2.3.11 Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes provisions when there is present obligation as a result of past events
and it is probable that there will be an outflow of resources and reliable estimate (legal or
constructive) of the amount of the obligation can be made. The amount recognized as provision is
the best estimate of the consideration required to settle the present obligation at the end of the
reporting period taking into account the risk and uncertainties surrounding the obligation

When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, a receivable is recognized as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent Liabilities are disclosed for

• possible obligation which will be conurmed only by future events not wholly within the control
of the Company

• present obligations arising from past events where it is not probable that an outuow of
resources will be required to settle the obligation or a reliable estimate of the amount of the
obligation cannot be made. Contingent assets are neither recognised nor disclosed in the
unancial statements.

2.3.12 Government Grants

Government grants are recognised where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with. When the grant relates to an expense
item, it is recognised as income on a systematic basis over the periods that the related costs, for
which it is intended to compensate, are expensed. When the grant relates to an asset, it is treated
as deferred income and released to the statement of profit and loss over the expected useful lives
of the assets concerned.

2.3.13 Financial Instruments

Financial Assets and Financial Liabilities are recognized when the Company becomes a party to
the contractual provisions of the Instrument.

Financial assets and Financial liabilities are initially measured at fair value. Transaction costs
that are directly attributable to the acquisition or issue of Financial assets and Financial liabilities
(other than Financial assets and Financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the Financial assets or Financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of
Financial assets or Financial liabilities at fair value through profit or loss are recognized
immediately in Statement of Profit or Loss.

For the purposes of subsequent measurement, Financial Instruments of the Company are classified
in the following categories:

a) Non derivative Financial assets comprising amortized cost

b) Financial assets fair value at fair value through other comprehensive income

c) Financial assets at fair value through profit or loss

The classification of Financial Instruments depends on the objective of the business model for which
it is held. Management determines the classification of its Financial Instruments at initial recognition.
Financial Assets

Recognition and Initial measurement

The Company initially recognises loans and advances, deposits, debt securities issues and subordinated
liabilities on the date on which they originate. All other Financial Instruments (including regular
way purchases and sales of Financial assets) are recognised on the trade date, which is the date on
which the Company becomes a party to the contractual provisions of the Instrument.

Subsequent measurement of the Financial assets

(i) Financial assets carried at Amortized Cost

A Financial asset is subsequently measured at amortized cost if it is held within a business
model whose objective is to hold the asset in order to collect contractual cash flows and the
contractual terms of the Financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.

(ii) Financial assets at fair value through Other Comprehensive Income (FVTOCI)

A Financial asset is subsequently measured at fair value through Other Comprehensive Income
income if it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling Financial assets and the contractual terms of the Financial
asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding. Further, in case where the Company has made an irrevocable
selection based on its business model, for its investments which are classified as equity Instruments,
the subsequent changes in fair value are recognized in Other Comprehensive Income income.

(iii) Financial assets at fair value through profit or loss (FVTPL)

A Financial asset which is not classified in any of the above categories are subsequently fair
valued through profit or loss. The transaction costs directly attributable to the acquisition of
Financial assets and Financial liabilities at fair value through profit and loss are immediately
recognized in the Statement of Profit or Loss.

Effective Interest Method

The Effective Interest method is a method of calculating the amortised cost of a debt instrument
and of allocating interest income over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash receipts (including all fees and points paid or
received that form an integral part of the effective interest rate, transaction costs and other premiums
or discounts) through the expected life of the debt instrument, or where appropriate, a shorter
period, to the gross carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those Financial
assets classified as at FVTPL. Interest income is recognised in Profit or Loss and is included in
the “Other Income” line item.

Impairment of Financial assets:

The Company applies the expected credit loss (ECL) model for recognising the impairment loss on
Financial assets measured at amortised cost and FVTOCI but are not fair valued through profit and
loss. Loss allowance for Trade receivables with no significant financing component is measured at
an amount equal to lifetime ECL. For all other Financial assets, ECLs are measured at an amount
equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial
recognition, in which case those are measured at lifetime ECL. The amount of ECLs (or reversal)
that is required to adjust the loss allowance at the reporting date to the amount that is required to be
recognized is recognized as an impairment gain or loss in the Statement of profit or loss.

Derecognition of Financial assets:

The Company derecognises financial asset when the contractual rights to the cash flows from the
asset expire, or when it transfers the Financial asset and substantially all the risks and rewards of
ownership of the asset to another party. If the Company neither transfers nor retains substantially
all the risks and rewards of ownership and continues to control the transferred asset, the Company
recognises its retained interest in the asset and an associated liability for amounts it may have to
pay. If the Company retains substantially all the risks and rewards of ownership of a transferred
Financial asset, the Company continues to recognise the Financial asset and also recognises a
collateralised borrowing for the proceeds received.

