1. Terms/Rights attached to Equity Shares: The Company has one class of equity shares having a par value of ' 10/- each. Each shareholder is eligible for one vote per share held in the Company. The dividend proposed by the Board of Directors of the Company, if any, is subject to approval of the members in the ensuing general meeting, except in the case of interim dividend, if declared. In the event of liquidation of the Company, equity shareholders shall be entitled to receive the remaining assets, after the distribution to preferred shareholders, if any, in proportionate of their shareholding.
*The general reserve is used from time to time to transfer profit from retained earnings for apportion purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit and loss. FUrther,under the erstwhile Companies Act, 1956, general reserve was created through an annual transfer of net profit at a specified
percentage in accordance with applicable regulations. Consequent to the introduction of the Act 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn. Hence, no amount has been transferred to general reserve while declaring and paying the interim dividend during the year."
**The portion of profits not distributed among the shareholders are termed as retained earnings. The Company may utilize the retained earnings for making investments for future growth and expansion plans, for the purpose of generating higher returns for the shareholders or for any other specific purpose, as approved by the Board of Directors of the Company.
*Secured against hypothecation of Company's entire stock of raw materials, stock in process, finished goods, consumables, stores and spares, finished goods in stores, in transit and with shippers at port awaiting shipment for exports, receivables, cheques, bank drafts and all other current assets and 2nd paripassu charge on Plant & Machinery.
During the year under consideration, no remuneration has been paid to Non-Executive Directors except sitting fees of ' 7.50Lakh (Previous year ' 8.25 Lakh) to Independent Directors.
35. In the opinion of the Board and to the best of its knowledge, the value of realization of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they have been stated in the Balance Sheet.
36. During the course of its business the Company usually extends credit terms for more than six months to some of its customers more particularly to overseas customers however there wasan abnormal increase in such outstanding since financial year 2019-20 majorly due to delay in release of payments under one of government tender supplies aggregating to ' 2,682.88 Lakhs on account of procedural compliances/clearances. The Company was in consistent follow up with the concerned authorities and during the year 2022-23 has received the payment aggregating to ' 2,246.32 Lakhs as full & final net of certain arbitrary deductions/claims on a/c of shortages, late delivery etc. The Company has preferred a
representation before the appropriate authority against such arbitrary deductions and is in process of filing a petition before theHon'ble High Court of Andhra Pradesh for appointment of an Arbitrator in this regard. Irrespective of these remedial action, in furtherance to Company's policy and assuming its non-recoverability in shorter period of time the Company has charged off the remaining outstanding balance of ' 436.56 Lakhs, net of share of respective vendorsto the extent of proportionate supplies made by them to the Company aggregating to ' 268.82 Lakhs, to profit & loss account for the year ended on 31st March, 2023 and Net Profits of the Company for the year are lower to the extent of ' 167.74 Lakhs.
37. Ageing schedule of Trade Receivables: Disclosure on ageing schedule of trade receivables in pursuant to Division II - Ind AS Schedule III to the Companies Act, 2013 is as under:
38. Provision for doubtful debts:
The Company has considered debts for ' 366.85 Lakh (Previous year ' 406.26 Lakh) as doubtful debts/advances/securities and also has withdrawn ' 22.96 Lakh (Previous year ' Nil) out of the provisions made in the earlier years for the
same and written off as bad debts ' 33.92 Lakh (Previous yearNil). Further the difference of the provision made and amount withdrawn during the year, detailed as under, has been charged to Statement of Profit & Loss for the year and the balance has been carried in the balance sheet.
39. In accordance to its policy as regards to evaluation of its trade receivables, considering the nonrecoverability of some of the debts/advances, the
Company has written off the debts/advances amount to ' 51.64 Lakh(Previous year ' 11.82 Lakh).
41. The Company has taken various retail stores and warehouses under operating lease arrangements. The lease agreements generally have an escalation clause and there are no subleases. These leases
are generally not non-cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed by lease agreements.
The leasehold rights are depreciated/amortized using the straight line method from the commencement date over the shorter of lease term or useful life of right to use.
42. The Company implemented the Ind-AS-116 with effect from 1stApril, 2019 and accordingly is considering all the persisting leasehold rights having maturity for more than 12 months including entered during the year 2022-23 at its present value as Intangible Rights in Schedule of Fixed Assets and is amortizing the leasehold rightson year on year basis. During the year 2022-23 the Company has capitalized/(adjusted)the present value of leasehold rights entered during the year
(net of terminated) for ' 3,255.46 Lakhs(Previous year ' 366.57 Lakhs) and has amortized the leasehold rights (net of terminated) for ' 1,934.24 Lakhs (Previous year ' 1737.35 Lakhs).
