Company Overview
Celebrity Fashions Limited (“the Company”) is a public limited company
incorporated in India. The Company’s equity shares are listed on BSE and NSE.
The Registered office is located at Chennai.
1.1 Statement of Compliance
The financial statements have been prepared as a going concern in
accordance with Indian Accounting Standards (Ind AS) notified under
Section 133 of the Companies Act, 2013 (“the Act”) read with the
Companies (Indian Accounting Standards) Rules, 2015 and other relevant
provisions of the Act.
1.2 Basis of Preparation of Financial Statements
The financial statements have been prepared on the historical cost
convention on accrual basis except for certain financial instruments which
are measured at fair value at the end of each reporting period, as
explained in the accounting policies mentioned below. Historical cost is
generally based on the fair value of the consideration given in exchange
of goods or services.
The principal accounting policies are set out below:
All assets and liabilities have been classified as current or noncurrent
according to the Company’s operating cycle and other criteria set out in
the Act. Based on the nature of products and the time between acquisition
of assets for processing and their realisation in cash and cash equivalents,
the Company has ascertained its operating cycle as twelve months for
the purpose of current and non-current classification of assets and
liabilities.
1.3 Going Concern
The board of directors have taken actions to ensure that appropriate
long-term cash resources are in place at the date of signing the accounts
to fund the Company’s operations.
1.4 Use of Estimates and Judgements
The preparation of financial statements in conformity with Ind AS requires
management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amount of assets,
liabilities, income, expenses and disclosures of contingent assets and
liabilities at the date of these financial statements and the reported amount
of revenues and expenses for the years presented. Actual results may
differ from the estimates.
Estimates and underlying assumptions are reviewed at each balance
sheet date. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and future periods affected.
1.5 Revenue Recognition
The Company has applied Ind AS 115 from April 1,2018 and had opted
for Modified retrospective application with the cumulative effect of initially
applying this standard recognised at the date of initial application. The
standard has been applied to all open contracts as on 1st April 2018,
and subsequent contracts with customers from that date.
1.5.1 Sale of Goods
Revenue is recognised when the performance obligations are satisified
and the control of the product is transferred, being when the goods are
delivered as per the relevant terms of the contract at which point in time
the Company has a right to payment for the asset, customer has
possession and legal title of the asset, customer bears significant risk
and rewards of ownership and the customer has accepted the asset or
the Company has objective evidence that all criteria for acceptance have
been satisfied.
Payment for the sale is made as per the credit terms in the agreements
with the customers. The credit period is generally short term, thus there
is no significant financing component.
1.5.2 Income from service
Revenue from job contract manufacturing activities is recognised when
the performance obligations are satisfied and the control of the product
is transferred at a point in time, being when the goods are delivered as
per the relevant terms of the contract at which point in time the Company
has a right to payment for the asset, customer has possession and legal
title of the asset, customer bears significant risk and rewards of ownership
and the customer has accepted the asset or the Company has objective
evidence that all criteria for acceptance have been satisfied.
Payment for the sale is made as per the credit terms in the agreements
with the customers. The credit period is generally short term, thus there
is no significant financing component.
1.6 Foreign Currencies
1.6.1 Functional and presentation currency
Items included in the financial statements are measured using the
currency of the primary economic environment in which the company
operates (‘the functional currency’). The financial statements are
presented in Indian rupee, which is the company’s functional and
presentation currency.
1.6.2 Transaction balances
Foreign currency transactions are translated into the functional currency
using the exchange rates at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange rates are
generally recognized in profit or loss.
1.7 Employee Benefits
1.7.1 Short term obligations
Liabilities for wages and salaries, including non-monetary benefits that
are expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service are recognized
in respect of employees’ services upto the end of the reporting period
and are measured at the amounts expected to be paid when the liabilities
are settled. The liabilities are presented as current employee benefit
obligations in the balance sheet.