On derecognition of Financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss
that had been recognised in other comprehensive income and accumulated in equity is recognised
in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on
disposal of that Financial asset.

On derecognition of a Financial asset other than in its entirety (e.g. when the Company retains an
option to repurchase part of a transferred asset), the Company allocates the previous carrying
amount of the Financial asset between the part it continues to recognise under continuing
involvement, and the part it no longer recognises on the basis of the relative fair values of those
parts on the date of the transfer. The difference between the carrying amount allocated to the
part that is no longer recognised and the sum of the consideration received for the part no
longer recognised and any cumulative gain or loss allocated to it that had been recognised in
other comprehensive income is recognised in profit or loss if such gain or loss would have
otherwise been recognised in profit or loss on disposal of that Financial asset. A cumulative gain
or loss that had been recognised in other comprehensive income is allocated between the part
that continues to be recognised and the part that is no longer recognised on the basis of the
relative fair values of those parts.

Foreign Exchange gains and losses:

The fair value of Financial assets denominated in Foreign currency is determined in that Foreign currency
and translated at the spot rate at the end of each reporting period.

For Foreign Currency denominated Financial assets measured at amortised cost and FVTPL, the
exchange differences are recognised in profit or loss except for those which are designated as hedging
instruments in a hedging relationship.

For the purposes of recognising Foreign exchange gains and losses, FVTOCI debt instruments are
treated as Financial assets measured at amortised cost. Thus, the exchange differences on the amortised
cost are recognised in profit or loss and other changes in the fair value of FVTOCI Financial assets are
recognised in other comprehensive income.

Financial liabilities

a. Classification as debt or equity

Debt and Equity Instruments issued by Company are classified as either Financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of a
Financial liability and an equity Instrument.

b. Equity Instruments

An Equity Instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity Instruments issued by a Company entity are recognised at the
proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No
gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s
own equity instruments.

c. Financial Liabilities

All Financial liabilities are subsequently measured at amortised cost using the effective interest method
or at FVTPL.

However, Financial liabilities that arise when a transfer of a Financial asset does not qualify for
derecognition or when the continuing involvement approach applies, Financial guarantee contracts
issued by the Company, and commitments issued by the Company to provide a loan at below-market
interest rate are measured in accordance with the specific accounting policies set out below.

d. Financial Liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the Financial liability is either held for trading or it is
designated as at FVTPL.

A Financial liability is classified as held for trading if :

• it has been incurred principally for the purpose of repurchasing it in the near term; or

• on initial recognition it is part of a portfolio of identified Financial Instruments that the Company
manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

• A Financial liability, other than a Financial liability held for trading may be designated as at
FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise;

• the Financial liability forms part of a Company of Financial assets or Financial liabilities or
both, which is managed and its performance is evaluated on a fair value basis, in accordance
with the Company’s documented risk management or investment strategy, and information
about the Companying is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits
the entire combined contract to be designated as at FVTPL in accordance with IND AS 109

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement
recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest
paid on the Financial liability and is included in the ‘Other income’ line item. The Company derecognises
Financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they
expire. The difference between the carrying amount of the Financial liability derecognised and the
consideration paid or payable is recognised in Statement of Profit and Loss.

However, for non-held-for-trading Financial liabilities that are designated as at FVTPL, the amount
of change in the fair value of the Financial liability that is attributable to changes in the credit risk of
that liability is recognised in Other Comprehensive Income, unless the recognition of the effects of
changes in the liability’s credit risk in other comprehensive income would create or enlarge an
accounting mismatch in profit or loss, in which case these effects of changes in credit risk are
recognised in profit or loss. The remaining amount of change in the fair value of liability is always
recognised in profit or loss. Changes in fair value attributable to a Financial liability’s credit risk
that are recognised in other comprehensive income are reflected immediately in retained earnings
and are not subsequently reclassified to profit or loss. Gains or losses on Financial guarantee
contracts and loan commitments issued by the Company that are designated by the Company as
at fair value through profit or loss are recognised in profit or loss.

e. Other Financial liabilities

Other Financial liabilities (including borrowings and Trade and other payables) are subsequently
measured at amortised cost using the effective interest method.

f. Derecognition of Financial liabilities

The Company derecognises Financial liabilities when, and only when, the Company’s obligations
are discharged, cancelled or have expired. An exchange between a lender of debt instruments
with substantially different terms is accounted for as an extinguishment of the original Financial
liability and the recognition of a new Financial liability. Similarly, a substantial modification of the
terms of an existing Financial liability (whether or not attributable to the Financial difficulty of the
debtor) is accounted for as an extinguishment of the original Financial liability and the recognition
of a new Financial liability. The difference between the carrying amount of the Financial liability
derecognised and the consideration paid or payable is recognised in profit or loss.