Further while amortizing the leasehold rights for the year, decrease in leasehold obligations agreed with the landlords due to the covid-19 outbreak in the country and resultant lockdown during the year has not been factored being temporary in nature and the said decrease in leasehold obligations aggregating to ^ 120.46 Lakhs (Previous year ' 319.24 Lakhs) has been passed on through Profit & Loss account for the year.
44. The Company has maintained separate record of its suppliers as micro & small on the basis of memorandum (as required to be filed by the suppliers with the notified authority under the Micro, Small & Medium Enterprise Development
Act, 2006) claiming their status as on 31st March, 2023 as Micro or Small Enterprise. Disclosure is hereby given in pursuant to requirement of section 22 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006
49. Detail of Employee Benefits - Gratuity
The Company has a defined gratuity plan (Defined Benefit). Every employee, on completion of continuous service of five years or more with the Company, is entitled to get the gratuity of15 days salary, on the basis of last drawn salary, for each completed year of service. The scheme is funded
with Life Insurance Corporation of India (LIC) in the form of qualifying insurance policy.
The following table summarizes the component of net benefit expense recognized in the Statement of Profit & Loss and the funded status and amount recognized in the Balance Sheet for the respective plans:
52. Contemplating the long-term benefits for unlocking the shareholders' value through acquisition of the tangible and intangible assets including business rights of two partnership firms, in which few Directors of the Company are interested as partners, namely Liberty Enterprises (LE) & Liberty Group Marketing Division (LGMD), the Company had entered into a Memorandum of Understanding (MOU) on March 31, 2015, with these two Partnership Firms for acquisition of their respective business of footwear. Since then, due to certain technical reasons, this MOU and the subsequent MOU for the related matter have not been materialized to the envisaged extent. The
Company, keeping in view the protection of its shareholders interest and also to ensure long term continuance of the arrangements with these partnership firms till materialization of the
acquisition of their respective business of footwear have extended the validity of earlier executed agreements and is assessing the business rights of the two firms with its availability till March 2028.
During the year in terms of above referred arrangements, the Company has paid/provided for franchise fee of '115 Lakh (Previous year '115 Lakh) to LE and '786 Lakh (Previous year '704.60 Lakh) to LGMD and in terms of the renewed agreement dated April 3, 2013 of the Company with Liberty Footwear Co. (LFC), another Partnership Firm of the group and owner of trademarks "LIBERTY", for granting exclusive rights of usage of the trademark "LIBERTY" for a
period of fifteen years from April 1, 2013 onwards, the Company has paid/provided for trademark license fee of '1263 Lakh (Previous year '998.54 Lakh) to LFC.
The Company is vehemently contesting the legal disputes raised by few partner(s) before respective authorities/NCLT/courts, challenging either the validity of the arrangements of one of the firm or interpretation of meeting the financial obligation by the Company with regard discharge of its commercial liability towards LGMD & LFC as regards to the referred agreements.In addition, during the year 2022-23, few of the partners of LE, LGMD and LFC have served notices to the Company for termination of the ongoing franchise/trade mark license arrangements w.e.f. 01/04/2023 onwards. The same have been suitably replied by the Company duly reemphasizing its right of usage of tangible and intangible assets of these firms till March 2028 by virtue of the above referred agreements and is also exploring the other legal remedies available to protect its rights.
The Company has also invoked arbitration clause of the agreement with LFC and has filed petition under Section 9 of The Arbitration and Conciliation Act, 1996 before the appropriate court at Karnal against LFC and keeping in view the submission, the Hon'ble court vide its order dated 16/03/2023 has directed both the parties to maintain status-quotill further order.
|
53. Contingent Liabilities
|
|
(Amount in 'Lakh)
|
| |
Particulars
|
2022-23
|
2021-22
|
|
I.
|
Bank Guarantees issued on behalf of the Company submitted with various institutional customers in terms of their orders.
|
214.87
|
429.27
|
|
II.
|
Letter of Credits (LCs) issued in favour of the Domestic and Overseas vendors for supply of materials/goods are for ' 227.40 Lakh out of which liabilities for ' 137.95 Lakh have been part of Trade Payables as on 31st March, 2023
|
89.45
|
|
|
III.
|
i
Value Added Tax for the financial year 2005-06, 2006-07, 2007-08 & 2008-09 on account of classification of goods at different rate of tax.
