entity may make deductions on reversal of deductible temporary difference (may or may not have arisen from the same source) and also consider probable future taxable profit. The Company is evaluating the requirements of the amendment and its impact on the financial statements.
Amendment to Ind AS 21
The amendment to Ind AS 21 requires the entities to consider exchange rate on the date of initial recognition of advance consideration (asset/liability) for recognising related expense/income on the settlement of said asset/ liability. The Company is evaluating the requirements of the amendment and its impact on the financial statements.
a) The Company has availed the exemption available under Ind AS 101, whereas the carrying value of property, plant and equipment has been carried forwarded at the amount as determined under the previous GAAP as its deemed cost. The Company has disclosed the cost as at April 01, 2016 net of accumulated depreciation. However, information regarding gross carrying amount of assets, accumulated depreciation has been disclosed by the Company separately as follows :
b) The above assets includes Gross block of land of Rs. 159.54 lakhs (March 31, 2017: Rs. 159.54 lakhs, April 01, 2016: Rs. 159.54 lakhs) & Gross block of building of Rs. 234.35 (March 31, 2017: Rs. 234.35, April 01, 2016: Rs. 234.35) situated at Narshingpur, Tehsil District Gurgaon(Haryana) for which the company has executed a construction project agreement with DLF Retail Developers Limited on November 30, 2007. However, as certified by the Management, the work has not started during the financial year 2017-18 due to pending receipt of license from the concerned authority.
c) In the earlier years, the Company had initiated the process of converting its leasehold land (situated at Plot A-3, Naraina, New Delhi) into freehold land. However, the deed is yet to be transferred in the name of the Company as at March 31, 2018.
d) Borrowing cost of â Nil (March 31, 2017 : Rs. 67.68 Lakhs; April 01, 2016 : Nil) has been capitalised during the year.
Estimation of fair value
The fair valuation is based on current prices in the active market for similar properties. The main inputs used are quantum, area, location, demand, restrictive entry to the complex,age of building and trend of fair market rent.
This valuation is based on valuations performed by an accredited independent valuer. Fair valuation is based on replacement cost method. The fair value measurement is categorised in level 2 fair value hierarchy.
(c) The Company has availed the exemption available under Ind AS 101, whereas the carrying value of property, plant and equipment has been carried forwarded at the amount as determined under the previous GAAP as its deemed cost. The Company has disclosed the cost as at April 01, 2016 net of accumulated depreciation. However, information regarding gross carrying amount of assets, accumulated depreciation has been disclosed by the Company separately as follows :
a) The Company has availed the exemption available under Ind AS 101, whereas the carrying value of property, plant and equipment has been carried forwarded at the amount as determined under the previous GAAP as its deemed cost. The Company has disclosed the cost as at April 01, 2016 net of accumulated depreciation. However, information regarding gross carrying amount of assets, accumulated depreciation has been disclosed by the Company separately as follows :
a) Out of the total Fixed Deposits held in the name of the Company the fixed deposit with carrying value of Rs. 876.56 lakhs (March 31, 2017 â1,440.52 lakhs; April 1, 2016: Rs. 985.04 lakhs) are pledged as security with various banks.
B) TERMS/ RIGHTS ATTACHED TO EQUITY SHARES:
The Company has only one class of equity shares having a par value of â10 per share. Each holder of equity shares is entitled to one vote per share. 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 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. During the year ended March 31, 2018, the amount of per share dividend recognised for the financial year 2016-17 as distributions to equity shareholders was Rs. 3 per share (during the year ended March 31, 2017 amount recognised for financial year 2015-16: Rs. 0.5 per share). Final dividend of Rs. 2 per share for financial year 2017-18 has been proposed and is not recognised as liability in the financial statements for the year ended March 31, 2018.
Nature and purpose of reserves
a) General reserve
The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act, 1956.Mandatory transfer to general reserve is not required under the Companies Act, 2013.
b) Securities Premium
The amount received in excess of face value of the equity shares is recognised in securities premium.
c) Capital Redemption Reserve
This Reserve has been created at the time of merger of other companies in earlier years in accordance with the provisions of the Companies Act, 2013.
d) Amalgamation Reserve
This Reserve has been created at the time of merger of other companies in earlier years in accordance with the provisions of the Companies Act, 2013.
e) Re-measurement net defined benefit plans
Differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised in âOther comprehensive incomeâ and subsequently not reclassified to the Statement of Profit and Loss
f) Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
g) Out of the above, reserve on account of revaluation of assets of Rs. 395.30 lakhs (March 31, 2017 â393.84 lakhs ; April 01, 2016 Rs. 388.48 lakhs) is not avaliable for distribution.
a) The nature of security for secured loans are :
(i) Corporate Term Loan (Kotak Bank) is secured by charge on immovable property situated at Plot No. 446, Phase-V, Udyog Vihar Industrial Estate, Haryana along with present and future structures including all present and future development rights. The loan is also secured by personal guarantee of the Promoter Director.
(ii) Corporate Term Loan (Andhra Bank) is secured by first and exclusive charge on the entire fixed assets including machineries,land and building at Chennai and Bangalore Plant of the Company. In addition, Equitable Mortgage of Land & Building located at Survey No- 262A in Aryapakkam Village at Kancheepuram measuring 4.8053 acre in Companyâs name.
(iii) Corporate Term Loan (HDFC Bank) is secured by exclusive charge over movable fixed aseets of the Company, both present and future. The loan is also secured by personal guarantee of one of the Promoter Director of the Company and exclusive charge by way of equitable mortagage on industrial plot no.446, Udyog Vihar, Phase- V, Gurugram, Haryana.
(iv) Vehicle loans are secured against hypothecation of respective vehicles.
c) The term loan(s) carries rate of interest ranging between 9.75% to 12.00% per annum.
d) The nature of Security for short term borrowings are as under:
- First pari-passu charge on movable fixed assets and whole of current assets including stocks of raw material, semi finished goods, finished goods, book debts, consumable stores and spares.
- Mortgage of the properties situated at Plot No. H -597-603, RICCO Industrial Area, Bhiwadi, Distt. Alwar, Rajasthan and Plot No 16-17, Phase VI, Udyog Vihar,Gurgoan (Haryana).
- Fixed Deposit of Rs. 79.47 lakhs (March 31, 2017: Rs. 101.77 lakhs ; April 01 2016: Rs. 79.47)
- Personal Guarantee by the promoter director of the Company
Note:
(a) There are no amounts due for payment to the Investor Education and Protection Fund Under Section 125 of the Companies Act, 2013 as at the year end.
(b) The companyâs exposure to currency and liquidity risk related to trade payables is disclosed in note 44.
a) Trade payable are generally on a credit of not more than 90 days.
b) This amount includes amount due to related parties (refer note 47)
c) It does not include any amount due to transferred to Investor Education and Protection Fund.
d) As per Schedule III of the Companies Act, 2013 and notification number GSR 719 (E) dated November 16, 2007, the amount due to Micro & Small Enterprises as defined in Micro, Small and Medium Enterprises Development Act, 2006 is as under :
NOTE 3 : GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS_
a) Defined contribution plans
The Company makes contribution towards Employees Provident Fund and Employeeâs State Insurance scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The company during the year recognised the following amount in the Statement of Profit and Loss account under companyâs contribution to defined contribution plan.
b) Defined benefit plans
In accordance with Ind AS 19 âEmployee benefitsâ, an actuarial valuation on the basis of âProjected Unit Credit Methodâ was carried out, through which the Company is able to determine the present value of obligations. âProjected Unit Credit Methodâ recognizes each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to built up the final obligation.
i) Gratuity scheme
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age.
a) Gratuity in case of Gurgaon Division (Funded & maintained by Life Insurance Corporation of India)
b) Gratuity in case of Chennai & Banglore Division (Unfunded)
ii) Other long term employee benefits
As per the Companyâs policy, eligible leaves can be accumulated by the employees and carried forward to future periods to either be utilised during the service, or encashed. Encashment can be made during the service, on early retirement, on withdrawal of scheme, at resignation by employee and upon death of employee. The scale of benefits is determined based on the seniority and the respective employeeâs salary. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method.
Re-measurements, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest and if applicable), is reflected immediately in Other Comprehensive Income in the statement of profit and loss. All other expenses related to defined benefit plans are recognised in statement of profit and loss as employee benefit expenses. Re-measurements recognised in Other Comprehensive Income will not be reclassified to statement of profit and loss hence it is treated as part of retained earnings in the statement of changes in equity. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Curtailment gains and losses are accounted for as past service costs.
c) The following tables summarize the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for the defined benefit plan (viz. gratuity and compensated absences).Leave encashment include earned leaves and sick leaves. These have been provided on accrual basis, based on year end actuarial valuation.
d) The following tables summarise the components of net benefit expense recognised in the Statement of profit or loss and the funded status and amounts recognised in the balance sheet for the respective plans:
NOTE 4 : CAPITAL MANAGEMENT_
For the purpose of Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing borrowings, trade and other payables, less cash and cash equivalents.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.
In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
NOTE 5 : DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE_ Forward currency contracts
a) For the year ended March 31, 2018, the Company has outstanding mark to market forward contracts amount to Rs. 215.55 lakhs (March 31, 2017: Rs. 1,120.27 lakhs ; April 1, 2016 : Rs. 215.06 lakhs) relating to derivative financial instruments. These commitments with respect to foreign currrency forward contracts have been entered into by the Company to hedge against future 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 following table represents the aggregate contracted principal amount of Companyâs Derivative contracts outstanding:
Management has assessed that trade receivables, cash and cash equivalents, other bank balances, trade payables, Interest accrued on borrowings and current maturities of long term borrowings approximate their carrying amounts largely due to the short-term maturities of these instruments.
Long-term borrowing includes vehicle loan and corporate loans obtained from banks and Financial institutions. Management determines vehicle loan and corporate loan to be at the market rate of interest as at the reporting date, accordingly, the carrying value of such long-term borrowing approximates fair value.
c) Discount rate used in determining fair value
The interest rate used to discount estimated future cash flows, where applicable, are based on the incremental borrowing rate of borrower which in case of financial liabilities is average market cost of borrowings of the Company and in case of financial asset is the average market rate of similar credit rated instrument. The company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
i) Fair values of the Companyâs interest-bearing borrowings, loans and investment in preference shares in subsidiary are determined by using DCF method using discount rate that reflects the rate as at the end of the reporting period.
ii) Fair value for security deposits paid & received (other than perpetual security deposits) has been presented based on the discounting factor as at the reporting date.
iii) Fair value for all other non-current assets and liabilities is equivalent to the amortised cost, interest rate on them is equivalent to the market rate of interest.
iv) For other financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
v) Specific valuation techniques used to value financial instruments include:
- The fair values of investments In mutual fund units is based on The net asset value (âNAVâ) as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which The issuer will issue further units of mutual fund and The price at which issuers will redeem such units from the investors.
