Mobile Nav

Market

NOTES TO ACCOUNTS

PC Jeweller Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 1692.59 Cr. P/BV 0.43 Book Value (₹) 99.27
52 Week High/Low (₹) 164/24 FV/ML 10/1 P/E(X) 2,856.67
Bookclosure 29/09/2018 EPS (₹) 0.02 Div Yield (%) 1.17
Year End :2018-03 

1. Corporate information Nature of operations

PC Jeweller Limited (the ‘Company’) was incorporated on 13 April 2005. The Company is engaged in the business of manufacturing, sale and trading of gold jewellery, diamond studded jewellery and silver items. The Company’s shares are listed on the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange (BSE).

General information and statement of compliance with Ind AS

These standalone financial statements have been prepared in accordance with the Indian Accounting Standards (‘Ind AS’) notified under section 133 of the Companies Act, 2013 (‘the Act’) Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other pronouncements/ provisions of applicable laws.

The standalone financial statements for the year ended 31 March 2018 were authorised and approved for issue by the Board of Directors on 25 May 2018. Revisions to standalone financial statements is permitted by the Board of Directors after obtaining necessary approvals or at the instance of regulatory authorities as per provisions of the Act.

2. Application of new and revised Indian Accounting Standard (Ind AS)

All the Ind AS issued and notified by the Ministry of Corporate Affairs (‘MCA’) under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the standalone financial statements are authorised have been considered in preparing these standalone financial statements.

Standards issued but not effective

On 28 March 2018, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115, ‘Revenue from Contracts with Customers’ and Appendix B, Foreign Currency Transactions and Advance Consideration to Ind AS 21, ‘The Effects of Changes in Foreign Exchange Rates’. The effective date for adoption is financials periods beginning on or after 01 April 2018.

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 establish the principles whereby an entity shall recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The entity shall be required to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer.

The standard permits two possible methods of transition:

(a) Retrospective approach- The standard shall be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors.

(b) Retrospective with cumulative effect of initial application of the standard recognised at the date of initial application (Cumulative catch-up transition method)

The Company is examining the methods of transition to be adopted. The effect on adoption of Ind AS 115 is expected to be insignificant.

Appendix B, Foreign currency transactions and advance consideration to Ind AS 21:

Appendix B to Ind AS 21 clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.

The amendment will be effective on financials periods beginning on or after 01 April 2018. The Company is evaluating the requirements of the aforementioned amendment/standard and does not expect the impact to be material.

Note

During the year, the Company has converted compulsorily convertible debentures (CCDs) into equity earlier than its due date of conversion and therefore, the deferred tax on the outstanding liability portion of CCDs, amounting to Rs. 6.21 crores has been transferred to retained earnings.

*During the previous year, the Company had issued compulsorily convertible preference shares (‘CCPS’). CCPS are compound financial instruments and in accordance with Ind AS, the Company had bifurcated amount so received into equity and liability components. The liability component amounting to Rs. 28.48 crores was reflected in borrowings and equity component (net of transaction cost of Rs. 2.57 crores) amounting to Rs. 226.32 crores was reflected in other equity

An amount of Rs. 2.40 crore (previous year Rs. 2.15 crore) has been recorded as finance cost on the liability component. In the current year, the aforementioned Compulsorily Convertible Preference Shares (CCPS) have been converted into 13,456,000 equity shares as per terms of the agreement.

b) Terms and rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 each. 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, holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential payments. The distribution will be in proportion to the number of equity shares held by the equity shareholders.

Terms and rights attached to preference shares

During the year, the entire CCPS got converted into 13,456,000 equity shares of the company having face value of Rs.10 each per terms of the agreement. However, the preference shareholders shall receive a mandatory dividend of 13% per annum which shall be paid on 30 September 2018 as per terms agreed.

c) Shares reserved for issue under options

(i) 3,461,867 equity shares are reserved for the issue under the Employees’ stock option plan of the Company. Information relating to Employees’ stock option plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in note 36.

(ii) During the previous year, the Company had issued compulsorily convertible debentures to be converted to equity shares within stipulated time. Per terms of the agreement, the same got converted to 22,473,600 equity shares of the Company having face value of Rs.10 each during the current year.

*As per the records of the Company, including its register of shareholders/members and other declarations, if any, received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

**Stake reduced to less than 5% of the shares of the Company.

e) The shareholders of the Company approved the issue of 179,212,800 equity shares as bonus shares which were subsequently alloted on 10 July 2017. Further the Company has allotted 11,236,800 equity shares as bonus shares on 19 August 2017 on conversion of compulsorily convertible debentures. Other than this, the Company has not issued any shares pursuant to contract without payment being received in cash, or allotted as fully paid up by way of bonus shares or bought back any shares during the period of five years immediately preceding the date of balance sheet.

