1. COMPANY OVERVIEW 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 registered office of the Company is located in New Delhi. 2. BASIS OF ACCOUNTING The financial statements are brpared under historical cost convention on an accrual basis, in accordance with the generally accepted accounting principles in India and including the Accounting Standards specified under section 133 of the Companies Act, 2013 (the 'Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and the guiding principles of the Accounting Standard 30, Financial Instruments- Recognition and Measurement issued by the Institute of Chartered Accountants of India in respect of certain derivative instruments. These financial statements have been brpared on a going concern basis and the accounting policies have been consistently applied by the Company. 2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) USE OF ESTIMATES The brparation of financial statements in conformity with the principles generally accepted in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised in the current and future periods. The Company's significant estimates pertains to useful life of fixed assets, provision for employee benefits, income taxes and provision for doubtful assets. b) FIXED ASSETS Fixed assets are stated at cost (gross block) less accumulated debrciation and amortisation. The cost of fixed assets comprises its purchase price and any cost attributable to bringing the assets to its working condition and intended use. Capital expenditure incurred on rented properties is classified as 'Leasehold improvements' under fixed assets. c) DEbrCIATION AND AMORTISATION Debrciation on fixed assets is provided as per the guidance set out in the schedule II to the Act. Debrciation is charged on written down value based on estimated useful life of the asset after considering the residual value as set out in schedule II to the Act referred above. The useful life of the assets are: d) REVENUE RECOGNITION Revenue from sale of goods is recognised on transfer of risk and rewards of ownership of goods to the buyer and when no significant uncertainty exists regarding the amount of consideration that will be derived. Sales are stated net of discounts and sales tax. Excise duty is not applicable to the Company. In respect of sale of goods at prices that are yet to be fixed at the year end, adjustments to the provisional amount billed to the customers are recognised based on the year end closing gold rate. Interest income is recognised on a time proportion basis taking into account the outstanding amount and the applicable rate. e) 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. Current investments are carried at lower of cost or fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline, other than temporary in the value of the long term investments. INVENTORIES Inventories are valued as follows: Raw material: Lower of cost or net realisable value. Cost is determined on first in first out ('FIFO') basis. Work-in-progress: At cost determined on FIFO basis up to estimated stage of completion. Finished goods: Lower of cost or net realisable value. Cost is determined on FIFO basis, includes direct material and labour expenses and appropriate proportion of manufacturing overheads based on the normal capacity for manufactured goods. Net realisable value is the estimated selling price in the ordinary course of business, less estimated cost of completion to make the sale. In respect of purchase of goods at prices that are yet to be fixed at the year end, adjustments to the provisional amounts invoiced by the vendor are recognised based on the year end closing gold rate. Alloys and consumables are charged to the Statement of Profit and Loss at the time of purchase. g) FOREIGN CURRENCY TRANSACTIONS Foreign currency transactions are recorded at the exchange rate brvailing on the date of the transaction. Differences arising out of foreign currency transactions settled during the year are recognised in the Statement of Profit and Loss. Monetary items outstanding at the balance sheet date and denominated in foreign currencies are recorded at the exchange rate brvailing at the end of the year. Differences arising there from are recognised in the Statement of Profit and Loss. Forward contracts are entered into to hedge the foreign currency risk of the underlying outstanding assets at the balance sheet date. The brmium or discount on such contracts is amortised as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of forward contracts is recognised as an income or expense for the year. h) DERIVATIVE INSTRUMENTS The Company uses foreign exchange forward contracts to hedge its exposure towards highly probable forecast transactions. These foreign exchange forward contracts are not used for trading or speculation purposes. The Company does mark to market valuation on outstanding forward contracts on highly probable forecast transactions and recognises the unrealised gains and losses per the available guiding principles of the Accounting Standard 30, Financial Instruments- Recognition and Measurement issued by the Institute of Chartered Accountants of India. i) EMPLOYEE BENEFITS Wages, salaries, bonuses and paid leave are accrued in the year in which the associated services are rendered by employees of the Company. The Company has two post employment plans in operation, i.e., Gratuity and Provident fund. Provident fund benefit is a defined contribution plan under which the Company pays fixed contributions into funds established under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The Company has no legal or constructive obligations to pay further contributions after payment of the fixed contribution. The contributions recognised in respect of defined contribution plans are expensed as and when they accrue. Liabilities and assets may be recognised if underpayment or brpayment has occurred and are included in current