- Investment in quoted equity instruments of entities other than subsidiaries has been determined on the basis of quoted rates available from securities markets in India.
- The fair value of derivative financial instruments (forward exchange contract) has been determined on the basis of mark to market valuation.
NOTE 6 : FAIR HIERARCHY_
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that has a significant effect on the fair value measurement are observable, either directly or indirectly.
Level 3: Valuation techniques for which the lowest level input which has a significant effect on the fair value measurement is not based on observable market data.
The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities
* Management has assessed that trade receivables, cash and cash equivalents, other bank balances, trade payables, Interest accrued on borrowings and current maturities of long term borrowings approximate their carrying amounts largely due to the short-term maturities of these instruments.
There have been no transfers between Level 1 and Level 2 during the period.
Specific valuation techniques used to value financial instruments. (refer note 42 c(iv))
NOTE 7 : FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES_
The Companyâs principal financial liabilities comprises of trade and other payables, borrowings, current maturity of borrowings, interest accrued and capital creditors. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support its operations.
The Companyâs principal financial assets includes Investment in mutual funds, loans to related parties, security deposits, trade receivables, cash and cash equivalents, deposits with bank, interest accrued in deposits, receivables from related and other parties and interest accrued thereon.
The Company is exposed to credit risk, liquidity risk and market risk. The Companyâs senior level management oversees the management of these risks and is supported by Treasury department that advises on the appropriate financial risk governance framework.
A. Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk borrowings, short term deposits and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at March 31, 2018 and March 31, 2017.
i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long-term debt obligations with floating interest rates.
The Companyâs main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to interest rate risk. The Company manages its net exposure to interest rate risk related to borrowings, by balancing a proportion of fixed rate and floating rate borrowing in its total borrowing portfolio. To manage this portfolio mix, the Company may enter into currency rate swap arrangements and/ or interest rate swap arrangements, which allows the company to exchange periodic payments based on a notional amount and agreed upon fixed and floating interest rates.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the portion of borrowings affected. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings, as follows:
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.
ii) Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in exchange rates. Foreign currency risk senstivity is the impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities on unhedged exposures. The following tables demonstrate the sensitivity to a reasonably possible change in USD, EURO and GBP exchange rates, with all other variables held constant.
B. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
i) Trade receivables
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating. Outstanding customer receivables are regularly monitored.
The ageing analysis of trade receivables as of the reporting date is as follows:
An impairment analysis is performed at each reporting date on an individual basis for major clients. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 42. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
ii) Financial instruments and cash deposits
Credit risk from balances with banks, investment in mutual funds and loan to related parties is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Companyâs Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Companyâs finance committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
C. Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses.
The Companyâs objective is to, maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including loans from banks at an optimised cost.
NOTE 8 : SEGMENT INFORMATION_
a) The companyâs operating segments are established on the basis of those components of the group that are evaluated regularly by the Executive Committee (the âChief Operating Decision Makerâ as defined in Ind AS 108 - âOperating Segmentsâ), in deciding how to allocate resources and in assessing performance. The Company has presented segment information on geographical basis in the consolidated financial statements.
b) The Company revenue from sale of garments to external customer are as follows:
c) All non- current assets are located within India:
d) Revenue from major customer: During the year the Company generates 90% of its external revenues from eleven (11) customers.
vi) As per the order dated July 13, 2016 issued by Honâble Madras High Court, minimum wages shall be paid to the employees retrospectively from December 2014 to June 2016. However, the management is of the view that the wages have to be paid only to the employees working presently in the company and also no PF & ESI is required to be deducted . Accordingly, the minimum wages, ESI and PF of past employees of Rs. 288.51 lakhs, Rs. 8.06 lakhs and Rs. 69.25 lakhs respectively has not been recorded in books of account. Further, Company has also not accounted for the PF contribution of Rs. 65.33 lakhs and ESI contribution of Rs. 12.88 lakhs due on the wage arrears paid to the present employees during the year ended March 31, 2017
vii) Several Legal Cases of labour pending at labour Court, Civil Court and High Court.
viii) Corporate Guarantee given by the Company (as per Section 186(4) of the Companies Act 2013)
- To Standard Chartered Bank, Hongkong Branch for securing credit facilities to its wholly owned subsidiary Pearl Global (HK) Limited, Hong Kong for USD 12,000,000 equivalent to Rs. 7804.80 lakhs (March 31, 2017 USD 12000000 equivalent to Rs. 7,780.80 lakhs ; April 01, 2016 USD 12,000,000 equivalent to Rs. 7,959.60 lakhs)
- To Standard Chartered Bank, Bangladesh Branch for securing credit facilities to its subsidiary Norp Knit Industries Limited, Bangladesh for BDT 900,000,000 equivalent to INR 6,930.00 lakhs (March 31, 2017 : BDT 900,000,000 equivalent to Rs. 71,100.00 lakhs April 01 ,2016: BDT 775,000,000 equivalent to Rs. 6,432.50 lakhs)
Above Corporate Guarantees have been given for businesses purpose.
Notes
a-i) Pending resolution of the respective proceedings, it is difficult for the company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgement/decisions pending with various forums/authorities.
a- ii) 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. The company does not expect any reimbursements in respect of the above contingent liabilities.
VI) Terms and conditions of transactions with related parties
All the transaction with the related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free except the interest bearing loan and settlement occurs in cash.
NOTE 9 : FIRST TIME ADOPTION OF IND AS_
As stated in note 2 (a), the financial statements for the year ended 31 March 2018 would be the first annual financial statements prepared in accordance with Ind AS. For year up to and including the year ended March 31, 2017, the Company has prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013 and other relevant provisions of the Act (âprevious GAAPâ).
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ended 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at 1 April 2016, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2016 and the financial statements as at and for the year ended 31 March 2017.
Exemptions applied
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
a) Mandatory exceptions
i) Estimates
The estimates at April 01, 2016 and at March 31, 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies, if any).
ii) De-recognition of financial assets:
The company has applied the de-recognition requirements in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.
iii) Classification and measurement of financial assets: i. Financial Instruments:
Financial assets like security deposits received and security deposits paid, has been classified and measured at amortised cost on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Since, it is impracticable for the Company to apply retrospectively the effective interest method in Ind AS 109, the fair value of the financial asset or the financial liability at the date of transition to Ind AS by applying amortised cost method, has been considered as the new gross carrying amount of that financial asset or the financial liability at the date of transition to Ind AS.
iv) Impairment of financial assets: (Trade receivables and other financial assets)
At the date of transition to Ind AS, the Company has determined that there significant increase in credit risk since the initial recognition of a financial instrument would require undue cost or effort, the Company has recognised a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised (unless that financial instrument is low credit risk at a reporting date).
b) Optional exemptions
i. Deemed cost-Previous GAAP carrying amount: (PPE and Intangible) :
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP (Indian GAAP) and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities, if any. This exemption can also be used for Intangible Assets covered by Ind AS 38. Accordingly, the company has elected to measure all of its property, plant and equipment, capital work in progress and intangible assets at their previous GAAP carrying value.
ii. Leases :
Appendix C to Ind AS 17 requires the first-time adopter to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements for embedded leases based on conditions in place as at the date of transition.
iii. Investment in subsidiaries :
Ind AS 101 provide an option to measure investments in subsidiaries at cost in accordance with Ind AS 27 at either fair value on date of transition or Previous GAAP carrying values. The Company has elected to use the carrying amount as its deemed cost on the date of transition to Ind AS.
iv. Foreign currency translation
Under Indian GAAP, the Group recognised translation differences on foreign operations in a separate component of equity. Under Ind AS, Cumulative currency translation differences for all foreign operations are deemed to be zero as at 1st April 2016. The resulting adjustment was recognised against retained earnings as at transition date.
v. Business combination
Ind AS 101 allows a first-time adopter not to apply Ind AS 21 Effects of changes in Foreign Exchange Rates retrospectively for business combinations that occurred before the date of transition to Ind AS. In such cases, where the entity does not apply Ind AS 21 retrospectively to fair value adjustments and goodwill, the entity treats them as assets and liabilities of the acquirer entity and not as the acquiree.
f) Footnotes to the reconciliation of equity as at April 01, 2016 and March 31, 2017 and profit or loss for the year ended March 31, 2018:
i. Carrying value of investment in subsidiaries in equity shares
Under previous GAAP, investment in subsidiaries were non current investments, hence were carried at cost. Whereas under Ind AS, Company has elected the option of carrying value of Investment in subsidiaries on the date of transition to Ind AS and using the carrying value as its deemed cost.
ii. Fair value of investment in preference shares of subsidiary
Under previous GAAP, investment in redeemable preference shares were non current investments, hence were carried at cost, whereas under Ind AS, the same are initially discounted and subsequently recorded at amortized cost at the end of every financial reporting period. Detail of investment in preference shares are given as here under:
iii. Fair value of investment in equity shares of entity other than subsidiary
Under previous GAAP, investment in equity shares were non current investments, hence were carried at cost, whereas under Ind AS, such investments has been classified and measured as fair value through profit and loss at each reporting date:
iv. Property, plant and equipment
On the date of transition, Opening balance of Land includes Rs. 452.29 lakhs on account of revaluation done on 31.03.2002 and the opening balance of Building includes Rs. 59.32 lakhs on account of reduction in revaluation done on 31.03.2002. However during the financial year ended March 31,2017, in compliance with para 32 of revised Accounting Standard(Previous GAAP)-10 âProperty, Plant & Equipmentâ the Company adopted the option of cost model for recognition of fixed assets for entire class of property, plant and equipment and accordingly as per para 91 of the revised Accounting standard, the Company adjusted the existing revaluation reserve of Rs. 392.97 lakhs against the carrying amount of relevant items of property, plant and equipment. However with the applicability of Ind AS, Company has elected Ind AS 101 exemption and continue with the carrying value for all of its property, plant and equipment as its deemed cost as at the date of transition i.e. April 1, 2016.
v. Security deposit paid
Under Previous GAAP, the security deposits paid for lease rent are shown at the transaction value whereas under Ind AS, the same are initially discounted and subsequently recorded at amortized cost at the end of every financial reporting period. Accordingly, the difference between the transaction and discounted value of the security deposits paid is recognized as deferred asset and is amortized over the period of the lease term (along with current and noncurrent classification). Further, interest is accreted on the present value of the security deposits paid for lease rent (along with current and non- current classification).
vi. Security deposit received
Under Previous GAAP, the security deposits received for lease rent are shown at the transaction value whereas under Ind AS, the same are initially discounted and subsequently recorded at amortized cost at the end of every financial reporting period. Accordingly, the difference between the transaction and discounted value of the security deposits received is recognized as deferred liability and is amortized over the period of the lease term (along with current and non- current classification). Further, interest is accreted on the present value of the security deposits received for lease rent (along with current and non- current classification).
vii. Borrowings
As required under Ind AS 109 transactions cost incurred towards origination of borrowings have been deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit and loss over the tenure of the borrowing as interest expenses, computed using the effective interest rate method corresponding effect being in Long term borrowings and to the extent attributable to current maturity of long term debts.