Retained earnings

Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc. General reserve

Under the Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with Companies (Transfer of profits to Reserve) Rules,1975. Consequent to introduction of the Act, there is no such requirement to mandatorily transfer a specified percentage of the net profit to general reserve.

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve will be utilised in accordance with provisions of the Act.

Share options outstanding account

The reserve account is used to recognise the grant date fair value of options issued to employees under employee stock option plan, over the vesting period.

Equity component of compulsorily convertible debenture

During the previous year, the Company had issued 4,269,984 compulsorily convertible debentures (CCDs) having face value of Rs. 1,000 each and in accordance with Ind AS, the Company had bifurcated amount so received into equity and liability components. The aforementioned CCDs has been converted into 22,473,600 equity shares having face value of Rs. 10 each during the current year.

Equity component of compulsorily convertible preference shares

During the previous year, the Company had issued 257,372,912 Compulsorily Convertible Preference Shares (CCPS) having face value of Rs. 10 each and in accordance with Ind AS, the Company had bifurcated amount so received into equity and liability components. The aforementioned CCPS have been converted into 13,456,000 equity shares of the Company as per terms of the agreement.

(i) Vehicle loans are secured by way of hypothecation of assets, thus purchased.

(ii) Term loans from banks (including current maturities) aggregating to Rs. 74.24 crores (31 March 2017: Rs. 86.75 crores) are secured against first and exclusive registered mortgage charge on immovable properties belonging to the body corporate. These loans are further fully secured by personal guarantees of promoter directors and corporate guarantees of the said body corporate.

(iii) Liability component of CCPS represents the mandatory payments required under the terms of the CCPS, discounted at the effective interest rate. Mandatory dividend is payable at the rate of 13% per annum. Such dividend is payable on 30 September for the preceding financial year.

(iv) Liability component of CCDs represented the mandatory payments required under the terms of the CCD, discounted at the effective interest rate. Interest was payable on the aforementioned CCDs at the rate of 13% per annum (16.25% per annum inclusive of tax deducted at source) and such payments had commenced from 4 July 2016 and were paid every quarter thereafter upto the conversion of these CCDs.

(i) Cash credit facilities, packing credit facilities, post shipment credit facilities, demand loans and commercial papers are secured against first pari passu charge on current assets, fixed assets and fixed deposits of the Company. These loans are further fully secured by personal guarantees of promoter directors and their relatives and corporate guarantees and collateral securities of other companies.

Note:

The Company has three manufacturing units located in Noida Special Economic Zone, namely, unit I, unit II and unit III. Unit III is fully exempt from income tax till 31 March 2021. Remaining units, i.e., unit I and unit II are partially exempted till 31 March 2022 and 31 March 2025 respectively under the provisions of Section 10AA of the Income-tax Act, 1961.

The Company’s manufacturing unit located in Dehradun is eligible for the deduction of 100% of the profits and gains of the unit for the first 5 consecutive years and 30% for the next 5 consecutive years under Section 80 IC of the Income - tax Act, 1961 till 31 March 2019.

During the year, the shareholders of the Company approved and subsequently alloted the issue of bonus equity shares in proportion of one bonus equity share for each equity share held which got duly allotted within the year. Accordingly, the basic and diluted earnings per share have been adjusted for the previous years presented in accordance with Ind AS 33 ‘Earnings per Share’.

These assumptions were developed by the management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year end by reference to government bonds of relevant economic markets and that have terms to maturity approximating to the terms of the related obligation. Other assumptions are based on management’s historical experience.

Sensitivity analysis

The significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate, the salary growth rate and the average life expectancy. The calculation of the net defined benefit liability is sensitive to these assumptions. The following table summarises the effects of changes in these actuarial assumptions on the defined benefit liability:

The present value of the defined benefit obligation calculated with the same method (projected unit credit) as the defined benefit obligation recognised in the balance sheet. The sensitivity analysis is based on a change in one assumption while not changing all other assumptions. This analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in the assumptions would occur in isolation of one another since some of the assumptions may be co-related.

Based on historical data, the Company expects contributions of Rs. 1.76 crores in the next 12 months.

Compensated absences

The leave obligations cover the Company’s liability for sick and earned leaves. The Company does not have an unconditional right to defer settlement for the obligation shown as current provision balance above. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. Therefore, based on the independent actuarial report, provision for compensated absences has been bifurcated as current and non-current.

