i. Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When
the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate
asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any
reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific
to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable
cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the
contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the
assets associated with that contract.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or
more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of
resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial
statements.
Provisions and contingent liability are reviewed at each balance sheet.
j. Retirement and other employee benefits
Retirement benefit in the form of provident fund, pension fund and superannuation fund are defined contribution scheme. The Company has no obligation,
other than the contribution payable. The Company recognizes contribution payable to provident fund, pension fund and superannuation fund as
expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet
reporting 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.
Accumulated leave, which is expected to be utilized within the next twelve 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 year-end.
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
twelve months after the reporting date.
k. Financial Instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contract embodying the related financial instruments. All
financial assets, financial liabilities and financial guarantee contracts are initially measured at transaction cost and where such values are different from the
fair value, 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 and loss) are added to or deducted from the fair value measured on initial recognition of
financial asset or financial liability. Transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through
profit and loss are immediately recognised in the statement of profit and loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the
relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial
instrument, or where appropriate, a shorter period.
(a) Financial assets
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these
assets 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.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective
is to hold these assets in order to collect contractual cash flows or to sell these 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.
Financial asset not measured at amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit
and loss.
Impairment of financial assets
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and fair value through profit or loss.
For financial assets whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses
is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk on the financial instruments has significantly
increased since initial recognition.
De-recognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the financial asset expire, or it transfers the financial
asset and the transfer qualifies for de-recognition under Ind AS 109.
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 assets 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 de-recognition of a financial asset in its entirety, the difference between the carrying amount measured at the date of de-recognition and the
consideration received is recognised in statement of profit or loss.
For trade and other receivables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity
of these instruments.
(b) Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into
and the definitions of a financial liability and an equity instrument.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments
are recorded at the proceeds received, net of direct issue costs.
Financial Liabilities
Financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective
interest rate method where the time value of money is significant. Interest bearing bank loans, overdrafts and issued debt are initially measured at fair
value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction
costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity
of these instruments.
De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange
or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit and loss.
Off-setting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
l. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or
less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.
m. Foreign currencies
In preparing the financial statements, transactions in the currencies other than the Company’s functional currency are recorded at the rates of exchange
prevailing on the date of transaction. At the end of each reporting period, monetary items denominated in the foreign currencies are re-translated at the
rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at
the rates prevailing on the date when the fair value was determined. Non-monetary items are measured in terms of historical cost in a foreign currency are
not retranslated.
Exchange differences arising on translation of long term foreign currency monetary items recognised in the financial statements before the beginning of
the first Ind AS financial reporting period in respect of which the Company has elected to recognise such exchange differences in equity or as part of cost
of assets as allowed under Ind AS 101-“First time adoption of Indian Accounting Standard” are recognised directly in equity or added/ deducted to/ from
the cost of assets as the case may be. Such exchange differences recognised in equity or as part of cost of assets is recognised in the statement of profit and
loss on a systematic basis. Exchange differences arising on the retranslation or settlement of other monetary items are included in the statement of profit
and loss for the year.
n. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes)
by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is
adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average
number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. Potential ordinary shares shall be treated
as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share from continuing
operations.
o. Corporate social responsibility (‘CSR’) expenditure
The Company charges its CSR expenditure during the year if any, to the statement of profit and loss.
p. Extraordinary Items
An item of income or expense which due to its size, type or incidence requires disclosure in order to improve an understanding of the performance of the
Company is treated as an extraordinary item and the same is disclosed in the financial statements.
23.1 CSR Expenditure
(a) Gross amount required to be spent by the Company during the year ended March 31, 2025 Rs. Nil (March 31, 2024: Rs. Nil)
(b) The Company has incurred on CSR activities during the year ended March 31, 2025 Rs. Nil (March 31, 2024: Rs. Nil).
Although the Company has met the criteria as specified under sub-section (1) of section 135 of the Act read with the Companies (Corporate Social
Responsibility Policy) Rules, 2014, however, in the absence of average net profits in the immediately three preceding years, there is no requirement for the
Company to spend any amount under sub-section (5) of section 135 of the Act.
24 Earnings per share ('EPS')
Basic EPS amounts are calculated by dividing the profit/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 period. The weighted average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the
number of equity shares outstanding, without a corresponding change in resources.
Diluted EPS amounts are calculated by dividing the profit attributable to equity shareholders (after adjusting for interest on the convertible securities) by
the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on
conversion of all the dilutive potential equity shares into equity shares.
25 A Income Taxes
Business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried
forward for an indefinite period.