Under the previous GAAP, these transaction costs were charged to statement of profit and loss as and when incurred. Consequently, borrowings as at transition date have been reduced with a corresponding adjustment to retained earnings.
viii. Proposed Dividend
Under Previous GAAP, proposed dividends and related dividend distribution tax was recognised as a provision in the year to which they relate, irrespective of when they are declared. Under Ind AS, dividends and related dividend distribution tax are recognised as a liability in the year in which it is approved by the shareholders in the Annual General Meeting of the Company.
ix. Excise Duty
Under Previous GAAP, excise duty was netted off against sale of goods. However, under Ind AS, excise duty is included in sale of goods and is separately presented as expense on the face of Statement of Profit and Loss. Thus, sale of goods under Ind AS has increased with a corresponding increase in expenses.
x. Lease equalisation payable
Under Previous GAAP, operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term. Whereas under Ind AS, lease equalisation reserve is derecognised as operating lease payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost.
xi. Lease Equalisation Receivable
Under Previous GAAP, operating lease payments are recognized as an income in the statement of profit and loss on a straight-line basis over the lease term. Whereas under Ind AS, lease equalisation reserve is derecognised as operating lease payments from the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost.
xii. Prior period expenses
Under previous GAAP, Company has recognised expenses pertaining to period prior to transition date in the financial year 2016-17. This has been shown as a prior period expenses. However, Ind AS requires the Company to correct the prior period errors retrospectively by restating the comparative amounts for the prior period presented in the which the error occurred. Further, where the amount of prior period pertains to the period before the earliest prior period presented, opening balances of the earliest period presented are to be restated.
xiii. Fair valuation of mutual fund
Under previous GAAP, investment made in mutual funds shown as current investments are valued at fair value and corresponding Investment Revaluation Reserve was created, whereas under Ind AS, such investments has been classified and measured as fair value through profit and loss at each reporting date.
xiv. Employee benefits
Both under Previous GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Previous GAAP, the entire cost, including actuarial gains and losses, are charged to statement of Profit and Loss. Under Ind AS, re-measurements (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognised immediately in the books with a corresponding debit or credit to retained earnings through OCI.
xv. Income on corporate guarantee
Under previous GAAP, income on corporate guarantee was not recoginised in the statement of Profit and Loss whereas under Ind AS income on corporate guarantee measured at fair value issued to subsidiaries has been recoginised in the statement ofProfit and Loss.
xvi. Deferred tax
Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the Balance Sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the Balance Sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences relating to various transition adjustments which are recognised in correlation to the underlying transaction either in retained earnings as a separate component in equity.
xvii. Other comprehensive income
Items of income and expense that are not recognised in profit and loss but are shown in âother comprehensive incomeâ includes re-measurements gain/(loss) of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP. As a consequence, re-measurement gain/(loss) of defined benefit plans has been regrouped from employee benefit expense to other comprehensive income.
NOTE 10 : IMPACT OF IMPLEMENTATION OF GOODS AND SERVICES TAX (GST) ON THE FINANCIAL STATEMENTS_
Consequent to the introduction of goods and services Tax (GST) with effect from 1 July 2017, VAT/Sales Tax, Excise Duty etc. have been subsumed into GST and accordingly the GST is not recognised as part of revenue from operations and excise duty as a seperate expense line item as per the requirements of Ind AS. This has resulted in lower reported revenue from operations in the current year in comparison to the revenue from operations reported under the pre-GST structure of indirect taxes. Accordingly, the Revenue from operations for the year ended March 31, 2018 are not comparable with year ended March 31, 2017 presented in the financial results which are reported inclusive of Excise Duty. The following additional information is being provided to facilitate such understanding:
NOTE 11 :
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 regularly updates 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 armâs 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 for the year ended March 31, 2018.
NOTE 12:
No material events have occurred between the balance sheet date to the date of issue of these financial statements that could affect the values stated in the financial statements.
NOTE 13:
The company has reclassified previous year figures to conform to Ind AS Classification.
NOTE 14:
The balances of trade receivables, trade payables, financial assets and other assets given are subject to reconciliation and confirmation as on March 31, 2018 and have realisation in ordinary course of business atleast equal to amount at which they are stated in the financial statements.
NOTE 15:
Figures have been rounded off to the nearest lakhs upto two decimal places except otherwise stated.
Mar 31, 2016
b) In the earlier years, the company had initiated the process of converting its leasehold land (situated at Plot A-3, Naraina, New Delhi) into freehold land. However, the deed is yet to be transferred in the name of the Company as at March 31, 2016.
c) The Opening balance of land includes Rs.45,229,131 on account of revaluation done on 31.03.2002.
d) The Opening balance of building includes Rs.5,932,276 on account of reduction in revaluation done on 31.03.2002.
e) The Cost of CWIP-Building Include Rs.993,055 (March 31, 2015 : Nil) being borrowing cost capitalized in accordance with Accounting Standard 16 (AS-16) on âBorrowing Costâ
f) The above assets includes Gross Block of Land of Rs.15,954,319 (March 31, 2015 : Rs.15,954,319) & Gross Block of Building of Rs.23,434,599 (March 31, 2015 : Rs.23,434,599) situated at Narshingpur, Tehsil District Gurgaon (Haryana) for which the Company has executed a construction project agreement with DLF Retail Developers Limited on November 30th 2007. However, as certified by the Management, the work has not started during the financial year 2015-16 due to pending receipt of license from the concerned authority.
NOTE 1: CONTINGENT LIABILITIES AND COMMITMENTS i) Corporate Guarantee given by the Company (as per Section 186(4) of the Companies Act 2013)
- To Canara Bank, Hong Kong Branch, for securing various credit facilities to its subsidiary Norwest Industries Limited for Nil (March 31,2015: USD 15,000,000 equivalent to INR 938,850,000)
- To ICICI Bank Limited, Hong Kong Branch, for securing the derivative limits to its step down subsidiary Norwest Industries Limited for Nil (March 31, 2015: USD 3,000,000 equivalent to INR 187,770,000)
- To Standard Chartered Bank, Hongkong Branch for securing credit facilities to its wholly owned subsidiary Pearl Global (HK) Limited, Hong Kong for USD 12,000,000 equivalent to INR 795,960,000 (March 31,2015 USD 12,000,000 equivalent to INR 751,080,000)
- To Standard Chartered Bank, Bangladesh Branch for securing credit facilities to its subsidiary Norp Knit Industries Limited, Bangladesh for BDT 775,000,000 equivalent to INR 643,250,000 (March 31,2015: BDT 560,000,000 equivalent to INR 442,400,000)
- Counter guarantee 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 Limited, Bangladesh for Nil (March 31,2015:USD 400,000 equivalent to INR 25,036,000)
ii) Export Bills Discounted with banks Rs.452,059,126 (March 31, 2015: Rs.442,187,091)
iii) Irrevocable letter of credit (net of margin) outstanding with banks Rs.620,416,450 (March 31, 2015: Rs.917,280,249)
iv) Bank Guarantee given to government authorities Rs.42,738,000 (March 31, 2015: Rs.60,355,500)
v) Counter Guarantees given by the Company to the Sales Tax Department for the enterprise over which Key Managerial
Personnel have Significant influence amounting to Rs.100,000 (March 31, 2015: Rs.100,000), for others Rs.50,000 (March 31, 2015: Rs.50,000).
vi) Claims against the Company not acknowledged as debts corresponding to:
- Case pending before ITAT (with respect to tax demand for A.Y. 2009-10) for which the Company has filed appeal amounting to Rs.7,347,870 (March 31, 2015: Nil)
- Tax Demand as per Sec 143(1) of Income Tax act , 1961 (with respect to Assessment Year 2014-15) amounting to Rs.2,786,040. (March 31, 2015: Nil)
- Several Legal Cases of labour pending at Labour Court, Civil Court and High Court.
NOTE 2:
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 March 31, 2016.
NOTE 3:
âThere is no reportable segment of the company in view of the Accounting Standard -17 âSegment Reportingâ as issued under the Companies (Accounts) Rules,2014.â
NOTE 4:
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 regularly updates 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 armâs 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 for the year ended March 31, 2016.
NOTE 5:
The balances of trade receivables and trade payables are subject to reconciliation and confirmation as on March 31, 2016. NOTE 37:
Previous year figures have been regrouped & reclassified wherever considered necessary.
NOTE 6:
Figures have been rounded off to the nearest rupee.
Mar 31, 2015
NOTE 1: CONTINGENT LIABILITIES AND COMMITMENTS
i) Corporate Guarantee Given By The Company (as per Section 186(4) of
the Companies Act 2013)
- To HSBC Limited, Indonesia for securing credit facilities to its step
down subsidiary PT Pinnacle Industry, Indonesia for Nil (March 31,
2014: USD 2,500,000 equivalent to Rs. 150,250,000)
- To Standard Chartered Bank, Hong Kong for securing credit facilities
to its step down subsidiary Norwest Industries Limited for Nil (March
31, 2014: :USD 21,052,840 equivalent to Rs. 1,265,275,684)
- To BNP Paribas, Hong Kong for letter of credit facility to its step
down subsidiary Norwest Industries Limited for Nil (March 31,2014: USD
10,000,000 equivalent to Rs. 601,000,000)
- To Canara Bank, Hong Kong Branch, for securing various credit
facilities to its subsidiary Norwest Industries Limited for USD
15,000,000 equivalent to Rs. 938,850,000 (March 31,2014: USD 15,000,000
equivalent to Rs. 901,500,000)
- To ICICI Bank Limited, Hong Kong Branch, for securing the derivative
limits to its step down subsidiary Norwest Industries Limited for USD
3,000,000 equivalent to Rs.187,770,000 (March 31, 2014: USD 3,000,000
equivalent to Rs.180,300,000)
- To ICICI Bank Limited, Hong Kong Branch, for securing the credit
limits to its step down subsidiary Norwest Industries Limited and Nor
Lanka Manufacturing Limited for Nil (March 31,2014: USD 15,000,000
equivalent to Rs.901,500,000).
- To Punjab National Bank, Hong Kong Branch, for securing the credit
limits to its step down subsidiary Norwest Industries Lim- ited Nil
(March 31,2014: USD 30,000,000 equivalent to Rs. 1,803,000,000).
