1 STATEMENT OF MATERIAL ACCOUNTING POLICIES
A. Background
Raymond Lifestyle Limited (‘RLL’ or 'the Company’)
[CIN:L74999MH2018PLC316288] incorporated in
India is a leading Indian Textile, Lifestyle and Branded
Apparel Company. The Company has its wide network
of operations in local as well foreign market. Company
is a textile powerhouse with modern infrastructure and
strong fibre-to-fabric manufacturing capabilities. Along
with being reputed, it is the fastest-growing fashion fabric
brand. Raymond Lifestyle offers an exquisite range of
shirting and suiting fabrics across a plethora of options
such as Worsted fabrics, Cotton, Wool blends, Linen and
Denim.
The Company is a public limited company and is listed
on the Bombay Stock Exchange (BSE) and National Stock
Exchange (NSE).
The Company has its registered office at Plot No.G-35 &
36, MIDC Waluj Taluka, Gangapur, Aurangabad - 431136,
Maharashtra.
The Board of Directors of the Company at its meeting held
on 27 April 2023 had approved the Composite Scheme
of Arrangement for the demerger of the lifestyle business
undertaking of Raymond Limited ('Demerged Company’)
into Raymond Lifestyle Limited (formerty known as
Raymond Consumer Care Limited) ('the Company’) on a
going concern basis. The appointed date proposed under
this scheme was 01 April 2023.
The Company had received requisite approval from
National Company Law Tribunal ('NCLT) vide its order
dated 21 June 2024. Respective companies had filed the
certified true copy of NCLT order along with the sanctioned
scheme with the Registrar of Companies on 30 June 2024.
Accordingly, the scheme was effeclive w.e.f. 30 June 2024.
The accounting of this scheme in the books of the Company
has been done in accordance with Ind AS 103 'Business
Combinations- ('Ind AS 103’) as on the appointed date. In
accordance with Ind AS 103, purchase consideration has
been allocated on the basis of fair valuation determined
by an independent valuer.
As a consideralion for the demerger, the Company was
required to issue rts equity shares to the shareholders of
Raymond Limited as on record date in 4:5 swap ratio (i.e.,
four shares of Rs. 2 each had to be issued by Raymond
Lifestyle Limited for every five shares of Rs. 10 each held
by the shareholders in Raymond Limited).
Accordingly, the Holding Company had allotted
53,258,984 equity shares having face value of Rs. 2 each
to the shareholders of Raymond Limited on 11 July 2024.
These equity shares were subsequently listed on BSE
Limited ('BSE’) and the National Stock Exchange of India
Limited ('NSE’) on 05 September 2024.
B. Material Accounting Policies followed by the
Company
(a) Basis of preparation
(i) Compliance with Ind AS
These standalone financial statements
('financial statements’) have been prepared
on an “accrual basis” in accordance with the
Indian Accounting Standards (hereinafter
referred to as the 'Ind AS’) as notified by Ministry
of Corporate Affairs pursuant to Section 133 of
the Companies Act, 2013 ('Act’) read with of
the Companies (Indian Accounting Standards)
Rules, 2015, as amended, and other relevant
provisions of the Act and guidelines issued by
the Securities and Exchange Board of India
(SEBI).
The accounting policies are applied
consistently to all the periods presented in the
financial statements.
(ii) Historical cost convention
The financial statements have been prepared
on a historical cost basis, except for the
following:
1) certain financial assets and liabilities that
are measured at fair value;
2) assets held for sale - measured at lower
of carrying amount or fair value less cost
to sell;
3) defined benefit plans - plan assets
measured at fair value;
(iii) Current and non-current classification
All assets and liabilities have been classified
as current or non-current based on the
Company’s normal operating cycle for each of
its businesses, as per the criteria set out in the
Schedule III to the Act.
(iv) Rounding of amounts
All amounts disclosed in the financial
statements and notes have been rounded off
to the nearest lakhs as per the requirement of
Schedule III, unless otherwise stated.
(b) Use of estimates
The estimates used in the preparation of the
financial statements are continuously evaluated
by the Company and are based on historical
experience and various other assumptions and
factors (including expectations of future events) that
the Company believes to be reasonable under the
existing circumstances. Differences between actual
results and estimates are recognised in the period in
which the results are known/materialised.