Defined contribution plans

The Company has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the Government. The obligation of the Company is limited to the amount contributed and it has no further contractual or any constructive obligation. The expense recognised during the period towards defined contribution plan is Rs. 2.90 crores (31 March 2017 Rs. 2.96 crores).

Note 3: Employee Stock Option Plan

PC Jeweller Limited Employee Stock Option Plan 2011

During the year ended 31 March 2012, the Company had formulated Employee Stock Option Scheme referred to as PC Jeweller Limited Employee Stock Option Plan 2011 (the ‘Plan’) for all eligible employees/directors of the Company.

The plan is implemented by the Nomination and Remuneration Committee constituted by the Company under the policy and framework laid down by the Company and/ or the Board of Directors of the Company, in accordance with the authority delegated to the Nomination and Remuneration Committee in this regard from time to time and subject to the amendments, modifications and alterations to the plan made by the Company and/or the Board of Directors in this regard. The issuance of the shares are under the guidance, advice and directions of the Nomination and Remuneration Committee.

Each stock option entitles the grantee thereof to apply for and be allotted one equity share of the Company upon vesting. Vesting of the options shall take place over a period of 4 years with a minimum vesting period of 1 year from the grant date.

The options granted shall vest so long as the employee continues to be in employment with the Company, i.e., the options will lapse if the employment is terminated prior to vesting. Even after the options are vested, un-exercised options may be forfeited if the services of the employee are terminated for reasons specified in the Plan.

The volatility used in the Black Scholes Option Pricing Model is the annualized standard deviation of the continuously compounded rate of return of the stock over a period of time. Informal tests and preliminary research tends to confirm that estimates of the expected long-term future volatility should be based on historical volatility for a period that approximates the expected life of the options being valued. The Company was listed on BSE Limited and National Stock Exchange of India Limited on 27 December 2012. The volatility is determined by taking into account the period since the listing of the Company.

Note 4: Related party transactions:

In accordance with the requirement of Indian Accounting Standard (Ind AS) 24 “Related Party Disclosures”, name of the related parties, related party relationships, transactions and outstanding balances including commitments where control exist and with whom transactions have taken place during the reported period are as follows:

During the year, the Company has paid short-term employee benefits (including sitting fee) amounting Rs. 7.24 crores (previous year Rs. 6.95 crores) included in Key management personnel’s compensation. As the liability for gratuity and leave encashment are provided on acturial basis for the Company as a whole, amounts accrued pertaining to key management personnel are not included. There are no amounts outstanding of post-employment benefits, other long-term benefits, termination benefits and share-based payment for the current and previous year.

Note:

(i) The Company has given loans to above entities for business purposes. All the loans given are unsecured loans.

(ii) As per the agreement, the rate of interest for the loan is the average cost of working capital facilities obtained by the lender i.e. 31 March 2018: 11.25% (31 March 2017:11.50%).

(iii) The loan is to be repaid after 5 years from the date of the receipt of loan.

(iv) The loan is to be repaid in 10 installments commencing from 1 January 2019.

Note:

(i) The Company has given loans to above entities for business purposes. All the loans given are unsecured loans.

(ii) As per the agreement, the rate of interest for the loan is the average cost of working capital facilities obtained by the lender i.e. 31 March 2018: 11.25% (31 March 2017:11.50%).

(iii) The loan is to be repaid after 5 years from the date of the receipt of loan.

(iv) The loan is to be repaid in 10 installments commencing from 1 January 2019.

Note 5: Hedging activity and derivatives

(i) The Company enters into foreign currency forward contracts to hedge against the foreign currency risk relating to payment of foreign currency payables. The Company does not apply hedge accounting on such relationships. Further, the Company does not enter into any derivative transactions for speculative purposes.

Fair value hedge of gold price risk in inventory

The Company enters into contracts to purchase gold wherein the Company has the option to fix the purchase price based on market price of gold during a stipulated time period. The prices are linked to gold prices. Accordingly, these contracts are considered to have an embedded derivative that is required to be separated. Such feature is kept to hedge against exposure in the value of inventory of gold due to volatility in gold prices. The Company designates the embedded derivative in the payable for such purchases as the hedging instrument in fair value hedging of inventory. The Company designates only the spot-to-spot movement of the gold inventory as the hedged risk. The carrying value of inventory is accordingly adjusted for the effective portion of change in fair value of hedging instrument. There is no ineffectiveness in the relationships designated by the Company for hedge accounting.

