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Kewal Kiran Clothing Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 1232.50 Cr. P/BV 2.87 Book Value (₹) 348.88
52 Week High/Low (₹) 1400/905 FV/ML 10/1 P/E(X) 15.35
Bookclosure 05/11/2019 EPS (₹) 65.14 Div Yield (%) 3.40
Year End :2018-03 


A. Corporate Information

Kewal Kiran Clothing Limited (“the Company”) is a Public Limited Company incorporated in India having its registered office at Mumbai, Maharashtra. The Company is engaged into manufacturing, marketing and retailing of branded readymade garments and finished accessories.

B. Statement of Compliance and Basis of Preparation

(i) Compliance with Ind AS

The financial statements are prepared in accordance with Indian Accounting Standards (“Ind AS”) as notified under the Companies (Indian Accounting Standards) Rules, 2015, the relevant provisions of the Companies Act, 2013 (“the Act”) and guidelines issued by the Securities and Exchange Board of India (“SEBI”), as applicable.

For all periods up to and including the year ended March 31, 2017, the Company had prepared its financial statements in accordance with Accounting Standards as specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 (“Previous GAAP”).

These financial statements for the year ended March 31, 2018 are the first financial statements that the Company has prepared in accordance with Ind AS. Refer Note 2.53 for information about how the transition from previous GAAP to Ind AS has affected the Company’s Balance sheet, Statement of profit & loss and Statement of cash flows.

(ii) Basis of Preparation and presentation

Basis of Preparation:

The financial statements have been prepared on a historical cost basis, except the following assets and liabilities which have been measured at fair value

- Certain financial assets and liabilities (refer accounting policy regarding financial instruments)

- Employee’s Defined Benefit Plan as per actuarial valuation

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date

Functional and Presentation Currency:

The financial statements are presented in Indian Rupees and all values are rounded to the nearest Lakh (INR 00,000), except otherwise indicated.

1) Property, Plant and Equipment:

Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life. The useful lives of the Company’s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.

2) Estimation of Defined benefit obligation:

The costs of providing post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 ‘Employee benefits’ over the period during which benefit is derived from the employees’ services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 2.40

3) Sales Returns:

The Company accounts for sales returns accrual by recording an allowance for sales returns concurrent with the recognition of revenue at the time of a product sale. This allowance is based on the Company’s estimate of expected sales returns. The Company deals in various products and operates in various markets. Accordingly, the estimate of sales returns is determined primarily by the Company’s historical experience in the markets in which the Company operates.

4) Fair value measurement of Financial Instruments: Refer Note 2.50

5) Impairment

An impairment loss is recognised for the amount by which an asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount to determine the recoverable amount, management estimates expected future cash flows from each asset or cash generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows, management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may vary, and may cause significant adjustments to the Company’s assets. In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.

2.1.1 Building includes the value of 14,000 (P.Y.14,000) share of Rs.100 each in Synthofine Estate CHS Ltd and value of 10 (P.Y.10) share of Rs.50 each in Gautam Chemical Industrial Premises CHS Ltd.

2.1.2 Balance useful life of membership rights as at year end is Nil (P.Y. 12 months).

2.1.3 Building includes building constructed on lease hold land having Gross block of Rs.226.65 lakhs (P.Y. Rs.226.65 lakhs)

2.1.4 I n the year 2014-15, the company has acquired freehold land with integrated structures for a composite value whose conveyance is registered and municipal records updated. The value of the structure is determined based on estimated depreciated value of structures and the balance is considered as the value of the land. In respect of the land, the company has undivided share in land. Also an insignificant portion of land is unlawfully occupied by an illegal occupant and the said occupant had raised some illegal structures which were demolished by the Municipal Corporation during the year under review. The said illegal occupant has filed a suit in the Hon’ble High Court for his alleged claim in respect of the portion of the land illegally occupied by him. The company has refuted the alleged claim of the illegal occupant and is defending the suit. The Company has filed an Eviction suit against the illegal occupant in the Hon’ble Small Causes Court. Both the said matters are sub-judiced.There is insignificant impact of these litigations on the financial position of the company.

2.1.5 Amount capitalised under building block includes Nil (P.Y.198.40) being the amount of capital expenditure incurred on self-constructed assets.Further such amount included under CWIP is aggregating to Rs.851.49 lakhs (P.Y.Rs.491.15 lakhs).

Maturity profile

The average expected remaining lifetime of the plan members is 10 years (31st March, 2017: 11 years) as at the date of valuation. This represents the weighted average of the expected remaining lifetime of all plan participants.

