Note1 SIGNIFICANT ACCOUNTING pOLICIES 1 Basis of brparation of accounts The financial statements are brpared on the accrual basis of accounting and in accordance with the Accounting Standards notified under Companies (Accounts) Rules,2014 and referred under Section 133 of the Companies Act,2013. 2 Fixed Assets and Debrciation (a) Fixed Assets are stated at cost less debrciation/amortisation and impairement. Costs comprise of cost of acquisition, Borrowing Cost, Cost of Improvement and any attributable cost of bringing the asset to condition for its intended use. (b) Debrciation on tangible assets is provided in accordance with useful life as brscribed in Schedule II of the Companies Act,2013. (Refer Note 4.22, Page 127) (a) In respect of the assets of the Retail Business on "Straight Line" method. (b) In respect of all other assets on "Written Down Value" method. (c ) Leasehold land is amortised over the period of lease remaining as at the date of their capitalisation. (d) Improvement to leasehold brmises are debrciated over the period of lease remaining as at the date of their capitalisation. (e) Intangible Assets are amortised over their useful life or ten years whichever is lower. 3 Investments Long Term Investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of Long Term Investments. Current Investments are stated at lower of cost or fair value. 4 Inventories Inventories are valued at lower of cost or net realisable value. 5 Income (a) Sale of goods is recognised on delivery to customers (b) Other operating revenues are accounted on accrual basis. (c) Interest income is accounted on accrual basis. (d) Dividend income is accounted when right to receive payment is establishe 6 Retirement Benefits 3.6.1 Defined Contribution plans a) Company's contributions during the year towards Government administered Provident Fund, Family Pension Fund, ESIC and Labour Welfare Fund are charged to the Profit and Loss Account as incurred. b) Company's contributions during the year towards Superannuation to the Superannuation Trust administered by a Life Insurance Company are recognized in the Profit and Loss Account as incurred. 6 Defined Benefit plans a) Company's Contribution towards Gratuity made under the Group Gratuity Schemes with Life Insurance Companies are determined based on the amounts recommended by Life Insurance Companies as per actuarial valuation. b) Provision for other retirement / post retirement benefits in the forms of pensions, medical benefits and long term compensated absences (leave encashment) has been made on the basis of actuarial valuation. 7 Foreign Currency Transactions Foreign Currency transactions are accounted at the rates brvailing on the date of transaction. Year end monetary assets and liabilities are translated at the exchange rate ruling on the date of the Balance Sheet. Exchange differences on settlement/conversion are adjusted to the Profit and Loss Account. 8 Provisions and Contingent Liabilities The Company recognises a provision when there is a brsent obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or brsent obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. 9 Taxation (a) Current Tax comprises of Provision for Income Tax as determined in accordance with the provisions of Income Tax Act, 1961. (b) Deferred tax, subject to the consideration of prudence, is recognised on timing differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In case of unabsorbed debrciation and carry forward tax losses, deferred tax assets are recognised to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. 10 Leases Lease arrangements where the risks and rewards incident to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rents under operating leases are recognised in the Profit and Loss Account on straight line basis. 11 Borrowing Cost Borrowing cost include interest, fees and other charges incurred in connection with the borrowing of funds and is considered as revenue expenditure for the year in which it is incurred. Borrowing cost attributed to the acquisition/improvement of qualifying capital assets and incurred till the commencement of commercial use of the assets is capitalised as cost of the assets. 12 Impairment of Assets The carrying value of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, If the carrying amount of these assets exceeds their recoverable amount.The recoverable amount is the greater of the net selling price and their value in use.When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit & Loss, except in case of revalued assets. Note 2 OTHER SIGNIFICANT NOTES 1. 