Disclosure of effects of fair value hedge accounting on financial position:

Hedged item - Changes in fair value of inventory attributable to change in gold prices

Hedging instrument - Changes in fair value of the option to fix prices of gold purchases, as described above

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness is performed. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the Company uses the hypothetical derivative method to assess effectiveness. There was no hedge ineffectiveness in any of the periods presented above.

(ii) Exposure in foreign currency- Hedged

The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes.

(iii) Exposure in foreign currency- Unhedged

The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into derivative intruments for trading or speculation purposes.

Outstanding overseas exposure not being hedged against adverse currency fluctuation:

Note 6: Financial instruments i) Fair values hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates;

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(ii) Valuation process and technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

(a) The use of quoted market prices for investments in mutual funds.

(b) Use of market available inputs such as gold prices and foreign exchange rates for option to fix prices of gold in purchase contracts and foreign currency forward contracts.

* Trade payables includes value of the option to fix prices on gold purchases (embedded derivative) that is carried at FVTPL. The value of such embedded derivative which is financial liability of Rs. 20.27 crores as at 31 March 2018 (31 March 2017: financial asset Rs. 8.43 crores) is added to value of the trade payables (as discussed further below).

(a) The carrying value of trade receivables, securities deposits, insurance claim receivable, loans given, cash and bank balances and other financial assets recorded at amortised cost, is considered to be a reasonable approximation of fair value.

(b) The carrying value of borrowings, trade payables and other financial liabilities recorded at amortised cost is considered to be a reasonable approximation of fair value.

The following table presents the option to fix prices on gold purchases that are added to/offset with trade payables, as at 31 March 2018 and 31 March 2017:

Option to fix prices on gold purchases is an embedded derivative that will be settled together with the trade payables. Accordingly, such amounts are either added to or offset with but are shown separately in the table above.

ii) Risk management

The Company’s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements:

The Company’s risk management is carried out by a central treasury department of the Company under policies approved by the Board of Directors. The Board of Directors provide written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, market risk, credit risk and investment of excess liquidity.

A) Credit risk

Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or pay amounts due to the Company causing financial loss. It arises from cash and cash equivalents, deposits with banks and financial institutions, security deposits, loans given and principally from credit exposures to customers relating to outstanding receivables. The Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at reporting date.

The Company continuously monitors defaults of customers and other counterparties, identified either individually or by the Company, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Company’s policy is to deal only with creditworthy counterparties.

In respect of trade and other receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any company of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various geographical areas. The Company has very limited history of customer default, and considers the credit quality of trade receivables that are not past due or impaired to be good.

The credit risk for cash and cash equivalents, mutual funds, bank deposits, loans and derivative financial instruments is considered negligible, since the counterparties are reputable organisations with high quality external credit ratings.

Company provides for expected credit losses on financial assets by assessing individual financial instruments for expectation of any credit losses. Since the assets have very low credit risk, and are for varied natures and purpose, there is no trend that the Company can draw to apply consistently to entire population. For such financial assets, the Company’s policy is to provide for 12 month expected credit losses upon initial recognition and provides for lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss based impairment recognised on such assets considering their low credit risk nature, though incurred loss provisions are disclosed under each sub-category of such financial assets.

Concentration of financial assets

Concentration of credit risk with respect to trade receivables are limited, due to the Company’s consumer base being large and diverse. All trade receivable are reviewed and assessed for default on a quarterly basis.

Our historical experience of collecting receivables is that credit risk is low. The Group’s exposure to credit risk for trade receivables is presented below:

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.

Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates. In addition, the Company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

Contractual maturities of financial liabilities

The tables below analyses the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying amounts as the impact of discounting is not significant.

C) Market risk - foreign exchange

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to US Dollar. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional currency. The Company, as per its overall strategy, uses forward contracts to mitigate its risks associated with fluctuations in foreign currency, and such contracts are not designated as hedges under Ind AS 109. The Company does not use forward contracts and swaps for speculative purposes.

Sensitivity

The sensitivity to profit or loss from changes in the exchange rates arises mainly from financial instruments denominated in USD. In case of a reasonably possible change in INR/USD exchange rates of /- 4 % (previous year /-4%) at the reporting date, keeping all other variables constant, there would have been corresponding impact on profits of Rs. 31.81 crores (previous year Rs. 28.03 crores).

D) Interest rate risk

i) Liabilities

The Company’s policy is to minimise interest rate cash flow risk exposures on long-term financing. At 31 March 2018, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates.

