NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH 2016 1 COMPANY INFORMATION The Company was incorporated in the year 1995 with the key objective of bringing the innerwear brand "JOCKEY" to India. The core values of the brand include youthfulness, fun, quality, value, confidence and innovation. The Company has introduced a wide range of quality products for men, women and children as well as innovative marketing concepts such as display modules aimed at enhancing the consumer's involvement with the purchase. The Company commenced operations in the year 1995 in Bangalore with the manufacturing, distribution and marketing of Jockey products. The Company has added to its profile by entering into license with "SPEEDO", globally known International brand for swim wear. 2. SIGNIFICANT ACCOUNTING POLICIES a) Basis of brparation The financial statements of the Company have been brpared and brsented in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis. The Company has brpared these financial statements to comply in all material respects with the Accounting Standards specified under Section 133 of the Companies Act 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year, unless otherwise stated. b) Use of estimates The brparation of financial statements are in conformity with generally accepted accounting principles and requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, disclosures relating to contingent liabilities and assets as at the balance sheet date and the reported amounts of income and expenses during the year. Difference between the actual amounts and the estimates are recognized in the year in which the events become known / are materialized. c) Inventories Raw materials, Consumables, Stores, Spares and Packing materials Are valued at lower of cost and net realizable value. However, material and other item held for use in the production of inventory are not written down below cost if the finished products in which they will be used are expected to be sold at or above cost. Cost is determined on a weighted average basis. Cost comprises of all costs of purchases including duties and taxes (other than those subsequently recoverable by the Company), freight inwards and other expenditure directly attributable to acquisition. Work-in-progress and finished goods Are valued at lower of cost and net realizable value. Cost for this purpose includes direct cost and attributable overheads. Finished goods are valued on standard cost basis that approximates to actual cost. Cost comprises of all costs of purchase including duties and taxes (other than those subsequently recoverable by the Company), freight inwards and other expenditure directly attributable to acquisition. Stock-in-trade Are valued at lower of cost and net realizable value. Stock in trade is valued at standard cost that approximates to actual cost. Cost comprises of all costs of purchases including duties and taxes (other than those subsequently recoverable by the Company), freight inwards and other expenditure directly attributable to acquisition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. d) Cash Flow Statement Cash flows are reported using the indirect method, whereby profit/loss before extraordinary items and tax is adjusted for the effect of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on available information. e) Cash and Cash equivalents Cash and cash equivalents in the balance sheet comprise of cash at bank and in hand and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. f) Debrciation and Amortisation Debrciation is provided on straight line method at the rates and in the manner specified in Schedule II to the Companies Act, 2013. Intangible assets are amortized on a straight line basis based on the useful life of the assets, which is estimated as 3 years. g) Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue from sale of goods is recognised when the substantial risks and rewards of ownership are transferred to the buyer which generally coincides with dispatch of goods from the factory/stock points. Sale of Goods Sales are recorded net of trade discounts, quantity discounts, rebates, indirect taxes. Sales includes Excise duty but exclude Sales tax and value added tax. Cash discount, duty drawback and yarn incentives are accounted on accrual basis. Interest Income Interest income is recognized on a time proportion basis taking in to account the amount outstanding and the rate applicable. Dividend income on investments is accounted for when the right to receive the payment is established h) Fixed Assets, including intangible assets and Capital work in progress (i) Tangible Assets Fixed assets are stated at historical cost (or revalued amounts, as the case may be), less accumulated debrciation and impairment losses (if any). Cost comprises the purchase price less rebates and discounts and any directly attributable cost of bringing the asset to its working condition for its intended use. When parts of an item of fixed assets have different useful lives, they are accounted for as separate items (major components) of fixed assets. Subsequent expenditure of fixed asset is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Capital work-in-progress comprises of the cost of fixed assets that are not yet ready for their intended use at the reporting date. The effects of changes in foreign exchange rates are charged to Statement of Profit and Loss. (ii) Intangible Assets Intangible assets are capitalised at acquisition cost including directly attributable cost. Intangible assets are amortized on a straight line basis based on the useful life of the assets, which is estimated as 3 years. i) Foreign currency transactions (i) Initial Recognition Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (ii) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. (iii) Exchange Differences Foreign currency transactions are initially recorded at the rates of exchange brvailing on the date of transactions. Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognized as income or as expenses in the year in which they arise. j) Government grants and subsidies Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attached conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Grants related to debrciable assets are treated as a deduction from the gross value of fixed assets. k) Investments Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost, less provision for diminution in value, other than temporary. l) Employee Benefits (i) Defined Benefit Plan The Company is required to pay gratuity under The Payment of Gratuity Act 1972. The liability for gratuity, being a defined benefit plan, is determined by an independent actuary using the Projected Unit Credit Method at each balance sheet date and actuarial gains / losses are charged to the Statement of Profit and Loss. The Company makes contribution to the Page Industries Limited Employees Group Gratuity Scheme which is administered by an Insurance Company. The difference between the actuarial liability and the fund balance is shown as Liability or an Asset as the case may be . (ii) Defined Contribution Plan The Company's defined contribution plan relates to the Employees' Provident Fund (under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952). The contributions are made to and administered by the Regional Provident Fund Commissioner and are charged as expense based on the amount of contribution required to be made and when service are rendered by the employees. The Company has no further obligation beyond making the contributions. (iii) Short-term employee benefits All employee benefits falling due wholly within twelve months of rendering the services are classified as short-term employee benefits, which include benefits like salaries, wages, short-term compensated absences and performances incentive and are recognized as expenses in the period in which the employee renders the related service. (iv) Other Long-term employee benefits Compensated absences : The Company's liability towards leave entitlement benefits (compensated absences) is accounted for on the basis of an actuarial valuation, using the projected unit credit method, as at each balance sheet date carried out by an independent actuary and the actuarial gains / losses are charged to the Statement of Profit & Loss. m) Borrowing Costs i) Borrowing Costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such asset up to the date when such asset is ready for its intended use. ii) Other borrowing costs are charged to the Statement of Profit and Loss. n) Leases Where the Company is the lessee Finance leases, where substantially all the risks and benefits incidental to ownership of the leased item, are transferred to the Company, are capitalized at the lower of the fair value and brsent value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged against income. Lease management fees, legal charges and other initial direct costs are capitalized. If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalized leased assets are debrciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. o) Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting brference dividends and attributable taxes if any) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares (if any) are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and consolidation of shares if any. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. p) Income Taxes Tax expense comprises of current and deferred tax . Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed debrciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such writedown is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred Tax assets and deferred tax liabilities are offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority. MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period. q) Impairment of Assets (i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal / external factors. An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to Statement of Profit and Loss in the year in which an asset is identified as impaired. The recoverable amount is greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows as a cash generating unit are discounted to the brsent value. (ii) After impairment, debrciation / amortisation is provided on the revised carrying amount of the asset over its remaining useful life. (iii) A brviously recognized impairment loss is increased or decreased based on reassessment of recoverable amount, which is carried out if the change is significant. However the carrying value after reversal is not increased beyond the carrying value that would have brvailed by charging usual debrciation / impairment if there was no impairment. r) Provisions / Contingencies A provision is recognized when an enterprise has a brsent obligation as a result of past event; and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are neither recognised nor disclosed in the financial statements. s) Operating Cycle Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current. 3 Segmental Information The Company is engaged in the business of "Manufacturing/Trading of Garments". As the basic nature of these goods are governed by the same set of risk and returns, these have been considered as a single business segment. Further the Company sells primarily in the domestic market where its operations are governed by the same set of risks and returns and the overseas sales are insignificant. Accordingly the segment reporting disclosure as envisaged in Accounting Standard (AS - 17) on Segment Reporting is not applicable to the Company. 4 Previous year's figures have been regrouped / reclassified wherever necessary to make them comparable with the current year's classification. As per our report of even date For Haribhakti & Co. LLP Chartered Accountants ICAI FR No. 103523W Shreedhar Ghanekar Partner Mem. No. 210840 For and on behalf of the board Sunder Genomal (Managing Director) DIN No. 00109720 Pius Thomas (Executive Director-Finance) DIN No. 06375352 V Sivadas (Director) DIN No. 01241967 C Murugesh (Company Secretary) Mem. No. A21787 Place : Bangalore Date : 24th May, 2016 |