On September 30, 2019, the Taxation Laws (Amendment) Ordinance 2019 (‘the Ordinance’) was passed introducing section 115BAA of the IT Act which allowed domestic companies to opt for an
alternative tax regime from financial year 2019-20 onwards. As per the regime, companies can opt to pay reduced income tax @22% (plus surcharge and cess) subject to foregoing of certain
exemptions. Central Board of Direct taxes vide circular number 29/2019 clarified that companies opting for lower rates of taxes will not be allowed to carry forward minimum alternate tax (MAT)
credit and also will not be allowed to offset brought forward losses on account of additional depreciation.
The Company has already opted for the aforementioned regime. Deferred tax is the effect of timing differences between taxable income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
(b) Fair value hierarchy
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below:
Quoted prices in an active market (Level 1)
This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in
quoted equity shares, and mutual fund investments.
Valuation techniques with observable inputs (Level 2)
This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as
prices) or indirectly (i.e., derived from prices).
Valuation techniques with significant unobservable inputs (Level 3)
This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using
a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data
(i) 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.
(a) Market risk- Interest rate risk
market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and
variable rate loans and borrowings.
(iii) Credit risk
Credit risk is the risk of financial loss arising from counterpart’s failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and
the risk of deterioration of credit worthiness as well as concentration risks. The Company has a policy of dealing only with credit worthy counter-parties and obtaining sufficient collateral, where appropriate
as a means of mitigating the risk of financial loss from defaults.
Financial instruments that are subject to credit risk and concentration thereof principally consist of trade receivables/ unbilled revenue, loans receivables, investments in debt securities of group companies,
balances with bank, bank deposits, derivatives and financial guarantees provided by the Company. None of the financial instruments of the Company result in material concentration of credit risk except
investment in preference shares/debentures made by the Company in its group companies and loans provided to its group companies. The credit risk in respect of such investments in preference shares/
debentures and loans are assessed on the basis of the fair value of the respective group companies determined based on their business plans.
The carrying value of financial assets represents the maximum credit risk. The maximum exposure to credit risk was Rs. 123.53 lakhs as at March 31, 2025 (March 31, 2024: Rs. 227.37 lakhs ), being the
total carrying value of investments, loans, trade receivables, balances with bank, bank deposits and other financial assets.
Customer credit risk is managed by eachbusiness unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. An impairment analysis is performed
at each reporting date on an individual basis for major customers. The Company does not hold collateral as security.
Credit risk from balances with bank and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with
approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential
failure to make payments.
(iii) Liquidity risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for
use as per requirements. The Company has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets through
commercial paper programs, non-convertible debentures and other debt instruments. The Company invests its surplus funds in bank fixed deposit and in mutual funds, which carry no or low market risk.
The Company monitors its risk of shortage of funds on a regular basis. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts,
bank loans, debentures, preference shares, sale of assets and strategic partnership with investors, etc.
The following table shows a maturity analysis of the anticipated cash flows (excluding interest obligations) for the Company’s financial liabilities on an undiscounted basis, which therefore differ from both
carrying value and fair value.
32 Segment Reporting
Operating segments are reported in such a manner which is consistent with the internal reporting provided to the Chief Operating Decision Maker (‘CODM’). As per the
evaluation carried out by CODM, the Company has only one reportable business segment, viz., "Textile Embroidery" and its new venture of Sports Academy. Accordingly, the
amounts appearing in the financial statements relate to the single business segment.
33 The Comparative financial statement of the Company for the year ended March 31, 2024 prepared in accordance with IND AS, included in this Statement has been reviewed/
audited, as applicable, by M/s Ravi Ranjan & Co. LLP ('the predecessor auditor'). The report of predecessor auditor on these comparative financial statement. expressed an
unmodified conclusion/ opinion, as applicable.
34 Extraordinary item comprise of TDS receivables, Self assessment tax and provision of tax adjustment.
35 As at March 31, 2025, the amount receivable in foreign currency from certain debtors of USD 31,977.88 is outstanding for more than 3 years. The Company is in the process of
filing necessary documents with RBI and is confident that such delays will not require any adjustments to the financial statement of the Company for the year ended March 31,
2025.
36 Capital Management
The Company’s capital management is intended to create value for shareholders by facilitating the meeting of long term and short term goals of the Company.
The Company 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. The
funding needs are met through equity, cash generated from operations and sale of certain assets, long term and short term bank borrowings and issue of non-convertible debt
securities and strategic partnership with investors.
For the purpose of the Company’s capital management, capital includes issued equity capital, convertible preference shares and debentures, share premium and all other equity
reserves attributable to the equity holders of the Company.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or
adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using
a gearing ratio, which is total debt divided by total capital plus total debt. The Company’s policy is to keep the gearing ratio at an optimum level to ensure that the debt related
covenant are complied with .