2.3.14 Operating cycle

Based on the nature of products/activities of the Group and the normal time between acquisition
of assets and their realisation in cash or cash equivalents, the Company has determined its
operating cycle as 12 months for the purpose of classification of its assets and liabilities as
current and non - current.

II. NOTES ON ACCOUNTS

1 Bank has issued one (PY 3 Bank Guarantees) Bank guarantees totalling to Rs.0.66 Lakhs
(P.Y.Rs.3.37 Lakhs) to Director General of Foreign Trade, Bangalore for Export Obligation against
which the Company has kept FDRs worth Rs.0.66 Lakhs (Previous year Rs.3.41 Lakhs) with bank
as Margin Money

2. There are no amounts due to be remitted to “Investor’s Education & Protection Fund” as at the
year end. (P.Y. NIL).

3. Figures for the previous year are regrouped/ rearranged wherever necessary to conform to the
current year’s classification. Figures are rounded off to the nearest Lakhs.

4. The Board of Directors have approved the Financial Statements in their Board Meeting on
18.06.2024

Security against above Term loans

a) Secured by hypothecation of Stock & Book debts and Collateral security by way of EM of Industrial property
Sy. No.198/2/2 at Mukram Gunj, Manchalapur Road, Raichur and Personal property of relative of Director.

b) Guaranteed by Sri S K Bhandari Managing Director, Pavan Bhandari and Chandana Bhandari in their
personal capacity.

Security against above Car loan

a) Secured by hypothecation of Stock & Book debts and Collateral security by way of EM of Industrial property
Sy. No.198/2/2 at Mukram Gunj, Manchalapur Road, Raichur and Personal property of relative of Director.

b) Guaranteed by Sri S K Bhandari Managing Director, Pavan Bhandari and Chandana Bhandari in their personal capacity.

Security against above Car loan

a) Secured by way of hypothecation of Car.

Note:- The tenure of ECGS loan is 4 years with a moratorium of 12 months. ECGS Loan is repayable in
36 equal monthly instalments commencing from January 2022 and ending in December 2024. Interest
payable on monthly interests.

Term Loan 1 is repayable in 84 equal monthly instalments commencing from January 2021 and ending
in December 2027. Interest payable on monthly interests @ 8.25% . Outstanding as on 31.3.24 Rs.
53.57 Lakhs (Non- Current Liability Rs 39.28 Lakhs) (PY Rs. 69.74 Lakhs).

Term Loan 2 is repayable in 60 equal monthly instalments commencing from January 2022 and ending
in December 2026. Interest payable on monthly interests @ 8.25%. Outstanding as on 31.3.24 Rs. 83.19
Lakhs (Non Current Liability Rs. 53.19 Lakhs ) (PY 112.70 Lakhs).

(i) Cash Credit facility is secured by :

a) Hypothecation of stocks & book debts and Collateral security by way of EM of Industrial
property Sy. No.198/2/2 and Commercial property of relative of Director)

b) Guaranteed by Sri S K Bhandari Managing Director, Pavan Bhandari and Chandana handari
in their personal capacity

(ii) Goods Credit loan facility is secured by Hypothecation of stock stored at APMC Warehouse, Raichur
by means of warehouse receipts. Outstanding as on 31.03.24 - Rs. 60.98 Lakhs ( PY Nil)

Note - There are no items giving rise to diluted equity shares. Hence, basic EPS is considered as diluted EPS.
Note 29 : Segment Reporting

The Company’s object is to engage in the business of manufacturing and trading of cotton and cotton
seeds and also carries the services of Ginning & Pressing of cotton and all these operations are carried
out domestically. In accordance with Ind AS 108 “Operating Segments”, whose operating results are
regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to
be allocated to the segment and assess its performance. The Company has no primary reportable
segments. The Company has effected Sales to one party worth Rs. 941.70 Lakhs which is greater than
10% of the total Sales of the Company.

Note 30 : Deferred Tax

Deferred Tax is recognized to the extent that it is probable that future taxable income will be available
against which the deductible temporary differences, unused tax losses, depreciation carry forwards and
unused tax credits could be utilized

Due to the above said reason, MAT Credit balance as on 31st Match 2024 of Rs. 36.28 Lakhs (PY Rs
43.85 Lakhs) is not recognized in books of account.

Note 31 : Employee Benefits

a) Defined Benefit Plan :

Since the Company is recognizing Gratuity amount payable to employees on cash basis, disclosures as
required under Ind AS-19 is not made.

b) Defined Contribution Plan

The Company makes Provident Fund contributions to Defined Contribution plan for all employees. nder
the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund
the benefits. The Company has recognised Rs. 2.23 Lakhs (Year ended 31 March, 2023 INR 1.28
Lakhs) for Provident Fund Contributions in the Statement of Profit and Loss which is grouped under
“Contributions to Provident Fund and other Funds” of Note 22 Employee Benefits Expenses.