- To Standard Chartered Bank, Hongkong Branch for securing credit
facilities to its wholly owned subsidiary Pearl Global (HK) Limited,
Hong Kong for USD 12,000,000 equivalent to Rs. 751,080,000 ( March
31,2014: USD 8,200,000 equivalent to Rs.492,820,000)
- To Standard Chartered Bank, Bangladesh Branch for securing credit
facilities to its subsidiary Norp Knit Industries Limited, Bangladesh
for BDT 560,000,000 equivalent to Rs. 442,400,000 (March 31,2014: BDT
560,000,000 equivalent to Rs. 425,600,000)
- HSBC Bank Plc. UK for securing credit facilities to its subsidiary
Poeticgem Limited, UK NIl (March 31,2014: GBP 12,050,000 equivalent to
Rs.1,203,192,500)
- HSBC Invoice Finance (UK) Limited UK for securing credit facilities
to its subsidiary Poeticgem Limited, UK Nil (March 31, 2014: GBP
5,000,000 equivalent to Rs. 499,250,000)
- Counter guarantee 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 Limited,
Bangladesh for USD 400,000 equivalent to Rs. 25,036,000 (March 31, 2014:
USD 400,000 equivalent to Rs. 24,040,000)
- To Intesa Sanpaolo S.P.A. Hongkong Branch for securing credit
facilities to its step down subsidiary Norlanka Manufacturing Company
Limited for USD Nil Equivalent to Nil (March 31, 2014: USD 10.00
Million equivalent to Rs.601,000,000)
- To Intesa Sanpaolo S.P.A. Hongkong Branch for securing credit
facilities to its step down subsidiary Norwest Industries Limited with
sublimit to Simple Approach Limited, Zamira Fashion Limited and /or
spring near East Manufacturing Limited for USD Nil equivalent to Nil
(March 31, 2014: USD 22.00 Million equivalent to Rs.1,322,200,000)
ii) Export Bills Discounted with banks Rs.442,187,091 (March 31,2014: Rs.
359,780,763)
iii) Irrevocable letter of credit outstanding with banks Rs. 917,280,249
(March 31,2014: Rs.919,723,355)
iv) Bank Guarantee given to government authorities Rs.60,355,500 (March
31,2014: Rs.86,081,000)
v) Counter Guarantees given by the company to the Sales Tax Department
for its associate company Rs.100,000 (March 31, 2014: Rs.100,000), for
others Rs.50,000 (March 31, 2014:Rs.50,000)
vi) Contingenet Liability: Claims against the Company not acknowledged
as debts:
Case pending before ITAT (with respect to tax demand for AY 2009-10)
for which the Company has fled appeal amounting to Rs.7,347,870.
NOTE 2:
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, 2015.
NOTE 3:
There is no reportable segment of the company in view of the Accounting
Standard -17 'Segment Reporting' as issued under the Companies
(Accounts) Rules,2014.
NOTE 4:
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 regularly updates 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 for the year ended March 31, 2015.
NOTE 5:
The balances of trade receivables and trade payables are subject to
reconciliation and confirmation as on March 31, 2015.
NOTE 6:
Previous year figures have been regrouped & reclassified where ever
considered necessary.
NOTE 7:
Figures have been rounded off to the nearest rupee.
Mar 31, 2014
1.1 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.
Note 3: Employee Benefit Expense
(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 4: 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.
ii) In effect of scheme above, the financial results of the Company for
the current & previous year does not includes the transactions of
''Demergerd Undertaking'' as under:
As a result of above, the figures for the current year are not
comparable with those of the previous year ended March 31,2013.
Note 5: 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:
(iii)In pursuance with Para 23 of AS-19, "Leases" issued by Companies
(Accounting Standard) Rules 2006, lease rent under operating leases is
recognized under statement of profit and loss on straight line basis
over the lease term. Accordingly Lease Equalisation Asset of Rs.
6,727,863 as on March 31, 2014 has been created.
b) Asset Taken on Lease
(i) Minimum Lease Payments Payables
The company has taken certain assets on non-cancelable operating lease
and lease rent charged to Statement of Profit & Loss amounts to Rs.
63,279,892 (March 31, 2013: Rs. 54,505,272). The details of future
minimum lease payments is as under:
(ii) In pursuance with Para 23 of AS-19, "Leases" issued by Companies
Accounting Standard rules 2006, lease rent under operating leases is
recognized under statement of profit and loss on a straight line basis
over the lease term. Accordingly Lease Equalisation Liability account
of Rs. 5,432,810 has on March 31,2014 has been created
Note 6: 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:
Forward Currency Contracts
a) As at the balance sheet date, the total amounts (notional) of
outstanding forward foreign exchange contracts that the company has
committed are as under:
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 reporting date.
Note 7: 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 8: 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 9: 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 10: Previous year figures have been regrouped & reclassified
whereever necessary.
Note 11: Figures have been rounded off to the nearest rupee.
Mar 31, 2013
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 in
India on Bombay Stock Exchange and National Stock Exchange.
Note 2
2.1 Basis of Preparation
The financial statements of the Company have been prepared in
compliance with Accounting Standards issued by the Companies
(Accounting Standards) Rules,2006, the relevant provisions of the
Companies Act, 1956 and other applicable statutes under the historical
cost convention and on an accrual basis of accounting in accordance
with Generally Accepted Accounting Principles (GAAP) except investment
available for sale and held for trading is measured at fair value and
land and building which is measured at revalued cost.
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.
Note 3: 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, 2013.
Note 4: 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 5: Amount rounded off to the nearest rupee.
Note 6: The process of obtaining balance confirmation from trade
payables & trade receivables is an ongoing process and as at March
31st, 2013, the Company is in process of receiving the confirmation
from the parties.
Note 7: Previous year figures have been regrouped & reclassified
whereever considered necessary.
Mar 31, 2012
1. Corporate Information
Pearl Global Industries Limited (Formerly House of Pearl Fashion
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.
2.1 Basis of Preparation
i) The financial statements of the Company have been prepared in
compliance with Accounting Standards issued by the Companies
(Accounting Standards) Rules,2006, the relevant provisions of the
Companies Act, 1956 and guideline issued by the Security Exchange Board
of India under the historical cost convention and on an accrual basis
of accounting in accordance with Generally Accepted Accounting
Principles (GAAP) except investment available for sale and held for
trading is measured at fair value and land and building which is
measured at revalued cost. However the financial statements of foreign
subsidiaries have been prepared in compliance with the local laws and
applicable accounting standards. Necessary adjustments for material
variances in the accounting policies, wherever applicable, have been
made in the consolidated financial statements.
ii) The accounting policies adopted for preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained para 2.3 (a) below.
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 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.
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) Vehicle loans are secured against hypothecation of respective
vehicles.
b) 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, NewDelhi owned and guaranteed by the promoter directors
of the company repayable Rs. 909,600 p.m.byjanuary2016.
c) Rupee term loan from UCO Bank is secured by exclusive first charge
on the movable/ immovable assets purchased from proceeds of term loan
(including exclusive charge on the superstructure built on land at
D-6/III, Phase II, MEPZ, Chennai and first charge on immovable property
situated at 446, Phase V, Udyog Vihar, Gurgaon, guaranteed by a
promotor director and repayable quarterly Rs. 3,025,000 byjanuary 2013.
d) Rupee term loan from Punjab National Bank is secured by exclusive
charge on the movable/ immovable assets purchased from proceeds of term
loan (including exclusive charge on the land & building located at Plot
No.51, Sector 32, Gurgaon guaranteed by promotor director and repayable
Rs. 5,000,000 quarterly by November 2015.
e) Rupee term loan & corporate loan from Yes Bank Ltd. are secured by
first charge on movable assets of the company and exclusive charge on
immovable property located at Plot No. 10; sector - 5, Growth center,
Bawal and at Plot No. 751; sector 37 - II, Pace City Gurgaon. During
the year, the company has fully repaid all such loans with Yes Bank.
Working Capital Loans including bill discounting under consortium of
Banks which are secured by first pari-passu charge on present and
future movable fixed assets comprising vehicle, furniture and fixtures,
disposable fixed assets, stocks of raw material, stocks in process,
stores & spares, bill receivable & book debts, guaranteed by a promotor
director of the company and mortgage of the properties situated at Plot
No.H-597-603, RICCO Industrial Area, Bhiwadi, Alwarand Plot No.16-17,
Phase-VI, Udyog Vihar, Gurgaon.
* Pursuant to amendments to schedule VI to Companies Act, 1956 vide
notification number GSR 719 (E) dated November 16,2007, there is no
amount due as of March 31,2012 due to Micro, small & medium enterprises
as defined in Industries (Development and Regulation) Act, 1951.
** It does not include any amount due to be transferred to Investor
Education and Protection Fund.
*** Others include Statutory Dues
1. CWIP includes pre-operative expenses of Rs. 4,185,753
(Previousyear: 3,874,753 )
2. During last year, the company had initiated the process of
converting its leasehold land into freehold land.
3. Opening balance of land includes Rs.45,229,131 on account of
revaluation on 31.03.2002 .
4. Opening balance of building includes Rs.5,932,276 on account of
reduction in revaluation on 31.03.2002 .
5. Capital work in progress include Rs. Nil (March 31, 2011 10,104,849
) being borrowing cost capitalised in accordance with Accounting
Standard AS-16 on "Borrowing Cost" as specified in the Companies
Accounting Standard Rules 2006.
6. The above includes the amount of Land of Rs, 15,954,319 & Building
of Rs. 14,890,483 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 30th
November,2007. However, as certified by the management.theworkhas
notstrarted duringthe financial year 2011-12.
Employee Benefits
The Company has classified the various benefits provided to employees
as under:-
(I) Defined Contribution Plan
The company makes contribution towards provident fund to a defined
contribution retirement benefit plan for qualifying employees. The
provident fund plan is operated by the Regional Provident Fund
Commissioner and the company is required to contribute a specified
percentage of payroll cost to the retirement benefit schemes to fund
the benefits.
The company recognized Rs. 20,239,167.44 (Previous Year: Rs. 1,041,262)
for provident fund contributions in the profit and loss account. The
contributions payable to these plans by the company are at rates
specified in the rules of the schemes.
(II) Defined Benefit Plan
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
obligations. The obligation for leave encashment is recognized in the
same manner as gratuity.
Note 3: Contingent Liabilities and Commitments
a) Contingent Liabilities
1 Corporate Guarantee given by the company to UCO Bank, Hong Kong tor
securing trade finance limits to its step down subsidiary Norwest
Industries Ltd, Hong Kong for HKD 300 million equivalent to Rs.
2,004,000,000/-& GBP 40 Million equivalent to Rs. 3,272,000,000/-(
Previous Year: HKD 280 million equivalent to Rs.1,626,800,000 & GBP 30
Million equivalent to Rs.2,157,900,000).