1.7.2 Other Long term employee benefit
The liabilities for earned leave are not expected to be settled wholly within
12 months after the end of the period in which the employees render the
related service. They are therefore measured as the present value of the
expected future payments to be made in respect of services provided by
employee upto the end of reporting period using the projected unit credit
method. The benefits are discounted using the market yields at the end
of the reporting period that have terms approximating to the terms of the
related obligation. Measurements as a result of experience adjustments
and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if
the entity does not have an unconditional right to defer settlement for at
least twelve months after the reporting period, regardless of when the
actual settlement is expected to occur.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based
on the actuarial valuation using the projected unit credit method at the
period-end. Actuarial gains/losses are immediately taken to the statement
of profit and loss and are not deferred. The Company presents the leave
as a current liability in the balance sheet; to the extent it does not have
an unconditional right to defer its settlement for 12 months after the
reporting date. Where Company has the unconditional legal and
contractual right to defer the settlement for a period beyond 12 months,
the same is presented as non-current liability.
1.7.3 Post employment obligation
The Company operates the following post-employment schemes:
a. Define benefit plans such as gratuity for its eligible employees, and
b. Defined contribution plans such as provident fund
Defined Contribution plan:
Retirement benefit in the form of provident fund is a defined contribution
scheme. The Company has no obligation, other than the contribution
payable to the provident fund. The Company recognizes contribution
payable to the provident fund scheme and pension scheme as
expenditure, when an employee renders the related service. If the
contribution payable to the scheme for service received before the balance
sheet date exceeds the contribution already paid, the deficit payable to
the scheme is recognized as a liability after deducting the contribution
already paid. If the contribution already paid exceeds the contribution
due for services received before the balance sheet date, then excess is
recognized as an asset to the extent that the pre-payment will lead to, for
example, a reduction in future payment or a cash refund.
Defined benefit plan:
The Company has a gratuity defined benefit plans for its employees. The
costs of providing benefits under these plans are determined on the basis
of actuarial valuation at each year-end. Separate actuarial valuation is
carried out for each plan using the projected unit credit method. Re¬
measurement gains and losses arising from experience adjustments and
changes in actuarial assumptions are recognised in the period in which
they occur, directly in other comprehensive income. They are included in
retained earnings in the statement of changes in equity and the
balancesheet. The Company has funded this with Reliance Life Insurance
and SBI Life Insurance. The defined benefit obligation recognised in the
balance sheet represents the present value of the defined benefit
obligation as reduced by the fair value of plan assets.
1.7.4 Bonus Plans
The Company recognizes a liability and an expense for bonus. The
Company recognizes a provision where contractually obliged or where
there is a past practice that has created a constructive obligation.
1.8 Taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
1.8.1 Current Tax
The income tax expenses or credit is based on taxable profit for the year.
Taxable profit differs from ‘profit before tax’ as reported in the statement
of profit and loss because of items of income or expense that are taxable
or deductible in other years and items that are never taxable or deductible.
The Company’s current tax is calculated using tax rates that have been
enacted.
1.8.2 Deferred Tax
Deferred tax assets arising from timing differences are recognised to the
extent there is reasonable certainty that these would be realised in future.
In case of unabsorbed losses and unabsorbed depreciation, all deferred
tax assets are recognised only if there is virtual certainty supported by
convincing evidence that they can be realised against future taxable profit.
Unrecognized deferred tax assets of earlier periods are re-assessed and
recognized to the extent that it has become reasonably certain or virtually
certain as the case may be, that future taxable income will be available
against which such deferred tax assets can be realized.
1.8.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when
they relate to items that are recognised in other comprehensive income
or directly in equity, in which case, the income taxes are also recognised
in other comprehensive income or directly in equity respectively.
1.9 Property, Plant and Equipment
Property, Plant And Equipment are stated at cost including incidental
expenses related to acquisition and installation, less accumulated
depreciation and impairment if any. Such assets are classified to the
appropriate categories of property, plant and equipment when completed
and ready for intended use. Direct costs are capitalized until the Property
Plant And Equipment are ready for use. These costs includes non
recoverable taxes, duties or levies, freight and any other directly
attributable costs of bringing the asset to its working condition for its
intended use.
Subsequent expenditure relating to property, plant and equipment is
capitalized only when it is probable that future economic benefits
associated with these will flow to the company and the cost of the item
can be measured reliably.
Repairs and maintenance costs are recognized in the Statement of Profit
and Loss when incurred. The cost and related accumulated depreciation
are eliminated from the financial statements upon sale or retirement of
the asset and the resultant gains or losses are recognized in the Statement
of Profit and Loss. The carrying amount of any component accounted for
as a separate asset is derecognised when replaced. The other repairs
and maintenance of revenue nature are charged to profit or loss during
the reporting period in which they are incurred. Gains and losses arising
from retirement or disposal of the Property, Plant And Equipment are
determined as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the Statement of
Profit and Loss on the date of retirement or disposal.