Note 32 : Other Disclosures

a. i. The Company has not given any loans or advances in the nature of Loans to Promoters, Directors,
KMP‘s and the Related parties (as defined under Companies Act, 2013) that are repayable on
demand or without specifying any terms or period of repayment.

b. The Company does not holds any Benami Property and there are no proceedings against the
Company under the Benami Transaction (Prohibition) Act 1988 (as amended from time to time)

c. The Company has used the borrowings from banks and financial institutions for the specific purpose
for which it was taken.

d. The Company has not been declared as a wilful defaulter (as per RBI circular) by any bank or financial
institution or any other lender at any time during the financial year or after the end of the reporting period.

e. The Company has had no transactions with Companies struck off under section 248 of the Companies
Act, 2013 or section 560 of Companies Act, 1956.

f. Creation or satisfaction of charges are not pending for registration with Registrar of Companies
beyond the statutory period.

g. To the best of our knowledge and belief, other than as disclosed in the notes to the accounts, no
funds have been advanced or loaned or invested (either from borrowed funds or share premium or
any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies),
including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or
otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons
or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate
Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

h. To the best of our knowledge and belief, other than as disclosed in the notes to the accounts, no
funds have been received by the Company from any person(s) or entity(ies), including foreign
entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that
the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified
in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide
any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

i. There are no transactions which are not recorded in the books of accounts that have been surrendered
or disclosed as Income during the year in the tax assessments under the Income Tax Act, 1961.

j. The Provisions of Corporate Social Responsibility under Section 135 of the Companies Act, 2013
are not applicable to the Company for the year.

k. The Company has not traded or invested in Crypto or virtual currency during the year (PY Nil).

l. The quarterly returns or statements of current assets filed by the Company with Banks or financial
Institutions are not in agreement with books of accounts. The details of variance and reasons for
variation are explained below:

j. The Provisions of Corporate Social Responsibility under Section 135 of the Companies Act, 2013
are not applicable to the Company for the year.

k. The Company has not traded or invested in Crypto or virtual currency during the year (PY Nil).

l. The quarterly returns or statements of current assets filed by the Company with Banks or financial

Institutions are not in agreement with books of accounts. The details of variance and reasons for
variation are explained below:_

The Company manages its Capital to ensure that the Company will be able to continue as going concern
while maximising the return to stakeholders through the optimisation of the equity balance. Further, the
Company ensures optimal credit risk profile to maintain/enhance credit rating. The Company is not
exposed to any externally imposed Capital requirement. The Capital structure of the Company consists
of equity and other reserves of the Company. The Company maintains its Financial framework to support
the pursuit of value growth for shareholders, while ensuring a secure Financial base.

The Company’s Management reviews the Capital structure of the Company on an annual basis and
determines the amount of Capital required on the basis of annual business plan coupled with long term
and short term strategic investment and expansion plans. As a part of this review, the Company’s
Management considers the loss of Capital and risks associated with each class of Capital. The funding
needs are met through cash generated from operations, long term and short term bank borrowings. The
Company monitors the Capital structure on the basis of net debt to equity ratio and maturity profile of the
overall debt portfolio of the Company.

Note 35.3 Financial Risk Management
Note 35.3.1 Objective

In the course of its business, the Company is exposed primarily to a number of different Financial risks
arising from natural business exposure as well as its use of Financial Instruments including market risks
(relating to interest rates and foreign currency exchange rate) , credit risk and liquidity risk. The exposure
to these risks and the companies risk management have been summarised as below :

Note 35.3.2 Market Risk

Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that
may result from a change in the price of a Financial Instrument. The value of a Financial Instrument may
change as a result of changes in interest rates, foreign currency exchange rates, equity price fluctuations,
liquidity and other market changes. Future specific market movements cannot be normally predicted
with reasonable accuracy.The Company is exposed to the following significant market risks:
INTEREST RATE RISK

Note 35.3.2.1 Interest Rate Risk Management

The Company draws working Capital term loans and avails cash credits etc. for meeting its funding
requirements.

Interest rates on these borrowings are exposed to change in respective benchmark rates. Interest rate
risk is measured by using the cash flow sensitivity for changes in variable interest rates. Any movement
in the reference rates could have an impact on the Company’s cash flows as well as costs. The Company
is subject to variable interest rates on some of its interest bearing liabilities. The Company’s interest rate
exposure is mainly related to debt obligations.

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a
Financial loss. The Company has adopted a policy of only dealing with creditworthy counterparties as a
means of mitigating the risk of Financial loss from default. The Company regularly monitors its counterparty
limits by reviewing the outstanding balance and ageing of the same.