The said estimates are based on the facts and events,
that existed as at the reporting date, or that occurred
after that date but provide additional evidence about
conditions existing as at the reporting date.
(c) Property, plant and equipment (including Capital
Work-in-Progress)
The Company had applied for the one time transition
exemption of considering the carrying cost on the
transition date i.e. 1st April, 2015 as the deemed
cost under IND AS, regarded thereafter as historical
cost.
Freehold land is carried at cost. AIL other items of
property, plant and equipment are stated at cost less
depreciation and impairment, if any. Historical cost
includes expenditure that is directly attributable to
the acquisition of the items.
Capital Work-in-progress includes expenditure
incurred tiLL the assets are put into intended use.
Capital Work-in-Progress are measured at cost less
accumulated impairment losses, if any.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item wiLL
flow to the Company and the cost of the item can
be measured reliably. The carrying amount of any
component accounted for as a separate asset is
derecognised when replaced. ALL other repairs and
maintenance are charged to the Statement of Profit
and Loss during the reporting period in which they
are incurred.
Depreciation methods, estimated useful lives
and residual value
Depreciation on Factory BuiLdings, Specific non
factory buiLdings, PLant and Equipment, is provided
as per the Straight Line Method and in case of other
assets as per the Written Down VaLue Method, over
the estimated usefuL Lives of assets. LeasehoLd Land
is amortised over the period of Lease. LeasehoLd
improvements are amortised over the period of Lease
or estimated usefuL Life, whichever is Lower.
The Company depreciates its property, pLant and
equipment (PPE) over the usefuL Life in the manner
prescribed in ScheduLe II to the Act. Management
beLieves that usefuL Life of assets are same as those
prescribed in ScheduLe II to the Act, except for pLant
and equipment’s and aircraft wherein based on
technicaL evaLuation, usefuL Life has been estimated
to be different from that prescribed in ScheduLe II of
the Act.
UsefuL Life considered for caLcuLation of depreciation
for various assets cLass are as foLLows-
The residuaL vaLues are not more than 5% of the
originaL cost of the asset. The assets residuaL
values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
Depreciation on additions / deLetions is caLcuLated
pro-rata from the month of such addition / deLetion,
as the case maybe.
BaLance as at 31 March 2024 Gains and Losses on
disposaLs are determined by comparing proceeds
with carrying amount. These are incLuded in the
Statement of Profit and Loss.
(d) Investment properties
The Company had appLied for the one time transition
exemption of considering the carrying cost on the
transition date i.e. 1st ApriL, 2015 as the deemed
cost under IND AS, regarded thereafter as historicaL
cost.
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 at its
cost, incLuding reLated transaction costs and where
appLicabLe borrowing costs Less depreciation and
impairment if any.
Depreciation on buiLding is provided over it’s usefuL
Life using the written down vaLue method, in a
manner simiLar to PPE.
UsefuL Life considered for caLcuLation of depreciation
for assets cLass are as foLLows-
Asset Classification Useful life
Non- factory building 60 years
(e) Intangible assets (including intangible assets
under development)
IntangibLe assets acquired separateLy are carried
at cost Less accumuLated amortisation and
accumuLated impairment Losses. Cost of a non¬
monetary asset acquired in exchange of another
non-monetary asset is measured at fair vaLue.
The Company amortizes intangible assets with
a finite useful life using the straight-line method
over following period in the statement of profit and
loss under the head depreciation and amortization
expense.
Asset Class Useful Life
Computer Software 3 years
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the Statement of Profit and Loss.
An intangible asset is derecognised upon disposal
(i.e., at the date the recipient obtains control) or
when no future economic benefits are expected
from its use or disposal.
The amortisation period and the amortisation
method for finite-life intangible assets is reviewed at
each financial year end and adjusted prospectively,
if appropriate. Indefinite-life intangible assets
comprises of trademarks and brands, for which
there is no foreseeable limit to the period over which
they are expected to generate net cash inflows.
These are considered to have an indefinite life, given
the strength and durability of the brands and the level
of marketing support. For indefinite-life intangible
assets, the assessment of indefinite life is reviewed
annually to determine whether it continues, if not, it
is impaired or changed prospectively basis revised
estimates.