2 Corporate Guarantee given by the company to HSBC Limited, Indonesia
for securing credit facilities to its step down subsidiary PT Norwest
Industry, Indonesia for USD 2,500,000/- equivalent to Rs. 127,900,000/-
(PreviousYear: USD 2,500,000/- equivalent toRs. 111,625,000 ).
3 Corporate Guarantee given by the company to THE CIT GROUP /
COMMERCIAL SERVICES INC, New York for working capital and letter of
credit facilities to its wholly owned subsidiary M/s House of Pearl
Fashions (US) Ltd for USD 400,000 equivalent to Rs. 20,464,000/-
(PreviousYear: USD 400,000 equivalent to Rs. 17,860,000).
4 Corporate Guarantee given by the company to HSBC, Hong Kong for HKD
330 Million, equivalent to Rs 2,204,400,000/- for securing credit
facilities to its step down subsidiaries Norwest Industries Ltd.,
Simple Approach Ltd. and Zamira Fashion Ltd (PreviousYear:- HKD 300
Million, equivalent to Rs. 1,743,000,000 ).
5 Corporate Guarantee given by the company to Standard Chartered Bank,
Hong Kong for USD 25,800,000 equivalent to Rs. 1,319,928,000/- for
securing credit facilities to its step down subsidiary Norwest
Industries Ltd(Previous Year: USD 16,928,000 equivalent to Rs.
755,835,200).
6 Corporate guarantee given by the company to HSBC, Bangladesh for BDT
1.673.367.000 equivalent to Rs. 1,037,487,540/- for securing various
credit facilities to its subsidiary Norp Knit Industries Ltd (Previous
Year: BDT 889,760,000 equivalent to Rs. 542,753,600).
7 Corporate Guarantee given by the company to THE CIT GROUP /
COMMERCIAL SERVICES INC, New York for credit facilities to its
subsidiary Depa International Inc. merged with House of Pearl Fashions
(US) Ltd, a wholly owned subsidiary for USD 1.000.000 equivalent to Rs.
51,160,000/- (Previous Year: 1,000,000 equivalent to Rs.44,650,000).
8 Corporate Guarantee given by the company to BNP Paribas, Hong Kong
for letter of credit facility to its step down subsidiary Norwest
Industries Ltd. for USD 8,500,000 equivalent to Rs. 43,486,000/-
(Previous Year: USD 6,250,000 equivalent to Rs.279,062,500).
9 Corporate Guarantee given by the company 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.
767,400,000/-. (PreviousYear: USD 3,000,000 equivalent to Rs.
133,950,000).
10 Corporate Guarantee given by the company to Bank of Baroda,
Hongkong, for securing credit facilities to its step down subsidiary
Simple Approach Ltd. for Nil (PreviousYear: USD 4,000,000 equivalent to
Rs.178,600,000 ). - EXPIRED ON 21.07.2011.
11 Corporate Guarantee given by the company to Bank of Baroda,
Hongkong, for securing credit facilities to its step down subsidiary
Norwest Industries Ltd. for USD 15.000.000 equivalent to Rs.
767,400,000/-(Previous Year: USD 5,000,000 equivalent to
Rs.223,250,000).
12 Corporate Guarantee given by the company to Bank of India, Hongkong
Branch for securing credit facilities to its step down subsidiary
Simple Approach Ltd. for USD 2.500.000 equivalent to
Rs.127,900,000/-(PreviousYear: USD 2,500,000 equivalent to
Rs.111,625,000).
13 Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A,
Hongkong Branch for securing credit facilities to its step down
subsidiary Norwest Industries Ltd. for Nil (Previous year USD
18,000,000 equivalent to Rs.803,700,000 ) -Cancelled during the year.
14 Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A,
Hongkong Branch for securing credit facilities to its step down
subsidiary Simple Approach Ltd. for Nil (PreviousYear: USD 3,000,000
equivalent to Rs.133,950,000).-Cancelled during the year.
15 Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A,
Hongkong Branch for securing credit facilities to its step down
subsidiary Zamira Fashion Ltd. for Nil. (PreviousYear: USD 3,000,000
equivalent to Rs.133,950,000 (.-Cancelled during the year.
16 Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A,
Hongkong, Branch for securing credit facilities to its step down
subsidiary Nor Lanka Manufacturing Ltd. for USD 6,000,000 equivalent to
Rs. 306,960,000/- (PreviousYear: USD 6,000,000 equivalent to
Rs.267,900,000).
17 Corporate Guarantee given by the company 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.
153,480,000 (PreviousYear: NIL).
18 Corporate Guarantee given by the company 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. 767,400,000/- (PreviousYear: NIL).
19 Corporate Guarantee given by the company to Punjab National Bank,
Hong Kong Branch, for securing the credit limits to its step down
subsidiary Norwest Industries Ltd. forUSD 30,000,000 equivalent to Rs.
1,534,800,000/-. (PreviousYear: NIL).
20 Corporate Guarantee given by the company 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 USD 18,000,000 equivalent to
Rs.920,880,000(Previous Year: Nil).
21 Claims against the Company not acknowledged as debts and other
matters Rs. 1,061,474/-(PreviousYear: Rs. NIL).
22 Export Bills Discounted with banks Rs. 380,521,957/- (PreviousYear
Rs. NIL/-).
23 Irrevocable letter of credit outstanding with banks Rs. 851,898,710
(Previous Year NIL).
24 Bank Guarantee given to government authorities Rs. 55,002,000
(Previous Year Rs. NIL).
25 Counter Guarantees given by the company to the Sales Tax Department
for its associates company Rs.100,000/-(PreviousYear:NIL), for others
Rs.50,000/-( Previous Year:Rs.NIL).
b) Commitments
1 Estimated amount of contracts remaining to be executed on capital
account (net of advances); Rs. 2,554,365 (March 31,2011: Rs. Nil).
Note 4 Scheme of Arrangement
During the current year, consequent upon sanction of Scheme of
Amalgamation of Pearl Global Limited ('Transferor Company') with the
Company ('Transferee Company'), as approved by the Hon'ble High Court
of Delhi vide its Order dated 11th November, 2011 u/s 394 of the
Companies Act, 1956 and necessary filing of said Order with the
Registrar of Companies, NCT of Delhi & Haryana on 19th January, 2012
being the 'Effective Date' when the scheme has become effective, the
Transferor Company has been merged with the company and the financial
statements of the merged company have been prepared in accordance with
the relevant clauses of the said scheme as under:-
a) Upon the Scheme became effective, the entire business of Transferor
Company including all property, assets and liabilities stand
transferred to and vested in the Company with effect from 1st April
2010 being the "Appointed Date.
b) The amalgamation 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, the
assets, liabilities and reserves of transferor companies as at close of
business on 31st March 2010 have been recorded in the company at the
same values. There is no difference in Accounting Policies between
transferor Company and the company; hence no material adjustments have
been made.
c) The scheme inter alia provided for issuance of two fully paid up
equity shares of face value of Rs. 10 each of Transferee Company to the
share holders of Transferor Company for every three equity shares of
face value of Rs. 10 each held in Transferor Company.
d) All inter-company balances between the Transferor Company and the
company have been eliminated without any further obligations or rights
in this behalf.
e. In view of the aforesaid amalgamation became effective during the
current year, the previous year's figures of the company represent
those of prior to the merger of Transferor Company. Therefore, the
figures for the current year are not comparable with those of the
previous year.
Note 6: 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:
Forward Currency Contracts - Cash Flow Hedges
a) As at the balance sheet date, the total notional amounts of
outstanding forward foreign exchange contracts that the company has
committed to are as below:
These commitments have been entered into to hedge against future
payments to suppliers and receipts from customers in the ordinary
course of business that will fall due in the period ending 31 March
2014.
b) The terms of the forward currency contracts has been negotiated to
match the terms & commitments. The Cash Flow Hedges of the expected
future sales in April 2012 to March 2014 value assessed at a loss of
Rs. 150,831,448 (P.Y. Rs NIL) as on reporting date and this has been
included in the hedging reserve.
These arrangements are designed to address significant exchange
exposures and are renewed on a revolving basis as required.
'Extended a working capital loans of Rs. 18,998,125/- on a rolling
basis to its subsidiary House of Pearl Fashions (US) Ltd. as an interim
use of funds.
'Extended a temporary loan of Rs. 65,651,922/- for working capital to
its subsidiary Pearl Global Limited as an interim use of funds.
'Extended a temporary loan of Rs. 17,565,300/- for working capital to
its subsidiary Pearl Global (HK) Limited as an interim use of funds.
'Extended a temporary loan of Rs. 83,170,000/- for working capital to
its subsidiary Norp Knit Industries Ltd as an interim use of funds.
Note 7: 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, 2012.
Note 8: 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 9: The name of the company has been changed to Pearl Global
Industries Limited pursuant to a 'Fresh Certificate of Incorporation'
dated 20th March 2012 issued by the Registrar of Companies, NCT of
Delhi and Haryana.
Mar 31, 2011
1. Contingent Liabilities
(a) 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 HKD 280 million equivalent to
Rs.1,626,800,000 & GBP 30 Million equivalent to Rs.2,157,900,000
(Previous Year: HK$ 200 million equivalent to Rs.1,160,000,000 & GBP 19
Million equivalent to Rs.1,289,530,000).
(b) Corporate Guarantee given by the company to HSBC Limited, Indonesia
for securing credit facilities to its step down subsidiary PT Norwest
Industry, Indonesia for USD 2,500,000/- equivalent to Rs.111,625,000
(Previous Year: USD 2,500,000/- equivalent to Rs.112,575,000).
(c) Corporate Guarantee given by the company to THE CIT GROUP /
COMMERCIAL SERVICES INC, New York for working capital and letter of
credit facilities to its wholly owned subsidiary M/s House of Pearl
Fashions (US) Ltd for USD 400,000 equivalent to Rs.17,860,000 (Previous
Year: USD 400,000 equivalent to Rs.18,012,000).
(d) Corporate Guarantee given by the company to HSBC for HKD 300
Million, equivalent to Rs.1,743,000,000 for securing credit facilities
to its step down subsidiaries Norwest Industries Ltd., Simple Approach
Ltd. and Zamira Fashion Ltd(Previous Year:- HKD 300 Million, equivalent
to Rs.1,740,000,000 ).
(e) Corporate Guarantee given by the company to Standard Chartered
Bank, Hong Kong for USD 16,928,000 equivalent to Rs.755,835,200 for
securing credit facilities to its step down subsidiary Norwest
Industries Ltd(Previous Year :USD 16,928,000 equivalent to
Rs.762,267,840).
(f) Corporate guarantee given by the company to HSBC, Bangladesh for
BDT 889,760,000 equivalent to Rs.542,753,600 for securing various
credit facilities to its subsidiary Norp Knit Industries Ltd (Previous
Year: BDT 293,700,000 equivalent to Rs.193,842,000).
