Basis of Consolidation and Significant Accounting Policies
A) Basis of Accounting and Preparation of Consolidated Financial Statements:
The Consolidated Financial Statements of the Group have been brpared and brsented in accordance with the generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 ('the 2013 Act') and the relevant provisions of the 2013 Act. The Consolidated Financial Statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the Consolidated Financial Statements are consistent with those followed in the brvious year.
All assets and liabilities are classified as current if it is expected to realise or settle within 12 months after the Balance Sheet date.
B) Principles of consolidation:
The Consolidated Financial Statements relate to the Group and its Jointly controlled entity. The Consolidated Financial Statements have been brpared on the following basis:
i) The financial statements of the subsidiary company and JCE used in the consolidation are drawn upto the same reporting date as that of the Company i.e., 31st March, 2017.
ii) The financial statements of the Company and its subsidiary company have been combined on a line-by-line basis by adding together like items of assets, liabilities, income and expenses, after eliminating intra-group balances, intra-group transactions and resulting unrealised profits or losses, unless cost cannot be recovered. Share of profit / loss, assets and liabilities in the JCE, which are not subsidiaries, have been consolidated on a line-by-line basis by adding together the book values of like items of assets, liabilities, incomes and expenses on a proportionate basis to the extent of the Group's equity interest in such entity as per AS 27 "Financial Reporting of Interests in Joint Ventures". The intra-group balances, intra-group transactions and unrealised profits or losses have been eliminated to the extent of the Group's share in the entity.
iii) The excess of cost to the Group of its investment in the subsidiary company/JCE over its share of equity of the subsidiary company / JCE, at the dates on which the investments in the subsidiary company / JCE were made are made/acquired, is recognised in the financial statement as 'Goodwill' being an asset in the Consolidated Financial Statements. Similarly, where the share of equity in the subsidiary company/JCE as on the dates of investment/acquisition is in excess of cost of the investment of the Group, it is recognised as 'Capital Reserve' and shown under the head 'Reserves & Surplus' in the Consolidated Financial Statements.
iv) Minority Interest in the net assets of the subsidiary consist of the amount of equity attributable to the minority shareholders at the date on which investment in the subsidiary company was made and further movement in their share in the equity, subsequent to the dates of investment. Net profit / loss for the year of the subsidiary attributable to minority interest is identified and adjusted against the net profit after tax of the Group in order to arrive at the income attributable to shareholders of the Company.
v) Following subsidiary company and JCE have been considered in the brparation of the Consolidated Financial Statements:
		Name of company	Nature of Relationship	Country of Incorporation	Extent of Holding / Voting Power % as on 31.03.2017	Extent of Holding / Voting Power % as on 31.03.2016
		Metmill Footwear Private Limited	Subsidiary	India	51%	51%
		M.V. Shoe Care Private Limited	JCE (w.e.f.24th August'2016)	India	49%	-
C)	Significant accounting policies
I)	Use of Estimates:
	The brparation of the Consolidated Financial Statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in brparation of the Consolidated Financial Statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialised.
II)	Revenue Recognition:
	Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and revenue can be reliably measured.
	i)	Sale of goods:
		Sales of products at showroom is recognized when risks and rewards of ownership of the products are passed on to the end customers which is generally upon delivery of goods to the end customer. Sales through "shop in shop" format is recognized when the goods at display at that specific store location is sold and delivered to the end customer by the "shop in shop" partner. In case of sales through the e-commerce website, the revenue is recognized when the goods are delivered to the end customer. In case of sales to the third party, the revenue is recognized at the time of delivery of the goods to the party. Sales are recognised, net of returns and trade discounts but include excise duty, sales tax and value added tax. Gift vouchers’ sales are recognised when the vouchers are redeemed and goods are sold to the customer.
	ii)	Other Income:
		Dividend Income is accounted when right to receive the dividend is established. Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.
III)	Property Plant & Equipment (Tangible / Intangible)
	Property, Plant & Equipment are carried at cost less accumulated debrciation / amortisation and impairment losses, if any. The cost of Property, Plant & Equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying Property, Plant & Equipment up to the date the asset is ready for its intended use. Subsequent expenditure on Property, Plant & Equipment after its purchase / completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its brviously assessed standard of performance.
	Property, Plant & Equipment acquired and put to use for project purpose are capitalised and debrciation thereon is included in the project cost till commissioning of the project. Property, Plant & Equipment retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately. Any expected loss is recognised immediately in the Statement of Profit and Loss. Losses arising from the retirement of, and gains or losses arising from disposal of Property, Plant & Equipment which are carried at cost are recognised in the Statement of Profit and Loss.
	Capital work in progress
	Projects under which tangible Property, Plant & Equipment are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
	Intangible Assets under development:
	Expenditure on Intangible under construction eligible for capitalisation are carried as Intangible assets under development, where such assets are not yet ready for their intended use.
IV)	Debrciation and amortisation:
	Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Leasehold improvements are amortised over the period of lease or 10 years whichever is lower. Improvements to building are debrciated over the estimated useful life of 10 years.
	Debrciation on other tangible Property, Plant & Equipment is provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013,except for certain assets, in case of the JCE, for which lower useful lives were used based on management’s assessment.