2 Capital and Other Commitments (a) Capital Commitments Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 11.14 crores (2014-2015 : Rs. 5.12 crores) (b) Other Commitments (i) The company has given undertakings to the lenders of its subsidiary,Westland Limited restricting its rights to sell the shares of Westland Limited held by it. (ii) The Finance Act,2007 introduced service tax on "Renting on Immovable Property" with effect from 01st June, 2007.The Company had entered into several agreements with Landlords and Mall owners prior to the introduction of service tax on rent. The Delhi High court through its judgement dated 19th April, 2009 had set aside the operation of service tax on rent as ultra vires.In the meanwhile ,the Finance Act, 2010 has amended the Finance Act retrospectively with effect from 1st June,2007 levying service tax on "Renting of Immovable Property". This retrospective amendment and applicability on service tax on rent was challenged by Retailers Association of India of which the company is a member . The case is brsently before the Subrme court pending final disposal. The company has paid and/or adequately provided for service tax on rent upto the period 31st March,2016 under rent/lease agreements in which it had explicitly assumed the liability of service tax on rent.As per the directions of the Subrme court dated 14th October 2011 the company had deposited Rs. 4.66 crores being 50% of the liability under such agreements.During the year 2015-16, residual service tax of Rs. 3.34 crores has been deposited with the Service tax Department after adjusting amounts already paid by the developers/lessors.Pending the final Subrme Court Judgement interest/penalty if any as may be payable is not brsently ascertainable or quantifiable. (iii) Export Obligation of Rs. 3.45 Crores against EPCG Licence of Landmark Limited since merged with company w.e.f. 01-04-2013. (c) Certain Key arrangements of the Company The Company has agreements in respect of the following and the parties inter-se have certain rights and obligations,also covering certain affirmative and shareholding related provisions, commensurate with arrangements of this nature: 1 Joint venture with Inditex Group for Zara & Massimo Dutti stores in India. 2 Joint venture with Tesco PLC UK,with respect to Trent Hyper-market Private Limited. 3 Arrangement with Amazon Group with respect to Westland Limited. 2.2. Contingent Liabilities and Claims (a) Contingent Liability in respect of Sales tax, Excise , Customs and other indirect tax matters: Rs. 1.63crores (2014-2015: Rs. 1.26 crores) - net of tax Rs. 1.08 crores (2014-2015 : Rs. 0.83 crores). (b) Contingent Liability in respect of Income-tax matters : Rs. 13.43 crores (2014-2015 : Rs. 2.07 crores). (c) Contingent Liability in respect of Claims filed against the Company Rs. 7.04 crores (2014-2015 : Rs. 6.81 crores) (d) Contingent Liability in respect of Provident Fund matter : Rs. 1.11crores (2014-15: Rs. 1.11 Crores). (e) Claims made against the Company not acknowledged as debts Rs. 0.95 crores (2014-2015 : Rs. 1.74 crores) (f) Corporate Guaranteegiven on behalfofa Subsidiary/JointVenture(Refernote:4.18.17, Page122) : Rs. 117.22 crores (2014-2015 : Rs. 150.9 crores) 2.3 There are no Micro and Small Enterprises , to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2016. This information as required to be disclosed under the Micro,Small and Medium Enterprise Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. 2.4 There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at 31st March, 2016 except Rs. 0.06 crores (2014-2015 : Rs. 0.06 crores) which is held in abeyance due to legal cases pending. 2.5 Entire proceeds of the issue of Non-Convertible Debentures (NCD) of Rs. 300 crores in 2015-16 have been utilised towards objects of the issue. 2.6 The Company has taken credit for MAT which it is entitled on future taxable profits 2.7 During the brvious year,the company had adopted the revised useful life of Fixed Assets as per Schedule II of the Companies Act 2013.Accordingly the opening written down value of fixed assets for FY 2014-15 was debrciated over their balance revised useful life. In respect of fixed assets whose useful life had expired as on 01st April 2014,the opening WDV of Rs. 4.53 crores (net of deferred tax) had been adjusted to opening balance of retained earnings as on 01st April 2014. 2.8 As per the agreement entered with Tesco PLC, UK in respect of Trent Hypermarket Private Limited (THPL), a wholly owned subsidiary of Tesco PLC, UK (Tesco) during the brvious year had purchased part of the equity shares held by the Company in THPL and had separately subscribed to additional equity shares of THPL. Following this investment the Company and Tesco each held 50% stake in THPL. Consequently, THPL is now a Joint Venture (JV) of the Company with Tesco. 3. Previous year's figures have been regrouped / reclassified wherever necessary. As per our Report attached. For N.M.Raiji & Co, Chartered Accountants Registration No.108296W CA Y.N.Thakkar Partner Membership No. 33329 For and on behalf of the Board, N. N. TATA h. bhat B. N. vAKIL m.m. surti p. venkatesalu z. s. dubash Company Secretary Executive Director (Finance) and CFO B. BHAT S. SINGH A. SEN philip auld Chairman Directors Managing Director PLACE : Mumbai, DATE : 26th May 2016 |