The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the method (Projected Unit Credit Method) used to calculate the liability recognized in the balance sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous period.

100% of the plan assets held by gratuity trust comprises of employees group gratuity scheme with Life Insurance Corporation of India. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The expected rate of return on plan assets comprising of Insurance Policy with LIC of India is based on the historical results of returns given by LIC of India.

The Company expects to contribute Rs.50.00 lakhs (P.Y. Rs.175.00 lakhs) to gratuity trust for contribution to LIC of India in financial year 2018-19.

b) Disclosure in respect of leave entitlement liability:

Leave entitlement is short term benefit which is recognized as an expense at the un-discounted amount in the year in which the related service is rendered and disclosed under other current liabilities.

c) Death in service benefit:

The Company has taken group term policy from an insurance Company to cover its obligation for death in service benefit given to eligible employees. The insurance premium of Rs.20.59 lakhs (P.Y. ' Rs.18.93 lakhs) is recognized in Statement of Profit and Loss.

d) The Company contributes towards Employees Provident Fund, Employees State Insurance, National Pension Scheme and Labour Welfare Fund. The aggregate amount contributed and charged to Statement of Profit and Loss is Rs.430.64 lakhs (P.Y. Rs.395.54 lakhs).

2.2 Related Party Disclosure:

Disclosures as per Ind AS 24 - ‘Related Party Disclosures’ are given below:

a) Related Parties where i) control exists and ii) where significant influence exists (with whom transaction have taken place during the year).

Joint Ventures:

White Knitwear Private Limited

Enterprises where Key Management Personnel (KMP) and their relatives have significant influence:

Enlighten Lifestyle Limited

Smt. Jatnobai Karamchandji Ratanparia Chouhan Charitable Trust Lord Gautam Charitable Foundation Kewal Kiran Finance Private Limited

Key Management Personnel:

Kewalchand P. Jain Chairman & Managing Director Hemant P. Jain Whole-time Director

Dinesh P. Jain Whole-time Director

Vikas P. Jain Whole-time Director

Prakash A. Mody Independent Director

Nimish G. Pandya Independent Director

Yogesh A. Thar Independent Director

Drushti R. Desai Independent Director

Relatives / Other concerns of Key Management Personnel (In cases where transactions are there):

Shantaben P. Jain (Mother of Key Management Personnel)

Veena K. Jain (Wife of Kewalchand P. Jain.)

Lata H. Jain (Wife of Hemant P. Jain)

Sangeeta D. Jain (Wife of Dinesh P. Jain)

Kesar V. Jain (Wife of Vikas P. Jain)

Pankaj K. Jain (Son of Kewalchand P. Jain)

Hitendra H. Jain (Son of Hemant P. Jain)

Kewalchand P. Jain (HUF)

Hemant P. Jain (HUF)

Dinesh P. Jain (HUF)

Vikas P. Jain (HUF)

P.K. Jain Family Holding Trust

Pandya & Co. (Controlled by Mr. Nimish G. Pandya)

Bansi S. Mehta & Co. [Partnership Firm- Yogesh A. Thar and Drushti R. Desai (Partners)]

Employee Funds:

Kewal Kiran Clothing Limited - Employee Group Gratuity Scheme.

2.3 Operating Lease Arrangements:

Disclosure as per Ind AS- 17 - “Operating Lease” are given below:

a) As lessee:

Rental expenses of Rs.117.31 lakhs (P.Y. Rs.88.73 lakhs) under operating leases have been recognized in the Statement of Profit and Loss. It includes contingent lease rent of Rs.16.53 lakhs (P.Y. Rs.7.83 lakhs) based on revenue sharing model.

At Balance sheet date, minimum lease payments under non-cancellable operating leases fall due as follows:

The above figures include:

i. The agreements are executed for the periods of 33 to 108 months with a non-cancellable period at the beginning of the agreement ranging from 12 to 36 months and having a clause for extension of lease period.

ii. Lease rentals based on estimated date of commencement of lease in cases where the agreements / MOU’s have been entered into but the date of commencement of lease is dependent on the date of construction/renovation of premises and based on the commitment for delivery by lessors.

iii. The above-mentioned lease rentals include a lease the period of which is dependent on the occurrence of an event, the date of which is not ascertainable beyond five years. Hence, the lease rentals are considered up to a period of five years only.

iv. Lease rentals do not include common area maintenance charges and tax payable, if any.

v. The above details of lease rental obligation exclude the amounts payable by franchisee in accordance with the arrangement with them (a) not later than 1 year Rs.21.15 lakhs (P.Y. Rs.29.04 lakhs) (b) between 1 to 5 year Rs.88.49 lakhs (P.Y. Rs.103.04 lakhs) (c) more than 5 years Rs.3.97 lakhs (P.Y. Rs.31.94 lakhs).

b) As Lessor:

The Company has given certain part of its property on operating lease. These lease arrangements are for a period of 9 years and cancellable solely at discretion of the lessees. Rental income from leasing of property of Rs.89.51 lakhs (P.Y. Rs.6.09 lakhs) is recognized in the Statement of Profit and Loss. The initial direct cost (if any) is charged off to expenses in the year in which it is incurred.