	All Tangible/ Intangible Property, Plant & Equipment costing Rs. 5,000 or below are debrciated in full by one time debrciation charge in the year the asset is put to use.
	Intangible assets are amortised over their estimated useful life as follows:
	Brand Name & Trademark – 10 years
	Copy Rights – 10 years
	Computer Software – 3-5 years
	Commercial Rights - 10 years
V)	Impairment of assets:
	The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment of assets. If any indication of such impairment exists. If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognised for such excess amount. The impairment loss is recognised as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in prior accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was brviously charged to the statement of profit and loss. In case of revalued assets such reversal is not recognised.
VI)	Investments:
	Investments that are readily realisable 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. Long-term Investments are carried at cost less provision, if any, for decline other than temporary in value of such investments. Current Investments are stated at lower of cost or fair value. Cost of investment include acquisition charges such as brokerage, fees & duties.
VII)	Inventories:
	Inventories are valued at the lower of cost and net realisable value, after providing for obsolescence, shortages and damaged stocks, wherever necessary. Cost is determined in respect of:                        (i) Company: based on the retail method by reducing gross margin from selling price (net of value added tax) and (ii) Subsidiary: by using the First In First Out (FIFO) method.
	(iii) JCE : a) Raw materials are valued at lower of cost and net realisable value. Cost includes purchase price, (excluding those subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their brsent location and condition. Cost of raw material is determined on First-In First-Out basis b) Traded goods are valued at lower of cost and net realizable value. Cost of inventory comprises all cost of purchases, (inclusive of custom duty, freight inward and other incidental expenditure). Cost of traded goods is determined on First-In First-Out basis. c) Manufactured finished goods are valued at the lower of cost and net realizable value. Cost of manufactured finished goods comprises cost of raw material overhead such as cost of conversion and other costs incurred in bringing these inventories to their brsent location and condition are allocated based on actual level of production.
VIII)	Taxes on Income:
	Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961 and other applicable laws.
	Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date.  Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.
	Minimum alternate tax (MAT) Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as “MAT Credit Entitlement.” The Company reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.
IX)	Employee Benefits:
	i)	Defined Contribution Plan:
		The contributions to the Provident Fund is charged to the Statement of Profit and Loss for the year in which the related service is rendered.
	ii)	Defined Benefit Plan:
		For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised on a straight line basis over the average period until the benefits become vested. The obligation recognized in the Balance Sheet rebrsents the brsent value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the brsent value of available refunds and reductions in future contributions to the scheme.
	iii)	Short-term employee benefits:
		The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
		The cost of short-term compensated absences is accounted as under :
		(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
		(b) in case of non-accumulating compensated absences, when the absences occur.
X)	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 translated using the closing exchange rate as on Balance Sheet date. 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.
	iii)	Exchange Differences
		Exchange differences arising on the settlement of monetary items or on reporting Group's monetary items at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognised as income or as expenses in the year in which they arise and disclosed as a net amount in the Consolidated Financial Statements.
XI)	Employees Stock Option Plan (ESOP):
	In respect of Employee Stock Options, the Company measures the compensation cost using the fair value method. The compensation cost, if any, is amortised on a straight-line basis over the vesting period of the options.
XII)	Provisions, Contingent Liabilities and Contingent Assets:
	A provision is recognised when the Group and JCE has a brsent obligation as a result of past events 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 (excluding retirement benefits) are not discounted to their brsent value and are determined based on the 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 Consolidated Financial Statements.
XIII)	Leases:
	Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognized as operating leases. Lease rentals under such operating leases are recognized in the Consolidated Statement of profit and loss on a straight-line basis over the period of the lease unless another systematic basis is more rebrsentative of the time pattern of the users benefit.
XIV)	Provision for warranty:
	The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claim will arise.
XV)	Provision for Loyalty Points:
	The estimated liability for outstanding loyalty is recorded when products against which they are sold are accounted. These estimates are established using historical information on the nature, frequency and average cost of loyalty utilisations and management estimates regarding possible future utilisations. The timing of outflows will vary as and when loyalty claim will arise.
XVI)	Earnings per Share:
	Basic earnings per share is computed by dividing the profit / (loss) after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
XVII)	Consolidated Cash Flow Statement:
	Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects 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 Group are segregated based on the available information.
XVIII)	Cash and Cash equivalents (for purpose of Consolidated Cash Flow statement)
	Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short- term balances (with an original maturity of three months or less from the date of acquisitions), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
XIX)	Borrowing Costs:
	Borrowing costs include interest and amortisation of ancillary costs incurred to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Consolidated Statement of Profit and Loss over the tenure of the loan. Borrowing cost, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Consolidated Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

Metro Shoes Limited ( the Company), and its subsidiary company (together referred to as 'the Group') and the Jointly Controlled Entity (JCE) are engaged in trading of fashion footwear, bags and accessories operating in the brmium and economy category and manufacturing of shoe care and foot care products.

The Group's only business being trading in footwear, bags and accessories on retail basis, thus the disclosure of segment - wise information is not applicable under Accounting Standard 17 - 'Segment Reporting' (AS-17). Further there is no geographical segment to be reported since all the operations are undertaken in India.