Sensitivity

The sensitivity to profit or loss in case of a reasonably possible change in interest rates of /- 50 basis points (previous year: /-50 basis points), keeping all other variables constant, would have resulted in corresponding impact on profits by Rs. 2.59 crores (previous year Rs. 1.24 crores).

ii) Assets

The Company’s financial assets are carried at amortised cost and are at fixed rate only. They are, therefore, not subject to interest rate risk since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

E) Price risk

Exposure from investments in mutual funds:

The Company’s exposure to price risk arises from investments in mutual funds held by the Company and classified in the balance sheet as fair value through profit or loss. To manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

Sensitivity:

The sensitivity to profit or loss in case of an increase in price of the instrument by 5% keeping all other variables constant would have resulted in corresponding impact on profits by Rs. 0.61 crores (previous year Rs. 0.31 crores).

Exposure from trade payables:

The Company’s exposure to price risk also arises from trade payables of the Company that are at unfixed prices, and, therefore, payment is sensitive to changes in gold prices. The option to fix gold prices are classified in the balance sheet as fair value through profit or loss. The option to fix gold prices are at unfixed prices to hedge against potential losses in value of inventory of gold held by the Company.

The Company applies fair value hedge for the gold purchased whose price is to be fixed in future. Therefore, there will no impact of the fluctuation in the price of the gold on the Company’s profit for the period.

Note 7: Capital management

The Company’ s capital management objectives are:

- to ensure the Company’s ability to continue as a going concern

- to provide an adequate return to shareholders

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

The Management assesses the Company’s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company’s various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in the economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

Note 8: Micro, Small and Medium Enterprises

Information as required to be furnished as per section 22 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 for the year ended 31 March 2018 is given below. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

Note 9: Disclosures in respect of non-cancellable operating leases

The Company leases various offices and retail stores under non-cancellable operating leases with different periods. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated. Contractual lease expense are summarised as below.

Note 10: Corporate social responsibility

The Company’s CSR programs/projects focuses on sectors and issues as mentioned in Schedule VII read with Section 135 of the Act. The CSR committee has been formed by the Company as per the Act. A CSR committee has been examining and evaluating suitable proposals for deployment of funds towards CSR initiatives, however, the committee expects finalisation of such proposals in due course.

a) Gross amount required to be spent by the Company during the year is Rs. 10.94 crores (previous year Rs. 10.32 crores)

b) Amount spent during the year on CSR (excluding 5% administrative expenses)

Note 11: Disclosure on specified bank notes (SBN)

During the previous year, the Company had specified bank notes or other denomination as defined in the MCA notification G.S.R. 308(E) dated 30 March 2017, on the details of specified bank notes (SBN) held and transacted during the period from 8 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification is given below:

Note 12: Reconciliation of liabilities arising from financing activities pursuant to Ind AS -7 Cash flows

The changes of the Company’s liabilties arising from financing activities can be classified as follows:

Note 13: Segment information

Disclosure for segment information as required by Ind AS 108 ‘Operating Segment’, notified under the Act has been provided in the consolidated financial statements of the Company comprising the Company and its wholly owned subsidiaries.

Note 14: Post reporting date events

No adjusting or significant non-adjusting events have occurred between 31 March 2018 and the date of authorisation of the Company’s standalone financial statements. However, the Board of Directors have recommended a dividend of Rs.0.55 (previous year Rs.0.75 ) on preference shares of Rs. 10 each, subject to approval of shareholders at the ensuing Annual General Meeting. Also, the Board of Directors have recommended a final dividend of 5%, i.e., Rs.0.50 (previous year Rs.1) on equity shares of Rs. 10 each for the year ended 31 March 2018, subject to approval of shareholders at the ensuing annual general meeting.

Note 15: Buyback of shares

On 10 May 2018, the Board of Directors of the Company approved a buyback proposal for the purchase by the Company of upto 12,114,285 Equity shares of Rs. 10/- each (being 3.07 % of total paid up equity capital of the Company) at a price of Rs. 350 per equity share, for an aggregate amount not exceeding Rs. 424 crore from the shareholders of the Company on a proportionate basis through the tender offer route in accordance with the provisions contained in the SEBI (Buy Back of Securities) Regulations, 1988 and the Act subject to applicable statutory/other requisite approvals.

This is the summary of significant accounting policies and other explanatory information referred to in our report of even date

Attention Investors :
Prevent Unauthorised transactions in your account --> Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile / email at the end of the day .......... Issued in the interest of investors
Attention Investors :
Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from NSDL on the same day......................issued in the interest of investors.
Attention Investors :
KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
Attention Investors :
No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account.
“Investment in securities market are subject to market risks, read all the related documents carefully before investing”.