(g) Corporate Guarantee given by the company to THE CIT GROUP /
COMMERCIAL SERVICES INC, New York for credit facilities to its
subsidiary Depa International Inc. merged with House of Pearl Fashions
(US) Ltd, a wholly owned subsidiary for USD 1,000,000 equivalent to
Rs.44,650,000 (Previous Year: USD 6,000,000 equivalent to
Rs. 270,180,000).
(h) Corporate Guarantee given by the company to BNP Paribas, for letter
of credit facility to its subsidiary Norwest Industries Ltd. for USD
6,250,000 equivalent to Rs.279,062,500 (Previous Year: USD 4,750,000
equivalent to Rs.213,892,500).
(i) Corporate Guarantee given by the company to Canara Bank, HK Branch,
for securing various credit facilities to its subsidiary Norwest
Industries Ltd. for USD 3,000,000 equivalent to Rs.133,950,000
(Previous Year: USD 3,000,000 equivalent to Rs.135,090,000).
(j) Corporate Guarantee given by the company to Bank of Baroda,
Hongkong, for securing credit facilities to its step down subsidiary
Simple Approach Ltd. for USD 4,000,000 equivalent to Rs.178,600,000
(Previous Year: Nil ).
(k) Corporate Guarantee given by the company to Bank of Baroda,
Hongkong, for securing credit facilities to its step down subsidiary
Norwest Industries Ltd. for USD 5,000,000 equivalent to Rs.223,250,000
(Previous Year: Nil ).
(l) Corporate Guarantee given by the company to Bank of India,
Hongkong, for securing credit facilities to its step down subsidiary
Simple Approach Ltd. for USD 2,500,000 equivalent to Rs.111,625,000
(Previous Year: Nil).
(m) Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A,
Hongkong, Branch for securing credit facilities to its step down
subsidiary Norwest Industries Ltd. for USD 18,000,000 equivalent to
Rs.803,700,000 (Previous Year: Nil)
(n) Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A,
Hongkong, Branch for securing credit facilities to its step down
subsidiary Simple Approach Ltd. for USD 3,000,000 equivalent to
Rs.133,950,000 (Previous Year: Nil ).
(o) Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A,
Hongkong, Branch for securing credit facilities to its step down
subsidiary Zamira Fashion Ltd. for USD 3,000,000 equivalent to
Rs.133,950,000 (Previous Year: Nil).
(p) Corporate Guarantee given by the company to Intesa Sanpaolo S.p.A,
Hongkong, Branch for securing credit facilities to its step down
subsidiary Nor Lanka Manufactruing Ltd. for USD 6,000,000 equivalent to
Rs.267,900,000 (Previous Year: Nil).
(q) Corporate Guarantee given by the company to ICICI Bank Limited, New
Delhi for Rs.100,000,000/- for derivative limits to its subsidiary
Pearl Global Limited (Previous Year: Rs.100,000,000/-).
(r) Corporate guarantee given by the company to HSBC for
Rs.200,000,000/- for Import documentary credits and import deferred
payment credits to its subsidiary Pearl Global Limited. (Previous Year:
Rs.200,000,000/-).
(s) Corporate Guarantee given by the company to Development Credit Bank
for USD 10,000,000/- equivalent to Rs.446,500,000 for derivatives/FX
Forward Contact to its subsidiary Pearl Global Limited (Previous Year:
USD 10,000,000/- equivalent to Rs. 450,300,000) .
(t) Corporate Guarantee given by the company to UCO Bank for
Rs.50,000,000/- for Term Loan facilities to its Subsidiary Pearl Global
Limited( Previous Year: Rs. 50,000,000/- both for Term loan and working
capital facilities).
(u) Corporate Guarantee given by the company to UCO Bank for
Rs.415,000,000/- for Working Capital Credit facilities to its
Subsidiary M/s Pearl Global Limited.( Previous Year: Rs. 415,000,000/-
both for Term loan and working capital facilities).
(v) Corporate Guarantee given by the company to Standard Chartered Bank
for Rs.960,000,000/- for securing Fund and Non Fund Based credit
facilities to its subsidiary Pearl Global Ltd (Previous Year:
Rs.556,750,000/-).
(w) Corporate Guarantee given by the company to Standard Chartered Bank
to secure derivative limits sanctioned to its subsidiary Pearl Global
Ltd. for Rs.300,000,000/- (Previous Year: Rs.300,000,000/-).
(x) Corporate Guarantee given by the company to Ye s Bank for
Rs.80,000,000/- for working capital facility to its subsidiary Pearl
Global Ltd (Previous Year: Rs.130,000,000/-).
(y) Corporate Guarantee given by the company to Ye s Bank for
Rs.132,500,000/- for Term Loan and Corporate Loan to its subsidiary
Pearl Global Ltd. (Previous Year: Rs.132,500,000/-).
(z) Corporate Guarantee given by the company to Ye s Bank for
Rs.100,000,000/- for Corporate Loan ÃII, to its subsidiary Pearl Global
Ltd. (Previous Year: Nil).
(aa) Corporate Guarantee given by the company to DhanLaxmi Bank
Limited, New Delhi for Rs.55,000,000/- for derivative limits to its
subsidiary Pearl Global Limited (Previous Year: Rs. Nil ).
2. a) Vehicle loans are secured against hypothecation of respective
vehicles.
b) 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 by promoter directors of the company
and personal guarantee by the promoter directors.
4. Capital Commitments
Estimated amount of contracts remaining to be executed on capital
account (Net of advances) Rs. NIL/- (Previous Year Rs. NIL)
9. Employee Benefits
The Company has adopted Accounting Standard 15 (revised 2005) 'Employee
Benefits' as issued by the Companies (Accounting Standards) Rules,2006.
The Company has classified the various benefits provided to employees
as under:-
(i) Defined Contribution Plan
The company makes contribution towards provident fund to a defined
contribution retirement benefit plan for qualifying employees. The
provident fund plan is operated by the Regional Provident Fund
Commissioner and the company is required to contribute a specified
percentage of payroll cost to the retirement benefit schemes to fund
the benefits. The company recognized Rs. 1,041,262 (Previous Year:
Rs348,569) for provident fund contributions in the profit and loss
account and Rs. Nil (Previous Year: Rs. 252,250) debited under the head
"Capital work-in-progress towards the implementation cost of SAP. The
contributions payable to these plans by the company are at rates
specified in the rules of the schemes.
(ii) Defined Benefit Plan
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
obligations. The obligation for leave encashment is recognized in the
same manner as gratuity.
10. Related Party Disclosure
(1) Related party disclosure as required under Accounting Standard-"18"
as issued by the Companies (Accounting Standards) Rules 2006 is given
below:
a) Subsidiary Companies:
Domestic
Pearl Global Limited India
Lerros Fashions India Ltd. India
Overseas
Norp Knit Industries Limited Bangladesh
House of Pearl Fashions (US) Limited, USA
Multinational Textile Group Limited Mauritius
Global Textiles Group Limited Mauritius
Pacific Supply Chain Limited UK
Zamira Fashions ( Europe) Limited UK
Poeticgem Limited UK
Pacific Logistics Limited UK
FX Imports Company Limited UK
Magic Global Fashion Ltd. UK
Poetic Knitwear Limited UK
Norwest Industries Limited Hong Kong
Zamira Fashion Limited Hong Kong
FX Import Hongkong Ltd. Hong Kong
PG Group Limited (formerly known as Pearl Ges Ltd.) Hong Kong
Pearl GES Home Group Limited Hong Kong
Pearl Global Fareast Limited Hong Kong
Simple Approach Limited Hong Kong
Poeticgem (Canada) Limited Canada
PT Norwest Industry Indonesia
Pearl GES Home Group SPA, Chile
Nor Delhi Manufacturing Limited (formerly known as Magic Global Fahions
Ltd.) Hong Kong
Nor Lanka Manufacturing Limited (formerly known as Poetic Hongkong)
Hong Kong
Grand Pearl Trading Limited China
b) Associates: Domestic
Hopp Fashions India
Pearl Wears India
Vastras India
Little People Education Society India
Pearl Retail Solutions Pvt Ltd India
Deepak Seth & Sons (HUF) India
Pearl Apparels Limited India
Vau Apparels Pvt Ltd India
Nim International Commerce Pvt. Ltd. India
Overseas
Pallas Holdings Limited Mauritius
SACB Holdings Limited Mauritius
JSM Trading (FZE.) Dubai
Lerros Moden GMBH Germany
Premier Pearl Garment Joint Stock Co. Ltd. Vietnam
Superb Mind Holdings Limited Mauritius
Grupo Extremo SUR S.A. Chille
Fru Holdings Ltd. Mauritius
NAFS UK
c) key Management Personnel
Mr. Deepak Seth Chairman
Mr. Pallak Seth Vice Chairman
Mr. Pulkit Seth Managing Director
(II) The Following transactions were carried out with related parties
in the ordinary course of business.
15. 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, 2011.
16. The company has not dealt in any derivative financial instrument
during the year.
17. 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.
19. During the current financial year company has disposed off entire
investment in its subsidiary Nor Pearl Knitwear Ltd, for a total
consideration of Rs.1034.45 Lacs as per RBI approval. This has resulted
extra ordinary loss of Rs.292,383,045/- due to written off loans & loss
on investment after adjusting the sales consideration of Rs.1034.45
Lacs during the current reported year.
20. Previous year figures have been regrouped/ recasted wherever
necessary.
Mar 31, 2010
1. Contingent Liabilities
In case of House of Pearl Fashions Limited (Holding Company)
- Corporate Guarantee given by the company to UCO Bank, Hongkong for
securing trade finance limits to its step down subsidiary Norwest
Industries Ltd, Hong Kong for HKD 200 million equivalent to Rs.
1,160,000,000 & GBP 19 Million equivalent to Rs. 1,289,530,000 (
Previous Year: HK$ 150 million equivalent to Rs. 1,009,500,000 & GBP 14
Million equivalent to Rs. 1,038,240,000).
- Corporate Guarantee given by the company to MSBC Limited, Indonesia
for securing credit facilities to its step down subsidiary PT Norwest
Industry, Indonesia for USD 2,500,000 equivalent to Rs.112,575,000
(Previous Year: USD 2,500,000/- equivalent to Rs. 130,425,000).
- Corporate Guarantee given by the company to HSBC Limited, Bangladesh
for securing working capital facility to its subsidiary Nor Pearl
Knitwear Limited, Bangladesh for USD 4,525,000 equivalent to Rs.
203,760,750 (Previous Year USD 4,525,000/- equivalent to Rs.
236,069,250).
- Corporate Guarantee given by the company to THE CIT GROUP /
COMMERCIAL SERVICES INC, New York for working capital and letter of
credit facilities to its wholly owned subsidiary M/s House of Pearl
Fashions (US) Ltd for USD 400,000 equivalent to Rs.18,012,000 (Previous
Year: USD 400,000 equivalent to Rs. 20,868,000).