(f) Leases
The Company assesses at contract inception
whether a contract is, or contains, a lease. That is,
if the contract conveys the right to control the use of
an identified asset for a period of time in exchange
for consideration.
To assess whether a contract conveys the right to
control the use of an identified asset, the Company
assesses whether: (i) the contract involves the use of
an identified asset (ii) the Company has substantially
all of the economic benefits from use of the asset
through the period of the lease and (iii) the Company
has the right to direct the use of the asset.
Company as a lessee
At lease commencement date, the Company
recognises a right-of-use assets and a lease
liabilities on the balance sheet. The right-of-use
asset is measured at cost, which is made up of
the initial measurement of the lease liabilities, any
initial direct costs incurred by the Company and
any lease payments made in advance of the lease
commencement date.
The Company depreciates the right-of-use assets on
a straight-line basis from the lease commencement
date to the earlier of the end of the useful life of the
right-of-use assets or the end of the lease term. The
Company also assesses the right-of-use asset for
impairment when such indicators exist.
At the commencement date of lease, the Company
measures the lease liabilities at the present value of
the lease payments to be made over the lease term,
discounted using the interest rate implicit in the
lease if that rate is readily available or the Company’s
incremental borrowing rate.
The Company cannot readily determine the interest
rate implicit in the lease, therefore, it uses its
incremental borrowing rate (IBR) to measure lease
liabilities.
Lease payments included in the measurement of
the lease liability are made up of fixed payments
(including in substance, fixed), and payments arising
from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will
be reduced for payments made and increased for
interest expenses. It is remeasured to reflect any
reassessment or modification.
When the lease liability is remeasured, the
corresponding adjustment is reflected in the right-
of-use asset or Statement of profit and loss, as the
case may be.
The Company has elected to account for short-term
leases and leases of low-value assets using the
exemption given under Ind AS 116, Leases. Instead
of recognising a right-of-use asset and lease liability,
the payments in relation to these are recognised as
an expense in profit or loss on a straight-line basis
over the lease term or on another systematic basis if
that basis is more representative of the pattern of the
Company’s benefit.
Company as a lessor
Leases for which the Company is a lessor classified
as finance or operating lease.
Lease income from operating leases where the
Company is a lessor is recognised in income on
a straight-line basis over the lease term unless
the receipts are structured to increase in line with
expected general inflation to compensate for the
expected inflationary cost increases. The respective
leased assets are included in the balance sheet
based on their nature.
(g) Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet
comprise cash at banks, cash on hand and short¬
term deposits with an original maturity of three
months or less, that are readily convertible to a
known amount of cash and subject to an insignificant
risk of changes in value.
For the purpose of presentation in the statement
of cash flows, Cash and cash equivalents includes
cash on hand, bank overdraft, deposits held at
call with financial institutions, other short-term
highly liquid investments with original maturities of
three months or less that are readily convertible to
known amounts of cash and which are subject to an
insignificant risk of changes in value.
(h) Inventories
Inventories of Raw Materials, Work-in-Progress,
Stores and spares, Finished Goods, Stock-in-trade
and Property under development are stated 'at
cost or net realisable value, whichever is lower’.
Goods-in-Transit are stated 'at cost’. Cost comprise
all cost of purchase, cost of conversion and other
costs incurred in bringing the inventories to their
present location and condition. Cost formulae
used are 'First-in-First-out’, 'Weighted Average
cost’ or 'Specific identification’, as applicable. Due
allowance is estimated and made for defective and
obsolete items, wherever necessary.
(i) Investments in subsidiaries, joint ventures and
associates
Investments in subsidiaries, joint ventures and
associates are recognised at cost as per Ind AS
27, as reduced by provision for impairment loss,
if any. Except where investments accounted for
at cost shall be accounted for in accordance with
Ind AS 105, Non-current Assets Held for Sale and
Discontinued Operations, when they are classified
as held for sale.
(j) Investments and other financial assets
(i) Classification
The Company classifies its financial assets in
the following measurement categories:
(1) those to be measured subsequently
at fair value (either through other
comprehensive income, or through the
Statement of Profit and Loss), and
(2) those measured at amortised cost.
The classification depends on the
Company’s business model for managing
the financial assets and the contractual
terms of the cash flows.