The Company has not given any property under non -cancellable operating lease.

2.4 Disclosure regarding Derivative Instrument and Unhedged Foreign Currency Exposure:

There are no open derivatives / forward exchange contracts as at year end. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

The above Provision has been grouped under the head ‘Current Provisions’ in Note 2.21.

The timing of the outflow is dependent on various aspects / fulfillment of conditions and occurrence of events. Such provisions are made based on the past experience and assessment of rates and taxes. However, it is most likely that outflow is expected to be within a period of one year from the date of Balance Sheet.

2.5 Contingent Liabilities:

a) Disputed demands in respect of income tax not acknowledged as debt by the Company of Rs.20.77 lakhs (P.Y. Rs.20.77 lakhs).

I n respect of Assessment year 2005-2006, there was tax demand of Rs.68.94 lakhs (Rs.68.94 lakhs) which had been adjusted by the tax authorities against refund due to the Company in respect of other years. During F.Y. 2015-16, the Company had received favourable Order passed by the ITAT, Mumbai against which the Income Tax Department has filed the appeal before the Bombay High Court and is under pre-admission stage.

Future cash outflows in respect of above are dependent on outcome of matter under dispute

b) The Company has purchased capital assets under EPCG license against which the Company has a balance export obligation of Rs.1,130.28 lakhs (P.Y. 1,103.79 lakhs). Contingent liability, to the extent of duty saved in respect of EPCG is Rs.188.38 lakhs (P.Y. 183.97 lakhs). The balance export obligation to be fulfilled as per license is upto year 2021-2023.

As at the year-end, amount of outstanding bonds executed by the Company in favour of customs authority aggregates to Rs.805.68 lakhs (P.Y. Rs.880.65 lakhs). Out of these, bonds aggregating to Rs.176.04 lakhs (P.Y. Rs.180.40 lakhs) are under the process of discharge from custom authorities.

c) Bank guarantees issued by the Company of Rs.94.91 lakhs (P.Y. Rs.73.67 lakhs)

d) The company’s contingent liability and capital/other commitment in relation to joint venture ' Nil and ' Nil.

e) The Company has process in place to ascertain the impact of pending litigation.

Note: No outflow of resources is expected in respect of Para (b) and (c).

2.6 Estimated amount of contracts remaining to be executed on-

a) Capital Commitment- Capital Account and not provided for Nil (net of advances) (P.Y. Rs.72.74 lakhs).

b) Other commitments-

1. Advertisement contracts aggregating to Nil (Net of advances) (P.Y Rs.12.65 lakhs).

2. Purchase of Consumables- Rs.15.94 lakhs (P.Y. ' Nil)

3. Capital Contribution Commitment for investment in India Whizdom Fund (IWF) Nil (P.Y. Rs.50.00 lakhs).

Also Refer Note 2.42 in respect of minimum lease rental payment under non-cancellable operating lease.

The effective tax rate is 32.52% (F.Y. 2016-17, 31.12%).

2.7 Corporate Social Responsibility

As per Section 135 of the Companies Act, 2013, the company has spent on Corporate Social Responsibility as per its CSR policy.

a) Gross amount required to be spent by the company during the year is Rs.193.33 lakhs (P.Y. Rs.191.20 lakhs)

Note: 1 Figures in brackets represents corresponding amount of previous year.

Note: 2 Cash flow from operating activities includes CSR amounting to Rs.247.00 lakhs (P.Y. Rs.191.35 lakhs)

c) Refer note no. 2.41 for transactions with related parties

2.8 Particulars of Loans, Guarantees or Investments pursuant to section 186(4) of the Companies Act, 2013-

2.9 Fair Value Measurement:

The management assessed that cash and bank balances, trade receivables, trade payables, cash credits and other financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair values of the financial assets and liabilities are 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 Company has established the following fair value hierarchy that categorises the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:

- Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities. The fair value of all equity investments and units of mutual funds which are traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date.

- Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on company specific estimates. The mutual fund units are valued using the closing Net Asset Value. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

- Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

2.10 Financial risk management objectives and policies:

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include trade and other receivables, investments, and cash & cash equivalents that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

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 two types of risk: (i) interest rate risk and (ii) currency risk. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings. The sensitivity analysis in the following sections relate to the position as at 31st March, 2018 and 31st March, 2017.

The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other postretirement obligations; provisions.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31st March, 2018 and 31st March, 2017.

(i) Interest rate risk

I nterest 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 Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s short term debt obligations with floating interest rates. The Company has sufficient amount of liquid investments to mitigate the interest risk on its short term debt obligations.

Interest rate sensitivity-

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings taken at floating rates. With all other variables held constant, the Company’s profit / (loss) before tax is affected through the impact on floating rate borrowings, as follows:

(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currency, primarily in USD. The Company’s trade receivables in foreign currency as at 31st March, 2018 is Rs.384.05 lakhs (P.Y. Rs.115.62 lakhs).

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in rate of USD, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities. The Company’s exposure to foreign currency changes for all other currencies is not material.

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).

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:

i. Actual or expected significant adverse changes in business,

ii. Actual or expected significant changes in the operating results of the counterparty,

iii. Financial or economic conditions that are expected to cause a significant change to the counterparty’s ability to meet its obligations,

iv. Significant increase in credit risk on other financial instruments of the same counterparty,

v. Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party guarantees or credit enhancements.

Financial assets are written off when there are no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the Company.

Assets in the nature of Investment, security deposits, loans and advances are measured using 12 months expected credit losses(ECL). Balances with Banks is subject to low credit risk due to good credit rating assigned to these banks. Trade receivables are measured using life time expected credit losses.

Financial Assets for which loss allowances is measured using the Expected Credit Losses (ECL):

The Ageing analysis of Account receivables has been considered from the date the invoice falls due-

No Significant changes in estimation techniques or assumptions were made during the year

c) Liquidity risk

The Company’s principal source of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the working capital is sufficient to meet its current requirements.

As on 31st March, 2018, the Company had working capital of Rs.18,535.43 lakhs (P.Y. Rs.16,736.16 lakhs) including cash and cash equivalents of Rs.6,154.29 lakhs (P.Y. Rs.6,556.03 lakhs) and current investments of Rs.9,329.67 lakhs (P.Y. Rs.7,582.84 lakhs)

Maturity patterns of the Financial Liabilities of the Company at the reporting date based on contractual undiscounted payment-

2.11Capital Management

(a) Risk Management

For the purposes of the Company’s capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders. The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to our shareholders.

The capital structure of the Company is based on management’s judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in 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 or issue new shares.

The Company’s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure

The Company monitors capital using Net debt-equity ratio, which is Net debt (i.e. total debt less cash & cash equivalents and current investments) divided by total equity.

2.12 First- time adoption of Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The Company has adopted Ind AS notified by the Ministry of Corporate Affairs with effect from 01st April, 2017, with a transition date of 01st April, 2016. Ind AS 101-First-time Adoption of Indian Accounting Standards requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements which is for the year ended 31st March, 2018 for the company, be applied retrospectively and consistently for all financial years presented. Consequently, in preparing these Ind AS financial statements, the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as explained below. The resulting difference in the carrying values of the assets and liabilities as at the transition date between the Ind AS and Previous GAAP have been recognized directly in equity.

Set out below are the Ind AS 101 optional exemptions availed as applicable and exceptions applied in the transition from previous GAAP to Ind AS.

A. Optional Exemptions availed

(a) Deemed Cost

The Company has opted paragraph D7AA and accordingly considered the carrying value of property, plant and equipment and Intangible assets as deemed cost as at the transition date.

(b) Investments in joint ventures

The Company has opted para D14 and D15 and accordingly considered the Previous GAAP carrying amount of Investments as deemed cost as at the transition date.

(c) Designation of previously recognised financial instruments

Paragraph D19B of Ind AS 101 gives an option to an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS. The company has opted to apply this exemption for its investment in equity Investments.

B. Applicable Exceptions

(a) Estimates

An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies).

Ind AS estimates as at 01st April, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in listed equity instruments carried at FVOCI;

- Investment in mutual funds carried at FVTPL; and

- Impairment of financial assets based on expected credit loss model.