- Corporate Guarantee given by the company to HSBC for HKD 300 Million,
equivalent to Rs. 1,740,000,000 for securing credit facilities to its
step down subsidiaries Norwest Industries Ltd., Simple Approach Ltd.
and Zamlra Fashion Ltd (Previous Year: Rs. 2,019,000,000).
- Corporate Guarantee given by the company to Standard Chartered Bank,
Hongkong for USD 16,928,000 equivalent to Rs. 762,267,840 for securing
credit facilities to its step down subsidiary Norwest Industries Ltd
(Previous Year :USD 16,928,000 equivalent to Rs. 883,133,760).
- Corporate guarantee given by the company to HSBC, Bangladesh for BDT
293,700,000 equivalent to Rs.193,842,000 for securing various credit
facilities to Its subsidiary Norp Knit Industries Ltd (Previous Year:
BDT 150,685,000 equivalent to Rs. 116,027,450).
- Corporate Guarantee given by the company to THE CIT GROUP /
COMMERCIAL SERVICES INC, New York for credit facilities to its
subsidiary Oepa International Inc. for USD 6,000,000 equivalent to Rs.
270,180,000 (Previous Year: NIL).
- Corporate Guarantee given by the company to BNP Paribas, for letter
of credit facility to its subsidiary Norwest Industries Ltd. for USD
4,750,000 equivalent to Rs.213,892,500 (Previous Year: NIL).
- Corporate Guarantee given by the company to Canara Bank, HK Branch,
for securing various credit facilities to Its subsidiary Norwest
Industries Ltd. for USD 3,000,000 equivalent to Rs. 135,090,000
(Previous Year: NIL).
- Corporate Guarantee given by the company to ICICI Bank Limited, New
Delhi for Rs. 100,000,000 for derivative limits to its subsidiary Pearl
Global Limited (Previous Year: Rs.100,000,000).
- Corporate guarantee given by the company to HSBC for Rs.200,000,000
for Import documentary credits and import deferred payment credits to
Its subsidiary Pearl Global Limited. (Previous Year: Rs.200,000,000).
- Corporate Guarantee given by the company to Development Credit Bank
for USD 10,000,000/- equivalent to Rs.450,300,000 for derivatlves/FX
Forward Contact to Its subsidiary Pearl Global Limited (Previous Year:
USD 10,000,000/- equivalent to Rs. 521,700,000).
- Corporate Guarantee given by the company to UCO Bank lor
Rs.50,000,000 lor Term Loan facilities to Its Subsidiary Pearl Global
Limited (Previous Year: Rs. 150,000,000 both for Term loan and working
capital facilities).
- Corporate Guarantee given by the company to UCO Bank for
Rs.415,000,000 for Working Capital Credit facilities to Its Subsidiary
M/s Pearl Global Limited. (Previous Year: Rs. 150,000,000 both for Term
loan and working capital facilities).
- Corporate Guarantee given by the company to Standard Chartered Bank
for Rs.556,750,000/- for securing Fund and Non Fund Based credit
facilities to Its subsidiary Pearl Global Ltd (Previous Year: Rs.
410,000,000).
- Corporate Guarantee given by the company to Standard Chartered Bank
to secure derivative limits sanctioned to its subsidiary Pearl Global
Ltd. for Rs.300,000,000 (Previous Year: Rs.150,518,093).
- Corporate Guarantee given by the company to Yes Bank for
Rs.100,000,000 for securing term loan facility to Its subsidiary Pearl
Global Ltd (Previous Year: Rs. 100,000,000).
- Corporate Guarantee given by the company to Yes Bank for
Rs.130,000,000/- for working capital facility to its subsidiary Pearl
Global Ltd (Previous Year: NIL).
- Corporate Guarantee given by the company to Yes Bank for
Rs.132,500,000/- for Term Loan to its subsidiary Pearl Global Ltd.
(Previous Year: NIL).
- Corporate Guarantee given by the Company to Carat Media Services
India Pvt. Ltd NIL in the current year (Previous Year Rs. 50,00,000)
- Counter Guarantee given by the company to Standard Chartered Bank,
New Delhi for stand by Letter of Credit (SBLC) in favour of Geoffrey
Beene, USA on behalf of wholly owned subsidiary House of Pearl Fashions
(US) Ltd Is NIL in the current year (Previous Year: USD 285,000
equivalent to Rs. 14,868,450).
- Export bills discounted with banks Rs. NIL (Previous Year: Rs.
10,301,946) In case of Pearl Global Limited (Indian Subsidiary)
(a) Claims against the Company not acknowledged as debts and other
matters Rs. 19,44,752 (Previous Year: Rs.3,413,854).
(b) Export Bills Discounted with banks Rs.377,250,832 (Previous Year
Rs. 212,561,243).
(c) Counter Guarantees given by the company to the Sales Tax Department
for Its associates company Rs.100,000 (Previous Year:Rs.100,000), for
others Rs.50,000 (Previous YearRs.50,000).
(d) Guarantee given to government authorities in respect of facilities
availed by holding co. & other parties Rs.200,000 (Previous Year
Rs.200,000).
(e) Corporate Guarantee given by the company to Axis Bank for securing
credit facility & term loan to Little People Education Society for
Rs.111,254,000 (Previous Year 111,254,000).
In case of Lerros Fashions India Limited (Indian Subsidiary)
Unexpired Letter of Credit Rs. 427,894 (Previous Year: 2,204,648)
In case of Norp Knit Industries Limited (Foreign Subsidiary)
The contingent liability of Norp Knit Industries Limited is Rs.
100,584,000 (Previous year Rs. 88,642,400) in respect of letters of
credit outstanding and Rs.1,244,100 (Previous Year: NIL) in respect of
bank guarantee.
In case of Nor Pearl Knitwear Limited (Foreign Subsidiary)
The contingent liability of Nor Pearl Knitwear Limited Is Rs. NIL
(Previous year Rs. 5,289,900) In respect of letters of credit
outstanding and Rs 3,564,000 (Previous year 4,158,000) in respect of
bank guarantee.
In case of Multinational Textile Group Limited and Its subsidiaries
(Foreign subsidiary)
At 31 March 2010, the sub-subsidiaries have the following Contingent
Liabilities: Poeticgem Limited
(a) The Sub-Subsidiarys banker, Royal Bank of Scotland pic have given
a guarantee to H M Revenue & Customs amounting to Rs. 40,721,530
(Previous Year 31,302,000) on behalf of the Sub-subsidiary. The maximum
liability of Poeticgem Limited to the bankers is 81,443,059 (Previous
Year: 62,604,000).
(b) The Sub Subsidiarys bank has issued a letter of credit for Rs.
541,903,313 (Previous Year Rs. 423,829,706).
(c) The sub-subsidiary has extended an unlimited guarantee on the
banking facilities of Its subsidiary company Pacific Logistics Limited.
This guarantee Is supported by a debenture dated 17th August 2005. The
Sub-subsidiarys maximum contingent liability under the guarantee as at
31st March 2010 Is Rs. 3,933,686 (Previous Year Rs. 4,682,988)
Norwest Industries Limited
Guarantee given to banks in connection with facilities granted to third
parties Rs.68,119,403 (Previous Year Rs. 232,350,833).
FX Import Company Limited
Royal Bank of Scotland pic, has provided a guarantee on behalf of
company to H M Revenue and Customs amounting to Rs.10,180,382 (Previous
Year: NIL). Under this guarantee the maximum liability as at 31st March
2010 Is Rs.10,180,382 (Previous Year:
NIL).
Pacific Logistics Limited
Royal Bank ol Scotland pic, has provided a guarantee on behalf of
company to H M
Revenue and Customs amounting to Rs.5,090,191 (Previous Year: NIL).
Under this guarantee the maximum liability as at 31st March 2010 Is
Rs. 5,090,191 (Previous Year:
NIL).
Company has also extended an unlimited guarantee on the banking
facilities of Its parent company Poeticgem Limited.This guarantee
Is supported by a debenture dated 17
August 2005.The Sub-subsidiarys maximum contingent liability under the
guarantee as at 31 March 2010 is Rs.285,599,443 (Previous Year: NIL).
Depa International Inc.
At 31 March 2010, Depa International Inc. had outstanding letters of
credit amounting to a total of Rs. 47,716,175 (Previous Year
63,297,183). Simple Approach Limited
Contingent Liabilities related to Irrevocable letters of credit is
Rs.246,451,442(Previous Year:Rs.251,538,333) and shipping guarantee is
Rs.NIL (Previous Year Rs. 1,499,679). Zamira Fashion Limited
Contingent Liabilities related to Irrevocable letters of credit is
Rs.57,656,457 (Previous Year:Rs.NIL). 2. Capital Commitments In case
of Indian companies
Estimated amount of contracts remaining to be executed on capital
account (Net of advances) Rs. 23,096,437 (Previous Year: Rs.
101,836.680) In case ot Foreign companies License Agreement (HOPFL US
Limited)
Effective February 1,2009, the company has entered into a license
agreement with Geoffrey Beene, LLC to design,manufacture and sell
certain mens apparel.This agreement expires on December 31,2011 with
an option to renew for an additional term of three years. The agreement
requires the company to make royalty payments based on specified
percentages of net sales, as defined. In addition, the company is
required to expend a specified percentage of net sales.as defined.for
advertising. For the years ended March 31,2010 and 2009, the license
and advertising fees amounted to approximately Rs.32,081,280 and
Rs.4,879,350 respectively. At March 31,2010 and 2009, the future
minimum payments required under this agreement were as follows:
3. securea Loans
In case of House of Peart Fashions Limited (Holding Subsidiary)
a) Vehicle loans are secured against hypothecation of respective
vehicles.
b) 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-ll, New Delhi owned by promoter directors of the company
and personal guarantee by the promoter directors.
In case of Pearl Global Limited (Indian Subsidiary)
(i) Rupees Term Loan and Working Capital From the Hongkong & Shanghai
Banking Corporation is secured by:
- First charge over stocks and receivables pari passu with consortium
banks.
- First pari passu charge over the companys movable fixed assets
(present and future)
- Exclusive first charge over the Fixed Assets of the Chennai unit at
D-6/II, Phase II at MEPZ, SEZ Chennai financed from the proceeds of the
term loan.
- Pari-Passu charge with UCO by way of mortgage of the Property
situated at 446, Udyog Vihar Phase-V, Gurgaon to secure term loan.
(ii) Rupee term loan from UCO Bank is secured by
- Exclusive first charge on the movable/immovable assets purchased from
proceeds of term loan (including exclusive charge on the superstructure
being built on the land at D-6/III, Phase II at MEPZ, SEZ Chennai).
- Second charge on immovable property at 446, Udyog Vihar Phase -V,
Gurgaon. After liquidation of HSBC charge, UCO Bank will have 1"
charge.