40 Additional disclsosure pursuant to schedule III of Companies Act 2013
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the company for holding any Benami property.
(ii) The Company does not have any transactions/ balances with companies struck off under section 248 of Companies Act, 2013 to the best of knowledge of the
management.
(iii) The Company has not traded or invested funds in Crypto currency of Virtual currency.
(iv) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other
person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner by or on behalf of the Group (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(v) The Company has not received any fund from any person(s) or entity(ies), including foreign entities(Funding Party) with the understating (whether recorded in
writing or otherwise) that the Group shall:
(a) 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
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vi) The Company has not been declared willful defaulter by any bank or financial institution or other lender.
(vii) The quarterly return/ statement of current assets filed by the Company with bank and financial institutions in relation to secured borrowings wherever applicable
are in agreement with books of accounts. During the year ended March 31, 2025 there is no requirement to file the quarterly statement with the bank.
(viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(ix) The Company has not granted any loans or advances in nature of loan, either repayable on demand or without specifying any terms or period of repayment, to
promoters, directors, KMPs and the related parties.
(x) The requirement of Section 2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017 is not applicable on the
Company.
(xi) The Company does not have any such transaction which is not recorded in books of account that has been surrendered or disclosed as income during the year in
the tax assessments (such as, search or survey or any other relevant provisions) under Income Tax Act, 1961.
(xii) There is no scheme of compromise/arrangement in the current year which is to be approved by the competent authority in terms of section 230 to 237 of the
Companies Act, 2013.
(xiii) The Company has used borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date.
(xiv) The Company did not carried the revaluation of its Property, Plant and Equipment during the year ended March 31, 2025. (Also refer note 41)
41 The Company has adopted the policy of revaluation of its Land in accordance with IND AS 16. The Company is using the land as part of Property, plant and
equipment. The last valuation done by the Company for the said land was during the FY 2021-22. The management of the Company is confident that the there is no
significant change in the value of the land and hence the carrying value of land is appropriate.
42 The Company has provided various loans to its group companies. The loans carries an interest @9.25% per annum. No such income has been booked by the
Company during the year. Due to this the other income of the Company has been understated by Rs 3.74 lakhs (approximately).
43 The Company taken various borrowings from its group companies and key management personnel and its relatives. The loans carries an interest @9.25% per annum.
No such expense has been booked by the Company during the year. Due to this the finance cost of the Company has been understated by Rs 7.95 lakhs
(approximately).
44 The financial statements for the year ended March 31, 2025 reflected an excess of current liabilities over current assets of Rs. 117.06 lakhs and losses from operations
before tax of Rs. 20.62 lakhs. However, net worth of the Company is positive of Rs. 2,745.25 lakhs. Further management is taking various initiative including
monetization of assets, recover of long outstanding dues, etc. Such initiatives will enable the Company to have sufficient funds to meet its financial obligations in an
orderly manner.
45 The Company has defaulted in payment of Employee's Contribution of Provident fund, amounting to Rs. 0.80 lakhs which is outstanding for more than four years.
Further no provision has been made for interest and penalty on the said outstanding liability. The management of the Company is in discussion with statuotry
authorities to settle the liability including fine and penalty.
46 The Company has defaulted in payment of TDS payable amounting to Rs. 3.01 lakhs which is outstanding for more than two years. Further no provision has been
made for interest and penalty on the said outstanding liability. The management of the Company is in discussion with statuotry authorities to settle the liability
including fine and penalty.
47 The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014
inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of account, shall use
only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of
account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company uses an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has
operated throughout the year for all relevant transactions recorded in the accounting software except for privileged access to specific users to make direct changes to
audit trail setting. Further, there is no instance of audit trail feature being tampered with in respect of the accounting software where such feature is enabled.
Additionally, the audit trail has been preserved by the Company as per the statutory requirements for record retention.
48 Certain amounts (currency value or percentages) shown in the various tables and paragraphs included in the financial statements have been rounded off as deemed
appropriate by the management of the Company.
49 Previous year’s figures have been regrouped/ reclassified, to conform to the classification adopted in the current year classification. The impact of the same is not
material to the users of the financial statements
The accompanying notes form an integral part of the financial statements.
RK Bhalla & C0. For and on behalf of the Board of Directors of RLF Limited
Chartered Accountants
ICAI Firm registration No.: 024798N
Sd/- Sd/- Sd/-
CA Rajat Kalsi Aditya Khanna Ashish Khanna
(Partner) Managing Director Director
Membership No.: 518515 DIN: 01860038 DIN: 01251582
Sd/- Sd/-
UDIN: 25515518BMHYJO7921 CFO Company Secretary
Place: 29-05-2025 Place: New Delhi
Date: New Delhi Date: 29-05-2025
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