|
55.70
|
55.70
|
|
IV.
|
Value Added Tax for the financial year 2016-17 on account of classification of goods at different rate of tax.
|
45.35
|
45.35
|
|
V.
|
Service Tax on GTA Services for the period from January 2005 to March 2007
|
5.29
|
5.29
|
|
VI.
|
On account of compliance relating to obligations under EPCG Licenses
|
-
|
10.56
|
|
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2023
|
|
(Amount in ' Lakh)
|
| |
Particulars
|
2022-23
|
2021-22
|
|
VII.
|
On account of few labour matters pertaining to earlier years which are pending before Hon'ble Labour Commissioner, Chandigarh and have been challenged by the Company being time barred.
|
210.00
|
210.00
|
|
Vlll.
|
Disallowance of certain expenditure on a/c of non-deduction of tax at source3 which otherwise are not liable for deduction in terms of applicable provisions of the law and for which Company is under appeal. Company has also preferred an appeal against the same before the appropriate authority and is pending for adjudication.
|
172.88
|
172.88
|
|
lX.
|
Disallowance of certain expenditure for the assessment year 2020-21 on a/c of non-allow-ability and some of enduring nature, grossly ignoring the past assessment history of the Company for earlier years, for which Company is under appeal. In addition, the Company has filed a petition before the Grievance Committee constituted by CBDT for such a high-pitch assessment framed under faceless mechanism andare yet to be addressed.
|
964.84
|
|
|
X.
|
On account of litigation initiated by some of the vendors and third parties for disputed claims before respective authorities
|
75.00
|
75.00
|
|
Xl.
|
On account of short deduction of Tax at Source4 in the case of erstwhile subsidiary company M/s Liberty year 2011-12, 2012-13, 2013-14 & 2014-15, for which Company has filed appeals before the appropriate authority and are pending
|
40.03
|
40.03
|
|
Xll.
|
On account of short deduction of Tax at Source for the assessment year 2018-19 which otherwise are not liable for deduction in terms of applicable provisions of the law and for which Company has filed appeals before the appropriate authority and are pending for adjudication.
|
27.51
|
27.51
|
|
Xlll.
|
On account of arbitrary additions made for the assessment year 2014-15 against which partly relief has already been granted by the appellate authority in favour of the Company and the department as well as the Company are in appeal before the Hon'ble ITAT for the same and are pending for adjudication.
|
46.84
|
46.84
|
|
XlV.
|
On account of reduction of deduction u/s 80IC of Income Tax Act, 1961 for the assessment year 2013-14 due to non-considering part of business income as industrial income, for which Company's appeal is pending before Hon'ble Punjab & Haryana High Court duly allowing the interim relief as regard to the related matter.
|
59.14
|
59.14
|
|
XV.
|
On account of disallowance made in accordance to the provisions of section 14A of the Income Tax Act, 1961 and disallowance of certain legitimate expenses of business for the assessment year 2012-13, which has been decided by the appellate authority in favour of the Company and the department has preferred a further appeal before the Hon'ble ITAT, Delhi.
|
70.93
|
70.93
|
|
XVI.
|
On account of disallowance made in accordance to the provisions of section 14A of the Income Tax Act, 1961 and disallowance of certain legitimate expenses of business for the assessment year 2014-15, which has been decided by the appellate authority in favour of the Company and the department has preferred a further appeal before the Hon'ble ITAT, Delhi.
|
114.40
|
114.40
|
Including amount deposited under protest ' 13.82 Lakh (Previous year ' 14.26 Lakh) 2Appeal Fee paid ' 7.10 Lakh (Previous year ' 7.10 Lakh)
3Amount deposited under protest ' 21.25 Lakh (Previous year ' 21.25 Lakh)
4Amount deposited under protest ' 2.32 Lakh (Previous year ' Nil)
54. The assessment of the Company in respect of Income Tax is completed up to the Assessment Year 2020-21vide order dated 27.03.2023 with an assessed income for ' 4038.41 Lakhs as against returned income for ' 2014.05 Lakhs on account of
arbitrary disallowance of certain legitimate expenses and additions made and the Company has preferred an appeal before the appropriate authorities. Further the assessment for the Assessment Year 2016-17 has also been reopened
vide order dated 05.04.2023 for want of certain clarifications alleging escaped income for ' 1557.99 Lakhs on the basis of information uploaded on Insight Systems of the Income Tax Department.
55. For the current year, Deferred Tax Liability has been calculated after considering the cumulative timing differences of ' Nil (Previous year ' Nil) mainly on account of depreciation.