Depreciation on tangible assets is provided on the straight-line method
over the useful lives of assets estimated by the Management. Depreciation
for assets purchased / sold during a period is proportionately charged.
The assets’ residual values, estimated useful lives and depreciation
method are reviewed at the end of each reporting period, with the effect
of any changes in estimate accounted for on a prospective basis. Gains
and losses on disposal are determined by comparing proceeds with
carrying amount and are credited / debited to profit or loss.
Additional depreciation is being provided to the extent required during the
year of sale of assets. Assets, for which the estimated useful life is completed,
have been removed from gross block and accumulated depreciation.
Advances paid towards the acquisition of property, plant and equipment
outstanding at each balance sheet date is classified as capital advances
under other non-current assets and the cost of assets not put to use before
such date are disclosed under ‘Capital work - in -progress’. Subsequent
expenditures relating to property, plant and equipment is capitalized only
when it is probable that future economic benefits associated with these
will flow to the company and the cost of the item can be measured reliably.
Repairs and maintenance costs are recognized in net profit in the Statement
of Profit and Loss when incurred. The cost and related accumulated
depreciation are eliminated from the financial statements upon sale or
retirement of the asset and the resultant gains or losses are recognized in
the Statement of Profit and Loss. Assets to be disposed off are reported at
the lower of the carrying value or the fair value less cost to sell.
1.10 Intangible Assets
Intangible assets are stated at cost less accumulated amortisation /
depletion and impairment loss, if any. The cost comprises purchase
price, borrowing costs and any cost directly attributable in bringing
the asset to its working condition for the intended use. Intangible
assets are amortized over their respective individual estimated
useful lives on a straight line basis, from the date that they are
available for use. The estimated useful life of an identifiable intangible
asset is based on a number of factors including the effects of
obsolescence, demand, competition, and other economic factors
(such as the stability of the industry, and known technological
advances), and the level of maintenance expenditures required to
obtain the expected future cash flows from the asset. Amortization
methods and useful lives are reviewed periodically including at each
financial year end.
Amortization of Intangible Assets
The amortization period and the amortization method for an intangible
asset are reviewed, at least, at each financial year end. Changes in
the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset is accounted for by
changing the amortization period or method, as appropriate, and are
treated as changes in accounting estimates.
which the asset belongs is less than its carrying amount, the
carrying amount is reduced to its recoverable amount and the
reduction is treated as an impairment loss and is recognized in the
profit and loss account. If at any subsequent balance sheet date
there is an indication that a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset
is reflected at recoverable amount subject to maximum of depreciated
historical cost and is accordingly reversed in the profit and loss
account.
1.13 Inventories
Raw Materials and Components are valued at lower of Cost or Net
Realizable Value. Cost of the said is computed by applying Specific
Identification Method. Work in Progress and Finished Goods are
valued at lower of Cost or Net Realizable Value. Cost of these
inventories includes Costs of Conversion and Other costs incurred
in bringing them to the present location and condition.
Cost of inventories also include all other costs incurred in bringing
the inventories to their present location and condition. Costs of
purchased inventory are determined after deducting rebates and
discounts. Net realisable value is the estimated selling in the
ordinary course of business, less the estimated costs of completion
and the estimated costs necessary to make the sale.
1.11 Investment property
Property that is held for long-term rental yields or for capital appreciation
or both, and that is not occupied by the company, is classified as
investment property. Investment property is measured initially at its cost,
including related transaction cost and where applicable borrowing costs.
Subsequent expenditure is capitalised to the asset’s carrying amount
only when it is probable that future economic benefits associated with
the expenditure will flow to the company and the cost of the item can be
measured reliably. All other repairs and maintenance costs are expensed
when incurred. When part of an investment property is replaced, the
carrying amount of the replaced part is derecognised.
1.12 Impairment of tangible and intangible assets
The Company assesses at each Balance Sheet date whether there is
any indication due to internal or external factors that an asset may
be impaired. If any such indication exists, the Company estimates
the recoverable amount of the asset. If such recoverable amount of
the asset or the recoverable amount of the cash generating unit to
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