(ii) Measurement
At initial recognition, the Company measures
a financial asset (excluding trade receivables
which do not contain a significant financing
component) at its fair value . Transaction
costs of financial assets carried at fair value
through the Profit and Loss are expensed in the
Statement of Profit and Loss.
Debt instruments:
Subsequent measurement of debt instruments
depends on the Company’s business model
for managing the asset and the cash flow
characteristics of the asset. The Company
classifies its debt instruments into following
categories:
(1) Amortised cost: Assets that are held
for collection of contractual cash flows
where those cash flows represent solely
payments of principal and interest are
measured at amortised cost. Interest
income from these financial assets
is included in other income using the
effective interest rate method.
(2) Fair value through profit and loss:
Assets that do not meet the criteria for
amortised cost are measured at fair value
through statement of Profit and Loss.
Interest income from these financial
assets is included in other income.
Equity instruments:
The Company measures its equity investment
other than in subsidiaries, joint ventures
and associates at fair value through profit
and loss. However where the Company’s
management makes an irrevocable choice on
initial recognition to present fair value gains
and losses on specific equity investments
in other comprehensive income , there is
no subsequent reclassification, on sale or
otherwise, of fair value gains and losses to the
Statement of Profit and Loss.
Compound financial instruments:
Preference shares, which are non-convertible
and redeemable on a specific date, are
classified as compound financial instruments.
The fair value of the asset portion is determined
using a market interest rate. This amount is
recorded as a asset on an amortised cost
basis until extinguished on redemption of
the preference shares. The remainder of
the proceeds is attributable to the equity
component of the compound instrument. This
is recognised and included in deemed equity
investment, net of income tax effects, and not
subsequently measured.
(iii) Impairment of financial assets
The Company measures the expected credit
loss associated with its assets based on
historical trend, industry practices and the
business environment in which the entity
operates or any other appropriate basis. The
impairment methodology applied depends on
whether there has been a significant increase
in credit risk.
(iv) Income recognition
Interest income
Interest income from debt instruments is
recognised using the effective interest rate
method.
Dividends
Dividends are recognised in the Statement of
Profit and Loss only when the right to receive
payment is established.
(k) Impairment of non-financial assets
Intangible assets that have an indefinite useful
life are not subject to amortisation and are tested
annually for impairment, or more frequently if
events or changes in circumstances indicate that
they might be impaired. Other assets are tested
for impairment whenever events or changes in
circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s
fair value less costs of disposal and value in use.
For the purpose of assessing impairment, assets
are grouped at the lowest levels for which there are
separately identifiable cash inflows which are largely
independent of the cash inflows from other assets
or group of assets (cash-generating units). Assets
other than goodwill that suffered an impairment are
reviewed for possible reversal of the impairment at
the end of each reporting period.
(l) Non-current assets held for sale
Non-current assets are classified as held for sale if
their carrying amount will be recovered principally
through a sale transaction rather than through
continuing use and a sale is considered highly
probable. They are measured at the lower of their
carrying amount and fair value less costs to sell,
except for assets such as deferred tax assets, assets
arising from employee benefits, financial assets and
contractual rights under insurance contracts, which
are specifically exempt from this requirement.
Non-current assets are not depreciated or amortised
while they are classified as held for sale.
(m) Derivative financial instruments
Derivative financial instruments such as forward
contracts, option contracts and cross currency
swaps, to hedge its foreign currency risks are initially
recognised at fair value on the date a derivative
contract is entered into and are subsequently re¬
measured at their fair value with changes in fair value
recognised in the Statement of Profit and Loss in the
period when they arise.
(n) Segment Reporting:
Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision maker.
(o) Borrowings
Borrowingsareinitially recognisedatnetoftransaction
costs incurred and measured at amortised cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in
the Statement of Profit and Loss over the period of
the borrowings using the effective interest method.
(p) Borrowing costs
Borrowing costs consist of interest, ancillary costs
and other costs in connection with the borrowing of
funds and exchange differences arising from foreign
currency borrowings to the extent they are regarded
as an adjustment to interest costs.
Interest and other borrowing costs attributable to
qualifying assets are capitalised upto the date such
assets are ready for their intended use. Other interest
and borrowing costs are charged to Statement of
Profit and Loss.
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