56. During the year, the Company has capitalized the borrowing cost of ' Nil (Previous year ' Nil) as part of the cost of the qualifying assets.
57. Capital commitments not provided for are estimated at ' 25 Lakh (Previous year ' 15 Lakh).
58. The Board of Directors of the Company presently considers and maintains "Footwear" as the main business segment of the Company. Further the Company's Lifestyle division has also formally commenced its operations w.e.f. October 17, 2018, however the same has not been considered as separate business segment because of its insignificant contribution to revenue during the financial year 2022-23 on account of Sales and Net Profits for ' 471.82 Lakhs and ' 34.79 Lakhs respectively.
Taking note of the ongoing dispute among the partners of related partnership firms as regards to its business operations, on the request of majority of the partners besides making the statutory payments of the related partnership firms on time to time basis, the Company, in accordance to the terms of respective agreements, had been discharging its contractual liability towards respective partnership firms till September 2022 by making the payment to respective partners in accordance to the details provided by majority of
partners. However thereafter due to serving of notices for termination of these arrangements with respective firms by few of the partners, the Company has, based upon the legal opinion available, stopped following the same practice for want of fresh mandate of majority of the partnersand accordingly has now been discharging its contractual liability on timely basis in the name of respective firms only.
2As the liabilities for provident fund, gratuity and compensated absences are provided on an actuarial
basis for the Company as a whole, the amounts pertaining to the Directors and KMP are not included above.
3As per the section 149(6) of the Companies Act, 2013, Independent Directors are not considered as "Key
Managerial Person", however to comply with the disclosure requirements of Ind AS-24 on "Related party transactions" they have been disclosed as "Key Managerial Person".
62. As per Company's assessment about recoverability and carrying values of its assets comprising of receivables, inventories, plant and equipment, intangible assets, it expects to recover the carrying amount of these assets. However, the Company will continue to monitor any material changes to future economic conditions due to uncertainties linked to COVID -19.
63. The Company has regrouped/reclassified/ rearranged the previous year figures in accordance with the requirements applicable in the current year as well as for appropriate presentation of the accounts detailed as under:
I. Packing Materials Consumed has been
regrouped/ rearranged from Schedule No. 31 (b) to Schedule 26 (b) under the head "Cost of Materials consumed and Finished Goods Purchased" and impact of such regrouping/ rearranging on the Net Profits of the Company is Nil.
64. The current year and previous year figures have been rounded off to the nearest rupee.
65. The Company does not hold any benami property and no proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and the rules made thereunder.
66. The Company has duly filed Quarterly returns or statements, Unaudited and Audited as the case may be, of its current assets with the banks and are in agreement with its books of accounts.
67. The Company is not declared as willful defaulter by any bank in accordance with the guidelines on wilful defaulters issued by the RBI.
68. The Company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013. This is determined to the extent of such parties have been identified on the basis of information available with the Company.
69. The Company has duly registered all the charges or satisfaction thereof with Registrar of Companies (ROC) within the statutory period.
70. The number of layers prescribed under clause (87) section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable to the Company
71. During the year, no scheme of arrangements has been approved by the competent authority in terms of sections 230 to 237 of the Companies Act, 2013.
72. The Company has not advanced or loaned or invested funds to any other persons (intermediaries) with the understanding that the intermediary shall directly or indirectly lend or invest in other persons or provide any guarantee in any manner whatsoever on behalf of the Company (ultimate beneficiary). The Company has also not received any fund from any persons with the understanding that the Company shall directly lend or invest or provide any guarantee to any other persons on behalf of the funding party.
73. The Company does not have any transactions which are not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
74. During the year, the Company has not traded or invested in crypto currency or virtual currency.
75. The Company has not revalued its property, plant and equipment or intangible assets or both during the current or previous year.
76. Fair Value Measurements
Fair value of financial assets and liabilities is normally determined by references to the transaction price or market price and in case of non-reliably determinable, the Company determines the same using valuation techniques that are appropriate in the circumstances and for which sufficient data are available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs as per the following:
a. Foreign exchange forward contracts are valued using market observable inputs such as foreign exchange spot rates and forward rates at the end of the reporting period.
b. Unquoted equity instruments where most recent information to measure fair value is not determinable, cost has been considered as best estimate of fair value.
c. The carrying amount of other financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate any
significant difference that the carrying amounts would be significantly different from the values that would eventually be received or settled.
Fair Value Hierarchy
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed as per IndAS 113 "Fair Value Measurement":
|