liabilities or current assets, respectively, as they are normally of a short term nature. The Company provides for gratuity, a defined benefit plan, which defines an amount of benefit that an employee will receive on separation from the Company, usually dependent on one or more factors such as age, years of service and remuneration. The liability recognised in the balance sheet for defined benefit plans is the brsent value of the defined benefit obligation ('DBO') at the balance sheet date together with adjustments for unrecognised actuarial gains or losses and past service costs. The brsent value of DBO is calculated annually by an independent actuary using the projected unit credit method. j) TAXATION Tax expense comprises current tax and deferred tax. Current tax is determined as higher of the amount of tax payable calculated at the tax rates applicable to the relevant assessment year on the assessable income of the respective year or tax payable on book profit computed in accordance with the provisions of section 115 JB of the Income - tax Act, 1961. Deferred income-tax reflects the impact of current period timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax asset to the extent it pertains to unabsorbed business loss/ debrciation is recognised only to the extent that there is virtual certainty of realisation based on convincing evidence, as evaluated on a case to case basis. Deferred tax assets or liability arising during tax holiday period is not recognised to the extent it reverses out within the tax holiday period. Minimum alternate tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income-tax during the specified period. In the period in which MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and write down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income-tax during the specified period. The Company has two factory units which are located in Special Economic Zone, namely, Unit I and Unit II. Unit II is fully exempted from current tax till 31 March 2015 and both the aforementioned units are partly 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. k) LEASES Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Lease payments under an operating lease are recognised as an expense in the Statement of Profit and Loss on straight line method over the lease term. l) IMPAIRMENT OF ASSETS The Company on an annual basis makes an assessment of any indicator that may lead to impairment of assets. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount is less than the carrying amount, then the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is charged to the Statement of Profit and Loss. If at the balance sheet date there is an indication that a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of debrciated historical cost. m) EARNINGS PER SHARE Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average numbers of equity shares outstanding during the year are adjusted for events of bonus issue and share split. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. n) PROVISIONS AND CONTINGENCIES The Company makes a provision when there is a brsent obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of the obligation can be made. A disclosure is made for a contingent liability when there is a: (i) possible obligation, the existence of which will be confirmed by the occurrence/non-occurrence of one or more uncertain events, not fully with in the control of the Company; or (ii) brsent obligation, where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or contd.) (iii) brsent obligation, where a reliable estimate cannot be made. Where there is a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. o) CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash at bank and in hand and short term bank deposits with an original maturity of three months or less. c) Details of shares issued pursuant to contract without payment being received in cash, allotted as fully paid up by way of bonus issues and bought back during the last 5 years to be given for each class of shares During the year ended 31 March 2012, the Company had issued two bonus shares for each share held by the shareholders per record on the 16 September 2011. Consequently, 89,311,000 bonus shares of H10 each had been issued by utilising the securities brmium balance and accumulated profits. Other than the aforementioned bonus issue, the Company has not issued any other shares pursuant to a contract without payment being received in cash nor has there been any buy-back of shares in the current year and brceding five years. d) Terms and rights attached to equity shares 1) The Company has only one class of equity shares having a par value of H10 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 at the ensuing Annual General meeting of the Company. 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 brferential payments. The distribution will be in proportion to the number of equity shares held by the shareholders. 2) During the year ended 31 March 2015, the amount of proposed final dividend recognised as distribution to equity shareholders is H3.20 per share (31 March 2014 H1.5 per share) and interim dividend paid was nil per share (brvious year H1.5 per share). 1. RECLASSIFICATIONS Previous year amounts have been regrouped/rearranged wherever considered necessary to make them comparable with those of the current year. For and on behalf of the board of directors Vijay Panwar Company Secretary Sanjeev Bhatia Chief Financial Officer Padam Chand Gupta Chairman DIN-00032794 Balram Garg Managing Director DIN-00032083 This is the summary of significant accounting policies and other explanatory information referred to in our report of even date. for Sharad Jain Associates Chartered Accountants for Walker Chandiok & Co LLP (formerly Walker, Chandiok & Co) Chartered Accountants per Sharad Jain Partner per Anupam Kumar Partner Date : 14 May 2015 Place : New Delhi |