(b) Classification and measurement of financial assets As required under Ind AS 101 the company has assessed the classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

C. Transition to Ind AS - Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS as required under Ind AS 101:

I. Reconciliation of Balance sheet as at 01st April, 2016 (Transition Date)

II. A. Reconciliation of Balance sheet as at 31st March, 2017

B. Reconciliation of Total Comprehensive Income for the year ended 31st March, 2017

III. Reconciliation of Statement of Cash flow for the year ended 31st March, 2017

IV. Reconciliation of Equity as at 31st March, 2017 & 01st April, 2016

The presentation requirements under Previous GAAP differs from Ind AS, and hence, Previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped Previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP.

A. Property, Plant and Equipment: The leasehold land having carrying value of Rs.210.16 lakhs as on 31st March, 2017 (01st April, 2016- Rs.213.22 lakhs) was classified as PPE under the previous GAAP, the same has been reclassified as “other non-current assets” under Ind AS in terms of the agreement. Depreciation of Rs.3.06 lakhs in respect to the above asset has been classified under “Manufacturing & operating expenses” under Ind AS.

Intangible Assets having carrying value of Rs.4.68 lakhs as at 31st March, 2017 (01st April, 2016- Nil) were reclassified as ‘Tangible Assets’ under PPE.

The Company has given part of the premises under operating lease during the financial year 2016-17. The same was classified as PPE under previous GAAP The carrying value of the above premises as on 31st March, 2017 of Rs.160.35 lakhs (01st April, 2016- Nil) have been reclassified as “Investment Properties” during the F.Y. 2016-17.

B. Investments:

The Company has designated all investments in mutual funds (classified under non-current investments, current investments, and cash & cash equivalents) at fair value through profit or loss (FVTPL) and investment in equity shares other than Investment in Joint Venture at Fair Value through OCI. Ind AS requires FVOCI and FVTPL investments to be measured at fair value. At the date of transition to Ind AS, difference between the fair value of investment and IGAAP carrying amount has been recognised in Retained Earnings.

C. Non-Current Financial Assets & Non-Current Other Assets: Reclassification from non-current financial assets to non-current other assets

D. Inventories: Effect of margin on sales return where there is a right to return the goods on inventories of Rs.56.24 lakhs (01st April, 2016- Rs.44.82 lakhs.)

E. Cash & Cash Equivalents:

1. Reclassification of liquid investments from cash & cash equivalents to current investments.

2. Reclassification of bank balance other than cash & cash Equivalents as separate line item.

F. Loans, Other Current Financial & Non- Financial assets:

Reclassification effect of Loans into other current financial and non-financial assets.

G. Other Equity: Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs.222.51 lakhs as at 01st April, 2016 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

H. Other Long-Term Liabilities:

Reclassification from other non-current long term liabilities to current liabilities.

I. Current Provisions: Tax liabilities were earlier classified under “Current Provisions”, the same has been reclassified as ‘current tax liabilities’ as separate line item in the balance sheet under Ind AS.

J. Discounts, Incentives & Promotional Expenses: Under the previous GAAP, promotional expenses, discounts and incentives to the customers were shown as a part of selling and distribution expenses. Under Ind AS, revenue from sale of products are recognised at net of these expenses. Thus, revenue from operations under Ind AS has decreased by Rs.2,281.67 lakhs with a corresponding decrease in selling and distribution expenses.

Under the previous GAAP, professional fees to management franchisee of Rs.95.13 lakhs was part of administrative expenses, the same has been reduced from revenue from operations under Ind AS. Under the previous GAAP, the cash discount offered to customers on early payment was part of finance cost. Under Ind AS, the cash discount of Rs.199.57 Lakhs is reduced from the revenue from operations.

The difference of opening and closing effect of margin on sales return (where there is a right to return the goods) of Rs.11.42 lakhs is shown under ‘Change in inventories of finished goods, work in progress and stock in trade’ with the corresponding decrease in revenue from operations.

Under the previous GAAP, revenue from sale of goods was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty is presented on the face of the Statement of Profit and Loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31st March, 2017 by Rs.1059.49 Lakhs.

There is no impact in the total equity and profit due to above adjustments.

K. Fair value difference of Rs.1,115.86 lakhs on investments in mutual funds is recognized as ‘Other Income’.

L. Re-measurement on defined benefit plans - Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in Other Comprehensive Income (OCI) instead of profit or loss. Under the previous GAAP, these re-measurements were forming part of the profit or loss for the year. As a result of this change, there is no impact on the total equity as at March 31, 2017.

2.13 Ind AS 115, Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should 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. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.

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 01, 2018.

The Company will adopt the standard on April 01, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.

2.14 Additional information as required by para 5 of General Instructions for preparation of Statement of Profit and Loss (other than already disclosed above) are either Nil or Not Applicable.

2.15 Previous year figures are regrouped or rearranged wherever considered necessary.

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