a. Change in Accounting policy Presentation and disclosure of
During the year ended 31st December 2012, the revised Schedule VI
notified under the Companies Act 1956, has become applicable to the
Company, for preparation and presentation of its financial statements.
The adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
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 and 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 long term investments.
d. Fixed Assets
Fixed Assets are stated at cost of acquisition (or revalued amounts, as
the case may be) less accumulated depreciation and impairment losses,
if any. Cost comprises the purchase price and any attributable cost of
bringing the asset to its working condition for its intended use. In
case of revaluation of fixed assets, the revalued amount as determined
by the valuer, is considered in the books of account and the
differential amount is transferred to Revaluation Reserve. Depreciation
on the revalued amount is transferred from Revaluation Reserve to
Statement of profit and loss.
i. FixedAssets costing below Rs. 5,000 are fully depreciated in the
year of acquisition.
ii. Lease hold improvements (LHI) included under building and
furniture & fixtures are amortised on straight line basis over the
period of lease or useful life (not exceeding 9 years), whichever is
iii. Depreciation on other Fixed Assets is provided on Written Down
Value method at the rates based on the estimated useful life of the
assets, estimated by the management which is in accordance with the
rates specified in Schedule XIV of the CompaniesAct, 1956.
iv. Depreciation on fixed assets added/disposed off during the year is
provided on pro-rata basis with respect to date of acquisition/
i. The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre tax discount
rate that reflects current market assessments of the time value of
money and risk specific to the asset.
ii. After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
Raw materials, components, stores and spares are valued at lower of
cost and net realizable value. However, raw materials and other items
held for use in the production of inventories are not written down
below cost if the finished products in which they will be incorporated
are expected to be sold at or above cost. Cost is determined on a
weighted average basis.
Work in progress and finished goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labour and a
proportion of manufacturing overheads based on normal operating
capacity. Cost of finished goods includes excise duty. Cost is
determined on a weighted average basis. Cost of traded goods includes
purchase and allied costs incurred to bring inventory to its present
condition and location, determined on FIFO basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
h. Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
i. Sale of Goods:
Revenue is recognized when the significant risks and rewards of
ownership of goods have passed to the buyer, which generally coincides
with delivery. It includes excise duty but excludes value added
tax/sales tax. Excise Duty deducted from turnover (gross) is the amount
that is included in the amount of turnover (gross) and not the entire
amount of liability that arose during the year.
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
iii. Export Benefits:
Export Entitlements in the form of Duty Drawback. Duty Entitlement Pass
Book (DEPB) and other schemes are recognized in the Statement of profit
and loss when the right to receive credit as per the terms of the
scheme is established in respect of exports made and when there is no
significant uncertainty regarding the ultimate collection of the
relevant export proceeds.
i. Foreign Currency Transactions
i. Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
iii. Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
iv. Forward exchange contracts entered into to hedge foreign currency
risk of an existing asset/ liability
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/ income over the
life of the contract. Exchange differences on such contracts, except
the contracts which are long-term foreign currency monetary items, are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on cancellation
or renewal of such forward exchange contract is also recognized as
income or as expense for the period.
j. Government Grants and Subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate. Where the grant
or subsidy relates to an asset, its value is deducted from the gross
value of the assets concerned in arriving at the carrying amount of the
Government grants in the form of non-monetary assets given at a
concessional rate are accounted for on the basis of their acquisition
k. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition or
construction of Qualifying Assets, which take substantial period of
time to get ready for its intended use are capitalized until the time
all substantial activities necessary to prepare such assets for their
intended use are complete. Other Borrowing costs are recognized as an
expense in the year in which they are incurred.
l. Segment Reporting Policies
i. Identification of Segments:
Primary Segment Business Segment:
The Company''s operating businesses are organized and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets. The identified segments are Footwear & Accessories
and Investment in erstwhile Joint Venture for Surplus Property
The analysis of geographical segment is based on the geographical
location of the customers. The geographical segments considered for
disclosure are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside
ii. Allocation of Common Costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
iii. Unallocated Items :
Includes general corporate income and expense items which are not
allocated to any business segment.
iv. Segment Policies
The Company prepare its segment information in conformity with the
Accounting Policies adopted for preparing and presenting the Financial
Statement of the company as a whole.
m. Intangible Assets
i. Computer SoftwareAcquired for Internal Use
Costs relating to computer software which is acquired, are capitalized
and amortized on a straight-line basis over its useful life of 5 years.
ii. Research and Development Costs
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is carried forward when its future
recoverability can reasonably be regarded as assured. Any expenditure
carried forward is amortised over the period of expected future sales
from the related project, not exceeding ten years.
The carrying value of development cost is reviewed for impairment
annually when the asset is not yet in use, and otherwise when events or
changes in circumstances indicate that the carrying value may not be
n. Retirement and Other Employee Benefits
i Gratuity liability is defined benefit obligation and is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The liability so provided is
represented substantially by creation of separate funds and is used to
meet the liability as and when it accrues for payment in future.
ii. The Provident Fund (where administered by a Trust) is a defined
benefit scheme where by the Company deposits as amount determined as a
fixed percentage of basic pay to the fund every month. The benefit
vests upon commencement of employment. The interest credited to the
accounts of the employees is adjusted on an annual basis to confirm to
the interest rate declared by the government for the Employees
Provident Fund. The Guidance Note on implementing AS-15, Employee
Benefits (revised 2005) states that provident funds set up by
employers, which requires interest shortfall to be met by the employer,
need to be treated as defined benefit plan. The Actuarial Society of
India has issued the final guidance for measurement of provident fund
liabilities. The Company has adopted actuary valuation to arrive at
provident fund liability as at 31st December, 2012.
iii. Short term compensated absences are provided on estimated basis.
Long term compensated absences are provided for based on actuarial
valuation on project unit credit method carried by an actuary as at the
end of the year.
iv. Retirement benefits in the form of Pension cost is a defined
contribution scheme and the contributions are charged to the Statement
of profit and loss of the year when the contributions to the respective
funds are due. There are no other obligations other than the
contribution payable to the respective trusts.
v. Actuarial gains/losses are immediately taken to Statement of profit
and loss and are not deferred.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of profit and loss on a straight-line basis over the
p. Taxes on Income
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act 1961 enacted in India.
Deferred income taxes reflects the impact of current year 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 the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax assets and deferred tax liabilities are off set, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on Income levied by the same governing
taxation laws. 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
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes- down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
A provision is recognised when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
r. Earnings Per Share (Basic & Diluted)
Basic earnings (loss) 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.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they were entitled to participate in dividends
relative to a fully paid equity share during the reporting year. The
weighted average number of equity shares outstanding during the year is
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares).
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.
s. Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.