(iii) Rupee term loan from Yes Bank Ltd is secured by exclusive charge
on movable fixed assets of the Company including plant & machinery
located at Plot No. 751; sector 3711 , Pace City Gurgaon.
(iv) Rupee term loan & corporate loan from Yes Bank are secured by
first charge on moveable fixed assets of the Company and exclusive
charge on Immovable property located at Plot No. 10, Sector-5, Growth
Centre, Bawal (Documentation in progress).
(v) Rupee term loan from Punjab National Bank is secured by exclusive
charge on the movable/immovable assets purchased from proceeds of term
loan (including exclusive charge on the land & building located at Plot
No.51, Sector- 32,Gurgaon).
(vi) Rupee short term loan from Punjab National Bank is secured by
sub-servient charge on current assets of the Company.
(vii) Vehicle loans are secured against hypothecation of respective
vehicles.
(viii) Pre- post shipment advances and working capital facilities from
PNB, UCO Bank, HSBC, Chinatrust Commercial Bank, Standard Chartered
Bank and Yes Bank which are secured by First pari passu charge on
movable fixed assets present & future comprising vehicle, furniture and
fixtures, disposable fixed assts, the stocks of raw material, stocks in
process, stores & spares, bill receivable & book debts and mortgage of
the properties situated at following addresses: Plot No.H-597-603,
RICCO Industrial Area, Bhiwadi, Alwar Plot No.16-17, Phase-VI, Udyog
Vihar, Gurgaon In case of Multinational Textile Group Limited (Foreign
subsidiary) Poetlcgem Limited a) Long term bank loans are secured by a
legal mortgage over the Freehold property at Teleflex plot, Burnleys,
Kiln Farm, Milton Keynes and over the leasehold property at Rat 16,15
Grosvenor Square, London, fixed and floating charges over the assets of
the sub-subsidiary and a cross guarantee between Poeticgem Limited and
its subsidiary Pacific Logistics Limited. The Loans carry an average
interest rate of 2.31% over the base rate and is determined based on
1.9% plus base rate.
At 31" March 2010, Poeticgem Limited had available Rs.344,761,886
(Previous Year:Rs.192,523,142) of undrawn committed borrowing
facilities in respect of which all conditions precedent had been met.
b) The company also has advances from factors that are secured by a
charge on the trade receivables of the company.
c) Bank overdrafts are repayable on demand. The average effective
interest rate on bank overdrafts approximates 4.30% per annum (Previous
Year 7%) and is determined, based on 1.75% plus base rate.
d) In the case Pacific Logistics Limited, subsidiary of Poeticgem
Limited, Bank Overdrafts is repayable on demand. Overdrafts of Rs,
4,682,988 (Previous Year: 11,164,698) have been secured by fixed and
floating charges over the sub-subsidiarys assets. The weighted average
interest rates on bank overdrafts are determined based on 2% plus the
average bank base rate.
a) Norwest Industries Limited has banking the facilities is secured by
way of:
- The Companys Pledge time deposit and marketable securities.
- Bank Guarantees issued by HSBC Bank and Standard Chartered Bank
forRs. 45,030,000 & Rs.36,024,000 respectively (Previous Year:
Rs.52,170,000 and 41,736,000 respectively).
- Guarantee from the ultimate holding company, a fellow subsidiary.
- Guarantee from the director of the Company and a related party.
a) Mortgage loan of subsidiary Norwest Industries Limited which is
secured, bears interest at 2.25% over 1 month HIBOR and is repayable by
119 monthly equal instalments of Rs.524,436 plus a final repayment of
Rs.522,116 commencing on 10* September 2006.
c) The subsidiary, Norwest Industries limited has also mortgage loan
which is secured, bears interest at 2% below the Hongkong and Shanghai
Banking Corporation limited best lending rate and is repayable by 120
equal installments of Rs. 551,000 commencing on 30" September 2007.
In case of Nor Pearl Knitwear Limited (Foreign subsidiary)
i) First Charge after BEPZA over book debts and receivables for
Rs. 215,820,000 (Previous Year 251,790,000) with Registrar of Joint
Stock Companies (RJSC). ii) First Charge after BEPZA over stock of
raw materials.work in progress and finished goods for Rs. 215,820,000
(Previous Year 251,790,000) with RJSC.
iii) First Charge after BEPZA over Plant & Machinery for Rs. 215,820,000
(Previous Year 251,790,000) with RJSC.
Iv) Personal guarantee executed by the directors of House of Pearl
Fashion Ltd. for Rs. 205,291,770 (Previous Year Rs. 237,843,030)
supported by personal net worth statements for the credit facility.
v) Corporate guarantee executed by House of Pearl Fashions Ltd. for Rs.
203,760,750 (Previous Year Rs. 236,069,250).
5. Alignment of Accounting Policy for consolidation.
a. In case of Multinational Textile Group Limited and Its subsidiaries
(hereinafter referred as foreign subsidiaries), Interest income is
recognized on an accrual basis using the effective Interest method by
applying the rate that discounts the estimated future cash receipts
through the expected life of the financial instrument to the net
carrying amount of financial asset. This is inconsistent with the
policy of parent company and its Indian subsidiaries, where interest is
recognized on time proportion basis. The Interest income from foreign
subsidiaries represents 32.48 % of total interest income (Previous
Year: 11.58%) i.e. Rs. 49,528,306.50 (Previous Year: Rs.51,642,420).
b. In case of Nor Pearl Knitwear Limited (foreign subsidiary) dividend
is accounted for when it is received. This Is inconsistent with the
policy of parent company and its Indian subsidiaries, where dividend
Income is recognized when the right to receive is established. However,
no dividend income during the year is received by the foreign
subsidiary.
c. In the case of Multinational Textile Group Limited and its
subsidiaries (hereinafter referred as foreign subsidiaries), cost of
fixed assets also Includes transfers from equity of any gain or loss on
qualifying cash flow hedges of foreign currency purchases of fixed
assets. This is inconsistent with the policy of parent company and Its
Indian subsidiaries, where no such treatment is prescribed under the
Indian GAAP. However, during the year, no fixed assets have been
purchased by the foreign subsidiaries in foreign currency.
d. In the case of Nor Pearl Knitwear Limited (a foreign subsidiary),
investments are stated at cost. This is inconsistent with the policy of
parent company and its Indian subsidiaries where investments are
classified as held for trading, held to maturity and available for sale
on the basis of AS-30.The valuation of investments as per AS-30 is
given In Point 9 of significant accounting policies above. The
Investment of foreign subsidiaries represents 0.54 % of total
investments (Previous Year: 0.11 %) I.e. Rs. 49,149,028 (Previous
Year: Rs. 278,671,905).
e. In case of partnership firm Hopp fashions, the WDV method of
depreciation (prescribed under Income Tax Act, 1961) was used, this is
Inconsistent with the SLM method of depreciation used in case of the
parent and other subsidiaries. However as It is Impractical & the
amount is immaterial, no adjustment for the same has been made in the
consolidated financial statements.
f. In case of foreign subsidiaries, sales made in foreign currency are
translated at the rate ruling at the date of transaction, this is
inconsistent with the policy of parent company and Its Indian
subsidiaries, where sales are recognized at monthly average exchange
rate. The sales from foreign subsidiaries represents 69.99% (Previous
Year: 73.63%) i.e. Rs 12,822,969,505 (Previous Year: Rs.
10,660,505,823) of total sales of Rs.18,320,485,571 (Previous Year: Rs.
14,479,092,981)
g. In case of foreign subsidiaries Inventories of Manufactured
Finished Goods, WIP and Raw Material are valued on FIFO basis, this is
inconsistent with the policy of parent company and its Indian
subsidiaries, where It Is valued on weighted average method.
6. The House of Pearl Fashions Limited has raised Rs. 2,854,335,000
lacs through a public issue of shares during the year 2006-07, the
proceeds of which are deployed as follows:
7. Currency Derivative
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.
At the balance sheet date, the total notional amounts of outstanding
forward foreign exchange contracts that the company has committed to
are as below:
These arrangements are designed to address significant exchange
exposures and are renewed on a revolving basis as required. 15. Lease
In the case of House of Pearl Fashions (US) Ltd.
The company has entered into a long term operation lease agreement for
the rental of showroom space which expires on September 30, 2015. For
the years ended March 31, 2010 and 2009, rent expenses amounted to
Rs. 12,985,280 and Rs. 9,526,539, respectively.
6. Employees Benefits (In the case of Indian Companies)
(I) Defined Contribution Plan
The company makes contribution towards provident fund to a defined
contribution retirement benefit plan for qualifying employees. The
provident fund plan is operated by the Regional Provident fund
commissioner and the company is required to contribute a specified
percentage of payroll cost to the retirement benefit schemes to fund
the benefits. The company recognized Rs. 21,440,939 (Previous Year:
Rs. 20,067,354) for provident fund contributions in the profit and loss
account. The contribution payable to these plans by the company are at
rates specified in the rules of the schemes.
(II) Defined Benefit Plan
The present value of obligation is determined 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
obligations. In the case of Pearl Global Limited (except Chennai Unit),
the employees gratuity scheme is managed by Life insurance Corporation.
The obligation for leave encashment is recognized in the same manner as
gratuity.
7. In case of Pearl Global Limited, The Company has initiated for
delisting of shares during the previous year ending 31st March 2009 and
the equity shares of the Company were delisted from Bombay Stock
Exchange and National Stock Exchange w.e.f. August 21,2009. The Final
Exit Option for six months following delisting of shares for public
shareholding expired on February 20,2010 and out of total public
holding of 2,082,345 shares as on 31st March 2009, shareholders holding
1,101,696 shares have availed the option at the exit price of Rs.47.50
per share.
8. Lerros Fashions India Private Limited (subsidiary of House of
Pearl Fashions Ltd.) was originally incorporated as a Private Limited
company on 30.03.2007 under the Companies Act, 1956 (No. 1 of 1956) as
Wear International Retail Private Limited and became a subsidiary of
Public company namely House of Pearl Fashions Limited with effect from
31st March, 2009. However, during the current year, the company has
changed its status from private limited company to public limited
company w.e.f. 02nd December 2009.
9. During the year ended 31.03.2010, Nor Pearl Knitwear Ltd incurred
a loss before tax of Rs.61,152,571 and as at 31" March 2010,its current
liabilities exceeds its current assets by 132,620,168.The operation of
the factory has remained closed since February 2009. The management is
however, confident that the company will resume its operation soon and
it will remain operative for the foreseeable future through continued
support from its parent company, House of Pearl Fashions Ltd.
10. In view of the management, the current assets, loans and advances
have a value on realization in the ordinary course of business at least
equal to the amount at which they are stated as on balance sheet date.
11. Previous Years figures have been regrouped/ recast wherever
considered necessary.